5 Mistakes SaaS Companies Should Avoid
As demonstrated in the accompanying graph, SaaS (software-as-a-service) is an already dominant business model that shows no sign of hindrance in the foreseeable future. Companies are beginning to understand the benefits of implementing the SaaS model into their operations, which allows them to distribute their software through paid subscriptions. While the future of this industry appears bullish, businesses looking to take advantage of SaaS must be cautious in their approach. As apparent in other lucrative ventures, there is a certain level of risk associated with SaaS that companies should be cognizant of in order to yield profitability and sustainability.
Underestimating the potential of this technology
Similar to pricing trends seen in the world of cryptocurrencies, SaaS products are often undervalued, largely due to the fact that cloud computing is a relatively recent field. Despite this fact, there is an evident potential for growth in this industry, and companies need to recognize that in order to have a more accurate understanding of how valuable their services are. As a business, it is best to examine one’s competitors to gain insight on what would be a proper valuation. Paying attention to market trends and analysts is important, yet direct competitors provide the most clarity for a business when it comes to pricing strategy, especially one in its early stages.
Understanding the characteristics and patterns of a company’s customer base is arguably the most essential aspect of selling a service in any industry. This is especially apparent for SaaS companies, whose products can be applicable to various types of clients. Because of the versatility and adaptability of SaaS products, it is easy for businesses to fall in the trap of trying to enter as many markets as possible. That being said, it is imperative to identify a niche market before spending countless hours and funding attempting to penetrate the market. Targeting a niche market leads to higher conversions because businesses have the ability to address specific client needs, which is a scenario that SaaS is built for.
SaaS companies are unique in the sense that they rely heavily on long-term relationships with their customers. Being in the service industry, these companies are expected to maintain an active and available presence, always ready to answer the questions of their clients. Failing to do so will certainly drive traffic away from their websites, and establish a negative reputation in the online community. In order to ensure that this situation does not occur, SaaS businesses should emphasize hiring as many customer service personnel as needed to handle the increased customer claims they will receive, especially in a rapid growth period. In short, supply must meet demand if the company hopes to thrive.
Ignoring the benefits of social media
In this era, and definitely the next one, social media is undoubtedly the best place to conduct marketing. For SaaS companies struggling to find potential clients, social media platforms like Facebook and Twitter provide already existent customer pools that they can penetrate in inexpensive ways. Furthermore, being able to integrate SaaS products with these platforms is a clear method to provide customer satisfaction and differentiate a business from its competitors. It would be a tremendous oversight on the part of the company to disregard the advantages social media provides. SaaS companies are future oriented, so it would make sense to direct marketing efforts toward mediums that will be dominant years from now.
Lack of analytical monitoring
To reiterate, SaaS companies must have a comprehensive understanding of not only who their clients are, but also how they behave and interact with content. Doing so would educate a company on which features of the service the company should improve on, where most of their traffic originates from, etc. Services like Google Analytics can assist companies in this process, but SaaS businesses especially should also make it a point to truly internalize customer feedback and make proper adjustments to their products. The focus should always be on the customer above all else, so taking an analytical approach to solving issues is crucial to the success of the company.
In conclusion, SaaS companies should maintain an awareness of the above topics, regardless of whether they are a mature business or a start-up. There is much reward to gain in this industry, however that will not be attained if these businesses choose to be ignorant and complacent in their operations.