Scaling your software as a service (SaaS) business in a way that’s efficient and profitable isn’t as simple as hiring more people on your sales and engineering teams. While both of these tactics can help with growth, they’re useless without a well-laid-out growth plan. The good news is that SaaS businesses are in demand and have the potential to be highly scalable. The industry is booming, with the global SaaS market currently worth about £2.3 trillion and expected to surge to £7.8 trillion by 2030. As SaaS companies flourish, the need for high-functioning SaaS marketplaces and platforms grows as well.
With these insights, you can strategically allocate resources to scale your business and minimise churn by keeping your current customers happy while attracting new ones. With the right investment and patience, you can build a SaaS business or platform that can weather market fluctuations and keep growing.
What's in this article?
- Refine and optimise your business model and pricing tiers.
- Cultivate a seamless onboarding experience.
- Use analytics to improve customer retention.
- Employ a dynamic billing and dunning strategy.
- Don’t underestimate the power of content marketing.
- Build a retargeting strategy that generates continual visibility.
- Automate everything that you can.
Refine and optimise your business model and pricing tiers
Bypass an all-too-common mistake by first pausing to understand your SaaS sales model, which plays a central role in defining your core business. While there are different schools of thought here, the two main SaaS sales models are low-touch and high-touch. Understanding the model that your business relies on provides a roadmap for which consumer insights to track, how to acquire new customers and much more.
In a low-touch sales model, sales are made with minimal person-to-person interaction, so the emphasis is on marketing to reach customers. Providing a free trial, sometimes known as a "freemium", is a central offering in low-touch sales models. It allows the product to speak for itself and gives the user space to explore its functionality on their own. Pricing on low-touch SaaS products is generally a tiered system, starting with a basic, free version and moving up to more premium, enterprise offerings.
In contrast, the high-touch SaaS model is a more traditional sales model, with members of a sales team generating leads, scheduling sales calls, booking product demonstrations for potential customers and closing deals. High-touch sales require a more hands-on approach to customer onboarding and technical support, which will be key to minimising churn. This model offers the sales team much more latitude in setting pricing packages that are tailored to a client’s particular needs, such as large businesses with hundreds of potential users.
Price is among the most important touchpoints for scaling your SaaS business and an important guideline is to price your products more boldly than you might have planned, especially for premium offerings like on-demand customer service. However, testing pricing and building new billing models can be a heavy lift for engineering teams. Fortunately, Stripe provides the ability to easily experiment with pricing without the added burden on engineering and complex billing logic.
Cultivate a seamless onboarding experience
After you’ve locked in a new user or converted a paid user to your premium product, having a seamless, low-friction onboarding process is the first important step in retaining that user. If the customer has a difficult time adapting to your user interface, troubleshooting the installation or getting help while learning to use your product, you risk immediate defection in addition to potential negative word-of-mouth feedback.
It helps to think of the onboarding experience as an extension of the pre-conversion marketing journey and curate it with a similarly meticulous level of care. The goal of the marketing funnel strategy is to move customers from the moment when your product’s value is undeniable and they truly consider becoming a customer to the moment when they decide to convert and become a customer. Moreover, the goal is to keep them moving easily the whole time. The same is true for post-conversion onboarding, and getting it right is just as important to customer satisfaction and retention.
Creating detailed customer personas is a great way to engineer tailored journeys that focus on the exact use cases and value propositions that compel your key customer segments. You can start developing these personas by having your customer-facing teams study the behaviour of successful users who already have a strong connection with your product and reverse engineer the key shared benchmarks on their journey.
SaaS leaders know that the onboarding process should be as quick and easy as possible, especially when it comes to that first login. Welcome new customers with an email or even a personalised welcome video containing a call to action on next steps, and make it clear how to hit the ground running with your product. By communicating with customers across multiple channels, such as email, text message and push notifications, you can make your users feel seen and supported, all while heading off any issues that they may encounter. You should also identify a win for the client that you can help deliver early and regularly check in to make sure that they’re hitting their own benchmarks for success.
Onboarding isn’t exclusively a concern for SaaS businesses that cater to end users. With Stripe Connect Onboarding, SaaS platforms and marketplaces can seamlessly onboard new accounts with a conversion-optimised, pre-built UI that makes identity verification easy and helps you to get up and running even faster. Stripe’s ready-to-use solution offers built-in error handling, formatting and input validation, streamlining customer signups without diverting your company’s limited engineering resources.
Use analytics to improve customer retention
Customer retention is key in scaling your SaaS business, and it is a perpetual exercise in tracking performance and making a plan of action based on your findings. Gathering customer feedback, including asking real customers what they want from your products, can provide invaluable insight to help you better serve their needs and tailor your future offerings. Implementing tracking metrics at every level in your SaaS product allows your company to study the value of each individual feature.
For low-touch SaaS models, the important conversion rate benchmarks vary greatly based on whether or not a credit card is required to sign up for a free trial. If a card is not required for a free trial, a conversion rate below 1% should be viewed as evidence of a poor product-market fit, while a rate of 2% or higher is extremely successful. When a credit card is required for signup and a user will be billed if they don’t cancel their trial in time, rates substantially below 40% show a poor product-market fit, a rate of 40% ranks as a competent execution and a 60% conversion rate is a strong indicator that you’re hitting the mark for your customers during the trial period.
Employ a dynamic billing and dunning strategy
When thinking about conversion rates and customer retention, there’s more to consider than customer experience. How you approach billing and dunning will also have a substantial impact on your ability to retain customers, especially as you scale the business. The benchmarks for high-touch SaaS models are generally more reliant on annualised churn rates, where a rate of 10% is typical in a company’s early years and 7% is considered an excellent rate to maintain. Tracking negative net revenue churn, or the value of clients increasing their contracts or other similar growth year over year, is also an essential metric to track in high-touch SaaS.
Stripe Billing allows users to easily manage their subscriptions and, when charges for subscriptions fail, Stripe’s Smart Retries uses machine learning to successfully recover an average of 38% of the charges that failed on the first attempt. Stripe’s Smart Retries uses hundreds of time-dependent, dynamic signals, including:
- The number of different devices that have presented a given payment method in the last N hours
- The optimal time to pay (payments made for debit cards in certain countries might be slightly more successful at 00:01 in local time zones)
Using a solution like Stripe Billing that opts for a continually evolving strategy that learns from customer behaviour as opposed to one that leans on fixed rules is an effective way to maximise your efforts in this area.
Finally, in those instances when customers do stop using your product, taking the time to conduct thoughtful exit surveys and quickly address negative feedback can give you indispensable insight into customers’ issues and help you pre-emptively address problems in the future.
Don’t underestimate the power of content marketing
Investing in content isn’t always the go-to strategy for SaaS companies. But as the industry grows, content is a powerful way to reflect to your audience that you understand their needs, their concerns and the pain points that your software or platform is aiming to solve. This is the goal of marketing efforts more broadly, but content marketing (blog posts, landing pages, white papers, videos, podcasts, etc.) provides longer-form vehicles for communicating even more to your audience. And content can play so many roles, from cementing your ideal brand expression to illuminating product use cases to highlighting how your business intersects with the wider needs and concerns of your customers.
For software companies and the platforms that support them, building out and strategically deploying a library of content that’s been specifically engineered to do a defined job can generate powerful ROI. Publishing content that speaks to your brand and offers your users authoritative resources can help to secure your place as a thought leader in the community, generating new leads and boosting customer retention by keeping your SaaS company top of mind when customers (or potential customers) are searching for resources and support.
When developing a content plan, consider the questions: "Who is my audience?" and "What problem am I solving for my audience?" By first understanding your audience and anticipating their questions, you can develop content that serves their needs, develops trust and boosts brand awareness while delivering the answers that they’re searching for when they need them most.
Build a retargeting strategy that generates continual visibility
It may not be common for you to convert visitors into paying customers on their first visit to your website, so retargeting strategies can increase your chances of bringing them back and successfully converting them. Retargeting is a marketing strategy to keep your SaaS business in front of potential customers by resurfacing your product as they browse the internet, with the goal of keeping your business top of mind and bringing those previous visitors back to your website to make a sale.
Among the most common retargeting strategies are working with the Google Display Network (GDN) or Facebook to buy advertisements and nurture leads. The stats are staggering: GDN reaches 90% of the world’s internet users, 65% of them on a daily basis. Facebook boasts a total advertising audience of more than 2 billion people, or 72.5% of their total 2.91 billion monthly active users.
You can also retarget free trial users who didn’t convert when their trial ended by offering time-sensitive discounts or an extension of their trial. Retargeting is also a successful strategy for nurturing current client relationships to avoid churn by updating them on new product launches, new content, and new events and webinars.
Automate everything that you can
Finally, to retain the gains that you’ve made, automate where possible to improve time management and allow your teams to focus on your core product. For SaaS platforms, automating back-end functions will give you the extra bandwidth that you need as you scale. There’s no one-size-fits-all approach to automation, so be clear about what works for your customers and your company before you begin. You can use automation in marketing and to schedule social media posts, or you could automate sales emails that help move prospective customers through the conversion funnel or help upsell and cross-sell. Automation could also feature as part of your onboarding process: By tracking users’ progress, you can identify points where they might stall and offer an automated action prompt to escalate an issue to your customer success team.
One of the most important ways to scale your SaaS business is to automate your recurring revenue and financial operations. Stripe allows SaaS companies to bring their revenue reporting, payments and billing together within the same ecosystem rather than relying on a patchwork of third-party products or a complicated and costly in-house solution. Stripe’s Revenue Recognition helps businesses effortlessly take on accrual accounting with an automated approach that ensures compliance with ASC 606 and IFRS 15. Stripe Tax, which is built into Stripe Billing and Payments, automatically eliminates the headaches associated with collecting sales taxes for all Stripe transactions. The overarching goal is to retrofit SaaS businesses and platforms with an interlocking suite of solutions that streamline as many front-end and back-end processes as possible – an essential part of priming a business to scale.
Ready to scale your SaaS business? Speak to an expert about how Stripe can help.
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The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accuracy, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent lawyer or accountant licensed to practise in your jurisdiction for advice on your particular situation.