The Not So Shocking Truth About SaaS Growth & Key Metrics You May Want to Measure

You have built a fantastic SaaS platform, now what?

Building a SaaS platform takes patience and expertise. So, now that your product is ready, do you know where to find users and customers? A typical SaaS company’s challenge is finding qualified leads that their sales team can convert, and their customer service team will be happy supporting and upselling to.

Do you have similar goals as it relates to your product?

The important question is – what will propel you to success? Hopefully, not a reactive approach to the next tactic on the horizon waiting to be tested, such as; the viral video campaign, press marketing strategy, next guerrilla marketing campaign or social media ads that will get you quick wins. And as much as these wins are important they will happen at some point during your SAAS journey. However, if you are looking for these wins to come faster, then try taking a scientific approach to customer acquisition, retention and Monthly Recurring Revenue (MRR).

It’s no longer enough for SaaS businesses to only acquire as many users as possible. Customer acquisition is just a tiny metric to measure. Here is a list of questions that will help you determine the real measurement of your SaaS company:

• Is your SaaS Company growing faster than your competitor?
• Are you able to convert most of your free trial and ad-hoc users into committed, paying customers?
• Do you have an active and engaged tribe?
• Are you retaining a high percentage of your clients?
• Are you able to obtain valuable, meaningful client referrals?

Here are what some SaaS companies look for as a metric for growth:

• If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years. (Tomasz Tunguz)
• The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18. (ForEntrepreneurs)
• It’s 4x’s cheaper to upsell existing customers than acquiring new customers: costing just $0.28 to gain an additional dollar of revenue. (ForEntrepreneurs)
• It’s 9x’s cheaper to retain existing customers than acquire new customers: charging $0.13 to acquire any additional dollar of revenue. (ForEntrepreneurs)
• 86% of SaaS businesses treat “New Customer Acquisition” as their highest growth priority, both concerning executive support and funding available. (Totango)
• 56% treat “Existing Customer Renewals” as a high priority. (Totango)
• 54% treat upselling and add-on sales as high priority. (Totango)
• The fastest growing SaaS companies scale their organizations extremely rapidly: growing their teams by an average of 56% each year. (Tomasz Tunguz)
• The median start-up spends 92% of first-year revenue on customer acquisition; taking 11-months to pay back their Customer Acquisition Cost. (Tomasz Tunguz)

Studies have also shown that it takes a lot more to acquire a new customer than it does to upsell or retain existing customers.

In this Infographic, compiled by The Insight Squared Blog, you’ll notice that the high growth companies focus more on generating a high number of leads, and putting them through a proven qualification process to filter only high-value leads, and then nurturing them for higher revenue. This is all made possible once SaaS Companies embrace Inbound Marketing as part of their overall marketing and sales mix. Automation plays a critical role as companies convert trials into paying customers.

Need to craft your strategy? Let’s Talk!