For every successful SaaS company that has grown over 50% year over year — including such well-known companies as Zendesk, Box, Hubspot, and New Relic — there are thousands of startups that have failed.
In fact, according to a recent McKinsey study Grow Fast or Die Slow,
When you’re a startup, it’s fairly easy to double revenues in a month (for example, going from $10K to $20K). As you start to grow, you can expect to double revenue in a quarter, then in a year. But as you get larger, it’s very, very difficult to double your revenues in these same time frames — after all, how many companies grow from $50M to $100M in one month?
So how can SaaS companies grow, grow fast, grow efficiently, and keep growing?
In working with hundreds of SaaS companies, we’ve learned that the solution to sustaining a high growth rate is to diversify your approach to growth and embrace multiple growth strategies.
We’ve boiled it down to the top 10 essential growth strategies: this article highlights the first – Create Tailored Product Editions.
We know that in order to scale and avoid being priced out by competitors, SaaS companies need to offer more than one product edition. The question is: how can you best design your editions to move your growth forward?
The best SaaS companies smartly package their product capabilities so that:
Editions and add-ons are just means for monetizing different parts of the customer base.
Zendesk is a great example of a company that continually experiments with tailored product editions, to design editions that are engineered to increase deals and ACV per deal — and that align with their growth strategy.
Back in 2010, Zendesk made some pricing changes that resulted in reported price increase of up to 300% for some customers. After tamping down the PR firestorm that resulted, Zendesk learned some valuable lessons about crafting meaningful editions and communicating their value.
Fast forward to the present time at which Zendesk is used by 200,000+ organizations worldwide, with a reported $208.8M in revenue for 2015.
Essential: Their low-priced starter plan for $5 is a clear example of going downmarket to capture the long tail — and an easy way to onboard new customers.
Team: Directly marketed to small teams (even in name) and offering everything SMB need.
Professional: Offering more feature functionality for established teams — clearly the option they’re pushing.
Enterprise: More features and flexibility to scale with larger companies.
Of course this isn’t the locked-down final incarnation of Zendesk’s product editions, nor is it the end of their pricing and packaging journey. Zendesk, like all growing SaaS companies, knows that pricing and packaging are dynamic. It’s an ongoing process of mapping product editions to strategy.
1. Change pricing in a central location so that it updates across all systems and sales channels (online, in the quoting tool, etc.)
2. Add new products, editions, and free trials over time without SKU explosion
3. Enable quick testing and iteration of pricing and packaging
