Most new SaaS founders don’t realize the bottom of their revenue funnel isn’t selling new customers.

Sales is important, of course, but it’s just one step in the revenue system that creates the most efficient growth and highest value for your software business.

The real bottom of your revenue funnel happens AFTER a new sale:

• Getting customers to value so they stay and pay for a long time.
• Helping customers grow their business and results so you can expand what you sell to them (users, editions, transactions, more products).
• Creating customers who love your company or product so much that they tell their friends and create great referrals that continue this cycle.

What happens after you sell a new customer creates the perpetual motion machine that creates amazing growth in any recurring revenue business.

Here’s what that looks like when you do it well:

1) Low or very low customer churn and raising prices over time.

2) High positive Net Revenue Retention (NRR) – A cohort of customers buys more from you every year, even when you lose some customers.

3) High referral rate and word-of-mouth marketing. 30-50% of new customers come from word-of-mouth referrals.

This is the fundamental insight of the growth game in the recurring revenue software business model—once you get past the startup stage.

I didn’t say that new customer acquisition isn’t important. It is.

But new sales isn’t the real bottom of your revenue funnel or the real goal in your revenue-creation system. It’s an important conversion step.

Until you figure out the real end game of your revenue funnel happens after the sale, you stifle your growth and waste money on sales and marketing.

As you grow past $2M or $10M ARR, SaaS business who care about revenue growth are forced to:

• Solve churn issues strategically
• Deliver great value for customers to buy more happily
• Create raving customers who create more customers

Many investors and SaaS CEOs would call this a true Product-Market Fit. The business is multiplying itself from within.

The bigger you get in the SaaS business, the more you understand this, especially if you have never raised funding to waste money acquiring customers who don’t stay, expand, and refer.

The only way to create 50%+ revenue growth with a profitable or breakeven business is to be amazing at what happens after you acquire a new customer.

When you do this well, you will rethink your marketing and sales strategies to acquire ONLY the customers who will stay, pay, and tell their friends.

That’s a great SaaS business that efficiently drives continuous revenue growth.

These are software companies that hit the “Rule of 80” with both high growth and profits.

Companies with high churn, low revenue retention, bad reviews, and expensive customer acquisition are not worth much to founders or acquirers.