Moving Up-Market to Drive Growth
Going up market is often seen as a milestone for SaaS businesses. It signals growth, expansion, and the opportunity to serve bigger clients and brands. But going up market is not without its challenges. Here are my three key principles to successfully navigate the path of going up market.
Principle #1: Are You Being Pulled Up Market?
The first principle is to determine whether you are already being pulled up market or if it is just a desire to go up market. TK emphasizes the importance of being honest about the current demand for your product or service from larger companies. If you are already starting to see mid-market or enterprise companies showing interest in your offering, that is a good sign. If not, it's crucial to test the waters and engage with potential customers in that segment to understand their urgency and needs.
Principle #2: Understand the Competitive Dynamics
The second principle revolves around understanding the competitive dynamics of the target market. TK notes that sometimes unique products or features can naturally attract bigger clients. However, it is essential to assess whether there is a gap in the market and how you can differentiate yourself from competitors. TK provides the example of ToutApp's integration with Outlook, which allowed them to serve larger companies who saw them as the only viable option.
Principle #3: Achieve Company Readiness
The third and most important principle is achieving company readiness to go up market. This involves several key aspects:
- Specific Products and Features: Develop features that will not only attract one customer but will be valuable to the next ten mid-market or enterprise customers. Avoid becoming a custom development shop for large companies.
- Go-to-Market Motion and Strategy: Revamp your go-to-market strategy to effectively reach and engage with the new target market. This includes establishing a strategic narrative, positioning, and messaging that resonate with bigger clients.
- Pricing Strategy: Adjust your pricing to match the value and expectations of mid-market and enterprise customers. Be careful not to undervalue your product or service.
- Security and Legal Footprint: Enhance your security and legal agreements to meet the requirements of larger clients. This demonstrates your professionalism and trustworthiness.
In Conclusion
By following these three principles, you can position your SaaS business for success as you go up market. It's important to recognize the benefits of serving bigger clients, such as higher quality customers, lower churn, and increased brand recognition. However, going up market also requires careful planning, investment, and a readiness to compete in a new segment of the market.