While much of the world slowed down over the last two years, the move towards spending more time at home has seen the software market expand.
Growth, not survival, was a top three metric for 77% of the B2B software companies we surveyed in this year’s Nordic B2B Software Growth Benchmark. In fact, a quarter of respondents fell into our ‘growth champions’ bracket, reporting a growth rate of over 40%.
While many surrounding industries contract, the B2B software industry remains fertile ground for growth. So how can you make the most of this opportunity to ensure early and continued success? We’ve compiled three top tips – based on common attributes shared by growth champions – to help you seize this moment and join the software leaders finding their place in the new world.
Invest more in sales and marketing
Sales and marketing are often subservient to product development in B2B SaaS businesses – but they’re crucial to long-term survival. In fact, these teams make up 24% of the headcount in organisations we classify as growth champions, as opposed to just 16% for the rest.
A well-oiled sales and marketing machine is the difference between standing out and getting lost in the noise. A strategy that focuses on customer demand, customer experience and targeting real needs is what keeps your product in line with expectations (and keeps customers coming back for more). Sales and marketing are cornerstones of your business strategy — not second-class citizens to product features.
Make expansion a priority
It’s easier to experience a high growth rate when you’re a small company building its customer base. But if you’re looking to maintain this rate, it’s crucial to expand early into new geographies or verticals – software companies that stand still quickly stop growing.
If you hit the point where your conversions are stalling, it might already be too late. Instead, look at new geographies and verticals while you’re still in a good place to build on what’s already made you successful.
But don’t just go after anything and everything. Starting small is key, focusing on one new vertical or region at a time. It’s worth identifying where your strengths are and building iteratively from that, while tailoring your offering to your new chosen market. Then, it’s easier to pinpoint what’s working and what isn’t, so you can keep on the up and up — all while still investing in your sales and marketing for a much-needed boost.
Refine your SaaS success metrics
Many companies that are concerned with growth stick with what they know: sales, bookings, and recurring revenue. But measuring success by those metrics means you might be failing to capture what’s really important to your business – and optimize your response to it.
That’s why it’s worth exploring other metrics such as Net Revenue Retention, which measures the growth of your current customer base by calculating your upsell from existing customers, minus churn and downsell. It takes the temperature of your business, with a net revenue retention over 100% meaning that your business would grow even if you didn’t get a single new customer for a year.
If you don’t already measure the cost of acquiring a customer (CAC payback), it’s time to start. Remember to take all costs related to acquisition, including salaries, free onboarding, and even time spent from your CEO on sales. CAC payback measures how many months it takes for a company to earn back their customer acquisition costs, with an ideal time between 9 and 12 months. If you have a lower CAC payback time, it’s usually an indicator that you’re leaving money on the table and spend too little on marketing and sales.
Getting these SaaS metrics correct, and following up on a regular basis, is critical to make sure you’re on the right track and that you’ll hit your growth targets.
To get your hands on more growth insights, take a look at our Nordic B2B Software Growth Benchmark Report in just one click