The SaaS market has solidified itself as one of the most lucrative industries in today’s world, worth over $170 billion globally. Characterized by its subscription-based pricing model, SaaS is a fantastic source of recurring revenue that allows businesses to effectively forecast and plan their growth.
Even so, driving growth is never easy and requires a concerted strategic effort to make sure you stand out in the increasingly challenging market landscape.
The elements of growth
When it comes down to it, there are five key elements that determine how to drive growth, whether SaaS or otherwise. By first exploring these core elements and what they mean to your company, you can then look at what other SaaS companies are doing in each area to drive growth.
How attractive are you to your target?
Before you think about sales, marketing, or getting more leads, you first need to look at your actual business proposition and the model you want to go for. SaaS is always subscription-based, but there are various ways you can go about this.
You could take a Freemium approach, where you have a free tier and the user must sign up to unlock better features. Then again, you may decide to have a limited free trial that runs out after a certain amount of time.
Beyond the subscription type, it’s also vital that you know exactly what your target customer finds valuable and how your product responds to their needs.
How do you acquire new leads?
You have a great service that your target audience will definitely benefit from… In theory. How to drive growth and make this a reality is another story altogether.
There are many approaches to developing your marketing and sales efforts. What matters most is that you stick with the strategy you choose as all take time to come to fruition. At the same time, make sure to closely monitor your customer acquisition costs. If you’re spending more than you’re bringing in over a certain period of time, it may be time to rethink your strategy.
How do you convert new customers?
One of the most delicate parts of the process is the initial conversion as any mistake can ruin your hard work and turn people off. Everything up until this point can be perfect, but if the potential customer even just gets a bad feeling, they aren’t going to subscribe.
If nothing else, you need to explain every relevant point before the sale clearly and concisely—and make it as simple as possible to complete their payment.
How do you retain customers?
Beyond the loss of recurring revenue, high customer churn can lead to bad reviews and affect new acquisitions. Once the sale is over, you need to make sure the experience meets their expectations!
How do you track your results?
Finally, you need to keep a close eye on how you’re doing at every stage! Perfection is impossible, but that doesn’t mean you shouldn’t shoot for it.
By tracking everything from acquisition to retention, you can see where you’re doing well and where you need to improve.
Shopify: A lesson in being attractive
Shopify is one of the largest ecommerce software companies, with almost 11% of the global market share in 2022. But it wasn’t always that way.
Although officially launched as Shopify in 2006, the company can be traced back to two years earlier when friends Tobias Lütke, Daniel Weinand, and Scott Lake wanted to sell snowboarding equipment. They weren’t happy with the ecommerce platforms on offer and so Lütke decided to make his own.
It may seem like Shopify’s success was a foregone conclusion, but like many of the best companies out there, they had a false start.
As Lütke says, “we picked a very poor business model when we started. Even though we had a great product that many people wanted to use, we essentially made it so the people who would use it a lot would pay way too much, and the people who wouldn’t really need it would get it for free.”
It wasn’t until 2007 that they introduced a tiered subscription pricing model that meant they were attractive to their target and offered them a fair service.
From then on, they have gone from strength to strength. The biggest leap was with the development of a new POS system called Shopify payments in 2013. This allowed merchants to avoid third-party vendors and simplified the process for them.
When Amazon’s Web Store was closed in 2015, they picked Shopify as their preferred migration partner and Shopify has been a huge market player ever since.
SEMRush: A horizontal marketing strategy
SEMRush is a platform for keyword research and other SEO data created by Russian friends Oleg Shchegolev and Dmitri Melnikov and launched in 2008.
It wasn’t until 2012 that the friends decided to focus on SEMRush full time and by 2019 it had an ARR of $100m and six million free users on their platform.
The way they managed this was by focusing on Monthly Recurring Revenue (MRR) as opposed to more traditional marketing strategies. This approach is built around three main axes: Data, Features, and Users.
By offering more value to their current customers, SEMRush is able to save money on customer acquisition. And this approach has worked for them. Their annual recurring revenue per paying customer is $2,123, which represents an increase of 12.2% from 2019 to 2020.
The genius of this strategy is in identifying the needs of their small and medium-sized businesses’ market needs and adjusting their strategy accordingly. By saving on marketing, they can provide better value to their customers and enjoy 78% paying subscribers per month.
Zapier: Customer support for retention
Zapier traces its roots back to 2011, when Bryan Helmig, Wade Foster, and Mike Knoop launched an SaaS tool that allows them to integrate the web applications people are already familiar with and using.
Their success has been phenomenal, gaining 600,000 users in three years and an ARR of $50m. It has become something of an indispensable tool for all SaaS users due to its incredible versatility.
Like the other examples, Zapier has triumphed because of its excellent product, good marketing strategies, and a smooth experience. But there’s one area that we want to focus on that they really excel in—customer retention.
At some point or another, customers are going to have an issue and the level of support they receive can have a huge impact on how they view the product.
So, how does Zapier handle customer support? Essentially, they have everyone chip in.
That’s right, there’s no actual customer service department in the company. If there’s a technical issue, the engineering team takes it on. If it’s not, then the rest of the employees provide support in rotation.
Not only does this mean customers get support from people who can actually help them, but this direct contact with the customers provides an excellent feedback loop that allows the team to gain insights.
And that’s without mentioning the cost savings of not having a dedicated department.
Data: How to drive growth
It doesn’t matter what strategies you decide to use for your own company, if you aren’t tracking their success, you’re never going to progress.
Before you decide on the direction you want to take, it’s important to choose a CRM that is right for your SaaS business. By centralizing all the data and communications and leveraging key reporting features, you can drive your SaaS to the next stages of growth.
At Pipeline.so, we provide an end-to-end CRM platform that is perfect for SaaS businesses looking to unlock growth and unleash their potential. If you’d like to learn more about how we can help you, please reach out to us today!
