Roughly 15,000 businesses are delivering SaaS in the United States. These companies collectively service 179 million global customers. This is the competition you face as a Software as a Service (SaaS provider. Here are ten tips for getting and staying ahead with your SaaS start-up.
Be Clear on Your Primary Target Market
You have the option to focus on B2B or B2C. The complexity increases with B2B along with the larger demand for applications such as production, customer support, and business analytics software.
Avoid the Start-up Graveyard
If you are aiming for outstanding success in your SaaS business, you want to avoid high complexity with a low average selling price (ASP). Amongst others, ASP measures competitiveness and the value the customer places on the service. The higher your complexity, the higher ASP must be, bearing in mind that customers may have to change their internal processes to take on SaaS. Three strategies for achieving your goals are to increase profit, velocity, or value.
You will have to balance customer acquisition cost (CAC) and ASP. This means attracting high-end customers and selecting the most profitable target market segments. This goes hand-in-hand with creating a hub on the web so that your customers can find you, and building the business into the product. For this you will need a transactional model which fosters an interpersonal relationship, and provides top-notch SLAs, signed contracts, invoicing, and human support.
You are aiming for a customer self-service model. Select a big target market and keep pricing competitive. At the same time, reduce complexity. Conduct an online trial before you launch.
The keywords are innovation and unique differentiation. This means rethinking applications that add value to customers and creating your own apps. Mass customization involves reducing the setup costs of unique customer requirements and providing automation instead. Don’t chase after a few high spenders; focus on the majority.
Focus On Customer Needs
Periodically check to see what customer preferences are and what is happening in the market. Upgrade your services accordingly. Aim for efficiency and ease of use in your offerings.
Problem and Solution
Make potential customers aware of a problem. Then show how your service resolves it.
Profile Your Customers
A manufacturing firm is very different from an SME in size and number of employees. Choose your niche. Likewise, concentrate your marketing on specific types of companies in an industry that have a use for your product. All are not equal and not every firm in a specific industry will need what you are offering. Don’t waste your efforts on market segments that are unlikely to buy and benefit from your product.
Choose the right tech stack for the most efficient development of your product and match the tech stack of customers. You will be employing various technologies, tools, and apps for your software product and this must have value to your customers.
Bypass the Competition
Focus on a niche market. This will be characterized by low search volumes. As Massimo Chieruzzi advises in this SaaS blog, “SaaS marketing is probably one of the biggest challenges for a marketer: relatively small space, low search volumes, and everyone has a lot of money to play with.”. Remember that you are competing against other marketers. So, your marketing must be precise, specific, and of very high quality.
According to the statistics, the SaaS market is worth $171 billion in 2022 and is growing by 18% per annum. With this level of competition, you need to hone your digital marketing strategies, stay ahead of new technologies, and expand the reach of your campaigns.
Keep Track of CAC and Churn Rates
If your churn rate is high, then there is some aspect of your product that customers are dissatisfied with. Survey this group and improve, eliminate, or replace any features that are not working well for your customers. CAC will tell you the cost of acquiring customers; here are some steps to reduce it.
Marketing plays a pivotal role in SaaS. Ensure that yours targets the customers who have the most need for your product.