To adapt to the times, many businesses chose to accelerate their digital transformation…and move that proved to be a big boost for SaaS startups. As businesses had to come to terms with flexible working and find more cost-efficient solutions to problems, cloud technology moved from strength to strength.
There’s never been a better time to create or refresh your SaaS growth plan. With economies unlocking and the biggest challenges (touch wood) behind us, conditions look set to stabilise, allowing businesses to start planning again. This blog will cover some of the ways that you can successfully scale and grow your SaaS business.
Making a SaaS growth plan
A good growth journey for a SaaS startup is based on a strong all-around foundation. Scalability doesn’t come from one ‘good’ element of a business; it's better to think about scalability as the result of a business that has many ‘good’ elements within it.
Having a SaaS business plan that’s based on a strong foundation puts your business in the best position to allow it to scale and achieve the explosive growth that all startups crave. When growth occurs, you need to be ready for it. Having an unprepared business that suddenly sees demand rise due to a new opportunity could find itself overwhelmed, and in this situation, a better-prepared competitor may be able to respond more effectively…leaving your business behind.
But, that’s why you’re reading this, right? To make sure this doesn’t happen! Below we cover six areas of your SaaS business model that you may want to strengthen.
1. Marketing, but better
Marketing is the natural place to start when you want your SaaS business to grow. When you begin you’re able to experiment with marketing strategy and different channels, to find out which best connects with your intended audience.
Making mistakes at this stage shouldn’t be expensive. Ensure that when you start with a marketing strategy costs are controlled and decisions are deliberate with a set purpose. Paying for third party ‘marketing solutions’ can be expensive, and if you’ve not completed your research your efforts may be misdirected. Market research is crucial in the early stages of a SaaS startup, it allows you to understand your market and the competitors operating within it. By doing this, you’ll get a good idea of what works, and what doesn’t.
Knowing your customer is a key element of market research. You want to know what problems they have and what type of solutions they’re looking for. Knowing the channels and content they currently engage with will help you focus your marketing efforts most effectively.
There are a huge amount of marketing strategies out there, each one has its strengths and weaknesses. Researching different approaches and understanding which one will best complement your SaaS business is key. Take email marketing, for example, it has a very high return on investment, £35 return on every £1 spent, but it requires a lot of attention and time to make it meaningful.
Whichever strategy you use to grow your SaaS business, you need to make sure your content and collateral are of high quality. Any content you produce you will need to get promoted to reach the widest audience, this is where being creative helps. Partnering with industry magazines and websites on blogs or expert articles can be a great way to deliver your message and build awareness.
2. Customers Don’t Grow on Trees
Reaching new customers is important, but just as important is keeping the ones you have. Not only does this prevent them from going to a competitor (protecting your market share) but keeping customers is much cheaper than winning new ones. Besides cost, there are some key reasons why retaining customers is vital for scaling your SaaS business.
As you grow your customer base, they get to know you and build a relationship with your brand. As they become more familiar with you, they will access your products/services more frequently. Making sales to existing customers is cheaper than making a new sale, this alone can keep marketing budgets efficient and allow cash to be available for other areas of the business. Communicating with people who are already aware of your brand is more direct and meaningful, and you don’t need to win them over with discounts or offers.
An additional benefit of customer retention is that they can do your marketing for you, and can help you grow your business without having to spend money on advertising. With social media and other online tools being so common, happy customers/users can be encouraged to share positive experiences with their social or professional networks. This is essentially free advertising for you. And, as your brand message is being delivered by people that they trust, it has more power. This can be a great and often overlooked tool to assist you in your SaaS growth strategy.
When it comes to development within your business, being able to call on a network of trusted and engaged users is something that money can’t buy. These customers have a connection and loyalty to your brand, so they’re in a unique position to make product feedback and suggestions for you, enhancing your offer and making it more customer focussed.
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3. Find Your Price Point
Pricing can be difficult for any SaaS business. If you get this wrong, it can have consequences that materially impact or stall your business. If your product is priced too high, competitors will undercut you and customers may go elsewhere. On the flip side, if you price yourself too low then profits may be hard to come by. But get it right, and that explosive growth all startups crave could be ignited. In business, finding the right price point can be hard, and it requires a careful understanding of the market and how valuable your offer is.
Having a price structure is one thing. Making sure it’s optimised and in keeping with the market is another. You'll need to ensure that your pricing is always kept in lockstep with the wider market, otherwise, you could find yourself getting left behind overnight.
There are numerous different pricing strategies that you can choose from, but in practice, the market you operate in has probably settled on the one which is best suited to drive growth. However, it’s always worth disrupting the status quo and even small variations of price can impact revenues significantly. Spending some time creating a solid price strategy will pay off, neglecting this element of your SaaS business plan could be leaving revenue (and growth) untapped.
4. Time to go international
Growing a SaaS business is a tricky time and there are various decisions to be made, all of which have costs or risks involved. Deciding which risks are worth taking and which aren’t is down to the intuition and guidance of the founders and investors. One sure-fire way to see growth, if successful, is to start selling worldwide. Going international is a big milestone to reach for any business, and it’s far from straightforward. Each region has its own set of customer behaviours and regulations, meaning your software may not be suitable everywhere. You’ll need to understand each region before you offer service there.
Another key element of international selling is the ability to take payments and process transactions across the globe. This issue doesn’t just relate to differences in currency, but also preference. If you don’t offer the preferred payment method of your new customer base, they’re likely to stick to the solution they already have, or go to a competitor.
If you’re dealing in cash while they’re dealing in bitcoin, it’s unlikely they will see synergies with your software!
To fully understand new markets, you’ll have to have to go into a level of granular detail. The customs and important dates of these regions can form part of your marketing and promotion strategies, but beyond that, being aware of them can prevent you from positioning (or delivering) your marketing in a way that might be off-putting, or even insulting to your new audience. In short, to be successful, you need to go international and then stay local!
5. Automate to accumulate
If your SaaS business plan doesn’t include automation, then it should. Understanding how your SaaS company can make the most of automation to reach a wider audience will help you reach a new level of efficiency. The increased efficiency within your operation opens the door to new processes and areas to direct resources.
Automation processes can include sales, marketing, and customer service, freeing up valuable employee time. This makes these valuable employee hours available for other areas of the business.
Automation of the customer life cycle revolves around having an understanding of your customer’s journey. The way the relationship develops from ‘visitor’ to ‘lead’ to ‘customer’ will provide important insights into how users initially become aware of, engage with and stay loyal to your brand. These insights can then be leveraged into new automated strategies and targeting techniques.
Some elements of your SaaS business marketing plan can also be automated. This might include things such as social media posting, that can be timed to best connect with your audience. Automation of some marketing elements can provide specific content, through specific channels to target a specific group of people. In this way, you can perform light touch marketing with people who may have visited your channels or may just be interested.
6. You tell three people, and they tell three people…referral programmes
Scaling a SaaS startup is hard enough, so why not leverage the resources you already have? Even better, why not get other people to do the hard work for you?
Loyalty programmes encourage strong connections between your brand and the customer network you’ve built up. A good loyalty programme offer should provide a large benefit to your existing customer through incentives. This builds an emotional connection through the concept of reciprocal advantage. This basic loyalty program can be built upon to form part of a larger scheme, perhaps with third parties who may offer lifestyle rewards.
Having a pool of customers who already like and interact with your brand are useful in that they will refer your services to their friends and family. This will happen organically, but having a purpose-built referral scheme in place will leverage this opportunity and make it both more likely to succeed and increase the frequency of referrals. A consumer is 50x more likely to buy a product when it is recommended by their close friends.
In the SaaS business model, the referrals are likely to be high quality and pre-qualified leads allowing for a high conversion rate. The referral will likely have come through a trusted third person, who will likely have already communicated the benefits of your products. These ‘primed’ leads can be a valuable source of revenue and require very little expense to see high multiple returns on investment.
We’ve discussed six ways to be able to scale your SaaS business. As we mentioned in the introduction, scaling is the natural result when you get other areas of your business right. It doesn’t happen by accident and isn’t as simple as just having the right product.
As cloud computing becomes synonymous with the modern workplace, the opportunities for SaaS businesses are enormous. But the market is crowded, with companies ranging from startups to multinationals all operating in this space. Being able to differentiate yourself is important. By following the advice in this guide, you can give yourself the very best possible chance to scale your business model. Having all the basic elements of your business operating efficiently and with high quality makes it more likely that growth will occur, and also enables your business to cope with it when you do scale.
There are some important aspects of this guide, such as managing pricing strategy, that shouldn’t be neglected. Pricing strategies should be accurately priced for maximum growth and this process requires a lot of market research. The messaging that can be sent out by getting your price point wrong can be damaging to brands, for example being labelled as ‘cheap’.
While preparing for a growth phase it can be useful to partner with professional advisors that have experience in taking start-ups through their growth journey.
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Navigating the markets with a fast growing startup can be a difficult and unpredictable journey. Even more so, when you’re developing your own brand identity and strategy, while also fighting off the competition and trying to differentiate your offer. Balancing these different priorities is challenging and often the help of external professionals will be a valuable resource of knowledge and experience.
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