If you’re a marketer working at a SaaS company, you’ll know that growth can be slow and challenging.
On one hand, you’re constantly judged on metrics like reducing customer churn or minimizing the cost of acquiring a customer. On the other hand, the realities of growing a SaaS startup can be daunting and you may not have as much control over metrics as you’d like.
The purpose of this article is to give a few concrete growth strategies to acquire new customers and fuel your marketing for rapid growth. You’ll learn:
- How to define a growth strategy
- The different types of growth strategies you can implement
- Examples of successful companies who’ve executed out of the box growth strategies
So if you’re ready to learn and gear yourself up with growth wisdom, let the fun begin!
What exactly is a growth strategy?
In the most simple light, a growth strategy is a few tactics or a plan of action you use to grow your company revenue and market share. It’s what makes your position more dominant, stable and ready for market expansion. And most importantly, it’s critical to your company’s overall direction and success.
A growth strategy has an impact primarily on the number of customers you have and your revenue. If you acquire more customers than you lose, you grow. If you increase revenue from each existing customer, you grow.
It’s quite simple math!
But it’s important you’re not just solely growing the number of customers or revenue, but also keeping your costs under control for making your growth sustainable in the long term. As a SaaS company, growth and profitability go hand in hand for company success.
What types of growth strategies can you use?
Growth Strategy #1: Product development
One way to grow is by developing a current or new product in order to meet or exceed customer expectations. If your customers love your product, they’ll stay with you, and tell their friends about it. It’ll create a viral loop, so you’ll continue to win new customers through positive word of mouth referrals.
This approach is imperative when you’re improving on your existing product. Think Apple and the iPhone. They’ll release a new iPhone every year, with the new model being a whole lot more powerful than the last one, which keeps Apple customers coming back to buy the newest release.
You could also choose to come up with an entirely new product for the exact same target market. For instance, last year Apple released the HomePod, a voice-enabled smart speaker. It’s a completely new product for the same target market ( i.e. tech enthusiasts and Apple loyalists).
Employing either of the above product development strategies will usually lead to your company acquiring new customers, making sales to existing customers, and naturally growing your market share.
Growth Strategy #2: Market penetration
The second approach is to penetrate a market with something unique. The unique feature about your company or offering could be accomplished through price differentiation — where you lower your prices more than your competitors to grab their market share or where you raise your prices higher than your competitors to capture a completely new segment of a market.
Think IKEA, the furniture retailer.
They penetrated the furniture market by selling their products at incredibly cheap prices to the existing market — by taking away assembly & storage, consolidating warehouses, and utilizing low-cost materials. This led to their success as one of the leading retailers for affordable furniture.
You could also differentiate your company through the exact way you do your marketing — by making your value proposition more attractive and consistently appealing to potential customers. You can change your advertising approach so customers perceive your brand in a completely new light, leading to increased market share.
Growth Strategy #3: Strategic partnerships & collaborations
There are businesses who compete with you, and then there are businesses who have the same target market as you but solve a different problem for the customer. In this strategy, you can grow your market share by collaborating with complementary businesses. This is what we call a strategic partnership.
For example, if you’re a bag manufacturer selling roller luggage to travelers (such as Away or Samsonite), while another retailer (such as American Express or Visa) is in the business of selling foreign currency notes to travelers. Both retailers complement each other simply by virtue of having the same target market.
The bag manufacturer could strike a deal with foreign currency retailer to refer customers in exchange for a referral fee —or they could initiate a special offering for customers referred through their channel.
The whole idea is for you to work out a win-win situation with your complimentary partner, so you can support each other’s growth goals. Usually, this leads to a very fruitful, consistent supply of customers for both parties, and can be a great strategy for long-term growth.
Growth Strategy #4: Market development
Another growth strategy you can utilize is to capture an entirely new market share. In this scenario, you grow by serving underserved or unserved customers. This could involve expanding your business’s reach to a new international market, or to a new customer demographic you previously might not have considered beforehand.
For instance, if you’re selling watches in the US, you could sell the same watches to customers in Europe and Asia too. This grows your customer base, and market share on an international scale, helping you become a global player in your niche.
Now that you know the different types of growth strategies you can use, let’s look into a few examples of tech companies who’ve walked the talk!
Examples of successful growth strategies
Example #1: Dropbox
Dropbox has proven that rapid growth is indeed possible for SaaS businesses, at a global scale. Their growth statistics speak for themselves, with their revenue growing from $116 million in 2012 to $1.1 billion in 2017. Plus, they have over 200 million users and 500 employees!
To do so, they used a smart growth strategy by incentivizing referrals to grow their customer base, which increased new signups by 60%. Being a seller of online storage space, they would give both the referrer and the referred customer an additional 500 MB of space on signing up.
And this simple growth hack weaved magic into their growth story.
It’s clear that referrals instill trust in new customers to sign up for a new service. So using your existing customer base to spread the word about your product or service is a great way to grow, while also simultaneously builds trust with customers. Keep it simple for customers to refer you and you really can’t go wrong with this one!
Example #2: Tinder
Tinder is the dating app that matches you with people near you to date. You’d think they would’ve had to spend a fortune trying to drive user adoption in their early days, but that’s far from the truth. Contrary to what you’d think, their growth strategy was quite old fashioned!
They started by asking people to sign up to their app at colleges and universities, in person. That’s right, they physically went to various university campuses and created a buzz around their app so people would sign up and start using it.
As Paul Graham says, “do things that don’t scale” in the early days!
There’s no shortcut to growth success. By getting in front of their real users, they nearly tripled their user base from 5000 to 15000 people, just using this one growth hack.
The key takeaway for you is to get out of the building, in front of your customers. You’ll learn a ton, build better relationships with your customers, possibly setting your growth trajectory on fire.
Example #3: Airbnb
There is no doubt that Airbnb has had an incredible growth story. The number of listings on their platform grew from 50,000 to 550,000 in just 3 years! They gained their initial short-term traction by poaching traffic from Craigslist, through creating listings on their platform that led to their website. This was a smart way to utilize a website with lots of website traffic and direct it to theirs, rather than having to spend a ton of money on paid traffic!
While poaching traffic was only one part of their growth strategy, the magical hack that added fuel to their growth was their offer to take high-quality photos to help hosts create a great listing. They started in New York City since users were not taking great photos of their space, whilst using their phone cameras to showcase their space.
Airbnb hired professional freelance photographers to help hosts take great photos and make their space look good, which nearly tripled their user bookings and doubled Airbnb’s revenue within a month from NYC! They simply replicated the same strategy for different cities and hacked their way to becoming a huge startup success.
Quite simply, if you’re looking to ‘hack your growth’, help your sellers do their job well, so you solve their problems and attract users to buy from them. This is especially true if you’re a two-sided marketplace wanting to attract both, sellers, and buyers to use your platform.
Example #4: Uber
Uber is now valued at $3.76 billion and has offices around the globe. Clearly, it’s growth story is worth mentioning here! For starters, Uber solved a real problem by making public transportation more accessible, transparent and affordable.
With the taxi industry’s infrastructure being weak, unable to accept payments via credit cards, Uber provided a solution that made people talk about it and spread the word among their friends and family. They spoke about Uber on blogs, social media, and parties, stimulating viral growth!
Uber also sponsored several tech events and provided free rides to their users in their early days. Sponsoring events with startup investors, techies and other startup enthusiasts sparked off their growth through positive word of mouth they got from these high-profile folks.
To grow their driver base, they incentivized referrals giving drivers cash for every new driver they referred. This made Uber an extremely lucrative way for drivers to make a living, helping grow the number of drivers they had on their app. Inevitably, growing the number of drivers on their platform led to excellent user experience, all contributing to their success.
The key takeaway here is to provide a solution that solves a real problem, be visible to your user base through sponsoring events they attend, and incentivizing sellers to register on your app!
Wrapping It Up
While there are some standard, tried and tested approaches to growth — there isn’t one silver bullet that will help your company grow.
You’ve just got to test different growth strategies to find the one that works best for you. Being creative and bold in your growth strategy is definitely recommended to grab the attention of new potential customers!
Ryan Gould is the Vice President of Strategy and Marketing Services at Elevation Marketing. From legacy Fortune 100 institutions to inventive start-ups, Ryan brings extensive experience with a wide range of B2B clients. He skillfully architects and manages the delivery of integrated marketing programs, and believes strongly in strategy, not just tactics, that effectively align sales and marketing teams within organizations