With the evolution of cloud technology, SaaS enterprises have grown into a whole industry of strategic business developers. Eighty percent of businesses already use at least one SaaS application, and the industry is continuing to expand into new areas and micro-niches.
The SaaS business model is here to stay as one of the most successful models in cloud computing, with a market size of $150 billion and increasing. SaaS has opened the door for lots of successful projects and, as a result of its meteoric rise, has been labeled a disruptive technology.
Despite its success, many business owners are still not achieving the full potential of their business ideas due avoidable mistakes, which include insufficient market research, underpricing and not following the customer feedback. In this article, we are going to go over some of the main mistakes that you can avoid when building a SaaS product.
1. Building a product that the market does not really want
One of the main avoidable mistakes that take place before the launch of a Saas product is not carrying out enough market research. Many owners take months working on a product, assuming they are going to gain a positive response from the market, without any validation or proof that people are actually going to spend the money on it.
This mistake usually occurs when you create a product in accordance with your own needs and your own interests, assuming that the customers want the same thing. In order to avoid this mistake, SaaS entrepreneurs should use market research tools, collect data and feedback on the idea, as well as its pricing, before the launch and implementation.
Such market research would provide you with sufficient information regarding the fundamentals of your product and price. As a result, it is critical to ensure that your product has a market presence prior to launch.
Once the product is already present on the market, is to constantly be informed of what your competitors are up to. Even if you are on pace and thriving after your debut, you need to remain vigilant and continue to make adjustments in accordance with the changes in the market.
2. Underpricing the product
Since SaaS products are based on a subscription model, pricing is the biggest leverage in this type of business. Do not fall into the trap of undervaluing your business model and the time that you have put in creating it. The price of the SaaS product is definitely not the sole factor that determines whether the customer is going to choose you over the competitors. Often times, it has quite the opposite effect, as the consumer market may see higher value and quality in competitors, through their higher prices.
3. Trying to reinvent the wheel
When it comes to putting fresh ideas and technologies into action, you don't have to be obsessed with being the next Uber or Apple company to fully transform the industry. The chances of being a pioneer in something wholly new are generally lower than the chances of capitalising on current possibilities.
Conduct research to determine where there is an innovation gap in established business models. Inventing a completely new concept might often be less profitable than using current concepts and just upgrading the user interface and overall customer journey.
4. Waiting too long to hire employees
Once you have launched, do not assume that you will be able to do everything yourself. Do not be afraid to hire professionals who are going to make sure that your product is on the level that it should be to stay ahead of the competition.
One of the reasons why managers are resistant to hiring staff is lack of trust and wanting to save money. However, this business model has a lot of competition, and the key is moving fast. Doing everything on your own or in an understaffed team, will result in lower efficiency and lower creativity in terms of solving problems. In order to stay ahead of the game, make sure that you hire outsource the necessary team members.
5. Not incorporating customer feedback
This point links back to the previously mentioned mistake of not conducting the right amount of market research. Once the product has launched, you should prioritize collecting customer feedback in order to make further changes to your features and improve the customer journey. SaaS is characterized by consistent changes and improvements, as it is a very fluid business model. If you listen carefully to what your users want, you will be able to implement higher prices and more advanced subscription plans, which will already have a solid base of guaranteed users.