It should come as no surprise that the Software as a service (SaaS) industry is booming. It’s grown a whopping 500% over the last seven years. And today, large companies (those with more than 1000 employees) use over 150 SaaS applications . As a result, we see increasing numbers of fledgling SaaS business enthusiasts deciding to enter the market with their own unique products. However, for many SaaS founders, effectively scaling their company is still a challenge and if you’re reading this piece you’re probably within this group of enthusiastic SaaS founders who are looking for new ways to scale their ARR – LIGHTNING FAST.
Annual Recurring Revenue, or ARR, is a vital metric for SaaS companies because it tells you the health of your subscription business. It’s the amount of revenue your company expects to repeat and, therefore, an excellent measurement of progress and prediction of future growth. But how can SaaS founders grow ARR Predictably? That’s what we’ll be diving into in this definitive guide.
How to Scale Your SaaS Company To $5 Million ARR (Fast)?
Every SaaS company wants to grow at breakneck speed, but this desire doesn’t always translate into reality. The word so many SaaS Startups focus on here is “fast” – they’re so focused on doing everything quickly that they cut corners and get less than optimal results. However, that doesn’t mean you can’t scale fast. You absolutely can; you just need to be both fast and deliberate. But what do we mean by this?
Before focusing on demand generation, lead generation, or account-based marketing, your first priority needs to be creating a robust minimum viable product (MVP) and excel in everything related to Marketing. Unfortunately, many SaaS founders rush this process and jump straight to attracting users when they should be spending more time testing, validating, and gathering feedback about their product, total addressable market size, identifying the underserved segment of the market and creating their ideal customer profile based on their findings.
By investing upfront in a powerful MVP, you position yourself for rapid growth. Why? Because you can refine your features quickly to offer more value to users and better position yourself in the market. It leads to a better product (that users are more likely to love) and strengthens your value proposition hence, will help you reach your main business goal = growing ARR -> by capturing demand around the people who are ‘most likely to buy’.
How Can B2B SaaS Founders Grow ARR Predictably?
Once you’ve got a strong MVP, honed in on your ICP and figured out if the problem you’re solving is urgent enough it’s time to get out there and start increasing your ARR, but how?
Acquire More Customers
It sounds simple, but it’s often more challenging in practice. So again, it’s about having a deliberate strategy and leaving no stone unturned. There are several things you can do:
● Chase new markets: Sometimes, we create a product with one persona in mind, and our focus narrows. Your product might be valuable to personas you haven’t even considered. Alternatively, you could expand your features to serve new personas or localize your website for customers in different countries, and this is exactly where your Marketing strategy becomes more efficient.
● Improve customer onboarding: Over 90% of customers feel companies could do better when it comes to onboarding, and 55% of people have returned a product because they didn’t understand how to use it . A poor onboarding experience can be a massive hit to ARR.
And that’s why you should start investing in your Customer Success team and if manageable to create an automated and seamless onboarding experience.
● Improve your website and strengthen your CTAs: if your website looks just like your competitors’, you’re giving users no reason to choose you. Likewise, if your CTAs are lacklustre, you could give the impression that you lack confidence in your product
Personalizing CTA’s to match with your Ideal Customer Profile pain and the content they consume will skyrocket your conversion rates and will help you capture more demand.
● Invest in your people right from the start: your first 25 hires are going to influence your company’s future like no one else and that’s why carefully choosing your first hires is a critical mission for SaaS founders. Today, the most rapidly growing SaaS companies have almost evenly allocated their hiring budget and positions to spread over the different departments and didn’t just invested in one or two areas of the business.
● Increase awareness through demand generation techniques (more on this later).
Grow Average Revenue per User (ARPU)
As the name suggests, ARPU measures how much revenue each user of your SaaS product generates. If done right, Boosting your ARPU can dramatically impact your ARR.
Design Your Product for Growth
Can you add new features or increase your market share with different products? When you continually add value to your existing product, you help existing users achieve their goals and attract new users into the fold.
Optimize Your Pricing Structure
Clearly, increasing your prices will boost your ARPU, but this shouldn’t be done without care. Customers become angry at random price hikes and will likely search for another option. So instead, it’s better to focus on pricing tiers that allow everyone to find a comfortable price point. You can also offer product bundles that include a range of add-ons and even incorporate these as a special offer during the first subscription so you can boost revenue when renewal comes around.
Reduce Customer Churn
Retaining existing customers is paramount for growing your ARR. Customer acquisition costs far more than customer retention, so keeping current customers happy should be a top priority. To reduce your customer churn, you should increase the reliability of your product to improve customer satisfaction, optimize your unsubscribe funnel to offer more solutions to customer problems, solve usability gaps, and improve your competitive features.
3 Things You Can Do To Build A Robust Demand Engine For Your SaaS Business
While many companies confuse demand generation and lead generation, they have distinct meanings. Demand generation is all about targeted marketing that drives awareness and interest in your product. By contrast, lead generation is about capturing data from your users – companies typically do this by creating valuable content that aims to solve the prospect’s problems.
With a robust demand engine, you successfully establish awareness, create interest, build brand trust, and get people to engage with your content. Demand generation is a critical step on the way to lead generation and a boosted ARR, but how do you cultivate a robust demand engine?
Become an Authority in Your Niche
Visitors might not be ready for your product today, but by increasing your brand awareness, you become the first company your ICP thinks of when the time comes to buy. To increase your chances of success in this area, you should create high-value content that establishes your company as an expert and thought leader in your niche. This means focusing on critical or exciting developments in the industry and explaining where your product fits into that.
Craft Landing Pages that Resonates with Your ICP
Ideally, you should tailor landing pages toward whether customers fit into three specific categories. These are problem unaware (they don’t realize they have a problem that needs solving), problem aware (they understand their problem and are actively seeking a solution), and solution aware (they know the options on offer and are deciding on the best one).
Accelerating the Pipeline
Pancakes and ketchup might work well separately, but they don’t sit well together. If your sales and marketing teams function like this, something needs to change. Marketers have to be hands-on after passing leads to the sales team. This means creating content specifically tailored to the users and where they’re at. Understanding at which stage your users are, what can trigger them to take the desired action and what type of content they would like to consume especially when they’re at the bottom of the funnel is a critical component when constantly looking to improve your pipeline velocity rate and push more deals down the funnel.
Why Do So Many SaaS Founders Fail To Reach Their ARR Goal?
Put simply, SaaS founders fail to reach their ARR goal because they focus too much on the finish line and not enough on how to get there. For example, they put all their energy into marketing without having a solid knowledge and MVP or start rolling out price hikes without considering the potential backlash. Other times, their marketing is inconsistent, poorly designed, and targets the wrong people.
Scaling lead generation, and demand capturing before you’ve identified your target audience, product use cases, acquisition channels, and monetization model is impossible, but for some reason many SaaS founders still insist on executing before having a clear Marketing strategy in place.
Moreover, we see more and more SaaS founders that make product decisions based on gut feeling and anecdote. Instead, they should talk to their customers, and make it part of the product development life cycle, this will dramatically improve Marketing all across the board!
SaaS founders are also incredibly busy, making taking deliberate and careful action challenging. Luckily, advanced tools exist to help bridge this gap. For example, Acquisent’s Marketing Framework can help scale your SaaS through detailed customer personas, compelling storytelling that targets decision-makers, influencers, and users, and account-based marketing techniques. To learn more, book a demo today!
