Creating Your Growth Plan Using The Rule of 72

Would you believe me if I told you there was a proven system to double the revenue of your SaaS company?

Imagine for a moment that you had the power to double the growth of your SaaS with just a few tweaks in your business.

We can understand you might be skeptical, but by the end of the article, we hope to share with you why this math works out. It takes a lot of time and energy to double your revenue. First, you have to find growth opportunities hidden in your product. Then, you have to validate those growth opportunities by collecting accurate data, getting your team on board, and experimenting to determine the best approach.

However, with one simple rule, this process can happen faster and easier than you may initially realize. We’ve seen it work with our clients, and we know it can work with your SaaS business as well.

What is this simple rule we’re talking about? The Rule of 72, a rule of thumb used in business to quickly figure out how many years it would take to double your money through an investment, given the annual rate of return.

The rule of 72 is an approximation, there’s a precise formula for calculating the exact doubling time for an investment earning a compounded interest rate and it’s much more complex, but it's always very close to this rule of thumb.

The equation of the rule of 72 looks like this:

72 ÷ interest rate = Years required to double investment

Assuming your rate of return is 12% year over year, the “Years required to double investment” would equal 72 divided by 12, which turns out to be 6 years.

72 ÷ 12 = 6 Years required to double investment

Quite a bit of time, eh? But since we aren’t looking at an investment like a Venture Capitalist would, we need to hack this rule to make it work for the growth of a SaaS business.

To growth-hack a SaaS conversion funnel using the Rule of 72, first, we need to change the name of some of the variables in the equation.

Instead of looking at the interest rate, we will be looking at the growth rate and instead of looking at years required to double the investment, we will be looking at the number of steps in a customer’s journey.

The equation then turns into this:

72 ÷ growth rate = Number of steps in a customer’s journey

Once we have our new equation adapted for growth, we need to determine the number of steps on our customer’s journey and solve for the growth rate.

Please note that this strategy will work for any SaaS product with any customer acquisition strategy. But to have the rule of 72 work properly for your business, the equation needs to be adapted to fit the specific journey your customers go through.

In this guide, we will use an example customer journey of a SaaS business to illustrate the technique. For our example, we will map out the customer journey of a software product with a free trial customer acquisition strategy.

There are typically 5 steps in the journey of a customer for this type of SaaS business.

They are:

Now that we have the five steps, we can reverse engineer the growth rate you need to “hack” your way to doubling your revenue. That calculation looks like this:

72 ÷ growth rate = Number of steps in a customer’s journey

72 ÷ growth rate = 5

growth rate = 72 / 5

= 14.4%

Your growth rate is therefore 14.4%. To keep the math easy though, let’s go ahead and round this number up to 15%. So what does this 15% mean?

This will mean that if you improve your conversion rates by a mere 15% between each step of the customer’s journey, the improvement will compound and you will double the revenue of your business.

It’s worth noting that if you have more or fewer steps in your customer journey, you can adapt your formula as you see fit. For example, if you have 6, 7, or even 8 steps in your buyer’s journey, your tweaks may be smaller but more spread out.

After we’ve identified the steps that a visitor goes through from the moment of discovery to the moment of generating recurring revenue, we can define the customer’s journey.

Let us illustrate what we mean with a funnel of our example. First, we will look at the initial funnel, then we will apply our improvement of 15% to each conversion rate and in the end, we will look at how the compounded improvements of all steps result in doubling the revenue of the SaaS business.

Doubling revenue can be an extremely difficult task to consider, but if you break it down and look at it as optimizing each separate step by a mere 15%, it becomes much more tangible and actionable.

For example, imagine we’ve improved our visits and we now want to move on to improve the conversion rate of the second step by 15%. We need our conversion rate of Visitor to Sign-up to improve just a little bit, from 5% to 5.75%.

If we continue to do these same small improvements for the conversion rate between the remaining steps, we will double the revenue of our business.

See how much more tangible and actionable it is when you have a growth plan like this one? You know exactly what you should be working on to double the revenue of your business.

Tiny changes compound and lead to big results!

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When we look at our goal of doubling our revenue, it’s hard to fathom a growth strategy that would get us there easily. But, when we break this down into a series of smaller, more achievable steps, the goal of making twice as much money feels more like something that can be measured, improved, and reached!

With this in mind, let’s break each of the steps of the customer’s journey down further with some tangible strategies you can use to improve the conversion rates of your SaaS business.

We know that finding the next growth opportunity or key insight that will help you reach the growth targets you set in the previous chapter can be challenging.

That’s why we decided to not only teach you how to craft a growth plan to double the revenue of your SaaS product (Chapter 1) but we will also help you discover the growth opportunities at different points of your customers’ journey. So you can follow through with the plan and double the revenue of your business.

This chapter will focus on uncovering growth opportunities for getting more traffic to your site.

The first step in a customer’s journey is getting them to one of your web pages. Whether it’s paid traffic, referral traffic, organic traffic, or social media traffic, the more qualified visitors you can get to your website, the better.

Working with our rule of 72 example, the goal is to improve traffic by a mere 15%. The question then becomes - how can you drive more traffic?

Well, it depends on how you're currently driving traffic to your website. We’ll break down the main 4 sources of traffic and discuss some growth strategies for each to get more people to visit your site.

Organic traffic encompasses all the visitors who end up on your website from a search engine without you having to pay for ads.

We know that 75% of all search traffic goes to the websites that rank on page one. We also know that 30% of all traffic in a search engine goes to the first link in the search engine result page (SERP).

The best way to improve your organic traffic, therefore, is to improve the search engine ranking of your pages. How do you do this? It all boils down to the proper search engine optimization of your content. If the blog posts, articles, web copy, etc… on your website don’t feature the keywords that people are searching for online, you won’t garner any page views from search engines.

Unfortunately, even if you do use the keywords people are typing into search engines you still could end up on the second page or worse of the SERPs. The cause? competition.

You need more than a single keyword on your post to rank among the top links. That’s why it’s important to understand domain rating, URL rating, what backlinks are, and their importance. With a good understanding of all of these factors, you’ll be able to find the best organic growth opportunities for your website.

Here are three things you could do to improve your rankings and increase your traffic starting today:

The best way to gain insights into what will help you grow is to effectively spy on the people outranking you and understand what are the gaps within their content strategy that need to be filled.

One of the most reliable ways to do this is with a content gap analysis, where you take all the keywords your competitor ranks for and subtract the keywords that your website ranks for. What you get is a list of keywords that you should be targeting.

Ahrefs’ Content Gap tool allows doing that with a bunch of competitors at the same time, giving you a massive list of keywords that you should be targeting.

Pick a Link Building Strategy:

Here are a few link building strategies you can use to build backlinks to your site:

Reverse-Engineer Your Competitors - Create better content than your competitor and reach out to the backlinks they have, it’s likely that those who linked to competing content will want to link to your content too (or instead).
Resources Page Link-Building - Reach out to pages that are a list of resources and try to add your piece of content to their list.
Guest-Blogging Link-Building - Offer to create valuable content for their blog, and in exchange, ask for a backlink.
"Guestographic” Link Building (Infographic) - Just like Guest-Blogging, offer them valuable content, only that this time in the form of an infographic. We like to highlight this twist on the previous strategy because infographics are much more likely to be shared between people and easier to link to.
Broken Link Building - Provide the service of checking for broken links on someone’s website. When you find a broken link reach out to them letting them know they have this problem and position your content as a replacement link that easily solves the said problem.

Another option to increase the number of visitors to your site is to pay for it. Some businesses are already using paid ads to garner page views. If you want more views, you can optimize your ads through iterative tests, but that will take time. If you want quick results, you’ll need to increase ad spend.

Another way to improve your paid traffic efforts is to look at less expensive options that will yield a better ROI. These days thanks to Facebook ads, Twitter ads, even Capterra and Linkedin Ads many paid traffic options might be less costly than Google ads.

This is one of the best types of traffic you can get because it’s built on trust. Essentially, your content gets shared around and more people visit your site because of it.

Your referral traffic will organically grow over time if you are truly putting out valuable content that is worth sharing and not just keyword stuffing.

As a bonus, referral traffic can help your organic traffic reach and backlinking goals as well. That’s why referral traffic and organic traffic often overlap each other - they go together like bread and butter!

While social media traffic still is relevant, we’ve found that there is no direct relation between the number of shares and the number of pageviews an article gets. In other words, just because something is shared on social media, doesn’t mean the end-user will click through to read the post in its entirety to learn more.

So what’s the best way to derive page views from a social media share?

Deliver maximum value to your audience instead of pushing for the sale. It’s all about building an engaged audience that waits eagerly for your next post.

The more informative and helpful your content is, the more likely it is for someone to pay attention to your next post and in turn, end up on your website more often.

Using these traffic growth strategies you will surely improve the traffic of your website. So our next strategic move is to improve the sign-up conversion rate as well, in other words getting more visitors to create an account with your product.

One of the first things we recommend doing is getting a complete understanding of which marketing channels are converting the most visitors into new accounts.

While we are at it, it would be smart to also understand which channels are giving us the most onboarded users and users that upgrade to paid.

By finding your highest performing marketing channels you can pinpoint where your focus should be and can even reverse engineer the journey of successful users to replicate it for the rest of your users.

In InnerTrends we have a one-click report that will tell you exactly this. Check out these two articles that will give you more information on how to find your best marketing channels:

Once you understand what are your best channels, you can begin to build on top of those and double down on what is working best to reach the improvement you need for your visitors to sign-up conversion rate.

The way you present the sign-up form to your visitors and the way you design the signup process can have an initial influence on their decision to not only create an account but even finish the onboarding process and eventually become customers.

Since this step is where you begin to ask visitors for their personal information, the signup conversion is a challenge every SaaS business faces.

Up until this point, the visitors haven’t received anything but a promise, so you have to be very careful about how you approach asking for their personal details.

For example, if your form is unnecessarily long, your visitor won’t bother filling it out.

Finding the best sign-up form will depend on matching the needs of the visitor with those of your business. It will be up to you to balance how much you ask for.

Pro tip: It’s not about the number of questions you ask in your sign-up form but about the context surrounding the questions in relation to what your product does at its core.

For some additional insight we have analyzed the sign-up forms of 40 SaaS companies and broken them down into these 4 categories:

Short and extra short sign up pages
Mid-sized sign-up pages
Multiple-step sign up pages
Upfront payment details

Since this step is where you begin to ask visitors for their personal information, the signup conversion is a challenge every SaaS business faces.

Up until this point, the visitors haven’t received anything but a promise, so you have to be very careful about how you approach asking for their personal details.

For example, if your form is unnecessarily long, your visitor won’t bother filling it out.

Finding the best sign-up form will depend on matching the needs of the visitor with those of your business. It will be up to you to balance how much you ask for.

The short and extra short signup pages are designed to collect a large number of leads and are less focused on the quality of those leads.

They are amazing at reducing friction to a minimum. This type of form is best used when the company isn’t in a position to provide a big incentive to convince visitors to provide a lot of personal details.

Growth Strategies To Optimize Short and Extra Short Signup Forms

We recommend you experiment with running multivariate tests of the CTA’s, page layout, and messages that are being shown to the visitor. These will have the biggest influence on a user’s decision to go through this step.

You can also add third-party signup buttons to the form. Visitors may be reluctant to create a new account they need to remember, so letting them automatically create an account through Facebook, Google or Twitter can greatly improve the odds that a visitor follows through with signing up.

If you decide to experiment with adding a third-party signup button, make sure you don’t forget to experiment and identify which of the third-party accounts work best for conversions on your sign up.

There’s no need to place ten fields in your form if you only need to know four things about your user. Each field in the form only adds to the friction and can influence your visitors’ into abandoning the signup process.

Growth Strategies to Optimize Mid-Sized Sign-up Pages

One idea to optimize mid-size signup pages is to split test form versions. Try to understand what form questions are necessary and even which messaging associated with each question helps convert. It can also be helpful to clearly tell the user the exact reason behind every form field, especially if they may question why it is being asked.

Forms that ask for payment details upfront generate the highest amount of friction. That’s why only a person who is committed to using your product would follow through with the signup process.

This type of signup form is mostly used by products that run the risk of free trial exploitation. There have been cases where users keep creating new accounts instead of paying for a service. That’s why it can make sense to ask for payment details upfront.

Growth Strategies to Optimize the Upfront Payment Signup Form

Optimizing this kind of signup form requires providing a very clear explanation to the users of the value they are getting and that they can easily stop the credit card payments at any moment if they wish to do so.

If you plan to ask for your user’s credit card details, you will end up with a long signup form. The best you can do is to make it as clean and clear as you possibly can.

Before we get ahead of ourselves, let’s explore why user onboarding is so important to SaaS products.

The onboarding process is closely related to the other core goals within your product, including retention and revenue. Therefore user onboarding becomes essential to successfully increase the conversion rates of the remaining steps of our growth plan to double revenue.

Watch this video to learn how user onboarding relates to the rest of the core goals within your product.

For many software products, onboarding is where a significant number of potential customers drop-off in the sales process. Therefore, it’s an area that holds a lot of potential for both B2C and B2B software businesses.

So how can you tell if your user onboarding is helping users or making them abandon ship?

The best and easiest way is to use InnerTrends to quickly find out:

The exact moment users drop off
The average time it takes a user to complete the onboarding process
The current onboarding rate of your product
and other actionable insights

With this data, you will be able to analyze what points in your onboarding process need improvement.

No one wants to spend a lot of time or effort setting up and learning a product that might not even do what it promised. Time to value or TTV refers to the time it takes for a user to see the value they were hoping to get from your product.

This is often referred to as TTFV or Time To First Value within the User Onboarding process since this is the first time you get a chance to deliver on the promise of your business.

The goal here will be to streamline TTFV for users in the most optimal way and time. This doesn’t always mean as fast as possible though, so you have to find the right balance.

In the previous chapters, we talked a lot about the rule of 72 and the small compounding changes you can make to double your revenue. We’ve shared how to increase traffic to your website. We’ve discussed ways to increase your signup conversion rate and your onboarding conversion rate.

By this point, you have done some heavy lifting. Now, we're at one of the most exciting stages in the customer journey - retention. After all, it’s the SaaS business’s ability to retain customers that attracts investors and gives your business the ability to weather most economic downturns. (Kinda important to get this part right!)

The question we’re going to tackle in this chapter is:

How can you improve your retention (first-week retention after achieving onboarded in this case) by a mere 15%?

Imagine you’ve decided to try the world’s best ice cream, and you’re committed to standing in the very long line. How does Salt & Straw treat this situation? They send their salespeople out into the line to provide tasting samples. By the time you’ve reached the cash register, you already explored and decided on a flavor you want to purchase.

Much like the long line at Salt & Straw, there’s a gap between the onboarded user (someone who has tasted their first sample) and a paying customer (someone who purchased an ice cream).

How your business interacts with a possible customer metaphorically “waiting in line to pay”, is exactly what we mean when we talk about the first-week retention after onboarded. We are not talking about long term retention here, but what users are doing in your software during their free trial before they pay you.

In the terms of the ice cream shop, new users will explore additional samples (product features) during their free trial (long line) to determine what flavors (paid plans) they would enjoy the most, so by the time they reach the end of the line (when their free trial is about to expire) they have explored enough, decided on a flavor, and are ready to make a purchase (upgrade to a paid account).

In our ice cream example, there could be 6 flavors of ice cream samples being taste-tested by potential customers in line. Wouldn’t it make sense to analyze which flavors were purchased most that day to determine which ice cream flavors might be purchased more the next day? and also which flavors keep getting customers to come back for more? This is exactly what you should find out for your product.

Using your product analytics tool, focus on analyzing a cohort of users who behave optimally in the shortest amount of time.

Let’s say we have a 14-day free trial. Usually, if a user doesn't come back within the trial period then the first experience wasn't of much value and they’re most likely not going to continue assessing the product any further. To work through this problem you would need to return to Step 3 of 5, the previous chapter on improving user onboarding.

However, if we look at the cohort of users that did return in the first 7 Days after onboarded and their common conversion activity, you will find deep insights into how to get users to come to explore a bit more and eventually upgrade to a paid plan.

You now have your cohort of users. Here is the question you are looking to answer:

Using your product analytics tool, focus on analyzing a cohort of users who behave optimally in the shortest amount of time.

You now have your cohort of users. Here is the question you are looking to answer:

By analyzing the actions performed that create a positive impact on bringing the accounts back to the product, we can start to understand the areas of the product that matter most to accounts at this stage.

However, if we want to optimize the conversion rate from First Week Retention after Onboarded to Paying Customer we need to also understand what specific events or actions lead accounts to churn (activity churn), or not return to the product in this time period.

By knowing this we can begin to try to keep users from experiencing negative events in the product and reach out to users proactively to guide them in experiencing the positive impact areas of our product. In other words, we help them avoid the bad in our product and guide them through the good in our product.

Now I know that what we just went through was kinda a rough one because it’s some deep analysis, but it’s extremely powerful! Because now you can time your messages in such a way that streamlines the journey of a user becoming a paying customer.

Switching payment providers within your platform is often not an easy feat, but using new payment providers in your email campaigns is much easier. Based on the results you get from such implementations you can take a data-driven decision on which provider works best for the rest of your business.

We have encountered many cases where a simple switch between payment providers did the trick, and the companies are able to get an improvement of 15% or more in the conversion rate of their last step.

You may be familiar with the theory of the 4-forces why consumers switch. The most important of these forces is often the most overlooked on pricing pages, Anxiety. Anxiety is an anticipatory fear that tells people NOT to try the new solution because (A) it might not actually help us or (B) once we buy into the solution, it won't hold up its end of the bargain. The user might simply be Anxious about their own ability to take full advantage of the investment, for example, video editing software where there’s a steep learning curve needed just to get started.

While we’ve covered a lot in this guide, believe it or not, we can help you even more in your journey to doubling the revenue of your SaaS company.

If you're looking to get deep insights into how your customers use your product, InnerTrends can help. Our software will dig into your data, cut through the noise, and deliver ready-to-use reports highlighting your most important growth opportunities. The best part? You won't have to be a data scientist to discover your best growth opportunities for your business, so you’ll be able to focus more on growing your business and less on tedious data tasks.

Experience the power behind our truly self-service product analytics tool, schedule your free InnerTrends demo today!

Table of Contents

Devising a Growth Plan to Double Revenue

Creating Your Growth Plan Using The Rule of 72

How to Apply the Rule of 72 for a SaaS Conversion Funnel

Example Conversion Funnel for Doubling Revenue with The Rule of 72

Initial Conversion Funnel

Doubled Revenue Conversion Funnel with 15% Improvements

Conversion Funnel Increases

Optimize Traffic Growth For Your SaaS Product

The 4 Sources of Traffic Growth

1. Organic Traffic Growth

Content Gap Analysis

Optimize Current Content

Backlink building

Content Gap Analysis

Optimize Current Content

Building Backlinks

2. Paid Traffic Growth

3. Referral Traffic Growth

4. Social Media Traffic Growth

Optimizing The SaaS Sign Up Process

Understanding your Best Marketing Channels

Reviewing Sign-up Intent & The Sign-up Process

Optimizing Your Sign-up Page & Form

1. Short and Extra Short Signup Pages

Growth Strategies To Optimize Short and Extra Short Signup Forms

2. Medium-Sized Signup Pages

Growth Strategies to Optimize Mid-Sized Sign-up Pages

3. Multiple-Step Signup Pages

Growth Strategies to Optimize Multi-step Forms

4. Upfront Payment Details

Growth Strategies to Optimize the Upfront Payment Signup Form

Improve User / Customer Onboarding & Time To Value (TTV)

Why is User Onboarding Necessary?

What is Customer Onboarding / User Onboarding?

What is TTV (Time To Value)?

Optimizing Time To Value

User Onboarding Optimization Resources

Improving Your First-Week Retention Rate

Shortest Period + Maximum Data

Strike While the Iron is Hot, or While the Ice Cream is Still Cold

Growth Strategies for First Week Retention After Onboarded

Leverage Event Trigger Notifications and Emails

Experiment with Different Walkthrough Paths

KLT Campaigns to Build Community

Retarget Engaged Users with Display Ads

Increasing Upgraded to Paid Account Conversion Rates

Growth Strategies for First Week Retention After Onboarded

Growth Strategies for First Week Retention After Onboarded

Once again, Common Conversion Activity can help

Initiating Timely Contact

Don’t Play Hard to Get: Make Paying You Easy

Strategic SaaS Pricing Updates

Understand Your Value Levers

Update Your Tiers

Address User Anxiety

Wrapping Up

Initial Conversion Funnel

Conversion Funnel with 15% Improvements

In Conclusion

No time to read now? Download the PDF format for later:

How To Double Your Software Revenue