SaaS Insights

Accelerate Your Tech Startup Revenue Growth

Pat Brothwell

Startup professionals discuss accelerating revenue.

Startup Life is Challenging

Starting startups isn’t for the faint of heart. 95% of startups fail, only 50% make it to the five-year mark, and only 40% become profitable.

The majority of startups fail because they’ve overestimated market interest. The second most prominent reason startups fail is running out of money, whether funding or revenue. While there will always be exceptions like Uber or Facebook—startups with so much funding they could lose money before getting profitable—those are outliers. The typical startup, especially smaller ones (the average early-stage startup has four employees), must steadily grow revenue to stay afloat.

What's a Good Growth Rate?

What’s considered a “good” growth rate varies substantially from industry to industry—the key is that the growth rate is sustainable and allows the company to scale. Widely-accepted best practices say that it should be somewhere between 20-30% a year. However, tech industry startups can easily grow 50-100% per year—one study found that the average revenue growth rate for a B2B software startup in the first two years is 82%.

If you’re not on track for 82% revenue growth, that’s fine. Remember, it’s average. There are also tactics startups can adopt to help sustainably accelerate startup revenue growth.

Some Startup Revenue-Generating Tactics

Reevaluate Your Pricing: You can affect revenue by reevaluating your pricing model. Do an internal pricing audit. Are you undercharging for fantastic service and functionality? Are your more established competitors charging much higher prices than you can get away with? Conversely, are your prices driving customers to lower-priced competitors? Would lowering your pricing attract more customers?
Have Plenty of Upsell Options: The Pareto Principle, a widely accepted economic theory, suggests that 80% of your revenue comes from 20% of your current customers. Taking that into account, how can you encourage those customers to spend more money? Upselling. Ensure you have additional products and services you can offer current customers to boost your revenue.
Become Part of a Partner Program: A partner program is a formalized relationship with existing businesses with their customer bases, sales channels, and audiences you can benefit from. Partner programs can help you get into new markets, increase brand identity, and gain new leads—referred customers (in this case, from your partners) are 18% more loyal, spend 13.2% more, and have a 16% higher lifetime value than customers who aren’t referred.
Prioritize Customer Service: 86% of buyers are willing to pay more for a great customer experience. Additional research found that customer service is expected to overtake price and product as a key brand differentiator. It can’t be overstated how strong the correlation between excellent service and revenue truly is.
Embrace Exclusivity: Customers like to feel special. 70% of consumers say it’s crucial that the brands they patronize offer some personalized experience or service. While inclusivity is the name of the game regarding marketing, branding, and overall messaging, you can embrace exclusivity with your current customer base. Offer customer-only services, product launches, and learning opportunities and build that into your upsell strategy.

Today's Best Way to Accelerate Your Revenue Growth is to Increase Your Functionality

While all of the above options are solid, tested revenue growth tactics, one of the best ways to accelerate revenue growth—and full disclosure: one of the best ways to most efficiently take advantage of the above tactics—is to increase the functionality of your core competencies.

Increase Your Functionality

The average mid-sized company replaces 39% of their SaaS applications with ones with better functionality—consumers want their SaaS apps to address several of their top challenges.

Feature Velocity is Integral to SaaS Startup Success

Today’s customers expect features that increasingly meet more of their needs to appear regularly. This is known as feature velocity. The more customers must leave your platform to find features they feel should be included, the more likely they are to jump ship for one that either has those features or is easily integrated with the tools they seek.

SaaS startups should plan to have a feature velocity strategy—incorporate new features frequently, ensure they are highly integrative (and regularly showcase new integrations) and have a steady stream of updates today’s customers expect from the world of SaaS and PaaS.

Savvy SaaS Professionals Are Embracing Feature Velocity

SaaS professionals are taking note. 83% of SaaS executives foresaw an increased need for new products and services and more than 80% of tech organizations are “moving quickly” on new development initiatives designed to make them more innovative and competitive.

Outsourcing is a Great Way to Quickly and Efficiently Add New Features to Your SaaS Startup

Developing your new solutions from scratch is expensive and time-consuming, especially for startups with limited resources and employees.

According to DevSquad, building a minimum viable product (MVP) takes an average of 2 to 10 months, while other sources report build times can range from 8 to 9 months. Estimated costs to create a market viable product (MVP) are between $50-250k. Still, prices often go higher—70% of software development costs occur after implementation, and 53% of projects cost 189% more than original forecasts.

Therefore, many cost-conscious SaaS professionals are turning to tech outsourcing. 59% of businesses outsource in some capacity to cut costs, and software outsourcing is projected to be on a 10-year growth spurt through 2025.

Outsourcing new tech features and functionalities is especially valuable for startups, who spend up to 40% of their time on non-revenue-generating tasks.

When you outsource, you can work with freelancers or an outsourcing agency, but we’d recommend white labeling or private labeling your new tech solutions. While there are great freelancers and SaaS outsourcing companies, white label or private label SaaS developers are experts in the specific tech they develop versus freelancers or agencies who work on the features and functionality the revenue leads them to.

The Beauty of White Labeling

Many tech startups partner with white or private label developers to present new functionalities as proprietary solutions to end users. This strengthens their brand, ensures they become more competitive, showcases that all-important feature velocity, and accelerates revenue. Private labeling is a great way to quickly and cost-efficiently add additional revenue streams to your core functionality without compromising your core competencies.

What's the Difference Between Private and White Labeling?

While white label and private label modalities are similar and often mistakenly used interchangeably, there’s a reason we’re highlighting private label: customizations.

White label applications are produced by their developer and then outfitted with the purchaser’s branding so they can sell their new solution to their customers. Conversely, a private label partnership goes further than a white label’s branding by customizing the new solution to meet the unique business needs of a business through bespoke workflows, add-ons, and single-sign-on capabilities.

Private labeling a new solution can be a revenue game-changer, so this isn’t a partnership startups should take lightly. That’s why we created The Ultimate Guide to Establishing a SaaS Private Label Partnership.

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