How to grow your SaaS Startup ARR from $5M to $20M: CEO?guide

Many great SaaS startups face similar challenges: you’ve had several great years, established products with happy customers, raised Series A funding with VCs… Now, you’ve hit about $5M ARR and realized you need to grow faster to meet your new investor expectations. It’s like racing against the clock: you have to show double/triple growth (remember the T2D3 concept?) while your current growth is slowing down, the market is getting even more competitive, and you’re struggling to attract top talent…

Sounds familiar?

I’ve been in your shoes several times and want to share my perspective on the new sales avenues (or channels) you must develop to scale up your startup’s growth rate. Simply hiring more salespeople won’t cut it; it takes time (up to 10 months for a new sales executive to get fully productive), and it’s expensive…

You need new sales channels for your product or new demand-generation activities to bump up your sales growth.

Here are my top 10 scenarios for CEOs to consider:

1. OEM Channel: If your SaaS product can add value to large Enterprise vendors, explore selling your product as a “white label” engine to accelerate new product (or product category) growth to large enterprise-size players. Large OEM deals can bring you cash injection upfront (to gap product development time), ongoing revenue share, and product improvement insights from your OEM partner. Be strategic in your OEM partner choice to protect your core geo market and limit your OEM market presence by geo or vertical.
2. Multi-year Deals: Close multi-year deals and collect cash upfront to lock your large customers into your product for years and generate more cash right away. Motivate your customers with locked or slightly discounted pricing.
3. Strategic Partnerships: Investigate large federal or regional players who can benefit from adding your product to their current offering. Leverage their sales team power and coverage to close more deals. Yes, it will cost you a deeper discount and probably some marketing efforts (investments) as well. But you can benefit from sales volume?—?by leveraging your strategic partner salesforce and existing customer footprint (X-sell is the best sales tactic to play here). Cementing relationships with large enterprise players might lead to deeper financial relations for your startup in the future, from funding to acquisition.
4. Expand into New Markets: Identify and capitalize on new market opportunities by entering new geographic regions or verticals where demand for your solution exists. Start with local geo partnerships before investing in your geo team.
5. Exclusive Distribution Deals in New Markets: Instead of opening your office in new geo locations, consider giving exclusive representation rights to a local partner. Exclusivity often comes with minimal revenue commitment and potential upfront partial payment.
6. (Re-)design Your Partner Program: If you haven’t developed your partner sales channel, it’s never too late. Partners can scale your sales cheaper and faster compared to adding new sales executives. Designing a new or improved partner program takes planning and a dedicated team. I am going to cover it in my future blogs.
7. Prioritize Customer Success: Reduce churn and maximize revenue by prioritizing customer satisfaction. Implement proactive support and personalized onboarding to pay back with upsell opportunities and skyrocket your Net Revenue Retention (NRR).
8. Price Increase: Introduce new price bumps together with a new feature set. Charge the same for existing functionality and make new features part of your core product offering at extra cost. Be cautious when introducing price hikes to existing customers; your ability to enforce it is limited.
9. Product Innovation and PLG (Product-led Growth): Explore new ideas and features to stay ahead and introduce new product offerings to niche (less competitive) markets. If you can offer in-product purchase (license activation), SKU-to-SKU transition, online (in-product) customer support, and multiple (convenient) payment options?—?go PLG. PLG includes free or freemium product offerings and self-service customer experiences. Be careful running your online/direct sales alongside channel sales to avoid demotivating your partners. Be smart with diverse sales channels for different product lines/verticals and markets.
10. Optimize Your Sales Operations/GTM: Improve your sales processes for a faster sales cycle and lower customer acquisition costs. Consider bringing in an experienced external consultant to provide a fresh look at your sales and marketing engine, Chief Outsiders can help here with 100+ team of battle-tested CMOs and CSOs.

I believe this is a great starting list for designing new sales channels to triple your ARR and accelerate growth. Knowing your product ICP and collecting constant feedback from your customers is a great start. Listen to your customers’ insights and explore new growth opportunities!

Happy selling, and stay tuned for more Sales Insights!