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Software as a Service (SaaS) is on a huge growth curve. Learn how to get in on the trend
The market for SaaS products has seen staggering growth over the last few years. The total market for SaaS platforms is set to hit $85.1 billion in 2019. And revenue is set to continue its growth curve, hitting $113.1 billion by 2021.
SaaS products are seeing rapid adoption. A recent report found the average 250-person organization uses 100 SaaS applications.
This means there's an enormous opportunity for SaaS creators. It also means competition is fierce, and your product and marketing have to be spot-on. Here are 10 tips to give you an edge in the SaaS market.
1. Determine the problems you're trying to solve
Before you start working on a SaaS project, you need to think carefully about the problem your product is trying to address. That's how you'll make the case to potential clients, and market your software.
The easiest way to do this is to think about your current job. What are the daily annoyances and roadblocks to productivity? Talk to other industry professionals and ask them which parts of their job they wish they didn't have to do. Get involved on industry forums and blogs and find out some of the common problems people in your industry face.
Next, consider whether and how software could fix this problem. Focus on the end benefit of the software. What does your daily routine look like now, and what would it look like if you could automate the tasks that are slowing you down? What other activities could you do if these tasks were automated? This is how you'll determine your product's value proposition.
2. Get the UI and UX right
This is one of the most important parts of SaaS development. You need to create a user interface (UI) and user experience (UX) that's simple, self-explanatory and easy to use.
Remember, your software is meant to increase productivity and eliminate annoyances. If you don't get your UI and UX right, you'll only end up compounding annoyances, and any clients you manage to win will churn quickly as soon as they get frustrated with using your product.
To create a quality UI and UX, you'll need to talk to an expert. Find a good graphic designer who specializes in UX. Tell them what you want your software to achieve, and work with them to develop an intuitive UX.
Once you've got a good designer on board, you'll want them to wireframe the UX. Wireframing is the process of establishing the basic structure of your software. It describes how your software functions, the actions users can take and what results those actions will have.
A wireframe doesn't include the final visual design. It's usually a simple black and white layout of the different features of your software. You'll be able to see how users will navigate your software, what different click events will result in, what input fields users will interact with and the results of inputting data.
Wireframing lets you see the user experience. This is the stage where you can identify potential problems with the UX, or elements that might be confusing or cause frustration.
After wireframing is complete, your designer can add the visual elements to your SaaS product that will make it visually appealing for users. Pay attention to things like font hierarchy to see if the different sizes and weights of font guide users to different elements of the software in the order of their importance. Make sure the UI is uncluttered and easy to understand. Determine the color scheme and branding you want for your product.
4. Find the right developer
Now that you have a beautiful looking product that's easy for users to interact with, it's time to actually make it work.
You'll need to hire an expert software developer to build your SaaS tool. Your software developer will use the designer's work to make a fully functioning product.
Your product doesn't have to be complete before you begin marketing it to potential clients. A developer will be able to build a prototype version for you that you can trial for customers. When you're working in a field as crowded and competitive as SaaS development, you'll want to start your marketing efforts as soon as possible.
5. Market with content
Marketing your SaaS tool will probably involve a lot of different channels. You'll most likely use paid ads, social media and even cold prospecting to find sales leads. But one of the best ways you can market your product is with written content.
Content marketing delivers a better return on investment than other marketing channels. It costs 62% less than traditional marketing channels and generates three times as many leads.
Content marketing can include guest posting on industry blogs (with a link to your sales landing page), social media posts and your own blog. Blog writing is one of the most effective tools you can use.
Start a blog on your company website (you do have a website, don't you?) and blog about industry issues. Do some keyword research to find words and phrases people are searching that relate to your product and work them into your posts. Position yourself as a thought leader in your industry.
You can use your blog to generate leads for your SaaS product. Include an email signup on your blog, maybe offering a free e-book in exchange for people's emails. This will help you build your email list and reach out to leads.
Once you've developed some leads, it's time to convert them into paying customers. A great way to do this is with a free trial of your software.
While you can demo your software on face-to-face sales visits or with explainer videos, the most powerful way to demonstrate your SaaS tool's value is to allow people to use it. You can choose to offer a free trial in a couple different ways. You can either offer a free version of your software with limited functionality, or you can let users trial the full version for a set period of time.
Our suggestion is to do both. Continue to offer a stripped back free version to get users familiar with your product's use and functionality, but also offer a free trial of a premium version so even free users can see what they're missing. Remember to collect payment info at the outset of the free trial to ensure a smooth transition to the paid version, but alert customers before their free trial is about to expire so you don't alienate users with unexpected charges.
The goal with a SaaS tool is to create sticky customers. The best way to do that is by integrating your product into their workflow to the point that they can't imagine functioning without it.
One way to do this is by using your SaaS tool to host their data or work assets. A great example of this is DropBox. DropBox offers cloud storage for companies, and has expertly created sticky customers by hosting so much of their data that moving it seems too laborious. It helps that they also provide a top-notch product that reduces the desire to move to another platform.
8. Give robust support
The churn rate for SaaS products can be quite high, especially for smaller SaaS companies. The average churn rate for SaaS products is about 13%. This rises to 20% for smaller SaaS companies with less than $10 million in revenue and a staggering 60% for some startups.
Why is churn so high in SaaS? Because SaaS products are easy to adopt, and just as easy to abandon.
One way to keep churn in check is to provide excellent support. You need to make sure there's excellent documentation explaining how to use your product. You need to produce explainer videos walking people through your platform. And you need to provide unimpeachable customer support.
Focus on building out a customer support team that can answer customer questions 24/7. Respond to queries quickly, patiently and thoroughly. If you create frustrated customers, you'll quickly see your churn rate getting out of control.
9. Get the pricing right
Your pricing will be a delicate balance between attracting clients and covering your fixed and variable costs. Several considerations need to go into setting your pricing.
First, you'll need to look at any competitors and get an idea of their pricing. You'll also need to consider the value your product actually delivers to a business. Finally, you need to consider the type of pricing that best fits your customer base.
You can price your product in two different ways:
Fixed pricing. This model charges the same amount and offers the same features to every user.
Dynamic pricing. This model offers different price points to different users for a different set of features.
You'll also need to decide if you'll be operating on a subscription model, a one-time fee or a pay-per-use model.
For our money (if you'll pardon the pun), a dynamic subscription model delivers the best results. It allows your customers to choose a set of features and price point that suits their needs, and can increase the lifetime value of a customer as their needs change and they adopt higher price points.
10. Be customer obsessed
The ultimate path to SaaS success is to focus your attention on the customer at every stage of the process. Remember your SaaS product exists to solve a problem and to make the user's life easier, more productive and more efficient. This should be the guiding principle of everything you do, from your product design to your marketing to your customer care. Focus on delivering a great experience to the customer, and you'll rise above a competitive market.