S3E2 – How to audit your SaaS growth? With Asia Orangio

What is SaaS growth and why is it important to audit your SaaS growth? In this episode of the Grow Your B2B SaaS Podcast, host Joran Hofman is joined by Asia Orangio, founder and CEO of DemandMaven, a growth consulting firm that assists SaaS companies in identifying their best growth opportunities. Together, they discuss the importance of auditing SaaS growth and provide valuable insights and strategies on how to conduct a growth audit. With a focus on revenue, retention, and sustainable growth, Asia shares her expertise from working with numerous SaaS founders and growth teams over the years.

Asia has extensive experience working with and advising SaaS founders and growth teams for the last six years and has worked with companies of all sizes and stages of growth. Her expertise spans from early-stage MVPs to scaling up, making her a valuable guest for discussing SaaS growth audits. Tune in to gain actionable advice and learn from the experiences of industry experts.

What is SaaS Growth?

Asia explains that SaaS growth is a holistic practice involving all the business’s various growth functions working together to achieve the desired outcome. This can include increasing revenue, growing the customer base, and ensuring profitability and sustainability. She emphasizes that growth encompasses marketing and acquisition, activation, retention, engagement, and monetization, as well as the team, people, processes, and tools involved in making these aspects work effectively.

Importance of Auditing SaaS Growth

Asia highlights the significance of auditing SaaS growth, stating that it helps troubleshoot challenges in the business, uncover missed opportunities, and make informed decisions. She explains that auditing growth allows companies to identify key performance indicators (KPIs) that need improvement, gain clarity on overall performance, and avoid missing potential red flags. By conducting a growth audit, companies can ensure they are focused on the most important areas for improvement and opportunity.

When to Start Auditing Growth

According to Asia, companies can start auditing their growth once they have acquired their first 10-15 customers. This stage indicates a need to focus on opportunities, successes, and areas requiring improvement. As the number of customers grows, it becomes crucial to analyze what is working well and what is not, and to understand the overall performance within the context of the entire business. By starting the audit process early, companies can begin to gather essential data for future growth strategies and decision-making.

Strategies for Conducting a Growth Audit

Asia emphasizes the importance of identifying the goal of the growth audit and forming a hypothesis to guide the process. She recommends gathering data on various performance metrics, financial perspectives, and qualitative insights, which may require several weeks for a thorough analysis. Additionally, she advises teams to create a safe and transparent space for the audit, encouraging a focus on alignment, honest assessment of what is unknown, and a commitment to the process. Asia also stresses the need to translate the findings of the growth audit into actionable projects and experiments to drive meaningful change in the organization.

Common Mistakes in Growth Audits

Asia discusses common mistakes in growth audits, including challenges in knowing what to measure, interpreting the measured data, and making assumptions about the findings. She emphasizes the importance of measuring the right KPIs, understanding how to interpret the data, and avoiding assumptions without validation. Asia points out that these challenges can lead to gaps in understanding and decision-making, highlighting the need for a holistic and informed approach to growth audits.

Overcoming Challenges faced When Auditing Growth 

Asia acknowledges the challenges of data collection, depth of analysis, and maintaining focus during the growth audit process. She advises teams to address these challenges by dedicating focused time and resources to gathering essential data, leveraging external expertise to ensure thorough analysis, and preventing distractions from derailing the audit. Additionally, she stresses the importance of translating audit findings into actionable plans and decisions, as well as maintaining a commitment to the entire audit process to drive meaningful outcomes for the organization.

Best Practices for Finding Growth Opportunities

Asia emphasizes the importance of creating a safe and transparent environment for the growth audit, where team members are aligned and focused on uncovering opportunities rather than judgment. She also suggests being honest about what is unknown and leveraging the audit process to identify areas for further exploration and improvement. By fostering an open and collaborative approach to the growth audit, teams can generate valuable insights and action plans to drive sustainable growth and profitability.

The Future of SaaS Growth

Asia discusses the evolving landscape of SaaS growth, emphasizing the increasing focus on sustainability, profitability, and strategic decision-making in the current fundraising environment. She points out the rising costs and competitiveness of marketing channels and the potential impact of AI on growth strategies, highlighting the need for efficient resource utilization and strategic positioning in the market. Asia underscores the importance of adapting to these changes and focusing on sustainable growth practices to navigate the evolving SaaS landscape successfully.

Advice for SaaS Founders

In offering advice to SaaS founders, Asia encourages them to persevere and recognize that their current stage and experiences are part of a larger journey. She emphasizes the value of making the best decisions with the available knowledge and understanding that growth challenges persist at every stage. Asia reassures founders that the challenges they face are universal and that continued dedication and focus will lead to growth and success in the long run.

Reflections on Personal Growth

Asia shares her personal insight by expressing that she wishes she had realized earlier in her career that the world does not revolve around her as an individual. She reflects on the significance of understanding the collective nature of organizations and the role of every team member in contributing to the larger picture. Asia’s reflection underscores the importance of recognizing the interconnectedness and collective effort required for organizational success, encouraging a shift from an individual-centric perspective to a more holistic and collaborative mindset.

Asia’s insights provide valuable perspectives on the essential aspects of conducting a growth audit, understanding the changing landscape of SaaS growth, and navigating the challenges of the entrepreneurial journey. Her advice and reflections offer valuable guidance for SaaS founders and growth leaders, emphasizing the importance of transparency, collaboration, and a strategic approach to sustainable growth in the dynamic SaaS industry.

Key Timecodes

• (0:43) Show and guest intro
• (1:24) Why you should listen to Asia Orangio
• (2:13) What is SaaS Growth?
• (3:30) Why should founders care about auditing their growth?
• (5:52) At what point should you prioritize auditing your growth?
• (7:01) What are the strategies or processes to use for audit growth?
• (13:10)  The common mistakes companies make while auditing their growth
• (18:51) What are the best practices for identifying growth opportunities or conducting a growth audit?
• (23:12) Challenges and obstacles faced while doing the audit growth
• (27:57) The future of growth audit
• (31:22) How to grow towards 10K MRR
• (34:01) How to grow towards 10 million ARR
• (37:39) Asia’s crucial advice to SaaS founders
• (39:46) What Asia wishes she had known 10 years ago

Transcription

[00:00:00.890] – Intro

Welcome to Season 3 of the Grow Your B2B SaaS Podcast. In this podcast, we cover all topics related to how to grow your B2B SaaS no matter in which stage you’re in. I’m Joran Hofman, the host of the show and the founder of Reditus, which is a B2b SaaS that helps other B2b SaaS companies to set up, manage, and grow an affiliate program. This basically means I’m going through the exact same journey as you are, experiencing the same issues, having the same questions. And this is the reason why I started the podcast in the first place, getting advice from industry experts on a specific topic. So if you like this content, make sure to follow, subscribe, review the show so we can help as much founders as possible. Let’s dive in.

[00:00:41.820] – Joran

In today’s episode, we’re going to talk about how to audit your SaaS growth. My guest today is Asia Orangio. Asia is the founder and CEO of the DemandMaven, a growth consulting firm that helps SaaS companies to find their best growth opportunities. Asia is a regular speaker on the big SaaS events. She runs her own substack newsletter. She’s a mentor at Tiny Seed. Before this, she had multiple roles within the Mondgen, has been a board member at MaaS until they got acquired in 2021, and a mentor in various SaaS communities. Definitely a mouthful over here. I’m really pleased to have her on the podcast today. Let’s just dive right in. Welcome to the show, Asia.

[00:01:20.690] – Asia

Yes, thank you so much for having me. Pleasure to be here.

[00:01:23.730] – Joran

No worries. I’m going to always start with a really Dutch, blunt question. Why should people listen to you today?

[00:01:29.640] – Asia

You should listen to me because I have been working with and talking to SaaS founders and SaaS growth teams for the last six years. I’ve worked with hundreds of them at this point. I’ve seen everything from zero MRR all the way up to 500 million MRR or excuse me, AR. I have quite literally seen just about every single stage of growth, everything from very early stage, MVP up to growth stage, traction stage, and then, of course, scaling up. When it comes to growth, of course, it’s holistic practice, but you should listen to me because I’ve been helping companies of all shapes and sizes accomplish it and do it. That’s my answer to that question.

[00:02:10.490] – Joran

Nice. I like it. I always start with the real basics. What is SaaS growth in your point of view? Is it purely revenue or do you also consider other things within SaaS growth?

[00:02:21.030] – Asia

Sure. To me, what SaaS growth means is it is the holistic practice, the combination of all of the various growth functions of the business working together to achieve the desired outcome. It could certainly be revenue. It could also be growing the customer base. Traditionally, I think what we see is we want to see increases in revenue, but this also can speak to, of course, profitability and sustainability. Ultimately, the desired outcome is what we have to align around whenever we’re thinking about growth. Traditionally speaking, I think historically speaking, we’ve seen it be about the numbers and less about profitability. I think that story is changing, especially in today’s fundraising environment. But that’s the way that I think about growth. It’s not just about marketing, it’s not just about acquisition. It’s about the whole piece of the puzzle. It’s about also activation, retention, engagement, monetization. So it’s about all those things working together. Then, of course, the team and the people and the processes and the tools that you use to make those things work.

[00:03:21.440] – Joran

Yeah, really nice. I think you mentioned the entire funnel over here already. We’re going to talk about how to audit your SaaS growth. I guess maybe then one really basic question still, why should founders care about auditing their growth?

[00:03:34.700] – Asia

A lot of times when we think about troubleshooting in our businesses in general, a lot of the times it feels like there’s always the one KPI that’s sticking out like a sore thumb. But sometimes when we do a full analysis and we’re looking at the whole business and we’re looking at from top to bottom, from left to right, let’s look at the whole entire thing, a lot of the times we find that the KPI, that is the thing that seems to be the most bleeding or hemorrhaging or whatever it is, usually there’s other indicators and other parts of the business about why that’s happening. When I think about why should we be auditing growth, you might have on your head that there is this one KPI that you need to improve. You also might not be clear at all about what the KPI is or sets of KPIs are. If we never audit or analyze what growth is looking like, how it’s performing today, then we run the risk of not knowing exactly where to put our focus and either what KPI to improve or what outcome to achieve. It could be very much a quantifiable thing, but it could also be a little bit more qualitative.

[00:04:38.650] – Asia

But when I think about auditing growth, usually it’s because there is some fundamental challenge in the business. It could be that we’re troubleshooting growth, like something’s not working as well and we need to figure out why. Or it could be everything’s going great, what are we missing? What are the opportunities that are available to us that we just don’t know about? That’s how I think about auditing growth and why we should do it. It is, of course, to make sure that we don’t miss the boat. We don’t miss out on the things that could, of course, be giant red flags and we just have no idea.

[00:05:07.980] – Joran

Yeah, but the funny thing you said, even though there are no red flags, even though things are going really well, you should still always be auditing your growth.

[00:05:16.490] – Asia

Absolutely. There’s no shortage, of course, ideas and things to do. The list is always and forever growing. But what I find a good audit process will do, though, is it’ll actually focus and alignment around, okay, what is actually the most important thing to do? That’s really tough to do in isolation. It’s also really tough to do just looking at the one KPI. It’s much easier to do when you look at the whole picture all at once and you can zoom out and take the bird’s eye view and ultimately be a little bit more strategic about how you approach it. So totally.

[00:05:47.700] – Joran

At the beginning, you mentioned you helped start it from early stage to later on. From which point should you care about auditing your growth?

[00:05:55.980] – Asia

I would say once you get that first 10-15 cameraEven the smallest analysis will help. There’s a few KPIs that I can think of that would certainly indicate that there needs to be a focus in particular areas. I think most founders and their growth and product teams are so concerned with the product market fit in the beginning, and that should certainly be the case. I’m not saying that’s not the case. But once you start getting your first 50 customers, your first 100 customers, then you can start to think about, okay, where are my opportunities? What’s working well? What’s not working well? And also what’s working well and not working well within the context of everything else? Getting that full picture is what’s important. But I would say you can start very early. There’s certainly a stage where maybe it doesn’t make sense, such as you’re in the customer discovery phase and/or you’re in the process of building an MVP, probably you don’t need a growth audit at that point. But once you start seeing, okay, we’ve got our first 10, we’ve got our first 30 customers, we’ve got our first 50, usually that’s an indicator we need some process, even if it’s a minimal one.

[00:06:58.940] – Joran

There’s a good bridge to the next question regarding process. Do you have any strategies or processes you can share which people can use to audit their growth?

[00:07:06.830] – Asia

Absolutely. The very first step with conducting your own growth audit for your own business is really to identify what the goal is. Why are you auditing growth? What is the thing that you’re hoping to achieve? Being careful, of course, that we want to form a hypothesis, but we don’t necessarily want to succumb to confirmation bias. For example, maybe we want to really understand how acquisition is performing, and also maybe our ultimate goal is to leave or walk away with really clear takeaways on what to do in acquisition to improve it. However, we want to also make sure that we don’t lead ourselves down a path that implies that that is the answer, especially if acquisition actually turns out to be fine and it’s actually retention that’s suffering. The ultimate first step is really to just form your hypothesis of what are you hoping to achieve? What do you think is actually happening? Keeping space for being proven wrong, of course. The next step is to either do one of two things. You’re either going to align a team that’s going to help you gather data, or you are going to decide to take this on yourself and you’re going to carve out some time.

[00:08:11.970] – Asia

This is not a done-in-a-day type process unless you are very small and you’re tracking everything. Usually, what ends up happening with a growth audit is you’re ultimately gathering data not just from one part of the business, but from several parts of the business, both from a performance metrics level basis to a financial perspective and then also ideally to a qualitative perspective. When I do this with companies, it takes about four weeks. But if a team were to put their heads together and to really dedicate time and energy to this, they could get it done in a week or two. But if it’s just you, maybe your earlier stage, maybe it’s just you on the team, or you have a small team of developers or engineers or what have you, this is probably going to take a few days. I would just set aside some time. Then if you can assemble a team of people to help with this, great. Tapping the people that you’ll need will, of course, depend on your goal. What is your ultimate goal for this audit? What are you trying to understand or what are you trying to uncover? Then from there, what I highly recommend teams do is identify a few different things across the areas of business.

[00:09:16.490] – Asia

You want to gather data of performance on how awareness and acquisition are performing. This is what does the funnel look like? How much traffic are you getting? Trials, demos, leads, et cetera. Next, you want to get a sense for activation, how is activation performing? This is how many of those trials are becoming customers. How many of those trials or new leads are achieving the moment of activation? The more that you study activation, the more that you learn that there’s actually several points in the activation journey. Then you want to also look at retention. How is retention performing? What does revenue cohort retention look like? What does overall revenue churn look like? Do certain customers churn more than others? You want to get what is the information that you’re need from retention in particular to help inform your overall audit? Then finally, if it makes sense for you to analyze this, because not everyone does have this, but there’s also expansion revenues and an understanding and an analysis of expansion. What percentage of your revenue comes from expansion? Is it really small? Is it higher? Then finally, the final layer to this is there’s the business performance, of course, but then there’s also team and overall organizational performance.

[00:10:25.480] – Asia

Are there any gaps in the team? Are there any gaps in the process? Are there any gaps in tools? Are there any gaps in maybe data or insights that you might need? This is all, of course, dependent on your goals, but usually the data and insights-gathering process is the hardest step. It’s the one that takes the most time, especially if you’re not tracking certain things or if you are… There are some founders out there that don’t have subscription analytics, for example, so they don’t even know what their MRR is at the tip of their fingertips, which is wild to think about. There’s all kinds of scenarios. I’ve seen it all. I’ve seen the team that’s crunching numbers manually in Excel, but I’ve also seen the team that’s manually crunching what their activation rates are without mixed panel or without amplitude. It’s painful to watch, but at the same as our time, they can do it. It just takes them longer. This is the type of data that we will need. Ideally, we are putting all of this into a dock of some kind. From there, it really becomes about the game of identifying what’s behind, what’s ahead, and what are the gaps based off of where we want to be.

[00:11:29.690] – Asia

Gathering the data is usually one of the hardest steps. The second hardest step is, of course, figuring out what’s maybe working or not working. But I find with a really good hypothesis and ultimate goal for the audit, usually that goal informs how you look at this data. Also, it forces you to get really honest about how much do you trust what you have and also what information might you be missing to make an even better decision about how things are going and what’s working versus not working. But what we find is typically in isolation, so if we were to just look at acquisition and we never once considered how retention was performing, we might come to certain conclusions that acquisition is doing great, or maybe it’s not doing great and we can’t figure out why. But actually, it’s retention that’s suffering or it’s something else that’s suffering. This is why we have to take a holistic approach to this because we could be leaving things on the table.

[00:12:20.040] – Joran

Yeah, because in the end, you don’t want to fill a leaky bucket. I’ve been a head of CS before and we really looked at what clients do we get in and why are we losing the client? We went all the way back to acquisition at the beginning. I guess to summarize a bit what you said, I can’t summarize everything, but start with what is the goal? Form a hypothesis, gather the data, so make sure you have everything, and indeed, get some metrics in place. There are a lot of free tools where you can at least get the basic metrics in place. How does the funnel look like? Look at the different areas: acquisition, activation, retention, and expansion revenue. Then make sure that you look at your organization performance. Are there any gaps there? Then basically conclude with what is behind and what is ahead and where are the gaps basically.

[00:13:02.610] – Asia

Yeah, perfect. Nailed it.

[00:13:04.530] – Joran

You already mentioned it a little bit like companies not having the data in place or not even having the basic things in place. Are there any other common mistakes companies make while auditing their growth?

[00:13:15.320] – Asia

Absolutely. There’s a couple of things, and honestly, more. The first is not knowing what to measure in addition to not knowing how to interpret what has been measured. What I mean by that is… If you know much about product management or growth, then you might know that within activation… Activation, you’ve probably heard of the pirate metrics are acquisition awareness, activation, blah, blah, blah, revenue retention, referral, et cetera. But when it comes to activation, there’s tons of KPIs that you could be measuring within activation. There’s net new user retention, there’s daily active users, monthly active users, annual or quarterly active users. Then there’s, gosh, you could look at just direct conversion rate of trial to paying customer. That’s what a lot of people start with. Then there’s activation rates based on, or cohorts even, based on how many people get to the aha moment, how many people get to the primary value moment, or how many people get to blah, blah, blah. There’s 20 different things that you could measure. What I find is a lot of teams get stuck on what is the thing that they need to measure to help them make a decision?

[00:14:19.610] – Asia

Then once they measure it, what does it mean? How do we interpret it? These are, maybe they’re less mistakes and they’re just more gaps. A lot of what we will see whenever we audit growth is there will be assumptions made about what these KPIs are and how they’re performing. What’s always so fascinating is whenever you pull up the industry standard B2B versus B2C, SAS KPIs and metrics and performance-level things, sometimes what you’ll find is there’s a KPI that we’re tracking in the teams. Yeah, this feels really good, but then when you compare it to the average, it’s much lower. That usually is a really clear like, This is interesting. This is an interesting opportunity to further explore. We’re not going to assume, of course, but it’s interesting to explore it. Then other times you get scenarios where it’s well-performing, well-over. For example, I think the average B2B, SaaS, free trial conversion rate today in self-serve companies is to get 30% for top performing companies. I’ve seen some activation rates or conversion rates, at least in this case, that are like 60%. I’ve seen quite literally double, really high. Sometimes it’s, Oh, yeah, let’s pat ourselves on the back, and it’s great.

[00:15:25.500] – Asia

But then maybe later we also see, though, that doesn’t have an impact on revenue growth. Then it’s okay, well, it’s happening. There’s a lot of the times it’s not knowing what to measure, not knowing how to interpret it. Then the other thing is making an assumption about what it means. This is extremely common. The thing about all the quantitative stuff, the KPIs, the metrics is it does a really good job of telling you what, but it does not tell you why, or how, or even who. Sometimes we’ll measure an activation rate, or a retention rate, or or revenue cohort retention, or whatever it is. We’ll look at the number and we’ll assume we know why was the website conversion rate that good, or why was the activation rate not good? We’ll make assumptions, and we make them instantaneously, almost without even thinking about it. Nine times out of 10, I will go through the report that we ultimately produce. It’s so interesting to hear people’s reactions and responses like, Oh, our activation rate is this way because of this, or, Oh, the reason why people don’t hit the value moment is because of this. Do you know that?

[00:16:33.780] – Asia

Or do you think that? It hasn’t been actually proven with qualitative insight. Usually, it’s a hunch, and it’s an assumption that we’ve made and we’ve not actually validated it. Once that’s enlightened, then it’s usually, okay, we have some work to do. That’s the work. Those are the top three that I see. There’s more that I could list off, but those are definitely the most common.

[00:16:59.190] – Joran

Yeah, and I think that the one making assumptions is indeed a big one. I even do it myself. The time of the recording for this one is at the beginning of the month, so I just wrote my update what happened last month? I gave a lot of metrics in our channel, and I did not dig deeper than just listing the metrics and then putting my assumptions why they’re a higher or lower. But I think also because it takes a lot of time if you want to dig behind the numbers and you might not always have the qualitative data as well.

[00:17:28.380] – Asia

I think too, if you’re a technical founder or if you’re a technical growth leader, the thing about the unique challenge I think that technical founders have when it comes to growing their SaaS companies is you are literally trained to when you come across a bug, your code doesn’t work. You are literally trained to come up with 20 reasons why and then troubleshoot down the list those 20 things. The really cool thing about coding is you obviously have a really fast feedback cycle. But when it comes to growth, it’s holistic. It’s connected to a million other things. And usually when it comes to, Oh, why is this not working the way I thought? Here’s a few reasons why. But there’s no process that happens to validate which one it actually is. But it’s just because I think the nature of the type of work that we’re used to and growth work being wildly different in my opinion. It’s not the same feedback loop at all. But yes.

[00:18:22.740] – Joran

Thank you for listening to the Grow Your B2B SaaS Podcast. This podcast episode is sponsored by Reditus. Reditus helps B2B SaaS companies to set up, manage, and grow an affiliate program. In short, an affiliate program means that you’re going to ask other people to promote your SaaS, and you would only pay them if they deliver you a paid client, making it a very cost effective and scalable way to grow your monthly recurring revenue. See more at getreadytaste. Com. We talked about mistakes. Let’s tune in around. Are there any best practices regarding finding growth opportunities or doing a growth audit?

[00:18:56.390] – Asia

The things that I typically recommend to teams and also help them with myself. But what I find is when you have the team aligned and on board with what the goal is, and also you’ve set the expectation that this is not a space for judgment. No one’s going to get fired because of this growth audit, as I hope not. This is not a space for judging. This is a space for uncovering, exploring, and finding. We’re seeking. We are seeking opportunities. Even if there is a KPI that is not working the way, you already know revenue churn is bad, or you already know your net new user retention isn’t great. Even if you already know what the problems are, creating a safe space to just say, The goal here is not to judge. The goal here is to troubleshoot, to fix, and to find, and getting the entire team aligned around that. Because what you don’t want to do is you don’t want to position the growth audit as something that is a scary thing and someone’s going to get in trouble. This will cause people to hide, and it will cause them to want to maybe not give you all the information.

[00:20:05.300] – Asia

That’s not what we want. We want transparency, we want the truth, but also we want to create a space that is safe ultimately, and it’s not a space for judgment. All that to say, though, when I find teams that do a really good job of either conducting their own growth audit or they do a really good job of collecting the information, collecting the insights, it’s because they’re coming from a space of trust and transparency and very low ego. No one is showing up to the table wanting to be right and also wanting to hide maybe the shitty KPIs that aren’t doing as good as they would like. They’re coming to table. Here it is. Here’s the truth. Here’s what I found. Here’s what I’ve learned. Here’s what I’ve taken away from this. Here’s what I think, but we should prove these or we should validate these things. That’s definitely one of the most healthy responses to a growth audit. The secondary thing I would say is getting really honest in that process around doing what you don’t know and what you don’t know. It never fails. Every time I’ve ever run a growth audit with a team, you always hear from the founder and from the product manager and then from the head of marketing, you hear, Okay, I know that the customers are doing this, or I know that this is our customer.

[00:21:16.880] – Asia

I know these things, but here’s what I don’t know. I don’t know if they’ve compared us to something else. They’re very transparent about what is unknown. I think where the growth audit falls apart is when you are neither aware nor are honest with what you know that you don’t know. I think sometimes, too, there’s this tendency to want to like, No, I know the customer, or I know this, or I know that. But in actuality, it’s like, Well, there are some things I don’t know. I think if you’re really clear and transparent about that, it makes the growth audit even more powerful because it makes it clear what your next projects are. All that to say, I think creating that safe space, definitely one of the best practices, especially if you have a team doing this. Then secondly, getting really clear about what you don’t know because that usually creates a project or a task for someone else to go know. Let’s go figure it out. Let’s go find out so we can improve our decision making. We can reduce the risk of making a decision based off of bad data or old data or missing data, which, of course, we can fix the missing part at least.

[00:22:16.680] – Joran

Yeah, it almost sounds like this is going to work really well within a company organization where they’re really transparent versus, I guess, if you work in silos, you have a lot of egos and indeed there’s a lot of judgment or people hiding information. They want to get their promotion, so they want to get there. In motion. They don’t want to review information, which could hurt them in the long term. Even though it’s not the case, probably.

[00:22:35.640] – Asia

Yeah, totally. I think a good growth audit probably doesn’t survive a not-so-great culture. But even if you are a leader, though, of a team, so maybe you’re a product leader or maybe you’re a growth leader, maybe you’re a marketing leader, you can still use the audit as a way to audit the marketing department or audit the product department. So even if you can’t do a cross-functional growth audit, that’s totally fine. It’s ideal if you can, of course. But if you’re feeling like, I don’t know if our culture would survive a cross-functional growth audit, then you can still use the audit as a way to see how your own function could improve on various aspects of SaaS growth.

[00:23:12.490] – Joran

Let’s assume we can do it cross-departments and everybody is transparent. There’s still probably going to be challenges and obstacles people are going to face while doing the audit growth. Any other challenges they will face and maybe some ideas on how to overcome those?

[00:23:26.920] – Asia

The first one is easily the collecting the data. If the data doesn’t exist, then it’s either a project to collect it. In some cases, that project might not be a short project. For example, you might conduct a growth audit and then realize that in order for you to actually make a really good, sound, strategic decision, maybe you need to conduct customer research or audience research or user research or all the above. That can take weeks. That’s an easily several weeks process or project. Even if you were to run a survey, it would still take a few weeks to design it, send it out, get responses, analyze it, et cetera. There’s collecting information to make a good decision. I think one of the other big challenges is not knowing if you’ve gone deep enough, but this ultimately comes down to experience level expertise and just general knowledge of how SaaS businesses grow, how they work, how they function, and at various stages. This can be remedied with really good advisors, consultants, coaches, people that you trust, other founders who’ve made it there in terms of knowing, have I gone deep enough? Have I looked at the right things?

[00:24:29.190] – Asia

And is there anything else that I’m missing? It’s one of those unknown unknowns, and usually the best way that we fix unknown unknowns is by leveraging people who know that it’s a known and can help enlighten maybe gaps that you might have. But apart from gathering the data itself and also knowing if you’ve gone deep enough, the last thing truly is committing to the process of auditing growth in and of itself. It’s really easy to get extremely distracted in the process. You’re collecting a data point for something, you’re analyzing or tearing down on marketing, for example, or maybe you’re tearing down something in awareness or acquisition or something. It could be whatever. You might find that you’ve actually uncovered another problem, and sometimes that problem is worth putting all of your energy and focus into, and then you abandon the growth audit altogether. But I find it’s rare. It’s usually very rare. It would have to be like a bug so bad or like a thing so wildly monstrous that it’s now the new focus. But otherwise, it’s getting distracted in the process. I recommend that teams don’t spend more than 2-3 weeks on this if they can help it.

[00:25:34.400] – Asia

If they find that there’s data that they need, then it’s going to take them a long time to collect, to even arrive and close out the original growth audit process so it doesn’t take six months for you to do it, that’s what I typically recommend. Letting this thing string out, that’s another big challenge. Keeping it tight and focused. Even if you know that you need data to make better decisions in that process, making the trade-off saying, Okay, we’re going to wrap this up. This is where we’re leaving off. We know that we need this. Here’s what we have learned, and here’s what we can execute on pretty confidently. Because you don’t want the growth audit to end up with you not executing anything or end up with you not making a decision about something, you want to ultimately conclude. There are scenarios where you won’t be able to, but it’s rare. It’s very rare.

[00:26:19.270] – Joran

You mentioned already, this is maybe even even a promotional question from my side. This is why they should be working with a company like the Man Maven, where you can actually help them to stay on track, stay on time, and make sure that they know the unknown or at least know that something is unknown and help them get to Unstock, basically.

[00:26:38.370] – Asia

Yeah, absolutely. I guess if there was one last thing I’ll mention about this is sometimes the growth audit goes great, but then it doesn’t actually turn into action at the end. Sometimes it’s okay, Asia told us to do a growth audit. We did it. Yay. But then it doesn’t actually turn into projects and experiments after, and that’s also a very big potential gap. The growth audit is done for several reasons. Usually, it’s to help you make a decision, but first and foremost, it’s absolutely to help you make movement, action on something and do something. It is to help, whether it’s strategically planning, like maybe you’re annually planning right now for 2024 and you’re like, I don’t know what my top growth priorities are. I think I do, but I haven’t validated them or whatever it is. Just make sure that whatever it is at the end of it that you actually do have an action plan for what to go and do next. If you don’t know how to translate what you’ve audited into action execution, my door is always open. I’m an open book. Any question you all have, I will be happy to answer.

[00:27:40.950] – Asia

That’s another potential gap. But anyway, yes.

[00:27:44.750] – Joran

Okay, guys. We’re definitely going to link your profile, LinkedIn profile, and email in the show notes. You already mentioned it, 2024, I guess you already also mentioned it a little bit at the beginning, SaaS companies focusing more on profitability, sustainability. How do you overall see the growth of companies changing and maybe going forward in 2024?

[00:28:04.280] – Asia

Absolutely. Already, the fundraising environment is completely different. I think what investors are hoping to see and wanting to see more than anything now is they want to see sustainability and profitability. Of course, growth is always going to be a part of the story. But to me, like I said, growth can really be truly like the we’re just going to grow at all costs mentality. But then there’s also the, no, we’re going to grow as sustainably and profitably as possible. Not only this, but marketing channels, it’s getting more expensive. I think in the last, I don’t know what, 6-8 years, it’s doubled, if I’m not mistaken. Marketing channels are going to continue to get more and more expensive. It’s also going to get noisier. It’s getting harder to stand out from competition, from other producers, providers, creators, and then you’ve got AI into the mix. Ai is going to make things really interesting because on the one hand, it’s going to make it really cheap for a lot of people to compete on the same thing and producing content about the same things, which means there’s going to be even more noise. But on the other hand, I think teams that learn how to use AI will…

[00:29:05.090] – Asia

One of the growth levers is operations and doing more with the resources that you have. On the other hand, AI can actually scale a team in a very different way. That’s going to be really interesting to see. All to say, I think the trend is going to be, how can you grow with what you already have? How can you grow without adding necessarily more and more headcount or spending more and more dollars on acquisition? There are going to be some markets and industries where doing that makes sense. We’re growing by headcount and growing by spending more acquisition dollars will make sense. But I think it’s going to be ultimately the day, how can we improve this cost of revenue that we’re seeing? If it’s too expensive to generate the revenue that we’re generating, is it worth it? I think the landscape is going to shift. I don’t know for how long. I feel like the last time we saw this was probably after the dot-com bubble was I think the last time this trend happened. We’re seeing it again due to COVID and other, I think also too, just in the VC world and in the VC market, we’re seeing WeWork and Theranos and FTX.

[00:30:07.570] – Asia

The hype bubble, I think, has burst on organizations like that in some ways. Even their skepticism about Uber. I think there’s a general fear and also concern, but then also a new value on let’s create sustainable growth, let’s create profitability. Yeah, that’s where I think we’re headed. I don’t know for how long. I also don’t know how… It could be fickle. It’s the story now, but maybe in another two years it’ll change again and it’ll be more about growth at all costs. But I don’t think we’re seeing that. I just get the general sense too that people are wanting to be more thoughtful and they’re wanting to be more strategic. Yes, the hustle is great when you love the hustle, but if the hustle is not creating more of what you want to see in the bottom line, then maybe we need to pause for a minute and think and get critical about what’s really happening.

[00:30:58.810] – Joran

Yeah, makes a lot of sense. I think that’s why we’re firstly in a mini good space because we’re basically helping SaaS companies to grow in a cost-effective way with using affiliates. Even the things you mentioned, I feel like we’re definitely in the right direction when I look at our own business. We are going to close off. I always have these four questions at the end. When we start with advice about auditing growth or maybe growth in general, what advice would you give somebody who’s just starting out and grow to 10K monthly recurring revenue?

[00:31:27.880] – Asia

This is actually true for really any company. But if you’re just starting out and you’re trying to get to 10K in MR, your ultimate mission is going to be, it’s called revenue court retention. Your mission is to get to, let’s say, 60% after 12 months. At six months, it should ideally be 60-plus %, and that’s on the way to 10K. The reason why is because if you’re not familiar with revenue cohort retention, basically what that means is the revenue that you’ve generated this month, how much of that revenue do you retain every month after that from that same bucket of revenue that you got this month? And if you use profit, there’s a chart for you for free. It’ll show you this. Bearmetrics has it too, and so does ChartMogul. I feel like there’s a couple of others that have this chart. But if you’re using any of those tools, they probably have a revenue cohort retention report for you for free right now. And your goal is to get to that metric. And the reason why is because if you don’t, you’re going to have to replace that 10K MRR every 6-12 months if you have less than 60% at six months.

[00:32:31.890] – Asia

And the way that you get there is by focusing on the things that you already know about. So you already know about getting to product-market fit. You already know about, okay, what are the channels for acquiring the best paying customer? Who is my best paying customer? Why do they buy it? You already know about that process or I’m assuming you do at least. But when I audit growth, the first thing I’m looking at is revenue core retention. It doesn’t matter what size the business it is. I can tell you without a shadow of a doubt, the highest growth companies, the ones that are like, they’re just like taking off, they have 120percent typically, like it’s 100-120 % revenue retention at 12 months. Then the ones who are in between at the 12-month mark, they’re usually getting 80 %. They should be getting 100, but even 80 % still is technically pretty good. If it’s 60 % or less at 12 months, this business is going to have to replace its revenue every 12 months. That’s a grind. Basically means that marketing has to work extremely hard, so does sales, and you really only grow by focusing on acquisition.

[00:33:30.280] – Asia

But we all know that acquisition is getting more expensive, which means that your cost of revenue might actually be really high. Also just generally, it’s not going to be as efficient as a funnel. But that’s what we typically see. It’s a little bit different for B2C. B2c SaaS, we can see the 60-80% at the 12-month mark revenue cohort retention, and it tends to be pretty healthy. But ideally, we’re still on the 100% if we can get there. But if you’re 10K MR, yeah, I would say at the six-month mark, get more than 60%. That’s a good sign if you’re getting better and better cohort retention on the revenue side.

[00:34:01.190] – Joran

When you go indeed past that 10K MR, what advice would you give SaaS companies growing to 10 million ARR? I know it’s a big step, but any advice here?

[00:34:10.430] – Asia

Absolutely. Okay, so I’m actually going to break it out into… Let’s go from 10K to 80K MR, which would get you to the million-ish, I think it’s 83 or whatever. From 10K to 83K MR, getting to the million, the biggest differences here are doubling down on the channels that generate the best paying customer, getting violently clear, violently aggressively clear about who the best paying customer actually is and what the context is upon which they are buying the software. Too many teams get way too distracted on the way to a million. They get super distracted. They think they have to be everything to everyone. They think that they have to scale and grow many different parts of the product, and they don’t necessarily have to. They actually need to instead focus on best paying customer, creating value, delivering value. That’s the trifecta. That’s what gets you to a million. That plus channels, we need to have a way to generate the best paying customer. Ideally, it’s with a channel that is cost effective. As we’ve discussed, it’s getting more and more expensive. Your pricing and monetization is part of the story as well. But once we get to a million plus…

[00:35:14.960] – Asia

A million to five is very different, in my opinion, than five to 10. One to five is usually, Oh, shit, we’re figuring it out. Teams are figuring out processes for the first time. Teams are also figuring out like, Oh, how do we actually all work together to accomplish the mutual goal? Usually also, this is when they discover that they’re actually not as good at product management as they think that they are. They start hiring the very first head of product, or they start hiring if they already have a VP of product, maybe they’re already investing in what is our methodology for how we define what customer value looks like and how we understand the problem space that we’re in and how we build new features. What are the trade-offs that we’re making? This is also usually like 1-5 million ARR is usually also when teams discover what is their go-to-market strategy now because it’s probably different from when they were at 20K and MRR. Usually, one to five, it’s fun and uncomfortable at the same time because you’re making trade-offs go-to-market-wise. What you build with the product makes trade-offs actively in the market. I think a lot of teams, they might know that subconsciously, but when it plays out in real life, it’s like a surprise.

[00:36:21.520] – Asia

Then 5-10, usually, so from my experience, 5-10 is… I feel like once you get to 5, getting to 10 is usually pretty clear because you’ve done all the struggling from 1-5. You’re probably pretty crystal clear on go-to-market strategy to an extent. You’re clear, here’s how we’re positioned, here’s what we’re ultimately… Here’s what we’re providing to the market. Here are maybe not just one best paying customer, but here’s our top 2-3 segments. Here’s how we go to market to each of those segments. Really, 5-10 ends up being more about team and people and culture, I find, and making sure you’ve got the right people in the right seats to do the good work. Then 10-beyond. I can give the picture 10-50, for example, because I’ve seen this too. This is where go-to-market strategy now changes and now we’re making decisions and trade-offs about our position in the market. This is where product development, product management, this actually becomes crucial. Also, too, we start to see companies make acquisitions. We start to see companies really building their brand. I think about HubSpot actually, thinking about how does HubSpot do what HubSpot does. When they were in that 10-50 space, they were making very specific investments in certain parts of the market to acquire their market share.

[00:37:31.570] – Asia

Then, of course, they’re huge now. But yeah, it’s a different race. But that’s the advice I would give.

[00:37:37.900] – Joran

Nice. Thank you. Maybe one more general piece of advice, I guess, for SaaS founders, because that’s our audience, any general advice you want to give toward SaaS founders who are currently on their journey growing their SaaS?

[00:37:50.980] – Asia

I would say hang in there. Where you’re at, who you are, what you’re doing, what you’re learning, there’s light at the end of whatever tunnel you’re in. It’s impossible for you to know everything. The best that you can do is with what you know today. There’s this common phrase that’s like hindsight is always 2020, and that is actually not true at all. Mindsight is not 2020. You can actually only make decisions with the information and the knowledge that you have today. Unless you dedicate your whole life to learning everything, it’s going to be impossible for you to actually make decisions with 180-degree view. That’s actually not realistic or possible. So I think hanging in there and doing the best with what you have, that is, I think, what we all have to hold on to. Of course, we all have goals. We have ambitions, especially if you’re an achiever. But I think if you’re out there listening and you’re beating yourself up for not being where you want to be, it’s just not… I want to relieve every one of that angst because where you are now is where you are meant to be, and where you’re going to be next is also where you’re meant to be.

[00:38:55.640] – Asia

You’re probably doing the right thing. You’re probably on the right path. Could it be better? Of course. It. But just hang in there. It gets better.

[00:39:03.670] – Joran

Nice. I think it’s a great piece of advice because no matter in which stage you’re in, you’re always going to have problems. They never stop coming.

[00:39:10.850] – Asia

Never. I’m working with a company that’s 500 million. Yeah, 500 million in ARR. They’ve got 70,000 customers, got five products, huge company. Of course, they have challenges. They have tons of challenges. They’re not wildly different from what we’re experiencing, from what the average person is experiencing running their SaaS company. It happens at every stage, every size. No one has it perfectly figured out. The scale of the problems gets bigger. If that’s exciting, then great. If it’s not exciting, then what can we do so that you’re focused on the problems that you really want to solve?

[00:39:45.330] – Joran

Nice. I like it. Maybe one final personal question? What is one thing you wish you knew 10 years ago?

[00:39:52.840] – Asia

The phrase that just came to my mind was that it’s actually not about me. When I was earlier in my career, so I started out in marketing and I’ve been in tech for the last, I don’t know, 11, 12 years, whatever. But I think in my earlier marketing roles, I used to think that just because my goal wasn’t met, that the whole company would fall apart. I’m not saying this to say that anyone who’s listening out there should relax on their goals. It’s less that as much as I guess I used to think that I was this magical linchpin. If I wasn’t doing it right or well, then the whole thing would fall apart. It took me years to realize, Oh, it’s actually not about me. It’s actually about something much bigger than me, and it’s actually about the collective, and it’s about all of us together. There’s value in being able to see yourself as the individual. Of course, there is. Of course, there’s value in being able to take responsibility for yourself. But what took me several years to realize was like, Oh, it’s actually about all of us. It’s about the whole picture.

[00:40:56.030] – Asia

I think if that was something that I had internalized earlier, I think I wouldn’t have maybe been so scared to make certain decisions. At the same exact time, I would have taken more risks because I think that there’s a fear that gets associated with thinking that you’re the linchpin for things. Well, if I mess up, then the whole thing falls apart. But actually, that’s not necessarily always true. We can take risks because it’s about the collective. It’s not about the individual in the same way. But anyway, I really hope that doesn’t get totally construed. I hope that makes sense. But that’s what I wish I had known 10 years ago, that the world did not evolve around me. Once I learned that, I was like, Oh, the world actually just revolves, and that’s it. Thanks.

[00:41:39.470] – Joran

Final question. If people want to get in contact with you, we’re going to link your LinkedIn profile. Is that the best way or should they contact you in any different way?

[00:41:47.310] – Asia

Yeah. Okay. Linkedin is great. I would say if you send a connection request, just say that you listen to this podcast and so I know that it was you. Otherwise, I’m active there. Of course, there’s also… I publish weekly on my newsletter called The Work. So if you like the way I think, if you want to learn more about not only how to audit growth, but also other growth-related concepts, whether it’s in marketing, product, whatever it is, there is my newsletter on Substack. It is called The Work by Demand Maven. Then I’m occasionally on Twitter here and there, X, whatever we’re calling it now. I think it’s X technically. Then, yeah, Demandmaven. Io is also where I reside. So if you ever want to chat, hit me up. I have an open book. I’m happy to answer any question you guys have. I’m just happy to provide value where I can.

[00:42:31.250] – Joran

Nice. We’re never going to make sure that we link to all the social profiles, but I guess the conclusion here is getting contact via the website or getting contact via LinkedIn because X or Twitter might not be the best way. Thanks for coming on to the show again. Thank you, Asia.

[00:42:45.540] – Asia

Thank you so much.

[00:42:48.150] – Joran

Thanks again for listening to the Grow Your B2B SaaS Podcast. If you found value in today’s episode, please leave us a review, follow us, thumbs up. You know what to do. If you want to sponsor the show to reach the SaaS founders, just ping us on LinkedIn. And if you’re experiencing any specific challenges right now, let us know as well. We’re always looking for topics to cover in our show. For now, have a great day and keep growing your B2B SaaS.