The 3 indicators that your SaaS business is ready to scale.
The 3 indicators that your SaaS business is ready to scale.
Hey - it’s Alex!
Today, I will share with you:
1️⃣ 3 Actionable SaaS growth tips
👉 Product-Market Fit, Repeatable Growth, and Internal Readiness (Team & Processes) define your scale readiness
👉 How the ICP is the backbone of your GTM
👉 The 10 early-stage B2B SaaS misconceptions
2️⃣ 1 Bonus tip by an experienced founder/VC/SaaS expert - this time by Miguel Marques (CEO of Raaft)
3️⃣ 1 Bonus material (software, content, news) - this time Raizor App (Database of 38k+ investors worldwide)
… that will help you quickly grow your SaaS product 🚀.
👉 Before you read on:
✅ Create your own powerful SaaS Growth Strategy with my FREE Workbook (helped 1800+ SaaS professionals)
✅ Nail your Go-to-market strategy fundamentals with my FREE 1-page Notion Template (helped 600+ SaaS professionals)
✅ Unlock your growth potential with 90+ actionable SaaS growth tactics (helped 100+ SaaS professionals)
1. The 3 indicators that your SaaS is ready to scale 🚀
Founders ask me a lot about how they know that they are ready to scale. When is the right time to hire more people and invest more money in marketing?
Finding the right timing is not easy. Some founders invest way too early, and doing so will burn a lot of money. While others already have pretty good signs but are still hesitant to double down and start to scale.
Here are 3 indicators that you can use to know when you’re ready to scale.
𝟭. 𝗣𝗿𝗼𝗱𝘂𝗰𝘁-𝗠𝗮𝗿𝗸𝗲𝘁 𝗙𝗶𝘁
Product-Market Fit tries to quantify the following:
✅ How satisfied are your customers with the product?
✅ Are they raving about your product?
✅ Do they tell others to use it?
You can use these 3 metrics as indicators:
1️⃣ (logo) churn rate
Measure how many of your existing customers are churning every month. Depending on the customer segment (enterprise vs. prosumers), this can vary from 3% up to 10% or more per month.
2️⃣ (usage) retention rate
But not only logo churn is an indicator. Also, keep track of how your existing customers use your product. Ideally, you see that they get more active every month. This means that they see the value in your product and keep using it. Especially if you only offer yearly plans, it can be a pitfall to only track logo churn (because you realize too late that they never really used the product and then churn).
Tip: Do a cohort-based analysis to see if new users show better retention rates (as your product involves).
3️⃣ Sean Ellis test
Another great way to measure whether people love your product is the Sean Ellis test. You literally ask your existing users in a quick survey how they would feel if they could no longer use the product.
How would you feel if you could no longer use the product?
And you offer them 3 options: “very disappointed” / “somewhat disappointed” / “not disappointed”
If 40% or more say they would be “very disappointed” if they can no longer use your product, you achieved product-market fit.
𝟮. (Repeatable) 𝗚𝗿𝗼𝘄𝘁𝗵
Product-Market fit shows you if your product is valuable for the market.
Channel-Market and Message-Market fit tells you if you found the right channels with the right message to acquire new customers in a repeatable and profitable way.
So do you have a clear answer to:
✅ Do you know which growth channels work for you?
✅ Can you consistently create pipelines and new clients?
✅ Do you know how much it costs you to acquire and retain new customers?
𝟯. 𝗧𝗲𝗮𝗺 & 𝗣𝗿𝗼𝗰𝗲𝘀𝘀𝗲𝘀 (Internal Readiness)
Before you scale you as a company (team + processes) need to be ready. Imagine you onboard 10 new team members but you haven’t implemented proper guidelines and playbooks. Or you can’t tell them their objectives and what they need to do to achieve them. Each of them would work differently and would risk the success of your business.
That’s why you, your team, and your organization need to be ready to add new team members.
Here are some things to consider:
✅ Playbooks (e.g. Sales Playbooks)
✅ Onboarding plans
✅ Org Chat & team structure
✅ Role descriptions
✅ Reportings & Meeting formats
✅ Compensation plans (e.g. for your sales team)
✅ Tools & Tech stack (ready to use for more users)
If you can say yes to all three, congratulations! You're ready to put the pedal to the metal and scale up your business 🚀
🚨 Coming soon…I’m launching a new program in Q3 2023 🎉
You know that I’m helping early-stage B2B SaaS founders to grow from 0€ to 1M€ ARR with a powerful GTM strategy.
At the moment I do this in two ways: Advisory/Sparring & Consulting.
As many of you ask for it, I’m now launching a 3rd way 🎉.
A 12-week GTM coaching program for early-stage B2B SaaS founders and leaders.
The program will help you:
✅ to identify the key drivers for your business growth
✅ to build and run an effective and scalable GTM strategy
✅ to do the right things at the right time (proven frameworks)
✅ to hold yourself accountable to get things done
👉 Interested? Apply HERE for my waitlist (Limited to 10 founders).
2. Your ICP defines everything in your GTM
I’m talking a lot about the ideal customer profile - what it is, how to get the 2 key elements of a powerful ICP right - it’s even the longest section in my SaaS growth strategy Workbook.
So I’m not exaggerating if I say
‘The ICP is the backbone of your GTM’
So choosing a different ICP impacts all your GTM decisions. Let’s take the example of selling CRM software (this is just a theoretical example to make it really tangible).
You could build a new CRM for freelancers, consultants, and creators (even here there are multiple niches) or you try to compete against the big incumbents like Hubspot and Salesforce and target larger companies.
Taking one or either has a huge impact on the rest of your GTM.
When you’re talking to the freelancers and creators, the status quo you’ll find is that they either do not have a CRM at all or use tools like Notion, Google Sheets, or Gmail to keep track of their clients. They have a very ‘basic’ approach to their CRM. And they have maybe 20 new prospects in their pipeline, manually managed.
Their problem with the existing set-up (Current way of doing X) will be limited features (no pipeline view, no reports on conversion, hard to keep an overview, no task feature…). For Salesforce Users, the reality would be different. They complain about huge costs (per seat pricing) and that Salesforce/Hubspot is hard to maintain (super complex settings).
Their motivations to fix the problem are different. While solopreneurs want to create a system, that reduces manual work and saves time to focus on their actual job to be able to win more customers. Larger companies, especially in times like these, look for ways to reduce costs and find ways to make their existing workforce more efficient.
This means your value proposition is a different one. Your messaging will be around why freelancers need a CRM at all and why it’s better than using Notion or Excel.
And as you serve different customer types, your product strategy will vary a lot. A freelancer CRM will focus on a lean user interface, simple settings, clear use cases & templates, and single-user mode - all self-serve.
As freelancers are solopreneurs, your pricing won’t be per-seat. Rather you would try to keep the entry barrier low (as they are very price sensitive) and go for a freemium model. In terms of value metric, you will probably choose leads (or go for a feature based pricing, where you gate premium features in your paid plans)
So your average contract value will be for sure below 100€ MRR, this means your sales motion will be product-led (as you can’t afford an expensive sales-led sales team). This means that you’ll pick different growth channels like SEO or Referrals - and not outbound sales for instance.
This obviously affects your sales process - you will optimize for a free trial (and not book a sales demo) as your main CTA and work a lot on your product onboarding to get customers as fast as possible to the aha moment (13 powerful tips for SaaS activation).
And of course, the list goes on. You will hire a different team with different skill sets, track different SaaS metrics, invest in different growth channels, and think differently in terms of internalization/expansion.
But I have multiple ICPs! What should I do? 🤔
Yes, a lot of the huge SaaS companies target different ICPs, from enterprises to Prosumers. But always remember that each of them started in their early days with one clear target audience. So try to remember:
One ICP = One dominant sales motion
Once you mastered this ICP you can add a new segment. But make sure you have enough resources to properly target this new segment.
So you can move from pure PLG to product-led sales (sales assisted) and then a sales-led layer on top. Keep in mind that each of the 3 motions requires dedication and expertise.
3. The 10 early-stage B2B SaaS misconceptions
Being in SaaS and Working with early-stage B2B SaaS startups and being in SaaS since 2014, I frequently come across common misconceptions. Today I will share with you 9 of my personal favorites 😄
10 early-stage SaaS Startups misconceptions
1️⃣ Go to Market (GTM)
→ ❌ Growth Tactics
→ ✅ Strategy first + execution (tactics)
A powerful GTM is always the combination of a GTM strategy and execution. The tactics are ‘just’ one part of the execution.
2️⃣ Sales
→ ❌ Selling features
→ ✅ Solving problems
It’s not enough to just show prospects all the cool features of your product. The sales job is connecting the dots, how your features enable them to do things better/faster/cheaper than before, that fixes their problem and brings them results in X.
3️⃣ Marketing
→ ❌ running ads & content
→ ✅ Messaging & value proposition
Only once you really understand your ICP you can build a powerful value proposition and messaging. The ads and content are again ‘just’ the execution of it.
4️⃣Customer Success
→ ❌ Handling customer requests
→ ✅ onboard new & upsell existing
Customer Success is not customer support.
5️⃣ SDR/BDR
→ ❌ Modern call center
→ ✅ understand ICP & build relationships
Giving your SDRs a list of 100 leads a day and asking them to cold call does not work anymore. SDR/BDR need to build relationships and therefore need to understand the needs & pains of the ICP.
6️⃣ Demos
→ ❌ presentation
→ ✅ 2-way interaction
Good powerful sales product demos engage the prospect. Always come back to their pain points and tell a compelling story. Check out the Ultimate Guide for Sales Demos to close more demos.
7️⃣ Content Marketing
→ ❌ Post daily on Linkedin
→ ✅ create valuable content for ICP
Consistency is obviously important. But only once you know what’s valuable for your target audience. Having one valuable lead magnet can be more powerful than 100s of bad content.
8️⃣ Ideal Customer Profile
→ ❌ List of accounts
→ ✅ Firmographics + Personas
An ICP is not a list of accounts. A powerful ICP has 2 key elements, the firmographics and the persona(s) with attributes like job title, responsibilities, current tech stack, pain points, and more.
9️⃣Sales Motion
→ ❌ We do PLG, SLG, and Hybrid
→ ✅ Optimize for 1 sales motion
Stop doing multiple sales motions at a time. Each sales motion works differently and needs a lot of resources. Focus on one ICP and one dominant sales motion.
🔟 Sales Messaging
→ ❌ Features 1, 2,3
→ ✅ We help ICP to go from A to B and achieve result
The strategic narrative needs to be how you help them to overcome their current problem and go from the shitty status quo (point A) to the desired state (point B), by using your product. It’s about what they can do with your product (capabilities), powered by features.
💡 Best tip, failure, and learning by Miguel Marques (CEO of Raaft)
From a strictly logical perspective, SaaS companies looking for growth only have 3 options:
Acquire New Customers
Upsell Current Customers
Increase Customer Retention
Most companies have pretty strong user acquisition strategies and they’re often well aware of how to upsell current customers. However, one thing they tend to disregard is increasing retention. I believe this happens for one main reason: it’s not too relevant when starting out. If you have zero customers, better retention will not matter. But at some point it does. And when that happens, one thing is particularly important: understanding churn.
Collecting Churn Feedback
“If you are allowing customers to cancel accounts without providing a cancellation reason, you’re missing out on invaluable insights.”
SaaS companies need to collect churn feedback - and even offer churned users something in exchange for sharing their experience with you.
Ask your churning users these 5 questions:
🔸 What made you look for a solution to your problem?
🔸 Where / How did you find us?
🔸 Why did you initially sign up for the tool?
🔸 How did you understand it was not the right tool for you?
🔸 How are you solving the problem now?
These conversations provide important qualitative feedback. You can have deep, meaningful insights into the experience of a few users. Yet, most churned users are likely to pass on the offer. That’s why it’s important to ensure you collect churn feedback from all canceling users, even if it’s in the form of a simple exit survey.
The data from exit surveys allows you to group the responses into categories (roughly product features), sort them by ARR, and inform the product roadmap. As you build these features, churn feedback changes to the next most relevant functionality.
🧠 Do you want to be next and share your best tip with 1200+ SaaS professionals? Reach out to me via Linkedin.
💪 1 Bonus material (software, content, news) - this time Raizor App (Database of 38k+ investors worldwide)
The raizor app is a database of 38k+ investors worldwide. What I like about it is:
🔸 great UI and filter options (e.g. investment stage & geography)
🔸 Link to the investor's Linkedin profile
🔸 verified email (haven’t tried it myself)
P.S. Check out my list of best software tools for SaaS startups for more inspiration.
Happy growth 🚀.
TL;DR
Product-Market Fit, Repeatable Growth, and Team & Processes define your readiness to scale
How the ICP is the backbone of your GTM
The 10 early-stage B2B SaaS misconceptions
🚀 Whenever you’re ready, 3 ways I can help you:
Follow me on Linkedin for more actionable tips to grow your B2B SaaS business
Download your FREE copy of the SaaS Growth Strategy Worksheet and unlock your growth with 90+ actionable SaaS Growth Tactics.
Work with me 1:1 to grow your B2B SaaS business:
1️⃣ Advisory/Sparring - We’ll have regular 1:1 sessions deep-diving into your most important challenges.
2️⃣ Consulting - We’ll work together hands-on to grow your business
Send me a DM on Linkedin or book a free 15min virtual coffee to learn more about my offering.
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