Five Keys to SaaS Success
by Kevin Quiring
Posted on Friday April 7, 2017 at 12:23 PM
How do I make my SaaS startup successful?
The answer is anything but simple. To succeed and make a successfull exit you must have an overview of your business, its key functions and the people working with you.
Many of the points are derived from the ideas presented in Verne Harnish’s book “ Scaling Up”. I highly recommend getting a copy and working your way through the book (which you can find here).
Here are 5 keys to making your next SaaS project a success:
Sell a Service not a Product
Most sales are completed when you have the product in hand and are happy with it. In software as a service you are offering much more: A service that includes delivery, support, and ongoing maintenance.
Remember that selling a service does give you home-court-advantage. Selling a service means selling an intangible. You don't need to know everything in advance, you can be flexible, add features and customize the offering along the way, to satisfy every customer's needs.
Yet some customers have a hard time imagining the service you are offering them if they don't have the end result infront of them. So make sure that you are there for them from the beginning. Communication is key. Talk to your customer on a weekly basis and understand his or her needs. Offer support wherever they are struggling, and make sure to have a plan prepared for when something goes wrong (server issues, data loss, etc).
Test your ideas with a small group of customers, or even family and friends (include a feature discussion, what the like/dislike and how much they would pay for a service like this).
Accountability
Many times Startups will tell themselves, we have great ideas and they are all stored in our minds, so no need to write them down. Wrong!
Goals and priorities need to be defined and shared with everyone in the company so the SaaS business can grow and blossom. This lets you define the key functions of your business.
Once everyone understands what defines the success of your company you need to pick leaders to hold accountable for reaching these goals. If more than one person is held responsible for a task to be completed, no one is responsible anymore.
Strive to be a no nonsense company, that eliminates waste wherever it can- be agile! Being transparent with everyone, being flexible and open to change, collaborating with your customers to ensure success and relying on a stable platform to work on.
Try completing the Gazelles "Function Accountability Chart" (FACe).
Know your Market
You might be thinking: “Anyone can use my service - so everyone can be a customer.” Sadly, this is most likely not a very profitable marketing strategy.
The SaaS market is packed, it is like a gold rush out there and everyone wants a piece of it. More SaaS ventures pop up daily, and yet less and less are able to make successful exits. Why is that? Because they aren't able to find the right market to target.
Make sure you understand who your target audience is by doing the proper research and analysis. Again having a clear definition of goals and what the priorities are to reach these goals is key. Don’t forget to make a clear picture of your competitors strengths and weaknesses. And then evaluate your product and have people test it before you introduce it to the market ( In this group of people you should include different demographics).
Write everything down at least once: What are you offering? What is the dollar size of your market? What is your sales setup? Describe your audience in terms of demographics. What competitors exist in your market? etc.
Turnkey Operations
In the world of SaaS delivery is everything. Products are developed quickly and efficiently, which makes customer service, customer satisfaction, and customer success critical.
Really nothing says it better than the word: Turnkey. Deriving from the concept of only needing to the turn the key to unlock the doors to begin operations. The Service delivered to your customer is complete, installed and ready to use upon delivery. It should be easy enough! Regularly schedule time to develop a Strategy for rapid and sustainable growth of the company, that will help you understand what you are selling, to whom you are selling and where your sales are going. So make sure you understand the customer's needs and requirements so it really is just a “turn of the key” when they “start it up”!
“Quality in a service or product is not what you put into it. It is what the customer gets out of it.” - Peter Drucker
Disciplined Financial Processes
SaaS providers will need to find the best value for their customers and themselves in order to be successful. Software as a service monetization usually works via recurring billing, usage-based billing, tiered functionality, etc.
To be successful and manage the company's financial model, you need to put together a financial process. This means keeping track of all your invoices, wages, expenses, calculating a churn rate, etc. You need this information to see where you are at and what the forecast looks like. This information gathered will allow you to understand your future income and the possible outcome of the business.
“Growth sucks cash. - The first law of entrepreneurial gravity.” - Verne Harnish
As the SaaS market continues to explode in growth, new opportunities are opening all the time. By learning about successful companies and by following the suggestions in this article you can set your SaaS project up for success.
Looking for someone to help you build your next SaaS project? Contact us today.
