For Whom the Bell Tolls: Business-Ending Mistakes SaaS Startups Make

SaaS is the future business model, but it is not fail-proof. Here are mistakes to avoid.

An increasing number of start-ups are embracing the as-a-service business model, including countless software start-ups. Software-as-a-Service offers a friendlier business model for software buyers, and not having to worry about expensive infrastructure and high-cost employee perks makes it seem like a no-lose business model.

Aspects of the model truly are innovative, and SaaS companies genuinely require much less start-up capital. You don’t need many employees, nor do you require fancy offices to make your business grow. Much work can be done remotely via the Cloud. But don’t be fooled. Like any business, SaaS companies can die when you don’t pay attention to details, just like with any other business.

Don’t Forget Old-fashioned Service

SaaS companies need to remember that though they’re not traditional software companies or even traditional businesses, they need to keep the “service” part of their business in the fore. Tech start-ups need to remember that customers come to them to solve a problem, and sometimes customers need you to identify that problem.

Old Fashioned Customer Service

Perhaps it’s just that your software does something your competitors’ product doesn’t, or does it better. Take Google, for example. Microsoft’s Explorer came with Windows, and Firefox had been around for years before Google’s search engine blew away its competition by providing unbiased access to knowledge and this simple phrase: “Don’t be evil.” Though some users now debate whether the company still provides unbiased access and morality, it provided users with a completely new experience, making Googling now synonymous with searching the Internet.

Though times have changed, the basic concept of customer service has not. Customers want you to interact with them. Though much customer service these days works through automation, live chats, messaging, and e-mails are effective ways to build strong bonds with your customers. And don’t forget to follow up after you make a sale. Hearing about a customer’s poor purchasing experience might feel painful, but it gives insight into how to change for the better.

One Size Doesn’t Fit All

While keeping in mind good business principles, using strategies that worked well for another business doesn’t mean it will succeed with yours. True, you can and should learn from the way others operate, particularly your competitors, but one of the biggest mistakes you can make as a CEO for a start-up involves copying other business models without completely evaluating how your situation differs.

Define those strategies that work for you. For example, working with pricing models and bundling might work for some SaaS companies, but not for others, or it might take intensive tailoring of your pricing structure along with bundling services to make this work.

Whatever you do, understand that just like your business is different than others, so too are your customers.

Hiring the Wrong People

Common mistakes new businesses make is hiring the wrong people. This especially is the case when it comes to start-ups. It takes a special person to put your heart and soul into a new enterprise. As a new business, you can’t afford to hire people that aren’t effective, and that won’t help your business grow.

Hiring Wrong People

According to Wavestone US managing director Doug Smith, you need people who understand your vision, and who know their responsibilities. It takes diverse talent to achieve success in a new venture, and those in your IT department need to understand what skills you’re looking for to make your company grow. You need to make this an absolute priority when looking at hiring and promoting workers. Once the person in charge of your IT department understands what you’re looking for, they can carry on with your vision.

You want people to fit with your culture, who also have the correct skills. When you hire the wrong person, that’s a waste of time and resources. This goes along with outsourcing work as well. You need an experienced consultant guiding your company to the top, which is why those who’ve been involved in previous start-ups tend to succeed more often than those who haven’t.

Trust Your Customers

One of the biggest mistakes a SaaS start-up can make is not reaching out to users. Feedback determines how you can make your products better, and if you’re not listening to your customers, you’re driving blind.

Engage with users. Run surveys. Collect data. Better yet, start groups or communities on social media and allow users to engage with each other. Listen to the conversations about product features and integration suggestions they desire, or the complaints about bugs about which you weren’t aware. If customers aren’t engaging or, even worse, canceling soon after signing up, find out why!

Take the good things your customers say about your product – how they describe it – and incorporate it into your brand. Empower users to help other users, reducing support costs while developing a community around your product. This is what influencers do to propel brands to the top, and by all means, use this as part of your marketing strategy. You can even approach knowledgeable and enthusiastic users to help drive your marketing efforts.

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Published on February 26, 2020 by Peter Hughes. Filed under: , .

Peter Hughes is a digital marketing consultant and author. Peter has more than 10 years of experience in SEO and Internet marketing.

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