In this post, I break down the steps I recommend in growing your SaaS business from the ground up to $2M ARR.
Why $2M?
Well, because $10k, $100k, and $1M have been done in different ways. $2M is the point where things really start to change.
By change, I am referring to starting to focus more on building a brand, your company culture, hiring, etc.
At $2M – you have found traction, growth is almost inevitable. How much is still to be determined, but it’s going to happen.
This, by no means, is the only way to grow. It’s what I feel is the most sustainable.
It’s broken down by stages of growth so you can quickly jump to the stage you are in. However, I do recommend giving the whole thing a read as it will ultimately all tie together.
It doesn’t matter if you’ve raised VC money, or bootstrapped, what I’ve found is the fundamental processes don’t change. What does change is how much gas you can put into it, but the activities won’t really change.
From $0 to $100k ARR
Although I’m starting this at $0, I’m not going to talk too much about what you need to do pre-launch.
In summary, let’s just say, you need to be building your email list, using things like Betalist, Betapage and ProductHunt Ship to start generating interest.
Stay in communication with your audience by showing progress.
Then, sooner rather than later you need to just…
Ship!
Ship the product as soon as possible.
Forget about trying to ship bug free and making things perfect. Drives me up the wall when someone tells me they’ve been working on a product for 12 months and haven’t shipped.
Why? Because I did that with my very first foray into SaaS. 12 months and $60,000 later, I had a big failure on my hands.
Forget about split testing, having systems and processes, launching bug free, etc.
Charge ASAP
This is hard to do because often times you don’t feel the product is quite where it needs to be.
The problem is, you’ll most likely never feel that way. Speed is of the utmost importance as you don’t actually learn anything until you launch.
If there’s one thing that I’ve learned, it’s that you want to accelerate your learnings as much as possible.
Pricing Based on a Value Metric
Over time, pricing is something you’ll end up tinkering with more than you ever thought you would.
And that’s a good thing.
At one point, we changed pricing plans FIVE times in a single month.
For LeadFuze, # of leads make a lot of sense as a pricing plan differentiator, not just features.
For project management, it might be number of projects or clients managed… for email marketing, it might be contacts or emails sent, etc.
Identifying the Right Customers
Not all customers are created equal.
Think of your favorite customer.
What industry are they in? What role do they have? What size are they? What other characteristics do they have?
Thinking through these questions allows you to target more customers who are just like your favorite customers. This, in a nutshell, is your ideal customer persona (ICP).
When you know WHO you’re targeting, you can build your messaging around that audience. You can target them through cold outreach and ads. You can speak their language in onboarding emails. You can have dedicated landing pages for different ICP’s if it makes sense as well.
Cold Email Outreach
I built a 7 figure digital marketing agency that started in 2008 (the worst economic times of our lives) using cold outreach.
I didn’t want to cold call.
I built some scrapers and had some clever hacks to help me scale this up which led to my first several clients.
I turned this whole concept into LeadFuze.
I wrote about my QVC cold email framework for HuffingtonPost here.
Capture Feedback
Be religious about capturing feedback and learning what can be better.
Install session recording software, like Hotjar or FullStory, to see how people are interacting with your website and app.
Use software like Gist for live chat, chat bots, triggered chats, etc to capture feedback. You can also use the event tracking features to have the history of every user at your disposal.
Founder / Developer(s) Involved with Support
If you are a technical Founder, then this means YOU.
If you are not a technical Founder, then this means you AND your developer.
If you are fortunate enough to have multiple developers on this, then you can assign one – or rotate the responsibility.
This is tricky as often times developers will feel they are “above” this.
However, the problem is they never actually feel the problems when they are shielded off from support.
They don’t actually end up close enough to the customer to build the right product in the way it needs to be built.
When you actually have a developer involved in support, you will be amazed at how quickly bugs get fixed, how much more the developer(s) care about the product, how much better testing gets implemented before features get shipped, AND how much better the in-app user experience becomes.
It might feel like you’re wasting expensive development resources, but let me assure you it is MUCH more expensive to end up building the wrong product. Trust me… I know 🙁
Prioritize Bug Fixes
The early days are so tough. There are so many features you want to release and work on, but there’s also existing bugs that need to be fixed.
How do you balance it?
I recommend adding bug fixes to the top of the list. This ensures your early customers are being taken care of, while increasing the likelihood of them referring others.
Obviously not every bug can be fixed right away. Extreme edge cases should be lower on the priority list.
Communicate EVERYTHING
Communicate as much as possible with your customers – about bug fixes, feature releases, and whatever else you can think of. Do this through blog content as well as through email marketing efforts.
Blog
Start blogging immediately. This provides a reason for you to stay in touch with your leads and customers.
Blog about topics where you can softly insert your product as the solution to a problem.
It can also serve as fuel for your social media efforts.
For example, I joined as many relevant LinkedIn groups as I could. When I would publish a new blog post for LeadFuze, I would immediately click the social sharing icon on the blog post, then share it to all those groups.
Note: some groups don’t like this, and it’s best if you have built up some credibility in the group first, but it works!
Additionally, and most importantly, it helps to start building organic traffic. You will be soooooo glad you did this as you start getting closer to $1M ARR and beyond.
From $100k to $250k ARR
Now just because you hit a new revenue milestone, doesn’t mean you stop what you were doing before.
The rest of this playbook assumes that you are continuing to dial in things from the previous stage(s).
I view $250k ARR as the next major milestone. It’s a quarter million dollars and means you are on your way to having something worthwhile.
What it is and what it can become, we don’t know yet, but it shows there is some level of traction happening.
Case Studies
By now, you’ve had people using your product that have had success. You need to prioritize reaching out to these folks to start building a case study.
You will find that people are hesitant to fill out a long survey or document. Ideally, you should try lining up a call to learn more about their usage of your product.
Then, you’ll want to start asking questions that get what you need from them. Questions like:
“What were you doing before using us?”
“What results have you gotten?”
“What has this meant to your business?”
At the end, you can ask them if it would be okay to feature them as a case study. Let them know they don’t need to do any work, you’ll do your part to try and help make them famous, etc.
From $250k to $500k ARR
Get Your Product Right
This sounds simple and straight forward enough, but believe me… there needs to be a massive emphasis on the customer experience at this stage.
All the marketing in the world won’t matter if this is not up to par. I experienced this firsthand when growing LeadFuze and it completely plateau’d because this element was not properly accounted for.
- Don’t stop talking to your customers and proactively seeking feedback
- Don’t stop signing up for your product and making note of every “hiccup” in the onboarding experience.
- DO show as much value and make sure it’s clearly demonstrated.
For example on the last point, LeadFuze would allow you to select a lead and add it to a list. Once you chose that, the leads would disappear from the search result and be in your list.
Well, that’s when all the magic happened. We would validate the email in real time, we’d give you all their social links, etc. However, no one realized that’s what was happening. They just thought it was a glorified “list organizer”.
We made a slight tweak to actually show progress, the steps it was doing, AND surfaced the result right there. Free to Paid increased by nearly 80% after this update.
Review Sites
Get as many positive reviews from folks as you can.
This paid big dividends for LeadFuze. G2Crowd listed LeadFuze as Arizona’s #5 Software company based on the ratings and frequency that they came in.
This was a pretty big deal, because GoDaddy was number 4.
Never mind the fact that this was a great link building campaign for G2Crowd, it helped us be recognized. Others on the list then wrote about us in blog posts also.
From $500k to $1M ARR
Paid Ads
I know companies that strictly do paid ads to fuel their growth. That’s awesome if you can get it to work for you in the early days.
However, in my experience, paid ads are much more effective when you have a proven onboarding flow in place, your product is delivering on its promise, you know exactly who to target, and you have the assets to leverage for landing pages, retargeting, etc.
Generally, these things aren’t yet in place until you’ve at least reached this point.
Integration Partnerships
I got very good with structuring integration partnerships. This is because I knew most other companies didn’t have a formalized process for handling it, but that there were some good sized companies that would make sense for us a partner.
We had several integrations that we would do a guest post for on their blog, one we did a webinar for but then over time I really perfected the whole integration partnership structure.
For example, one of the first structured integration partnerships I worked on was with Mailshake. We agreed to a 90 day exclusive (no other similar tools would be integrated with in that time frame), plus we agreed on each doing 3 different email blasts to our list, then a guest blog post.
The schedule went like this:
- Day of launch email promo
- One week later email promo
- Two weeks after (3 weeks from launch) a guest post swap that was also promoted via email blast (we promote a guest post on our blog contributed by them an vis versa).
We left the door open for webinars, and other cross promotion ideas as well.
Prioritize the integrations based on customer need/requests, how much more functionality it allows your product to have, and of course – that they’ll help cross-promote it. I grade things on a 1 to 10 for each of those three and then prioritize accordingly.
Free Tools
Think about something you might be able to quickly spin up that’s related to your product.
For inspiration, look at other lightweight tools in the space. You can look at purchasing them like I did with a competitor (original owner shared the story here), or just flat out making a similar product available for free.
You’ll have to support this, which is why it’s important that it’s a “simple” product. However, the link juice you can build from it is rather powerful and can be a funnel into your main product.
From $1M to $2M+ ARR
Congrats on $1M ARR! The magical $83,333.33 MRR.
From here, I’m going to list out several things that you’ll do going forward. It will certainly take you beyond $2M ARR as well.
- A podcast
- Affiliate program
- An event / conference
- App marketplace
- Continued integration partnerships
- Building out a sales team
- Start running and managing growth experiment sprints
- Localization of content based on country of site visitor
- Testing direct mail as part of the Trial process
- Building / releasing more free tools
- Release product “add-ons” or “plugins” that are sold separately
- Scale paid ads
- Double down on verticals that are working
- Acquire relevant blogs in your space that drive traffic
- Distribution partners
Where to Go From Here?
From this point on, you should have some systematic channels that are working for you. Those are where you need to double down while focusing on these three things:
- People you hire
- Company culture
- Your brand
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