How to Grow a Successful Recurring Revenue SaaS Business

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As businesses look to leverage the benefits of recurring revenue, their executives understandably turn to other leaders in this space. And there’s an incredible depth of knowledge available among individuals who’ve paved the way and mastered the various elements of SaaS business growth.

Below, we’ve collected insights, advice, and lessons learned from seven industry leaders on how to scale a SaaS business with success.

From onboarding their first 1,000 customers to confidently taking action on everything from digital transformation to cultural and revenue diversity, here’s how the experts make it happen.

1. Tom Zsomborgi, CBO, Kinsta:

On reaching the magical first 1,000 customers:

“There is nothing more fulfilling as a company than starting from the very beginning and watching your customer base continually grow over time. But once you reach this magical 1,000 customers you can’t just sit back and relax.

In many ways, it’s just as challenging as the early days of the business. You just have to deal with different kinds of challenges like constantly hiring, managing your growing team, handling finances, and a more complicated product development cycle.”

 

Kinsta offers premium WordPress hosting for brands like TripAdvisor and Intuit. Zsomborgi and three friends founded the business in 2013 and grew it with 100% bootstrapped funding.

Today, Kinsta has 24 data centers and handles 30,000+ gigabytes of traffic a day.

How did they do it? They didn’t let off the gas pedal once they started hitting milestones.

The main attraction of the recurring revenue business model is that once customers are acquired, they provide predictable income every billing cycle.

 

However, this predictability only exists as long as a SaaS product or service remains useful and competitive. That requires ongoing work.

As you continue to scale, don’t expect to kick back and watch the Monthly Recurring Revenue (MRR) roll in. Keep that pedal to the metal, and continue to iterate and innovate. By doing so, you’ll be much more likely to keep the customers you’ve already won over while you continue acquiring new ones.

2. Safra Catz, CEO, Oracle:

On action and inaction:

"You can't beat the competition by standing still and you can't be driven by caution all the time. It is extremely easy to be lulled into inaction.... Indecision really is your enemy.... If you want to beat the competition and you want to advance your career personally, you need to make decisions and take actions.

If you make decisions quickly, and you make a mistake, you may have a chance to fix it. [But] if you wait too long, the decision will make itself, and any change will be impossible."

 

As the tech world tilted toward a preference for SaaS, legacy company Oracle needed to adapt. Now, Oracle offers autonomous cloud and database technology with industry-leading security. This positioned the enterprise well for continued growth and success.

Just as recurring revenue requires ongoing work to maintain, it also requires strong decision-making and decisive action at critical junctures. When decision-makers are challenged with tough choices, the worst thing they can do is nothing.

Leverage data to inform decisions and be prepared to make corrections as you go.

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3. David Cancel, CEO, Drift:

On the importance of diversity and culture:

“Drift is in the 2 percent of VC-backed startups led by Latinx founders. Diversity is baked into our culture because it’s baked into who we are as people.

We want to be the new face of tech and corporate America, and we believe our roots are a competitive advantage in a competitive environment.

A diverse team means diverse opinions and solutions. So if you’re looking to attract talent, showcase diversity, but don’t just talk about it. Live it.”

 

Diversity, equity, and inclusion (DEI) in tech has been getting a lot of airtime lately, and for good reason. Diverse businesses are more likely to have financial returns above their national industry medians—yet the tech industry has struggled to meet DEI goals. Fortunately for Drift, diversity has been a core value since the beginning.

Success in SaaS requires innovation, and a lack of diversity kills innovation. To rise above the competition, leaders must be intentional with their DEI goals.

Learn about DEI workplace strategies and how they can improve your business.

4. Molly Graham, COO, Lambda School:

On the emotional realities of scaling up:

“There’s no way that the stress of building something from scratch doesn’t affect your emotions. You’re cycling through anxiety, fear, euphoria, boredom and then back to fear again as the situation changes, and that’s completely normal.”

 

Up until she became the COO of Lambda School, Molly Graham was a startup advisor with experience scaling teams at Google, Facebook, Quip, and other big names in tech and SaaS. She’s known, among other things, for her “give away your Legos” advice for leaders of growing businesses.

As a business scales, leaders inevitably and increasingly must hand off their responsibilities to others. Navigating this tough but necessary step is essential to healthy growth and scale.

In a more recent metaphor, she explains why executives need to “make friends with the monster chewing on their leg.” The monster represents all of the emotions that come with scaling, and its job is to “make you the worst version of yourself.”

Graham’s advice? Observe these emotions, but don’t act on them—for at least two weeks. Business leaders in SaaS can certainly benefit from this advice.

5. Jeff Lawson, CEO, Twilio:

On digital transformation and the importance of seamless technology integration:

Typically… you have to change your business to meet the software you bought to run that business. Instead, we want to change our software to meet the business we’re trying to build.”

When it comes to differentiating and maintaining a competitive advantage, it’s hard to beat solutions that feel customized. Twilio’s customer engagement platform approaches this by offering customers the building blocks to create their own unique customer experiences. From SMS and Voice to Video and IoT, customers can “wrap Twilio around their business”, rather than the other way around.

As any good business leader knows, a promising product is one that solves a problem. Your SaaS business should solve problems other solutions present—like integration struggles.

And if your business can digitally transform with technology solutions that better solve your own problems and pain points as well, all the better!

6. Sanjit Biswas, CEO, Samsara

On diversifying your revenue streams:

Samsara's approach is to use the Internet of Things to help increase the efficiency, safety, and sustainability of industrial operations. As Samsara has grown, we've continued to discover new opportunities to innovate on behalf of our customers.”

Samsara is an Internet of Things (IoT) platform with both hardware and subscription-based service elements. Its various product lines, which bring analytics, AI, and real-time visibility to a number of industries, have helped the business grow to an over $6 billion valuation in five years.

While it’s wise to have focus when it comes to the solution your business provides, being able to diversify your offerings to meet the needs of various customer segments can increase both your market and growth potential over time.

And leveraging a variety of SaaS or IoT monetization possibilities doesn’t hurt either.

Product catalog flexibility and the ability to perform rapid pricing model adjustments—including usage, overage, or any hybrid variation—are huge advantages of digitally transforming your business with a modern subscription billing management solution.

7. Neil Barua, CEO, ServiceMax:

On entrusting the skill and knowledge of frontline employees and surviving change:

Leaders work for you.”

Field and asset service management software provider ServiceMax has undergone many recent changes. After being acquired by GE Digital for two years, the business was re-introduced as a standalone operation after a buyout from a private equity firm in late 2018.

Barua spent 2019 taking actions like hiring the organization's first heads of HR and sales, as well as meeting as many employees as possible. Then COVID-19 hit.

Barua quickly shifted his teams to remote work, prioritizing his employees and their families. A future-looking leader, he knows that employees are the face of the business.

Hire and retain leaders by valuing and trusting their expertise. This will help your businesses manage any major change that comes your way.

Recurring revenue growth requires movement

If there’s one common thread within these nuggets of SaaS wisdom, it’s that the work truly never ends on the road to scale. Success in SaaS requires continual action and evolution: there’s no set-it-and-forget-it option.

From change management to prioritizing diversity, SaaS leaders looking to grow have a number of considerations on their plate while juggling the ongoing stressors of scaling a business.

With commitment, the right team, and scalable processes and infrastructure, SaaS businesses can harness the power of recurring revenue as the pathway to success.

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Tags: SaaS SaaS Strategy Recurring Revenue

Shannon Burton

Shannon Burton is a writer with a background in B2B and internet-based business. As a regular contributor to the Fusebill blog, Shannon draws upon her experience and the Fusebill team’s expertise to write about developments and practices in the SaaS and subscription business fields. She enjoys using new research to reveal the best ways to adapt in an ever-changing technological landscape. Based in New Orleans, she often travels to her home on St. Thomas, Virgin Islands to visit family, and spends her free time writing about culture and volunteering in environmental education and reproductive health.

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