What current Chinese SaaS companies need to establish is a sustainable growth model.
This kind of sustainable growth is based on the value thinking of the track where the company is located, that is, believing in the value that SaaS can bring to the company, constantly polishing products based on needs, looking for high-quality companies to provide services, living and growing together with high-quality companies, and embracing the ecological environment at the same time. Strength, build a benign PMF system, and realize the supply and demand flywheel co-created between products and corporate services.
Author|Piye
Produced | Industrialist
China's SaaS has been on the road to "finding solutions".
"The SaaS industry as a whole is not very optimistic this year, and some companies have experienced varying degrees of problems in their revenue and capital chains." An investor who has been paying attention to SaaS for a long time told an industrialist.
Behind this sentence, it corresponds to the embarrassing situation of many SaaS companies in the past few years - the corporate organizational structure is not sound enough, the customer group selection is not clear enough, and the industry track is cold.
Or it can be said that due to factors such as ebbing capital, shrinking valuations, slowing growth, etc., the industry has begun to return to value-driven from capital-driven. A question that SaaS companies are generally thinking about is: What is the path to healthy operation?
In fact, China’s SaaS, or the SaaS enterprise model, has always been the focus of market discussion. Some of the clear questions include“Can SaaS implement a subscription system in China?” “With customized delivery, does SaaS still belong to SaaS?” “What is the difference between PLG and SLG? Which should be the model for SaaS companies?", and "Which type should be the core battlefield for SaaS companies, large KA customers or small, medium and micro enterprises?"
These discussions correspond to people's exploration and hope for China's SaaS market path, and they also look forward to anchoring a special solution in China's complex and diverse digital environment.
If we move the timeline forward, in 2004, Salesforce on the other side of the ocean was successfully listed, ushering in the era of software and services. A few years later, the SaaS concept was gradually introduced into China, and in the following ten years, in China, In the past, some SaaS companies with Chinese characteristics have also grown up. Although these SaaS companies have different textures from SaaS companies on the other side of the ocean, they have also become a new force in China's transition from IT digitization to digital informatization and today's intelligent era.
What is the SaaS path with Chinese characteristics? Some answers are being given to this question.
1. SaaS under the cycle: Reshaping in retrospect
"It's not that China's SaaS business model is bad, it's the core contradiction between subscription and customization." The above-mentioned investor said, "The essence is still a proposition of survival and development."
A stronger representation of this sentence is at the level of corporate development.
In the past ten years, a series of thoughts on the development path of SaaS companies have been constantly put forward - for example, should SaaS companies focus on large customer groups, or should they focus on the small and medium-sized enterprise market? For another example, SaaS companies should extend their business sectors horizontally. To meet customer needs, we should still dig wells vertically, engage in team battles through connections horizontally, etc.
Behind these thoughts are the special current conditions of China’s soil. That is to sayDifferent from the European and American IT markets, the digital construction of Chinese enterprises relatively lacks underlying standardization and has not experienced the ITIL underlying construction period like in Europe and the United States. It is more in a state of disorder. Therefore, What this brings is that SaaS companies need to provide different services for different customers.
It is precisely based on this that many SaaS companies have fallen into the whirlpool of project customization. The most obvious manifestation is that the more corporate customers there are, the more internal business segments the company has, but the more serious the company's losses are.
This is also an issue that an earlier batch of China's leading SaaS companies were the first to realize - namely, "What should be the core user groups of SaaS companies in China?" and "What kind of services should SaaS companies provide?"
One set of data is that, according to incomplete statistics, the average lifespan of China's small, medium and micro enterprises is 36 months. This brings about the typical characteristics of this group in SaaS enterprise products: a large base, but low renewal rates and revenue. The proportion remains low.
However, looking at large customers, due to their strong corporate entity stability and internal IT construction projects that often last for a long time, corresponding to specific projects, they can contribute stable revenue to SaaS companies. Although the execution cycle is long, The advantage lies in its strong certainty.
In other words, among the customer groups of small and medium-sized enterprises, a more benign business format for SaaS companies should be to increase the proportion of large customers in their own company's revenue territory.
However, this is not an easy task.
It can be understood that compared with the standardized version of small and medium-sized enterprises, large enterprises often require higher standards of service requirements. For example, in addition to software, they also require corresponding capabilities in consulting, after-sales, and data integration. In addition, in addition to standardized versions, large customers often require enterprises to carry out customized transformations based on specific scenarios.
And this has become the core reason why many Chinese SaaS companies have more than enough ambition and insufficient capabilities. That is, they know that large customers are the direction of their efforts, but they do not have the ability to meet the corresponding needs. In the end, they can only seek optimal solutions in the small and medium-sized enterprise market.
The problem doesn't end there. Since the underlying IT architecture of Chinese enterprises is relatively extensive, the services provided by SaaS enterprises are often diverse and disordered. This disorder ultimately constitutes different links within the enterprise, such as ERP and MES, For example, CRM and WMS cannot be connected. For enterprises, once problems arise later, they can only invest huge sums of money in redevelopment.
This ecological isolation ultimately caused a backlash in the development of the SaaS industry in terms of demand satisfaction and imagination. “In the past, the PE value of SaaS companies could reach up to 20 times, but now it is generally very low.” A relevant person told the industrialist, “There are many reasons for this, not just the market temperature itself. ."
A new question that must be considered is: What should be the benign closed loop of China's SaaS?
In Huawei’s internal conferences, Ren Zhengfei often said in his early years,“A company that can survive the cycle is a truly long-term company.”For Chinese SaaS companies, it is now time to re-understand this sentence.
2. Seeking characteristic benign paths
Analyzing foreign SaaS companies, it is not difficult to see that because foreign IT environments are relatively standard, companies only need to provide specialized services in a single link, whether it is CRM, IT operation and maintenance, or underlying databases, middleware, etc., which brings What comes is the prosperity of the ecology in individual links and the emergence of various giants.
The complexity of the Chinese market, the diversification and personalization of customer needs, and the constraints of some "historical factors" make it difficult to find the answer to this question.
So, under China's special soil, what will be the answer? In fact, among Chinese SaaS companies, Weimeng is a good observation target.
Not long ago, Weimob and Cui Niuhui joined hands with many SaaS entrepreneurs to launch the documentary "Long Run: Ten Years of SaaS in China", a documentary about the tortuous growth of China's SaaS industry over the past ten years. It once hit the screen in the circle, and then on September 21st, Weimob's 10th anniversary A brand upgrade conference and brand upgrade conference was held in Shanghai. Sun Taoyong, Chairman and CEO of Weimob Group, officially announced the Weimob brand upgrade at the meeting, which also attracted widespread attention in the industry.
For Weimob, the new label outside is a digital business service provider based on "private domain". But in fact, beyond these labels, what should be more noticed is the unique Chinese SaaS model and path that this company has formed and run under the SaaS label.
The sustainable development of Weimeng stems from Sun Taoyong and the founding team of Weimeng’s judgment of the ecological niche and the rhythm of the times. This not only reflects the choice of the TO B track when it was founded in 2013, but also reflects its strategy and business layout. In 2019, as the first company in the industry to be listed on the Hong Kong Main Board with SaS as its main business, Weimob, known as the first SaaS stock in the new economy, gave hope and light to Chinese SaaS practitioners at the beginning of its listing, and also allowed overseas SaaS practitioners to see hope and light. International investors are beginning to pay attention to China's SaaS market.
However, an issue that deserves more attention is Weimob’s very unique strategic choice after it went public in 2019. According to Sun Taoyong's recollection, "One year after listing, we made an important decision. At that time, competing products in the industry wanted to build traffic and platforms. We did not follow the trend, but chose to dig deep. Great guest."
Judging from the results, we started exploring in 2019 and fully promoted and implemented the big customerization strategy from 2020 to 2023. Weimob’s “big customerization” and its subsequent layout are likely to be the leader of China’s SaaS It is very rare for start-up companies to realize the large-scale customization strategy at the same time as "scale" and "efficiency". Once this barrier is broken, Weimob will no longer “simply pursue a certain market trend, or simply rely on spending money to hit the market and lose money to make a profit.”
Take the retail industry that Weimob is deeply involved in as an example. In terms of business proportion, as of the first half of 2023, the latest data shows that Weimob customers account for 47% of the top 100 fashion retail companies, and 40% of the top 100 convenience chain companies. .
In addition to proportion, look at revenue and efficiency. From a revenue perspective, Weimob’s interim financial report released on August 15th showed that revenue continued to grow steadily and gross profit margin recovered. According to estimates,Weimob’s passenger revenue share will increase by 50% in 2023, and is expected to increase to 70% in 2025. While coach revenue has steadily increased, losses have gradually narrowed. From this point of view, Weimeng’s “big customerization” has achieved a certain degree of “scale”.
(2023 interim financial report data)
After the "scale" of the large-scale customization business, the more critical point is that what supports Weimeng's large-scale customization business goal is technical means and ecologicalization, rather than simply relying on expanding the scale of the R&D team Go for customization. To put it more bluntly, in terms of large-scale customization, Weimob has not only achieved scale in the past few years, but also achieved economy and sustainability. There is a key variable here that appears in 2022.
Sun Taoyong said, "2022 will be an important milestone moment for Weimob - WOS is officially released. We define it as a new commercial operating system. It is a new product based on Weimob's accumulation of product technology in the past 10 years. Digital infrastructure or technology base.”
This new commercial operating system is designed based on decentralized logic. According to reports, the data assets it generates are completely owned by customers, thus helping customers achieve effective governance of digital assets.
From the perspective of specific functions, Weimob WOS can accelerate its own R&D and delivery efficiency on the one hand. Weimeng Group CTO Huang Junwei said that Weimeng WOS new commercial operating system can increase product development efficiency by 50%-80%. On the other hand, WOS is used to achieve openness inside and outside the industry and build a more compatible ecosystem. According to incomplete statistics, Weimeng Cloud will add more than 50 high-quality ecological partners and launch more than 400 cloud market applications in 2022, creating revenue for ecological enterprises that will increase by more than 500% year-on-year. At the same time, Weimeng's own revenue will also increase by more than 500%. %.
For enterprises, this new commercial operating system based on Weimob can realize the connection and connection between various internal SaaS products and links.Through the Integration can truly realize the flow and unified management of internal data, thereby helping enterprises better establish and operate their own private domain systems, truly transform software into enterprise productivity based on indicators such as repurchase and retention, and achieve true sustainability. Continued growth.
Sun Taoyong said: "We hope that when companies need to digitize, or connect, reach, and trade with customers, they can have a main core, and this core is Weimob's WOS."
A series of customer cases also verify that the expectations of Sun Taoyong and Weimob are being realized.
In 2022, Xtep and Weimob will upgrade their cooperation and enter Weimob WOS new commercial operating system, gradually upgrading from scattered brands to the cloud to integration and unification. Lin Jun, assistant vice president of Xtep Group, said, “Our business itself is growing and we need a big plan to be able to withstand the demand. Weimob can meet many personalized needs. The PaaS platform provided by Weimob WOS can do Customized development. Weimeng’s open capabilities are also gradually being connected with Xtep. Based on Tencent’s WeChat ecosystem, we hope to integrate CDP, CRM, enterprise micro, BI, mini program mall, etc. in the future to form a multi-brand, full-link membership operation System and sales closed loop.”
In the cooperation between Jiumu King and Weimob, Weimeng has made full use of its product and service advantages to help more than 900 of Jiumu King’s stores migrate to the cloud through tools and products such as mini program malls, corporate micro assistants, and super shopping guides. Relying on Weimob’s ecological capabilities, Jiumuwang has also completed the integration of video account live broadcasts and mini programs, and is focusing on improving the multi-channel layout and refined operations such as Xiaohongshu, Alipay, and video account live broadcasts, and has begun to lay out and build a complete distribution system. With the support of Weimob WOS new commercial operating system, Jiumuwang’s digital system and private domain construction have further achieved operational upgrades, service upgrades, and channel upgrades.
Up to now, the vast majority of Weimob's large customers have switched to Weimob WOS and are experiencing the efficiency and quality improvements brought by the "fast iteration, strong integration, scalability, and flexible customization" business infrastructure.
In fact, this is the epitome of Weimeng's actions in the past many years, which Sun Taoyong said was "repairing the roof on a sunny day".
From an objective point of view,Whether it is the earliest SaaS+ marketing service, or the later ALL IN mini program, and now the technology strength and ecological layout to carry large customization Strategy, use technology empowerment to solve the dilemma of SaaS in the market and revenue model. What is special about Weimob is that it carries out rigorous corporate transformation and does the hard but right things in the spring.
If you zoom in further, as far as China's SaaS track is concerned, what you can see is that the characteristics of companies like Weimob are that while thinking about the company's own development path,< a i=1>Further thinking about real digital supply and demand issues and problem-solving capabilities, promoting the continuous evolution of China's SaaS supply and demand balance based on the balance of customer needs and ecology,In promoting the transformation of its own products into " At the same time, it also creates enough upper space for ecological partners to help customers and ecological partners realize value while also driving their own growth flywheel, using a virtuous cycle to make SaaS an enterprise. “Real Productivity” and “Real Connectivity” at Different Times.
3. From 60 minutes to 90 minutes, where is the way?
As we all know, imitation, catching up and surpassing are the core secrets of the sustainable development of China's Internet industry. However, as a SaaS industry, it did not shine as quickly in the Chinese market as the Internet did. Instead, it experienced a long period of "ups and downs" from scratch to around 60 points in the early stages.
Where is the real access? In other words, on the basis of 60 points, how can China's SaaS industry find a way to 90 points or even 100 points?
In fact, some answers to this question have already emerged. For example, from the strategic level, the proposal and implementation of large-scale customization, ecology, etc., whether it is Weimob, Beisen, eSaiBao, or leading SaaS companies in various directions such as Decbeitong and Yikuaibao, these answers are all becoming their common direction of travel.
For another example, from a product perspective, with the support of PaaS capabilities or integrated capability building, an integrated service model can achieve lower R&D costs and higher demand satisfaction for SaaS companies, while also laying the foundation for SaaS companies’ ecological strategy of opening up to the outside world. as the cornerstone, so as to be interconnected with digital applications in all aspects, thereby helping enterprises achieve a better digital experience.
At the recently concluded Weimob 10th Anniversary Conference, Weimob went one step further and proposed a new brand proposition - let growth continue to happen. In the words of Sun Taoyong, founder of Weimob Group, it is“First, customer-centered; second, long-term compound interest.”
In Sun Taoyong's view, the value of "customer-centric" lies in enabling more and more companies to have the ability to "know users" and know where their real customers are, and then adjust their own products and business based on customer feedback. ; And "long-term compound interest" corresponds to the need for enterprises to continuously operate and maintain their own "private domain", and through continuous companionship and operation, they can increase repurchases and achieve true sustainable growth.
In Weimob, it is broken down into six levels of goals - Let the company's users continue to grow, let the company's data value continue to grow, and make the company's operating efficiency Continue to grow, let the enterprise channel empowerment continue to improve, let the customer's product-efficiency synergy continue to grow, and let the customer's model innovation continue to iterate.
If Weimob’s 60-point path lies in the choice of its own products and customer groups, then its 90-point path is precisely the representation of SaaS companies that can help the served companies achieve sustainable growth, two-way blessing, and two-way empowerment.
As far as the SaaS service providers themselves are concerned, this new thinking corresponds to what the current Chinese SaaS companies need to establish a sustainable growth model. This kind of sustainable growth is based on the value thinking of the track where the company is located, that is, believing in the value that SaaS can bring to the company, constantly polishing products based on demand, looking for high-quality companies to provide services, and working with high-quality Enterprises coexist and grow together, and at the same time embrace the power of ecology to build a benign PMF system,realize the co-created supply and demand flywheel between products and enterprise services, and consolidate their own competitive barriers.
Finally, returning to the "Long Run: Ten Years of China's SaaS" mentioned earlier, we can see that the ten years of SaaS have been full of thorns. In the past, many companies were founded under the coercion of capital and the catalyst of the storm, but they have truly stepped out of the There are very few companies with a sustainable development path. For Chinese SaaS companies, the real logic of going from 60 points to 90 points may be to discover problems with keen insight and truly solve them with extremely high execution, strategy and business layout. Difficulties, taking the difficult and right path.