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3 revenue resources to optimize for SaaS companies to maximize growth

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During the early stages of SaaS companies, their primary focus is to grow the user base and start building revenue momentum from there. This is only sustainably profitable if those customers stay, renewal after renewal or upgrade. Obtaining new customers is always an objective for any business but so is customer retention. Imagine the impact of positive word-of-mouth from existing and returning customers – referrals are a huge source of potential revenue when done right. Not only is the company reputation enhanced but it makes it a lot easier to attract more customers.

In Cloudstrategies’ article: “Maximizing revenue for SaaS companies is more than customer acquisition“, Dave Key states how important it is to stay close to the customer especially in a recurring revenue environment. Companies need to understand how to build up customer loyalty with constant engagement and monitoring. What does that mean? Understand how your users are using (or not) your product, the pattern of their usage, what they’re saying on social channels and analyzing all their interactions with your business as a whole (i.e. what was their implementation experience like, what have they contacted support regarding, what kind of interactions did they have with your sales people, which marketing efforts have solicited an action from them, etc). Using Salesforce and Netsuite as his “World Class SaaS” examples, he illustrates that a good chunk (67.7%) of their revenue comes from existing users. And we all want to learn from the best, don’t we?

(source: Cloud Strategies)

Think of all the effort, resources and marketing dollars that are put in winning each customer, you don’t want to start from scratch each time. It’s definitely a lot more costly to replace an existing customer than retain one, and similarly it’s easier to upsell and expand an existing one than selling to a new one. This is why Dave says the best SaaS companies optimize by focusing on maximizing their revenue growth and minimizing the cost of growing their revenue, especially in these 3 areas:

1) New Customers
2) Incremental Sales to Customer Base (aka upsell/cross sell/upgrade)
3) Retaining the Customer Base

We all like making new friends but old ones are as solid as gold.

Jill Rubin

Jill is a senior marketing and business development executive with experience leading successful teams in both large companies and startups. She has taken companies from early stage to strong revenue growth and propelled established businesses to industry leadership positions.

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