Quit with the spray and pray approach to SaaS growth, stop chasing multiple metrics and tactics, and get a simple and repeatable process which works every time
Dear SaaS startup CEO,
What would you do if you had products much loved by users, a very strong community associated with your brand, an authority position in your industry, and YoY growth of 20%?
You would celebrate, and then double down on whatever you are doing.
But if you were the CEO of Moz-one of the most well known companies in the SEO space- it would be the "single lowest point of [your] professional life" because you would have laid off 28% of your employees and shuttered entire product lines that took years and millions of dollars of VC dollars to build.
In a poignant blog post Rand Fishkin, the founder of Moz, revealed just how many things could go wrong when you are trying to grow a SaaS company:
...forecast showed Moz burning much more cash than we’d planned due to lower expectations for every product...Every product was growing in revenue and customers, but none of them were growing as fast as we’d forecast.
SaaS is a world where companies burn a lot of cash to get growth...even if that means hiring fast one year and laying off a large portion of your workforce the next.
...here we were, overextending finances to try and grow into new product lines outside our core competency ... and winding up making too little progress at too high a cost.
Moz decided to take a risk and adopt a multi-product strategy. They soon found out that this strategy "dilutes brand association, impedes funnel optimization, and puts stress on product, marketing, sales, operations, customer service, and engineering teams".
As a startup CEO, a wrong business decision which forces you to cut costs will inevitably mean lay-offs, mainly because software companies spend the most on people. And that sucks the most because you now have to tell someone who might be a close friend that they have been let go for no fault of theirs.
No matter what industry you are in keeping it simple and focusing on a few things you are good at is always a sound business strategy. Most startups skip these principles and end up failing their promise.
Startups, startups everywhere, so few successes to be seen
Startup failure stories are legion. To paraphrase Gary Vaynerchuk, for every Instagram there are thousands of Instashits.
Researchers at Standford and Berkely analyzed 3200+ web/mobile startups and found that they had a 75% chance of failing in the next two years, even if they were funded by VC money.
Oh, and it's not like you are out of the woods if you are still surviving after 2 years.
Statistic Brain crunched the numbers and found that if you are a tech startup, the chances that you are still operating after four years is only 37%!!!
Let's move away from numbers and talk about some startups which failed despite showing initial promise, raising gobs of cash, or even having tens of thousands of users.
The founder of Wattage, a failed hardware startup says they stumbled because they didn't seek out traction.
...we focused on building prototypes to validate that our vision was technically feasible. In retrospect, this was a mistake.Instead, we should have released something far more lightweight, and as quickly as possible.
Our efforts should have been focused on validating interest in our product and generating traction. We did realize this, and we were moving to launch a beta as a means of validating interest.
The problem is we realized too late, and ultimately didn’t want to launch a beta that we couldn’t afford to support.
People, just KISS!
Let's see why RewardMe, a loyalty platform for restaurants and retailers went bust.
Our demise happened because we tried to scale prematurely...
We attended expensive conferences and trade shows, booked flights to meet with clients, added several people to the growth team, bought tons of hardware before we sold it to clients (so we had to hold inventory), and delegated customer support before finding product market fit.
Though on paper we had tremendous progress, we brute forced our growth and never established a stable product or a scalable customer acquisition channel.
And rounding up the startup autopsies, the founder of Patient Communicator, a failed patient portal talks about how he tried to unsuccessfully change user habits.
It’s extraordinarily difficult to take a product that was built perfectly for a particular user and commercialize that into a broader market....
I never really spent time pitching to other doctors to see if anyone would pull the trigger and use PC (patient communicator).....
A PC sale meant... the doctor would need to adjust behavior, the staff would use a new system, the patients would have to learn a new website.
Turns out, that doesn’t happen without a fight... we had no customers because no one was really interested in the model we were pitching. Doctors want more patients, not an efficient office."
These are not just stories of three different startups from three different industries.
Beyond the heartbreak and the dashed dreams common to all such failures, if you look deeper, there are a few common triggers which precipitate startup failure.
And no matter the business model, the industry, the size or the availability of funds these triggers rarely change.
Causes of startup failure
So if you don't want to fail but grow you might Google "How to Grow my SaaS startup".
Or (you knew this was coming) Google "SaaS growth hacks".
And just like that you have entered the rabbit hole.
Why "growth hacks" and "tips and tricks" from the Internet are useless for your SaaS growth
Five years ago social media marketing used to be the shiniest buzzword.
Right now it's growth hacking. If you are a part of the startup ecosystem I can guarantee that barely a day goes by without you seeing an article about growth hacking online.
Articles like these...
Doesn't it seem like there are as many growth hacks floating around as there are ads for supplements which promise to melt fat off your body?
And that's not all!
If you clicked on any of these articles you will see that most of the growth hacks are linked to a bunch of metrics. When you apply a particular growth hack you are essentially seeking to optimize one metric or another.
In principle this is good. If you want to grow you have to track your effort and metrics are the best way to measure success. It's just that there are way too many of them to be useful.
Here's a very limited list of metrics that anyone working in SaaS will recognize.
It's no wonder if reading these articles and thinking about how to optimize the associated metrics makes you feel like this:
Actually, you don't have to chase after every shiny new growth hack or try to optimize all metrics to grow sustainably.You will crash and burn if you do that.
There's only one way to grow sustainably: by optimizing for one metric at a time.
The Silver Bullet for Sustainable SaaS Growth: OMTM (One Metric That Matters)
You might think that there's no single metric which drives SaaS growth and I am simply full of sh*t.
Don't listen to me. I didn't dream up the concept of OMTM.
It's a real thing, and companies that are household names have used OMTM to grow at blistering rates.
In 2014 Noah Kagan's SumoMe's only goal was 1,000,000,000 unique visitors to sumome.com.
AirBnB's optimized for "# of nights booked".
Product Hunt tracked Product Page CTR.
Square measured "# of merchant transactions".
In its growth stage Whatsapp drove all efforts to increasing the "Message Sent" metric.
Working with one single metric can be incredibly liberating. You will:
- Experience unmatched clarity: You won't have to track fifteen different metrics and suffer from analysis paralysis after looking at all those graphs and charts on your dashboard.
- Run disciplined growth experiments: You no longer have to throw everything at the wall and pray that something sticks. Because you know your goal, your growth experiments will be more purposeful, disciplined and strategic.
- Achieve organization-wide unity of purpose: From the CEO to yesterday's newly hired intern everyone knows the goals of the company for the week, month, quarter, and year, and what's expected of them in their respective roles. Decision making becomes a lot simpler.
- Improve customer experience: Your customers will have a better experience with your brand than they did before when you were trying to do many things at once.
- Have a real impact on the bottom line: You will have noteworthy results to share with your investors, mentors, coaches, backers, peers, and other stakeholders. You will make real progress, and not just increase the likes on your Facebook page.
- Diagnose critical issues: Missing out on your OMTM is an indicator that there are issues with your product, people or processes in need of urgent fixing. Without an OMTM to guide you, these flaws might remain hidden and harder to fix down the line.
If you want these benefits you will have to choose the right OMTM. Pick wrong, and it will be like a surgeon opening up the patient's heart when the problem is actually a tumor in the lungs.
This is where I come in with my lean analytics inspired OMTM Optimization Service.
Want to know more about what I will actually do? Read on.
Optimizing one OMTM at a time for fun and exponential profits
In my experience, there are two types of startups facing growth issues.
They are either in the Gym where they have locked down on the fundamentals and are looking to scale their growth rate...
...or they are in the "Emergency Room" (my type of clients) when what's broken is so obvious that you don't need any complicated cause-effect analysis to figure out what the OMTM should be.
You might be in the Emergency Room if:
- Traffic has dropped off rapidly because Google changed their algorithm.
- Your ad budgets are increasing month on month while the user base has remained stagnant or dropped.
- Your sales team is wasting their time chasing unqualified leads.
- The free trial to paying customer conversion rate has dipped off drastically or hasn't improved despite your best efforts.
- Customers keep on complaining about poor support.
- Your monthly churn rate is more than 3-4%.
- Your MRR keeps on dropping.
Usually, you can isolate these issues to any one of the 5 stages in the AARRR funnel.
Once the burning problem has been isolated I will work with you to figure out one key metric which would signal real change, and then optimize for it. My process looks like this:
Depending on where your problem area is, here is what I can do for you.
Some of the most common startup woes are linked with acquiring ideal users fast without burning up a pile of cash. I can reduce customer acquisition costs by:
- Getting your product in front of more eyeballs by content marketing, building high-quality backlinks, and other SEO tactics so that your website performs well in search results.
- Increasing the number of signups for demos/free trials by optimizing the conversion rate of your website.
- Creating an attentive audience for your marketing messages by building a responsive email list.
When your acquisition issues are fixed your customer life time value will be much more than your customer acquisition costs.
The tech stack I use for solving acquisition problems includes WordPress, Google Analytics, Optimizely, Intercom, Qualaroo, Mailchimp etc.
Are you battling with acquisition issues? Click on the button below to hop on to a free 15 minutes Skype call.
Are your active users only a fraction of the total number of users? You have an activation problem when new users never come back to use your product, which I can solve by:
- Making new users feel welcome by fixing or building in-product and email onboarding flows.
- Converting more free trial users to paying customers by mapping out the ideal customer flow, figuring out which activities deliver the highest value to the users, and then optimizing for them.
- Solving user issues faster by improving live chat, ticket handling, building knowledge bases, and sending triggered emails.
The tech stack for this phase includes Mixpanel, Intercom, Groove, Active Campaign/Vero/Customer.io, UserTesting, Qualaroo,Crazyegg etc.
Are your users simply signing up but not doing anything with your product? That will affect your growth rate. To get some insight, get a free call.
Keeping users around is the best guarantee for success. But the SaaS model is vulnerable to churn because it's so easy for the user to cancel their account before the next paying cycle. I can reduce churn by:
- Figuring out the biggest product hurdles users face through analysis of support tickets, running customer surveys, etc and working with product team to fix the bugs.
- Identifying users whose behavior indicate disengagement and proactively re-engage them through drip emails or retargeting campaigns.
- Understanding that "sticky" feature which users can't live without and make it the centerpiece of your brand experience.
- Getting customers into the habit of using your product through Nir Eyal's Hook Model (Dave McClure from 500 Startups calls it "the crib sheet for startups looking to understand user psychology ")
Once the churn is down to manageable levels of 2-3% per month, you won't be scrambling to replace lost users with new users. Not only will you grow, but you will also be able to predict your revenue with reasonable certainty.
The tech stack I use for slashing churn include tools like Mixpanel, Vero/ActiveCampaign/Customer.io, Intercom etc.
Hop on a no-strings 15 minutes phone/Skype call to find out how I can slash churn.
If you have a working product and paying customers odds are that you are leaving money on the table by neglecting several revenue levers available to you. I can:
- Increase revenue as much as by 33% without any substantial increase in investment in marketing, product or sales.
- Help you inch closer to profitability by running experiments designed to shorten the time taken to recover the customer acquisition cost to the recommended 6-8 months.
- Boost customer life time value by incorporating value metrics in your pricing plans, rationalizing price points based on customer feedback, and building an upsell/cross-sell strategy.
My key revenue optimization strategy is to identify your best paying customers so that you can target more of the same and deliver the expected customer experience.
The primary tool I use for understanding and optimizing revenue is Mixpanel.
If you want more revenues (who doesn't?) click on the button below for a free 15 minute consultation.
Users who sign up after being invited by a friend or a colleague are more favorably inclined towards your product than normal users. They tend to use your product more frequently, have a higher LTV, and are more likely to be your advocate and invite yet another user.
Unicorns like Dropbox and Uber have grown at scorching pace on the back of a high-performance referral engine, and I would like to build one for you too by:
- Improving your chances of getting referred by asking users for a referral right after a "WOW" moment with your product.
- Setting up the referral process so that both the user and the invitee have incentives to complete the action.
- Picking the highest performing referral channel by running experiments across multiple channels and incentives.
- Making the referral process absolutely painless by working with the product team to eliminate friction points.
Because referrals are so important to sustainable growth my objective will be to seek out and optimize referral opportunities across multiple touch points, from blog posts, emails (using NPS surveys), widgets etc.
The tools I use for maximizing referrals include Mixpanel, Referral Sasquatch, Groove, Wootric/Promoter.io/Delighted etc.
To unleash the awesome power of word of mouth and acquire loyal customers on the cheap who would spend more with you over their life time click on the button below.
To sum up:
When you are in the Emergency Room you have already angered the gods of SaaS, and you will have limited wiggle room.
You have to grow to get out of the hole but your options are very limited. The only way you can get back into black is if you:
- Keep customer acquisitions costs low.
- Increase customer life time value.
- Reduce revenue churn.
I can help you do all of that and more. But why should you listen to what I have just said? How well do I know my stuff? What are my qualifications? Those are fair questions.
Why should you work with me?
My name is Bhaskar Sarma and this is the part where I am supposed to brag about how I used ninja growth hacking tactics to grow a mailing list by 243% in 6 months or increased MRR by 1.4x.
I don’t have such numbers. They are meaningless without context and will vary by company, business model, and industry.
Instead, I have a story about how not focusing on processes and metrics can sink your growth ambitions even if you have a stellar idea.
Here's what happened:
In December 2015 I was hired as a consultant on a retainer to work remotely and grow this very early stage startup. The product was just out of alpha and there were no marketing assets: unoptimized website, no blog, no email list, no social media presence, no knowledge base, no tool stack, no data.
And to complicate matters further we neither had product market fit nor problem solution fit.
My mandate was to do everything necessary to get people to sign up, try, and pay for the product.
And like many startups, I threw a lot of balls in the air and attempted to catch all of them. I:
- Worked on the website copy.
- Created a content marketing calendar.
- Set up and wrote blog posts.
- Evaluated systems like Intercom, Segment, Mixpanel, Groove, Active Campaign etc.
- Raised multiple bug reports for the product.
- Reached out to prospective users for feedback.
- Designed email onboarding logic and wrote out the emails.
- Started working on an analytics stack to collect and measure data.
This isn't an exhaustive list, but as you can see I did the extreme opposite of focusing on one metric. I was soon enmeshed in tactical marketing hell and my to-do list started to look like this.
Finally, after 8 months of misdirected effort and confusion around product roadmap I had to end my stint without zero users or revenue.
What would have happened if I had followed my initial plan and focused only on growing a responsive email list?
We would have:
- A group of people interested in what we were doing.
- A library of updated content that would lend us credibility and boost our search rankings.
- Steady increase in top-of-the-mind brand awareness.
- Valuable feedback from real users that could validate or correct our assumptions.
- A large number of paying customers.
If I had stuck to my OMTM instinct I would be able to build a solid base of users, and then build up from there into greatness.
But there's another lesson I learned from this fiasco.
I learned that process trumps passion any day. And so, everything that I do will be based on building a repeatable process grounded in data which runs on a feedback loop.
For example, here's what I will do if you have trouble with onboarding users and converting them to customers.
That's the bird's eye view. Here's what I might actually do when I start to optimize your onboarding (and hence activation).
But I don't just stop at setting up systems and processes which keep on giving you leads and customers even after our engagement has ended.
I document everything: email workflows, triggers used in automation tools, results of A/B tests, learnings from blog posts which generate the highest clicks etc so that you will be able to build on these insights and not reinvent the wheel.
So, to sum up here's what will happen once you click on the blue button.
Discovery of the problem
I will send you a discovery questionnaire so that I can get some background information about your business, your challenges, and your goals.
It will be a short questionnaire and I will try to get as much information about your biggest business bugbear.
We will set up a Skype/phone call for 15 minutes where we will talk about your biggest business issue, identify your OMTM and give you some actionable advice about it. At this point my advice will give you some ideas on how to tackle growth related issues.
If you like what you hear and want me to do more we will go to step #3 and start a formal engagement.
Creating the Growth Plan
I will run a thorough audit of everything you have done until now to fix your biggest business issue and try to figure out why things are going sideways. You will also get a plan of action for optimizing your OMTM complete with benchmarks and targets, deadlines, testing plans, tool stack, action items...the whole nine yards.
If you decide that you have the in-house resources to implement this plan our engagement will end. But if you want me to
Executing the Plan
I will follow the plan that we both agreed upon and start executing on it. And because no plan survives the first contact with the enemy I will modify the plan as I execute it to keep it in sync with ground realities.
You will get weekly (or daily, when necessary) status reports and I will virtually be a part of your team during the execution phase.
Documentation and handoff
Once we have met the targets (lift in qualified leads by X%, improvement in free trial to paid customer rate by Y%) I will document our results, feedback from users, strategies/tactics that worked and failed, the tech-stack in use, the settings and workflows, and recommendation on the next OMTM.
This document will be like your startup's journal, and will allow you to build on my results and follow my processes to gain the same results even after my engagement is over.
Ready to get started?
However, you gotta hurry. I don't want to give you any bullshit scarcity excuses but I foresee a number of these calls turning into long term engagements. In that case, I will take only limited engagements per month and might not be able to work on your OMTM project even if we hit it off famously.
Who should not work with me
As a growth philosophy, OMTM is applicable for all kinds of businesses.
But I don't work with all kinds of businesses or companies. I deliver the best transformational results when you:
- Run the business on a SaaS model where users pay you on a recurring basis.
- Already have users or paying customers for your product.
- Are at least approaching product-market fit.
- Favor the idea of rapid experiments and multiple tests.
- Make data-informed decisions.
- Consider customer success as the ultimate goal to shoot for.
Paying customers is an important factor because I need raw data to base my decisions on, and it's sign that your product actually has real world value.
The other points are all mindset related: during the course of our engagement I will practically be a member of your team and we won't get far if we don't agree on certain basic principles.
So if you don't tick off these boxes we might be wasting our time.
Exponential Growth Ahoy With OMTM Optimization
So, to recap:
You are in a growth rut where nothing that you do is addressing urgent and bleeding neck problems either in your Acquisition, Activation, Retention, Revenue or Referral stages.
I will talk to you on a free no strings attached 15 minutes call and give you actionable ideas which you can test out to move the needle.
If you want me to do more than give ideas, I will run diagnostics and prepare a detailed execution plan for improving your OMTM.
And then, if you want to execute that plan I will embed myself with you and work on a time-bound basis to give you quick and big wins.
Interested? Hit the button below to get started.
P.S: If you already have a burning problem you might want to hurry, because why would you want to wait and bleed out more? Also, I take a limited amount of clients every month and depending on my project load I might not be able to give you much time.
And that would suck, because I want you to be the next growth success story (I need testimonials from you so that I can brag in this letter :D)