2023 will probably be the year of the biggest economic downturn we’ve had in a while. Massive layoffs in tech companies of all sizes, a looming recession, inflation, and the general economic instability might make growing a business seem like a nightmare.
However, you shouldn’t give up on the idea of growing your SaaS business just yet. A SaaS company has multiple benefits and allows you to build something truly unique for your customers. Right, the situation and the market might seem unstable and scary, but there are definitely ways in which you can grow your business and make it a cool experience for your clients, stakeholders, and employees.
But—
How does growing a SaaS business look in practice in 2023? What are some tips to avoid failure? How can you optimize your processes to achieve greatness?
Well, look no further. This guide offers you in-depth advice on sustainably growing a SaaS business in 2023.
Let’s get down to reading.
Growing a SaaS business: the basics
It’s no secret that software as a service (SaaS) is a highly popular business model these days. There are currently more than 30 thousand SaaS businesses worldwide, and this number will continue to grow. Gartner predicts that the SaaS industry will grow by around 17% by 2024.
It sounds quite impressive.
But how do you stand out in this competition?
Well, growing a SaaS business is all about adopting a data-driven strategy from the start, tracking the right metrics, and believing in those who are working by your side.
Let’s discover the six essential steps to take to achieve data-fueled and sustainable growth.
1. Establish relevant metrics
There are dozens of metrics you could establish in order to see the state of your business. However, in order to facilitate sustainable growth based on data, it’s vital to take care of some crucial ones.
To start with, track your activation rate and conversion rate.
These two metrics are probably the most important when it comes to SaaS businesses. Your activation rate helps to track the users’ ‘aha’ moment when they realize your product is the one for them, while your conversion rate shows how many of your free trial users sign up for paid plans. These two metrics show whether you are on the right track with your product and can pinpoint what can be improved to achieve new users and make them convert into paying customers.
Another important metric is your churn rate.
Your churn rate shows how many customers leave your product compared to the total number of customers. Measuring your churn rate can help you understand when and why your customers abandon your service and, eventually, solve the issue leading to higher retention and loyalty.
Finally, an exceptionally important metric to track is the Monthly Recurring Revenue (MRR) of your SaaS.
This metric indicates your profitability and the overall health of your business. Combined with other data, tracking it will help you make vital business decisions regarding pricing.
Once you are sure your SaaS business is data-driven, you should work on the main hero of your SaaS story – your product.
2. Follow the product-led growth approach (but combine it with a good sales strategy)
One of the most optimal SaaS growth strategies is a product-led growth approach when you make your product the absolute focal point of your activities and allow it to sell itself.
To be truly product-led, your SaaS company should offer more than simply a freemium plan or a trial period. To build a genuine product-led company, you have to make sure that your product brings instant value to your customers, solves their pain points, and makes them want to stay. Even on a free plan. This strategy of offering immense value while asking nothing in return is what lures your free users to convert into paying customers to get even more benefits.
This is different from a more traditional sales-led growth, when potential customers see an ad, connect to the sales team, hear their pitch, and then make a decision to purchase. Product-led growth allows users to actually test your product and its benefits. Of course, you have to constantly work to optimize your product, or else no one will want to stay.
In 2023, the best approach would be to combine these two growth strategies. Let your users try your product but be ready to offer them a chat with a sales specialist to guide them through the purchase. Listen to your customer and always optimize your product, but don’t fail to pitch it well. The combination of those two strategies will help you achieve sustainable and efficient growth in the tough market of 2023.
3. Provide exceptional customer service
This one is a no-brainer – it’s absolutely crucial for a SaaS company to offer exceptional customer support via multiple channels. Well-organized support helps to ensure users return and convert to paying customers, as well as increases customer retention and loyalty and reduces churn.
For SaaS businesses, good customer support can be offered via different tools: a live chat, AI-powered chatbots, email support, and more. A great solution is to combine these channels to be there for your customers at all times: for instance, you can use a live chat during your working hours and then an automated chatbot that can answer questions and comments 24/7 and in multiple languages.
According to statistics, as many as 45% of customers stop buying from a company if they have had negative customer experience with it. It says a lot: if you really invest in customer experience, you will surely grow your SaaS business.
4. Invest in content marketing and SEO
No doubt, every SaaS business dreams of sustainable organic growth. Increasing traffic, lots of website visitors and clicks on your CTAs, conversations in the media… Sounds great, but how does one achieve this?
Well, the answer is nothing new: invest in your content marketing and SEO efforts. With so many SaaS businesses fighting for customers, ranking high in the search results by offering exceptional content is a ticket to success.
Make sure your blog is regularly updated, SEO-optimized, and full of content offering actual value to your readers. Your pieces should follow the E-A-T (Expertise, Authoritativeness, Trustworthiness) guidelines, be mobile browser optimized, and aspire to be better than everything else already written on the topic. In addition to creating quality content, make sure to spread the word about it to facilitate organic growth. Follow only white-hat legal SEO link-building practices, don’t cheat and buy links – Google algorithms will know it, and you won’t rank high.
In addition to quality content marketing and SEO, you can gradually introduce other channels, e.g. Linkedin prospecting, paid ads, email marketing, influencer marketing, and others.
5. Do not fear AI – work together with it
AI is taking over the world. However, instead of being scared and waiting for it to come and steal your job (which is unlikely anyway), you have to think how you can jump on the trend with your SaaS business.
What else can you automate for your customers? How can you integrate machine learning or natural language processing in your service? Perhaps you can use ChatGPT to improve your own tools? Or let AI prepare your business contract templates?
Artificial intelligence goes hand in hand with SaaS innovations – it can help SaaS products be more flexible, scalable, and easy to use for customers. Both small startups and large companies can take advantage of new technologies, and it’s up to you to choose how to do it. Whether you want to create your own AI-powered tool, integrate AI in your existing product, or just use it to optimize your workflow, 2023 is a perfect point to start being better friends with artificial intelligence.
6. Keep prioritizing employees
The beginning of 2023 was marked by mass layoffs in tech giants like Google, Meta, Amazon, and others. Often, the affected employees found out about being laid off through an email sent overnight.
Great businesses start with a great culture. You have to keep in mind that for every SaaS, its employees are its strongest asset, even in such challenging and uncertain times. Build a culture of honesty, transparency, and respect for those who are building your product with you. If people feel safe and valued, they will go the extra mile to perform well and directly contribute to your business growth.
If you are not sure you are doing well financially, talk to your employees since they deserve to know it. Introduce a system of your company ‘wellness statutes’ that you can update regularly with your numbers. Be open to addressing any concerns, hold regular meetings, and appreciate your employees. No SaaS can grow without talented and dedicated people on board, so make sure you have them and their trust in 2023.
Now, let’s sum up everything we’ve learned throughout this guide.
Key takeaways
Growing a SaaS business is not an easy task, especially in 2023 – the year of multiple economic challenges. However, sustainable and efficient growth is still possible if you follow certain steps. Keep in mind your metrics, adopt a winning growth strategy, offer stellar customer service, never underestimate the power of content marketing and SEO, be friends with AI, and value your employees – these are the tips you have to follow if you want to succeed in the heated SaaS competition. Most importantly, believe in what you are doing, and 2023 will surely be your year of SaaS victories.
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