Between the lingering effects of the pandemic, the wave of reduced tech spending, and the precarious macroeconomic conditions, achieving B2B SaaS growth has become much more difficult than it was just a couple of years ago.
While the SaaS industry has always been fiercely competitive, 2021 and the first half of 2022 resulted in a boom that has since sharply retracted, Although the value of tech stocks has dropped by 30%, there have been some unexpected rebounds, leaving many SaaS companies uncertain of where the industry will go next, and wondering whether the growth strategies they’ve been using up until now will work in 2023 and beyond.
The pressure is especially on for startups that are expected to grow at aggressive rates, and many startups are now struggling to live up to the valuations set during the good days a couple of years ago.
Fortunately, if you’re looking to integrate a growth strategy that will work even during these uncertain economic times, many of the basic techniques won’t be that different from what’s always worked—they’ll just require a few tweaks.
Keep reading to learn the 8 steps you should take to create a B2B SaaS growth strategy that will help you achieve sustainable growth in 2023 and beyond.
What is a SaaS growth strategy?
A SaaS growth strategy is essentially a roadmap that details how your company intends to achieve sustainable growth and secure an advantageous position in the industry. A growth strategy should focus on:
- Working out kinks that have held you back in the past.
- Recognizing opportunities to expand and creating a plan to act on those opportunities.
Why do I need a SaaS growth strategy?
With countless companies vying for investor and customer attention, it's crucial to have a roadmap that guides decision-making and prioritizes efforts toward activities that maximize growth potential. Without a defined strategy, startups risk losing their way, struggling to gain traction, or falling behind their competitors.
When examining the average ARR growth rate for B2B SaaS startups, industry benchmarks show that, on average, top-performing companies achieve between 80 percent and 85 percent of the growth rate as that from the previous year.
In general, young startups grow faster, and may have growth rates of 100% or more, while more mature companies grow slower—and tend to continue slowing down at a relatively predictable rate, which can be approximated using the Mendoza Line.
Whatever your growth rates are, the important takeaway is that consistent growth and building upon existing momentum is crucial for success in this industry—especially in today’s environment, when the market isn’t working in your favor and accessing investor capital is more challenging than ever. In this environment, it’s important to focus on sustainable growth rather than growth at all costs—without swinging too far the other way either.
The bottom line is that there’s a delicate balance to achieving growth, a sustainable business model, investor support, and product innovation, and such a complex balance requires a plan.
A proper B2B SaaS growth strategy allows you to create this plan by identifying areas that need work, setting realistic growth targets, ensuring your team’s energy is spent on truly productive projects, and creating an actionable roadmap to recognize and achieve crucial expansion and improvement opportunities.
How to measure your SaaS growth strategy’s impact
While the metrics you track can vary depending on what areas you choose to focus on in your growth strategy, here are a few key areas most B2B SaaS companies should pay close attention to.
- Revenue growth and profitability. Revenue and, to a lesser extent, profitability, are probably the most important metrics to track as they represent the bottom line for whether a business is considered successful or not. Create targets for metrics like ARR, MRR, ARPU, and net profit to ensure your business is continually growing and generating positive returns.
- Customer acquisition and retention. Measuring customer acquisition provides insights into the success of your marketing, sales, and product development efforts to attract new customers, while retention reflects your success in nurturing existing customer relationships. Track your customer acquisition rates and retention rates MoM and YoY to see how they change as you implement new initiatives.
- LTV/CAC ratio. Your customer lifetime value (LTV) to customer acquisition cost (CAC) ratio represents the total value a customer generates throughout their relationship with your company compared to how much you spent on acquiring them. Tracking how LTV/CAC changes over time can help you determine what marketing, sales, and other acquisition tactics are working, as well as if there are any problems with your product or customer service.
- Churn rate and customer satisfaction. Your churn rate measures the rate at which customers discontinue their subscriptions or stop using your product. It is essential to keep your churn rate low to maintain a stable customer base. Customer satisfaction metrics, such as Net Promoter Score (NPS), can provide valuable insights into customer sentiment and loyalty. Together, these metrics help paint a picture of whether your product delivers what it promises from the perspective of your customer.
- Market share and competitive positioning. Evaluating your market share and competitive positioning allows you to understand how your growth strategy is helping you gain a competitive edge and capture a larger share of the market. These also give you insight into what your competitors are doing so you can make informed decisions about what your target audience wants.
To effectively measure and evaluate the impact of your growth strategy, you can leverage various tools and methods:
- Analytics and reporting software. Implement robust analytics tools, such as Google Analytics, Mixpanel, or Amplitude, to collect and analyze data on user behavior, conversion rates, and other relevant metrics. These tools offer valuable insights into the effectiveness of your growth initiatives.
- Surveys and feedback collection. Regularly collect feedback from your customers to gauge their satisfaction, identify pain points, and gather suggestions for improvement. Online surveys, feedback forms, and customer interviews can provide qualitative data that complements quantitative metrics.
- Accounting and financial tools. Arm your finance and accounting teams with accounting software like Quickbooks or Xero, financial planning and analysis (FP&A) software like Workday’s Adaptive Planning, as well as business intelligence tools like Tableau or Looker to store, sort, analyze, and gain insights on your business’s financial performance.
- Case studies and customer examples. Illustrate the impact of your growth strategy to both internal stakeholders and customers by highlighting real-world success stories that demonstrate how specific strategies or initiatives have led to positive outcomes, such as increased revenue or improved customer retention.
Finally, to ensure effective measurement and evaluation of your growth strategy's impact, consider the following tips:
- Set clear goals and objectives that align with your growth strategy, enabling you to track progress and measure success against defined targets.
- Regularly monitor and analyze your metrics, establishing a cadence for reviewing data and identifying trends or patterns.
- Establish benchmarks or industry standards for each metric to gain context and understand how your performance compares to peers or competitors.
- Continuously iterate and refine your measurement approach based on insights and feedback, adapting to changes in your business or market conditions.
What should be included in my SaaS growth strategy?
The ideal SaaS growth strategy should include a plan for improving your:
- Business objectives and goals. Clarify your big-picture vision and how your short-term goals fit into that vision.
- Product-market fit. Analyze your target market and how your product solves its problems. Adjust your product and ICPs as necessary.
- Marketing and sales. Streamline and optimize your targeting, KPIs, marketing process, and sales process.
- Internal operations. Reduce redundancies and time-wasting projects, processes, and even people.
- Logistics and infrastructure. Fix any bottlenecks in your storage, security, and supply chain.
- Customer communication and support. Identify areas for improvement in your customer experience.
- Product’s functionality. Remove bugs and kinks while expanding whatever’s working well.
- Financials. Ensure your financial targets make sense and identify any metrics or processes that aren’t being measured properly, aren’t realistic, don’t capture the full picture, or simply aren’t useful.
…But if you can’t hit all of these and need to focus on a more specific collection of problem areas, that’s okay too.
8 steps to creating a successful B2B SaaS growth strategy
Here are 8 steps you can take to create a B2B SaaS business growth strategy that works in 2023.
1. Perfect your product-market fit
Invest time in researching and defining your ICP. Gain deep insights into their demographics, pain points, goals, and challenges. In some cases, it may be necessary to conduct specialized research to gain a comprehensive understanding of your target market. This can involve surveys, interviews, or focus groups to gather valuable insights that shape your product and messaging.
You should also continuously gather feedback from your customers to understand their experience with your product and how well your product addresses their pain points and iterate on your solution accordingly. This will help you identify any pain points your business has been missing, as well as ways in which your product may be malfunctioning or simply not living up to its full potential.
2. Adopt a data-driven approach to decision-making
If product-market fit is the foundation of your growth strategy, data is the frame: It keeps the structure in one piece no matter what environmental variables happen.
By adopting a data-driven approach to decision-making, you can make informed choices based on reliable insights and predictions, rather than hopeful guesses. Start by identifying what pieces of data and metrics are necessary to analyze your growth objectives. Figure out which ones you already have, and which ones you need to get, then work on implementing solutions that will help you get that data.
Key metrics and performance indicators related to customer acquisition, retention, revenue, user behavior, and market trends will all provide valuable insights into the health and progress of your business. Utilize analytics tools and platforms to gather actionable information from the data you collect.
You should also think of data on a more granular level. For example, implement A/B testing and experimentation to test different strategies, features, or marketing approaches, such as emails, landing pages, or pricing models. This allows you to measure the impact of variations and make data-backed decisions.
For all your data, leverage predictive analytics techniques and forecasting models to anticipate future trends and outcomes. By analyzing historical data and market patterns, you can make informed predictions about customer behavior, market demand, and revenue projections. This enables you to proactively plan and adjust your growth strategy.
3. Optimize the onboarding experience
The onboarding process is the first interaction your customer has with your product and sets the tone for the rest of their experience with it. A bad onboarding experience can result in increased churn, decreased customer LTV, and a negative brand image from the bad customer experience. A good onboarding process should be frictionless, easy, and accessible to all your target users.
Ensure that your user interface is clear and intuitive as it guides users through the initial setup and feature exploration. Provide interactive tutorials and demos that allow users to learn and engage with your product in a hands-on manner. You should also try to personalize the experience to each customer's specific needs and objectives, when possible.
You should also ensure that both your team and your customers have the necessary resources and support to troubleshoot during onboarding and beyond. Offer comprehensive documentation, knowledge bases, and FAQs. Provide responsive and timely customer support to address any questions or issues that may arise.
4. Improve retention and reduce churn with a customer success program
High retention and low churn rates lead to a lower average customer acquisition cost (CAC) and increased total revenue. When customers are loyal and engaged, you can spend less time on prospecting while generating the same amount of money.
A customer success program is one effective strategy to improve retention and churn. It involves proactive support through regular check-ins, education, training, and feedback collection and analysis.
Engage in proactive customer support by staying in touch, addressing concerns, and providing timely assistance. Assign customer success tasks to sales or product teams, or hire a dedicated customer success team. This includes scheduled check-ins and prompt communication, as well as answering support tickets or emails.
Customer education and training are also crucial for ensuring that users fully utilize your product's capabilities. Offer resources such as webinars, video tutorials, knowledge-sharing sessions, or simply an FAQ to enhance their understanding and proficiency. You should also develop a system for collecting feedback from customers. Use surveys, customer interviews, or user forums to gain insights into your customer’s experience so you can identify upselling opportunities and areas to improve.
5. Streamline your sales process
Investing in a high-performing sales team and eliminating kinks in the sales process is crucial for closing more deals and accelerating growth.
To do this, implement well-designed sales enablement processes by providing your team with content, collateral, and support during each stage of the buyer’s journey. This ensures consistent messaging, accelerates deal velocity, and improves conversion rates.
You should also focus on developing upselling and cross-selling protocols to take advantage of your existing customer base. Use personalization and targeted recommendations by leveraging data and customer insights to understand specific customer needs. Offer tailored recommendations that align with their goals.
Timing and context-based offers are also important for sales. Have your sales and marketing teams work together to create collateral and protocols for introducing upselling opportunities during key moments of the customer’s journey—such as when a customer achieves a specific milestone or expresses interest in additional features.
6. Identify opportunities to expand into new markets or segments
Every successful company eventually expands beyond its initial product offerings, and for good reason—expanding into new markets brings additional revenue streams and diversifies your customer base.
Start your expansion efforts by identifying the most strategic areas to expand into. Research industries, geographies, or new ICPs that may be aligned with your SaaS offering. You should also think about expanding the functionality of your product. Looking at what competitors are doing is an excellent way to brainstorm new directions to go into.
After you’ve come up with a plan, develop a product development plan (if applicable), as well as a market entry strategy. Being specific is the key to success here. Pinpoint your new target market(s) as precisely as possible, and develop highly tailored messaging that will speak to their pain points. If you’re expanding to new geographies, localization is also very important—adapt your product to meet local needs, including language, compliance, and cultural nuances.
7. Foster strategic partnerships and collaborations
Partnerships and collaborations are essential to expanding your reach, diversifying your product offerings, and opening up new opportunities.
To foster new partnerships, start by identifying potential partners that align with your business objectives. Companies that share similar target customers or offer complementary products or services are a good place to start. Conduct thorough research to assess their reputation, market presence, and compatibility with your brand. It’s important to be realistic here—aim for companies that are in a similar stage of growth as your company.
Next, create a pitch. Decide how your goals may align, and create a plan for how a partnership may unfold. Maybe your potential partner has a technology that you don’t have and vice versa, so collaborating on a new product is in order. Other times, a shared PR or marketing initiative, like a webinar or event, is the best way to provide mutual benefit.
Finally, work on fostering the relationship. Develop a system for reaching out and keeping in touch with your potential partner. In many cases, a professional relationship needs to develop for a while before it's appropriate to pitch your collaboration idea, so don’t rush it.
8. Re-evaluate your pricing structure
Your pricing structure plays a critical role in lead generation, conversions, and overall revenue generation. If you’re seeing a dip in conversions or renewals, it may be time to refresh your pricing.
To determine what needs to change about your pricing, analyze market trends, competitor pricing, and customer feedback to gain insights into pricing benchmarks and expectations. Then, explore different pricing models and options. Consider tiered packages or usage-based pricing to cater to diverse customer needs and offer flexibility.
One potential way you can improve the flexibility and conversion potential of your pricing is to implement a B2B BNPL solution. Like their B2C counterparts, B2B BNPL solutions are designed to allow you to secure the full contract value upfront, while your customer gets to pay in comfortable installments.
This significantly reduces the financial burden for the customer, which eliminates the need for extensive negotiations, discounts, or other costly incentives. It also allows you to make your product more accessible and address pricing concerns without having to change your pricing or revenue potential.
To learn more about B2B BNPL solutions like Capchase Pay, check out this ebook on how B2B BNPL can solve many problems SaaS companies are facing in 2023.
Final step: Stay adaptable and flexible as your SaaS business grows
Your 2023 B2B SaaS growth strategy will include many different goals and plans. By the end of the year, not all those goals will be achieved: some will run into hiccups that cause delays, some will change so much they’re unrecognizable, and some will be considered irrelevant as the market and your business change.
That’s why the most important step of your SaaS growth strategy should be to stay adaptable and flexible.
No one can predict the future, and often, the best ideas are the ones that haven’t happened yet. If you choose to rigidly stick to a plan no matter what, you risk sinking money and effort into projects that simply don’t make sense anymore. So, remember to stay open to changes and new ideas, and don’t be afraid to pivot directions.
No matter what the world throws at your business, Capchase is here to help. Whether you need non-dilutive financing to fund your next project or B2B BNPL to help you close more sales even in a tougher macroeconomic environment, we’re here to help your business hit its goals throughout 2023 and beyond.
To learn more about our offerings and how they can help you achieve faster growth, book a demo today.
