Ansoff Matrix Example: Software Company Growth Options
A B2B SaaS company with 400 customers deciding where next year's growth should come from.
This matrix was built to settle an argument: the founders wanted a new product for a new vertical, which is the diversification quadrant, and the numbers suggested the answer was sitting in the penetration box all along.
Writing all four quadrants out is what made the comparison possible. Each option carries an estimated cost and an estimated return, on the same page.
Market Penetration
- Cut churn from 18% to 12% annually — worth ~£340k, costs ~£40k
- Upsell the analytics tier to the 60% of accounts not on it
- Improve trial-to-paid conversion from 9% to 14%
- Reduce discounting: average discount currently 22%
Product Development
- Build the reporting module 40% of customers have requested
- Add an enterprise tier: SSO, audit logs, procurement support
- Package existing features into an onboarding service
- Estimated cost ~£280k over two quarters
Market Development
- Same product to healthcare providers — same job, different vertical
- Expand to Ireland and the Netherlands, no product changes needed
- Sell to the operations buyer as well as the finance buyer
- Cheapest test: hire one vertical-specialist salesperson for two quarters
Diversification
- New compliance product for a vertical we do not serve today
- Nothing transfers except general engineering capability
- Estimated £600k and 18 months to first revenue
- Decision: cap at 10% of engineering, review at 2 quarters
What this canvas reveals
- Churn reduction was worth more than the proposed new product and cost roughly a tenth as much. That comparison only became visible once both were written down together.
- The market development option is cheap to test — the product needs no changes, only a different sales motion.
- The diversification option was kept, but capped and time-boxed rather than funded open-endedly.
Block by block
1Market Penetration
- Cut churn from 18% to 12% annually — worth ~£340k, costs ~£40k
- Upsell the analytics tier to the 60% of accounts not on it
- Improve trial-to-paid conversion from 9% to 14%
- Reduce discounting: average discount currently 22%
2Product Development
- Build the reporting module 40% of customers have requested
- Add an enterprise tier: SSO, audit logs, procurement support
- Package existing features into an onboarding service
- Estimated cost ~£280k over two quarters
3Market Development
- Same product to healthcare providers — same job, different vertical
- Expand to Ireland and the Netherlands, no product changes needed
- Sell to the operations buyer as well as the finance buyer
- Cheapest test: hire one vertical-specialist salesperson for two quarters
4Diversification
- New compliance product for a vertical we do not serve today
- Nothing transfers except general engineering capability
- Estimated £600k and 18 months to first revenue
- Decision: cap at 10% of engineering, review at 2 quarters