Archives for posts with tag: Scale

A while back I wrote a post called Churn or Growth for Startups, and referenced the excellent content from the VC blogger Tom Tunguz. The answer was churn.

What should be the focus for the SaaS company looking to scale its business and grow at a rate that attracts heathy valuations and juicy multiples for an IPO or an exit? It’s grown by bringing on new companies and keeping them, so surely it should keep adding new logos, right?

The beauty of the SaaS model is that on the first of the year you can count on the revenues for all your customers who are renewing their annual commitment. Going from $80m to 100m in one year may seem like a giant jump, but the successful SaaS company has close to the €80 coming in during month 1, so it’s not such a big leap and, indeed, many such companies see themselves growing at phenomenal annual rates, far in excess of the 25% in my example.

The scaling company should focus on keeping and growing its existing customer base.

Have a look at this post from Mr Tunguz, which he said in an email recently was far and away the most popular post he did in 2018, 10 times more popular in fact than the next most popular post. Which is intriguing, since the post he links to is from 2016…

So startups should focus on preventing churn, and more established companies should focus on renewals, which is to say they should focus on preventing churn…

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There is a term in sales remuneration called OTE. It’s a three-letter acronym – aka TLA 🙂 – naturally. OTE stands for On Target Earnings or On Track Earnings, though I prefer Opportunity to Earn myself. In sales jobs you can have a base salary element and a commission element that together give you your OTE if you hit your sales quota.

In a previous post I talked about the importance of having a product/market fit. Once you have that, then you need to scale your business so that you can capitalise on your potential. Your ‘opportunity to earn’, therefore, is to be found quite literally in the word ‘promote.’ To attract the right customers in the right numbers, you need to effectively promote your business.

If you’re a business owner/manager with a successful product, you want to take your business to the next level and you think the key is something to do with this marketing lark, here are some things to think about.

– Do you know your market? Can you profile it, describe it, and define it, tightly?

– What slices or segments make up your market? Remember that you can slice the market ‘pie’ according to things like region, industry, size etc, but also according to what is important or needed by customers. How you segment your market is crucial.

– Which segments of the market do you want to sell to? Even though you want to grow, you can’t be all things to all people. Well, you can, but not for long.

– What are these buyers like? What are the buyer ‘personas’? How do they prefer to buy?

– How will you position yourself to these segments? Positioning is the third leg of the segment-target-position stool on which will sit much of your go to market plan. By ‘position’ I mean your messaging, or how you describe your value to customers.

– Does your brand truly reflect where you’re going, not where you are or where you’ve been?

If any of this is alien to you, invest in someone to help you figure it out. It’s the key to unlocking the OTE at the end of promote.