You’ve gotten your SaaS business up and running, and maybe even secured some funding. Now how do you scale up? Well, there is no easy way to scale a SaaS business, and the “overnight success” formula is just a myth. Here we’ll look at seven tips on how to scale, but remember that whatever you do, scaling takes time, patience, trial and error, and investment – in terms of commitment and resources. Let’s dive in!
1. Understand your biggest challenge
Before you start thinking about growth, start digging into what might be your biggest challenge – what could be the biggest obstacle to scaling your business: is it acquiring new customers, onboarding, monetization, retaining customers or preventing churn? Of course, each area requires a deep dive. If we take onboarding for example, look at how you measure success, map the customer onboarding journey to milestones, think of what technology you are using to help with the onboarding process – WalkMe type tools is one example. Going further, understand what onboarding actions have a high impact on retention and how you can optimize the process overall.
2. Consider a growth framework
A growth framework requires serious data analysis and a pinch of gut feeling, but it will give you insights that will help you scale. Put your data scientist hat on and think of it as a process of using data to find hypothesis that are easy to test; the results will be clear answers on what you need to do to generate growth. An important part of the growth framework is the growth equation, which was coined by Chamath Palihapitiya in his Facebook days like this: Top of funnel (traffic, conversion rates) x Magic Moment (create an emotional response) x Core Product Value (what solves a real customer problem) = Sustainable Growth. Essentially, the growth framework is a way of finding what you need to do to grow organically.
3. Go international
Selling internationally is an important milestone in the growth journey of your SaaS business. First, do some research on which markets are your best targets. Then, figure out buyer personas by market – there may or may not be notable differences between countries.
Think about localization – this can be done gradually, and some pieces of it even outsourced from day one, if you’re selling online, work with your digital commerce or your payments provider to see which payment methods you can offer in which country. This should require zero investment from your side – and be easy to implement. While accepting Visa and MasterCard may be ok overall at the global level, there are markets where other payment methods are dwarfing cards: iDeal in The Netherlands, Alipay in China, PayPal in Germany, etc. Not offering such payment methods in these specific markets will hurt your conversion rates.
Then there is the question of support, time-zone differences, site and product localization. Also, consider creating an international promotions calendar featuring local holidays to target. Bottom line , implement a “local approach” in your global selling strategy to help you scale.
4. Work on your pricing
Your pricing is not set in stone, so don’t treat it like something that shouldn’t be changed during your growth journey. In fact, according to ProfitWell who are experts on SaaS pricing, more price changes correlate to higher Average Revenue Per User. I’m not suggesting that you should simply increase your fees to grow the business, but rather to optimize the price in a smart way, by using data and by looking at value (and less so features) and customer’s willingness to pay. Pricing is an important part of your monetization strategy so the recommendation here is to not be afraid to continuously improve and optimize your SaaS pricing to fuel your growth. Also, don’t forget to localize your pricing in those international markets for the best results.
5. Focus on retention and improving CLTV
This falls into the bucket “use retention as a lever to gain more customers”. Let’s do simple math: you improve retention then your customer lifetime value (CLTV) increases. This means that you have more money to spend on acquiring new customers. At the same time, your own marketing and sales efforts are amplified by advocacy actions of your clients (more about that, in a minute). To improve retention, you essentially need to be customer-centric. Have mechanisms in place to constantly gather feedback from your customers and understand the value they’re getting from your product and how you can support their needs with an enhanced product, tools, content, etc.
Another point to make on retention is related to involuntary churn – anything that has to do with payments (card declined on renewal, card expired, etc.), you can deal with your commerce/ payments provider – no excuses for letting perfectly valid customers end their subscription because of technicalities. And there are upgrades, upsells and other opportunities to monetize your product across the subscriptions lifecycle and improve again that CLTV.
6. Have a referral program in place
Turning customers into advocates and using a referral program is a sure way to help you scale. However, a prerequisite for this is … happy customers. Start by looking at some key metrics and use industry benchmarks to see where you stand. For example, track your churn rate and your Net Promoter Score (NPS). The B2B SaaS average NPS is about 40 so you really want to be above that for your referral program to stand a chance.
7. Automate… as much as you can
Scaling without automation is not possible, so take a fresh look at all of your systems and see what you can automate – from marketing campaigns to onboarding and nurturing to accepting payments and billing to triggered notifications and churn prevention. Especially in areas that you outsource – such as billing and payments – automation is a must and something you shouldn’t worry about at all.
There’s so much more to scaling your SaaS company – improving your marketing, sales strategy, processes and so on.
On a final note, industry experts say that between acquisition, monetization and retention – monetization and retention-based growth outpaces acquisition-based growth. Provided you’ve already got some decent, healthy acquisition, you should next think about driving that scale by focusing on improving monetization and retention.
Author Alexandra Marcu, Marketing, VP 2Checkout www.2checkout.com
