SaaS (Software as a Service) is a software delivery system where a cloud service provider hosts applications and avails them to consumers through the internet. In this system, an ISV (independent software vendor) may outsource the application’s hosting needs to a third-party cloud service provider.
In the case of big corporate companies, the cloud service provider will also be the software vendor. This article shall discuss various SaaS business tips to help you launch a successful SaaS business.
How to Start a Successful SaaS Business
If you are considering venturing into the SaaS business world, start by defining your needs. If you do not know where to begin or what you will need to begin, here are tips from experienced professionals to ease the process.
#1. Create a Solution to a Problem
Before working on branding, developing a team, or pricing, start by identifying a problem to focus on, and a robust solution. Remember, your business will only thrive if you are providing real solutions to existing problems. You can determine a problem worth seeking solutions for in various ways, as seen below.
Address and Solve Existing Problems Better than Anybody Else
CEO and founder, Gabriel Kuperman, says “If you can fix a problem for someone and do it better, quicker, and/or cheaper than your competitor, you’re off to a good start.”
Create Solutions for Problems you Can Identify with
Understanding specific problems gives you the experience you need to provide robust and practical solutions. CEO and founder Uwe Dreissigacker, says “The number one rule for any SaaS business should be to solve your own, real problems and not someone else’s problems. Only by solving a problem you have struggled with yourself will you fully appreciate how to solve the problem in the best possible way.”
Leverage Your Expertise in a Certain Industry to Fix a Problem
Being conversant with the operations of a specific industry means you understand related problems better and can offer practical solutions. According to founder Ryan Chan. “I had industry experience and knew that there was a big void to be filled for small and medium-sized businesses that could not afford to pay for local servers and an IT team. We created UpKeep to fill this void—a cloud-based solution that was affordable for any size business.
#2. Devise a Plan
A business plan helps you navigate the industry with minimal struggle. Instead of creating a bulky plan, consider starting with a single-page pitch. Doing so is the fastest strategy to put your idea down on paper. Your pitch should include:
- Your schedule, that is, define who will be executing specific tasks and at what time.
- Your business model, how you plan to make money
- Your approach, how you will execute your idea
- Your strategy, what you plan to do.
#3. Verify Your SaaS Idea
Your plan, at this point, is just a draft of assumptions. Here, you will need to determine the authenticity of your assumptions before adjusting the plan to accommodate your findings. To do so, ask yourself; is my idea enough to generate money? Your answer helps you determine whether you can convert your ideal into a viable business.
Consider meeting your potential customers and holding a face-to-face discussion. In today’s digital era, you can even contact surveys via digital platforms.
Your goal should be acquiring real-world feedback and outlining a framework for success to ascertain whether your idea is viable. To verify his idea, Co-founder Gene Caballero says he went out and spoke to random people. “We went door to door and even rented a kiosk in the mall to get feedback to see if people would use a product like ours. It’s a very humbling process.”
Why Engaging People is Crucial
- It helps you determine the problems they are struggling with
- It helps you figure out whether you are trying to solve a problem they have
- By talking to people, you will understand whether you have the right solution for their problems.
- Allows you to determine the best and worst strategies of selling to them
- It helps you understand what they would be willing to pay for the service.
- You get to understand the solutions they are using for their problem
- Depending on your findings, you may want to go back and revise your plan.
Run a Competitive Study
Before forming a great relationship with your consumers, you want to know your competitors. Having competitors in your industry is an indication that you have identified a problem. The idea at this point will be identifying the inadequacy in their solution.
Determine what customers need, but they are not getting from the existing solutions. Remember, you will encounter numerous competitors along the way. Take time to study and determine how customers and your competitors solve the problem you are focusing on.
#4. Develop Your MVP (Minimum Viable Product)
Another critical analysis strategy in the SaaS industry is developing your MVP or an uncomplicated form of your product. This process is a popular strategy in the product development world that facilitates fast analysis of a product, or product attribute.
Eric Ries, an entrepreneur at Silicon Valley, promoted this web application strategy. He mentions: “The minimum viable product is that version of a new product that allows a team to collect the maximum amount of validated learning about customers with the least effort.”
Where possible, start developing your prototype in advance. However, if you lack the right resources to execute this task, consider developing the MVP. One expert says you should: “Start with cheap mockups, wireframes, or even sketches on paper to make sure that your customers are going to want what you build.” Apart from prototypes, minimum viable products are available in various forms like:
- Landing pages
- Explainer videos
An MVP helps you save money and time before you take your ideas to the next step. Take time to develop an MVP, introduce it to your potential customers, and listen to their feedback.
#5. Pick Your Pricing Model
A pricing model is critical for the success of any business. You need to choose the right monetization strategy wisely to earn a stable income. You can combine various models to alleviate financial risks. Here are some pricing options to choose for your SaaS business.
Free but Ad-Supported Application
When you offer your SaaS product for free, numerous users will be interested. Integrating inbuilt advertisements is one of the most robust strategies you can use to monetize your SaaS app. Avoid excessive utilization of inbuilt commercials because it can hinder user experience.
Flat-rate pricing is a straightforward pricing model that features a single package with only one price. The difference, in this case, depends on whether you want end users to subscribe for annual or monthly services. Often, this model features a trial period and a fixed guideline on the number of users per account.
This model aims at offering consumers basic functionality free of charge. It is an excellent alternative for starting your SaaS business. Consumers can get premium features for an extra fee. One of the biggest challenges with the freemium model is the high consumer churn rate. People often have more value for what they have paid for than what they receive free of charge.
Per Storage Pricing
Based on your SaaS product, you could charge users depending on the quantity of storage they require. Often, companies give consumers a fixed amount of storage free of charge. Consumers who need more space will then have to pay for it. Through this model, consumers will get conversant with your services. Interacting with the service motivates them to upgrade after exceeding the limit.
#5. Establish Your Brand
To stand out in the industry, you must understand how to brand and set yourself ahead of competitors. Consider referring to the competitor survey you conducted to understand how to position yourself. You do not have to outsource this process to a brand expert. You can delegate it to your in-house staff. Before creating a mockup, here are some tips to ease the process.
Create a Unique
To create a unique brand, experts recommend investing time in the branding process. One investor mentions that “There are a lot of competitors in this space, many with much more money than us. However, we have been able to differentiate [ourselves] and also excel by making enterprise software fun and enjoyable. Our biggest differentiator has really been our design, from the ease of use to our playful tone.”
Ensure Your Brand Explains Your Vision
Branding is more than a design-based initiative. It can be modified to bring every party onboard and guarantee consistent messaging. Some experts say ensuring your vendors know your vision and your intention to execute it is crucial.
If you collaborate with partners to enhance product distribution, ensure they understand your brand, voice, and target audience. Consider creating a brand identity guide to help your partners understand your message and circulate it better.
Create a Domain
Creating a good domain name is a critical part of your branding strategy. According to experts, choose a short, easy-to-spell .com domain. Investing in a domain name can make a long-term difference in your brand and give you an edge ahead of your competitors.
Other critical tips to help you built a successful SaaS business include: acquiring financing, choosing a development team, and launching your MVP. Having a powerful marketing strategy is also a crucial part of building your SaaS project. After launching your MVP, keep a tab on its progress to determine its success rate. Launching a SaaS business requires extensive analysis and planning. Use this article as a guide to ease the process.
About the Author!
Geordie Wardman is an entrepreneur of 15 years, author, investor, multiple SaaS builder, and owner at OneStopDevShop. He has personally mentored over 40 SaaS and eCommerce founders because he loves helping people. Say hello to him on Twitter @geordiewardman