Top 10 Success Mantras for SaaS Business

1. Large Total Available Target Market (TATM)

Evaluate if the target market that you have identified is large enough or not. As a SaaS service provider, you will have to incur upfront capital expenditure to build the infrastructure required to run the SaaS service. On the contrary, your revenues per month per client will be of small denomination. Remember, SaaS is about accessing IT services economically. The TCO (total cost of ownership) for the clients should be lesser in the long-term for them to be able to see business value in SaaS models. To reach profitability you will have to generate volume business. Hence the TATM for your SaaS business must be large enough.

2. Identify A Strong Need Area

When ideating for building a SaaS business, it is better to do due diligence before defining your service area. As a start-up to succeed, it is important to receive early adoption of your business to be able to build a strong growth trajectory. This can happen only when your service meets a strong unmet need. A strong growth curve early on will bring profits to you much sooner.

3. TATM Should Be Accessible

It is normal for any SaaS business start-up to first approach the SME/SMB market as their sales cycle is typically shorter than that of the larger enterprises. Moreover, large enterprises have their own multi-layered IT stacks across departments, which make them slow to adapt to any change. Therefore, you should make sure that the SME/SMB segment that you are targeting is not too difficult to reach.

4. Keep Cost of Acquisition Low

You have to agree that SaaS is a volume driven business. To generate volume the cost of acquisition must be keep as low as possible. As a service provider through web, you should make sure that you are able to reach your target customers via web. Web is the best way to keep your total cost of acquisition low. This comes as the direct fall-out of the mantra #3, that your target customers must not be too difficult to reach.

5. Create Demand Side Pull

Keeping the fundamentals of SaaS in mind, it is imperative to keep the acquisition costs low as the revenues per client are small. In this type of business the hard selling tactics might prove cost intensive. The best way is to get found on the web and have the prospects sign-up to try your product. Once the prospects try your product you can build a customer relationship in order to convert them into paid customers.

6. Cash-in the Organic Growth Strategy

Again, this is the direct fall-out of the mantra #5. To create a demand pull, you should use the free marketing tool available on the web to get found by the prospects. Tools, such as blogs, presentations, whitepapers, case studies, webinars, videos etc. should be published in order to create an online buzz about your product. The catch here is that the content generated should be interesting, relevant to the target market and be compelling enough for them to try your free version.

7. Drive Affiliate Programs

Everything about building a successful SaaS business boils down to increasing volume and keeping acquisition costs low, while leveraging the viral effects of web. Yet another important strategic handle for achieving this is running affiliate programs for your SaaS product. Affiliate programs simply spread out the entry points to your product across the web.

8. Be Cloud Friendly

Do not try to build a SaaS product which provides a stand-alone service. Your SaaS should be able to talk to other software and hardware either on web or at on-premise IT stack. If your SaaS product is not built to leverage these issues, then you might have a hard time closing your sales. It is best to make your SaaS product open standards-based API friendly or even better offer integration solutions to different sets of customers.

9. Provide Customization

As a continuation of mantra #8, providing integration solutions is almost a necessity today. Leaving integration to the customers defies the logic of lower TCO for the customer as the customer will have to spend man-hours in getting the service up and running and also lose on the time-cost factor. Your SaaS product should be able to handle automated customization for your customers and this should be achieved at the architectural design level of your SaaS product.

10. Leverage Crowd-sourcing

Another way to keep your costs low is to encourage product enhancements through crowd-sourcing. Crowd-sourcing as a strategy has proven to bring about very good results with low cost to the company. This has especially been a great hit in the technology world.

Do you think there can be more mantras for start-up success in SaaS business? Share your thoughts here.