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Three factors that might be hurting your growth

July 27, 2017

 

 

Every self respecting SaaS business is investing in battling churn or busy investing in a great customer success initiative. I am sure at the time of reading this blog post you too can relate to some of the initiatives I have mentioned.

 

What is concerning, is that many organisations today are too tied up with traditional initiatives and fail to see factors that can help them grow.

 

At InsideSelling.org we have seen great companies lose out on growth opportunities purely because they were too busy following practices from the early 2000's.

 

Here is a list of factors that effect growth that you might be directly or indirectly overlooking:

 

1) Not looking at the bigger picture (Negative Churn v Churn)

 

First up let me start by introducing the concept of negative churn.

 

Simply put, negative churn is when your organisation is actually making more money from existing customers than you are losing from churn.

 

To quote a simple example: Let's assume you have 1000 paying customers and each pays $10/month. So your overall MRR (Monthly Recurring Revenue) is currently 1000 x $10 = $10,000. 

 

Now let's say for various reason you lose 100 of these paying customers but at the same time you manage to get 100 customers to upgrade to paying you $30 a month. 

 

So where does that leave you as a C level exec/business owner?

 

Traditionally, you would mourn the loss of 100 paying customers but let's analyse the situation:

 

Before churn your overall MRR was $10,000. 100 of your customers now pay you an additional $20 a month. This means that from those 100 you now get $3000 revenue and from the remaining 800 you get $8000 revenue.

 

This makes the overall MRR of your organisation $8000 + $3000 = $11,000!

 

Traditionally, you would try and fill the gap in revenue by acquiring 100 new customers but by nurturing your existing customers you can now spend less on new business acquisition!

 

So don't just do your math based on one end of the spectrum. Build a concrete sales and account based expansion strategy that incorporates both churn and negative churn. 

 

Which brings us to the second growth factor you may be ignoring. 

 

2) CAC > ABE i.e. lack of Account Based Expansion

 

Apologies for the math formula but here is the what we mean. The Cost of Acquiring a Customer (CAC) is always greater than growing revenue through Account Based Expansion.

 

In a nutshell, your existing customers are your real goldmine.

 

Unless you have a very advanced product model or have literally exhausted your ABE strategy it is worth investing in a sales team that deals exclusively in ABE.

 

Depending on the products you offer, ABE can help revenue grow via:

 

a) Upgrading existing accounts

b) Selling to more teams within existing account (also known as Expansion in sales jargon)

c) Cross selling products 

 

 

By no means does this mean that you can ignore new customers, all this means is that your traditional growth metrics will need to work on both new customer acquisition and ABE. 

 

Unfortunately, there is no simple formula that can tell you when is the right time to go for an ABE team but professional consultation can help you in the right direction. 

 

We found a lovely blog post that outlines the advanced mathematics involved in the metrics discuss so far and recommend you have a read through here. 

 

3) Lack of inbound initiative

 

Great sales team: check.

Great sales leader: check.

Quality inbound initiative: Huh? What?

 

If your game plan is solely to rely on an outbound sales team to get you business and leads, then you might be leaving a lot of money on the table. 

 

First up, a dedicated outbound SDR team or sales team is an added cost to your organisation. Second, customer loyalty and word of mouth are not a given.

 

By no means are we saying that outbound is dead but outbound as a strategy should go hand in hand with an inbound initiative. 

 

Yes, hiring a growth/marketing team is also a cost but the long term results far outweigh the benefits of ignoring an inbound initiative. 

 

Only when you have a cohesive inbound strategy in place can you make sure that you have all your bases covered. It's easy to say you are a niche market or that you really don't need added expense but the reality is that buyers are more empowered than ever and unless you offer a product that no one else makes, they will research. 

 

A good inbound initiative will ensure that the right prospect gets to you and you. This means more time and effort is spent qualifying and closing business.  

 

It is not surprising that most SaaS companies are now investing in their inbound initiatives. 

 

Need data? Here you go.

 

PS: If your boss still won't listen to you and feels things are fine without an inbound initiative, put him in touch with us we are confident we can change his mind. 

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