Five Reasons Your SaaS Growth Strategy Might Not Be Hitting the Mark in 2024

If you're reading this, I hope it's just curiosity that made you click and that your business is well on track for 2024. But if things aren’t going as planned and you’re thinking about what might be wrong, we are seeing several reasons that are consistently surfacing as to why SaaS growth strategies are struggling this year that can hopefully help guide you where to need to inspect.

? Lack of Clear Vision and Goals: Focus, or lack thereof, is a hot topic in every conversation we have with investors and their leadership teams.

Without a well-defined and UNDERSTOOD vision with specific, measurable goals aligned to the vision, your strategy can lack the direction to achieve intended outcomes. (Yes, it's OKRs and KPIs, but much more.) Ambiguity makes it difficult to align efforts, effectively reach your audience and measure progress effectively. In the software industry where I spend most of my time, one of the biggest vision > goal achievement challenges used to be around effectively evolving from from on-prem to SaaS. Innovation is only accelerating. Now its all about AI. Company visions are changing. Investment priorities are far different than they were 12 months ago. Stakeholders have not been able to fully keep up. To capitalize on the AI opportunity, we now know our client's vision must clearly articulate - for all stakeholders - how it is delivering greater and differentiated value through AI, not just that the acronym AI is in a tagline or mission statement. Paraphrasing from a conversation I had with a technology CEO last week, everyone says there are an AI guy now while most companies really don't yet fully understand what AI means to their business or for their customers.

Those that will successfully navigate and leverage the emergence of AI will be those who can define and execute a clear, while agile, AI adoption model that provides demonstrable incremental value alongside evolution of their AI strategy.

? Inadequate Market Understanding: Your growth strategy can fall flat if its not in tune with market demands, customer needs, or industry trends - that you can directly correlate to the unique value of your product or service. (Make special note of the second part of that sentence.)

Insufficient market research or a misunderstanding of customer preferences can lead to misguided strategies and missed opportunities. A great way to counter this is to focus on customer advocacy. Review your market opportunity through the lens of your customers (and to some extent prospects.)

This is a good reality check for product-market fit, the customer pain points you are actually addressing and how to define a credible value proposition that peer customers will realistically buy into. Reminder: The value of peer endorsement is valued more than vendor-provided information. See my other LI posts for references to the many 2024 research reports citing the increasing trend of skepticism about vendor-provided information.

? Poor Execution and Implementation: Even the best strategy can flop if the execution isn't up to par. This might include issues like inadequate resource allocation, ineffective processes and budgeting, or failure to adapt plans based on real-time feedback and performance data.

Often these words are just another (nice) way to say do we have the wrong people in the wrong jobs.

First, as a commitment to your existing team, are the skills and knowledge of your team members current and relevant for their existing positions with the attitude and commitment necessary to excel in the new change mandate? In a challenging economic environment, training budgets are often reduced. As an employer, have you done your part to advance skills of valued employees required for execution of this next phase of your business?

Training aside, sometimes the solution is simply a direct conversation with an employee or several employees to (re)share the current vision and their role and accountability in it. At other times, it may be replacing permanent full-time roles with fractional or part-time experts, who are best fit for purpose, where full-time or permanent hires aren't actually required or where you need the skills now and can't wait on training internal staff. Executives today should ensure they are leveraging the many talent models available to align execution requirements with the right skills, workloads and budgets.

? Resistance to Change: It's commonly understood that organizational resistance to change can impede the success of a growth strategy. What often isn't accurately understood is the un-filtered state of organizational sentiment toward the necessary change.

If employees or stakeholders are not on board or lack the necessary skills and support, implementing your strategy can be challenging. With what have been recently tough labor markets in most industries, employees can be hesitant to convey their actual sentiment for fear of losing their jobs. It can lead to employee frustration, ineffective communication, increased (sometimes passive-aggressive) pushback, decreased productivity and overall negative impact on organizational culture.

While it is easy and cheap, relying solely on leaders observations for understanding sentiment is often found to be shortsighted in the long run. At a minimum, we recommend ongoing (ideally reputable third-party) surveying of all stakeholders. By doing so, each stakeholder group will obviously share insights (hopefully actionable) about their own group (employees, partners, suppliers, investors, recruits, etc), but surveying all stakeholders will also reveal insights about other groups that weren't revealed by the members within that group. Understanding actual sentiment is foundational in driving successful transformation initiatives.

? Inflexibility and Failure to Adapt: Technological advancements, globalization, market dynamics, economic conditions, regulatory updates, workplace trends and competitive pressure (whew!) are all undergoing significant change. A couple of these would be challenging for anyone to deal with at any given time.

The business environment is clearly dynamic. A model and culture that doesn’t evolve and support its largest investments - its people - to thrive through successfully dealing with changing conditions will become ineffective.

A good place to start is your leaders. Often revealed is "do as I say, not as I do" management styles (either perceived or real - it doesn't matter.) Are employees really comfortable embarking on the change, new motion or sharing the new vision - without repercussions of making mistakes which are inherent while learning. Are leaders modeling the courage, empathy and support that is needed? Management needs to support the obvious motion (and fumbles) of learning. Without this it leads to decreased engagement and motivation, reduced trust and morale, lack of innovation and ultimately high turnover. This creates a fear-based culture with low productivity which contribute to overall company underperformance.

These are just five reasons within a library we've built of lessons learned and strategies for tackling underperformance of B2B software businesses. If any of the above sound familiar, and you're an investor or operator in the business software industry, at Brightrose Ventures we focus on defining and executing growth initiatives for underperforming software portfolio companies.

Addressing these issues involves revisiting and refining your growth strategy, improving execution practices and overall GTM motion, ensuring alignment with market needs, and fostering a culture that embraces ongoing change and innovation. We know every company is unique. If interested in learning more about our ideas relative to your growth challenges, we invite you to schedule an introductory meeting. We'd love to learn more about your business and see how we can help your business transform to perform.