Internet companies and SaaS product companies can start with a very small capital and scale up to a $100 million in annual recurring revenue without external investment. If this statement sounds too optimistic or bold, let me tell you that it is very much possible by imbibing the global best practices of Inbound Marketing.
Primary Stage Internet Companies
SaaS products should focus on 2 essential cornerstones during the primary stage. The primary stage is when the startup is making up to $5000 monthly recurring revenue (MRR).
- Make the product small and sweet so that the customers can start deriving value from the moment they sign up.
- Focus on hacking growth by accelerating lead generation.
Let me elaborate these 2 cornerstones to bring a crisp clarity on why and how of things.
During the primary stage the product may not be 100% stable and may contain a few bugs. Keeping it small makes it manageable since such startups also have a small team maintaining the product. Start generating leads even before the product is ready by accepting early birds. ‘ProductHunt’ has recently started a new section called “Upcoming Products” which allows such concept level startups to start collecting early leads.
To launch your Upcoming product on ‘ProductHunt’ you need to send an email to Nick Abouzeid, and as per Nick you need to have at least a month or so, of time before the launch of your MVP.
SaaS product companies do not have the privilege to physically meet their prospects to demonstrate their product's capability. In such circumstances, they need their product to go live with a single click, or with very little intervention. While easier said than done, majority of the prospective customers of SaaS products abandon the software due to lack of their self-motivation and continuity of their interests and lack thereof.
If you get 10 early bird subscribers, 5 of them would have lost the interest by the time you launch your product, 2 of them may signup and then abandon it half way, 2 may not be satisfied with the features, and if you are lucky only 1 may actually continue using your product. While many of you may think that this is outrageous, a 10% conversion rate is quite optimistic.
This also means that you need to hack growth from day one to generate huge volume of leads so that even your 10% conversion will amount to a substantial volume of users.
While you can read many expert articles on how to hack growth, the actual fact that has remained in the shadows, is a big spend on advertising via PPC, Facebook and other digital channels.
As a new startup you will invariably have to spend to bring quality traffic to your website, but you can use tools like Notif to make the most out of those dollars. Notif is a genuine social proof plugin that displays actual signups, purchases, and subscriptions rapidly to your website visitors, creating a Fomo (Fear of missing out). There are established case studies which have proven that Notif has accelerated Lead Generation and Website Conversions 20 times more than in ordinary circumstances.
“Remember all those dollars spent on Facebook ads will only continue to make Mark Zuckerberg richer if you don't have a tool like Notif to convert your traffic.” - Palash Bagchi, Retainly
During this stage, use tools like Chatterbox, that will help you immediately attend to a customer's query from your Slack. Why Slack? Because Slack has become the de facto standard of modern companies, and with Chatterbox, primary stage products can allow their entire team to double up as customer support or inbound sales specialist.
While many internet companies at this stage may consider not going in for a live website chat thinking that too many unscrupulous characters may bother them day and night, Chatterbox has a built in bot to filter out genuine leads and hide all those who are intending to prank. No more worries, right?
“A $5000 MRR + 10% Churn + 90% Growth + Great Founding Team = A Unicorn in the Making.”
Progressive Stage Internet Companies
Internet companies who have scaled to $4 to $5 million in Annual Recurring Revenue (ARR) have not done it by building processes manned by human resources. They have all employed robots and automations. IBM can afford to have 450K employees for a $79 Billion in revenues, while Facebook had achieved $26 Billion with less than 20K employee strength. When WhatsApp was acquired for $19 Billion Dollars, it had only 45 employees.
While all processes need to be automated, the primary focus for Internet companies should be on Marketing Automation.
Progressive Stage companies need to focus not only on automatic lead conversions, but a huge amount of focus and strategy goes behind reducing churn. Churn doesn’t happen overnight. It slowly sinks into the system. Everything in Internet and SaaS companies start to get complicated with too many customers, too many workflows, too many marketing programs, too many salespeople.
Inbound Sales and Customer Success Programs are the most essential at this stage.
Tools like Retainly has helped both Primary and Progressive Internet Companies to achieve scale by automating Lead generation, Lead Capture, Lead Nurture, Lead Conversion, and Customer Retention (Churn Reduction, Cross-Sell/Up-Sell). Retainly provides automated Customer Engagement Score built with a proprietary algorithm that predicts which customers are going to Churn and which leads are more probable to conversion.
Also use tools for NPS surveys to detect customer dissatisfaction before the churn rate goes beyond control.
“A $5m ARR + Net Negative Churn + 70% Growth + Awesome CEO = An Unstoppable Internet Company.”
For those who had thought that a startup cannot scale to a $100 million without external investment, read about some of them here.