#2 First Things First: Foundations and World View
Build roots before you can bloom.
This week started with me writing about an organic strategy. Four paragraphs down and it hit me that to really add value, I will have to discuss things which are foundations but gets overlooked very easily. In fact these are the things very few people talk about, but are very crucial in building a SaaS business.
I slept over these thoughts and let one more day pass. Finally, I left the original post in the drafts and started this one.
Premise: it’s best to take time and discuss a few basics so that there is enough clarity on concepts and direction later on about What, Why, How of growing a SaaS company. So lets dive in.
What exactly does ‘Growth’ mean?
For a SaaS company, growth is the process of getting maximum number of people within the target audience to:
Experience the product
Pay for it
Engage with it at high frequency
Keep using it with their increasing needs and help in products’s improvement
and doing it fast.
You can see this is a multi-dimensional process.
A single campaign, initiative or action will not be able to make this process work.
You will have to:
Reach out to your target audience [Audience selection, Channel selection]
Convey the benefits of your product to them in most enticing way [Market Research, Positioning]
Enable them to experience the product features in most friction-less way [Funnels, Onboarding]
Turn the free users into paying customers [Pricing Models]
Make them use your product at high frequencies, understand their needs, educate them about the product [Customer Research, Customer Marketing]
Innovate, solve deeper problems and improve product [Product, Engineering]
Convey the improved product’s value to customers [Marketing]
Run all above steps in a loop
Do all this fast enough to avoid unnecessary competition
Can You see why a single action will not work? SaaS growth is not marketing.
You will have to build a multi-dimensional growth engine.
But the good thing is, even a single founder or a small team can build and execute this growth engine. Might not be easy but possible.
Whats’s the secret then?
Secret lies in looking at growth as a full-stack process led by engineering.
Avoid dumb shits and build scalable solutions.
Building A Growth Engine
Since growth is a full stack process, you will need to bring in following skills together -
Product (research, specifications)
Analytics (data systems, statistics)
Marketing (copywriting, positioning, channel knowledge)
A person or a team need not to be an expert in these skills, only need to have enough working knowledge to apply them.
How these skills play out? Here is a case -
While reaching out to your target audience over cold emails (Marketing) you realize that none of them even signed up for your free plan over a period of 7 days.
You looked at your data (utm link clicks, heatmaps, page recordings - Analytics) only to realize that many people did click on the signup button but left immediately after seeing a form with over 10 fields to fill.
You researched the best companies and decided that you will ask for only a few details at signup and prompt users to complete their profiles (so that the product can provide them better value) at a later stage (Product).
Over the course of next 24 hours, you coded the new flow and push it for new visitors. (Engineering)
This is a fairly simple example. My intention here is to explain the importance of all these skills.
When a product gets launched all the marketing efforts goes into acquiring new users and that is fair. Every business need users and customers to grow. But if you have passed this initial stage, then you should look at all of the followings levers to grow:
When at first you reach out to strangers (within target audience), a very small percentage of them turns into users. Once they become the users, experiencing your product daily, it is relatively easy to turn them into paid users and even offer advanced plans. Conversion at each of these step will boost the growth.
For example, focus on retention, will help a company to reduce the churn, a significant problem within SaaS.
C. Mind of a Scientist:
Running an engine of growth is a real world multi-variate process. It requires running a series of experiments, carefully capturing data, understand the changes in variables and then designing new experiments.
Consider the case when you are sending cold emails to get more free signups, to say 300 prospects. One way is to design a script mentioning the benefits of your product to them in a way you think will be most attractive for them.
A more growth oriented approach would be to design 3 different scripts. Each script will explain the benefits of your product to your prospects in different way. Each will touch different trigger of your audience. One script can talk about the freemium plan, another can talk about your product’s seamless integration with slack while third script can talk about its ease of use. Then you send each script to 100 prospects, covering all 300 of them. Tracking response to these emails will give you insight on what excites your audience most. Whichever script gets most signups, use that message angle at large scale next.
These small wins, accumulated over a time, will eventually help you building a very sharp growth machine. By running these small experiments, you will eventually be able to find what exactly works and what not. Then it will be just a matter of scaling what works.
Follow a systematic approach to all growth initiatives, just like scientists -
Hypotheses - Create a hypothesis
Experiment - Design an experiment to test the hypothesis
Analysis - Analyse the outcomes
Repeat - Learn from this experiment, improvise and design a new hypothesis
D. Trap of Vanity Matrices:
I love when someone appreciates my work and I am sure you do to. People go to great lengths to get complimented. Many industries have built on this simple human emotion. Great internet products are built on it. The world of Likes, Shares, Retweets is built on it. Cool fun.
But when you are a business these things can easily take you to an unproductive path.
Growth engine works well when you run multiple small experiments, this also include social media. You will have to post different things, some will be appreciated, some will not be. These reactions should not bother you. Positive, negative and no reactions are all valid outcomes of experiments. You will aim and expect all. Nothing to gain from begin carried away by positive ones and bogged down by negative ones. Just give them ratings (0, 1, 2), record the result and move on, like”
“Oh, this kind of posts do not work at this time on this platform, cool. Noted”
“More likes, more retweets,
shares and love,
all these are good, if only
they lead to higher conversion
by themselves they mean nothing
even the free users mean nothing
if they don’t ultimately lead to
higher paid users
today or tomorrow!”
Poetic! I know. Thanks.
E. Key Performance Indicators:
KPIs are the measurable performance indicators which can help us to keep track of all the growth initiatives. Based on the business requirements, KPIs can change and you should design your own KPIs.
What I mean by designing KPIs is to select a few performance indicators which you think are most useful for your business at present and assign them a value. Then all of your growth engine will move to achieve those values.
Some performance indicators are:
MRR (Monthly recurring rate)
Net Promoter Score (NPS)
Average Revenue Per Account (ARPA)
There are many other performance indicators for SaaS. These few are mentioned here just for the clarity of thoughts. For now, just keep in mind that:
There is no way to measure progress without the KPIs.
KPIs comes first, growth initiatives are built around KPIs.
Carefully design KPIs based on the current stage of your business.
I will write about KPIs in detail in one of the coming newsletters.
F. Signal Vs Noise:
Every magician knows the vanity of his tricks, don’t be fooled by them.
People and ideas which fail do not get much written or talked about.
This means that when you consume information over internet, you are essentially consuming from a biased and loaded resource.
Learning to differentiate between signal and noise is a valuable skill to learn. More so when you are building engine of growth for your business. The resources you have, time, energy, momentum and money, all these are too valuable to be spent on noise.
G. Stay Nimble:
The strength of startups lies in their agility. Free from hierarchical chains and bureaucracy, they easily adopt, regroup and attack back.
Whenever you find yourself overwhelmed with all the information, media and scope of work involved in growth, just go back to basics and execute your tiny experiments.
Target audience research: Irrespective of how good your product is, if you do not understand your audience, you will have difficult time growing. Imagine selling worlds most delicious pizza at 50% discount to someone who is dying of thirst!
There are many ways to research and understand your audience. An easy way is to answer there four questions about your target audience.
World View: How would have the most successful person handled this situation? This is a question I found myself asking a few times. It is tricky but the world is not we think it is. Different people get different outcomes under similar situations. Often times, massive growth opportunities are found by looking outside your immediate world. A great many businesses were built by the founders who knew some secrets about the market which no one else knew. Answer to these three questions might throw massive growth opportunities to you.
Note: A lot many opportunities also exist at the intersection of change. When things change, the market takes time to respond, it does not remain a level playing field for a while. A sincere attempt to answer those three questions might reveal a new opportunity to you.
It is also important to know self. It is a continuous process but will unlock great potential. As one of my mentors once told me:
“People do not have business problems. People have personal problems that manifest in business.”
Again, use these three questions to deeply know the world and know yourself. You will be poised for growth.
Create a repository of ideas: As you go into growing your business, designing and executing experiments and observing data, a great many ideas will flow into your mind. Not all of those ideas can be executed immediately. Only the best has to be executed. But it is beneficial to make a repository of all those ideas. This repository will help in refining those ideas and generating new ideas inspired from those.
Setup tracking on your website/app: If not have done already, setup tracking on your website. Easiest way to do is to setup Google tag manager and then add tracking codes of all other apps within it. Some must have tags are Facebook, google analytics, hotjar (or any other similar), twitter, perfect audience (or any other for re-targeting). As you build your growth engine you can decide to add few more based on the growth activities i.e. if you ended up getting response from Quora, you would like to look at adding quora code too.
Setting up this tracking should be straight forward once you setup Google tag manager. Still if you could not get your head around it, shoot me an email and I will help you out.
We have covered a lot of ground today. All of this should form a solid ground for coming days. Let me know your thoughts about it and what you are working on these days. I would love to learn more about you!
❤️ Thanks for reading Issue #02. I’d truly appreciate it if you help me spread the word on Twitter by Clicking Here.
We’ll talk soon.
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For tweets: @Thoughtlytics
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