How to Create Healthy, Sustainable Growth for Your Early-Stage SaaS Businesses

How to Create Healthy, Sustainable Growth for Your Early-Stage SaaS Businesses

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Good news seems to have become a scarce commodity in most SaaS companies these day. The share prices of publicly traded stalwarts have fallen significantly from their levels a year ago. The tech-heavy Nasdaq is down more than 30% already this year. High-growth startups are seeing their funding and valuations dip as profitability replaces growth as a key value driver. As survival is the goal, early-stage startups will have to cut costs and rethink their funding strategies. And I haven’t even mentioned the layoffs yet.

As a result, SaaS companies that, until recently, were following a growth-at-any-cost playbook are now scrambling to become profitable before their cash runs out or draconian covenants are triggered.

But, what if I said there was a silver lining to all of this? It’s true, it’s an opportunity for tech professionals to look at their businesses and come up with something better and more durable that everyone can use in the long-term. This is your chance. It’s real. It’s amazing.

Related: 5 Growth Hacks for Your SaaS Businesses

Building your durable growth engine

While the most mature SaaS companies likely have enough market value or private equity backing to weather the current downturn, many growth-stage firms have only one option in a climate where capital infusions are no longer cheap and plentiful. They must build sustainable, efficient growth engines now.

Through my conversations with customers, as well as a recent Gainsight survey of leading SaaS investors and CEOs, I’ve learned that their top priorities are all tightly aligned on strategies to drive efficient growth — growth driven by customer, product and community-led strategies. This includes an increased focus on retention and expansion, cross-sell, product adoption, automation and digital-led strategies. This is logical. This is because it is the most efficient way to generate revenue. Retaining, selling, and upselling to existing customers is the best way to grow.

But today’s economic climate demands more than just strategy. This requires you to do more with fewer resources. It requires you to leverage your limited resources more efficiently in order to simultaneously scale and boost net retention. How can you do more with fewer resources at a time when customers are looking at their software spend closely and scrutinizing every ounce, experience and value you provide? How do you optimize growth at a time when valuations are increasingly tied to metrics such as Net Retention (NRR) and Customer Acquisition Cost (CAC) instead of pure logo and bookings growth? Given the likelihood that you’ll acquire fewer logos in the months ahead, what can you do to encourage existing customers to not only renew their contracts but actually increase their spend?

Related: 3 Tips for Maximizing Software-as-a-Service Growth

Building the “bionic” CSM

One of the most cost-effective solutions for growing SaaS firms is a Digital Customer Success program. You can scale your retention and expansion efforts by deploying the right digital tools, workflows, and messaging at the right times. This will allow you to transform existing Customer Success Managers (CSMs), into “Bionic CSMs”. “Yes, this is “Six Million Dollar Man” or Woman stuff.

By leveraging product adoption data, digital communication channels, in-app engagements and surveys, automated email sequences, workflow-driven playbooks and a vibrant user community, you can make every CSM better, stronger, and faster — freeing them to devote more time to high-value activities rather than repetitive low-value tasks.

Incorporating digital tools isn’t about replacing CSMs with a fully automated Customer Success (CS) program. It’s about giving them tools that will help them become force multipliers, enhance their abilities, and allow them to concentrate on strategic initiatives rather than sending the same emails over and over again. Scaling CS is more than hiring more people and hoping for the best. You need a digitally-enabled program that provides customers with more personalized experiences without requiring more personnel. Digital-led motions can help you achieve that, whether you are investing in customer health scoring tools or in-app engagements.

(A CS Ops Manager is a crucial role that drives efficiency and is worth seriously considering hiring. It is worth investing in one Ops Manager to help you develop and manage your digital strategy.

Related: A Tech Viewpoint On How To Create And Grow a SaaS Business

Making growth sustainable

In addition to scaling through digital, several other CS motions can help ensure that your growth is more efficient and sustainable:

A risk management program that helps prevent churn and other distressing surprises. A customer health-scoring model should be the heart of such a program. It serves as a “canary within a coal mine”. The customer health-scoring framework should give you early-warning data about product deployment, user adoption, and engagement. This will help you to identify what’s working and what’s not, and what you can do in order to increase retention.

Organization-wide strategies for acquiring customers, managing them and driving them to verifiable success again and again. This requires honest conversations with customers, a deep understanding of your strategies, and reliable metrics to measure the impact of those strategies. It also means building a strong community around your product. Customers can find answers from others who have achieved success by building a community. Peer-to peer networking provides continuous value to existing and new customers.

A focus on offense over defense. You should not place your trust in your instincts. However, you need to make sure you unlock the expansion potential within your install base. To fully exploit this potential, look to increase adoption of the underemployed parts of your technology, and utilize integrated account management to help your post-sales teams identify and acquire more qualified expansion leads.

Grow through your product. Product development, marketing, sales, customer success and customer service must closely collaborate to make the customer priority #1. To facilitate collaborations, you might consider creating a “Product CS Interlock” to identify key initiatives for which the sales and post-sales team should work together.

A human-first approach. This is especially important for SaaS companies confronting declining sales, downsizing, cost constraints and other challenges. You can show empathy and care by being a human being. This will help you build stronger, more lasting relationships.

It can be hard (really hard) to look on the bright side at a time when many SaaS businesses are implementing hiring freezes, cutting costs and laying people off. If you are patient enough and learn to trust your data, you will soon realize that it is possible to grow a healthy, sustainable-growth business through investing in efficient strategies like Digital Customer Success. These strategies could even make the difference between life or death.

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