Comprehensive Guide to SaaS Growth Strategies

The SaaS industry is plagued with a stark reality: about 90% of them fail in the beginning stages. But with SaaS growth strategies, you can do more than just keep your company afloat. In 2014, Salesforce brought in about $4 billion of revenue. In 2024? About $34 billion. 

No matter how complex Salesforce’s growth strategy, it started like any other: with the right data and metrics

In this comprehensive guide to SaaS growth, we’ll cover important metrics, growth models, key strategies, and how Grow Slash helps grow SaaS brands with our performance tracking data and strategic insights. 

1. Key SaaS Growth Metrics

SaaS growth refers to a company’s increased revenue and market share. In other words? A boost in customers and customer value. 

But you can’t measure SaaS growth without an eye on your company’s performance, which we can measure with key SaaS metrics. 

SaaS metrics fall into two categories: financial, which are revenue-focused; and subscription, which are customer- and lead-focused. 

Here are the most critical metrics for SaaS growth to keep tabs on: 

• Monthly Recurring Revenue (MRR): This metric measures all revenue brought in each month.
• Customer Churn Rate: Churn refers to the percentage of the time where customers halt payments with a SaaS brand.
• Customer Lifetime Value (CLV): This is the value of your customer’s interaction with your company over the course of their lifetime. If a company subscribes to your SaaS product for five years (with a tier upgrade in year 3), you can calculate that customer’s CLV by adding up all the money they’ve spent on your company throughout those five years. 
• Customer Acquisition Cost (CAC): This is the total cost incurred by a business to acquire one new customer. 

Explore more detailed breakdowns of SaaS metrics in our Grow Slash Metrics Hub. 

2. Common Growth Challenges in SaaS

It’s not easy to scale your SaaS business like Microsoft or Salesforce. But you can make headway if you’re prepared with solutions to these common barriers to SaaS growth: 

Let’s dive into these into a bit more detail. 

Customer churn

Ever noticed a recurring subscription on your card that you haven’t used in a while? You might cancel that subscription — this is called customer churn, and it’s one of the biggest SaaS growth challenges. 

Customer churn describes the percentage of customers who halt their subscription to your SaaS product. This could include people who sign up for free trials and cancel before the plan begins, or even years-long customers who cancel and flock to competitors. 

SaaS companies in the health and wellness industry tend to see higher churn rates (10%). But a reasonable churn rate to strive for is between 5% and 7%. Keep in mind that once you build your product’s customer base and reputation, churn rates should decrease for successful SaaS growth. 

So, how do you stop customers from cancelling their subscriptions?

Prepare for it with churn prediction models and retention campaigns. 

We’ll cover this in more depth further down the article in our “growth strategies” section. But essentially, retention is a company’s efforts to encourage customers to maintain their purchase relationship or subscription over time. 

Maintaining profitability while scaling

Scaling means acquiring more revenue through increased customer numbers, as well as higher-value customers with more expensive subscriptions. 

But to scale your SaaS brand, you might spend thousands in marketing initiatives or sales strategies. This gets tricky — an investment in scaling works if you find more revenue at the end of the tunnel. Many SaaS brands struggle to maintain profitability while scaling. 

Performance tracking can help. 

Grow Slash’s AI-powered tools give you trend analysis and actionable insights to help you invest in more revenue-generating initiatives, over ones that stifle your profitability. 

Changing customer expectations and market trends

No industry or customer stays the same. Your job as a SaaS brand is to evolve with the changes in your business landscape. Meaning? Your pricing strategy needs to be adaptable. 

But finding the right balance between profit and customer appeal can prove difficult. If you increase your prices, will your customers cancel their subscriptions? Or will you offer enough value and service to justify an increase in your customers’ minds? 

You might also change your pricing model rather than the price amount, which can also impact growth if your customers aren’t happy with the change. 

The solution? Scenario planning, where you can predict and monitor pricing impacts on a smaller scale before implementing large-scale changes. 

3. Core SaaS Growth Strategies

Overwhelmed by the SaaS challenges above? Let's cover all the options you have to overcome them with these growth models and strategies.

Retention Optimization

Customer retention is your company’s ability to maintain your existing customers’ subscription to your product. Indeed, studies show that a mere 5% increase in customer retention can translate to a 25% boost in revenue. 

Say your product’s first pricing tier cost $40 per month, and the second tier cost $60. Who would be a more profitable customer?

1. Customer A: Subscribes to Tier 1 at $40/month for 5 years and counting.
2. Customer B: Subscribes to Tier 2 at $60/month, but cancels after one year.  

Since you retained Customer A for a longer period of time, they’re more profitable for your SaaS product. 

But a strong customer retention strategy helps you retain both customers. 

Here are ways to retain your subscribers: 

• Conduct a survey: Survey customers who cancel their subscription to find out why they didn’t want to continue paying for your product. Use this feedback to improve. 
• Check out competitors: Do they offer more value for a similar or more competitive price?
• Reward customers: A little appreciation goes a long way. Offer milestone rewards for customers who reach 6 months, 1 year, 2 years, etc., subscribed to your product. 

Another tactic is to remind your customers of your offerings during their cancellation process. LinkedIn does a great job of this. 

LinkedIn retention strategy

LinkedIn offers a free platform to connect with professional networks. But the company’s Premium feature always offered perks to sign up for around $30 monthly. 

I’ve been offered a 50% discount at the cancellation page as a last-minute retention strategy to keep me as a customer. 

Here's what LinkedIn shows me when I start the process to cancel my premium membership now:

When I select, “continue to cancel,” LinkedIn reminds me of the core features that got me to sign up in the first place:

Next page? A reminder of more benefits that I risk losing:

Until finally, LinkedIn accepts my cancellation and uses it as an opportunity to find out what went wrong to improve its service:

Survey results will give the professional networking giant valuable insights to understand their clients better and improve their services. 

Notice how they didn't offer a discount this time? I've accepted one in the past, so they may not offer that to subscribers who have cancelled more than once.

Customer retention is vital for SaaS brands because it’s a lot cheaper to keep existing customers happy than it is to market to new ones. 

Keep reading for another strategy you can use on your current subscribers.

Upselling and Cross-Selling

Most SaaS companies have 3 tiers of pricing, which increase in features, function, capacity, and price. Your most profitable tier might be an enterprise plan — but you won’t maximize that tier if all your customers remain in your basic, tier-1 plan. 

Upselling is a growth strategy that helps you maximize revenue from each customer. In fact, you can use a key growth metric to evaluate your upselling strategy’s success: customer lifetime value. 

To upsell effectively, you’ll need to know which of your customers are most suitable for your more expensive tiers. 

You can collect data from: 

• Surveys and customer service transcripts from customers
• Customer journey data 
• Performance and revenue stats from Grow Slash

Sometimes, a customer just isn’t poised to be an enterprise subscriber. In this case, you might need to expand your marketing reach to attract new customers with bigger budgets or enhanced needs for your more advanced features. 

Freemium/Free Trials

About 30% of mobile app companies didn’t offer users a free trial option in 2024. Our take? That’s a missed opportunity. Nothing communicates your product’s value more than your actual product, which is why a free trial is necessary to attract customers and minimize their perceived risk. 

If you’re worried about losing out on revenue, just look at the most successful SaaS companies — most of them offer free trials: 

Hubspot: Free 14-Day Trial

Source: Hubspot

Amazon: Free 30-Day Trial

Source: Amazon Prime Video

Notice how Hubspot and Amazon have different lengths for their free trials? Each brand might have analyzed A/B testing data to determine which trial length resulted in the highest trial-to-paid conversions. Amazon saw higher success with a 30-day trial, while Hubspot landed on 14 days.

Freemium membership trials are another tactic to attract new users with more flexibility. In this model, the trial is free but you can offer additional features at an extra cost to appeal to a more specific customer and generate revenue. 

Referral Programs

Guess how most people discover and purchase from companies in the US? Word-of-mouth (WOM) marketing, according to Statista. 

Referral programs help you leverage the power of WOM at a highly competitive price: free. That’s because it doesn’t cost you any ad fees or sponsorship costs to reward your existing customers for promoting your brand. 

I'm subscribed to TrustedHouseSitters, a platform where homeowners and petsitter pay an annual fee to exchange petsitting services for accommodations while traveling. The company offers users two months free if they refer new users with a 25% discount:

Market Expansion

You might have conducted significant audience research to identify your key customers. But as your customers and industry evolves with new trends and preferences, new potential markets might appear. 

Conduct audience and market research annually to discover new markets. You could look for new individuals or companies as customers based on: 

• Location: If most of your customers are in the US, you might try an ad campaign in Canada to see if you generate new leads. 
• Demographics: Perhaps you released a new feature that might cater more to female users than male. 
• B2B vs B2C: Some SaaS products offer tiers that appeal to companies and individuals.  You might offer a new pricing tier to appeal to one group that you hadn’t accommodated before. 
• Industry or niche: You can often find sub-industries within your niche to discover new audiences. 

SaaS investor and Paddle founder, Jimmy Fitzgerald, also points to location as a great SaaS growth strategy. While some SaaS markets have cooled in the US and Canada, he points to Europe and Asia as consistently growing in the SaaS industry. 

Inbound marketing and SEO

SEO is the process of optimizing web content with keywords and various search engine principles to appear higher in the search engine results page. The higher you rank, the more likely a prospective customer is to click on your site. 

For example, if you type in “best accounting software for small businesses.” the SERP starts with sponsored posts that sometimes, users may skip over. But the first organic result generated by SEO is Quickbooks: 

Here are some tools you might use to improve your SaaS website’s SEO: 

• Semrush
• Ahrefs
• Clearscope
• Frase

Or, you could employ a dedicated SEO agency with experience in SaaS brands to handle all the work for you, like: 

• HawkSEM
• MADX
• WebFX

Partnerships and Integrations

It takes a village — and that’s true for SaaS growth, too. 

You can reach new heights with the right partners, like: 

A) Affiliate partners

Affiliates are content creators or publishers who your audience or potential customers would follow and trust. 

For example, fitness influencers would be ideal affiliate partners for a fitness app or nutritional tracking product. You could provide them with branded materials to promote on their channels, and pay them a commission if they lead you to more subscribers. 

B) Integrations 

These are other software companies that can integrate with your product. For example, 

Tapfiliate is an affiliate marketing platform that has over 30 integrations with tech like Mailchimp, Shopify, and WooCommerce: 

Source: Tapfiliate

Integrations can help you tap into the audiences of people using the integrative software, and you also create opportunities for marketing collaborations. 

C) Sales and apps platforms

App stores are great partnerships to get your product to your target audience. They put you in front of thousands of potential subscribers. However, just make sure the hefty publishing fee (upwards of 30%) is worth the results. Any partnership should benefit your product’s bottom line. 

Product Differentiation

The SaaS industry is competitive. If you have a healthcare SaaS platform, I could think of hundreds of others. That’s where product differentiation comes in. 

But it’s not enough to only offer better or additional features compared to competitors — you need to communicate those differentiations to your target audience. 

Monday.com does this effectively with its “alternatives” web page. You can navigate a chart that compares its features to competitors, like Asana, Wrike, and Airtable: 

Source: Monday.com

Data-Driven Decisions

We’ve covered a few different strategies to grow your SaaS business. 

But you won’t see results with any of them unless you track performance data. 

Let’s say you launched an expensive LinkedIn Ads campaign to expand your reach to professionals with different seniority levels or industry niches. You invest $2,000+ each month to gain new subscribers, and you notice new memberships increase. Sounds good, right?

The only snag? You don’t know if the new memberships are worth your investment in the campaign strategy. After all, if the new memberships bring you $500 of monthly revenue, it’s not really worth the $2,000 monthly campaign cost, right?

That’s why you must track relevant metrics for your SaaS product to make data-driven decisions. Grow Slash takes care of the busywork for you by: 

• Making AI recommendations: SaaS brands have many metrics to consider in its growth strategy, but no company is the same. Our platform uses AI to identify the most pertinent metrics to track that are most likely to relate to your company’s growth. 
• Monitoring key growth metrics: Our platform monitors metrics like customer retention, annual recurring revenue (ARR), SaaS quick ratio, and more. You can access these in a user-friendly dashboard and share them with your team. 
• Analyze trends and generate actionable insights: All those metrics might not mean much on the surface. But our platform analyzes those metrics over time to assess trends within your product’s growth. We can see if your ARR goes up in the 5 months since you marketed to a new audience, or if customer retention goes down when you remove a new feature. 

4. SaaS Growth Models and Frameworks

The good news about SaaS growth? Plenty of companies have skyrocketed their revenue and reach before you. 

That’s why we can look at a few established growth models and frameworks: 

Pirate Metrics Framework (AARRR)

Dave McClure, Silicon Valley investor and founder of the firm 500 startups, created the AARRR model. The acronym stands for: Acquisition, Activation, Retention, Referral, Revenue. 

It separates initiatives and metrics into the above categories to organize your growth strategy. For example, MRR and ARR would fall into the last category, revenue. 

Relevant SaaS growth strategy: Data-driven decisions

Product-Led Growth (PLG)

Sometimes, things just sell themselves. That’s the idea with the PLG SaaS growth model, where the emphasis is on a great product to attract more users. 

In this case, you’d shift budget funds away from sales and marketing and focus all your energy on creating the most functional and attractive product as possible. This would include repairing any bugs noted in user feedback, enhancing features to compete with other industry players, and creating self-service models to make it easier for people to use your product. 

Once you’re satisfied with your product, you could attract users and channel confidence in its features with a free or freemium trial. The minimized risk and low barrier to entry will attract users to try your product, while your incredible product itself would recruit them as a subscriber. You can also upsell them later on 

Relevant SaaS growth strategy: Free and freemium trials; Upselling

Marketing-Led Growth (MLG)

MLG growth focuses on customer acquisition through marketing tactics. The goal is to find new subscribers to your SaaS product, which works especially well for B2C products. B2B businesses can also use MLG tactics on relevant platforms like LinkedIn. 

Relevant SaaS growth strategy: SEO, Pay-Per-Click (PPC) ads, affiliate marketing and partnerships

Sales-Led Growth (SLG)

Marketing might score you a few new subscribers to a basic plan. But an ad on LinkedIn isn’t enough to convince an enterprise client to pay thousands of dollars per month for your product.

The sales-led growth model focuses on high-caliber sales tactics and funnels to attract higher-value clients. This might look like hiring a business development team with sales representatives to conduct outreach and book consultations with prospective clients. 

Relevant SaaS growth strategy: Market expansion, upselling, and data-driven decisions

Community-Led Growth (CLG)

Similar to the marketing model, CLG relies on organic conversations and interest among a product’s audience to grow its subscribers. 

One popular CLG tactic is to engage with interested audiences on forums like Reddit or Quora. You might even find conversations happening about your industry on LinkedIn, where you could join and give your brand more exposure.

This organic engagement not only makes your brand image more approachable and likeable; it also drives customer loyalty. The more your subscribers like your brand and relate to it, the more likely they are to continue using your product. 

Land-and-Expand

The land-and-expand growth model focuses on large companies as clients. However, a SaaS company’s sales team would start by trying to secure one small deal within the customer’s company. This could be a subscription for the company’s accounting team, for example. 

But once you land one deal, you can nurture your customer relationships and eventually build enough trust to secure more deals within the same company. 

5. Factors to Consider When Choosing a Growth Strategy

We’ve covered many different growth strategies and the frameworks they fall under. 

But how do you know which is the best option for your business? Here are some factors to consider when you shape an SaaS growth strategy: 

Target Audience

Who uses your SaaS product? Who do you want to use your SaaS product? A one-line answer isn’t enough to know your target audience. Every SaaS company (and every business in general) should have documented buyer personas to help identify their target audience. 

First, you need to distinguish B2B (business to business) and B2C (business-to-customer). Is your SaaS product for businesses or individual people, or both? These will help influence your personas. 

If B2B:

• Business size: SMB or Enterprise
• Employees and executives: # of each
• Decision-maker: Job position of the person who makes decisions
• LinkedIn examples: Profiles of ideal targets
• Industry or niche: Healthcare, ecommerce, accounting, etc. 
• News: Platforms you find them on
• Location: Where are they headquartered and where do they operate
• Pain point: Problems you help them solve

If B2C: 

• Demographics: Age, race, culture, marital status, parental status, etc. 
• Position: Their role in the company they work for, or whether they’re an entrepreneur
• Industry or niche: Marketing, communications, software development, etc. 
• Location: City and state; include any international dealings
• Interests: Hobbies, politics, and priorities
• Household income: What they make per year
• Pain point: The problem you help them solve
• Platforms: Activity on social media, like Instagram, TikTok, Facebook, and LinkedIn

You can learn more about your subscribers or target audience with: 

• Surveys
• Social media analytics
• Market research 
• Grow Slash SaaS metrics

All these details on your target audience will help you understand them better, and influence your growth strategy. 

For example, let’s say your research shows that your B2C target audience has tried competitor products but they lacked one vital feature. You could market that feature heavily in your SEO campaigns, offer them in a freemium trial, or promote your features with your integration partners. 

Product Complexity

Product complexity speaks to the extensiveness of your features and use cases. Does your product function similarly for everyone? Or are there tons of different filters, features, and pathways a diverse audience could take?

More complex products might warrant an investment in tutorial content, like videos, or a more comprehensive demo. Simpler products might lend themselves nicely to bite-sized social media marketing infographics, or how-to articles on your website.

Company Stage and Resource Availability

Some of the growth strategies we mentioned are more expensive than others. That’s why your company stage and budget can influence your next step. 

Earlier-stage startups might be on a tighter budget, which might make community-led growth models and partnership strategies more accessible. These strategies are budget-friendly and also build an early-stage product’s reputation and credibility. 

Established SaaS companies might have more resources to fund, say, expensive international ad campaigns. Or, they could invest more manpower to build new features based on audience feedback. 

Market Dynamics: Trends and Industry News

Market dynamics tell you how your customers and industry in general evolve over months or years. 

For example, your target audience might experience a recession, which may influence their buying patterns or company budget. 

Similarly, your competition could release an innovative new product or feature that you’ll need to assess and strategize to differentiate your product. Stay adaptive to competition and customer behavior trends.

6. SaaS Pricing and Its Impact on Growth

Pricing models for SaaS platforms vary, but usually fall under these three models: 

• Usage-based pricing: This charges your subscribers based on the number of features they use, or the extent of their use. For example, a marketing platform might charge a user a set fee per tracked transaction. 
• Tiered: This is the most popular pricing model, where a company creates 3 or more tiers of offers with respective feature access and pricing. For example, a basic plan might cover 10 out of the product’s 20 features, and go up in price and feature access with the tiers. 
• Free or freemium: Some platforms are completely free to use, but charge extra for specific features. This might also look like an app’s free plan compared to their “pro” plan. 

Source: Grow Slash’s tiered pricing model

The right pricing model is essential for growth, as your product price impacts key metrics like MRR, CLTV, and churn. If your pricing is too expensive or not competitive, you’ll face higher rates of churn. 

Similarly, your MRR will suffer if you don’t attract enough users to your product. To mitigate this, many brands launch a free trial to encourage users to try, and eventually subscribe, to the product.

How do you optimize your pricing strategy?

A) Conduct A/B tests

Try out different pricing models and see how it affects your key growth metrics. An A/B test helps you measure the effectiveness of one variable compared to another. 

For example, A in an A/B test could be your Tier 1 plan, priced at $10/month. B could be the same plan priced at $15. 

You might try a 3-tiered model with certain features for three months, then add a fourth tier to see if you attract any upsells. Or, you might take away a feature from your basic plan to see if you lose any subscribers or encourage them to convert to a higher tier. 

But remember, A/B tests are only effective when you test one variable at a time. This means that you won’t generate any meaningful insights if you change every aspect of your pricing within a test. 

B) Monitor Pricing Strategy Impacts with Grow Slash

You might notice more subscribers in the B of your A/B test. That’s a great plus for customer acquisition — but it doesn’t necessarily indicate sustainable growth. 

Are your new customers showing high CLTVs and buying high-tier subscriptions? That differentiator could show up in key growth metrics like MRR. 

Grow Slash can help you monitor metrics in real time on our comprehensive, intuitive metrics dashboard. You can see changes in MRR, CLTV, net new sales, and much more and how they relate to your SaaS pricing strategies. 

7. Emerging SaaS Growth Trends

No industry stays the same forever, including SaaS. 

We’ve seen serious fluctuations in the market, from skyrocketed growth and success for some brands during the pandemic, to dramatic drops in sales and revenue just one year after. 

Here are some SaaS growth trends we’ve noticed lately: 

A) Increased reliance on AI and automation: AI saves time for both your staff and customers. SaaS products outside the AI industry still use it — just look at Microsoft’s chat assistant. About 42% of SaaS brands plan to implement AI features in their offerings this year. 

B) Rise of personalized plans: Flexibility became a strong customer value after COVID. If a user doesn’t fit into the box of your pricing tier, they’ll feel better with an option with their own curated selection of features. That’s why many SaaS companies now offer custom pricing to meet each users’ unique needs while boosting retention. 

C) Growing focus on user-centric design: A competitive SaaS market means you don’t have room to create clunky, unintuitive products. The bar is higher than ever for a SaaS product’s user design to flow seamlessly and feel accessible to each user. 

Our team at Grow Slash has kept up with these trends to help our clients shape their future SaaS strategies. That’s why we leveraged AI technology to study our clients’ data and recommend the most effective growth metrics to track. We also use AI to generate user-friendly visualizations and make your growth insights more accessible. 

8. SaaS Growth Statistics

Industry data for SaaS brands change constantly. Let’s look at some key SaaS growth statistics for the overall market, customer trends, and metrics. 

1. The global SaaS market value is $3 trillion as of 2022, and could reach as high as $10 trillion in 2030 (McKinsey). 
2. B2C SaaS software experienced a compound annual growth rate (CAGR) of 6.3% in Q1 2024, which is the highest since Q1 2022 (Crunchbase and Paddle).
3. B2B average customer churn is low at about -1.6% (Crunchbase and Paddle). lg
4. The industries with the highest customer lifetime value (CLV) in subscription businesses are food and beverage, and pet and animals (Statista). 
5. As of 2024, the leading industries in the SaaS industry are AI, analytics, and financial services, which have 4,300 companies across the three (Statista). 
6. The average customer retention rate for SaaS businesses is 68% (Vena Solutions). 
7. SaaS businesses in Singapore and the UK experienced the highest rates of customer churn in 2023 (Statista). 

So, how do SaaS industry stats help your business? It’s always helpful to have benchmarks to compare to. 

For example, Grow Slash’s industry comparison tools help you analyze your company’s growth metrics against competitors in your industry. This helps you recognize and identify gaps in your product, and improve your growth strategy. 

9. Conclusion

Bottom line? Your SaaS product will only be as successful as your growth strategy. 

But no matter your strategy — whether it’s SEO, ads, partnerships, or a new pricing model — you can’t grow SaaS products without the right data and insights. 

That’s where Grow Slash comes in. 

We help you grow your SaaS business with access to key growth metrics, AI-powered recommendations, and actionable insights that give you the confidence and backing to grow your brand. 

Ready to skyrocket your SaaS product’s reach and revenue? 

Sign up for your free trial today!