- What Is a Saas Business?
- Why Are Saas Companies Growing in Popularity?
- 7 Best Methods To Skyrocket Your Saas Company
- Strategy 1) Invest In Quality Lead Generation and Sales Funnels
- Strategy 2) Leverage Content Marketing and SEO
- Strategy 3) Optimize Your Customer Acquisition Costs (CAC)
- Strategy 4) Increase Your Average Revenue Per User (ARPU)
- Strategy 5) Optimize Your Customer Lifetime Value (CLV)
- Strategy 6) Scale To New Markets Globally
- Strategy 7) Automate Your Processes
- How Can You Measure SaaS Growth?
- How To Apply These Saas Growth Strategies?
- How To Overcome The Biggest SaaS Growth Challenges?
- What Is The Future Of SaaS and What It Means For Your Business?
- Last Thoughts
Last Updated on January 19, 2023 by Jordan Alexo
SaaS companies are growing at an alarming rate.
By 2022, there will be an estimated 17,000 SaaS companies in the United States with 59 billion customers worldwide. The current annual growth rate for this industry is 18%.
To keep up, businesses of all sizes need to understand the ins and outs of this type of software.
In this guide, you’ll discover seven saas growth strategies to help your business. I’ll also provide tips on how your business can apply these strategies to increase its growth.
What Is a Saas Business?
SaaS stands for software-as-a-service. It is a type of cloud computing that allows users to access applications over the internet without having to install or maintain any hardware or software themselves.
This means saas businesses can save on costs associated with purchasing, storing, and managing their equipment while still giving customers the same functionality as if they were using the software from their own machines.
Contrary to traditional software companies, SaaS companies charge customers on a subscription basis. This subscription model allows businesses to scale their services as they grow while providing more flexibility and cost savings over time.
Why Are Saas Companies Growing in Popularity?
The main driver of SaaS growth is the increasing demand for remote working. With more people working from home or on the go.
According to recent studies, 26% of all American employees work remotely as of 2022.
For this reason, businesses must find ways to securely access their software and data without investing in costly infrastructure.
SaaS solutions offer a convenient way to do this without sacrificing security or reliability. Additionally, these services are often more cost-effective than traditional software solutions.
You probably have used SaaS products before, such as:
- Google Cloud
Now that you have an idea about what consists the SaaS industry. Let’s see how to grow your business.
7 Best Methods To Skyrocket Your Saas Company
Here are the seven strategies to help your business grow:
Strategy 1) Invest In Quality Lead Generation and Sales Funnels
Lead generation is essential for any saas business. It’s the process of attracting and converting prospects into paying customers.
The key here is to build an effective sales funnel that nurtures leads throughout their buyer’s journey, from awareness to consideration to conversion.
To improve your lead generation, you should consider the following:
- Optimize Brand Presence: Ensure your brand is visible in relevant online channels like social media, search engine results, and industry blogs. Furthermore, adjust your logo, website, and other visuals to make them more memorable.
- Outreach: Establish relationships with influencers in your industry and collaborate on activities such as hosting webinars, sponsoring events, and creating content.
- Lead Magnets and Interactive Tools: Use lead magnets such as eBooks and checklists to capture leads or create interactive tools such as calculators or quizzes.
Also, you should optimize your sales funnel for maximum conversion. You should split-test different landing pages, calls-to-action, and offers. Sometimes, changing the CTA button color or text can make a difference.
Strategy 2) Leverage Content Marketing and SEO
Content marketing and SEO (Search Engine Optimization) are critical components of any saas growth strategy. Content creation and optimization can help to increase visibility, engage with potential customers and build trust in your brand.
You want to build content related to your Saas product/s. This should be:
- How-To Guides: Show your prospects how to use or get the most out of your product.
- Product Reviews: where you review other products that can benefit your customers.
- Case Studies: where you explore how your product has helped other customers and businesses.
- Product Comparison: where you compare your product to others in the market.
You should also learn about search engine optimization. This is important so that your web pages rank high on search engines for relevant keywords.
SEO nowadays has become easier than ever with the help of artificial intelligence tools.
If you’re looking for an AI tool to assist you with your content marketing and SEO efforts, look no further than Surfer SEO.
It’s an AI-driven platform that provides actionable insights to help you improve your website’s search engine ranking and visibility. With Surfer SEO, you can quickly create high-quality content that engages and converts your target audience.
If you want less time learning SEO, you can always hire an SEO specialist to manage the process.
Strategy 3) Optimize Your Customer Acquisition Costs (CAC)
Customer acquisition costs (CAC) refer to the total cost of acquiring one customer. It’s essential to keep your CAC as low as possible to ensure your saas business can scale.
There are several strategies you can use to optimize your CAC:
- Focus on Customer Retention: The longer a customer stays with you, the lower your CAC will be over time. Offer incentives for loyalty, such as discounts or exclusive access to new features.
- Invest in Lead Generation: Focus on generating high-quality leads that are more likely to convert into paying customers. This can be done through content marketing, SEO, or paid advertising.
- Leverage Referral Programs: Referral programs are a great way to acquire new customers at a lower cost than traditional marketing methods.
- Optimize Your Pricing: Make sure you’re charging enough for your product to cover your CAC. This will ensure that you can continue to scale your saas business without losing money.
Hiring someone expert at Facebook ads and Google Ads can also be a great option to help you optimize your CAC. With someone experienced, you can save a lot of money with optimized ads.
Strategy 4) Increase Your Average Revenue Per User (ARPU)
The average revenue per user (ARPU) is a metric that measures how much revenue your saas company is generating per user. Increasing this metric will help you maximize profits and scalability.
There are several strategies to increase ARPU, such as:
- Offering Premium Features: Offer additional features at a higher price point to customers who need them.
- Upselling & Cross-Selling: Offer related products or services to existing customers.
- Increasing Pricing: Increase prices for existing customers over time. This can be done gradually and must be monitored closely to ensure you don’t lose customers due to price sensitivity.
By leveraging these strategies, you can increase your ARPU and maximize the profitability of your saas business.
Strategy 5) Optimize Your Customer Lifetime Value (CLV)
Customer lifetime value (CLV) is a metric that measures the total amount of revenue a customer generates for your saas business over their lifetime.
Optimizing CLV can help you increase profits and scale your saas business. Here are some strategies to do so:
- Enhance Customer Experience: Ensure your customers get the best experience possible. This can be done by offering excellent customer service, providing helpful resources, and utilizing feedback to improve your product.
- Leverage Upsells and Cross-Sells: Offer related products or services to existing customers. This can help you increase customer loyalty and retention.
- Increase Customer Engagement: Utilize email marketing, surveys, and social media to engage with customers and keep them informed about updates or new features.
Optimizing your CLV can increase profits and grow your business.
Strategy 6) Scale To New Markets Globally
Expanding your business to new markets can help unlock untapped potential and increase profits. Here are some tips for scaling globally:
- Research Local Demographics and Trends: Make sure you understand the needs of the market you’re entering. This will help you customize your product or service accordingly.
- Localize Your Product: Translate your product or service into the local market language. This will help you better attract and engage customers.
- Leverage SEO & Advertising: Utilize SEO techniques and paid advertising to increase visibility in new markets. For instance, you can have your content in several languages and target specific countries or regions with ads.
Scaling to new markets globally can help you unlock growth opportunities and maximize profits for your company. However, you should first focus on one market until it is well-established before expanding to others.
Strategy 7) Automate Your Processes
Automating processes is one of the best ways to scale your business. Technology can help you save time, reduce manual labor, and increase efficiency.
Here are some tips for automating processes:
- Invest in Automation Software: Utilize automation tools like Zapier or IFTTT to automate certain parts of your business.
- Outsource Tasks: Hire freelancers or outsource tasks to third-party companies to save time and resources.
- Leverage AI and Machine Learning: Utilize Artificial Intelligence (AI) and Machine Learning (ML) to automate complex processes and increase efficiency. For instance, Jasper AI and Surfer SEO can help your team create higher-quality SEO content faster.
You should automize your online business whenever possible to optimize your processes, reduce costs, and maximize profits.
How Can You Measure SaaS Growth?
When scaling your business, it’s important to track key metrics that will help you measure success. Some of the most important SaaS growth metrics include:
Monthly Recurring Revenue (MRR)
This metric measures the revenue generated from subscriptions. To calculate MRR, you may use the following formula:
MRR = Number of Customers x Average Amount Billed
Annual Recurring Revenue (ARR)
This metric measures the revenue generated from subscriptions over a 12-month period. To calculate ARR, you may use the following formula:
ARR = MRR x 12
This metric measures the rate customers cancel their subscriptions or stop using your services. To calculate churn rates, you may use the following formula:
Churn Rate = Number of Customers That Cancelled / Total Number of Customers
Revenue Churn Rate
This metric measures the rate at which revenue is lost due to customer cancellations or downgrades. To calculate the revenue churn rate, you may use the following formula:
Revenue Churn Rate = MRR Lost / Total MRR
This metric measures the difference between revenue and cost of revenue. To calculate gross margin, you may use the following formula:
Gross Margin = (Revenue – Cost of Revenue) / Revenue
What Is The 40% Rule?
The 40% Rule is a popular saas growth strategy that states that if you can increase your customer lifetime value (CLV) by 40%, you can double your customer base without increasing customer acquisition cost/s.
To use this strategy, you must identify areas where you can increase CLV and focus on delivering more value to your customers.
How To Apply These Saas Growth Strategies?
Let’s see how you can apply all these strategies to achieve SaaS growth for your business.
1) Review and Optimize Your Product
Take a look at the features you offer and make sure they are up-to-date and meet customer needs. Then, focus on improving your product offering to keep customers engaged.
2) Increase Customer Lifetime Value (CLV)
Identify ways to increase the value of your products or services by adding features and bonuses that will make customers more likely to stay with you for longer.
3) Streamline Customer Acquisition and Onboarding Processes
Make sure your sales process is efficient and your customers have a positive experience signing up for your services.
4) Leverage Data to Gain Insights
Use analytics tools to track key metrics, identify areas of opportunity, and make decisions based on real-time data. Even tools like Google Analytics can help you gain valuable insights.
As they say, “numbers speak for themselves,” and data is essential to make informed decisions. So, start tracking key metrics and use analytics tools to gain insights that will help you achieve growth objectives.
How To Overcome The Biggest SaaS Growth Challenges?
Although launching and growing a saas business can be rewarding, it’s not without challenges.
Many businesses encounter roadblocks such as inadequate lead generation, high customer acquisition costs, and low customer retention rates.
To help overcome these common roadblocks, here are some strategies to consider:
1) 3 Common Account Segmentation Mistakes
- Not Segmenting at All: Not using account segmentation can lead to a one-size-fits-all approach, which won’t be effective in delivering personalized services and experiences.
- Over-Segmenting: Too many segments can make it difficult to target customers effectively and manage campaigns.
- Ignoring Customer Feedback: When creating segments, it’s essential to consider customer feedback and preferences to ensure that the segments are meaningful and relevant.
2) How Can You Market More Efficiently?
- Invest in Lead Generation: Focus on strategies that generate high-quality leads at a lower cost.
- Use Content Marketing: Content effectively reaches and engages potential customers, demonstrates expertise, and drives conversions.
- Utilize Influencer Marketing: Influencers can help increase brand awareness and build trust with potential customers.
- Leverage Social Media: Social media channels are powerful tools for helping you reach your target audience.
3) 2 Ways To Increase Revenue Growth?
- Add More Sales People: Hiring additional salespeople can help you find more prospects and close deals faster.
- Increase Your Sales Team Performance: Invest in training and coaching your existing sales team to help them become more effective at selling. Plus, providing your team with the right tools, so they don’t waste time with non-sales activities will also help them close more deals.
Using these strategies, you’ll be able to overcome your biggest obstacles and increase your saas growth easily.
What Is The Future Of SaaS and What It Means For Your Business?
The future of saas is bright and shows no signs of slowing down. As cloud computing technology continues to evolve, so makes the demand for saas solutions.
According to recent projections, the global software as a service market is set to reach $700 billion by 2030.
As you may see, the future of SaaS is exciting. Staying ahead of the curve is important for businesses looking to capitalize on the growing demand for saas solutions. Investing in training, technology, and partnerships will enable you to capture more customers, increase revenue growth, and achieve long-term success.
Keeping up with the latest trends and identifying opportunities to optimize your business will help ensure you stay ahead of the competition.
Launching and growing a software-as-a-service company is a challenging task. Many B2B SaaS providers looking to scale their business and customer base encounter various roadblocks, such as inadequate lead generation, high customer acquisition costs, low customer retention rates, and less-than-optimal customer lifetime value (CLV).
To overcome these common roadblocks, businesses should focus on lead generation, content marketing, influencer marketing, and social media.
Additionally, hiring more salespeople and increasing team performance can help increase revenue growth. Finally, it’s important to stay ahead of the curve by investing in training and technology.
With the strategies explained in this guide, you’ll see your SaaS revenue growth rate increase, allowing you to reach your goals faster. Good luck on your SaaS journey!