I'm the founder of a SaaS company, and I do not want more software ❌

I want my operations to generate more revenue efficiently 💸

Fewer tools (and people operating it all) 👌

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Your marketing & sales stack doesn't need to feel duct-taped together

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When you choose to stitch together a series of software solutions, you log in to your Sales CRM software to understand what Accounts to focus on, your email marketing software to send an email campaign to Accounts at risk of churn, and your Analytics software to run a Cohort report. Even if these systems are well integrated, context on your customers and their journey is inevitably lost along the way. You’ll have a “Doh!” moment or two when you deliver a lousy user experience to one of your customers because of the context you were missing.

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Multiple IDs for the same Customer is often the root cause.

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Working with hundreds of Marketing and Sales professionals, we've found that "best-in-class" software tools (that each do one thing) are heavily underutilized — and the more integrations you have in place, the more your marketing stack feels held together by bailing wire and duct tape.

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Does it feel like you're managing your GTM stack, or is your GTM stack managing you?

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We've asked CRO's or VP's of Marketing you know who have had a successful run, a few questions…

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How often did you change the tools in your stack as you scaled?
How much time was spent evaluating and integrating new tools?
How often were you asked to pull data from one tool to support a campaign deployed in another?
How often did you encounter issues with data consistency?
How often did your integrations break?

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The point is, as your customer base grows, time spent evaluating, integrating, and maintaining the GTM stack scales up dramatically. That’s why you see entire IT departments and full-time salaries devoted to sales and marketing operations teams.

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We built this company deliberately over the last 5 years, so you don’t end up there 👆

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From Funnels to Flywheels

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The main problem is that a fragmented data stack also perpetuates a dysfunctional growth model.

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The standard operating model in marketing centers around the funnel. We invest resources into ads, customers get acquired, make a conversion, and then rinse and repeat.

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This is no longer how growth works in modern companies.

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Throughout my career, I experienced every stage of the company’s growth, from launching one of the first CMS at Vignette, helping scale the web analytics business at Omniture, and working at enterprise scale at Adobe Marketing Cloud and Intel New Devices division. The game haspatterns. And Flywheel-based growth is one of them👇

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The hard truth...

Is that marketing and sales software you choose to use will have a monumental impact on your company’s ability to coordinate marketing and sales operations. Why? There’s one factor that does have an outsized impact on your chances of growing fast and profitably—the quality of your flywheel - in other words, how do you take customer data and re-invest it back into generating customer revenue to help you Acquire, Retain, and Monetize efficiently.

That’s why you must evolve the linear acquisition funnel into a retention and monetization flywheel.

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Funnels vs Flywheels‍

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It sounds great, but … will it work for my business?

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Explore the detailed shift in growth fundamentals for eCommerce, SaaS, and Mobile app companies.

Select your industry 👇

Let’s look at the fundamentals of a multi-category online store aiming to acquire new customers after the fall holiday season. After peak sales, most eCommerce stores experience drastic revenue dropdown - organic traffic and sales can be down as much as 60-70%.

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The challenge is acquiring new customers without going net negative on profits.

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Here's the revenue model:

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The store’s average order value (AOV) is $90
The gross margin is 60% (so $36 is the cost), so they have $54 left to work with.
Let’s assume the marketing budget is $1000 and your cost per click is $1.23 (industry average)
Your cost to acquire a new customer (CAC) is $41.67, which leaves you with about $12.33 of runway to break even.

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This $12.33 is your profit or promotion budget (unless you are OK with losing revenue for the first transaction).

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What lever can you pull to profit on the first sale to a new customer, a hardcore “comparison shopper”?

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Acquisition

Focus on cross/up-sell. Depends on the data you collected - if you don’t have good historical data for recommendations, you’ll use the standard “Frequently bought together” approach, which rarely cuts the mustard.

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Show retargeting ads. CAC is vulnerable to the Ad Networks (see below), and you must be OK with CAC increases. If your conversion rate is standard - 3%, you will need at least 30 clicks ~ $30 to make the first conversion. This is way above the $12.33 runway we have for the campaign.

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Increase conversion rate: So you either focus on discounting to increase the conversion rate, or you can leverage personalization & experimentation to increase lift. The first approach is a crutch as with increased conversions, your gross margins will worsen, and you’ll end up with negative or razor-thin profits.

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As you can see from the example below, if your conversion rate improves at at least 20% due to optimizations, your profit increases from $12.33 to $19.52, which you can reinvest into your ad budget/promotions and still keep profitability. The bottom line is that if you focus on improving your conversion rate, you will ultimately generate more revenue and profits - it’s up to you how much you want to reinvest into growth.

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Retention & Monetization:

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Increase lifetime value (LTV). If you do use the approach to break even (or make a low profit) to acquire the customer, you MUST make it for it using a high repurchase rate or robust LTV approach to get to CAC: LTV ratios of 1:3.

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Even the most efficient acquisition strategies will fail if your LTV/CAC ratio will stay low - customer retention is ALWAYS the most efficient way to reach profitability.

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After the first purchase, your LTV is $90 and CAC $41.67, so 1:2, you need at least an additional order to get to 1:3. In this case, you need to focus on post-purchase upsell and personalized offers to keep engaging the customer so they stay in the loop with your brand.

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$72.25

/mo

Billed at

$867

/yr

$72.25

/mo

Billed at

$3,807

/yr

Let’s look at the fundamentals of a SaaS company - these are real-world numbers of one of our customers.

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The company (let’s call it “Otto”) sells Banking software for financial services. The first target customer is small and medium-sized businesses that pay, on average, $649/mo. The enterprise segment pays an average of $1290 per month. The overall MRR median is $833/mo.

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The company operates a hybrid go-to-market motion (product-led & sales-expanded) and has 3 tiers - Free, Professional, and Enterprise.

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The flywheel starts with a self-service funnel to onboard new customers on their free tier. As soon as the lead reaches a usage threshold (become a product-qualified lead) - sales reps engage the accounts ready to convert the paid plan.

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After the customer converts to the Professional plan, account executives look for usage and fit data to determine when the account becomes expansion-qualified so they can upsell for the Enterprise plan.

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Here are the “before” company metrics:

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The goal is to reach the “After” state - be on the top quartile benchmarks for $1-5M.

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We will focus on CAC Payback and Net Dollar Retention since those are easier to influence using product-led activities. Your ARR/FTE and Gross margin are vital, but those require significant operational/personnel changes that are outside the scope of this article.

To understand these benchmarks in action, let’s look at the fundamentals of the Otto revenue model.

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The initial ACV target is $10K/year, $833/Monthly (MRR).
You can see below that as you go up in the initial ACV target, your MQL cost will increase (fewer buyers).
20% of our deals are sales-sourced, and 80% are marketing-sourced.
MQL to SQL to Opp to Closed Won funnel is 25%, 50%, and 20%, respectively.
80% of deals close in the same quarter, costing $69 per MQL.
You’ll need to spend about $330,000 to generate $539,784 in the pipeline
The CAC at $10K deal is about $6,111, so it will take 7.3 months to get it back. This is OK and should be reduced to 5 months

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Acquisition

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Lower CAC. The goal is to get CAC Payback down to as close to 5 months as possible. This means heavily controlling the cost per qualified lead (PQL, MQL, SQL), cost per opportunity, and cost per closed/won, which will significantly impact your CAC payback period.

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However, the major leverage (where you have the most control) is improving your free-to-paid conversion rate - how many signed-up leads end up being paying customers. This can be done via A/B testing, personalization, and onboarding journeys to acquire the paying customer at a higher rate.

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Retention & Monetization

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Lower churn and increase expansion revenue. The industry standard benchmark is quickly becoming “net dollar retention.” If I acquire $1 of MRR today, what is that $1 worth over time? Today's true best-of-breed companies see $1 grow over time, becoming $1.10 or more.

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We suggest taking a step further and breaking down this metric into two derivative KPIs that your marketing & sales teams can pursue - churn and expansion revenue. The most critical churn version is monthly recurring revenue (MRR) churn and expansion (the total amount of your products and services that were upsold to your existing customers). You must lower churn and expand the customer base simultaneously to achieve profitability.

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Let’s take an example of a music streaming app on the iOS App marketplace.

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The app is free to download and has 3 paid tiers (Starter, Professional, and Premium). On the free plan, the app utilizes an ad revenue model by showing ads for users who have not yet subscribed to the paid plan. Subscribers also have an option to purchase in-app exclusive content.

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Overall, the app has multiple ways to monetize the user (via subscriptions or ad revenue and in-app purchases). Still, the revenue model fails to reach profitability:

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Most users stay on the free tier /don’t convert to paid
The churn rate is high (compared to industry benchmarks)
Low ad revenue generated by free users
Low upsells for in-app purchases

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What levers can the app pull to grow faster and more profitably?

Acquisition

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The app needs to show interactive in-app messages to incentivize users to convert to paid plans. This must be done via personalized messages - either offering reverse trials or emphasizing the feature benefits of going to paid.

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You can do it with personalization campaigns tracking lift or A/B testing, watching for statistical significance to optimize the experience further.

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Retention

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Churn is the primary metric needing improvement for retention optimization. Many app users stop using the app because they fail to form a habit & experience the actual value of the services. The main tactics to tackle this are as follows:

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Identify which users are at high risk to churn and engage them via reactivation campaigns
Improve customer experience for core app features so customers can get the most value of it (feature benefits). Use personalized in-app messages that trigger depending on user behavior and affinity.

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Monetization

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The app needs to increase stickiness (DAU/MAU) so it can monetize the free app users (Ad Revenue per Free User ) and subscribed (in-app purchases) more effectively.

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You need to track users’ affinity (via rule-based or AI models) and enroll them into targeted email journeys to incentivize in-app purchases.
Track product engagement and feature adoption to uncover new insights on how to improve your app monetization.

$72.25

/mo

Billed at

$3,807

/yr

eCommerce Saas Mobile

Solution? Enter GrowthOS

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With many business leaders at a crossroads, the new direction is clear—precision and efficiency to manage the customer's lifecycle.

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High-performance companies are deploying AI-first technology that provides customers the timely marketing they seek, thereby growing LTV sustainably.

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The hard truth is that if you don’t create timely marketing moments with your customers, your competitors will.

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GrowthOS components

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Sellers & marketers need an elegant GrowthOS that operates on Intent rich User to create timely marketing moments:

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Data integrations & identity resolution

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It needs to connect multiple data sources and allow having a unified user profile to enable consistent experience & personalization across any device.

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Timely experiences and an all-in-one marketing suite

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Have a range of marketing & sales tools to increase marketing efficiency and provide timely experiences to customers with less operational overhead.

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Growth methodology

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GrowthOS is not just another tool - it is fundamentally a new way to operate your growth operations end-to-end.

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We developed a thoroughly researched and industry-backed methodology to empower any business to level up its game in reaching the ultimate goal - growing faster & more profitably.

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1. Discover audiences🔮

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Identify, build, and analyze audiences. Unify customer data across all digital and offline touchpoints and use it to identify your target leads & accounts.

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✅ How to →Audiences

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Predict user-intent in real time with machine learning. Understand your customers better than ever before with a neural network algorithm that identifies future-purchase intent.

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✅ How to → Predict

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2.Engage customers 💬

Personalize every interaction to deliver an optimal customer experience at scale across web, mobile and email.

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✅ How to → Personalization

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Set timely, automated triggering events based on real-time behavior to send timely emails and SMS when customers are most likely to engage, like in the event of lifecycle stage change, a lack of activity shown in the past week, and more.

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✅ How to → Journeys

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3.Optimize experiences 💹

Experiment anywhere on your digital properties with great agility, more confidence, and less risk

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✅ How to → Experiments

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✅ How to → Insights

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Sounds great, but how complex is this?

Launching your GrowthOS motions does not require dozens of spreadsheets, OKR docs, or multiple agencies to figure out your way. We created a library of use cases to get inspiration on starting up with GrowthOS on the fly. ✅ Use cases

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Go get em'!

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