Sales Growth in SaaS Product- The Scaling stages

Learn the stages of sales growth in SaaS product


Explore the right conditions for change

There are three-stage of the sales funnel for a SaaS product, namely: Awareness, Education and Selection. In the awareness phase a potential customer discovers the existence of the product. He/she also becomes aware of the problem and the negative impacts of the problem going unsolved. In the education phase the SaaS marketer presents her product as a solution. Also, the prospect explores alternative solutions during education phase. In the selection phase the prospect selects a particular product and signs up for a trial.

However, the sales cycle doesn’t close here. A sale is closed only when the trial user converts into a paying customer. It happens at the end of a successful trial period with the customer upgrading to a paid plan.

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A sale is closed only when the trial user converts into a paying customer.

Beyond the stages of the sales funnel, there are three more phases of significance here: Onboarding, Impact and Growth.

Onboarding

Once a prospect signs up for a trial she is onboarded. It means creating an account for her business, setting up the system, data migration, integrations and user training, etc.

Impact

This is when a customer tastes an early success using the SaaS product. A quick fix solving a low hanging problem for the user is the key here. Impact is the result that the customer was looking for.

Growth

Customers buy a solution with a desired result. They don’t care much about how you solve the problem as long as you solve the problem within his budget and time. Growth happens in the form of an upgrade, renewal or referral when we have created a remarkable first experience (let’s call it RFE) for the user and solved a real problem he or she had.

Let’s have a quick look at a growth-matrix for a SaaS Product

In this 2X2 we have product features (existing, new) on horizontal axis and user type (existing, new) on another. When we sell the same feature to the same user, it is called renewal. When we sell the same feature to a new user, it is called re-selling. If we sell a new feature to an existing user, it is called upsell. Finally, if we sell a new feature to a new user, we might call it a cross-sell.

The typical growth journey of a SaaS product can be put into four stages:

Stage 1

It starts with onboarding some prospects in a target market as trial users, then creating an early impact to ensure renewal of these trial users into paid customers.

The goal here is to ‘recruit’, say, your first 100 users, iterate quickly through early versions to get closer to solving the right problem for the right person.

Stage 2

In this stage we sell the same product features to many other similar users (resell).

The goal here is to increase our reach to 1000s of customers and continue rapid learning and product innovation.

Stage 3 

Till now if the product-market-fit is reached, the company ventures into developing extended features for the same customers hence gets into upselling.

By this time your offerings are getting matured. The goal here is to scale within the same domain, upsell new features. You might have up to a million users at this stage.

Stage 4

At this stage the company has more information about the market and the need for the end-users. Hence it might pivot or expand into adjacent markets by building a new product or a new feature for new customers.

The goal is to sustain growth and protect the business you have built through deliberating on all four levers of growth.

There are two necessary conditions for change for a SaaS Product:

  1. Broaden your definition of a sales funnel from a three-step (awareness, education, selection) to a six-step (also onboarding, impact, growth) process.

  2. Identify your growth stage (among the four described above) and align your sales and marketing team accordingly to create maximum sales using the four levers of growth (renew, re-sell, up sell & cross sell)

Read the three-step solution in overcoming the top five marketing challenges in SaaS industry.

Avijit Dutta
Avijit Dutta
Avijit is a seasoned industry expert and a sharp strategist. Alumnus of Jadavpur University and IIM Bangalore he writes on innovation and entrepreneurship.

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