After you’ve gotten your SaaS business up and running, determined your product/market fit, and even secured some funding, you get to the scaling step. Then, there’s the expansion stage, which you’ll reach once you’ve figured out which growth levers you should pull to make your business generate more and more revenue.
No matter whether they are VC-backed or bootstrapped, all SaaS businesses aim to achieve a Drift or Slack kind of growth. However, there is no easy way to scale a SaaS business, and the “overnight success” formula is just a myth. If you embarked on this journey thinking there’s a silver bullet, you’re going to be disappointed. Scaling takes time, patience, some mistakes, and a lot of resources.
A popular mistake SaaS startups make is allocating resources the wrong way. Hoping they will achieve exponential growth and success instantly, they get ready for the moment they will “go viral,” and invest the bulk of their resources in preparation for that moment which may never happen, or at least not when it’s planned. And if it does happen, it rarely meets the expectations of the team. Let’s not forget the SaaS industry is very competitive; it’s getting more and more difficult to make yourself heard.
Now, what does scaling a business, either SaaS or not, mean?
Scaling a SaaS business means looking for ways to generate more profit. This can be achieved by entering new markets or gaining more customers, for example.
Let’s dive in, with some examples below!
1. Rethink your sales strategy
Take a closer look at your sales funnel and invest in prospecting and hiring the right salespeople. You can’t build and grow a company without making smart hires. However, you should invest aggressively in expanding your sales force only once you have found a successful sales model for your business. If you hire too many salespeople too soon, your cash flow will be affected.
If you don’t hire sufficient people at the right time, your Monthly Recurring Revenue (MRR) growth rate will decline due to churn (and not enough new customers to make up for the churn). There is a delicate balance between growth and cost that you need to achieve. That is why a repeatable, scalable sales model is essential to begin with.
Another question you might have: “How do I close more deals?” Besides hiring more people, you should optimize your sales strategy and tactics, automate some parts of the process to require less time and effort from salespeople, invest in trainings for your team, and hire effective management. Don’t forget to adjust sales quotas and gross margin percentages accordingly. Once you have those elements in place, you’ll be on your way to success.
2. Fuel your marketing efforts
Especially in the scaling stage, you can experiment with more channels to see which one could work for your business, but you should also keep investing in whatever paid channels already work. Don’t just throw money away on expensive experiments, especially if your team isn’t ready to handle them.
The focus of your marketing efforts should be to keep the Customer Acquisition Cost (CAC) as low as possible. If you manage to implement such a scalable CAC strategy, you will pay less than your competitors to acquire clients and thus be able to invest more in other areas of growth.
Pay more attention to creating persona-based, quality content and try to promote it accordingly. You’ll be surprised how far helping others can get you – so make sure your content answers the questions and pain points of potential customers. Invest in thought leadership content, as it will contribute to brand awareness and trust. A good content strategy can help you generate leads quickly and at lower costs than if you just invested in paid advertising – thus keeping CAC down.
The other side of the profitability equation is your Customers’ Lifetime Value (CLTV). To ensure growth for your SaaS business, you should always aim to have a Lifetime Value (CLTV) higher than 3x the Customer Acquisition Cost. You can grow CLTV through well-thought-out marketing mechanisms like upsells, cross-sells, upgrades, or even downgrades (to minimize churn), and by surprising and satisfying your customers at every touchpoint.
3. Have you thought about growth hacking?
You knew this one had to come up at one point or another. Growth hacking is not only a buzzword, but it’s also a proven way to help a business reach success very quickly.
Deploying growth hacking techniques such as launching a program to reward loyal customers, offering help in online communities such as Quora or Reddit, repurposing marketing content, or offering strategic discounts are just a few ways to get a business closer to success. All you have to do is pick the right approaches (depending on your business model, resources, objectives, and so on) and experiment your way to growth.
4. Keep your customers insanely happy
First of all, always track your churn rate and your Net Promoter Score (NPS). These metrics show how healthy the relationship between your business/product and your customers is. Companies with a customer-focused strategy have always been more successful than those focused inwards, on their product. Always ask for feedback from your customers and show that you are genuinely interested in how they’re using your product, so that you can offer them the very best version of it. Keep in mind that a brand’s reputation and the reviews its products receive are some of the most important factors influencing customers’ decision to buy.
Additionally, your customer success and customer support teams should be trained and empowered to properly solve any issues for those customers you’ve worked so hard to win over.
5. Build a referral program
Turning customers into advocates is the way to go if you want to scale. You can gain advocates with custom outreach efforts, such as a personalized video, email, or even engaging in real conversations with your clients.
Timing is also important: it’s better to ask for referrals after getting positive feedback from customers. If they do accept, come up with some kind of special reward for advocates.
Customer advocacy strategies could be a great competitive advantage if you know how to leverage them. All you have to do is to approach customers with a combination of trust, respect, and goodwill that will motivate them to tell a compelling story.
6. Improve your pricing
Your pricing should be a matter of continuous improvement and optimization, so don’t treat it like something that shouldn’t be changed during your growth journey.
To find the right pricing strategy for your SaaS, feel free to experiment with the page, packages, names, and the offering. A/B testing is going to be a huge help for you in this matter. We’re not necessarily suggesting that you should increase your fees to grow the business, but rather to optimize and price your product(s) accordingly.
7. Conquer the international markets
Selling internationally is an important milestone in the growth journey of your business. First, have some research done to see which markets are worth giving a try. Then, figure out the shopping behavior of the people who live in the countries where you are planning to sell. Think about the payment methods you should offer, what shoppers are looking for when researching a product online, which support method they prefer, and so on.
Also, you should consider creating an international promotions calendar featuring local holidays/days to target. Each country has its own unique holidays that represent important opportunities to reach their buyers. Key takeaway: you should have a “local approach” in your global selling strategy.
Scaling a SaaS business is a matter of teamwork, making the right business decisions, and allocating resources the right way. Always keep an eye on your metrics and don’t wait too long to make adjustments.
Good luck on your growth journey!
Ready to scale your SaaS business to the next level and expand into international markets? Watch this webinar to learn first-hand strategies that you need to now when planning your expansion.