Given that 80% of companies used SaaS in 2023, starting one seems like an exciting opportunity and the most promising business. However, SaaS businesses have their dark side — they not only grow at a pace that usually surpasses initial optimistic predictions, they’ve got to keep up to stellar industry benchmarks or become doomed.
It’s not just some theoretical assumption — according to SaaS stats and benchmarks, software development companies with an annual growth rate of 20% have only a 8% chance of surviving.
In such a high-paced and volatile industry, organizational management can be a challenge even for experienced managers. It requires balanced decisions to avoid wasting budget that usually comes from scattershot approach to growth hacking.
What is growth hacking and how it can help you to grow faster through experimenting
The culture of experimenting among SaaS companies is still relevant. So-called “high-tempo” experimenting refers to testing as many ideas as possible over a short period of time to learn faster. The more ideas you’ve tested, the more you’ve learned and the closer is the small win. There is a theory that success in SaaS is all about compounding such small wins over time until it leads to substantial results. Ergo, if you don’t nurture the culture of experimenting within your organization, there is no place for you in this business at all.
- Generate ideas
After defining your product/market fit, following this simple scheme will let you focus on main processes and avoid getting into chaos.
Gather and analyze data
The initial stage requires you to monitor the behaviour of your customers closely. What things engage them most? Where do they bounce? What are the reasons for the bounce?
By analyzing the initial wave of customers that you’ve acquired, you pave the way for your future ideas and hypotheses.
Try to find out what makes your initial users abandon your product as well as where they drop on your website. The three main question that you attempt to answer here are:
- Who is my target audience?
- What are they looking for?
- What events cause them to abandon the product?
Every idea your team generates should contribute to your growth objective and describe ways of implementation. It should also come with an MVP version (test version) of it in case it has one.
All ideas are usually focused around Acquisition, Activation, Retention, Referral or Revenue.
The ideas are often generated through brainstorming with those worthy of submitting voiced on growth meetings. Each idea that gets the highest score in the result is shared with other team members and fixed someplace.
Prioritize your ideas
Prioritizing ideas is a duty of the “growth leader” of your organization. There are numerous ways of singling out the most valid idea, ICE Scoring being among the most popular.
That’s the stage where each idea gets assigned to team members to move forward. It’s important to fix the process of implementing each idea and ensure access to this database to each team member so everyone can see what is put to test and the outcome of it.
How many tests do I need?
Start from running 20-30 per week. Of course, the number directly depends on the budget & company’s size, however, failing to keep up to this number can make you lagging behind. The more experiments you run, the more you learn and the greater are the chances that some of them will produce dramatic wins.