The Greatest Secret of High-Growth SaaS Companies

Unveiling the untold secret to extraordinary success, high-growth SaaS development companies have uncovered a game-changing strategy that sets them apart from the rest. While countless businesses strive for greatness, these companies have cracked the code to explosive growth and unmatched customer satisfaction.

In this article, we delve into the greatest secret behind the triumph of these SaaS software development companies, revealing the astonishing strategy that propels them to the pinnacle of the industry.

What Does the High Growth Mean for SaaS Companies?

According to the latest SkyQuest Technology report, the expected revenue of the SaaS market is $720.44 Billion by 2028. It is another evidence of high industry growth. At the same time, most founders wonder how fast is fast enough to grow their projects since they want to show an excellent business performance to potential investors. 

The answer is the T2D3 concept. This abbreviation was presented by Neeraj Agrawal, a partner at Battery Ventures, and means “triple, triple, double, double, double.” It demonstrates the path to becoming a unicorn* in five years: two years of tripling your yearly revenue growth and then doubling it. 

Unicorn is a company with a valuation of $1 billion and more.

If you expect to create a successful SaaS software development company, you should follow three steps:

1. Find a product-market fit at the initial stage.
2. Reach a $2 million level by annual recurring revenue (ARR)*.
3. Follow the T2D3 pathway to reach the $144 million level of AAR within five years. 

Annual recurring revenue is a SaaS metric that shows the amount of expected revenue to generate in a year from your business clients.

Strategies to Build a Successful SaaS Business

Less than 5% of companies reach the billion-dollar valuation, so growing a considerable profit may be challenging for startups. Still, you can build a successful SaaS-based product development company, and the following strategies will help you in this case. 

Hire an External Development Team 

You can assign some operations to the dedicated team. For instance, outsourcing to Eastern Europe is an excellent way to cover the entire process in one shot. Most dedicated teams implement agile frameworks to monitor project progress and improve the software development process. Plus, such a squad is results-driven and self-organizing, and you will get remarkable software for less money and time. 

Measure What Matters and Set Clever Goals

When implementing a Software-as-a-Service model, using the right estimation approaches is a must. To do this, you have to get the right performance benchmarks. 

All companies have unique KPIs that suit their specification. Some estimate it through ARR, while others measure a churn rate* to stay on top of their business. In any case, you should use the right metrics to set clear objectives for the SaaS project. 

*Churn rate is the percentage of customers that leave your company over a given period.

Setting business objectives results in a roadmap for a specific target, so you should plan them carefully and thoughtfully. The best way to do this is a SMART framework that involves the following aspects:

• Specific refers to setting as specific goals as possible, which helps you define clear steps to success. 
• Measurable means ensuring that you can monitor the progress using a specific criterion.
• Achievable refers to checking the goal feasibility and the ability to achieve it within a given period.
• Relevant means ensuring the goal alignment with business values.
• Time-bound refers to assuring the goal includes a specific time frame. 

SMART goals help your business to achieve both short-term and long-term objectives.

Adopt a Customer-Focused Operation

While implementing the Software-as-a-Service business model, you cannot make more income than clients. Therefore, you should build a client-centric approach to maintain a great relationship with them. It will save your company from lots of hassles and keep your customers loyal. 

Ultimately, you are not a unique SaaS product development company on the market, and your clients can go to competitors. This is why a customer-focused operation allows you to retain your clients and expand your target audience, turning them into your brand ambassadors. 

In addition to the Software-as-a-Service, there is another business model — Software-Development-as-a-Service (SDaaS). Similar to SaaS, it has a wide range of applications. Learn more about the unique development approach here. 

Offer Freemium

The freemium model is another excellent tool to increase the number of customers. It will especially attract millennials as the driving force of the economy. For example, over 70 million American Gen Y people spend about $2,5 trillion yearly (according to YPulse’s report). And here is the kicker: this customer category adores freebies. 

When thinking about how to build a SaaS app development company, you can introduce a free trial plan to bring Gen Y clients into your sales funnel. The freemium model also helps you to maintain stable communication via free adverts and email marketing. Thus, you can introduce exclusive offers to them at any time. 

Build a Robust Partner Network

Apart from implementing your SaaS marketing strategies, it will be better to start collaborating with your channel partners*. It is another key to making your business skyrocket.

*Channel partners are the companies in a distribution channel that market and sell manufacturer’s products

Before starting cooperation, you should define their product-market fit and create a shortlist of potential partners. In this case, we mean collaborating with other SaaS companies that fill a similar market segment and place the same growth stage. If the proposed solutions do not meet your requirements, you have to avoid contacting this company.

Whichever SaaS project you select to partner with, you should build a symbiotic relationship (for example, share the income or provide them with a free-of-charge subscription to your product). But remember that you should check the potential partner’s viability from the growth perspective. 

Introduce a Referral Program

A successful SaaS business should have a referral program for clients who invite their friends, colleagues and acquaintances to register on the service. This approach is highly effective for a SaaS subscription model.

Here is an example. The cloud storage service Dropbox set up a referral program that rewarded both the referrer and the invited person with an extra 500 MB of storage space. This step expanded a customer base by 3900% (from 100,000 to 4 million customers) in a year. 

Another great success story came from Evernote. The cloud notebook service gained 1 million users in about 14 months after presenting the referral program.  

Start a Google Ads Campaign

This strategy is not the ideal option for all Software-as-a-Service businesses, as CPC (cost-per-click) bids for keywords can reach a $100 level. Therefore, no one can guarantee building a successful campaign in Google Ads, and you may lose your money. However, long-term use of this service can become an effective instrument for generating high revenue.

Deciding on implementing Google Ads in your SaaS strategy, you should consider three critical factors:

1. Gmail advertising. Set an ad campaign using the exact target keywords your competitors use. You can find them via signing up for your competitor’s mailing list and reviewing the keywords that appear often. 
2. Similar audiences. An online advertising platform offers you to work with similar audiences. If you have used the same feature in the Facebook Ads Manager, you will be ready to do the same on Google platforms. In this case, you have to examine the profiles of the best-performing client segments and target new customers with similar profiles. 
3. Negative keywords. You can specify keywords that are irrelevant to your SaaS company. It will help Google to show your ads to the right potential customers and increase conversion. For instance, if you offer a comprehensive cloud product for medium-sized and big enterprises, negative keywords may include “desktop.”

In addition to learning advanced strategies, you should know how to create remarkable SaaS applications. Learn more about SaaS development here.

Conclusion

Building a high-growing SaaS application development company requires adopting client-focused operations and combining them with other marketing activities and performance estimation. If you expect to turn your project into a unicorn, you should implement unique ideas in all company units.