5 SaaS Growth Mistakes to Avoid
I have worked in a full-time capacity at four early-stage start-ups, and my main KPI in them was practically the same: “Help grow the business.” I was fortunate enough to experience the growth of firms from ~$1M ARR to ~$10M ARR. These accomplishments were not free of mistakes. Today I’m sharing the top 5 mistakes I have made in growing SaaS businesses so you should not:
- Not Defining Your TAM
I get it: it’s early days. You are pressured to gain new customers and increase ARR ASAP; otherwise, you’ll be irrelevant. Your instinct might be to chase every possible deal: “We sell to the financial sector, but why not try Government?”, “Our best product-market fit is in Fortune500, but that mid-enterprise could benefit our product.”
Do these sound familiar? I’m not trying to discourage you from expanding into other segments. You should, as long as there is a fit in that particular segment. If not, you should let go of the desire to go after anything other than your TAM (Total Addressable Market). Otherwise, you’ll get disappointed. Identify your TAM and Ideal Customer Profile, aka, the persona, industry, company size, geo, and every other characteristic that makes your product a differentiated offer.
If you don’t do your TAM analysis and create TAM-specific programs but instead create your programs for a general audience, you’ll waste your time and resources. In early stages, it’s critical to focus. As Geoffrey Moore suggested, focusing on short-term will bring you long-term success. Focus impeccably on penetrating your initial TAM before moving to adjacent markets.
2. Assuming One Method Works Everywhere
Throughout my experience, I couldn’t find that magical “the flagship campaign” that works for every company. In one of the companies, I got the highest ROI from Social Content & Infographics combo, in another one from Webinars, and in another one via Detailed Industry Research Reports. And there is Free Trial that happened to be my highest ROI initiative during my corporate position at Nvidia.
Whenever you start a new growth initiative, you have to understand the market dynamics, buyer personas, sales cycles, and competition before launching your programs. Feel free to ignore advice that doesn’t pertain to your business. Just because a call center or webinar series worked for one company doesn’t mean they’re good for you. You know your market much better than anybody else, so make sure to find your unique programs that accelerate your growth. Unfortunately, no single unique campaign works for all startups. So, don’t blindly copy the programs executed by Box, Intercom, or Slack.
You should also dynamically modify your initiatives as you grow. One example of this is Salesforce. When it was a small startup, it was applying guerilla-marketing methods, i.e., hacking a Siebel event with protesters. Once playing the role of David, it has now become the Goliath, i.e., spending $5B+ a year for S&M expenses.
No matter where you are in your maturity, you have to be innovative in your growth initiatives: try breaking the rules; be bold and persistent. My motto has always been “Break first, and apologize (if necessary) later.”
3. Not Experimenting Enough
Based on your industry, size, and budget, there are hundreds of ways you can grow. The challenge is to identify the correct channels, campaigns, and tools. During SaaStr 2018, Mada Seghete of Branch said: “We allocate a significant portion of our time and budget to experiments with the expectation that 50% of them will fail.” Find your balance between scaling existing projects and experimental projects, but if you don’t put enough emphasis on the latter, you’ll miss out on finding new opportunities. Execute a variety of campaigns and give each of them ample time to see their outputs.
Experimenting is more than A/B testing your website messaging. It’s about looking at the problem from a bigger picture and trying new approaches. You should be able to allocate your budget to meetups one month and executive luncheons the next month, and compare the ROIs of these two campaigns. The more the experiments are unique, the more chances you will succeed (See #2 point above)
Finally, make sure to use the right metrics. Understand what’s most important for your bottom line and go after those KPIs. Hint: it’s almost always not the MQL.
4. Not Aligning with the Rest of the Business
The most successful growth stories are the results of a team that is executed with harmony by Product, Marketing, and Sales departments. If you create a marketing initiative or try to sell a feature that is not in the product roadmap, you won’t be successful. Similarly, if you spend R&D resources for a feature that no customer cares about, the investment won’t be fruitful. Therefore, create growth initiatives by jointly working with other department leaders.
Communication is vital as that’s usually the number 1 reason for any misalignment. Collaboration among teams must be supported by the CEO, and if it’s not, it’s up to you to explain to other teams’ members that you are all in the same team with one common goal before any departmental priorities.
If you’re a CEO, foster collaboration and demote departmentalization from day one. That culture will support healthy growth down the path. If you’re a department leader, make sure to understand others’ goals and how you can collaborate with them. In addition, spend time with your peers outside of work. If you’re a Marketing Manager and have not yet had a beer with your Product Manager or Account Exec, you should. ASAP!
5. Not Allocating Enough Resources
One of the big mistakes in growth initiatives is starting a campaign with less than enough resources. Say you learned that there’s a big opportunity for you to sell in Japan. You can’t do that with one remote salesperson in Utah. Similarly, if you think a particular trade show might be valuable for you, you have to invest in it.
To sell in Japan, you have to recruit and train Japanese salespeople in Japan plus deal with possible partners/resellers and give them some time to get up to speed. To execute that trade show, you should do more than send an employee to walk the floor. As a starter, you have to have a booth, outreach attendees before, and promote (for more, take a look at this post on getting the highest ROI from trade shows)
Finally, if you want your program to succeed, you cannot put an inexperienced person in charge of it. It would be unrealistic to expect your SEO to perform well if you assign it to a junior employee with limited experience. If you rush your initiatives without allocating enough resources and budget, you set yourself up for failure.
These are the top 5 growth mistakes I encourage you to avoid. To succeed, understand your TAM, find your unique campaigns by doing enough experiments with the right KPIs, align with key stakeholders and allocate enough resources for your programs. Happy Selling…
