4 Ways to Reignite SaaS Growth
In 2008, the CEO of a small web service startup had just made the most “adult” decision of his life: to shut down his one-year-old company and fire his staff. There was just enough money left to cover the legal fees of closing, if they shut down immediately.
Then the phone rang.
One satisfied customer was all it took. The caller, a happy user of the service, was ready to become an investor. He wired half a million dollars to Evernote, the kind of funding that helped prove traction, iron out legal wrinkles that had kept earlier investors at bay, and save the business.
Soon after, Evernote CEO Phil Libin was hailed as the man who had created a “unicorn”: the privately held business was valued at over $1 billion. Few knew how close the company had come to becoming obsolete.
Evernote’s situation is a bit different today. After a CEO change in 2015, and then again in 2018, the company struggles with user complaints and recently let go of much of their leadership staff. Barring another investment miracle, Evernote’s future is unclear.
Can the company recover as it did in 2008? That remains to be seen.
SaaS businesses experiencing stalled growth benefit from examining the strategies of those who came before. Investigating sources of stall makes resolutions clearer, and with some added ingenuity, individualized business solutions can come to light.
Let’s take a look at some ways to reignite growth.
1. Revisit your metrics
There are many ways to measure business success, some of which have to happen early in startup creation.
For example, if you aren’t absolutely sure that you have a product or market fit, then you’re in choppy waters before you’ve even begun. It’s impossible to ignite growth when there’s no interest in what you have to offer. Make sure your product lends itself to progress.
Another non-starter situation is a business with no traction. Again, if you aren’t already measuring this, you’re probably going nowhere fast. Set your business up for success by understanding this key early element.
Perhaps you already have those metrics covered, and you’re ready for the big guns. You’re measuring Key Performance Indicators (KPIs) such as:
- Monthly Recurring Revenue (MRR)
- Customer Lifetime Value (CLV)
- conversion rates
- churn rates
- Customer Acquisition Cost (CAC)
Perhaps you use Klipfolio or Tableau to help you visualize the data. If you have a comprehensive recurring billing platform like Fusebill, that’s another way to access detailed reports and visuals on MRR types and sales cohorts.
Let's explore some other metrics.
- Are you looking at Lead Velocity Rate (LVR) and active user growth rates?
- Would tracking your revenue per employee offer a new perspective on your business’s health?
The best thing you can get from reassessing your metrics is a fresh way of seeing your business. This can reveal revenue and customer leaks that were previously hidden behind the metrics you’ve been watching.
One metric every SaaS business needs to prepare for is their growth ceiling. A growth ceiling is when the number of customers acquired is equal to the number churned. Check out this useful calculator to see your growth ceiling.
Knowing your growth ceiling, and planning to break through it, is essential to continued growth. By discovering ways your business can increase acquisition and lifetime value while reducing churn, you can get back on track with your goals.
Using these metrics can help you identify areas of improvement in your business operations. Once you’ve done that, you’ll be ready to take more steps to reignite growth.
2. Revisit your pricing strategy
When Unbounce went live in 2009, the team’s decision on pricing wavered. They had initially planned on tiered prices ranging from $49-$199. As the launch date approached, however, company leaders thought, “no one’s going to pay for this. Let’s just have a $10 plan and $25 plan.”
That decision wound up costing the business in big ways. With CAC at $150, and the average customer staying around only four months before churning out, Unbounce was paying for customers to use their service.
After deciding to go back to their original pricing plan, things immediately improved. Lining up their pricing with their ideal customer profile also meant better feedback, leading to a better product that people were willing to spend money on.
If you’re not sure whether a big pricing jump is a good decision, you can test the waters by experimenting with pricing on a smaller scale.
Collaborative platform Front discovered the benefits of this approach by testing and tracking increased pricing on small cohorts of new customers. If the new customers at the higher pricing stuck around at the same (or even better) rates, then the pricing increase would be implemented across the board.
Front had to dedicate time and resources up front to make its software capable of handling such experimentation. However, an agile subscription management and recurring billing platform comes with such capabilities out-of-the-box. It is important to have the tools that allow for flexibility in growth-centric price testing.
Don’t feel like a price increase is fair without an increase in features? You’ve likely just answered your own question: It may be time to invest in building on your product and moving upmarket.
How? Consider whether your product or service is capable of growing into a platform of extended tools, creating an “ecosystem” within your business offerings. Already there? Expand your ecosystem by finding new integration possibilities on the edges of your market.
Think Netflix: from mailing DVDs, to streaming, to downloadable content and a production company. Now ask yourself what your next steps will be. Who are the outliers in your customer base who stick around because what you offer works for them? Can you draw in more customers like them?
3. Reevaluate internal factors
Sometimes, you need to look inward for solutions.
While hiring a new VP of Sales seems to be the quick fix everyone’s clawing for, it’s worth it to take the time to reflect on internal practices and evaluate what works, and what doesn’t.
Often, the reason bringing “new blood” into a business works so well is because existing staff know the product too well to empathize with new or prospective customers. Staff who have been around for most of a business’s journey have also often had a chance to see all of their most innovative ideas through to success or failure.
Someone new offers fresh insight, but that can come at a cost. If you need to let people go to take on a new hire, you need to be absolutely sure that it’s the right choice. Sometimes, simply re-delegating someone to a different role in the business can generate the productivity you’re craving.
Communicate problems clearly with your team, and you’re likely to get a few possible solutions. Optimize your team with transparency, engagement, and inclusion of individuals in the “big picture,” and you’re more likely to keep your most talented employees on board.
Whether hiring new talent or reigniting the talent in your current team, shake-ups that offer new perspective can uncover what is causing the stall.
4. Reconnect with customers
We talked a little about metrics before, and here’s another important one: your Net Promoter Score (NPS).
What customers think of your product is paramount in the age of online reviews. If your score is below 7, it’s time to take customer success efforts to the executive level.
There are many ways to hunker down and focus on customer success. If you aren’t already using exit surveys when customers leave, start now. Knowing why customers left can show where there is room for improvement. Sometimes, you find customers who were unaware that you have implemented the very feature or solution that was important to them, so you can bring them back!
This practice can be applied to potential customers who never signed up, as well. Asking why they didn’t choose your business after expressing initial interest can reveal useful information. This can happen after a deal falls through, after a free trial ends without a sign-up, or even in an email to newsletter subscribers.
Alex Turnbull, founder and CEO of Groove, learned this lesson firsthand one year while investigating lead loss. When he asked a perfect-fit business owner who had been reading Groove’s blog and email subscription for over a year why he hadn’t signed up for a free trial, the answer was simple: “You guys stopped asking me.”
The answer was repeated often by other potential customers who hadn’t signed up.
By making a few simple changes to their email practices, Groove was able to turn that problem around, picking up customers they’d previously left on the table.
Reigniting growth is sometimes simpler than you think. In some cases, all it takes is asking.
Through surveys, emails, or forums, ask your existing customers what features they wished your product had. Looking into popular requests can hand you the answer to growing your business on a silver platter.
And then, of course, say thank you.
While investigating lost customers and deals, and asking for feedback, don’t forget to thank the customers who remain. By putting a little effort into customer appreciation, those who have continued to use your product are reaffirmed in their decision and feel valued. Maintaining a positive relationship with your customer increases the chances that they’ll not only stick around, but recommend you to others as well.
While watching your SaaS business growth stall can be scary, it’s important not to become paralyzed. Take action by using new metrics to gain perspective on possible reasons for slowing customer acquisition. With a clear vision of the problems at hand, tackling new pricing strategies and making informed decisions becomes easier.
By including both veteran and new team members in decisions, and reaching out to reconnect with customers, you ensure a multifaceted approach that tackles your growth ceiling from all sides.