What is the SaaS Multiplier Method?

If you’re seeing this page, then I probably haven’t finished my book, The SaaS Multiplier Method.

So what’s the whole thing about?

It’s the idea that, in a typical SaaS PPC funnel, there are 8 multipliers. And, if you optimise all 8 of these, you’ll get extraordinary results.

So let’s imagine your SaaS customer journey looks like this:

#1: Someone does a Google search and they see your ad.

#2: They click on your ad.

#3: They arrive on your landing page, like what they see and click through to your signup form.

#4: They complete the form and are now a triallist. 

#5: They go through the on-boarding process and decide to become a paying customer.

#6: They choose a package that’s $X/month.

#7: They stay for Y months.

#8: They spend $Z on additional products and services.

So let’s plug in some semi-random numbers:

  Stage Metrics
1Impressions100,000
2Click rate5%
3Click to form %15%
4Form completion %30%
5Conversion from trial to paid %15%
6Monthly subscription $$40.00
7Lifespan (months)20
8Other products and services$200.00

Now let’s see how visitors/money flows through the system:

Stage  
1Impressions100,000
2Visitors5,000
3Form visitors750
4Triallists225
5Paid users33.75
6Monthly sub$40.00
7Lifetime subs$27,000.00
8Other revenue$6,750.00
 Total Revenue$33,750.00


So you’re earning $6.75/click. Which might be a good thing… might be a bad thing.

What happens when you improve by just 20%

Now, let’s see what happens if we improve every step by 20%. Your metrics become this…

 StageMetrics 
1Impressions120,000
2Click rate6%
3Click to form %18%
4Form completion %36%
5Conversion from trial to paid %18%
6Monthly subscription $$48
7Lifespan (months)24
8Other products and services$240

And the flow of visitors and money through the funnel looks like this:

Stage  
1Impressions120,000
2Visitors7,200
3Form visitors1296
4Triallists466.56
5Paid users83.98
6Monthly sub$48
7Lifetime subs$96,745.88
8Other revenue$20,155.39
 Total Revenue$116,901.27

So your revenue has increased from $33,750 to $116,901. That’s an increase of 246%.

Your revenue per click is up from $6.75 to $16.24.

That’s the first advantage of the SaaS Multiplier Method: You don’t have to be good to get extraordinary results.

But that’s just revenue, what about profit?

Now, let’s say your initial return on ad spend (ROAS) was 2:1. So you were paying $16,875 to generate that $33,750.

After the 20% improvements, you were getting 44% more clicks, so let’s increase your ad cost by 44%. That gives you an ad cost of $24,300.

Now let’s look at profit:

Before: Spending $16,875 to generate $33,750. Profit $16,875.

After: Spending $24,300 to generate $116,901. Profit $92,601.

So, profit has increased by 449%.

That’s the second advantage of the SaaS Multiplier Method: Because revenue goes up far faster than costs, your profits grow much faster (as a %) than your revenue.

How realistic is this?

In my experience, 20% is very conservative. With testing, you can often improve different stages by 50% or 100%.

Now, of course, sometimes you’ll find you can’t improve a particular step in the process. But if other steps in the funnel are producing large gains, they make up for it.

And that’s the third benefit of using the SaaS Multiplier: It gives you so many ways to win, it doesn’t matter if some parts under-perform.