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The Three SaaS Levers that Drive Growth and Keep You From Plateauing

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To build a high-growth SaaS business, you need three growth levers working perfectly. If any of them aren’t working, your SaaS growth plateaus. You also need to build them in the right order. We’ll make sure your growth levers are healthy so you can keep adding momentum to your growth.

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The Three SaaS Levers that Drive Growth and Keep You From Plateauing

  1. 1. The Three SaaS Levers that Drive Growth and Keep You From Plateauing Lars Lofgren
  2. 2. @larslofgren
  3. 3. I’ve built Growth Teams at:
  4. 4. 1. World-class churn 2. Revenue expansion from each cohort 3. Accelerating acquisition at the right time 3 Fundamental Growth Levers for SaaS
  5. 5. You plateau if all 3 don’t work together
  6. 6. Also plateau if you build in the wrong order
  7. 7. Conquering Churn
  8. 8. • 2-3% or less = on target • 3-5% = not there yet, double down on product and onboarding • 5-10% = Major P/M fit gap • 10% and above = business is on fire Monthly Churn Benchmarks
  9. 9. • Remove self-service cancellation • Fix product onboarding • Push annual plans • Force annual plans • Reaching out to inactive accounts • Downsell campaigns • Prioritize support for large accounts • Onboarding programs with 30/60/90 goals Popular churn reduction ideas
  10. 10. Bad Marginal Major Wins Remove self-service cancellation Push annual plans Fix product onboarding Contact inactive accounts Support ticket prioritization Improve product value Downsell campaigns 30/60/90 onboarding programs
  11. 11. Wait, what about forced annual?
  12. 12. If there’s an established norm of forced annual in your category, use it.
  13. 13. Marketing automation has an established norm
  14. 14. Misapplied, forced annual drops your funnel off a cliff
  15. 15. Improving P/M fit and onboarding are your most reliable levers for churn.
  16. 16. • Very disappointed • Somewhat disappointed • Not disappointed (it isn’t really that useful) The P/M fit question from Sean Ellis: How would you feel if you could no longer use [product]?
  17. 17. 40% of respondents should say “Very disappointed” 51% 72%
  18. 18. Cohort Expansion
  19. 19. As customers grow revenue, so should you
  20. 20. Your expansion revenue depends on the quality of your pricing metric.
  21. 21. Salesforce seat metric is a cash machine
  22. 22. When seat pricing does NOT work • Attendees = makes sense, easy upgrades • Organizers = limits are annoying, resist upgrading
  23. 23. Match your pricing metric as closely to your product value as you can.
  24. 24. Expansion engine + low churn = negative churn.
  25. 25. What is negative churn? Revenue from each cohort expands faster than the revenue lost from that cohort.
  26. 26. Let’s recap: • We’ve focused heavily on P/M fit to get super low churn. • We’ve found the pricing metric that easily convinces customers to pay more. • Low churn + expansion revenue means we’re stable or growing without any acquisition. • Now our acquisition is 100% upside.
  27. 27. Acquisition
  28. 28. You should already have steady organic growth by now from P/M fit.
  29. 29. Lots of lead gen paths: • Inbound and content funnel • Cold calling and outbound • Events • Partnerships • Paid marketing • PR • Affiliates • Viral loops • Social
  30. 30. All of these can work if you get the execution right. Hence the advice: “double down”
  31. 31. 10% month over month lead growth
  32. 32. What happens if we pursue acquisition too early?
  33. 33. Acquisition can’t outrun high churn forever
  34. 34. If the majority of your acquisition goes to replacing lost MRR every month, you will plateau.
  35. 35. Funnel also suffers: the alligator sales funnel Leads growing at 10% MOM, new customers constant at 100 per month 0 1,250 2,500 3,750 5,000 Jan Mar May Jul Sept Nov Jan Mar May July Sept Nov Qualified leads New logos
  36. 36. Marketing can dodge a bad product, sales can’t
  37. 37. The alligator funnel is nasty. Marketing and sales will blame each other.
  38. 38. Usually a product problem. This is why we focus on churn first.
  39. 39. 1.Make sure you have P/M fit and low churn 2.Get cohort expansion in place with a great pricing metric 3.Build your lead gen machine at the right time Your growth levers, step-by-step
  40. 40. Questions? Lars Lofgren @larslofgren bit.ly/3-saas-levers

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