Narrow Your Focus For Scalable, Consistent GrowthRead time: 4 minutes
You’ve hit the jackpot!
You have an amazing SaaS product with so many use cases the TAM makes your mouth water. During your founder-led sales phase, you closed customers that spanned across several different industries/departments/niches.
Now it’s time to scale and rake in the riches!!
World domination is at hand – soon everyone will be using your product and there’ll be no escaping fro-
Wait… why are things slowing down? That growth curve is flatter than it should be…
Oh, right. I forgot that in this scenario, you don’t have the tens of millions of recurring revenue needed to support go-to-market functions across several verticals.
What you do have is one small team, a limited budget, and investors to satisfy.
Trying to scale a horizontal product (that is, a product serving several market segments) will stretch your resources too thin to successfully compete in any of those markets.
Luckily, you have one more secret weapon: data.
And here’s how you can use it to become the world-dominating horizontal SaaS of your dreams (…eventually).
Phase One: Find Your Lowest CAC Channel
If your GTM strategy is scattered across multiple channels, take a look at how they compare. There’s likely one that stands out among the rest with the lowest Customer Acquisition Cost (CAC).
You can calculate your CAC for each channel by dividing the total amount of money put into that channel by the number of customers acquired from it.
More than likely, this channel is going to be organic social media or email marketing.
If your budget is tight, focusing on the cheapest path to you is going to get you farther.
Phase Two: Identify Your Highest Value Customer Segment
Now that you’re looking at a particular channel, it’s time to zoom in.
Take a look at the customers that are spending the most money on your product. Are there any patterns? Can you group them into segments such as:
- Company size
- Geographic location
So if you have five customers in the automotive industry that spend twice as much on average as every other customer from the same channel, that segment has a much healthier Lifetime Value (LTV).
And since they’re coming from your lowest CAC channel, their LTV:CAC will be healthier than any other segment in any other channel.
Everyone’s business is going to be different. Which means there might be other data points that indicate a good potential customer that are only relevant to your specific business.
For example, I once sold a software product marketed to soccer teams.
We knew that certain leagues in certain countries had more money to spend on our software. We validated that this made them better customers.
Collecting very specific data points on different types of soccer leagues became important to us.
But there’s no reason whatsoever that any other business would need the same slices of data that we had.
– And no “best practices” playbook would have ever told us to collect it!
You want to be able to track, record, and slice the data that matters to your business.
Phase Three: Scale and Repeat
The whole idea of narrowing your focus as a late-stage startup is to make sure you’re not spreading yourself too thin by taking on too much before you’re ready.
So when do you know you’re ready?
Once you’ve grown your ARR enough to support the costs of hiring another GTM team.
This process will give you the strength to scale and the experience to repeat, instead of trying to do everything at once and burning out fast.
- So many companies like to overcomplicate things in the beginning, but there’s no reason to create more overhead and stretch yourself too thin to function
- Instead, create scalable and repeatable growth by:
- Focusing on your lowest cost channel
- Identifying the highest value customer segment in that channel
- Dominating that segment until you have the resources to tackle a new one
When you’re ready, here’s how we can help:
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