The Flywheel SaaS Model: How To Unlock Self-Sustaining Growth For Your SaaS Company
For most businesses, the customer journey looks like a one-way path that a customer goes through from the moment they realize their need or pain point up to purchasing a product.
It can even include their experience while using or consuming the product, and what comes after.
While this linear customer journey may be what it really looks like for traditional companies, some SaaS businesses and thought leaders beg to differ.
There is another way to look at the SaaS customer journey. And this is the flywheel SaaS model.
This model suggests a change of perspective when it comes to the SaaS customer journey and the SaaS sales funnel.
Instead of having a linear path with a definite beginning and end, the flywheel model shows the whole process as a cycle.
In this article, we will talk about the flywheel SaaS model, its key stages, and how you can create a powerful flywheel for your SaaS business.
What Is The Flywheel SaaS Model?
Have you ever seen an actual flywheel?
It’s this mechanical device made of a heavy wheel or disc. When you apply force to it, either manually or using a motor, the disc gains momentum and keeps spinning, storing the kinetic energy.
It keeps on going and going until the energy gets released to to power either a machine or an electricity generator.
Now, with the exception of the “releasing” part, this is also how the SaaS flywheel model works.
A SaaS flywheel, also sometimes called a marketing flywheel, is a model that describes a more cyclical process of a SaaS company’s customer acquisition, retention, and customer advocacy.
Much like a mechanical flywheel, the SaaS flywheel involves gaining momentum through satisfied customers.
If your customers are happy enough with your SaaS product, they will recommend it to others or at least give positive reviews about it.
As a result, it can bring a steady stream of new customers, creating a continuous cycle of growth.
By focusing on providing a great SaaS product and an awesome customer experience rather than relying solely on customer acquisition, the flywheel SaaS model can help you build sustainable, efficient, and effective growth for your company.
Key Stages Of The SaaS Flywheel
Although the SaaS flywheel is more cyclical rather than linear, it is also made up of stages that are somewhat similar to the SaaS sales funnel’s stages.
One thing to note, however, is that the flywheel model takes a more customer-centric approach.
Let’s talk about the different stages of a SaaS flywheel:
Stage 1: Attract
The Attract stage, as you may guess from the name itself, focuses on acquiring new customers.
Although, as we mentioned earlier, happy customers can help with customer acquisition, you still need to make your own efforts to get new users.
In fact, this stage is crucial as it sets the foundation for the rest of the SaaS flywheel stages. Especially if you’re a SaaS startup or still in the hyper growth phase, you can’t retain customers if there are not customers to retain in the first place.
So at this stage, your marketing strategy is one of the most important factors for customer acquisition.
And boy, there are A LOT of factors that go into customer acquisition. So we won’t dive into much into detail about this. Just some important points.
Most SaaS businesses use an inbound marketing strategy, which attracts new customers through organic channels, such as content marketing and social media marketing.
Some also use a sales-based approach in generating leads and nurturing them through email or other communication channels.
Whatever strategy you use to gain new customers, make sure that you understand your target audience and how to best reach them.
Stage 2: Engage
Once you acquire a new customer, you need to engage them with your SaaS product.
This stage is all about providing an excellent product experience for your customer and giving them a headstart on using your SaaS solution.
For almost all (if not all) SaaS businesses, a thorough and engaging user onboarding process is non-negotiable in this stage. You have to make sure that every new customer learns the ropes on how they can use and maximize your SaaS product.
What’s more, you also need to ensure that they have minimal issues along the way and that they reach their own goals with the help of your Saas product. That means your customer support and customer success services would be crucial at this point.
The Engage stage is critical in the SaaS flywheel because it lays the foundation of a long-term relationship with your customer.
Remember that the flywheel model will only work if you have successful and happy customers.
Speaking of which, let’s move on to the next stage of the flywheel SaaS model.
Stage 3: Delight
For the flywheel model to really work, your customer retention strategy shouldn’t just be about retaining your customers. It should be about delighting them.
Rather than just doing the bare minimum to keep your customers, you need to kick it up a notch and make them happy about using your SaaS product.
That’s why the goal for this stage is to turn these satisfied users into loyal customers and even brand advocates.
Again, customer support and customer success come into play here. For your users to delight in your product, you should be able to not just fix any issues they encounter. But also to ensure that your SaaS solution actually brings more value to their businesses and/or their lives.
And when users do become passionate advocates of your SaaS product, it would drive even more customer acquisition through referrals and word-of-mouth.
As they bring new customers to your SaaS company, the cycle starts again and the flywheel gains more momentum.
How To Build A Powerful Flywheel Model For Your SaaS Business
Now, do you think a flywheel model would work for your SaaS business? If the answer is yes, then you will need to prepare for it.
After all, making a SaaS flywheel work is no easy task — attracting, engaging, and delighting customers all at the same time is definitely not a walk in the park.
Here are some tips on creating a powerful flywheel model for your SaaS product:
1) Create An Excellent SaaS Product
Of course. Developing a top-notch product is the foundation of having a healthy and growing SaaS business. Without a great SaaS platform, you can’t really attract, engage, and delight your customers.
So how do you ensure that your SaaS product is up to par?
Make Sure It Is User-Friendly
One way to ensure a high-quality SaaS product is to design it with the end-user in mind. You need to make sure that your product’s interface is intuitive and easy to use.
Plus, having a clean look and layout can also work wonders in improving their user experience.
Regularly Test For Bugs
You also need to continuously look out for bugs and glitches that your SaaS product may have. No SaaS platform is perfect. And sometimes, there are a few bugs that slip through your quality control measures.
Stay Up-To-Date On Trends & New Technologies
What’s more, the world of SaaS is a fast-changing one. New innovations, such as AI and machine learning, arise faster and faster nowadays. And if you fail to keep up, you risk making your SaaS product obsolete.
So staying updated on new trends and applying them to your SaaS platform is a must if you want to make sure that it stands the test of time.
2) Define Your Target Audience
Whatever marketing or any other customer acquisition effort you’re doing, it’s essential to know who you’re trying to reach.
This will set the tone on what kind of messaging you will craft and what marketing channels you will use.
You can start by building your ideal customer profile (ICP) and SaaS buyer personas. These will help you understand your target audience in terms of various characteristics, such as their challenges, needs, and preferred communication channels.
Consequently, having a firm grasp on these details about your potential customers can help you create a more targeted marketing strategy that would be more effective in attracting them.
3) Build A Proactive Customer Success Team
As you may observe from what we’ve talked about so far, customer success is essential to building a strong SaaS flywheel.
Your customer success team is all about encouraging your use to engage with your SaaS product and helping them achieve their desired outcomes.
Let’s talk about a few ways to improve customer success:
Design An Efficient Onboarding Process
As we mentioned earlier, your onboarding process is one of the most important things when it comes to engaging your new customers.
Note that we’re using the word “efficient” here. That means your onboarding process should be both quick and effective in setting your new customers up for success.
That could mean using visual tutorials, such as images, videos, and even in-app interactive guides.
Ideally, your onboarding program should help new users learn the most information with as little clicks as possible.
Track Each Customer’s Product Usage
One important step in improving customer experience for the future is knowing more about what they are experiencing now. And that means monitoring their product usage.
Knowing what features they’re using and the level of engagement they have with your SaaS solution can give you rich insights into their product experience.
As a result, you can offer personalized help to them.
Your customer success team can give customized recommendations that can help them achieve their goals with your SaaS product.
What’s more, tracking user engagement can also help you optimize your upselling strategy. Knowing what features are most useful to them, you can highlight how the more advanced plans can help them achieve even better results.
4) Use Customer Feedback For Improvement & Promotion
When it comes to making sure your customers are happy, one of the most important things to do is to listen to them.
Customer feedback, whether positive or negative, can help you grow your SaaS business.
When a customer gives you negative comments, either through your survey forms or through SaaS review sites, you can take it as an opportunity to improve. Take the customer feedback onboard and think of ways that you can improve their user experience.
Of course, if the comment is on a public platform like a review site or social media, it can be a different story.
In such a case, you can turn a negative review into a customer service conversation. Right then and there, you can provide technical support and (in the process) show the world how awesome your customer support team is.
On the other hand, when you receive positive customer feedback, you can use that for promotion.
When potential customers are deciding whether or not to buy a SaaS product, most of them check review sites. And when they see that most of the product’s current users are happy with it, they would likely feel more confident about purchasing it.
What’s more, you can also outright ask your happy customers for testimonials rather than waiting for them to leave positive reviews.
User testimonials can be powerful in convincing potential customers to buy your SaaS product, especially if it’s coming from your existing customers who are similar to them.
Final Thoughts: The Product Led Growth Flywheel
As you can see, the flywheel SaaS model can be a powerful way for a SaaS business to grow.
By focusing on customer satisfaction, you can turn your existing users into advocates that can help you bring in new customers through referrals and word-of-mouth.
This principle is especially true for product led growth companies (or PLG companies).
With product-led growth, your SaaS product is the main driver for customer acquisition, retention, and expansion. It doesn’t rely much on sales or an aggressive marketing strategy.
In other words, you let your product sell itself.
And it takes a really high-quality product and excellent customer experience to have this kind of growth.
With both of these, a product led flywheel can be a powerful machine that attracts new customers, engages new users, and delights existing customers into recommending your SaaS product to their friends and colleagues.
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