What is the SaaS Growth Pyramid?

The Startup Death Spiral

Tell me if this sounds familiar. There’s a cycle I see happen all too often with small businesses, and it seems many business leaders ignore it or are ignorant to it.

Here’s a simplified version:

Company finds PMF and sales surge
Company hires expensive sales and marketing team to scale
Company reaches a point where all low-hanging fruit has been picked, and/or new competitors have entered the market
Growth slows down (naturally) combined with changes in economic / market conditions
Company looks to “shake things up” (i.e. hire a new sales or marketing leader, add new product features, enter a new market, etc.).
Sales and marketing team experiences massive churn as pressures to hit increasingly more difficult targets mount
New marketing leader changes the website, may update the branding, “gets aggressive” on user acquisition, and makes leadership seem like new and bold action is happening
Costs mount and margins are squeezed, but company remains hopeful. They feel like they’ve taken the necessary steps
The ROI / CAC of all this hiring isn’t sustainable with the growth rate
Company is unsure what to do
Market position continues to slip
Layoffs
Desperation
Company looks to secure more funding

I’ll let you figure out how the story ends.

It seems as though many business leaders expect constant growth YoY. What they need to understand is there are different stages of growth (which we’ll look at in this post), and at each stage, your strategy and tactics need to change. You cannot continue to acquire users at the same rate in the “low-hanging fruit” stage.

As you move up the ladder into different stages, new fruit is more scarce, harder to reach, and thus becomes more costly… especially with other fruit pickers competing with you.

And thus, new strategy and tactics need to be implemented.

The SaaS Growth Pyramid

The SaaS Growth Pyramid is a framework I use to diagnose why a SaaS company stalls or fails to scale. Think of it like Maslow’s hierarchy, you can’t move to the next level sustainably until the one below it is solid.

Level 1: Product–Market Fit (PMF)

Product–Market Fit (PMF) is all about asking the core question: Do people truly need this?

If your consumer lacks a deep, painful problem that you solve, then you don’t have a clear consumer base who has strong enough demand.

Symptoms of this are:

Customers churn after a few months
Sales cycles are long and rely on discounts
Founders still “explain” what the product does rather than buyers instantly “getting it”
Feedback is inconsistent or contradictory

To overcome this, try narrowing your ICP (ideal customer profile) and focus on solving one specific use case until retention exceeds 80–90%. Once you identify that thing that makes customers have that ‘aha’ moment, then you can optimize the onboarding process to drive users there faster.

Level 2: Positioning & Messaging

Positioning & messaging often get confused, but they are distinctly unique. Positioning is all about creating a clear story and differentiation. Why should customers choose you. If you don’t have that clear distinction, and you look exactly like your competitors, you don’t have a brand, you have a commodity, and there’s no reason to choose you other than price. So it becomes a race to the bottom as they say.

If prospects compare you feature-for-feature with competitors, then it’ll be harder to charge premium prices.

Unsure you define your category and frame competitors as outdated or incomplete. Then you can craft messaging that speaks to emotional outcomes (not just features). Use customer language, not your own, in marketing copy.

Level 3: Go-To-Market Alignment

Part of finding product-market fit is being able to predictably acquire and retain customers. Often this comes down to a misalignment between marketing, sales, and success.

Leads are unqualified or churn quickly, sales blames marketing; marketing blames sales, and customer success is firefighting, not expanding accounts.

Instead, build a feedback loop between acquisition → activation → retention.

Use a single metric (e.g., LTV:CAC (customer acquisition cost) or NRR (net reoccurring revenue)) to align the org.

Ensure you optimize for retention before scaling acquisition.

Level 4: Growth Loops

I’m a firm believer in growth loops, and have written about it before – What is the Biggest Limiting Factor for SaaS Growth?

Essentially, you want growth to compound automatically and have less of a reliance on paid acquisition or one-off campaigns.

If CAC rises faster than LTV and marketing feels like constant reinvention (where virality, community, or integrations aren’t leveraged) then you don’t have a sustainable business. You have a flash in the pan that eventually will fizzle out.

Identify self-reinforcing systems:

Viral Loop: Users invite others (Slack, Loom, Notion)
Content Loop: Users generate content that attracts more (Webflow, Figma)
Data Loop: Usage creates insights others value (Ahrefs, HubSpot)

Invest in community, education, and brand trust.

Level 5: Capital Efficiency & Scale

Is your growth sustainable – that’s the million-dollar question.

Growth is fragile, expensive, or unprofitable. In so many cases, businesses need constant fundraising to maintain burn, metrics look good top-line, but margins or cash flow lag, hiring outpaces culture or operational maturity, etc.

The most successful companies prioritize Net Revenue Retention (NRR) over new MRR, they automate internal processes (billing, onboarding, renewals), and invest in brand to lower future CAC.