How to Build a SaaS Growth Model Framework

Once you have a product you believe in and it’s selling, founders get anxious to move straight into the growth marketing and scalability phases.

What so many SaaS companies do is start with experiments in a loose, or even well-documented fashion without outlining their growth model first.

Growth “hacking” or marketing isn’t just awareness, acquisition, and experiments.

You need a robust SaaS growth model framework to get sustainable, predictable results.

The process of growth is much bigger and should be treated as a way of company life instead of a period of time in your history.

The growth model you use should serve as the broad framework that your brand uses to drive and continue raising the bar of your marketing efforts. It should be easy to communicate this framework to everyone in your company, potential VC’s, and anyone else who is directly or indirectly involved in the operation.

So, how do you build it out? What are the steps involved in putting it together?

This post goes over the topic as well as highlighting resources to help you move further down the path toward becoming a company well-suited for growth.

What Is It, Exactly?

Let’s use an analogy.

When you are looking at a book to read, we mean really interested, you don’t just look at the cover. After you pick it up, you look at the back and the inside flap. This short amount of information should give you an idea of what the full book entails.

If you need further information, but don’t need to read it all (because you’re not deeply involved) there the cliff notes, or a synopsis available. It’s a lot more detail than the back cover, but not the book itself.

Lastly, there is the book itself.

Your growth model should have different levels of detail, like our analogy.

  • There is a basic model (usually very similar for all companies) to explain to anyone who isn’t involved, but a part of the company. Consider it a way to explain to customer service reps their part in growing the company.
  • The next level is the more detailed version of all of the big picture elements that go into your company’s specific growth strategy (We’ll be spending a lot of time here a bit further down). This one is great to introduce new growth team members or explain how you plan on growing to your VC’s.
  • Finally, there is the machine. The full plan (experiments and all). The process that is hopefully run by a great growth leader who has an even better team. Not really a model, but a detailed plan. A structure to keep everyone moving toward the goal—exponential growth.

The Basic Growth Model

This model isn’t unique to anyone. It’s rather a much agreed upon (see here and here) introduction into mapping out your company’s growth model and helping those who aren’t directly involved in the process to grasp it.

It looks a bit like this:

Top of Funnel: Essentially, this is drawing in those who weren’t really aware of your product. Metrics may include traffic to your website, subscriptions to your email list (or free trial offer), and any cold outreach (ads, email marketing).

“Magic Moment”: Not my terminology, but it’s when users interact with your product or material and it generates an initial or continued emotional/psychological response to a lead or even an existing customer.

Core Product Value: When your product solves a real problem, then you will have this element. SaaS products continue to enhance through development and need to solve a problem really well. This includes post sale interaction (onboarding, customer service).

If you put those very broad/basic things into the spotlight, the end result should be sustainable growth in any industry.

But it’s not exactly specific to your company yet.

Your Company’s Growth Model

A slightly more detailed, but still broad growth model/framework is necessary to make sure everyone is working towards the same “big picture”.

Your company’s model is not individual experiments or the standard procedures to increase metrics. It’s the metrics that are pillars in the overall rapid growth of your company.

Fire is an element that can be brought about a number of different ways. “Fire” is an element for your growth model, but the fuel and ignition sources are strategies to make it happen. Make sense?

The example rolling around the internet most is Amazon’s growth model.

Since they aren’t really a SaaS company we won’t rehash that one. However, we will go over some elements that could be considered “pillars” in the model and include a couple of examples.

Elements of Growth (Look for Fire, not Matches)

Top of Funnel

Very similar to the basic model here. You need leads in the top of your funnel. If your model is freemium, you need users. If it’s pay-to-play, you need subscribers/leads in your sales funnel.

In most cases, web apps that are public focused (e.g. Evernote) do this through email and web traffic.

Example: GrowthHackers revived their growth with traffic and subs dramatically. Here’s a detailed look at how they did it with “high-tempo testing”.

User Engagement

SaaS companies have recurring charges. Monthly, quarterly, annually and beyond; people regularly pay you to use your service.

If users aren’t using your service (engaging the app), they’ll stop paying you. Using this kind of logic will help you determine the things you need to survive, sustain, and grow business (like fire).

Example: AirBnB needed people to look for and book stays, but that wasn’t their problem. The main problem was getting people who had property to list (engage) on their platform. How they did it was questionable but effective.

User Success/Onboarding

How do you define a user’s success? What numbers and metrics help you boil down which of your customers are fully involved, trying you out, or on their way out?

Figure those out and you have a way to gauge user success and find out how to get more people to that benchmark.

Example: For Slack, they know that once a company uses their service to send 2,000 messages—they’re hooked. It doesn’t matter if they are a team of 10 or 100, but the most reliable metric for user success is 2,000 messages.

Churn/Lifetime Value

I understand that these are two wildly different numbers, but I lumped them into one because they are essentially a two-sided coin.

Churn is the percentage of users who quit paying you each month and the lifetime value is the dollar amount you can expect from your average user. Both are incredibly important in growth. While they aren’t new acquisitions—a penny saved is a penny earned.

Bonus Resource: Here’s a great case study post from ConversionXL that highlights nine different companies that lowered their churn.

Your Company’s Growth Plan

After you put together the basic elements that you need to thrive in the marketplace, you’re ready to put together a plan and start seeing results. All the while keeping an eye on those big picture pillars to keep things moving in the direction you want.

The next step would be putting together a growth team (and a good growth leader) to implement and document the process.