Scaling a SaaS company is risky business, but if you know where to start, you can set yourself up for healthy growth and continuous success. Find out how to start scaling a SaaS business the right way.
I like to lead with value, so here at the outset of this article, I’m going to give you the most important piece of advice about scaling a SaaS business.
Here it is... The Best Advice Ever About Scaling SaaS
Scaling takes time. Scaling a SaaS business should be a methodical and gradual process. You cannot do it all at once, and you cannot expect results overnight.
You should read that again.
(And then keep reading because I'll tell you a lot more about HOW to scale thoughtfully...)
Now, that may not seem like a glittering golden nugget of epic truth, but if you design your growth strategy around that advice, you will enjoy healthy, sustainable business growth and a successful, profitable SaaS business.
Sounds good, right? But, of course, that’s just the tip of the iceberg… Incorporating that advice will serve you profoundly as you go forward in business, but there’s a lot more to consider before you start scaling a SaaS product.
Let me tell you how to start…
Scaling a SaaS Business is Complex and Competitive
Growing any business is hard, and it's especially hard to scale a SaaS product in a world so saturated with other businesses selling software as a service. So... Is it worth it? Is it worth the careful, constant, and painstaking effort grow a SaaS business when there is so much competition afoot?
The answer, folks, is yes. It’s absolutely, definitely, yes.
If you can be precise and vigilant, a successful SaaS business can be insanely rewarding.
Do These Things Right
SCALE SLOW (and at the appropriate time)>
Scaling your SaaS business is a big, risky commitment, and you have to be certain your product and your team is ready for the change. This means there are a few critical things to cross-off your pre-scaling checklist before you plunge head-first. Namely...
build an MVP
keep at least 10 satisfied accounts (clients)
validate your product and product/market fit
augment your MVP (continuously)
If any of those things is surprising to you, slow down and stop trying to get ahead of yourself. It’s impossible to be in two places at once, so be where you are and take care to grow proportionally.
If you can confidently check-off each one of these points, then you are ready to start scaling!
Remember, we are still scaling slowly…
Whatever developmental stage your SaaS product or business is in, growth must be gradual. Use a trickle up approach and remember that...
You Have to Spend Money to Make Money
That’s an old cliche, but it still very much applies. So when you start planning your scaling process, be sure you remember that it’s going to cost you some money at the outset. Prioritize your scaling process with a generous estimation already in mind of how much it’s going to cost you to start growing.
Prioritize your scaling process based on user feedback and an informed product backlog. This will ensure you start scaling the most critical areas first and that you can accurately plan for the results of your scaling efforts.
Scaling your business should start with augmenting 3 essential areas of you business:
Here's a little more information about each of those elements...
How to Start Scaling Your CRM
If you ask me, everything starts with your relationship with your customers. This means you need a really powerful customer relation management system (CRM). If you already have a good CRM, explore how you can make it better.
If you don’t have a CRM in place, it’s time to implement one. After all (and especially so when you’re selling SaaS), a user experience begins the moment a prospect or client starts using your software. In this way, your CRM is more than just a management system, it’s the foundation of all of your customer relationships.
A powerful CRM creates happier customers, increases conversion rates, and increases customer retention. If you augment your CRM, it will grow your SaaS business.
These are the things you want your CRM to do for you:
gather and store customer data (this makes things easier for your clients and also informs your user metrics (which helps you make users happier))
be easy to use and have intuitive pathways between features (so that people will want to use it)
offer instant answers to common questions (using something like an FAQ resource where users can seek support)
offer a live-chat feature (easy points of contact enable you to immediately satisfy customer needs)
complete product usage information (so you and your users have a repository of critical information for using your SaaS (which can also be used like an FAQ or customer support resource)
How to Start Scaling Your Billing Structure
You gotta get paid, and having a great system in place to ensure you get paid is key.
Scaling your billing system enables you to be more efficient with your time and more profitable with each payment.
You know what’s a huge waste of time? Chasing money you should already have.
You know what else is a huge waste of time? Creating and sending manual invoices that you will then have to manually follow-up with (often multiple times) until that invoice is balanced.
So... Streamline the way your business handles accounting, and the benefits will compound.
Automate your billing structure with an efficient and transparent system. If you can do that, your accounting team will be more productive and, with an easier way to pay you, your clients will pay-on time with zero hassle.
Important Note: In any automated billing scenario where money debits to you from your customer, be sure your customers are aware that this will happen. It can be an “agree” situation, an “opt in” situation, or any other user approved situation so long as your client agrees to the transaction.
Speaking of automation...
If your SaaS business offers an introductory free trial, automate it! Build automation to update users on trial expiration times, automate the process by which your system begins billing after the free trial expires, and make sure your customer’s account automatically terminates if your prospect does not go forward with your service.
A Little More About Billing
Scaling your billing system starts with getting paid, but there’s more to it than cashing regular paychecks from your clients. If you are like many SaaS businesses, you can scale your billing system by offering tiered services with tiered pricing.
Tiered offerings enable you to appeal to a broader range of clients, and tiered pricing enables you to convert clients in spite of budget barriers. It also increases conversion for add-on or a la carte items at the point of sale.
If you have a powerful CRM in place, you can use customer data to find gaps in your SaaS product and broaden your offerings to fill those gaps.
A Little More About Automation
Usually money goes both ways, and this will mean that you are likely to encounter situations where you owe your clients credits or refunds. Ensure that this feature is part of your scaled billing structure so you don’t waste money while paying it out.
There are a lot apps that can help you automate billing. You can have something customized for your SaaS or explore solutions like Stripe.
Scaling Your SaaS with Automated Deployments
Automated deployments are awesome, but like all truly great things they require a lot of careful planning. If executed properly, adding and automated or continuous deployment system means customers can instantly access new software without any work on your part (or theirs).
Automated deployments should include automated testing and automated data backups.
Here are some things you have to do to successfully scale automated deployments:
strategize and implement a plan for continuous augmentation of your SaaS and continuous deployment of those improvements
choose an appropriate cloud management tool so you can operate and monitor more effectively
And BOOM! Those are the big 3 focus areas for scaling a healthy SaaS business. You're now ready to start slowly scaling your own SaaS product.
Scaling a SaaS business has some important prerequisites, but at the end of the day, if your business offers a terrific CRM, employs an efficient billing system, and strategizes for careful automated deployments, you are well on your way to a healthy, growing, successfully scaled product.
Always remember that scaling is gradual, and if you fully understand the goal and scope of your scaling process, you can lay the groundwork for a highly successful SaaS.
Want to grow your SaaS business with custom software? DevSquad can build it for you!
Want a little more? Click here to schedule a call with Phil, the serial entrepreneur who created DevSquad.