Software as a Science

Why SaaS Companies Hit Growth Plateaus

All SaaS companies are roughly 80% the same. They face identical challenges and encounter predictable patterns of growth ceilings.

Growth ceilings happen when new customers equal exiting customers. This typically occurs when a software company reaches between $10,000 and $30,000 in monthly recurring revenue.

You can predict when your company will stop growing by tracking these four metrics:

• Current customers
• New customers per month
• Monthly churn rate
• Monthly average revenue per account

The Three Growth Levers You Control

A healthy SaaS company needs to:

1. Attract new customers
2. Retain existing customers
3. Increase revenue from current customers

Your ultimate goal? Net negative revenue churn - when revenue increases from existing customers outpace your churned revenue.

The three levers to grow your SaaS business are:

• Acquisition: Get more customers
• Retention: Keep customers longer
• Expansion: Make customers more valuable

Fix Your Retention First!

The order matters! Focus first on improving retention rates. Reducing churn will significantly change how long until you hit your next growth plateau.

Mastering Acquisition

Building Effective Marketing Channels

Marketing channels generate new attention. Marketing funnels convert attention into leads and customers.

Channel examples:

• Earned media
• SEO
• Paid ads
• Cold outreach

Choose One Channel and Make It Excellent

Focus on only one marketing channel at a time. Evaluate each channel with these questions:

• Do I have a documented, executable process that consistently produces results?
• Do I have dedicated people executing this process without my direct involvement?
• Do I have a measurable scorecard for this channel’s inputs, activities, and outputs?
• Do I have a testing cadence to continually improve this channel?
• Am I recovering my customer acquisition cost in under 90 days?

Identify which channel is closest to being all “green” and focus there. Prioritize speed of execution over perfection. Once a channel is optimized, move to the next one.

The Four Types of Marketing Channels

1. Earned media: Podcasts, speaking events, influencers, guest posting, newsletters, joint webinars

   • You need a lead magnet to capture audience into your conversion funnel
   • Find where your potential customers already pay attention: authors, podcasts, blogs, coaches, events

2. SEO: Include target keywords your customers search for

   • Create content that addresses problems, solutions, and why your solution is better
   • Develop helpful content about solving the main problem, even without mentioning your software

3. Paid ads: Your customer acquisition payback period must be less than three months

   • Typically not recommended as your first channel

4. Cold outbound: Viable if your deal size is at least $5,000 annually

Converting Through Your Marketing Funnel

The marketing funnel has four stages: awareness, consideration, decision, conversion.

Most attention comes from people in the awareness and consideration phases.

Awareness Stage

Your ideal customers become aware of their problems. Identify the top five hot button items on your customers’ problem list. Your content must address these issues.

Accelerant: Place retargeting tags on all your content (Meta, Google, etc).

Consideration Stage

Don’t try to sell during consideration—teach prospects how to think about the problem. Use lead magnets that are:

• Short
• Actionable
• Goal-oriented
• Easy to implement

Position your platform as the only viable solution. When someone consumes your content and leaves, serve them a retargeting ad with a lead magnet.

Accelerant: Put lead magnets behind email capture forms. On the thank you page, offer a sales call. Follow up with an email sequence offering additional help.

Decision Stage

Your potential customer is getting serious about buying. You need a world-class website that clearly states who your product is for.

Conversion Stage

As a founder, you are a salesperson. You sell the product, the vision, the workplace, and your point of view in the market.

Start fixing your funnel from the bottom up.

Creating a Sales Process That Works

Sales is about understanding your buyer’s mindset. Find out the customer’s pain point first, then show how you can solve it.

Customers don’t care about your product—they care about their pain.

The Rocket Demo Builder

Each sales call should follow these steps:

1. PREP: Research the business and diagnose their problems

   • Check LinkedIn, social profiles, company website, reviews
   • Identify likely pain points

2. ORCHESTRATE:

   • Appreciate: Show you value their time
   • Check: Confirm your research is accurate
   • End Goal: Clarify the call’s purpose

3. AGENDA: Provide product overview and key features

   • “My goal is to show how our product solves your problems and help you make a decision today”

4. FEATURE ONE:

   • Address the first pain point
   • Ask: “Does this solve your problem?”
   • Ask: “What impact would this have on your business?”
   • Ask: “Can you see your team using this?”
   • Give them silence to respond

5. FEATURE TWO & THREE: Repeat the same approach

6. REVIEW: Summarize key points and answer questions

7. CLOSE:

   • Get the credit card on the phone
   • Use “Virtual Close”: Have them explain how the purchase would work internally

8. FOLLOW UP: Book your next meeting before ending the call

Activating New Customers

First Value is the moment when customers realize how amazing your product is. This must be a key performance indicator.

Provide clear instructions to reach First Value:

• Create a simple onboarding flow
• Use in-app prompts and trigger-based emails
• Make customer support readily available

If customers are canceling, talk to them directly to find out why.

The Three-Step Path to First Value

1. Identify the First Value moment Ask customers:

   • How would you describe our product?
   • What problem does it solve for you?
   • When did you realize the product would solve your problem?
   • What steps did you take to reach your desired outcome?
   • What’s the most important thing our product does for you?

2. Build stepping stones to reach First Value

3. Make each step incredibly easy

   • Eliminate friction points
   • Make instructions obvious
   • Use automations to streamline the process
   • Send event-driven emails to bring customers back
   • Offer phone support for struggling users
   • Consider paid implementation services

Reducing Churn

If your churn exceeds 10%, fixing it is your top priority.

Create a Customer Health Index (CHI) from 0-100 based on usage frequency and feature adoption.

Use a Customer Engagement Elevator to categorize users:

• Advocates (Purple)
• All-Stars (Green)
• At Risk (Yellow)
• Unengaged (Red)

Your process:

1. Identify behaviors of healthy customers
2. Promote those behaviors
3. Measure if customers adopt these behaviors

Adjust your CHI every 1-2 quarters. To start, identify what features matter most to your best customers versus your worst customers.

Customer problems are opportunities to impress with amazing service.

Focus on moving yellow customers up to green.

Creating Brand Advocates

The best time to ask for help is right after a customer experiences a win.

The Customer Value Chain

Match your asks to the size of their wins:

First Value	Big Win	Transformation
Reviews	Case Study	Referrals
Sound Bites	Content	Intros/References
Testimonial	Video	Keynote/Podcast

Creating Effective Testimonials

1. Set the story: Include dates, revenue, names, and emotions
2. Describe the pain they experienced before your solution
3. Explain how your solution solved their problem

Only ask for referrals or references after delivering significant value.

Automating Advocacy

• Send trigger emails after First Value for testimonials
• Incentivize customer success teams around social proof creation
• Mention future case studies during sales and onboarding
• Position testimonials as promoting the customer’s business
• Track advocacy and referrals as key metrics

Optimizing Your Pricing Strategy

If nobody’s telling you no, you need to raise your prices.

The Pricing Triangle

1. Value metric: The key result driving value for most customers
2. Depth of usage: Secondary metrics that increase with value delivery
3. Feature fencing: Offering specific features only on certain plans

Companies that price based on value metrics grow twice as fast. Your offering should deliver a 10x return in value to customers.

Be careful not to disincentivize product usage with your pricing model.

Identifying Your Value Metric

Ask these questions:

1. Does the metric grow with increased platform usage?
2. Is it easy to track?
3. Is it easy for customers to understand?
4. Can customers predict their budget usage?
5. Do customers perceive it as fair?
6. Does the metric grow when the customer’s business grows?

Don’t bundle all features into the highest plan. Offer an à la carte menu for specialized features.

Optimal Plan Structure

• 60% of accounts in the lowest plan should hit limits in 6-9 months
• 40% of accounts in the middle plan should hit limits in 8-12 months
• 20% of accounts in the top plan should hit limits in 12-18 months

Your Pricing Action Plan

1. Identify your value metric using the six questions
2. Identify metrics that increase as customers get more value
3. List features and assign them to appropriate plans

Implementing Price Increases

Companies that revise pricing quarterly grow 4x faster than those who do it every 3 years.

Never use inflation as a reason to raise prices. Instead, create a dollar estimate of the value you’re creating and work backward.

When raising prices, use it as an opportunity to lock in long-term pricing. For example, offer the quarterly plan at the same rate as the original monthly plan.

Adding Revenue Through Services

You must offer these services:

Customer onboarding

• Charge for implementation
• This typically doesn’t hurt conversion rates
• Can be offered free to sweeten deals

Priority Support

• Let customers pay to skip the support line
• Typically 20% of customers will opt in
• Charge 10% of your ticket price

The SaaS Service Planner

1. Map the problems

   • Identify customer starting points and ideal end states
   • Document every step to reach the end state
   • Identify challenges at each step
   • Focus on problems most likely to cause churn

2. Build the process

   • Take your customer’s current process
   • Make it better/faster or do it for them

3. Nail the pricing

   • Set your margin target (50% breaks even, 70% enables growth)
   • Estimate delivery costs
   • Calculate your price point
   • Use flat fee pricing if you can estimate costs within 20%