Build a sustainable SaaS growth process
Measure your desired outputs for example ARR, customers and MRR. Compare them over the course of the last 12 months. to identify the area of your business that’s hurting the most.
Here are the macro outputs you need to track: Number of signups; Number of upgrades; Average Revenue Per User (ARPU); Customer Churn; Annual Recurring Revenue (ARR); Monthly recurring revenue (MRR).
Take, for example, a hypothetical $10 million annual recurring revenue Saas business. Its numeric objective could be to hit $15 million ARR in the next 12 months.
According to Jay Abraham’s multiplier theory, there are three levers you can pull for SaaS growth: Churn, ARPU (Average Revenue Per User), and Number of customers. Drew Sanocki, former CMO at Teamwork, found that decreasing his churn rate by 30%, increasing ARPU by 30%, and increasing total customers by only 30% increased lifetime value (LTV) by over 100%.
Use a chart like this one:
Unless you’re just starting out, reducing churn and increasing ARPU will almost always have the biggest impact.
Ask yourself which part of your business is underperforming and brainstorm potential inputs to run experiments.
For example, If you’re struggling with low signups, do customer research to understand the value your buyer perceives. Then, communicate that value to them. One way to find opportunities to improve the buying experience is to buy your product once a month. You’ll quickly spot easy improvements.
If you don’t have an existing prioritization system, start with the ICE score framework. It’s easy to understand and implement. The ICE score framework is a prioritization method that scores each input on three elements: Impact. (how big of an impact could this input have on an output I want to improve?) Confidence. (how confident am I that this input will improve my output metrics?) Ease. (how easy is it to implement?).
Here’s an example of what this could look like:
If this is your first time going through a SaaS sprint, start small: choose an input that is easy to implement and has a moderate-to-high estimated impact. Later you can tackle more complex growth opportunities that require more resources and time.