Top 10 Field-Tested Strategies for Scaling SaaS Businesses Effectively

A study conducted by McKinsey & Company has shown that even startups that have managed to create successful products have an 80% failure rate.

This could seem disheartening at first. Indeed, the road from startup to scaleup is winding, uncertain, and fraught with many dangers.

For this reason, we've compiled a list of battle-tested strategies that some of the global SaaS giants used and continue to use with stellar results.

A few of these SaaS scaling tips are a bit unorthodox, but hey, fortune favors the bold as they say. So, let's jump right in and take a look at our first entry.

Leverage Radical Transparency

In the movie 8 Mile, famous rapper Eminem (basically playing himself) finds an ingenious way to win the final rap battle against the antagonist. Namely, he uses the fact that he's the one starting the rap battle and goes on to tell the crowd all of the antagonist's arguments against him, thus effectively nullifying them.

The antagonist, left with nothing to say, has to admit defeat, and Eminem walks away victorious. You can call this crazy or ingenious, but the technical term is radical transparency. And it's something that more and more companies are using to form genuine connections with their users.

Radical transparency is a bold strategy that entails sharing crucial information (including product roadmaps, successes, failures, and even financial data) about your business with your customers, employees, and stakeholders.

This raw, unvarnished communication appeals to users because it tells them you have nothing to hide. Sharing your journey, warts and all, makes your business appear authentic and approachable.

It also has the added benefit of providing you with tons of feedback and valuable insights. Customers who have access to your product roadmap will feel included in your journey and will likely share their two cents on the matter.

Users may also feel that they're part of something greater than a transaction, which would boost their loyalty and create many advocates for your brand.

Here are a few ways you can use radical transparency:

• Share your product roadmap.

• Celebrate successes but acknowledge failures and how you learned and improved from them.

• Publish some of your financial metrics.

• Let your users have a say in the development process by letting them vote on features, participate in surveys, etc.

Though not without risks, this practice can go a long way in helping your business scale to new heights.

Adopt a Reverse Trial Model

Don't you hate it when you subscribe to something for free, thinking you'll get to experiment with some neat options and features? Then reality hits, and you're left with a walking skeleton, the most bare-bones version of the product.

You're not alone; many people feel this way. In fact, reports show that users actually prefer something called a reverse trial model to the standard freemium model.

A reverse trial model is a business model that offers users a chance to try out all of the product's premium features for a limited time. Once the time is up, users who don't want to pay for continued use are downgraded to the basic model.

So basically, users who sign up get a full taste of all the best a product has to offer, and if they don't find the product to be a good fit – no harm done.

A study conducted by OpenView has shown that this model beats out the standard freemium model in terms of conversion, with the reverse model averaging conversion rates of 7-21% and the standard freemium model averaging conversion rates of 3-15%, respectively.

So, if you're unsure which approach to take, you should definitely consider reversing the freemium model.

It enhances user retention by allowing users to stay engaged with core features, even after the trial ends. Additionally, it boosts user engagement by allowing unrestricted access to premium features. This enables users to thoroughly explore the product and build a stronger connection to it.

Finally, it's rooted in loss aversion psychology, motivating users to upgrade after experiencing all the product has to offer, significantly increasing conversion rates.

Gamify Your Product

Gamification is using game mechanics and game design elements in a non-game context. Basically, it's taking what makes games fun and applying it outside the regular context.

Why do this? Well, like we said, games are fun. And, as is the case with video games for example, they can be addictive. The idea of gamification is to borrow some of this magic and add a bit of zest to tasks and activities that might otherwise be mundane.

Gamification is used by many businesses in a wide range of industries and SaaS is no exception. It's a fantastic fit for EdTech products and fitness apps because it uses psychology to motivate you to go the extra mile, learn that lesson, or do another set of pushups, even if you're not feeling up to par.

Duolingo, the world's leading language learning app, relies heavily on gamification elements like points, win streaks, and badges to keep users hooked and coming back for their daily lessons.

Fitbit's fitness app has users participating in various challenges and competing with friends. Users also earn badges by hitting milestones in regard to workout streaks and calories burned.

Beyond fitness and education, gamification is popping up in other SaaS spaces like project management and productivity tools. Apps like Trello and Asana use progress tracking, visual rewards, and team-based competition to keep users engaged and motivated. By adding leaderboards or task completion streaks, these tools turned dull workflows into fun experiences.

Investing in gamification means coaxing your users to stay engaged, form better habits, and enjoy the journey. If we piqued your curiosity, check out our comprehensive guide to get the full story on gamification.

Be Prepared for a Spike

Imagine you build a spectacular product; it's the best software within its niche. Everything went great. Word of mouth and marketing are spreading tales of your product far and wide, sales are booming, and positive reviews are flying in.

Suddenly, you have an influx of people eager to use your product. And hopefully, you're ready for it. Because if not, you're in a world of trouble.

With increased user demand comes an increased strain on your infrastructure, which could lead to:

• frequent outages

• crashes

• slow load times

• bottlenecks that disrupt core functionalities like data processing, user authentication, or API performance

• vulnerabilities in data storage, transfer, and security protocols

In short, being unprepared for success will drag your product down and make it unsuccessful in the long run. In light of this, here are a couple of things you should do to prepare before the customers start rolling in:

• Use cloud-based infrastructure – Cloud infrastructure was designed with scalability in mind, and platforms like AWS, Google Cloud, or Azure allow you to expand capacity on demand. This means any sudden spikes in users won't disrupt your services.

• Automate business processes – Additional customers won't just strain your infrastructure; they'll strain your employees as well. You should automate repetitive tasks like billing, data entry, and customer boarding to give your teams a breather. It will reduce manual errors and enable your employees to focus on more nuanced tasks.

Using these strategies will ensure your product remains reliable, responsive, and ready to meet the demands of paying customers.

Leverage Partnerships for SaaS Growth

Chances are that no matter how good your product is, it won't be able to address all of your customers' needs. You could expand on your existing software by adding a slew of options and features, but it's highly unlikely that you'll keep a consistent level of quality.

That's why our advice is to stick to what you're good at. If your company's great at building project management tools, there's no need to build a payment processor in-house.

This doesn't mean you won't have to address your customers' needs. What it does mean is you'll need to find companies that are just as great at building software and partner with them to give your customers the full range of services they desire.

All the major SaaS companies do this. For example, Zoom partnered with Otter.ai, an AI transcription service, to offer real-time transcription during meetings. Zoom increased its customer base by attracting users who wanted enhanced accessibility and note-taking features.

Here are a few things to keep in mind when searching for your ideal partner in crime:

• Be on the lookout for SaaS companies whose offering addresses gaps in your product. This way you can create bundled solutions and give more value to your customers.

• Try and integrate your product with widely used platforms for added visibility. Tying your software in with a major platform gives your users a chance to use your product in a system that's already familiar to them.

• Partnerships are a great chance to tap into your partner's existing customer base and enter new markets. The same goes for them.

• Choose partners that align with your long-term strategic goals. The partnership needs to add tangible value to your users. The partnership should address customer pain points, add value to your product, or create new revenue streams.

Build a Community Around Your Product

Humans are social creatures, and we have a strong need to belong. Cooperation is ingrained in our DNA.

Heavy hitters in the SaaS industry like Figma, Salesforce, Slack, HubSpot, Stripe, and many others know this and dedicate resources towards building large communities of like-minded individuals who become these brands' greatest advocates.

To reap the same benefits as these companies, you must decide on a few things when building a community around your SaaS product:

• Defining a Purpose for Your Community – Typically, your purpose should be to provide additional value to your users. This can take the form of:

  Networking – Build a hub for users to connect professionally.

  Knowledge Sharing – Create a space where they can share tips, tricks, and best practices.

  Skill Development – Provide users with resources to accelerate their professional growth.

• Choosing a Platform – Do a bit of digging and find out where your users already hang out and what their needs are. If they're already on Slack or Discord, use those. If they're on Linkedin, use it. Get to know your customers and take it from there.

• How to Incentivize Participation – Everybody loves a freebie. Your users are no different. Offer perks like early access to features or a special mention in your newsletter for the most active contributors. It'll make your users happy and keep the ball rolling.

• Creating Community Leaders – Recruit power users to be moderators and brand ambassadors of your product. Offer them free subscriptions or exclusive content, and they'll drive your engagement through the roof.

Building a community is a long-term investment. It won’t show up in your profit and loss statement today, but it sets the foundation for sustainable growth by creating loyal customers, positive associations and deeper product adoption.

Consistently Improve Your Product

Silicone Valley's Vallhala is full of companies that could have dominated the tech scene for decades. Before Facebook, Instagram, and the like, there were Friendster and Myspace. Before Google, there was AltaVista.

But barely anybody mentions those companies anymore. They could have hit it big. In fact, they had the great advantage of being pioneers in their respective areas. So what went wrong? Well, in short, they stagnated. Other companies that innovated more heavily lapped up their ideas, refined them and took their piece of the pie.

Google came in guns blazing and created a better search algorithm. Facebook made a cleaner, more intuitive platform than MySpace and Friendster. If there's a lesson that these fallen giants can teach us, it's that coming up with something first and resting on the laurels is dangerous, often fatal.

For SaaS companies to stay relevant and to have a shot at making it big constantly refining the product is key. Now more than ever gathering data from existing customers and potential ones is a piece of cake. Analyzing customer feedback and making product adjustments based on it is crucial for companies that wish to stay relevant and competitive.

By looking for pain points and prioritizing the most impactful enhancements that address them SaaS businesses signal a strong commitment to user satisfaction. And they're rewarded for it. In a landscape where resting on past successes can be fatal, staying proactive and heeding your customers' advice is the best safeguard against becoming another forgotten pioneer.

Track Key Metrics

Every business needs to track its performance. However, it can be dull and uninspiring drudgery, with some spreadsheets so convoluted that even an experienced accountant would wince.

Nonetheless, keeping a close eye on the numbers is necessary, as they're the best indicator of how the business stands and where it's heading.

Not all metrics are equally important, though. Most SaaS companies tracks approximately 25-40 of them, but we've listed out the top 5 that you definitely must keep an eye on:

1. Monthly Recurring Revenue (MRR) – It shows you how much revenue you're collecting from your users per month. Monthly revenue generated from subscriptions is the lifeblood of any SaaS business and is essential for tracking your growth over time as it represents your company's predictable income.

2. Customer Lifetime Value (CLTV) – Represents how much revenue your business expects to garner from a customer during the course of their entire relationship with your business. It's nifty because it tells you how much you can spend on acquiring a customer while remaining profitable in the long run.

3. Customer Acquisition Cost (CAC) – Measures the cost (sales & marketing efforts) of acquiring new customers. High CAC is unsustainable over long periods. A good rule of thumb is that the ratio between CLTV and CAC should be 3:1 or higher to ensure scalability.

4. Customer Churn Rate (CCR) – Shows you the number of users your business has lost within a specific period. This metric is important because customer retention is cheaper than acquiring new ones. High churn could also mean users are not finding long-term value in your product.

5. Net Revenue Retention (NRR) – Measures revenue growth from existing customers, accounting for expansions, downgrades, and churn.

For a more thorough overview of metrics, check out our blog post on the subject.

Minimize Customer Acquisition Costs

Scaling your SaaS business entails increasing the number of customers. Obviously, there's no point in having a stellar product and consistently innovating it if people aren't using it.

In the last section, we mentioned CAC (customer acquisition cost) and how it's unsustainable over long periods. This is self-explanatory. If the price of acquiring a customer ends up costing your business the same as what you're making from them, you're stuck at square one and aren't growing.

Your funds dry up, you're no longer innovating, and before long, the Valkyries come to take you to Silicone Valley Valhalla. Jacking up your prices might work in the short term, but it's bound to fail in the long run.

A shrewder approach would be to optimize your marketing efforts and your sales process. Here are a few things your sales and marketing teams can do to help you lower CAC:

• Optimize Channels – Invest in channels that produce high-quality leads at lower cost and phase out the ones that don’t. Focus on content marketing strategy, SEO, and thought leadership to drive organic growth and reduce dependence on paid ads.

• Improve Sales – Shorten sales cycles by focusing on warm and qualified leads and using CRM. Automate repetitive tasks like follow-ups to increase productivity and reduce wasted resources.

• Use Customer Referrals – Create referral programs that incentivize happy customers to promote your product. Word of mouth typically brings in high-trust leads that convert faster rapidly increasing your customer base.

• Onboard and Retain – Simplify onboarding so users can get value fast. This increases satisfaction and retention. Happy, loyal customers generate repeat revenue and organic growth through advocacy.

• Segment Your Customers – Use data to segment your users and target with precision. Targeted campaigns get better conversion rates, so every marketing dollar counts.

Make Customer Support the Pride of Your Company

Having a superb product that users adore is all fine and dandy, but the reality is, at times, it will fail. Misinterpreted instructions, outages, and various glitches – the reasons are numerous and, ultimately, unimportant.

The important thing is how your company handles the problems as they arise. Your customer support department is your first line of defense, but it can be more than that. If organized properly, it can become a well-oiled machine for turning flaky customers into your company's greatest advocates.

There's a phenomenon called the service recovery paradox that states how, under certain conditions, customers will think more highly of a company after it has corrected a service failure compared to customer satisfaction prior to the failure.

Turns out all those pesky problems can actually be great opportunities for a SaaS business to solidify and potentially even improve its relations with users. They give you a chance to exceed customer expectations.

By focusing on customer success and ensuring users can achieve their goals with your product, you turn satisfied customers into loyal advocates who drive organic growth.

Exceptional service transforms your support team from a defensive operation into an offensive juggernaut. Little things like taking a proactive approach to solving problems or following up after an issue has been resolved can leave a lasting impression.

Those positive impressions add up, and if they end up traveling by word of mouth, as they usually do, they can act as rocket fuel for your growth. Ultimately, customer support becomes not just a safety net but a strategic tool to enhance loyalty and attract potential customers.

Conclusion

Scaling your product will take time and patience. Your product might be your baby, but at the end of the day, it's all about your users. Being raw and unvarnished shows them you've got nothing to hide.

Giving them full access through a reverse trial model lets them use all the goodies your developers poured their hearts and souls into. And building a vibrant community around your brand? That's like creating an army of advocates who'll stick with you through thick and thin.

Remember not to get too comfortable; SaaS Valhalla is full of companies that rested on their laurels. Keep innovating, keep measuring key metrics, and don't forget keep your acquisition costs in check. Your analytics dashboard is not just something to be glanced at once a quarter.

And when things go wrong (which they almost certainly will), that's your moment to shine. Talented support teams have the Midas touch and can turn complaints into growth rocket fuel. For them, each complaint is an opportunity to prove why your users made the right choice by picking your product.

The advice we've shared with you isn't theoretical. These are battle-tested approaches used by some of the most successful SaaS companies worldwide. Choose the ones that mesh best with your business model, adapt them, and start implementing them. You won't regret it.

And keep in mind that growth isn't about explosive overnight success. It's about making clever, calculated moves that compound over time. So be bold, take that first step, measure your progress, adjust your approach, keep pushing forward, and the results will come.

No Time Like the Present

Have questions and ideas about SaaS but aren't sure where to start? At brigit.dev, we specialize in building custom software solutions tailored for growth-driven businesses. If you need

• a robust architecture

• user-friendly design

• innovative features like AI and blockchain

We’re the people to call. Schedule a free consultation today and let’s build your SaaS business together.