Looking to grow your business? Of course you are—like all technology companies. But what separates the dreamers from the achievers is knowing the right way to grow. Increasing customers and boosting sales can occur in a handful of different ways, and all of them require some type of investment. The key for businesses is knowing where to find the highest reward for the least amount of effort.
Before anything else, consider a thorough analysis of your market opportunities, which will arm your organization with the insight needed to build smarter strategies that create real sustainable growth.
In assessing your software company’s market for growth, consider these five strategies.
Leading technology companies understand that an effective data strategy is critical to not only growth but survival. But more than just the volume of the data itself matters; it’s what you do with it.
If data isn’t being analyzed thoroughly—that is, combining and comparing millions of data points from across multiple business units and running it through a myriad of scoring scenarios—you’re losing money. It’s that simple. It wastes resources on sales that will never happen and misses out on real opportunities by creating transactional instead of strategic relationships with your customers—it also drives up churn rates.
Taking a consolidated approach to customer, product, and market data increases your chance of future growth. Smart data analysis can predict customer behavior, reduce churn, and identify opportunities for product upgrades or empower more personalized marketing and support communications.
Operational data can be used to improve efficiency and drive better customer outcomes by arming organizations with strategic insight on how customers use services and what they might be interested in next. It can also help develop systematic programs to identify, target, and nurture existing customers for cross and upsell possibilities.
Investing in growth built on a shaky foundation is pointless. It’s time to take an honest look at your company and ask yourself some questions:
Answering these questions is essential to make sure that you have product-market fit—the holy grail for growth in the space
The generally accepted benchmark for successful software companies is to achieve and maintain a combined growth rate plus profit margin equal to (or more than) 40%. High-performing companies are never complacent about this “Rule of 40.” They constantly tweak their products, their target markets, and their sales and marketing tactics to focus in on the perfect way to satisfy customer needs, wants, and demands. If your business isn’t currently achieving the ideal balance of growth rate and profit margin, it’s a clear indication that there’s work to be done before investing in additional growth strategies.
Selling more to your existing market is the fastest, most profitable path to incremental revenue growth. Excellence in cross and upselling is vital for technology companies, with the top-performing SaaS companies reporting 41% growth from these activities alone. Selling more to your loyal customer base can also lead to increased customer lifetime value (CLTV).
How do you identify which customers to target? Make sure your approach is relevant and targeted to your customer’s specific needs—which means going back to the data.
For example: With event-based analytical tools integrated with your CRM, you can measure product usage and identify your product’s most active users. Or you could use machine learning models to prioritize who to target at right time with the right product using Netflix- or Amazon-style recommendation systems that incorporate a range of variables such as their existing data stack compatibilities, purchasing habits, engagement level, and company size.
It may not sound like a growth strategy, but your churn rate can significantly impact your bottom line. We all know that some degree of churn is unavoidable. But if your churn rate is too high, it’s both impacting your revenue and wasting money and resources on attracting and selling to those customers. A 5-7% annual churn is a great benchmark for established tech companies.
If your churn rate is high, dig deeper to uncover why. Use data to analyze at what stage of the product life cycle you’re losing people and which customer segments are churning: Are they lower or higher value customers? You might be able to identify some easy retention strategies—like a better onboarding strategy or improved customer support—that makes a noticeable difference in retention rates. You can also leverage machine learning to proactively identify which customers are most likely to churn in the three to six months and then develop strategies for retention based off that information.
After working through the previous steps, you should have a clear understanding of your current strengths—and you should be able to more easily identify opportunities to improve your offering or service.
The final step is to turn your focus outward and see what’s happening around you. Continuous evolution of your products and services is mandatory, but understanding the shifting needs of your customers to remain aligned requires taking a broader perspective.
Take a deep dive into customer feedback and gather insights from departments across your broader business, including R&D and marketing. Analyze the external market to assess customer needs and how they’re being met by other companies. Look at your value proposition and evaluate how it fits with target consumers, direct and indirect competitors, and the environment as a whole.
An external market analysis might highlight that there’s growth to be had by merely tweaking your outreach methods—a strategic marketing or communication strategy could be vital to success. But if you’ve identified an opportunity to launch a new product to target a new segment of the market, it’s likely to be a far more intensive process.
The quality of data and the depth of analysis once again will again be crucial to garnering real, meaningful insights to ensure you achieve a growth level that justifies the significant investment.
Employing a sustainable growth strategy in the technology space is becoming increasingly complex. Innovations and new competitors enter the market at dizzying rates. Products are indispensable one day and obsolete the next. Once-loyal customer bases are being wooed from all angles. Where once a shiny new marketing campaign might have been all it took to boost sales, the rules (and stakes) are different now. That’s why taking a strategic, data-driven approach to your growth is essential to give yourself the best chance of success.