Tuning a SaaS business for growth
As a SaaS business, or any online software business, moves beyond its startup phase and starts to grow seriously, there is a period of adjustment as the business adapts its operations, sales and other functions to the need for scale.
Some of these changes are obvious adjustments – user onboarding needs to be streamlined to drive increased conversion or there won’t be any capability for more rapid growth. Sales and marketing teams need to prioritize new customer acquisition. Underlying engineering and capacity issues need to have been solved so that the software and server capability can handle the anticipated growth.
We have gathered a set of articles that look at this period of adjustment and operational tuning to find the secrets to success.
It’s fair to say that all plans need to start with information. So it’s no surprise that SaaS companies tend to obsess about metrics – perhaps too much. Nevertheless, the right metrics are crucial. This blog post by Jon Sonnenschein takes a look at the right customer metrics to measure so that you can then drive growth. It’s a real hands-on article with details on building out a dashboard and then using it properly.
David Skok looks at more stages of growth and the top to bottom of a sales funnel in a piece on his For Entrepreneurs blog. The post is about optimizing the whole SaaS Sales Funnel and cites a lot of additional material for reference. It’s not as hands-on and specific as the Sonnenschein post but does take a more holistic approach.
KPMG produced a report on transforming SaaS businesses (and cloud software businesses) that is mostly a report on the state of the industry and which businesses have managed the transformation to growth. But it also includes details about how specific businesses did it, including a study of the metrics that these businesses used to facilitate the transformation. The report also looks at different market segments and verticals and analyzes some of the specific approaches that led to success. At 64 pages this is not light reading but careful study provides some very useful tips about SaaS success.
Now that we’ve started to dive into some of the specifics about making adjustments for growth, let’s take a step back and consider just exactly what growth means. In an uncertain economic climate, expectations shift. The Insight Squared blog takes a look at how the concept and targets for growth have shifted, particularly in light of a new awareness that grand exits and IPOs are less likely and where success means a steady ongoing business showing growth. It turns out that that kind of growth is slower (NOT slow – slower) and more sustainable.
One way to make adjustments for growth is through pricing. It is an obvious consideration for a consumer-focused platform but can be much less obvious for enterprise platforms where pricing ramifications can take months or even years to play out. The Funnel Envy blog takes a look at strategies to optimize SaaS pricing for profitability. There is useful advice in there but we’d also suggest considering growth, in addition to profitability as you read this article.
An alternative viewpoint on the necessary metrics to run your SaaS business comes from the Insight Squared blog. They view the transition to growth as an opportunity to correct misalignment between revenue and expenditures – not a surprising viewpoint considering that expenditures often get skewed during startup. Their focus is more on controlling customer churn rather than growing customer acquisition.
Paul Glarata wrote a great article covering nine different approaches to tuning a SaaS startup when moving from its first major iteration to its second – in other words from startup to growth. There are three main factors to his approaches: Optimize perceived and real performance, measure and monitor customer engagement, and map the full SaaS customer lifecycle. But he then expands on these precepts to an additional six factors that are worth consideration.
If there’s one thing to read in order to help you grow a SaaS business, then it’s the SaaS Growth Guide, a whole website devoted to a seven month plan that can help grow your SaaS business. An example of the great advice on tap is month 5’s piece on analytics and advanced revenue tracking, which includes updating your database and recordkeeping in order to improve the metrics you are collecting.
A lot of this advice focuses on sales, customers and revenue, but sometimes it is your operations (including your marketing, sales and revenue operations) that need a shake-up. This Cognizant whitepaper takes a dive into using systems of engagement to transform your business operations.
If you are looking to optimize the payment portion of your operations to help grow revenue then take a look at our whitepaper on driving revenue through integrated payments.