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Create a Revenue Generation Strategy for Your SaaS in 6 Steps

Revenue. The one word that makes us tick and drives everything around in a B2B SaaS world. 

Generating revenue is an essential step in the product validation cycle. If your product generates revenue, you’re on the right path — your users trust you, believe in your capabilities, and are ready to open their wallets to you.  

But how do you generate revenue? How do you align your marketing, sales, content, and development initiatives to be in sync to drive revenue?  

Sometimes, we obsess over growth so much that we tend to oversee the fundamentals. One of the first questions you should ask yourself as a startup is, “How do I make money?” 

The answer is revenue generation — the money you receive from users once they become your customers. 

To most people, revenue generation is too simple a concept to pay attention to. But if you’re new to the SaaS world or even if you’ve been here for a while, make sure to have the following answers before you move ahead with your marketing and sales plans: 

  • What does revenue mean in terms of your company business model? 
  • How to create sustainable revenue for your business? 
  • How to create a revenue generation strategy? 
  • How to align your sales and marketing to drive revenue? 

In this blog, we’ll look at some of the fundamental questions related to revenue generation and help you create an ideal revenue generation strategy for your startup. 

Revenue generation activities in modern B2B SaaS

Revenue generation is often confused with return on investment (ROI). While both have their textbook definitions, they are two sides of the same coin. 

True that both are crucial to the success of any SaaS startup, but revenue generation should be the first milestone to focus on. 

In the beginning, finding ways to generate revenue is more crucial than ROI calculation. ROI measurement only comes after the business starts generating revenue. 

Here are a few ways to start with revenue generation as your first focus milestone:

  • Setting up financial goals for the whole year, including monthly and annual revenue targets. This can include setting desired monthly recurring revenue (MRR) and annual recurring revenue (ARR) figures. 
  • Syncing your sales and marketing strategy with your monthly and annual revenue goals. 
  • Finding the team and creating an organizational structure that’s designed around revenue generation as a core metric.
  • Setting up key performance indicators (KPIs) to measure revenue generation as an activity and creating SOPs to deal with deviations from goals. 
  • Training your team members to understand their objectives and key results (OKRs) and KPIs for revenue generation. 

Seems like too much work? As a marketer or SaaS founder, you should care about all of the above. 

Though every startup wants to maximize ROI, finding profitable B2B marketing channels is crucial for your job. However, you should have a clear idea about where and how your revenue is generated before you finalize any sales and marketing acquisition tactics and strategies. 

Revenue generation is more than just a financial tactic — it’s about finding the right sync between sales and marketing to scale a SaaS business.

Who is responsible for revenue generation? 

Okay! You get it. Revenue generation is important (and different from just focusing on sales or ROI). But who should take care of revenue generation? 

The first thought that crosses our minds is sales. Right? After all, they’re the ones who drive revenue directly. 

But then, wait! 

Marketing equally contributes to revenue, too. 

So, what should an entrepreneur do while assigning the activities that boost revenue generation? 

The secret to a good revenue generation strategy is in sharing the responsibility. 

Your sales and marketing team share a common goal — driving sales and revenue. So, naturally, they should work together.

But unfortunately, most sales and marketing teams are misaligned and work in siloes — marketing teams sometimes keep creating content without inputs from sales, and sales guys forget to check in with marketing if they have the right sales enablement content to convert leads. 

A misaligned sales and marketing team is like a lost opportunity. It’s like leaving food on the table or giving a hammer to the lumberjack to cut a tree. 

Don’t believe me? Here’s some insight: 

It’s clear. Sales and marketing alignment isn’t something to think over. It’s essential for generating revenue as a B2B SaaS startup. 

Alignment between sales and marketing can be achieved by:

  • Aligning goals: Syncing marketing metrics with the sales team’s targets/quotas to make sure both work together to offer something of value to every prospect. 
  • Aligning roles: Sales and marketing teams should clearly understand each other’s role in the buyer’s journey. Aligning their functions to work in sync is your responsibility. 
  • Aligning technology: Deep integrations to empower both sales and marketing teams. Both should be aware of the progress at every stage of the buyer’s journey. 

Want to learn more about sales and marketing alignment? Here you go: 

Types of revenue generation models

Before we dig deeper into building a revenue generation strategy, let’s explore how a B2B SaaS startup generates revenue. 

Subscription-based revenue model 

Subscriptions are the way to go for any SaaS tool in 2022. 

According to Gartner, 80% of the SaaS startups and legacy software companies run on a subscription-based revenue model. 

The subscription model has two important metrics to monitor:  

  1. MRR — Monthly Recurring Revenue: Powered by a pricing strategy where you charge your customers a monthly fee for using your service. 
  2. ARR — Annual Recurring Revenue: You charge customers a fixed fee on an annual basis. 

The reason why subscriptions have turned into a gold standard for SaaS companies is the steady revenue forecasts for the future. 

Other revenue models

Charging users a fixed monthly recurring fee isn’t the only way to generate revenue in SaaS. There are eight different revenue models you can consider for generating revenue as a B2B SaaS company: 

  • Freemium: This pricing model works for a company that offers their base product for free and upsells some premium features for an additional fee. The freemium model could be combined with a one-time payment model, recurring subscription model, or another type of revenue model.
  • Transactional: This pricing model works for a company where you offer a product and get paid based on a number of transactions. For example, if you provide a no-code eCommerce platform and charge a percentage per sale from your customer. 
  • Pay-per-use: Also known as a metered model. The customer pays you for using your product. This pricing model works well for applications that provide a service and earn money per usage. For example, you might have video creation software where you charge the user a fixed fee for each video created. This model can be rolled out as a recurring subscription model, too.
  • Pay-per-seat: Here, the customer pays you for every seat they acquire from you. Take the example of Zoho One. They charge a monthly price per user per month. 
  • Markup: The markup model is popular where branding is integral to your product. Your customers are willing to buy from you at a premium price. For example, Apple sells its cloud service at a premium (more than other cloud players) because of its brand power. 
  • Licensing: Licensing is where you sell your product for a fixed price and get a percentage of the cost when the product is sold. For example, if you sell software and get 1% of the sale, you get $1 for every $1000 sale.
  • Advertising: The advertising model is at play where startups use ads to generate revenue. For example, you can use ads on your main product dashboard (or website or blog) that advertises other brands to your audience. This model is prevalent with B2B SaaS companies in the media and publishing industry.
  • Commission: This model works for the businesses where you sell a product and get a percentage of the sales. For example, you sell an application and get 10% of the sale. Think of all the discovery platforms that advertise/publish info about other businesses on their platform for users to discover. 

Now that you’re clear about the what, who, and why, let’s look at how you can generate revenue for your startup. 

A simple revenue generation strategy for B2B SaaS 

Step 1: Set SMART goals and OKRs 

You probably hate this part, but it’s quite critical — setting goals, priorities, and OKRs. 

It would help if you had a framework to structure how you’d generate revenue. Your framework should include: 

  • SMART financial goal — How much money do you wish to charge? 
  • Clear Responsibilities — Whol will take ownership of the goal? 
  • SOPs — What will be done daily to stay on the path? 
  • Key results — What will be the intended results from all the revenue generation activities?

You need to set your OKRs straight before planning anything else.  

You probably hate this part, but it’s quite critical — setting goals, priorities, and OKRs. 

It would help if you had a framework to structure how you’d generate revenue. Your framework should include: 

  • SMART financial goal — How much money do you wish to charge? 
  • Clear Responsibilities — Whol will take ownership of the goal? 
  • SOPs — What will be done daily to stay on the path? 
  • Key results — What will be the intended results from all the revenue generation
    activities?

You need to set your OKRs straight before planning anything else.  

Step 2: Evaluate different models and develop a pricing strategy

Pricing is the pillar that helps you generate recurring revenue for your startup. But creating a pricing strategy is more complex than just adopting a simple “higher price, higher revenue” approach.

A typical SaaS startup sells a subscription to access the software. But as you saw above, that’s just one of the ways to generate revenue. 

Nowadays, SaaS companies compete to gain the maximum value from every customer — improving customer lifetime value (CLTV). 

This is a part of the decision-making and strategy process related to pricing. Once you understand your CLTV, you can identify the most valuable users, segment them and offer them personalized pricing packages to maximize revenue per user. 

How does it work? 

Let’s look at this with an example: 

A B2B SaaS startup supporting marketing agency services wants to generate $10,000 in revenue per month. A user on a paid pricing plan pays $100 per month. 

So, to achieve its revenue goals, the business needs 100 customers per month. Your B2B marketing channels, sales initiatives, and other activities should focus on this north star metric. 

But let’s say the same startup starts charging $250 per user; it will achieve its goal with fewer paid users.

Of course, this example is overly-simplified, but it illustrates why you need to tie your pricing model with a solid pricing strategy. 

Picking the right pricing strategy can help you harness the true revenue potential of your B2B SaaS startup. You can set a pricing strategy keeping your revenue generation model in mind. 

Below we share some pricing strategies that you can implement in your business:

Pricing StrategyWhat?Impact
Penetration pricingReduced pricing for rapid product adoption among the target market. Grab huge market share before other competitors. 
Captive pricingOffering the “core” product at a lower than expected price (no-brainer offer) but upselling additional features to make the most out of the core product. Get users into the system or flywheel to nurture them for cross-selling or upselling. 
Skimmed pricingSetting a high price initially and bringing down the price with time. Look more exclusive and create a cycle of “bragging rights” among the elite circle of early tech adopters. 
Prestige pricingKeeping prices higher to stand out and appear exclusive in the marketHave a circle of high-value customers who love your product. 
Free trial pricingThe most common strategy that involves offering the product for free for a limited time, usually 14 to 30 days.Provide customers with a foot in the door and nurture them with onboarding emails and trial expiration emails.
Cost-plus pricingAdd your profit margin to development costs and set that as the price for your productHelps unique products and solutions with fewer data points (or competitors) to set the right pricing. 
Value-based pricingSet the price based on the value product provides in the life of the user based on feedback, surveys, and user researchEasy-to-market pricing model justified by real insights and feedback from actual users.

After shared discussions with marketing, sales, and analyzing other competitors in your domain, you can go for different pricing strategies based on your goals, startup stage, and other factors.  

Step 3: Pick a B2B marketing channel and create a lead generation plan

Once you’re done with the strategy game, it’s time to roll up your sleeves and get to execution. 

The first order of business is to choose a B2B marketing channel to start lead gen. There are various ways to attract leads. I am sure you’re familiar with LinkedIn marketing, inbound marketing, content marketing, or paid channels. 

You need to pick and choose a B2B marketing channel that suits your overall objectives. 

But 68% of the marketers admit struggling with lead generation

So, how do you create a lead gen strategy that works? 

Well, the first step is to understand the concept of business leads and map them to the buyer’s journey. 

As you’d have noticed, you need a sequence or an automated flow to turn an incoming lead into a customer.

A marketing automation suite like Encharge helps you drive more leads in several ways. User tracking, personalization, behavioral emails, lead scoring, and automated flow builders can help you convert lukewarm leads into customers. 

Step 4: Fine-tune your content marketing and sales enablement efforts

 If you’ve gone through the steps above, you’re all set to put the pedal on gas with full force. 

Your marketing team will have to start creating content for sales enablement and marketing channels. Coordination between sales and marketing is quite crucial at this stage. 

There are many ways to achieve this, starting with: 

  • Your sales and marketing teams can come together to create an ideal buyer’s persona 
  • Decide on marketing channels and content calendar by mapping the content types based on the buyer’s journey and revenue goals

Once you map out the needs of your buyers and sync it up with sales/marketing capabilities (as per the chart above), you will make progress as follows: 

  1. Your marketing team would understand the needs of your sales reps and your audience. 
  2. They can then start organizing sales content for easy access at different stages of the conversion cycle for sales enablement. This can include eBooks, whitepapers, customer case studies, demo decks, etc. 
  3. Then the marketing and content team can analyze the current state of state enablement content and start plugging the content gaps. 

In short, your content team would understand what kind of content would be needed at different stages. Marketing and sales integration will help you efficiently utilize your marketing and sales team for revenue generation. 

Step 5: Nurture leads with scoring, segmentation, and personalization 

Your lead generation and sales enablement efforts would get you ahead in your revenue generation journey. But if you fail to optimize for this new opportunity, you’d fail spectacularly in converting leads into paying customers (and growing your revenue). 

So, how to make sure you don’t end up empty-handed? 

By leveraging the holy marketing trinity of personalization, segmentation, and nurturing. Let’s look at them one by one: 

  • Segmentation: User segmentation is about groping and categorizing leads based on predefined attributes. Segmentation is performed to improve the relevance of marketing campaigns. 
  • Personalization: Personalization involves sending contextual, relevant, and strategic content, emails, or communication to your target audience or leads. Personalization helps nurture leads into paying customers.  
  • Lead nurturing: Lead nurturing is building relationships with your prospects, audience, and leads. The goal is to improve the relationship with the audience and move them further in the buyer’s journey. 

Encharge helps you with all three aspects related to lead nurturing in 2022. 

You can set up automated flows to capture leads, segment and score them, nurture, and send personalized automated email sequences to automate your revenue generation initiatives. 

An onboarding flow to nurture a trial user into a paying customer in Encharge

Step 6: Engage in high-touch sales

The final step in any revenue generation strategy is making sales. If you want to make sales, you need to focus on building a sales team and training them in the art of ‘high touch sales’. 

The high-touch sales model involves helping and educating your leads and your audience at every step of the buyer’s journey. 

High-touch sales include dealing with your customers, answering their queries, and being helpful so that they start trusting you (or a team member). Following this model increases the likelihood of converting into a paying customer. 

Marketing automation can streamline your high-touch sales efforts. You can use Encharge’s inherent features like lead scoring, nurturing, and personalization to automate high-touch sales for revenue generation. 

Here are two specific use cases where Encharge can help: 

Discover hot leads and assign sales follow-up

Encharge allows you to track users who visit your pricing page. If you’ve recorded their email, you can set an automated trigger to send a Slack message to your #sales channel, notifying your sales team to follow up.

Discover sales opportunities in live chat conversations 

Turn your support function into a lead generation channel that sends hot leads to a sales representative as soon as someone asks about the product. 

You can even create automated flows to track user behavior and convert a prospect into a warm lead. 

Encharge comes with dozens of pre-built automated flows for lead nurturing, conversions, churn prevention, and boosting revenue in general. Here’s why you should choose Encharge as a B2B SaaS startup

Final words

That’s it on revenue generation. You now know how to drive revenues for your SaaS. Now, you should start taking your effort to the next level. And don’t forget to use marketing automation in the process. If you need a deep dive into how Encharge can help you achieve your goals, book a demo now.

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