As the world of B2B SaaS continues to grow, it can be hard to keep up with all of the latest trends and strategies. It’s important to have a clear understanding of growth tactics and the market conditions if you want to stay ahead in this highly competitive market.
Our growth strategy for b2b saas is divided into 13 key steps:
- Product + Customer research
- Segmentation / Defining ICP
- Product strategy
- Go-to-market Strategy
- Sales Strategy
- Distribution channels
- Product market fit
- Scale up
- New funding round
Let’s look more closely at each of these steps:
This is the very initial part during the ideation phase where we are finding challenges to solve. At this stage we look at market segments that we have experience with or through study and research find the market sectors with room for growth over the next few years.
A few key things that we are looking for as we find our market are as follows:
- Is this a growing sector? / Is the sector outlook healthy for the next 10 years?
- Is this a universally demanded sector?
- Are the barriers to entry very high? I.e Compliance, legal , social factors and bureaucracies.
- How accepting is the sector towards innovation?
- What is the rate of digitization in the sector?
- What is the total market size?
With the last question you will uncover the TAM or total addressable market for your business which means total number of accounts that exist in your target market. How many accounts can you get from your TAM?
This you will uncover in the upcoming parts of this journey.
After defining the market, a natural next step is to figure out the challenges of the market. At this point you are still scanning and understanding the market at a high level to understand the dynamics of the market sector and what potential problems could be solved.
Some problems are identifiable at a high level because they are prevalent, however if you are looking to go beyond the surface level problems you need to immerse yourself into the industry by engaging with the industry participants to really extract the gold that would inform your business model later.
Product + Customer Research:
At this point you have a decent idea of the market you want to go after and a few key challenges you can solve.
Now is the time to validate our idea by conducting hardcore research methods. During this research you are trying to uncover the following facts:
- Does this problem exist industry wide?
- What kind of a problem is it? Revenue? Cost based? Productivity based?
- How urgent is the problem?
- How much , if at all, would people pay to solve this problem?
- Are there existing solutions?
- What would the future customers want from a solution like this?
- Why has this problem not been solved yet?
- Who are the people most affected by this problem in the industry?
- Who are the potential advocates of a solution to this problem?
- Which department does this fall under?
- Who would be the people that would need to be convinced?
Segmentation / ICP:
Through the insights you uncover during your research you will notice there are a select few businesses that are more challenged than others with the problem that you are solving and they have the most urgency to find a solution. This information coupled with the total market size uncovered in step one we will do our market sizing and determine the ICP.
This means calculating three key metrics:
- TAM (total addressable market)
- SAM (Serviceable addressable market)
- SOM (Serviceable obtainable market)
The ones that are in your SOM are the businesses you want to go after as they are already problem aware and need a solution meaning shorter sales cycle and less convincing to be done.
At this point we figure out the Job titles of our target buyers as well and the exact accounts in our SOM and build out a list if we can.
NOTE: Segmentation and ICP are something that get reiterated with changes in business strategy, at this point without any practical experience we are taking an educated guess which will most likely be changed during the life of the business.
This is the point where all the research starts to inform real world action.
Positioning is essentially your “business sales pitch” or “Narrative”. This also defines what kind of customers you would attract and naturally trickles down into product, sales and marketing communications as well.
This informs the market what our product aims to solve? for who? And How?
Positioning can be done at two strategic levels:
- Brand level:
At this point positioning is done based on a promise , ideology , emotion or a new narrative about an old thing.
Think of examples like hubspot and salesforce, both similar products yet two very distinct brands. Hubspot positioned itself at a brand level for SMEs and startups whereas Salesforce positioning attracts enterprise clientele.
- Product / Delivery level:
Two businesses selling exactly the same service could differentiate themselves and position themselves differently based on the service delivery or the product experience.
For example, think about canva and adobe photoshop. Essentially the same products right?
But totally differentiated based on the UX and useability models.
We need to be very thoughtful in deducing data from our prior research at this point as this will shape how our company and brand is perceived in the market.
This is where we get tactical with our positioning and market research to incorporate that into the product. This goes deep into the HOW of the product, what it does, how does it do it? What are the outcomes? we need to answer the following questions:
- What is the product supposed to do? - Increase efficiency? Reduce cost? Grow revenue?
- Who are the users? Are their multiple users?
- What does it deliver to the user?
- What are the use cases beyond the main use case?
- How often does it get used?
- How technical is the product?
- Does the user need to learn usage?
- What metrics do you need to measure for useability?
- Is the product sticky?
- What features can complement this product?
- Is the implementation easy?
- How often does the product get updated?
- What are our unique features?
- Can we upsell with different tier levels and usage?
- Does the charge need to be subscription based or consumption based?
It’s time to decide how you will enter the market with your product.
This will mean defining the following:
- Pricing strategy
- Brand messaging
- Sales strategy
- Distribution channels
You need to answer the following questions:
- What pricing models do you have? - Flatrate? One-off charge? Consumption based charge? Tiered pricing? Custom pricing?
- Do you want a free trial or a freemium? What would be the condition
- What are your up sells and cross sells i.e add-ons?
Based on the problem you solve, your positioning and the customer persona you sell to, there is a distinct tone of voice , vocabulary and communication style that you need to adopt in order achieve the following outcomes:
- Clearly explain the function of the product
- Clearly communicate your narrative and who you are for
- Clearly explain your motivation behind the product
- Clearly explain how you are different from the market and competitors
- Build sales enablement material
- Resonate with the target buyer so that they feel heard and can relate
You have your product, it's time to sell.
At this point you need to answer the following to build your sales strategy:
- What is your sales process? - This ties back into the pricing strategy somewhat, you need to understand whether you are product-led, sales-led or working a hybrid sales model.
- What value can you provide during the sales process?
- What are the stages of your sales process? A typical sales-led process looks like this:
- MQL - Marketing qualified lead that submitted a form on the site or came in from content/ads.
- SQL - The MQL gets sent to sales usually and SDR for further qualification. At this point the lead gets accepted or rejected based on various factors.
- SQO - Sales qualified opportunity, this is the result of an SQL being accepted and vetted by the SDR.
- DEMO - The SQO is handed over to an AE (account executive) or a solutions engineer to present the product capability.
- Quotation - Based on the Demo if the client thinks this is what they want, they are sent a quotation outline the price and the deliverables
- Negotiation - The quote is debated upon ( This stage is subjective and dependant on client response to the quotation)
- Closed WON/LOSS - The deal gets closed.
- What does the customer journey look like? How would they find the product?
This is perhaps the most critical and focused element in the whole b2b saas growth roadmap, what I mean is people generally focus on this the most and not so much on the other elements.
And rightly so, these channels are where the awareness is driven for your product and is generally the first touchpoint for your customers.
Let's look at some distribution channels:
- Search engines ( SEO and SEM to drive traffic to your site )
- Social media
- Partner channels
- Complementary products
- Owned media channels
- Referral Networks
- Affiliate networks
- Industry Events
- Industry Publications
- SMEs and Influencers
Iteration is the key in growth journeys. With digital analytics and mediums the response time from our feedback loops is hyper fast which enables entrepreneurs to move fast and adapt to market demand. Every element from ICP / segmentation to Distribution channels would need some sort of iterations and adjustment in the growth loop.
Most often if there is friction in sales I recommend going to product strategy and moving from there as a majority of the time the problem lies either in the product strategy or the elements there onwards.
Product Market Fit
The holy grail of B2B saas , Product market fit. If you’re lucky you might even get it without going through the experimentation phase, but for a majority we reach product market fit after a couple of years worth of experimentation and iterations on the overall marketing strategy.
How do you know if you have product market fit?
Even though there are no hard and fast rules to suggest that you have product market fit there are a few signals that can exhibit product market fit. These signals are:
- Is your retention rate high? Or is your churn rate low?
- Are the users recommending the product to other people?
- Are the sales cycle lengths getting shorter?
- Are you getting attention via earned media?
These signals are indicators of product market fit and a sign that your overall go to market strategy is working.
Scale + New Funding Round
You have done the hard part, you built something that people want and like. You have distributed it in the right channels to get it to them, your product has constantly delivered on its promise and most importantly you have found a system that works.
It’s now time to scale your efforts and take this product to the next level.
Most founders at this point would like to raise funding to scale the efforts while some prefer to reinvest profits and keep ownership. This is for you to decide, but if you can, grow slowly and keep ownership.
Happy growing SaaS founder!