It’s no question that starting a Software-as-a-Service (SaaS) business is difficult. There are simply so many options and ideas that many are never fully fleshed out. What do successful SaaS companies have in common?
Uses Growth Hacks
A newer term to the business world, growth hacking is focused on getting startups where they need to go. Small companies have to get bigger to get the funds they need to stabilize. It is especially important for SaaS tech companies to develop growth hacking techniques that will help them stand out and get the positive attention they need from their target audience.
Focuses On the Product First
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The number one reason startups fail is because their product is poorly developed or simply not needed in the market. With nine out of ten startups failing, it is very important that SaaS startups consider their product the core of their business. Your SaaS product needs to be something customers can’t function without.
Even if your product is needed by your target audience, it still has to make good business sense from the beginning. You need to have a product that is better than the current alternative. Consider how Hootsuite has become an invaluable part of many businesses’ marketing strategies with a perfected design and integrated app, available across a wide variety of smartphones. It’s hard to say no to that for a cheaper knock-off version. Your product has to be worth whatever you are going to ask for it, and it needs to withstand the inevitable undercutting by the competition.
Factors in Marketing Costs
You will need an efficient sales model that takes into account the online marketing costs for each customer acquisition. This cost per acquisition (CPA) becomes central to your marketing strategies and has to be easily recouped by your company sales. It is often ideal to offer annual contracts in order to reap the profits and adjust accordingly before the customer has the option to fade out.
Offers Real Market Leadership
It is not enough just to own the marketing with an innovative product, you need to form the kind of industry leadership that secures your spot at the top. If you prove that you are the authority on your corner of the market, competitors will find it harder to break through and take business. Consider the impact of Adobe; while there are many competitors doing similar things with their software tools, Adobe has cornered the market, and nearly every user considers them the authority on image editing and design tools. LinkedIn is another example of a company that created software and then became the clear leader in its field, making it nearly impossible for anyone to follow up with a successful competitive model.
Beats the Current Competition
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While you might consider it a turn-off to have other forerunners beat you to market, that can be turned to your advantage. Can you beat the leader? Just because a company comes out of the gate first does not make them the automatic choice in the long run. Facebook quickly ate up smaller startups with similar ideas, like MySpace and Xanga, as it became the clear leader in social networking. From interface and user experience to content marketing, look at where your predecessors are weak and come in stronger.
Companies that succeed often have one very important thing in common: their creators spent a lot of time and effort upfront with no compensation. Starting your own company isn’t easy. If you are planning to pull a salary at the beginning, then you might be setting yourself up for failure. Instead, put every dime of whatever startup money you have into your software development, marketing, presentation, and delivery. Then, look for more backing to get your company in a solid place before you consider any salary for your own efforts. If the company thrives, then you will eventually have a salary to match—so, be patient.
At the end of the day, a great startup is all about commitment and hefty research. You need to know the data inside and out, and you need to be prepared to work hard with little or no return at the beginning. These are all characteristics of great startups.