Avoid the SaaS Death Trap: Your 5-Day Survival Guide

by Vadim  - May 2, 2024

The harsh reality - most SaaS startups fail within the first few years due to non-technical blindspots.

Below i am going to reveal the unspoken truths and insider strategies for navigating the business side of SaaS. 

I know coding is sexy and that is what you love most, but getting paid for your product is also amazing (trust me!).

Rethinking your mindset and priorities as a post-launch SaaS founder

You quickly find yourself "deflated" after the hype of the launch, after the Product Hunt upvotes, after all the congratulations you will receive, and after the first clients pay you money.

Why is that?

Well, on the one hand - you made it; but on the other - did you make it?

So, here's what you nee to do:

  1. Shift from build mode to growth mode by tracking the right metrics. Example:
    •  MRR is great but that is a resulting metric. You cannot impact it.
    • What you can impact is its components: churn, CAC (client acquisition cost), conversions.
  2. RE-Validate your value proposition through customer interviews and surveys 
    • Now that you have paying clients, how are they feeling?
    • What's working for them? Do not be afraid to point blank ask: "Are you getting value?"
  3. Map out your customer journey and identify points of friction 
    • You had an idea that you are going to solve a particular problem for people/businesses
    • Are there upstream or downstream opportunities for your product? (new features)
    • Are you talking in the right way to the market?

These 3 alone are gonna flip your mind into the building mode of a different kind. The mode that expands your business. 

Example: Mailchimp

In the early days, Mailchimp was just focused on building a better email marketing tool. They were metrically obsessed with things like the number of new signups and total user base.

However, as they matured, the founders realized that vanity metrics like total user count were distracting them from what really mattered - generating sustainable revenue and profits.

So Mailchimp made a mindset shift to become laser-focused on financial metrics that demonstrated real business growth, like:

  • Monthly Recurring Revenue (MRR)
  • Average Revenue Per User (ARPU)
  • Customer Acquisition Costs (CAC)
  • Customer Lifetime Value (LTV/CLV)

They began rigorously tracking and optimizing each of these key performance indicators across every aspect of their business.

For example, they stopped just churning out random new features based on supposed "growth hack" tactics. Instead, they began validating new features and product roadmap decisions based on rigorous voice-of-customer research and data demonstrating a higher willingness to pay.

They also overhauled their marketing and sales funnels to prioritize high-value customers over low-quality "freebie" seekers who had no intention of paying.

This mindset shift from vanity metrics to money metrics completely transformed how they operated and made decisions as a company. And it directly paved the way for their meteoric growth from startup to $800 million in revenue.

In essence, Mailchimp realized that chasing surface-level "growth" metrics was destructive. Whereas prioritizing the right financial measures systematically compounded their business into a profitable juggernaut.

Cool, right?

Going, back to our path, expansion will lead to another important avenue to tackle. Can you improve your pricing that makes customers say "Shut up and take my money!"

SaaS products

How to Stop Leaving Money on the Table?

With a new perspective on your SaaS product and getting laser-focused on the right metrics and customer insights, time to turn into more revenue.

If you take to heart all the feedback, and make changes, build new features, do NOT forget to charge more for it.

Smart pricing is the lifeblood of a thriving SaaS. Let's crack the code on crafting a pricing strategy that extracts maximum value.

Actionable Strategies:

  1. Use pricing tiers and packaging to segment your market and capture different buyer personas
    • This means, you  may want to adjust how you structured your tiers/packages going forward
    • You may find your most used features that are not "core", they can be put into the premium set and the core functionality can become free. Think of the "background remover" on Canva.
  2. Implement pricing psychology tactics like decoy pricing, charm pricing, and anchoring 
    • These are necessary tricks that convince clients that they are getting a great deal
    • Pro tip: on every page except "Pricing" remove the reference to "per month" or "per year". It is a psychological anchor that creates a  more expensive
  3. A/B test your pricing page using heat maps and scroll maps to identify bottlenecks 
    • What you are looking for her is to learn what people are looking at when making buying decisions
    • You know the accordion feature sections that users open up? They are an excellent indicator of which feature sets potential clients care about the most. 

Example: PageCloud

PageCloud is a website builder SaaS that allows users to create professional websites without coding. Like many SaaS companies, they initially had a simple 3-tier pricing model: Basic, Pro, and Advanced.

However, after analyzing their conversion data, they realized two major issues:

  1. The Basic plan was cannibalizing upgrades, as too many users stayed on it long-term despite needing more features.
  2. The large jump from Basic to Pro was a pricing friction point that caused sticker shock and abandonment.

To fix these issues, PageCloud implemented some smart pricing restructuring tactics:

They broke out the Pro plan into three distinct tiers (Starter, Freelancer, Agency) to better segment their customer base by use case and needs.

They also eliminated the perpetually "free" Basic plan.

Decoy Pricing: They added a higher "Unicorn" tier priced at $299/month to make the Freelancer ($99/mo) and Agency ($199/mo) plans appear more attractive in comparison to decoy options.

They also used "charm pricing" (ending prices like $99 instead of $100) to make the Pro/Freelancer plan seem like a relative bargain.

In the end, they got 3 results:

  1. Increase perceived value and reduce pricing friction across their product tiers
  2. Better capture willingness-to-pay at multiple customer segments
  3. Guide more customers towards their highest-value annual plans

The net result? Their average customer value (ACV) increased by 32% after restructuring, without losing conversions. This directly translated to over $1 million in extra annual recurring revenue.

It's a great example of how strategic pricing optimization, when combined with smart packaging and positioning tactics, can substantially elevate a SaaS's growth trajectory.

Up next, the customer acquisition playbook that turns visitors into evangelists (without blowing your marketing budget).

The Evergreen SaaS Funnel for Hyper-Profitable Customer Acquisition

Now, I'll hand you the proven playbook for systematically acquiring and nurturing customers into loyal superfans without blowing your budget.

Actionable Strategies:

  1. Map out the full customer journey and optimized each touchpoint into a conversion engine 
    • If they are not problem aware - teach; if they are product aware make an offer. These are just 2 examples of saying the right thing at the right time.
  2. Use the AARRR framework to guide prospects from awareness to revenue to referral
    • Focuses on five key metrics: Acquisition, Activation, Retention, Revenue, and Referral. Helps you to see and optimize the customer lifecycle.
  3. Automate and scale outreach using marketing automation tools like ActiveCampaign (for known leads) or Lemlist (for cold outreach) 
    • Always automate. Otherwise, this will become your job and then your core product suffers.

Example: Ahrefs

Ahrefs is a widely popular SEO tool and one of the fastest-growing SaaS companies today. A big driver of their success has been their masterful customer acquisition funnel.

At the top of the funnel, Ahrefs has an incredible content marketing engine that attracts tons of relevant organic traffic. They have a popular blog covering advanced SEO tactics, as well as free tools like their Keyword Explorer that provide a taste of their paid offerings.

This top-of-funnel content generates a ton of awareness and draws people into their ecosystem. Those interested prospects are then nurtured through an automated email funnel sequence that provides even more value while soft-selling the paid tools.

For example, one automated funnel promotes their free WebMaster Tools course on using their suite of SEO tools. This gives prospects a first-hand experience of how powerful the tools are for growing traffic.

Another funnel gives away a popular bundle of free SEO eBooks and templates as lead magnets to capture emails. Once subscribed, they receive a drip campaign introducing them to different Ahrefs features and use cases.

Those who don't convert are then retargeted across various ad platforms with special trial offers or discount coupons. They also retarget existing free users with personalized campaigns to upgrade to paid based on their usage behaviour.

No matter which entry point, all roads lead to the bottom of the funnel which is optimized for conversions through tactics like:

  • Social proof with case studies and success stories
  • Risk reversal with generous money-back guarantees
  • Pricing PAGE optimizations informed by heatmaps and scroll maps

By combining valuable content, automated nurturing, strategic ad retargeting, and conversion optimization, Ahrefs has a well-oiled acquisition engine across all stages of awareness.

This full-funnel approach is how they've been able to acquire over 1 million customers consisting of everyone from freelancers to Fortune 500 companies.

It's a brilliant model that any SaaS can learn from!

Finally, it's time to reveal the counterintuitive business model that gives your SaaS an evergreen growth engine.

The SaaS Empire Code: Unlock Unfair Competitive Advantage

Most founders sleepwalk into the commodity trap. You, on the other hand, will learn a radically different business model that cultivates raving superfans.

  1. Transition from selling features to bundling outcome-based solutions and services
  2. Monetize your expertise by offering done-for-you services or accelerators
  3. Build a thriving community of power users through events, AMAs, and advocacy

There is so much to unpack her, but the bottom line is that you are creating ADDITIONAL revenue streams that can at times rival your subscription income. 

Example: Kajabi / Podia

Kajabi and Podia are both platforms that allow creators, coaches, and online course businesses to package and sell their expertise digitally. What's unique about their trajectory is that they didn't just sell software - they cultivated thriving ecosystems around their core products.

Monetizing services and expertise while their SaaS tools provided the foundational technology, both companies also monetized higher-end services and accelerators. For example:

  • Kajabi offers "Blueprint" packages from $999-$3,999 where their experts will actually build out and launch a customer's online course from scratch.
  • Podia has a "Partner Program" providing done-for-you website design, migration, and marketing services tailored for course creators.

By bundling these hands-on services and "white glove" experiences, they increased their revenue streams and captured more of the total value chain beyond just software.

Building a tribal community: Kajabi and Podia both invested heavily into building thriving communities of superusers and advocates:

  • Kajabi has a popular annual "Impact Summit" where their power users can network, attend workshops, and get inspired.
  • Podia runs regular webinars, AMAs, and start live shows like "Small Biz Buzz" to engage their creator audience.

These community elements foster a loyal tribe of evangelists who act as an incredible growth engine through word-of-mouth referrals and social sharing. The strong network effects and high switching costs also increase customer stickiness.

By combining software subscriptions, services revenue, and community advocacy, Kajabi was able to grow from $0 to over $350 million ARR. Podia is smaller but grew over 330% in one year by emulating similar strategies.

This "services plus community" business model creates stickier, more valuable customer relationships compared to just selling software features. It gives companies like Kajabi and Podia an unfair competitive advantage that drives exponential growth.

The Unsexy Truth About SaaS Riches (It's Not Just Code)

We've covered a lot of ground, including the crucial non-technical pillars of sustainable SaaS growth: mindset, pricing, acquisition, and business model.

In this section, I want to acknowledge that a lot of this is NOT as easy as it is made out to be above.

It may be making your head spin a bit. But reframe this: your head should be spinning from the opportunity that this presents!

I want to tie everything together and introduce my services, my 1-on-1 coaching program designed to accelerate your SaaS ambitions.

With my new "Unspoken Truths" coaching program, I'll personally guide you through each step to crafting a tailor-made growth architecture for your SaaS.

No fluff or theory, just raw strategies from an execution-focused founder who's been in the trenches.

Ready to break through the dreaded SaaS plateau and join the 1% who actually win?

Click here to apply and see if you are a good fit.

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