For our SaaS Commerce Trends: 2020 Report, we conducted a survey across hundreds of decision makers in SaaS companies based in the UK and Europe with between 1 and 500 employees to bring you data-led insight into 5 key growth levers. It may be unsurprising to learn that the more routes you take to grow your SaaS company, the greater success you’ll experience. But what do those routes look like? And what successes and difficulties have SaaS companies experienced taking these routes?
By gathering data from thousands of SaaS companies, we’ve identified that the 5 key growth levers that companies are taking to succeed are:
- Moving Upmarket
- Moving Downmarket
- Expanding Internationally
- Expanding your Product Suite
- Optimizing Monetization
The big findings
Our independent research found that companies who’ve used between 3 and 5 growth levers over their lifetime tend to have a higher ARR growth rate than companies that have used 2 or fewer levers.
So, what are SaaS companies prioritizing?
Interestingly, our research uncovered that nearly half of SaaS companies who haven’t already taken the leap globally plan to expand internationally in the next year (45% of those surveyed said this) while a whopping 72% of SaaS companies we spoke to said that they rework their pricing either regularly or semi-regularly.
We found moving upmarket and expanding your product suite to be the top 2 most popular growth levers taken by SaaS companies - and also the most popular growth tracks to be used in the next 12 months by companies who haven’t already done so.
Of the SaaS companies we surveyed, 47% had grown by expanding their product suite, while 44% achieved scaling success by moving upmarket and selling to larger customers.
However, we’ve discovered something that doesn’t quite add up…
Are SaaS companies focusing on the wrong thing?
The graph above shows the percentages of our surveyed SaaS companies who have taken each growth lever. The highest percentage of companies are opting to expand their product suite, while the lowest percentage of companies are optimizing their monetization, at just 18%.
Our research also unveiled that the growth lever having the highest impact on revenue growth is better monetizing.
Why, then, is optimizing monetization the least commonly used?
From Paddle’s conversations with thousands of SaaS companies whose checkouts we power, we’re noticing a lot less focus on product expansion in order to grow and a shifted emphasis onto monetization and pricing optimization. This trend has been charted elsewhere in the SaaS world, too, with Profitwell’s blog post noting the decreasing importance of features to consumers:
“In the world of B2B software, core features, as well as traditional add-ons and differentiable features like single sign-on, included analytics, and the like have lost anywhere from 60 to 80% of their value in the eyes of consumers the last six years” - Neel Desai, Profitwell
Our findings indicate that SaaS companies could therefore be focusing on the wrong thing, pouring their efforts into releasing new features as opposed to fine tuning their billing model to ensure they’re getting the most value from their current customers using their current product.
Download our SaaS Commerce Trends: 2020 Report for the full breakdown on each individual growth lever. How can you use each lever to grow? What successes and difficulties have SaaS companies experienced taking this growth lever? Which companies have achieved success this way? From stats to case studies, our report is your one-stop growth shop!