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Scaling ARR and Market Share: How to Grow Your US Business Fast
Starting a business is a calling as it is a passion. When you have a business, your primary goal is to drive profitability and revenue. That’s why profit and revenue are kings. However, today’s business landscape is forcing US businesses to redefine growth metrics and approach success with the 21st-century customer in mind.
Two metrics are central to maintaining competitive advantage: annual recurring revenue (ARR) and market share. While revenue growth is the underlying goal of scaling ARR and market share, this article takes on a more grounded approach to improving these metrics.
Why Is Measuring ARR Important?
ARR is a metric that refers to the annual recurring revenue that a company — particularly a software-as-a-service or Saas business — earns from customers’ contracts or subscriptions.
By measuring ARR, businesses can holistically assess their financial health and performance, allowing them to make strategic, data-driven decisions that further elevate their growth. Below are the benefits of measuring ARR.
1. Anticipate Revenue
Because ARR helps you forecast future revenue, you can create long-term financial plans and ensure effective resource allocation for hiring, marketing campaigns, and more.
2. Gain Investor Trust
ARR also serves as a benchmark for investor trust. The more financially stable your business is, the more it will attract investors, increasing the chances of future funding and acquisition.
3. Create Opportunities for Scalability
Scaling a business is an investment in itself. A good ARR — along with a realistic scalability plan that includes your risk management strategies — gives you the foundation and confidence to scale your business.
4. Guide Decision-Making Processes
ARR offers data-driven insights that allow you to develop competitive pricing options, identify patterns in customer preferences, optimize product development, and expand to a high-value market — driving more revenue to your business.
Why Does Market Share Matter?
Market share refers to the percentage of your business’s sales relative to the sales of its industry over a given period. Let’s say your company has sold $50 million USD worth of clothing, and industry sales amounted to $200,000 USD for one year. Divide the company sales by industry sales, multiply the quotient by 100, and your market share is 25%.
Essentially, market share shows the competitiveness and relevance of your business in relation to your industry competitors. Calculating and maintaining your market share in an ever-changing market opens a world of opportunities for your business. Here are reasons why it matters.
1. You Can Negotiate to Your Advantage
A large market share makes you the star of the industry you’re operating in, and this often comes with more leverage in business negotiations. By bargaining for lower prices and beneficial terms and conditions with your suppliers, your business will enjoy increased profitability and customer satisfaction.
2. You Can Invest In Other Business Ventures
Maintaining a large market share comes with the gift of consistent revenue streams. When your company has a stable revenue, you can confidently invest in research and scalability efforts that guarantee success.
3. Your Business Can Dominate An Industry
Market dominance is an achievement. When a business is at the top of the market share food chain, it can influence market dynamics and set unprecedented standards among its competitors. Companies with a solid foothold in the market also tend to be more reputable, making it easier to attract new customers and boost revenue.
How to Scale ARR and Market Share to Grow Your Business Fast
Scaling ARR and market share is one of the best gifts you can give to your business. If you’re looking to gain a competitive edge in your industry without losing your loyal customers, here are five tried-and-tested tips on how to scale ARR and market share.
1. Work On Your Business’s Product Market Fit
Scaling ARR and market share boils down to achieving product-market fit. Coined by Marc Andreesen, an American entrepreneur, product-market fit is a process that involves developing a product that caters not only to the needs of your target market, but also meets demand. In other words, even if you created the best product, no one will buy it if there is a lack of demand.
Steve Blank, an American entrepreneur and writer of “The Four Steps to the Epiphany,” asserts that product market fit is when the product’s features meet (i.e. match) its customers’ needs. In summary, product market fit centers on creating products or services that satisfy your target market’s underserved needs and demands.
Netflix is a good example of product market fit. Before it was the popular streaming service we know today, Netflix was a DVD-by-mail service. As DVDs and DVD players become obsolete, Netflix pivoted to streaming and on-demand entertainment. The company’s shift in media delivery shows that products must change with the times; otherwise, they’ll be left in the dust and fade into non-existence.
To achieve product market fit, you must have a deep knowledge and understanding of your target market, including demographics, pain points, and interests. Having a clear value proposition helps you create a product or service that is as unique as it is helpful for your customers.
If your offerings receive a positive reception from your customers, or your business is earning a higher revenue, your product or service is a good product-market fit. As a business owner, you must always be open to feedback. This way, you can refine your products and services to ensure alignment with your customers’ needs.
2. Create More Pricing Options
As they say, “the more, the merrier.” When scaling ARR and market share, this phrase makes a lot of sense. By offering multiple pricing tiers, customers have more options to choose from. Not only does a multiple pricing tier model retain existing customers, but it also attracts new ones to your service — which, in turn, boosts revenue.
Let’s take Netflix as an example. The streaming service features multiple subscription plans for every type of viewer. Netflix then introduced a non-ad-free subscription plan in its catalog. Because the pricing plan appealed to viewers with tight budgets, AdNews reported that it contributed to more than 45% of signups. As of this writing, Netflix’s ad-supported plan boasts a monthly active user base of 94 million.
Before launching a new pricing tier, study your target audience and their needs. What are their motivations? What kind of features are they looking for? These questions help you create pricing plans that meet their pain points and budget.
Whether it’s yearly cost savings or exclusive features, each pricing plan must have unique perks that are perfectly crafted for every buyer. Too much of a good thing is bad, though. Shopify recommends limiting the number of pricing plans to just three (as much as possible).
According to Shopify, having too many pricing tiers sets your future buyers up for analysis paralysis. At the end of the day, the success of your tiered pricing model is dependent on its execution. And a successful one can improve ARR and increase your company’s market share.
3. Build Customer Trust
Customer trust refers to an individual’s faith and confidence in a brand and its offerings. Like interpersonal relationships, trust is the bedrock of a solid customer relationship. Without trust, how can customers rely on your products? How can they trust your brand enough that it will deliver what is promised?
Data from PwC shows a perception mismatch between customers and business leaders. Most executives (90%) are confident that their customers trust their businesses; however, only a small percentage of customers (30%) trust businesses. They lose trust because of poor communication and a lack of accountability.
Thankfully, there are plenty of ways to build customer trust. Offering high-quality products and services is one thing, but nowadays, business owners must go beyond that. As customer relationships are pivotal to trust and growth, you can optimize your customer service channels for real-time and self-service support and approach customer queries with empathy and personalization in mind.
Most importantly, keep communication lines open and deliver on your promises with actions. Be accountable for your mistakes, as well. When you earn your customers’ trust, they’re more likely to make repeat purchases and spread positive feedback about your brand. As a result, this solidifies your reputation in the industry, spurring ARR growth and improving market share.
4. Acquire Brands
In business, growth comes in the form of an acquisition — a transaction that involves buying most, if not all, assets or shares of another company. Apart from increasing your market share, acquiring a brand or competitor can expand your customer base, enabling you to explore a new demographic for your existing (or new) products and services.
Furthermore, acquisition also means increased access to a brand’s resources, including manpower and equipment. These resources enable your business to gain new perspectives, share best practices, boost profitability, and optimize day-to-day workflow. Plus, you can also bolster revenue by selling your competitor’s products and services.
Let’s recall Microsoft’s acquisition of Activision Blizzard, which started back in 2022. For $68.7 billion USD, Microsoft intended to acquire Activision Blizzard with the goal of expanding its gaming market share. If successful, Microsoft would have access to Activision Blizzard’s beloved titles, such as “Call of Duty” and “Overwatch,” and become a key player in the gaming industry.
There was a regulatory tussle, but despite that, Microsoft successfully acquired Activision Blizzard in 2023. Thanks to the acquisition, Microsoft has added Activision Blizzard’s games to the Game Pass, promoted cloud gaming, and innovated accessibility options. The Microsoft-Activision Blizzard acquisition shows how purchasing a company positions your business for market share dominance and brand visibility.
However, acquisition should be approached with caution. Do your research and see if your competitor shares similar values, culture, and objectives with your business. Failing to do so can lead to conflicts of interest and issues in resource allocation and management. You could also end up spending more on overhead, or worse, take on additional debt if the competitor has financial issues.
5. Outsource to A Service Provider
Outsourcing is your cheat code to scaling ARR and market share. This business strategy is a partnership between your business and the service provider to benefit from the latter’s services and manpower.
While there are different outsourcing models, you’ll get the most bang for your buck with offshoring — a type of outsourcing model where you collaborate with a service provider from a distant country like the Philippines.
Outsourcing is beneficial for US business owners like yourself. In a country where the average cost of hiring an American employee is $4,683 USD, hiring outsourced staff is a more financially sound option as salaries in the Philippines and other developing countries are lower than in the US. This means you can build larger offshore teams composed of members of various seniority levels.
The best part? Employees from top BPO companies possess college degrees and specialized skills in their respective industries — eliminating the need for training. Outsourced team members also have a knack for innovation, so any marketing collateral they produce is fresh, engaging, creative, and on-brand. This enhances brand visibility and makes products and services more appealing, driving up ARR.
Most importantly, outsourcing paves the way for global expansion. You can tap into your outsourcing partner’s market and seize emerging business opportunities, which enhances brand presence and increases your market share in the industry.
To ensure the success of your outsourcing efforts, carefully compare the pricing models of BPO companies. Cheaper doesn’t mean better, so choose a service provider that may give you the best return on investment (ROI).
Scale ARR and Market Share With KDCI Outsourcing
At KDCI Outsourcing, we make scaling ARR and market share a less intimidating endeavor for growth-minded US businesses, from SMEs to SaaS companies.
As a Philippine BPO company with more than a decade of experience in the outsourcing industry, we provide our clients with world-class offshore solutions for any industry — whether it’s real estate, accounting and finance, or creative and design.
With our advanced technologies, competent staff, and strong work ethic, KDCI Outsourcing helps your business innovate its branding and workflow and gain the confidence of future investors — all while slashing labor and overhead costs by 70%.
Ready to scale your ARR and market share with our offshore team? Head on to our Contact Us page and fill out a short form. Once submitted, wait for our outsourcing expert to reach out to you!
