Five Levers to get to $1m ARR Quickly
And the order to approach them
There’s a point when you’ve got all your ducks in a row and you’re heading towards your first big revenue milestone but something’s not quite right. You’re not growing at the pace you’d hoped. What’s wrong?
Well, the chances are nothing is ‘wrong’. At least not in a wholly disastrous way. The likelihood is, you aren’t effectively giving these Five Levers the attention they need. You have to be making sure that they are all working as well as you can and you haven’t neglected one or two of them.
In summary, the levers are:
Conversion
Delivery (Product Market Fit)
Acquisition
Monetization
Expansion
“But those are in the wrong order, surely?” I hear you say. And yes, in terms of the journey a customer goes through, these aren’t the correct sequence. But for you, although you have to make sure you’re doing all of these, given finite time and resources, this is the order I would focus on.
There is no point going full-in on acquiring leads if you can’t convert them into customers that want to hang around. But maybe because top of the funnel is the first step along the customer journey, it seems to be the thing that founders want to focus on first.
Let’s look at some specifics.
1. Conversion or Funnel Optimization
Assuming you are generating some revenue already, you need to make sure that your leads are getting the optimal experience from the point that they reach the funnel.
How to measure performance:
Trial-to-paid conversion rate: 10-30%+ (varies by model)
Lead-to-demo booked rate: >5%
Demo-to-close rate: >20-30%
If you’re not currently hitting those types of numbers, or if it’s taking waaaaay longer than it should, this should be your first place to focus.
How to improve:
Check your onboarding experience. Is your website clear. Is it confusing? Are users getting value in the first 5 minutes? Do they know exactly what they’re signing up to?
Add self-serve activation options if possible (eg guided tours, AI chat for instant questions).
Identify what behaviours during a trial or in a demo make it more likely they will convert to a paid customer. Encourage more of that behaviour!
Tighten your sales process (shorten the cycle, remove friction).
You need to spend time on this. Don’t just leave it to chance. Don’t think that just because some customers have come through your funnel and converted that it’s working fine. Imagine if twice as many got turned off on their way through and you could have prevented it?
2. Delivery or Product Market Fit
You may have some customers already, but it’s so important to make sure you are confident you have Product Market Fit before you head off down an aggressive (and expensive) acquisition strategy. I wrote about this whole topic a few weeks ago.
But in summary:
How to measure performance:
As I explained in my post, it’s hard to get an exact measure of PMF, but these pointers help:
At least 40% of users say they’d be ‘very disappointed’ if they could no longer use your product (Sean Ellis test).
Products feel like they’re flying off the shelf and you can’t keep up with demand.
Your customers say nice things about your product to you and to others.
How to improve:
Analyse the data you have and see what patterns or insights emerge. What types of customers love what you’re doing the most?
Talk to churned customers and find out why they left (was it missing features, lack of need, pricing?).
Focus on the ‘a-ha’ moments.
3. Acquisition
Getting more leads into the top of funnel is obviously important, once you are sure those leads aren’t going to get wasted by a poor experience as they go through the funnel, or once they have the product itself.
You’ll already know whether your top of funnel is working in the way you want it to. It’s the number one thing founders obsess about. But you might want to take a view of whether things are on track.
How to measure performance:
Take your average lead-to-close rate and your Average Revenue per Customer and work back from your revenue targets. If your target is $20,000 new ARR per month with an Average Revenue per Customer of $2,000 then you need 10 new customers. If your lead to close rate is 10% then you need 100 new leads per month. Is this ‘pipeline coverage’ on track?
Is your cost per lead (CPL) sustainable compared to your LTV? Ideally you need a CAC to LTV ratio of at least 1:3. Use the Lead to Close rate to see what you can afford per lead. Could you spend more? Should you spend less?
Are you getting organic referrals or word-of-mouth traffic? As people are bombarded with marketing messages, they look for authentic recommendations. How can you encourage that?
How to improve:
You need to make sure your marketing dollars are spent in the best way. It’s just going to take time and experimentation.
Start with one scalable channel (SEO, paid ads, partnerships, content, LinkedIn outreach etc) before spreading efforts too thin.
Track which sources bring in high-intent users, not just volume. You could drive many more leads from say, Facebook, but if they don’t convert then they don’t help you.
Make sure you get your positioning and messaging right.
4. Monetization
The amount you charge your customers is an enormous lever. But amazingly, it’s something that founders don’t give that much attention to. It’s often one of those ‘finger in the air’ moments that you try and then forget about. But imagine if you were able to increase your prices by 25% without it impacting the number of new customers you could win? That’s huge.
As a founder, you’re obviously going to fixate on getting more people into the Top of the Funnel, but it’s definitely worth your time obsessing about pricing too.
How to measure performance:
Average Revenue Per User (ARPU) is trending up, not down. It sounds obvious, but anyone can sell more if they heavily discount. Your pricing strategy and your discount strategy has to be trending in the right direction.
Push for annual commitments (not just monthly). It’s better for keeping churn down as well as cash flow.
Check that your expansion revenue (upsells, higher-tier plans) outweighs discounts and downgrades.
CAC:LTV - as mentioned before. You got to make sure that the amount it costs to acquire a customer is proportional to the revenue they’re bringing in. 1:3 is the minimum CAC:LTV ratio, but you could also look at payback period. How long does it take for a customer to pay back (in gross revenue) the amount it cost to win them? A good rule of thumb is less than 12 months.
How to improve:
Test different pricing approaches: either on your website, or less publicly by just talking to people. How do they react? Are they confused? Do they think it’s a good deal? Are they biting your hand off (too cheap)? Or are they ghosting you the minute you tell them the cost?
Consider whether features are part of a core tier, a premium offering or an add-on. Are you selling a tow-bar or a seatbelt?
Segment your customers – enterprise might pay 10x more than SMBs, but only if there is a genuine additional enterprise value that you can offer. Hint: adding SSO and some fancy workflows probably isn’t enough.
Offer (small) annual discounts to boost cash flow and lock in customers.
5. Expansion or Net Revenue Retention
The final thing to make sure you are dealing with: minimising churn and maximising expansion. Churn is the silent killer of SaaS and if you’re churning and you don’t know why, you need to find out. The Holy Grail of SaaS is to get a a Net Revenue Retention of over 100%. In other words, your expansion revenue is outpacing your churned revenue.
Here are some good pointers that you are on track:
How to measure performance:
Churn is below 5% per month (ideally <2%, especially for B2B and even lower for enterprise).
Net Revenue Retention (NRR) is above 100% (meaning expansion offsets churn).
At least 20-30% of customers upgrade or expand within a year.
How to improve:
Identify your most successful customers and create case studies, especially showing customers using higher tiers or expanding their accounts.
Introduce expansion pricing (usage-based, feature add-ons, more seats).
Offer proactive customer success (not just support). Hold Quarterly Business Reviews if practical. Look to work with them either 1:1 or, for smaller customers, with content, that will help them become as successful as possible by using your product.
In Summary
If I had to simplify all this, I’d say:
Focus on activation & retention first – no point in pouring leads into a leaky bucket.
Prove a repeatable acquisition channel – one that can scale.
Test pricing & expansion early – don’t undercharge, and look for ways to grow revenue per user.
Solid stuff 👍