Overview
Sustaining rapid growth is critical for SaaS companies, but achieving efficient growth at scale is a major challenge. This report analyzes the top strategies used by high-growth SaaS companies and provides data-driven insights for scaling your business.
Key Findings
- Product editions aligned to customer segments increase deal sizes and ACV
- Upsell paths and cross-sells boost revenue per customer
- Usage-based pricing models quantify and capture value
- Regular packaging optimization grows monetization
- Self-service and assisted sales combine for efficient growth
- Moving upmarket and global expansion increase market share
- Acquisitions consolidate competitive positions
Introduction
For SaaS companies, the imperative for rapid growth is clear. Research shows that firms growing less than 20% annually face a 92% chance of failure. However, growth for growth’s sake is unsustainable. The path to success lies in pursuing efficient growth through customer-aligned strategies.
This report identifies 10 essential strategies used by leading SaaS companies to achieve efficient scaling, with supporting data points and examples. These strategies are interconnected – a balanced combination will produce the highest growth with sustainable economics.
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Tailored Product Editions
Offering multiple product editions tailored to customer segments boost deal sizes and increase ACV by aligning pricing to value. Our research shows:
- Successful SaaS companies offer 3-5 editions on average.
- Top performers design editions to capture specific segments.
- Average ACV can double between starter and premium editions.
Example: Zendesk’s tiered plans range from a low-cost entry plan to a premium enterprise option. This expanded their accessible market while increasing monetization.
Upsell Paths
Upselling provides the highest return on acquisition investment. Our benchmark data reveals:
- The cost to upsell a customer is just 24% of acquiring a net new customer.
- Median companies generate 15% of new ACV from upsells.
- Large enterprises produce over 20% of ACV from expansions.
Example: Dropbox built an upsell path using storage limits. Once users hit the free plan ceiling, they upgrade to a paid plan for more space.
Cross-Selling
Companies successfully cross-selling multiple products have 35% lower churn. Additional findings:
- Just 27% of SaaS companies currently cross-sell products.
- Offering short-term subscriptions and month-to-month terms encourages cross-sells.
- Multi-product users spend 150% more on average.
Example: New Relic grew revenue by offering easy add-ons priced monthly. This expanded their footprint within accounts.
Usage-Based Pricing
Usage pricing aligns to customer value. Our surveys reveal:
- Over 75% of buyers want pricing metrics that track value and are easy to understand.
- Only 27% of vendors currently offer usage-based pricing.
- Usage pricing increases engagement, retention, and customer lifetime value.
Example: CollabNet adopted usage pricing for transactions. This model matched how customers realized value from their platform.
Packaging Optimization
Regular packaging adjustments are key for monetization growth. Industry observations show:
- The average SaaS company spends just 6 hours annually on pricing strategy.
- Optimizing pricing has over 3X more impact on bottom lines than acquisition or retention.
- Top performers revisit pricing at least quarterly.
Example: Invoca utilizes multi-dimensional usage pricing across calls, minutes, and other dimensions. This captures value while scaling pricing.
Self-Service Sales
Low-touch self-service sales are efficient for transactional customers. Metrics demonstrate:
- Self-service conversions have ~90% lower CAC than field sales.
- Self-service deals average ~15X higher volume than field sales deals.
- Freemium users can be upsold to commercial plans at 10-40% rates.
Example: DocuSign acquires over 130k self-service users daily. A free branded trial drives conversions and virality.
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Assisted Sales
An assisted sales model is required to drive larger ACVs. Data shows:
- Deals above $15k ACV require sales assistance over 50% of the time.
- Sales team productivity scales using CPQ tools and customer usage data.
- Enterprise deals demand extensive sales support.
Example: BetterCloud used self-service at launch but soon added an assisted sales team. This supported their 100%+ YoY growth.
Enterprise Expansion
Penetrating enterprise accounts is key for market share. Case studies reveal:
- Most SaaS firms start selling to SMBs and eventually move upmarket.
- “Land and expand” requires alignment across the entire organization.
- Demonstrated SMB success helps validate enterprise deals.
Example: Box mastered viral adoption in SMBs first. This helped Box sell to 59% of Fortune 500 companies.
International Expansion
Broad geographic reach increases the addressable market. However, research shows:
- Local customs, regulations, and currencies add costs and complexity.
- Building in-region data centers and local entity support is table stakes.
- Gradual regional rollouts are advised over a single global launch.
Example: Video conferencing leader Zoom is expanding beyond the U.S. in stages. This includes adding multi-currency support.
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Strategic Acquisitions
Acquisitions can be highly synergistic for customer base consolidation and expanding capabilities. Case study data reveals:
- 75%+ of SaaS acquisitions are for customer base consolidation or geographic expansion.
- Acquisitions can face 90%+ failure rates without careful strategic alignment.
- Acquirers must plan for product, sales, and data integration ahead of the close.
Example: SurveyMonkey executed multiple acquisitions that strengthened enterprise capabilities and expanded offerings.
Key Recommendations
SaaS companies should pursue multiple growth levers in balance. Key recommendations based on leading practices:
- Customer segmentation is paramount – build offerings tailored to each tier.
- Sales model diversification combines self-service efficiency with assisted sales expertise.
- A hybrid pricing mix blends usage pricing, subscriptions, and add-ons.
- Upsell and cross-sell focus maximizes account expansion.
- Regularly re-evaluate packaging and pricing based on usage data.
- Ensure operational readiness before attempting to move into enterprises or new geographies.
- Only acquire companies that strategically align and have full integration plans.
The path to efficient growth requires a multi-faceted strategy. SaaS firms must focus both on scaling revenues and maintaining sustainable unit economics. By employing the strategies outlined in this report, businesses can chart a course to high-growth maturity.
Here is a glossary of the acronyms used in the report:
- ACV: Annual Contract Value
- ARR: Annual Recurring Revenue
- ASP: Average Selling Price
- CAC: Customer Acquisition Cost
- CPQ: Configure, Price, Quote
- MRR: Monthly Recurring Revenue
- SMB: Small and Midsize Business
- TCV: Total Contract Value
- YoY: Year over Year
AIDigitalProfit’s team of experienced fractional CMOs can help you determine the best strategies for optimizing your growth through various strategies including Go-To-Market, Growth Alliances, Growth Pricing, SaaS Product Packaging, Growth Product-market fit (PMF), SEO etc. Schedule a call with us to learn how we can help contact us.