Scaling revenue in early-stage SaaS companies can be challenging, even for the most experienced entrepreneurs. While developing a digital product is easy today, getting people to pay for it is not. This blog post will explore the different phases of early growth, the balance between product-fit and growth-fit. We’ll also discuss the core tactics to get started and what metrics to measure in each phase.
This article is a sneak peak of our webinar on the topic: Watch the full video here!
Phases of Early Growth
The way we see it, there are three overlapping phases of early growth for SaaS companies: product-market fit, growth-market fit, and scale-up phase. In the product-market fit phase, the main focus should be on mission, customer, and product. The goal is to find a market that has a problem your product can solve (or vice versa). During the growth-market fit phase, the focus shifts to pricing and go-to-market strategies. The goal is to find a repeatable and scalable way to acquire new customers. Finally, during the scale-up phase, you need to have all these things in place and scale up your executionuion.
Product-Market Fit
Product-market fit is often referred to as market-product fit, because you should start with the problem, not the solution. It’s not an easy process, but it’s a fun one. Also, it’s not binary, and you’ll never be done. There are signals of product-market fit such as qualitative feedback, positive retention metrics, and organic growth. The core goal of this phase is to make sure your customers actually have a problem and that your product can solve it.
Balance Between Product-Fit and Growth-Fit
The balance between product-fit and growth-fit is essential in the early stages of a SaaS company. The product-fit phase focuses on creating a product that solves a market problem, while the growth-fit phase focuses on scaling revenue by finding a repeatable and scalable way to acquire new customers. The key is to find the balance between these two phases and not focus too much on one or the other.
Go-to-market strategy
According to a study from failory.com, companies fail for various reasons, but the most common are lack of product-market fit (34%), marketing problems (22%), and team problems (18%). We’d argue that marketing problems are actually product-market fit problems, but where the startup won’t face the truth that their product isn’t really reasonating with customers.
There are three fundamental go-to-market strategies – sales-led, marketing-led, and product-led. You should have a hypothesis early on of which strategy is right for you. What works for one company may not work for another. It’s essential to understand that what you try first won’t work, and it’s going to take longer than you think. It’s essential to start with the right mindset, prioritize, focus, test, and learn to avoid these issues.
Tactical Side
Independent of you strategy, it’ can be ‘s useful to get a full understanding of what a funnel for conversion can look like. A general framework can be divided in three stages: Attract, Engage, Convert:
- Attract: The first step in the funnel is to attract prospects to you. This can be done through various marketing activities such as content marketing, search engine optimization (SEO), social media marketing, pay-per-click (PPC) advertising, email marketing, influencer marketing, and more. The goal is to create awareness and generate interest in your product or service.
- Engage: Once you have attracted prospects to you, the next step is to engage them and provide value. This can be done through various tactics such as giving away valuable content, offering a free trial or demo, providing social proof through customer testimonials or case studies, and engaging with them on social media or through email. The goal is to build a relationship with the lead and move them further down the funnel.
- Convert: The final step in the funnel is to convert the prospect into a paying customer. This can be done through various tactics such as offering a special promotion or discount, providing a clear call-to-action (CTA) on your website or landing page, providing a seamless and user-friendly checkout process, and following up with the lead after the purchase. The goal is to make it as easy as possible for the prospect to become a paying customer.
It’s important to note that the funnel is not a linear process and prospects may enter at different stages. Therefore, it’s important to have a holistic approach and provide value throughout the funnel to increase the chances of converting into a customer.
Metrics
Measuring the right metrics in each phase is crucial for success. In the product-market fit phase, the metrics to measure are more of qualitative feedback and NPS. In the growth-market fit phase, your should focus on acquisition/sales and conversion metrics. In the scale-up phase, the metrics to measure are retention, ARPU and CAC.
Success Factors
To succeed in scaling revenue for an early-stage SaaS company, you should focus on your mission and really stand for something. Be a thought leader in you niche. Do the hard work and don’t give up, and don’t be boring.
In conclusion, scaling revenue in early-stage SaaS companies is challenging, but with the right mindset, focus, and understanding of the different phases of early growth, it’s possible to succeed.
This article is a sneak peak of our webinar on the topic: Watch the full video here!
