For any SaaS startup, the road to accelerated growth can seem daunting in the early days. While founders and small teams now have access to a plethora of free startup resources at their fingertips, there’s hardly a one-size-fits-all recipe for growth that exists out there. Hustling to find out what works, thus, develops into a norm. Early stage hustlers may often find themselves working with what may seem like a familiar-sounding mantra; test, analyse results, re-test and finally, scale up what works.
The Journey To 100
No hustle can arguably be more fulfilling and insightful than the one that’s experienced on the road to a startup’s first 100 customers. The journey to 100 is one where young teams understand product-market fit and gain valuable insight from customers — knowledge that eventually helps them better their offering.
When planning your own revenue roadmap in the early days, you may wonder what The Journey To 100 looks like for other SaaS startups, and how long it takes them to get there. We dug into Chargebee’s data from 750 SaaS companies across 45 countries, to benchmark the time it takes them to hit this milestone.
Our analysis found that the top 50% companies in our sample, acquired their first 100 customers within 72.5 days, out of which 48% achieved this milestone in less than 65 days.
The benchmarks suggest that it’s not unrealistic for a SaaS startup to expect to acquire its first 100 customers within the first 100 days of operation. It took less than 10% of the sample more than 260 days to achieve this milestone.
These intriguing findings led us to the next question: What does the road to achieving revenue milestones look like? What are the timelines for baby steps towards a startup’s first $10k in revenue, and does the journey to a $100k change drastically?
Our data finds that while growing to $10K in revenue can take just ~three months for the top 50% in the sample, increasing the number to $100K can realistically take up to a year.
When benchmarking & forecasting growth however, SaaS growth experts across the globe rely on one key predictive metric — Monthly Recurring Revenue, i.e. the revenue received each month for a subscription to a product or service. We looked at how our sample fared in reaching $10k MRR milestones, and found that while it takes an average of nine months to hit this milestone, the top 50% achieved it in just six.
Metrics to monitor early growth (ChartMogul)*
To measure progress against these benchmarks, SaaS companies should monitor a set of key metrics. Monitoring these KPIs enables startups to grow more efficiently by identifying revenue opportunities and losses. While these are especially crucial in the scaling phase, the metrics can provide valuable guidance in the early days.
Monthly Recurring Revenue (MRR)
This is, hands down, the most important metric a SaaS business needs to calculate. It is the guiding light of revenue growth. You can monitor not just the static MRR value (eg: $5k MRR), but also the velocity of your MRR growth. When is it accelerating, and when is it decelerating? These trends provide insight into whatever growth strategies you’re employing in house.
Note on calculating MRR: If customers are paying for more than one month upfront, such as an annual plan, then you divide the amount paid by the number of months in the subscription period.
Not all MRR is created equal. Breaking down the metric into “movements,” or categories of shifting revenue, is crucial to having a clear picture. On its own, MRR can suggest promising growth. But it also could be masking a revenue-draining high churn rate.
By evaluating MRR movements in conjunction with overall MRR, you can understand the roles that expansion and retention play in the velocity of your growth. You can analyze the data to answer questions such as: How much of last month’s recurring revenue was from existing customers upgrading to a pricier plan? Has expansion business steadily increased over the last three months?
Net MRR Churn Rate
This metric is the rate at which you are losing MRR through downgrades and cancellations, offset by account expansions.
The dream here is to have net-negative churn, where the increase of account expansions outweighs the decrease of lost revenue. For obvious reasons, a negative churn rate is extremely appealing to potential investors.
Net Promoter Score (NPS)
The Net Promoter Score is basically formalized customer feedback. It measures your customers’ satisfaction and how likely they are to recommend your product to others (i.e.- to be a “Promoter”).
In the early stages of growth, revenue-based metrics can only be so useful to gauge the success of your product and business operations. Qualitative feedback from your users, however, is hugely valuable, and you should seize it from the beginning.
*As the company gains initial traction and scalability becomes more of a focus, additional metrics come into the fold, such as Customer Lifetime Value (LTV) and Customer Acquisition Cost (CAC).
Download the free Ultimate SaaS Metrics Cheat Sheets to learn more.
Tried & Tested: The SaaS Marketing Strategies For Early Customer Growth
Revenue metrics, regardless of how desirable they may or may not look, have considerable implications for early-stage growth marketing efforts. To see positive trends in metrics like MRR, teams must consistently experiment with several customer acquisition strategies that can get the product in front of the right audience.
Some marketing techniques have proven to be more successful than others in accelerating early growth. We’ve collected insights shared by successful SaaS companies, on the strategies that worked for them, back when they were working toward their first 100-1000 customers. Understanding these tried-and-tested strategies can open doors for your marketing team and encourage them to experiment with new customer acquisition tactics.
Let’s jump right into it.
For Pipedrive, a CRM solution that set out to redefine how companies do sales, acquiring their first 100 customers was far from an easy feat. Yet today, Pipedrives serves more than 10,000 customers, across 100+ countries. What worked for them? In a blogpost documenting their early journey, Timo Rein, founder of Pipedrive, outlined three strategies that gave them the initial push towards achieving their growth milestones.
- Address Your Customer’s Pain – “When building the product, think pain, not features.” Pipedrive believes that a product’s quality can be it’s greatest asset to growth, and understanding and acting on a customer’s pain points is an integral part of improving it. By focusing on building only the features that directly addressed their customer’s pain points (as opposed to building an exhaustive feature list just to outdo competitors), Pipedrive was able to develop a CRM that customers really valued.
- Get Your Product In The Hands Of The Right People – Getting the product in front of of industry influencers and thought leaders was a key driver in helping Pipedrive grow their user-base to 100, and subsequently 1000+ customers. Networking & working with startup incubators helped them gain word of mouth traction, and content marketing helped them gain credibility within the startup community. They also engaged in a deal with AppSumo, to offer cost-conscious tech entrepreneurs a 78% discount on the product. This led to a surge of signups, and in turn resulted in more word of mouth promotion.
- Make It Incredibly Easy To Sign-Up – Conversion rate optimisation was a core component of Pipedrive’s early stage growth. Feedback from customers indicated that the value proposition on their website was confusing and crowded with multiple call to actions. Subsequent UX & copy changes led to a 3x increase in visitor to signup conversions.
“In B2B SaaS, if you’re doing something that’s either category-creating or category-defining, you need to push forward the ideas that are embodied in your software.” – Niels Bischoff, Founder
In other words, it’s the thinking and ideas that go into a product that really attracts customers, and not necessarily the nitty gritties of features & functionality. Customers are more likely to give a product a try if its values resonate with them, and early stage growth marketing should focus on communicating these values in the most efficient way possible. It’s this belief that eventually led to Intercom’s early success, making them one of Silicon Valley’s fastest growing startups today.
Intercom’s road to their first 100 paying customers was a long one; their product started off as being free for all, and they launched their paid versions after one year of operation. Yet they used the time that led up to their official launch valuably, by creating an early buzz around topics that were relevant to their target market. By creating content on themes ranging from running & scaling a SaaS business to customer delight, they gave their future product a strong voice right from the start. As a result, they were able to create a strong following, even before they had launched their official product.
When they finally did launch their paid version, a number of customers had already lined up to convert. By building a reputation as thought leaders before they launched, Intercom built enough trust in the market, and buying the product seemed like a no-brainer to their follower base.
Like Intercom, Groove put in a ton of work before they even launched or started charging for the product. That’s what CEO and Founder Alex Turnbull credits for their success, which got them their first 100 paying customers in just one day.
Their pre-launch efforts were about customer development — building a base of engaged users. Turnbull describes how he used his network to conduct market research, receive early product feedback, and eventually gain steady users.
“In early customer development, you’re not selling. You’re learning.” – Turnbull
This meant doing things that don’t scale. Turnbull emailed personal contacts (and their referrals) with questions about their experience using help desk tools. Whenever he himself received customer support, he asked that employee their thoughts on the support software they were using.
This creative approach to research and feedback set the stage for more formalized networking: attending meetups and getting acquainted with local incubators. Getting fellow startups on board was a great way to validate Groove’s product.
Finally, nearing time to launch, Groove focused on PR and content marketing to promote their beta signup. Groove had a stroke of luck on each front: one write-up in The Next Web, and an insanely popular blog post about their “Journey to $500K.” Each secured them about 1,000 private beta signups!
They also added virality to their beta signup:
“We sent visitors to a beta signup form that would put them on a waiting list, and then offer them a chance to advance by sharing the form. This increased our free beta signups at the time by nearly 30%.”
After launch, the product remained free for several months, similar to Intercom. Over that time, Groove accumulated about 2,000 active users. When Groove finally turned on paid accounts, about 5% of users converted on the first day — and that was their first 100 paying customers. Now Groove is serving 4,500 businesses around the world.
Gleam, a B2B growth marketing platform, also credits “doing things that don’t scale” for their ability to gain 100 paying customers in five months. Stuart McKeown, one of Gleam’s Co-founders, doesn’t downplay the intensity of the hard work involved.
The initial research consisted of individually emailing 30 companies with questions. Once they collected feedback from potential customers, Gleam began to build their product. They focused on function, on doing “one thing exceptionally well,” rather than features. This ensured the tool was both easy to use and actually useful, and so they were ready to beta test.
Since the initial beta product was a tool for publishers to run online contests, Gleam emailed about 50 bloggers to ask if they would test the tool in return for a free lifetime plan. Selecting and reaching out to so many individuals is a lot of leg work for an uncertain payoff, but by doing this manually, Gleam was able to target their exact market.
“This stage was critical in getting our product mature enough to start charging real money.” – McKeown
Beyond that, McKeown personally sent 10 outreach emails every day for two months, all of them to relevant businesses.
Gleam had inbound marketing efforts as well. In fact, inbound marketing was the source of over 30% of their early signups. Like the other companies discussed here, Gleam recommends content marketing as a low-cost, relatively high-return strategy. Add in prospecting on social media platforms like Twitter and Reddit, and it’s easy to imagine the hustle Gleam put into marketing their product.
Not all SaaS startups exhibit a predictable pattern to achieving early stage milestones. While the process may be overnight for some, it could be significantly drawn out for others. Yet the length of time it takes to hit growth milestones doesn’t necessarily define or predict a SaaS startup’s future success — it’s the strength of the product that does so. A strong product is built upon a deep understanding of customer pain and innovative insight into how to solve the problem. It’s important to acquire this understanding and insight in the early days, which often involves doing things that don’t scale. The main tactic we’ve seen is to lock in conversations with people, industry influencers and potential customers, who can provide honest feedback. Acing these conversations, working on improvements, and increasing exposure through content marketing and social media outreach, can together help a SaaS startup gain the traction it needs to achieve its early milestones.