So you’re building a SaaS business. Today, we’re putting our hard-earned experience to work for you.
Our CEO at DevSquad CEO of DevSquad has successfully exited a SaaS business and now helps established companies and startups alike to build SaaS products.
Meanwhile, as an experienced SaaS copywriter, I’ve learned a ton from VC-backed and fast-growing startups, profitable and established companies, and new entrepreneurs getting ready to launch.
We’ve put our heads together to come up with our top tips for what it takes to build a successful SaaS business today.
1. Build a product that solves a problem
The top SaaS products solve problems for people. We’re firm believers that the best opportunities in SaaS are in the B2B space. Your SaaS product should solve problems for entrepreneurs, business owners, or employees in certain roles.
While there’s never a guarantee that your company will achieve a certain valuation or hit a specific annual recurring revenue goal, there is one guarantee: if you build a SaaS product that doesn’t solve a painful problem, you will fail.
Here are some examples from a few SaaS companies you may have heard of:
Slack solves the problem of time-consuming communication between colleagues
Asana solves the problem of confusion over projects and tasks
Zendesk solves the problem of customer support tickets getting lost or falling through the cracks
Docusign solves the problem of having to use scanners and fax machines to legally sign documents
Hubspot solves the problem of categorizing and staying in touch with prospects and customers at various stages of the buying process
Every successful product needs to solve a problem. It can be a small problem, like how UTM.io helps you keep track of UTM links, but big or small, the problem needs to exist.
2. Don’t build anything that no one asked you to build
This is a follow up to the above, but it’s important to note separately because it can help you throughout the entire journey of running a SaaS business.
During prototyping, beta testing, and launching, and then years later when you’re scaling, you’ll be tempted by new ideas. You’ll want to create awesome new features that you think are important.
But unless dozens of customers, beta users, or prospects explicitly ask you to build these features, you should not build them. Popular social media scheduling tool Buffer had to cut 10 employees after building expensive new features and apps based on guesses, when it later turned out there was no new revenue to be made with the add-ons.
3. Do extensive customer research at every stage
So, how do you build something that solves a problem? How do you only build what customers actually need and will pay for you?
You do customer research, and you never stop. For example, Avi Meir, the CEO of TravelPerk (Europe’s fastest growing SaaS company) originally set out to build a business travel platform that would incentivize employees for staying under budget and within policy when booking trips. But after talking to in-house office managers in charge of managing travel at local startups in Barcelona, he discovered that they were uninterested in his idea. What they really needed was an easier way to book travel within policy and keep track of invoices.
You should never build something in a vacuum. You should never guess. Get out and talk to your ideal customers. If you don’t have the guts to do customer research in the form of informal, in-person conversations, video calls, surveys, and emails, then you shouldn’t build a SaaS product.
4. Make your minimum viable product as “minimum” as possible
Your minimum viable product is smaller than you think it is. Too often, new SaaS entrepreneurs assume that their MVP is whatever initial group of features make sense to them to include in the first launch. Not so. Your MVP is actually the minimum functionality that customers will pay for (or free users will get value from).
Most SaaS products can help a user achieve numerous tasks and satisfy several use cases. However, there has to be one core task or use case to begin with. It should be the one that is most valuable, and that best solves the problem you’re trying to solve. Everything else can come later.
Getting too fancy too soon is the death of SaaS. I’ve seen companies with 100 employees and thousands of customers, but no mobile app. I’ve seen companies with 300 corporate customers, but no logo. At the same time, I’ve seen entrepreneurs that build too fast too soon—a web app, an iOS app, an Android app—all before they have even one paying customer.
Getting an outside help with a true MVP is the best way to avoid mistakes.
5. Validate before you build
In order to succeed, you need to validate your concept before you build. There are several ways to do this.
Launch a minimalist landing page to collect interested participants and test what they’re willing to pay
Interview 10 - 30 people who match your ideal customer, show them your prototype, get their feedback, and ask what price range they would pay
Send a survey to 50 - 500 people who match your ideal customer to validate that they have the problem your product solves, and ask what price range they would pay for software that solves it
6. Don’t attempt to build or management development yourself (unless you’re experienced)
Assuming that you can manage freelancers yourself is a huge mistake. Unless you have a long work history as a software developer or product manager, the chances are that you will not be able to manage developers without wasting a lot of money and time.
Unfortunately, when entrepreneurs attempt to manage a software product themselves, they typically end up with something that is low-quality, riddled with bugs, and worst of all, more feature-rich than they need.
When working with freelancers or even low-quality agencies, you might get “yes men.” They say “yes” to every feature you ask them to build, and you waste money instead of creating a true MVP that works as needed.
7. Make the decision to take on technical co-founders very wisely
Groove HQ founder got tired of waiting to find the right technical co-founder and decided that his smartest option was to work with an agency to build his SaaS product instead of to continue waiting to find the right co-founder.
He writes, “Four months from now, I could have a living, breathing product in the market that would let me collect user feedback, get validation and push this business forward. Or, I could still potentially be sitting here with nothing.”
Non-technical SaaS entrepreneurs are often told that bringing in a technical co-founder to build their product (instead of outsourcing development) is the smartest bet. However, finding a technical co-founder that is highly skilled, trustworthy, motivated, responsible, and worth a large portion of equity is like finding a needle in a haystack. Most likely, if you don’t already have this person in your personal network, you won’t find them online.
The point here is to work with someone you know and trust. Otherwise you’ll find that working with a SaaS development agency is far less risk-prone than taking on an incompetent co-founder or outsourcing to unmanaged freelancers.
8. Create a freemium model only if it matches the market
A freemium model can be detrimental to your SaaS business if done wrong. For the most part, the only SaaS businesses that can afford to offer a free forever plan are those with a massive addressable market. Freemium should be seen as acquisition model, a way to market your business. For products that can be potentially used by businesses of any industry or size, freemium is a way to experience rapid growth.
However, for most SaaS companies, freemium means you run the risk of satiating users in your much smaller addressable market, meaning you’ve shrunk your pool of potential customers even further.
9. Build virality into the product or inspire word of mouth
Not every SaaS product can be viral. Companies like InVision and Loom are great examples of virality because the user will share what they’ve created with others, which brings in new signups. If you can build a similar viral effect into your product, do it.
If your product likely won’t have any sort of viral sharing, then you need to plan how you will build word of mouth. You can use SaaS products to help create an affiliate program with no custom coding, or otherwise incentivize sharing. Whatever you do, don’t take a passive approach. Because word of mouth is so valuable, you should do what you can to help get it started.
10. Launch with relationships, referrals, events, and outreach
When launching, it’s easy to get sucked into fancy funnels, campaigns, hacks, strategies, and tactics.
But for most successful SaaS companies, they got their initial customers in one or more of these ways:
Introductions by investors or colleagues
Referred by beta users
Meeting customers at industry events
Selling to friends and personal contacts
Cold calling or cold emailing prospects
To begin, look to your personal network. If you’ve been doing market research and making connections, then you should have an initial pool of people to sell to. Once you’ve tapped into your network, expand it with industry events and cold outreach that offers help and conversation, not a direct sale.
11. Go with frictionless pricing to begin
What should you charge when you’re building a SaaS business? The answer is: whatever fewer than 20% of your prospects object to.
You’ll always have pricing objections, but when you’re in the early stages, you don’t want price to knock out too many potential customers.
Customer research, surveys, and feedback during sales calls can all inform what price you settle on. Later, you can always raise your prices.
12. Don’t spend money on paid ads until you’re ready
We’ve already mentioned that you’ll need to launch your business with in-person events, warm outreach to your network, and cold outreach to prospects.
This means that you shouldn’t start blowing money on ads right away. Acquisition costs are rising, and paid advertising is a dangerous game for a startup with little to no revenue.
Also, if you’re struggling to sell your product using outbound and traditional marketing, then you might have some other problem that needs to be addressed (messaging, pricing, functionality etc.) before investing in paid channels.
13. Start with one channel for your inbound marketing
Inbound marketing promises more leads at a lower cost. However, it can take a while to get up and running with inbound marketing and start seeing results.
To improve your chances, begin with one channel. Depending on your industry and product, this could be LinkedIn, Pinterest, YouTube, or a blog. Most likely, you’ll want to choose SEO-focused blog content to begin, but for some niches, specific social platforms are a better start.
14. Learn how to sell your product yourself on demos
Assuming that your self-product isn’t self-service, you’ll need to sell it. It might be a few months before you’re able to hire a head of a sales. While building a SaaS product isn’t something you can do yourself, selling one is definitely something you can learn.
Afraid that you’re not good at sales? Don’t worry! The best salespeople understand that sales is a conversation. You need to validate the problem, and help them see how you can solve it. There are no tricks or persuasion that are better that good listening skills. Plan to learn as much as you can about SaaS sales.
15. Stay laser focused on the core value you provide to customers
Finally, the best tip we can leave you with is to stay focused. Stay focused on the problem you’re solving, the value you provide, and your best customers.
Don’t get swayed by new ideas or even new potential markets if they have the chance to alienate your current customer based before it’s even established.
The closer you can get to your customers (through regular interactions) the more you’ll be reminded of the real value you provide.
Building a SaaS business is an amazing opportunity right now, especially a B2B SaaS business. To succeed, you need to mitigate risk, be prudent, and make smart decisions.
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