What Is SaaS Growth Hacking?

SaaS stands for (Software as a Service). Therefore, SaaS growth hacking is also known simply as growth hacking.

Growth hacking is a term coined by Sean Ellis and used by startups to describe the process of rapid experimentation across marketing channels, product development, sales segments, etc., to drive explosive customer acquisition growth (or radical expansion in user base with existing customers) at minimal costs (or an unsustainable cost structure leading to inevitable collapse).

In other words:

Growth Hacking is using creativity and analytical thinking to grow a business. It borrows from the lean startup approach and focuses on quickly testing every aspect of the business model. This requires scrappiness, speed, and immense curiosity about your customers’ problems!

In fact, if you think about it, growth hackers are not concerned with what is working. Instead, they are obsessed with what is working better and cheaper!

What is SaaS growth marketing?

Let’s see what Andrew Chen thinks about it:

“The most significant difference between growth marketing at a startup versus an established company is that the core product is already working for you. In other words, when companies are more focused on establishing product-market fit and building out their initial feature set, growth marketing requires a lot of creativity to get initial traction.

However, once your product has enough users initially, your job changes from getting traction to retaining every user as they expand into new use cases or grow in number.

Quantitative metrics must now replace a lot of the creative tactics you used to use to measure performance so as not to waste resources on initiatives that don’t accomplish goals.”

In short, SaaS Growth Marketing is a complex mix of strategies, techniques, and practices that are used to grow a SaaS business. Growth Marketing is all about achieving high scalability of the product through its application at a large scale.

The process involves identifying opportunities for growth in each customer lifecycle stage (acquisition, activation, retention, and referral) and then creating iterative marketing experiments designed to convert users into satisfied paying customers while delivering an outstanding user experience.

There are three key factors when implementing SaaS growth marketing programs:

Experimentation & optimization

SaaS companies use rapid experimentation as part of their core strategy for finding new ways to acquire users cheaply through an iterative process of testing, learning, and iterating.

The ability to test new ideas quickly with a minimum viable product being built out and deep analysis on what works best.

Customer empathy

Being able to understand and map out the customer’s journey using research techniques to build a picture of the customer’s needs at each stage of their interaction with you.

The traditional marketing concepts of the customer are limited to real-time behavior (conversion), while growth marketers are primarily concerned with what user needs to lead to conversion at each stage of the customer journey. This is something that traditional marketers don’t always take into account.

A/B testing

The ability to test different marketing ideas quickly by applying them to a percentage of customers in real-time, then decide which approach works best.”

SaaS companies use statistical hypothesis testing as part of their core strategy for finding new ways to acquire customers, engage them and retain them while minimizing costs. Unlike traditional marketers who are often not equipped enough or have access to tools enabling this type of analysis.

That being said, there isn’t a big difference between SaaS Growth Marketing and its Old School counterpart when it comes to its overall objective: ensuring the satisfaction of existing customers by delivering an outstanding customer experience.

As you can see, Growth Marketing has many similarities with traditional marketing, but also significant differences:

Focus on growth

Traditional marketing usually focuses more on individual customers and delivering value over time, while growth marketers are focused on driving scalable revenue growth in shorter bursts.

What sets Growth Marketing apart is that it focuses on finding new ways to acquire users, what we would generally refer to as marketing, and how to further optimize and scale those channels through testing and analytics.

SaaS marketers quickly learn which growth hacking techniques are working best at a scalable level to focus their efforts where they can have the most significant impact.

Also worth mentioning is that SaaS companies see great value in having a solid Customer Success Team responsible for minimizing churn and maximizing LTV since satisfied customers tend to be more likely to stay beyond the free trial period. So basically, there isn’t much of a difference between SaaS Marketing and Growth Marketing – they both share the same purpose.

However, there are some differences in terms of tools and data — SaaS companies typically use marketing automation platforms that give them access to more precise data about their customers’ user behavior. This is especially useful to success teams who can act sooner at each stage of the customer journey with personalized content for each user.

So if you want to become a growth hacker, you should first learn how traditional marketers operate; after all, most principles used by conventional marketers are transferable over to growth hackers.

There will always be new channels for product distribution but what’s important is knowing how to test ideas quickly to ensure that you’re continuing to optimize your acquisition strategy.

SaaS companies are constantly experimenting with new ways of acquiring users due to the low-cost nature of online channels, but they must retain those users to sustain their business.

Be ready to be flexible and willing to adapt as new marketing techniques emerge, but always ask yourself whether or not what you’re doing is genuinely adding value for customers at each stage of their journey.

What is a good SaaS growth rate?

A reasonable growth rate in the SaaS world will vary from company to company – there’s no universal number.

Over time as your user base gets more prominent, you can begin customer acquisition activities with more confidence and scale these efforts over time as well.

As an example, Inside Intercom currently has around 170,000 users – but we only acquired about 30,000 of those through marketing. So instead, we focus on building a great product that people continue to love and are happy paying for — retention is our primary goal.

Then from there, we’re constantly growing the user base by improving in ways like adding new features, improving personalization, or focusing on mobile apps. The key is knowing what value you’re providing your customers so that they keep coming back for more.

Early-stage companies will typically focus their efforts internally instead of increasing the number of users at this stage. At this point, marketers will be responsible heavily involved with sales and support – i.e., managing communities, creating content, etc.

These activities could also include providing public relations support or establishing partnerships with complementary products.

Marketing teams in this stage will be focused on engaging the few customers they have with valuable content.

This means that they’ll be utilizing social media and blogging sites like Quora to generate interest around their product, almost always by providing value through educational posts or case studies related to your business.

They’ll also begin optimizing their website for specific keywords, which will help them gain some early search rankings.

As a product grows and becomes more popular, so do the number of users. At this point, marketers may be focused on scaling up acquisition efforts – eCommerce companies can utilize retargeting ads and email marketing. Still, they must understand how these channels fit into the larger scale where retention is equally vital to customer acquisition.

If you’re unable to retain your existing users, scaling these processes over time will not be beneficial.

At this point, marketers are responsible for ensuring that new customers become successful with the product – using e-commerce as an example, marketers would need to have a strong understanding of what makes up transactional (or cart-abandonment) emails to send out effective messages. They’ll also focus heavily on customer development and improving their website content to help increase conversions. Leveraging social media and blogging sites at this stage is often less about building brand awareness and more about establishing organic search rankings.

Summary:

SaaS marketing is a constantly evolving field, but when you understand what value you’re providing customers at each stage of their journey, it becomes easier to determine where and how your marketing efforts should be spent.

As long as you understand how the customer lifecycle works with these products, companies will find that incorporating various channels into their growth strategy can be rewarding for customers and businesses alike.