How we want to grow Buffer

Up: § 2023 Shareholder Letter Index

Given the clarity of our strategy and our cultural DNA, I have spent some time reflecting on the 13 years Buffer has existed and the ways we have either grown or declined each year.

With SaaS, there are a limited number of ways you can grow. One of the simplest equations for MRR is to multiply the number of paying customers by how much they pay per month (ARPU). Therefore, to grow MRR, you either need to grow the number of paying customers you have, or grow your average revenue per user.

For most of our journey, we grew each year by growing our number of paying customers, alongside seeing steady growth in ARPU. In general, our paying customer growth outpaced our ARPU growth and was the the key driver of our overall ARR growth.

In 2018 and 2019, we saw great ARR growth, but our paying customer growth slowed down significantly in 2018 and declined in 2019. We achieved this by building functionality exclusively for paid plans and further restricting the free plan. I later reflected and realized that to continue this type of growth, we would find ourselves going fully up-market. For many SaaS companies, a strategy of growing ARPU while seeing the number of paying customers remain stable or even decline may be sensible. For Buffer, growing ARPU aggressively goes against our mission to serve and help more entrepreneurs and small businesses thrive. Additionally, extrapolating it over multiple years would represent a drastic change in our business model and culture. Beyond seeing the challenges ahead in growing this way, I personally felt a real conflict in my own sense of purpose when we dabbled with going up-market. This is one factor which led to my decision to double down on individuals, the free plan, and our down and wide strategy.

Going forward, our goal is to grow Buffer primarily by growing the number of customers we serve. Despite a number of months in 2023 where we grew MRR/ARR, we were not successful in growing our number of paying customers in any month. This is something we are putting a strong focus on, and expect to see change in 2024. We expect ARPU to grow steadily as we add value to our offering. Indeed, ARPU grew 3.2% in 2023 without any changes to pricing or any reductions in our free offering. We achieved this by introducing new channels and adding more value to our paid plans. We’d love to have customers grow with us over time while maintaining a very low barrier to starting to use Buffer.

Taking this to a leading indicator and earlier step in the user flow, we have put a clear focus on significantly growing new user signups. In 2023, we saw a 28.95% increase in signups with 946,614 people signing up to try Buffer. We achieved this through a renewed focus on growth marketing, SEO, and content marketing alongside our product improvements and launches.