Growing Your SaaS Business in 2021: Are You On the Right Track?

Despite ever-changing business landscapes and turbulent economies, the SaaS industry is set to see exponential growth in the years to come. 

Data from Synergy Research Group states that the market will grow by 30% year over year, with revenues projected to reach $233 billion next year. Since 2020, several SaaS companies have dominated the market—including Zoom, Dynatrace, and CrowdStrike—and instantly positioned themselves as leaders in the space.

Based on these figures and the current high demand for SaaS solutions, it’s safe to think that there’s nowhere to go but up.

Now, we’re already more than halfway through 2021—how is your SaaS business doing as you move towards sustainable growth?

Growing by leaps and bounds, or bound to fail?

For your SaaS business to successfully surf the tides of growth, here are the key metrics to evaluate to ensure that you are on the right track.

1. MRR & ARR

Your monthly recurring revenue (MRR) and annual recurring revenue (ARR) are just two of the most crucial finance metrics you should be looking at regularly. Compare your current MRR to that of the same month in previous years to spot changes and get a firmer grasp on trends in certain seasons.

2. Pricing

We go back to basics—if you are using the right pricing model for your business, it will reflect how effective your marketing plan is and how well you support your customers in their buyer journey. Is your current pricing model optimized? Is it helping you capture leads and contribute to your conversion rate? Or are your payment options not flexible enough that it drives potential customers away? Whether you’re using the Freemium model, pay-as-you-go, or a feature-based one, assess if it still gives value to both your business and customers.

3. Monthly Active Users (MAU)

Check the number of your monthly active users (MAU), so you can measure your levels of engagement. MAU is indicative of user growth and is among the first metrics that investors look at to understand how your company attracts and retains customers. It also often dictates your company’s stock price, particularly that of social media platforms.

4. Systems Integration

SaaS companies have embraced AI as a part of their operations—if your resources allow. Still, if you haven’t considered automating your processes yet, you’re missing out on many benefits. Automation reduces the need for manual intervention on otherwise tedious tasks, thus freeing your staff to focus on other essential parts of your business, such as customer success and engagement.

5. Churn Rate

Customer attrition continues to haunt SaaS businesses anywhere, and if you have a high churn rate, you might want to rethink your customer retention strategy. 

One example of a SaaS company that effectively reduced churn is the online money transfer service TransferWise. Initially, the company was struggling to retain customers as people were more reluctant about the safety of doing monetary transactions online instead of going to an actual bank to have them processed. For this reason, TransferWise had a bit of trouble keeping a steady flow of usage on the site, with most customers not doing repeat transactions.

The company decided on a solution: they will focus more on supporting users across every touchpoint to guarantee customer safety and satisfaction. At present, TransferWise successfully grew their customer base mainly through referrals from happy users and monitoring their net promoter score (NPS).

Maintaining Your SaaS Business’ Health

Growing your SaaS business involves continuously testing out new ideas until you figure out what will work best and dealing with learning curves in identifying what will support your goals and objectives in the long run. The metrics we’ve listed above are just some of the areas you should regularly monitor to ensure that your business will stay resilient and adaptive to future trends in the SaaS ecosystem.

 

Join us for our upcoming webinar: Automating and Optimizing Finance Operations At Scale on September 22. 

 

Photography by Adeolu Eletu via Unsplash.

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