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  • Jeff

These 6 Drivers Will Help SaaS CEOs Beat Revenue Goals in 2020

For 2020 there are great reasons for CEOs to be bullish about record top line revenue growth, especially if you are running a SaaS business.

Let's step back from the day-to-day demands of running the company and take the opportunity to assess the macro-level changes you can leverage to drive new top-line revenue growth this year.

Here are 6 levers that will help you reach new highs in revenue and margin growth in 2020.

1.   The hot economy will float all boats.  Companies will move to a growth footing and as our customers grow, we will grow by helping them.  After a tenuous 2019, the end of Q4 brought great news – trade tension is loosening with China, Brexit is clearing up, and U.S. markets are at an all-time high.  Supported by easing of fiscal policy and strong consumer demand, business growth is expected to turn up in the first half of 2020.

“The consumer remains well-positioned to keep spending and will remain the backbone of demand growth in 2020,” said Michael Feroli, J.P. Morgan Chief U.S. Economist.  JPMorgan Global Market Outlook

We all saw our customers slow their spend with the cautionary environment of the last two quarters, but these cautions are subsiding, and demand remains strong. 

2.   Support sales with the latest best practices.  Sales is no longer just the job of the sale team, new processes and game plans coordinated across sales, marketing and products will drive top line revenue growth. Gone are the days when your best strategy for sales was a large field sales team roamed the country to convince customers to do a long POC.  

New best practices in sales, marketing and go-to-market strategy have changed the process and cost to grow revenue.  In 2020 cost-efficient Sales Development Reps (SDR) teams using automated targeting systems get customers to the table in larger numbers and with lower costs of acquisition than a direct team alone. Marketing has been retooled from makers of brochure-ware into a critical operator of the sales funnel. Now marketing is an analytics powerhouse that can use automation to target likely prospects proactively and herd them through the online sales funnel. Product management now drives sales with products designed to do their own marketing and sales conversion using low-friction end-user trials, viral growth and in-app upselling.  

3.   Overcome obstacles with a network of experts.  Don’t be constrained by the limits of your current team.  You can grow your revenue and tap experts to analyze expansion markets, revise your pricing strategy, level up your sales process, and automate your lead generation, to name a few tasks. We’re not talking about the gig economy, today you can find and access virtually any expertise and operational experience with engagements that suit your budgets.  With the emergence of strong collaborative tools like Zoom, Google Docs, and Slack you can tap into a virtual team to tackle projects leveraging experts from anywhere on the globe.  Leverage operational experts as needed to boost your teams ability and sprint through barriers.  

4.   Invest in AI to leap ahead.  The more data you have, the more strategic opportunities you have to apply AI.  54% of survey respondents say deep learning will play an essential or large role in upcoming projects, according to O’Reilly’s recent survey.   While it’s still early, that’s a big number and it’s a flashing warning that you need to plan how you will use AI to outperform or just keep up.  Successful AI use cases are proliferating across sales, customer satisfaction, operations and recruiting. AI can make a big impact in operating your business more efficiently and offer strategic new capabilities to boost your revenue.  As a SaaS CEO, the potential to you is exceptional. SaaS applications often aggregate a lot of data across many customers and that same data can be leveraged with AI to drive positive outcomes.

5.   Use the cloud and APIs as force multipliers.  Don’t get stuck thinking that you need to build everything in house when time to market is critical. Being a SaaS company, you are very likely building and deploying your products from the public cloud.  Not only is this very cash efficient, it opens you to the ability to upgrade your software by connecting to a large variety of third-party software systems. With so many 3rd party capabilities, you can augment your systems faster and at lower cost than building capabilities yourself.   There is an ecosystem of other SaaS CEOs are offering an extraordinary variety of value-add products and data sets you can leverage to streamline your financial operations, differentiate your products, automate sales, and forge unique partnerships.  

6.   Invest free cash flow to grow.  The best news of all is the nature of the company you are growing - SaaS companies have an enviable business model.   Your cost of goods remains low and predictable even as customer growth scales up. The magic, as you know, is getting the Monthly Recurring Revenue reliably above the monthly burn. Once that line has been crossed, the SaaS business can invest free cash flow to accelerate revenue and EBITDA.   While the people skills are expensive, other costs compared to non-SaaS business models are very low, or zero, to finance equipment, buy materials, transport goods, buy energy and other capital expenses necessary to operate most businesses.  Drive for positive cash flow, keep the revenue engine healthy with $150,000-200,000 ARR per employee, and hold your churn close to zero.

Now is the time to rethink what's possible and use leverage best practices to grow. 2020 will be a great year to beat your growth numbers.  

If you need help to explore growing your revenue faster, send me a note and we will setup a free 30-minute call to discuss your challenges and opportunities.

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