5 Important Lessons for SaaS Startups
March 12, 2015
Over the course of building Beatrix I've learned some hard-earned lessons. Some of these might be obvious, some are not so obvious - I hope they help you in your SaaS project.
1. Make Your Customers More Money
There are many types of value that a startup can provide. Save a customer time, make a customer smarter, introduce customers to members of the opposite sex. Many of the most successful startups however, are the ones who align their value proposition closely to their customer's ability to make money. Think ad networks, marketplaces, marketing software, and tools that fundamentally help keep the business running.
Saving time, making something faster, getting better or smarter recommendations for something; these are all nice to have. You want to be in must have territory for your startup to be successful, and for me I think the most obvious way to do that is to provably make your customers more money.
This is my main criticism of my current SaaS (social media software), and is something I've been especially cognizant about when brainstorming new ideas.
2. Get to the WOW Moment in the First 30 Seconds
It's not enough to just have a great value proposition. You need to make it clear to the user within the first 30 seconds of them using your SaaS, exactly what that value is.
You must craft a moment where a user says wow or aha I get it - where they finally understand the value of your SaaS, and how easy / graceful it is to get that value.
The wow moment is all about great UX. It is a careful sequence of interactions that are easy for the user to accomplish, but not too easy as to feel trivial, that quickly crescendo into an achievement event of some kind.
For my current SaaS Beatrix which is social media planning software, the wow moment was getting people to add content to their queue (from a list of auto-suggestions), and the more I engineered the UX towards getting people to add content, the more trial-to-paid conversions I saw.
3. Don't Allow Subjectivity in Your Value Proposition
This is one trap I want to avoid in the future. Never build your value proposition around something subjective.
With my current SaaS, much of the value proposition is in automatic content suggestions. You get a list of tailored content and can pick and choose what content to add to your social feed. Are you spotting the problem yet?
This value proposition only holds up if the user likes the content suggestions. But that's incredibly hard to control - what might be fantastic suggestions in the eyes of one user, will be terrible suggestions in the eyes of another. And I have observed a year of data that shows there is no pattern to this - some people love the suggestions, others don't, and it's an incredibly fuzzy thing to try to optimize from an engineering standpoint.
My advice to anyone in SaaS is to make your value proposition much more clear cut. More binary. Less subjective.
4. Don't Enter a Crowded Market with a Good Solution
I came late to the social media software industry with Beatrix. It's a great solution, but it's a competitive space. Hootsuite has been around for 7 years, and Buffer has been around for 4. That's just two of the many, many solutions out there.
Competing with a good product in this space is hard.
If you're entering a new market or one with entrenched, old-school competition, then a good solution can get you far. But if you're entering a competitive market, you should come armed with a radically better solution, or radically better marketing than the competition.
5. Have a Well-Defined Target Market
Everybody good entrepreneur knows this.
But so often we ignore this advice because hey, anyone can use our SaaS! We have a huge potential market! Look at Mailchimp, they sell to everyone!
Pick one customer segment in the early stages of your SaaS product's life. This helps you really nail down who your customers are, where you can find them, what marketing messages you can use to reach them, how much they can pay you, what your solution needs to do in order to make them happy - in other words, a bunch of really fundamental questions that you need to know the answers to, get answered way, way easier if you have a well-defined target market.
I hope those lessons gave some perspective!