T H E 1 0 E S S E N T I A L SAAS GROWTH S T R A T E G I E S

3 Introduction

6 Create Tailored Product Editions

9 Expand through an Upsell Path

14 Expand with a Cross-Sell Strategy

18 Expand with Usage Pricing

22 Optimize Pricing and Packaging

26 Enable Self Service

30 Enable Assisted Sales

35 Expand into the Enterprise

39 International Expansion

42 Strategic Acquisitions

46 Conclusion

Table of Contents

3

Introduction

For every successful SaaS company that has grown over 50% year over year — including

such well-known companies as Zendesk, Box, Hubspot, and New Relic — there are

thousands of startups that have failed.

In fact, according to a recent McKinsey study Grow Fast or Die Slow,

"If a software company grows less than 20% annually, there is a 92% chance of failure.”

4

When you’re a startup, it’s fairly easy to double revenues in a month (for example,

going from $10K to $20K). As you start to grow, you can expect to double revenue in

a quarter, then in a year. But as you get larger, it’s very, very difficult to double your

revenues in these same time frames — after all, how many companies grow from

$50M to $100M in one month?

So how can SaaS companies grow, grow fast, grow efficiently, and keep growing?

In working with hundreds of SaaS companies, we’ve learned that the solution to

sustaining a high growth rate is to diversify your approach to growth and embrace

multiple growth strategies.

We’ve boiled it down to the top 10 essential growth strategies:

Here we highlight Zuora customers who provide great examples of

SaaS companies who are nailing each of the 10 growth strategies, and

offer lessons for your own (super)growth.

TAILORED PRODUCT EDITIONS

#1

SELF SERVICE SALES

UPSELL PATH

ASSISTED-SALES MODEL

CROSS-SELL STRATEGY

EXPAND INTO THE ENTERPRISE

USAGE PRICING

INTERNATIONAL EXPANSION

PRICING & PACKAGING OPTIMIZATION

STRATEGIC ACQUISITONS

#2

#7

#3

#8

#4

#9

#5

#10

#6

1. Create Tailored Product Editions

Sure, many SaaS companies might start off selling a single product. But as new features

are added, cramming everything into a single product doesn’t really work.

We know that in order to scale and avoid being priced out by competitors, SaaS

companies need to offer more than one product edition. The question is: how can you

best design your editions to move your growth forward?

The best SaaS companies smartly package their product capabilities so that:

- Each edition appeals to a different segment of the customer base, and

- Each add-on targets a different customer need

Editions and add-ons are just means for monetizing different parts of the

customer base.

7 lessons about crafting meaningful editions

and communicating their value.

Fast forward to the present time at which

Zendesk is used by 200,000+ organizations

worldwide, with a reported $208.8M in

revenue for 2015.

Their editions may change — and likely will,

as that’s part of the growth process — but

they currently offer monthly and annual

plans for four editions:

Essential: Their low-priced starter plan for

$5 is a clear example of going downmarket

to capture the long tail — and an easy way to

onboard new customers.

Team: Directly marketed to small teams

(even in name) and offering everything SMB

need.

STAR EXAMPLE

Zendesk is a great example of a company

that continually experiments with tailored

product editions, to design editions that

are engineered to increase deals and ACV

per deal — and that align with their growth

strategy.

Back in 2010, Zendesk made some pricing

changes that resulted in reported price

increase of up to 300% for some customers.

After tamping down the PR firestorm that

resulted, Zendesk learned some valuable

8

Professional: Offering more feature

functionality for established teams —

clearly the option they’re pushing.

Enterprise: More features and flexibility

to scale with larger companies.

Of course this isn’t the locked-down

final incarnation of Zendesk’s product

editions, nor is it the end of their pricing

and packaging journey. Zendesk, like all

growing SaaS companies, knows that

pricing and packaging are dynamic. It’s

an ongoing process of mapping product

editions to strategy.

Since editions and add-on products

change over time, SaaS companies need

the ability to:

Change pricing in a central location

so that it updates across all systems

and sales channels (online, in the

quoting tool, etc.)

Add new products, editions, and

free trials over time without SKU

explosion

Enable quick testing and iteration

of pricing and packaging

Key Takeaways

2. Expand through an Upsell PathAs Paul Farris noted in Marketing Metrics: The Definitive Guide to Measuring

Marketing Performance:

“The probability of selling to a new prospect is 5-20%. The probability of selling to an existing customer is 60-70%.”

Given the nature of SaaS’ recurring revenue business model, it’s no surprise that the

fastest growing companies are the ones that are most successful at growing revenues

from existing customers.

This is well demonstrated in the recent Pacific Crest 2016 SaaS Benchmarking Survey

in which we see that the CAC (customer acquisition cost) to acquire $1 in upsell

revenue is just 24% of the cost to acquire a new customer.

The same study also shows that median respondents are able to successfully

capture 15% of new ACV from upsells. As revenue rises, it’s clear that larger

companies have an even higher percentage of ACV coming from upsells,

largely to sustain CAC and growth efficiency.

Pacific Crest 2016 SaaS Benchmarking Survey

0

$0.25

$0.50

$0.75

$1.00

$1.25

$1.50

New ACV from New Customer

Upsell to Existing Customer

Renewals

$1.18

$0.28

25th percentile

Median

75th percentile$0.68

$0.11

$0.55

$0.33

$0.07

$0.13

CAC vs. Selling Path

Respondents: New ACV from New Customer: 142, Upsell ot Existing Customer: 102, Renewals: 97

Upselling is not only critical to increasing revenue, but also for customer

retention and stickiness, because the more value your customers get from your

products/services, the more satisfied they are.

Pacific Crest 2016 SaaS Benchmarking SurveyNew ACV vs. GAAP Revenue

0%

5%

10%

15%

20%

25%

30%

2015 GAAP Revenue

% N

ew

AC

V f

rom

Up

sells

& E

xpan

sio

ns

Median ≈15%

9%

14%

16% 16%

20%

23%

<$2.5MM $2.5MM-$5MM

$5MM-$7.5MM

$7.5MM-$10MM

$10MM-$15MM

$15MM-$25MM

$25MM-$40MM

$40MM-$75MM

$75MM

25% 25%

28%

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The trick, of course, is that you need to understand your customers, and have deep

insight into their usage in order to identify upsell opportunities and build strategic upsell

paths.

Dropbox strategically established this

storage threshold as a willingness-to-

pay boundary. In other words, they know

that 2GB is just enough to get customers

hooked — and then they’ll need to

upgrade to the Pro plan.

With their B2B offering, Dropbox is pulling

on a different lever, that of capability-

driven growth. Their Business plan offers

an expanded set of capabilities that

companies will require as their business

grows and number of users expands.

There’s a real race going on in the cloud

storage space. To maintain their current

valuation of $10B and prepare for their

rumored IPO, Dropbox will need to

continue to innovate on their offerings

and play with their consumption and

capability levers to push their Business

solution and drive users upstream.

STAR EXAMPLE

Dropbox provides a good example of a

SaaS company that has a smart approach

to upselling for increasing revenue and

customer success.

On the B2C side, Dropbox uses a

consumption-driven growth model. They

offer a free Basic plan to individuals, with

2GB of cloud-based storage space. If users

run out of space (which happens quickly

once you start backing up photos and other

media), they can upgrade to a Pro plan.

To create and execute on a clear upsell path, SaaS businesses need the ability to:

Use data to influence packaging decisions and design meaningful tipping

points for upsell paths

Design an upsell path to either be capability-driven or consumption-

driven — or both

Arm sales with the customer information they need to successfully target

potential upsells

Key Takeaways

3. Expand with a Cross-Sell StrategyWhile upselling and cross-selling are sometimes conflated, they are really two distinct

separate growth strategies. While upselling is a strategy designed to sell a more

feature rich (and expensive) product edition to an existing customer, cross-selling is a

strategy designed to sell additional products to an existing customer (to provide a more

comprehensive solution).

UPSELL

CROSS-SELL

SALES & MARKETING EXERCISE

PRODUCT DEVELOPMENT

EXERCISE

According to a recent SaaSRadar report by McKinsey & Company and Gainsight, of

later stage SaaS companies (with revenue in the $25-75M range), companies that

had the lowest churn were those that cross-sold multiple products to about one-

third of their customers. The takeaway is pretty clear: The ability to solve for a broad

range of customer problems, with a broad range of solutions, increases retention.

Cross-selling provides an impetus for innovation. SaaS companies that want the

ability to cross sell need to be continuously innovating, adding new products,

features, functionality, and offerings to entice customers to add on to their plans.

15

16 developers. They build on this fan base

and drive retention through bottom-up

adoption of their products. In other words,

rather than marketing solely to leadership,

they connect directly with developers,

providing a wide range of easy-to-deploy

products and additional features that solve

very real pain points.

New Relic has wisely recognized that to

optimize growth, they need to go outside of

just being an APM (application performance

management) offering. As New Relic

founder and CEO Lew Cirne has said "We'd

love New Relic to be for the IT management

market what Salesforce is to sales and

CRM."

Towards this end, they’ve been successful:

According to their FQ4/15 earnings report,

20% of new recurring revenue came from

STAR EXAMPLE

New Relic, a leading digital intelligence

company, is a great example of a SaaS

company that has grown very quickly, in

large part due to its cross-sell strategy.

In 2016, New Relic was ranked as one of

the Fastest Growing Companies in North

America on Deloitte's 2016 Technology

Fast 500 with 847% revenue growth

between fiscal year 2012 and fiscal year

2015.

New Relic is known for their awesome

products, with a huge base of devoted

non-core products, approximately 15%

of their customers were paying for more

than just one product, and multi-product

customers (that is, customers who pay for

more than just one product) increased by

more than 400%.

They did this by offering every product as

a monthly. Any developer can pay a small

fee to try out an add-on product without

a big commitment. This significantly drives

cross-sells.

By diversifying their product line and

focusing on cross-selling to their devoted

base, New Relic is not only increasing

earnings per customer and thus overall

revenue, but is also poised to grab a larger

share of the global IT operations and service

management software (ITOSM) market —

which grew to nearly $21 billion in 2014,

according to Gartner.

To effectively cross-sell, SaaS

businesses need the ability to:

Track customer behavioral (what

they do in the product) and

financial (what they’re paying)

information to understand

customer needs and uncover

new add-on opportunities

Guide the sales team to target

specific customers for specific

add-on offerings

Offer creative pricing strategies

(e.g. in New Relic’s case, a

shorter billing frequency) to

incentivize cross-sells

Key Takeaways

4. Expand with Usage PricingAt its heart, SaaS pricing is a way of quantifying value. The goal: let customers pay

for the value they need. The best pricing strategy will let you put a number on the

metric that customers value most, based on how they actually use your service.

This is commonly called a “value metric.”

Simply put, a value metric should do 3 things:

1. Align to customer needs

2. Grow with customers

3. Be predictable — for customers and for the organization

This is fully supported by a recent McKinsey survey of Enterprise SaaS customers

that showed that more than 75% of customers want pricing metrics that are

aligned with perceived value, easy to understand, and easy to track (and thus

predict costs). And yet, only about 27% of SaaS businesses use some sort of usage-

based pricing today.

The nice thing about a usage-based model is that you can use it to create multiple

dimensions — which are, essentially, the levers you pull to drive price points higher

and higher, drive engagement, and drive revenue. Depending on your business, your

levers could be number of emails, API calls, number of units, or any features that can

be packaged in different ways.

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DATA AND INSIGHTSIncrease Engagement and Retention

In the Subscription Economy, the subscriber is at the center of the business. Everything that your business does (no matter how far removed it might seem from the customer) and every decision you make must be done with a subscriber-centric approach. Your customers want to be recognized as unique individuals rather than a nameless count in a broad market segment.

Gone are the days of product or plan recommendations based on basic profiling. Today’s

realized that they were essentially shifting

to a subscription commerce model. But

with their current billing infrastructure,

they calculated they'd spend more time on

billing than actually delivering their service.

In fact, CollabNet was spending about 25%

of their road map on a billing platform. As

Guy Marion, VP & GM, Cloud Services for

CollabNet notes put it, "That is pretty much

shooting yourself in the foot as a start-up

SaaS company."

CollabNet iterates fast. They pride

themselves on working in two-week sprint

cycles to release products to customers

that they really want, when they need

it. Fortunately they found Zuora to help

them keep up with pricing and package

innovation and iteration (and billing) as well.

And Zuora gave them the ability to easily set

value pricing for multiple markets based

STAR EXAMPLE

When CollabNet, a leading provider

of Enterprise Cloud Development and

Agile ALM products, launched a new

professional service, one of their key

concerns was how to price it. They

quickly realized that a pricing structure

based on usage would make more sense

to subscribers than rigid feature-based

pricing. So they decided to transition from

a utility pricing model to a subscription

pricing model based on usage (i.e. number

of transactions per month that customers

performed on the CollabNet platform).

As they got further into the rollout, they

on usage.

Usage pricing is about more than

pricing; it defines how CollabNet delivers

products and services to their customers.

Having an always available, always

flexible way to update pricing means that

CollabNet can update pricing as their

customers’ needs change. As Marion

notes, this means that “Customers feel

like they’re getting what they’re paying

for, as opposed to being forced into

buying something they don’t really want.”

This is the true meaning of value pricing.

With the Zuora platform, CollabNet is

able to leverage the flexibility and the

speed to provision a range of pricing

plans — and focus on what they're best

at: providing collaborative software

development features and functionality

that help developers build great

software.

To develop a meaningful, value-based

pricing strategy around usage, SaaS

businesses need the ability to:

Accurately track usage

Enable usage-based pricing,

including overage plans, tiered

usage pricing, volume pricing,

rollover windows,

and more

Rate usage to accurately bill

customers

Rate usage in real time to

provide customers with real-

time billing information

Key Takeaways

5. Optimize Pricing and PackagingOver the course of the entire lifetime of a SaaS business, do you know how much time

the average company devotes to planning their pricing? Six hours (that’s according to

research by Jeanne Hopkins, Executive Vice President & CMO at Ipswitch, presented at

a recent SaaSFest). That’s it.

This seems crazy, especially considering the huge impact that pricing has on your

bottom line — bigger even than acquisition or retention, according to research by

Price Intelligently.

Since pricing strategy is key to successful monetization, SaaS businesses need to

constantly be optimizing revenue through pricing. In our experience, we see this

philosophy reflected by our customers who, generally, update pricing annually

(which means that they’re thinking about pricing throughout the year).

Impact of Improving Each Growth Lever

0%

5%

10%

15%

Acquisition Monetization Retention

3.32%

12.70%

6.71%

Impact of improving each lever by 1%

Price Intelligently @PriceIntel

% im

pac

t o

n t

he

bo

tto

m li

ne

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along with recurring monthly charges.

Because of the nature of their business,

Invoca’s pricing manages multiple usage

dimensions including minutes, calls, phone

numbers, voice prompts, and more. This

combined with recurring monthly charges

creates exponential complexity in terms of

pricing.

So, to optimize pricing, Invoca needed

pricing and packaging flexibility to easily

and quickly match customer requirements

and demonstrate value. And they needed a

system that could support their negotiated

sales process and provide clear insight into

the pricing dimensions throughout the

quote-to-subscription cycle.

According to Christensen, Zuora “really frees

[Invoca] up to be creative and intelligent as

STAR EXAMPLE

Invoca, a call performance marketing

solution, demonstrates an evolved

approach to pricing.

According to Kyle Christensen, VP of

Marketing at Invoca, “If you can't price and

package the services and the software and

the products that you're delivering — or if

you do it inefficiently — you're not going

to be successful with growth.”

Invoca wanted a pricing solution that

could handle multiple usage dimensions

they go through pricing exercises. It really adds value to our customers and to

the business.” With increased visibility into key subscription metrics such as TCV,

ARR, and MRR, they can make more data-driven pricing decisions.

To increase monetization through pricing optimization, SaaS businesses need

the ability to:

Change pricing in a central location so that it updates across all systems

and sales channels (online, partner resellers, in the quoting tool, etc.)

Point-and-click to change pricing, not re-write code

Easily manage the impact of pricing changes for the entire organization

so that finance, sales, and operation teams can keep up with pricing

changes

Key Takeaways

6. Enable Self ServiceWhile there’s a lot of emphasis on SaaS startups moving upmarket from self-service

sales to a sales-assisted model, that isn’t the only path. Successful, mature SaaS

companies generally use some sort of hybrid sales model in which they embrace self-

service, transactional, and enterprise sales.

Self-service sales, with their lower price points and shorter sales cycles, are a growth

strategy unto themselves. What you lose in deal size, you make up for with sheer

volume (not to mention upsell opportunities).

To deploy a self-service sales strategy, you need to simplify. Your customer needs to

be able to easily find, understand, try, buy, use, and pay for your product.

Towards this end, the key to successful self-service sales is to have fully automated

systems to manage customer acquisition, onboarding, billing, payment, and account

management. These automated systems eliminate the need for sales support which

translates into a lower CAC (customer acquisition cost), relative to the ASP (average

selling price) for a new customer.

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of the five included documents a month

sent by an individual user is branded with

DocuSign (“Powered by DocuSign"). This

naturally lends itself to viral growth. With

more than 85 million users worldwide in

188 countries, this is a guerilla marketing/

sales team unto itself!

Companies like DocuSign that sell to both

consumers and businesses often track

individuals that sign up with the same

domain name (e.g. joe@abc.com and jill@

abc.com). Once they see traction for a

certain domain, they can then target those

customers for an upsell to a business plan.

Thus the self-service channel funnels into

an upsell path.

Self-service extends to account

management as well. Through self-service

STAR EXAMPLE

DocuSign, a trusted esignature solution,

employs self-service sales to bring on

new customers and capture the lower

end of the market, with more than

130,000 new users joining the DocuSign

Global Network every day.

For most of their plans — Personal,

Standard, and Business Pro — customers

can sign up right from their website.

Only their Advanced Solutions requires

sales support. Their Personal version

serves as a lead gen tool. Every one

amendments, DocuSign customers can make changes to their plans. This ability

for customers to easily self-service their own accounts is also a great driver for

conversions and upgrades.

To deploy a self-service sales model for customer acquisition and lead gen,

SaaS businesses need the ability to:

Track usage to target free-to-paid conversions

Empower customers to self-manage their own accounts beyond sign-up

(e.g. view balance, change subscription, update billing information, and

pay for invoices)

Support a wide variety of electronic payment methods targeted for

different geographic locations

Keep all customers in a single system so that the customer experience,

over self-service or assisted-sales, is consistent

Key Takeaways

7. Enable Assisted SalesAssisted sales teams are built on the foundation that a business needs to provide

some sales guidance (for new and existing customers). Generally, an assisted sales

model indicates that your product is feature-full enough to bring in higher ACV

customers that will need guidance in the sales process.

Pacific Crest saw this exact trend in their 2016 SaaS report — the greater the

ACV, the more dependent a business was on an assisted sales model.

Pacific Crest 2016 SaaS Benchmarking SurveyPercentage of Sales by Contract Size

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Median Contract Size (ACV)

<$1K

Inside SalesField Sales

25%17%

28%23%

52%

68%72%

85%38%

7%

5%

2%

40%

40% 49%

22%

13% 7%

38% 37% 28% 29% 24% 19% 21% 15%

Mixed/OtherInternet Sales

$1K-$5K $5K-$15K $15K-$25k $25K-$50k $50k-$100K $100K-$250K >250K

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As a SaaS business grows, they need to figure out a way not only to offer assisted

sales, but to overcome operational challenges to scale their sales team over time.

Companies looking to double down on their sales team need to:

- Enable sales with the tools and real-time consumer information to upsell, cross-

sell, and renew customers

- Scale with built-in discounting and approval workflows

- Provide the capabilities to take payments and automate prorations

to go “from zero to a thousand paying

customers in the first month of going

live,” according to BetterCloud CFO Bart

Hacking.

But soon they realized they needed to

go beyond the self-service model with a

direct sales team — and needed to figure

out how they would scale the sales team.

This required them to integrate their CRM

from a quote, order fulfillment, and order

processing standpoint.

BetterCloud was able to standardize across

new sales, renewals, expansions, and upsells

with Zuora's quoting solution. And this

automation ensured that when they needed

to grow their sales team, there was no

systemic limitation to doing so.

STAR EXAMPLE

When BetterCloud, the leading provider

of automated management and intelligent

data security for cloud office systems,

decided to move to a paid model, they

knew they needed help. With thousands

of free users, and projections for a 10%

conversion rate, they needed a robust

solution to manage their subscription

management, billing, and payment

systems as they looked to scale.

They started with a self-service model,

supported by Zuora, that enabled them

BetterCloud is now used by 50,000 organizations worldwide, supporting tens of

millions of employees. As CFO Bart Hacking says, “Our business has grown over a

hundred percent year over year, and that's going to continue.”

To successfully grow a sales team, SaaS businesses need:

Guided selling interfaces to help sales determine which products and add-

ons to sell

Real-time information on customer subscriptions, billing, payments,

and refunds

Built-in discounting and approval workflows

Automatically calculated proration when customers upgrade to a different

edition, suspend a subscription, add more seats, or make other changes

Integration between sales and finance systems so that the downstream

impacts of sales are easily managed (e.g. invoicing impact, revenue

recognition, etc.)

Key Takeaways

8. Expand into the EnterpriseWhile most SaaS businesses initially start with self-service or transactional sales

into smaller accounts, to avoid stalling growth they will eventually need to sell into

the enterprise. As TechCrunch recently reported, “At around $30 to $50M ARR, and

sometimes earlier, the law of large numbers takes hold, and adding enough new

‘small deals’ to maintain a high growth rate becomes increasingly challenging.” The

“law of large numbers” essentially dictates that without landing large deals, it’s going

to be pretty hard to reach $100M ARR, and beyond.

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36

Moving upmarket into the enterprise means bigger ACV (annual contract value) and

increased overall market share. But moving into the enterprise isn’t as easy as the

glib “land and expand” mantra would make it appear.

Going upmarket isn’t just about selling bigger deals. It’s an internal cultural shift that

requires thoughtful preparation.

There needs to be demand for an enterprise version, the product needs to

be enterprise-ready, and systems need to be in place to support these larger

customers. On the sales side, a business needs to have proven their ability to sell —

to multiple stakeholders across organizations — and needs to be prepared for the

much longer sales cycles that come with enterprise sales.

STAR EXAMPLE

Box provides a great example of a

company that successfully moved

upmarket. When they first started, as a

cloud storage and filesharing company,

their revenues through a sales team were

just 0-1%. In other words, they were pretty

much a pure freemium product with

almost all self-service signs-ups. Now,

even though so many of Box’s customers

are just individual users, almost all of their

revenue comes from businesses — with

99% of their revenue being produced

through their sales team.

Box CEO Aaron Levie succinctly explained

how this came about: “You make your

product as easy as possible to adopt but you

make it so a large enterprise can fully adopt

it across their entire company.”

According to Levie, “There’s probably not a

single enterprise that we ever sold to that

didn’t start with users in that organization

having adopted Box.” When enough

individual users within an organization have

adopted a product, organizational adoption

is the next logical step.

When Box started to make the shift from a

consumer product to an enterprise business

application, they discovered that they

needed the right infrastructure to scale.

They needed:

- The ability to support multi-year

contracts or ramp deals for larger deals

- The ability to track product usage to

promote upsells and negotiate renewals

- The ability to guide sales teams to

the right products and add-ons in their

quoting tool

Box used Zuora to make the charge

into the enterprise market. And today,

more than 41 million users and 59,000

businesses — including 59% of the

Fortune 500 — trust Box to manage

their content in the cloud.

To successfully expand into the

enterprise, SaaS businesses need:

Internal infrastructure that is

“enterprise-ready” such as data

access controls and multi-entity

management

Quoting flexibility to sell into

larger enterprises, with the ability

to price for multi-year contracts

or ramp deals

Systems integration so that

global sales, finance, and

customer success teams can all

work off the same data

Key Takeaways

9. International ExpansionWith a cloud product, there’s no geographical limits to where you can sell your

product. But while going global is a clear growth opportunity for SaaS, it poses

myriad operational challenges.

To go international, SaaS companies need to consider and be prepared for legal and

regulatory requirements, potential taxes, local payment methods and currencies,

different payment gateway partnerships, and data residency requirements. And

individual offerings need to be tailored for each new geography in terms of payment

options, pricing, etc.

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But up to this point, they have mostly

focused on direct sales in the U.S., with the

majority of their total revenue coming from

inside the U.S.

In 2017, international expansion is a

strategic priority, with plans to launch in

multiple countries. With the enterprise

multi-entity version of Zuora, they are

prepared to expand. In the near term, they

are also expanding their currencies to

include the Euro, UK pound, and Australian

dollar in addition to U.S. dollars.

STAR EXAMPLE

Cloud-based video communications

company Zoom has won over more than

just the U.S. with its reliable, affordable,

and easy-to-use product line.

Zoom is already supported in a wide

variety of countries — in fact, they excel

in remote regions due to the product’s

ability to handle low bandwidth really well.

And in addition to their U.S.-based data

centers, they already have data centers

in various locations around the world

including India and China.

To become a truly global company, SaaS businesses need:

Ability to accept multiple payment methods in different local currencies

Automatic tax calculation to avoid tax issues

Different payment gateways to maximize local payment offerings

Accurate reporting on foreign exchange gains and losses

Ability to run multiple financial entities separately

Key Takeaways

10. Strategic AcquisitionsStrategic acquisitions are a next-level growth strategy. For those companies that

have enough cash to fund an acquisition, it can be a smart move to reinvest that

cash into future growth.

Access to capital is only one of many requirements for SaaS businesses

contemplating strategic acquisition. In addition to cash, an acquiring company also

needs a strategic plan that fits in with their business model and

day-to-day operations.

They also need the infrastructure in place to support all product lines in one system

so that upsells and cross-sells across product lines are workable and the customer

experience across product lines is seamless.

Successful acquisitions can help a growing SaaS business increase their market

visibility and market share while enhancing their offerings to build out a more

comprehensive solution.

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44 Their first acquisition in 2010 was

Precision Polling which was, according

to TechCrunch, “like SurveyMonkey for

phones.” Just a few months after this

comparison was published, SurveyMonkey

took the hint, acquiring Precision Polling to

expand their surveys from online to phone.

In 2011, they acquired WuFoo for $35M,

expanding their product line with this

easy-to-use solution for building online

forms. And they acquired rival MarketTools,

through a partnership with a private equity

firm. This acquisition yielded them three

new products, 1.7M survey users, 2.4M panel

respondents, and some big name enterprise

customers.

SurveyMonkey continued their push into

the enterprise market in 2014 with the

acquisition of Fluidware, a competitor from

STAR EXAMPLE

SurveyMonkey has skillfully used

strategic acquisitions to make them the

world’s leading online survey platform:

between 2010 and 2015, they acquired

six companies — all of which helped

them increase market visibility and market

share while enhancing their offerings and

building out their solution (while folding in

the competition).

Today, SurveyMonkey cross-sells a

number of products that came from

these acquisitions.

Canada, with deep-dive features that appeal to businesses.

And in 2015, SurveyMonkey expanded into app insights with the acquisition of

Renzu, and took additional steps to expand their solution with the acquisition of

TechValidate, an automated content-generation platform, intended to "help every

customer now get more from their survey results," according to SurveyMonkey’s

CEO, Bill Veghte.

As SurveyMonkey continues to grow, we look forward to seeing their next smart

acquisition. It’s only a question of when.

To make strategic acquisitions, SaaS businesses need:

The ability to migrate customers from acquired companies onto one main

platform for improved accuracy and efficiency of back-office systems

Consistent invoicing and billing for seamless customer experience

Key Takeaways

CONCLUSIONGrow Fast — but Stay EfficientWhile each of these growth strategies is important and has its place in the overall

growth strategy of a SaaS business, you can’t just jump in headfirst to take on all 10

strategies simultaneously.

Growth rate is undoubtedly important, but the ability to grow efficiently is of equal

importance. If we had to pick one metric to represent efficiency, it would be CAC

(customer acquisition cost) - the cost to attain $1 of new ARR (Annual Recurring

Revenue). The industry average is $1.13. If CAC is too high, then growth becomes

meaningless.

The fastest growing SaaS companies are able to stay efficient as they grow: efficient in

terms of infrastructure, headcount, systems, processes, and organizational alignment.

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