Eric Siu: In this video I'm going to talk about three tried and true ways to actually grow a SaaS business. I'm Eric Siu, and I'm here to help you grow your business. So just hit subscribe if you like videos like this.
First and foremost, you have to think about customer development. Steve Blank wrote a book around customer development, I recommend checking that book out, you can just pick it up on Amazon, but it's the idea of going out to your customer, talking to them, seeing what their struggles are, and then also getting feedback on your product too, because you're serving your customers, at the end of the day. They can help be your north star, they can be the guiding principle to what you should be doing. That's not to say that you should listen to everything that they say, you have to be able to figure out, "Okay, there's a lot of noise," and then you have determine a signal, because people are going to ask for a lot of features all the time that are what they need, but if people keep asking about features and you keep hearing about them over and over, that's a signal that you should be perhaps paying a little attention to.
Number two; upsells and cross-sells. If you're a SaaS business, and your set pricing is $25 a month, or whatever, the way you can actually grow is to have upsells and cross-sells. These people are already your customers, so how do you go about increasing the value, the lifetime value of that customer? Leadpages, for example, they're a landing page development tool. They bought the company Drip, Drip is an email marketing tool, or email automation, so that's a cross-sell, right? It's not similar. But an upsell could be selling them to a two year plan of Leadpage, instead of one year, that's an upsell. So the customer ends up paying a little less, maybe 20%, 30% less or so, but they stay for a lot longer, so the lifetime value's a lot higher.
Now, the third thing is, why are you not increasing your pricing? Why don't you price based on value? Just because everyone else prices at $99 a month, $200 a month, $500 a month, doesn't mean you should be pricing like that. If you think that you can add $1 million of value to your customer, why shouldn't you collect a percentage of that, or a smaller percentage? You price $500 a month, right, you make $6000 a year. If you make them $1 million, why can't you make, let's just say, $20,000, that's 2%. That way you're able to basically increase the LTV, and you're able to grow a lot faster too, because you are pricing based on value.
Now, you've got to do testing here, obviously, but a lot of people are too resistant here, right when you pitch them this idea, they shut it down. So, if you like videos like this, just go ahead and hit subscribe, and we'll see you in the next one.