Wanted to hear thoughts on best practices for building and scaling Vertical SaaS businesses:
My thoughts below:
1️⃣ Expansion Areas: Multi-product expansion can target new customer segments to increase your Total Addressable Market (TAM) or deepen engagement with existing customers to enhance Net Revenue Retention (NRR), growth, and profitability. The latter is often the first choice for creating additional value.
2️⃣ Next Product: Understanding the customer's workflow is crucial to identifying areas where multiple products may be needed. This guides what to build based on ARR & gross margin impact, effort level, and potential attach rates. Ask yourself, "What other costs or inefficiencies do customers face beyond the core product?" and consider whether the new product provides compounding benefits to the core product.
3️⃣ Build, Partner, or Buy: Building is not always the best approach. Guide the "build, partner, buy" decision by asking key questions about competitive differentiation, alignment with core competency, implementation time, cost, and compliance risks.
4️⃣ Pricing and Bundling: Pricing is a strategic lever that should be given equal, if not more, importance. Through thorough pricing discovery, effective pricing and bundling can increase overall Average Revenue Per User (ARPU) while reducing costs for the customer and improving NRR. The Van Westendorp method is an excellent tool for determining customer price sensitivity.