Strategy & Best Practices
10 B2B SaaS Companies That Crushed Their Growth Goals—and How They Did It
By Ideas @ AppDirect / June 22, 2020
SaaS adoption has skyrocketed over the past decade. In 2016, 38 percent of companies used SaaS for at least 80 percent of their software needs. In 2018, that number jumped to 51 percent of companies, and by 2022, 86 percent of companies will rely on SaaS for at least 80 percent of their software needs.
However, that doesn’t mean every SaaS product is a guaranteed success. There are many challenges to reaching the magical $1 million in annual recurring revenue mark, and then scaling to reach even greater heights. Read on for inspiration on how 10 B2B SaaS companies were able to do just that and crush their growth numbers.
1. Intuit: Reinventing Itself As an Open Ecosystem
The secret to Intuit’s success is that it continuously disrupts itself. Correctly “intuiting” the direction of the software market, the company seized the opportunity to become more than a provider of products and services. Today, it views itself as an open platform, with an ecosystem exchange reseller model where Intuit opens its reseller network to an ecosystem of third-party products that complement its core platform. The company’s bets have paid off. Its stock hit new highs in 2019 and it has raked in revenue of $6.8 billion.
2. Atlassian: Fostering an Ecosystem of Add-ons
Now valued at $22.7 billion, Atlassian is the company behind project management tool JIRA, office messaging service HipChat, and other software. Recognizing the opportunity for fostering a technology ecosystem, the company launched a marketplace in 2012 with 1,000 integrations to third-party services. Since then, Atlassian has onboarded more than 4,000 add-ons into its marketplace. The company announced in early 2020 that its marketplace has generated more than $1 billion in total lifetime sales.
3. Salesforce: Creating an Ecosystem Five Times Larger than the Company
Launched in 1999, Salesforce is arguably the original SaaS company. Less than 20 years after it was founded, the company announced that it had reached a $10 billion revenue run rate faster than any enterprise software company in history. One key reason for the company’s success is its ecosystem. Back in 2005, Salesforce launched the AppExchange, now a massive ecosystem offering 3,400 applications and components for Salesforce.com. By 2024, the Salesforce ecosystem will be six times bigger than the company itself, meaning that for every dollar Salesforce.com will make, its ecosystem will make $5.80
4. Xero: Turning to Expert Users as Resellers
A SaaS-based accounting solution from New Zealand, Xero launched in 2009 and quickly acquired 12,000 customers through traditional direct sales and online self-service. Then it rolled out a new go-to-market approach utilizing resellers. Accountants who used Xero became resellers of the product, pairing it with their accounting expertise. In three years, Xero grew from 12,000 to 135,000 customers, 60 percent of which were acquired through its reseller program. Today, the company boasts 1.8 billion subscribers worldwide.
5. Microsoft: Soaring High with Its Massive Global Reseller Program
For more than 40 years, Microsoft has been a partner-focused company, with more than 95 percent of its business generated through its partner ecosystem. Driving the success of its cloud business—which recently surpassed a $20 billion annualized run rate—is the Microsoft Cloud Solution Provider (CSP) program. Created in 2014, the CSP program allows partners to resell Microsoft cloud services, such as Office 365 and Azure, in combination with value-added services, either directly or indirectly through partners. In 2019, the number of partners transacting through the CSP program grew to reach a total of 70,000 worldwide.
6. Shopify: Operating One of the Most Successful Affiliate Programs
Founded in 2006, Shopify is a Canadian company that provides websites, payments, shipping, and more for1 million-plus online merchants in 175 countries. Five years after going public, Shopify has a market cap of $89.9 billion and boasts high year-over-year growth rates. The company has grown so fast thanks to its highly successful affiliate program. Approximately 26,400 ecosystem partners referred merchants to Shopify in 2019, and the strong symbiotic relationship continues to grow.
7. Dropbox: Achieving Nearly 2,000 Percent User Growth with Referrals
Launched in 2007, the cloud storage company Dropbox has since built a successful business by targeting consumers, prosumers, and small organizations. By encouraging users to invite a friend to join in exchange for 500MB of free storage, the company quickly grew from 100,000 registered users to 4 million in just 15 months. By 2012, it had 100 million users and today it has more than 600 million. The company went public in 2018 and brought in $1.7 billion in revenue in 2019.
8. Zendesk: Serving Up Sales Directly
Customer service software provider Zendesk serves nearly 145,000 paid customers around the world. Started in 2006, the company reached $1 million in annual recurring revenue within 18 months using only self-serve signups. Still with no direct sales organization, the company then grew revenue to $10 million in another 18 months. Adding direct sales helped Zendesk reach a $100 million revenue run rate in 36 months. The company recently announced it had hit a 36 percent year-on-year growth rate that has put it on track to pass a $1 billion run-rate in 2020.
9. DocuSign: Reaching Customers Everywhere Through Channel Partners
The electronic signature company DocuSign is another SaaS success story. In the first quarter of 2020, the company reported it had reached $214 million in revenue, a 37 percent year-over-year increase, and now has 500,000 customers. While the company has an impressive direct sales history, it decided in 2016 that it was time to begin driving massive scale through a global reseller program. By automating the partner program and enabling distribution of DocuSign through a network catalog, the company now has the potential to reach every customer within its addressable market, no matter where in the world they are or which industry they are in.
10. Slack: Starting with a Robust Freemium Offer
Founded in 2012, Slack’s exponential growth is the stuff of founders’ dreams. Within two years of launching, it set a record for the fastest-ever startup to achieve a $1 billion valuation. In 2017, it had a $5 billion valuation and annual recurring revenue of $200 million. For the fiscal year 2020, Slack had total revenue of $630.4 million, up 57 percent year-over-year.
Today, the company has 110,000 paid customers, with 893 customers spending more than $100,000 annually. How did it get here? By continuously converting free customers into paying ones. It offers a freemium model that delivers value right from the start by solving some key communication problems for teams. Signing up for the premium model lets teams gain even more value, making the decision to convert a no-brainer.
Dig Deeper into Subscription Commerce
As these examples make clear, subscriptions are a critical part of creating a high-powered engine for growth. Read more about why recurring revenue is an increasingly important business model, and how to launch or scale your own subscription commerce strategy, in our new e-book, "Subscription Commerce 101: A Quick Guide for B2B Executives."
Ideas @ AppDirect is a leading source for trends, statistics, best practices, and other information related to the digital economy.
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