A SaaS . bowls business today is more difficult than in years past. Whatever stage your business is in, a nearly 70% drop in the value of SaaS public stocks, increasingly limited access to finance, and shrinking business technology stacks all point to a more challenging path for an industry that has been accustomed to rapid growth almost by default.
By nature, ambitious SaaS founders and operators don’t want to give up on their growth ambitions, even during an economic downturn. There is no reason why they should do that. The fact is that VC financing is not a prerequisite for retaining customers and scaling steadily.
There is, however, no doubt that traditional growth levers such as digital advertising and larger sales force are likely to prove too expensive or unreliable in the current climate. There is still room for growth, but founders and operators need a new strategy if they are to continue growing through the recession. The key is to focus on scaling sustainable by tapping into more overlooked and undervalued revenue streams.
If your CX isn’t geared for international customers, you’ll leave critical gaps in your offerings and see potential sales fall through the cracks.
As a founder of a payment infrastructure provider for SaaS companies, I have helped thousands of software companies in the last 10 years and we see the financial statistics of 30,000 subscription companies. Based on this experience and analysis of our data, I believe there are three growth levers that are often overlooked by SaaS leaders that every business should investigate.
Focus on expansion for recession-proof revenue
Encouraging companies not to prioritize new customer acquisition may seem counterintuitive, but the truth is that keeping existing customers happy — and generating new sales from them — is much easier and much cheaper than acquiring new customers. This is especially true now, as many buyers will be reluctant to spend money trying out new tools.
That’s why SaaS companies need to pay attention to expansion revenue – the additional revenue generated after the customer’s first purchase. This basically means that your customers spend more than the month before. Our data shows that the most successful subscription companies worldwide get 20% of their new revenue from existing customers, but many companies have almost none.
This is a result of what we call “sales brain” – a flawed mindset that sees sales as the end goal rather than the beginning of a long-term process.
Here are a few ideas SaaS leaders can use to boost their expansion revenue:
- Add upsell levels to your prices, pushing valuable features to more premium levels. Our research shows that the top 1% of growing apps 16 pricing tiers, so don’t be afraid to charge for the most popular tools on your platform.