It is 2023 believe it or not and while there are global economic headwinds, the outlook for SaaS remains bright and focused on targeted growth strategies. Let’s kick-off the year with what you need to know to scale this month. Think retro motivational posters, but knowing you are in on the proverbial joke.
Gartner forecasted that this year that spending for SaaS would hit nearly $177B worldwide. Now that’s with an economic slowdown that began to hit markets in early Q2.
So there’s no end in sight for SaaS as we head into 2023. The big trend most likely is going to be on retention and that means taking those bundles and unbundling them to appease customers. We should also expect a swing toward vertical-specific solutions. This might also translate into consumption-based pricing models where companies are just paying for the resources used. And with an added demand for cloud security, existing SaaS is going to need to add a layer themselves.
The net/net for small niche SaaS companies and their clients alike – pricing models will need to pivot slightly to not only retain, but also attract new customers. It’s a tricky balance, but if companies can get it right a financially rewarding one indeed.
The Street Five
- Brain Implants (yup brain-computer interfaces are real) – Synchron raises $75M – investors include Bezos & Gates
- Speaking of Bezo’s – Mackenzie Scott breaks down how she’s given away $14B to over 1.6K non-profit organizations
- Parents in Canada are suing Epic Games, claiming their kids are so addicted to Fortnite that they won’t shower, eat or sleep
- Ticketmaster is facing a class-action lawsuit from Taylor Swift fans while parent company LiveNation faces an antitrust investigation from the DOJ
- Twitter drama – it’s just entertaining and fascinating to watch Elon destroy Tesla brand equity in the process
(Image credit: Shutterstock / thongyhod / Twitter)
The Rise of CRO
Okay, Conversion Rate Optimization (CRO) has been around for a while now, but in a downturn or even an uncertain economy where investment tickets are smaller, small businesses need to shift from just top of funnel strategies. In essence, if you are focusing on just demand, you are not being operationally efficient nor do you have a full inbound strategy in place. Companies interested in sustainable growth and extending their runways need to invest in demand + conversion strategies.
That means understanding the nuances of your growth strategy. Not only is this better for acquisition, it’s also a great look for your investors.
Now you might ask, how is hiring new staff cost effective to implement CRO? Well, you don’t need to do a massive hire – there are actually tools out there like Mutiny that are more cost efficient and if done correctly can have an exceptional ROI.
The Fall of NFTs
This trend began in September, but I think we can officially call it. I mean Jack Dorsey’s first tweet, which originally sold for $2.5M cannot even fetch a few hundred dollars now.
I mean it’s sort of a jpg folks (hello, Bored Ape Yacht Club buyers). And if that doesn’t make you ponder NFTs – let’s just say a 5x filed for bankruptcy, controversial former President launched their own NFT “cards” (their language not ours) for only $99 each.
While according to Non-fungible Market Tracker – sales have been in decline for a bit. In the last 3 months, sales plummeted 38% and primary was down 58%. To make things worse, unique buyers dropped by nearly 33% so it isn’t looking pretty.
What does it all mean? It means no more overnight millionaires and more real-world use cases for NFTs. Expect to see a shift into gaming where both game creators and brands can monetize NFTs in more digestible ways.
Yuga Labs, Bored Ape Yacht Club 4466. Courtesy of Sotheby’s.
What you Need to Know to Scale:
Last month we talked about Dry Powder. Hey, we didn’t make up the name, some “bro” at a PE firm did. Sticking with that jargon, let’s pivot to your 2023 Playbook. By now you’ve done your due diligence and most likely mapped out your goals for growth in 2023. But, does your strategy align with achieving your revenue goals?
If you aren’t sure we’ve got a few tips:
- Customer Centricity – plan for a sales slowdown by focusing on retaining customers and expanding existing customer accounts (to 20-30% of revenue)
- Be Efficient – review your costs and take steps to increase your cash runway for 18-24 months
- Product – invest in your product and improve the product-market fit (using NPS and CAC/LTV ratio)
While most of us are tired of hearing the term “product-led” now is the time to own that trendy phrase and positioning, because it will be critical to your growth. If you’re not sure where you stand on the product vs. sales barometer – here’s a great resource.
Some folks love the 4 p’s – we like C.E.P. – add that to the acronym list, but don’t blame us!
The Great Fail. Think if True Crime, John Grisham, and the Wolf of Wall Street were a thruple. This series is about companies who seem poised for BlueChip status but eventually, implode. If you’re curious about what happened to Microsoft’s Mixer or Jawbone – take a listen to this relatively new series.
Lost and Founder from founder and ex-CEO of Moz, Rand Fishkin. Fishkin gives a painfully honest and realistic point of view of his start-up story as well as a truly insightful and comprehensive guide to marketing management. A timely read for any start-up looking to scale.
Well, that’s all for now folks! Any scale-up strategies we missed to kick start the year? Any must-hears you want to share? Let us know below