News
How to succeed with your SaaS Growth Strategy
Are you looking for a way to accelerate growth and gain a competitive edge in your software as a service (SaaS) market? The path to success is not always clear. It might be challenging to identify the most effective growth strategies for your unique situation. Thus, we will introduce a framework for B2B SaaS growth that can help you strategize for success.
By breaking down the key elements of growth and identifying the levers you can pull. This strategy framework provides a clear structure for you to follow as you develop your growth strategy. In the following, we will discuss this framework’s details and how to implement it in your SaaS business.
Written by Andreas Davies Sandbu, Senior Investment Manager at Viking Venture
Why you need a framework for SaaS growth strategy
B2B software companies are under constant pressure to grow and stay competitive. With so many options to drive growth, it can take time to determine the most effective strategies for your company. Here is where a framework for SaaS growth comes in.
A well-defined framework provides a straightforward, structured approach for evaluating and selecting growth opportunities. Moreover, ensuring that you make decisions based on data, facts and evidence rather than intuition or guesswork. It also allows for more efficient use of resources by helping you prioritize the most impactful growth initiatives.
A framework enables you to quickly adapt and pivot your strategy as the market evolves. With a framework in place, you can make informed decisions and take targeted action to drive sustainable, long-term growth. Our framework consists of four steps, and below we will go through the framework step-by-step:
- Vision & ambition
- Strategy: Where to play and how to win
- Strategic initiatives and value creation plan
- Enablers & capabilities required to deliver
Have a clear vision and ambition
A clear vision and ambition are crucial for any company including B2B SaaS companies. It sets the foundation for your overall strategic direction. It will help you find a North Star, and guides decision-making at all levels of the organization.
A well-defined vision and ambition help you articulate what your company stands for. It should also include what you aim to achieve, and what you are willing to sacrifice to get there. The vision and ambition serves as a filter for evaluating growth opportunities. As well as determining which initiatives align with your company’s values and goals.
However, it’s important to remember not to set the ambition in stone. You should continuously evaluate and refine it based on data and evidence from the strategy phase. Ensuring your company stays aligned with the market and the company’s growth.
Strategy: Identify the markets, products, and customer segments to focus on
Developing the right strategy, or deciding “Where to play – and how to win,” is crucial for the growth in the SaaS industry. The first step in this process is to assess and define “Where to play”. The assessment is done by identifying which markets, products, and customer segments your company should prioritize.
One helpful tool for this is the Product/Market Expansion grid – also known as Ansoff Matrix. The matrix organizes analyses and discussions by mapping different growth opportunities in four quadrants.
Simple strategy framework to assess “Where to play” and “How to win”
When evaluating each quadrant, it is essential to consider a range of factors. Factors such as market size and growth. As well as, profitability, competition and saturation. Competitive advantages and uniqueness, customer feedback, and barriers to entry for new markets and regions.
These data and findings will help you to understand the opportunities and risks in different markets and segments.
How to win on your strategy
The next step of the strategy process is to define “How to win”, based on the prioritized opportunities under “Where to play”. This step determines the tactics and actions required to succeed in the chosen markets and segments.
It includes questions like, how can you increase market penetration through marketing and new sales? How can you cross-sell new products to existing customers? How can you expand to identified regions organically or through M&A? Should you make changes to your Ideal Customer Profile (ICP), target audience and positioning?
A good strategy will ensure that your company makes informed decisions to win in the chosen markets. You can do so by providing answers to these questions based on data and facts. Additionally, a good strategy should also define what the company shouldn’t do to avoid unnecessary investments or mistakes.
Strategic initiatives for SaaS growth
Strategic initiatives, sometimes called Must Win Battles, are the critical steps a company takes to achieve its growth goals. They might include expanding into new markets, launching new products or services, or acquiring complementary businesses. The key to effective strategic initiatives is to be selective and focused. Choose only a few (3-5) high-impact, time-boxed initiatives that align with the company’s overall vision and strategy.
When developing strategic initiatives, it’s vital to consider the resources required to deliver on the initiative. These initiatives can be expensive and put a significant strain on the company’s resources. So clearly understanding the costs and benefits associated with each initiative is crucial. Moreover, it will help you to prioritize the most impactful initiatives and design a value-creation plan.
It’s also important to consider external factors such as the availability of funding and the valuation targets set by owners. Keeping a close eye on your Key Performance Indicators (KPIs) will help you stay on track and make timely adjustments.
Each initiative should have a clear strategic rationale, a responsible party, and a timeline. Ensuring that you stay aligned with the company’s goals and objectives. You must be able to measure the impact of the initiatives over time.
Identify and build the right enablers & capabilities
To successfully execute the strategic initiatives, it’s crucial to identify and build the necessary internal capabilities and organizational enablers. Including an assessment of the company’s existing capabilities and resources, and determining where improvements are needed is beneficial. Depending on the scope of the strategy process, this might involve reviewing the organizational structure, processes, talent, culture, tools and technology, and KPIs.
Consider questions such as, Is the current organizational structure supportive of growth, or are changes needed? Do we have clear and repeatable sales processes in place in your sales and marketing department?
Are we equipped with the right tools and technology to execute our initiatives? Do we have the right talent and people in our organization? And do they have the adequate skills and experience? Are we fostering a culture that supports growth and innovation?
As with strategic initiatives, each enabler and capability should have a clear strategic rationale, a responsible party, and a timeline. The strategic rationale helps you ensure that the company takes the necessary steps to build the internal capabilities required. Consequently, to execute the initiatives successfully and achieve long-term growth.
Strategize for SaaS growth
This article introduces a framework for B2B SaaS growth that can help companies strategize for success. The framework breaks down the critical elements of a growth strategy. In addition, providing a clear roadmap for companies to follow as they navigate the challenging landscape of B2B SaaS. The framework consists of four steps: Vision & Ambition, Strategy, Strategic Initiatives, and Enablers & capabilities.
Each step is essential and helps a company identify its unique growth opportunities and execute them effectively with the right resources. Effective communication and alignment within the company and external stakeholders is crucial for the success of the growth strategy. Companies can use this framework as a guide to make informed decisions and take targeted action to drive sustainable, long-term growth.
Scaling your business
Our strategy playbook reveals all you need to know to set the strategic direction for your software business and prepare for your growth journey. Get insights into how we run strategy projects with our business-to-business SaaS companies. From how we scope and plan the projects, mobilization, and process to actual examples from analyses we have done.