10 Mistakes to Avoid When Developing Saas Products

Developing a new SaaS product holds a myriad of challenges. However, an efficient SaaS marketing strategy can be narrowed down to designing a solid plan, anticipating the things that can derail the process, and taking precautions.

As one of the most successful business models in cloud computing with a market size of $150 billion and growing, the SaaS business model is here to stay. SaaS has paved the way to hundreds of success stories, and thanks to its explosive success, has been labeled as a disruptive technology.

However, unfortunately, there are also many businesses that don’t make the cut. Most SaaS startups fail due to bad planning, a faulty growth strategy, or misunderstanding the market.

Furthermore, young entrepreneurs often underestimate the potential setbacks. Transforming an idea into reality has its challenges and rarely goes according to plan. Many SaaS startups rush to create their minimal viable product (MVP) and hurry to deliver it to the market ASAP. Yet, taking your time to identify risks and acknowledge potential pitfalls during this initial stage is an indispensable factor to success.

So, in this article, we’ll be sharing some powerful insights on the key mistakes to avoid when developing a SaaS product. Read on to find out more.

1. Lacking Understanding of the SaaS Business Model

SaaS is a distribution business model in which the product is a cloud-based software that customers can use via a subscription plan from any device with an internet connection.

A SaaS organization holds the responsibility for the servers, database, and other software that enable their product. The payment plans offered to clients may vary significantly depending on their needs. There are SaaS companies that offer multiple tiers and plans within their products that grant access to different services.

The key characteristics of the SaaS business model can be summarized as:

• The software is the product.
• Revenue is based on recurring payments – monthly and yearly.
• The heightened importance of customer retention, due to the subscription-based revenue.
• Consistent service updates to keep repetition high, provide greater efficiency and better security.

Understanding these key points is essential for successfully developing your SaaS products and, ultimately, growing your business. They directly impact every operation starting from how you design and market your solutions to how you communicate with clients and approach sales.

2. Not Knowing Your Market

According to Baremetrics, the SaaS market differs from traditional software distribution models in three aspects:

• Its laser focus is on customer retention.
• Has continuous customer acquisition.
• It’s data-dependent for decision-making.

This model offers much more transparency and visibility when it comes to user behaviour. It provides business owners with powerful insights that they can use to track the right SaaS growth metrics more effectively and tailor their strategies. Thus, to improve customer retention and customer lifetime for a product, you need to know your market well, monitor and respond to changes.

Here is how to perform market research for your SaaS venture:

• Find a client’s pain point that you can provide a new or better solution to.
• Map out who your potential customers are.
• Identify your niche and market size.
• Analyze your competitors and find potential substitutes.
• Speak to your prospects and understand their needs.
• Set an end goal for your customers that can be achieved by using your products.
• Sustain your competitiveness by continuously offering new features.

Always make sure that there’s demand for your product – if there is not, you should add demand creation to your plan. Don’t forget to back up your product development strategy with thorough research and analysis. Otherwise, you risk creating a great product that nobody wants or needs.

3. Developing a Poor SaaS Marketing Strategy

You’ve done your research, you’ve found your niche, and know how to make your product stand out. Good job! Now you have to develop a strong SaaS marketing strategy so you can start getting subscriptions.

What sets SaaS marketing apart from other industries is that it’s all about obtaining long-term customers. If the payback period for customer acquisition costs exceeds the customer lifetime, your business will be operating at a loss. Therefore, once someone becomes a client, SaaS companies have to consciously communicate and market to them. This way, they can prevent churn, and make sure that they retain the customer for long enough to make a profit.

Below you can find the staples of a strong SaaS marketing strategy:

• Email marketing
• SEO strategy
• Social ads and PPC
• Organic social media
• Long-form content – blog articles, case studies, etc.

The SaaS marketplace is crowded with competition, making the customer journey quite complex and long. Marketers in this industry have to create and promote high-quality content and build a robust omnichannel strategy, enabling them to meet the customers where they are.

In addition, according to research by Gartner, nowadays, the average buyer is overwhelmed with information. In order to stand out, your SaaS marketing strategy should create a balance between educational and interesting information, and show unique expertise.

4. Not Knowing How to Price Your SaaS Product

Determining the price strategy of your SaaS product is yet another uphill battle during development. It’s an incredibly important aspect of your business success and, as such, you have to spend enough time and consideration on it.

Here are a few tips to make this process more efficient:

• Conduct pricing research.
• Learn the pros and cons of the different SaaS pricing models.
• Define your target market and the optimal size of your customer base.
• Know the true value for your customer.
• Calculate the ROI of the customer value.
• Determine your position in the market.
• Pick your pricing metrics.
• Map the customer journey and estimate their lifetime value.
• Research the customer’s perceived value of the product.
• Find out how much potential clients are willing to pay.

The process might require some experimentation, and it should change as your product offering expands and as your business evolves.

5. Forgetting Customer Feedback

To stay relevant, you want your business to flourish and sustain a competitive advantage. However, if your SaaS product doesn’t satisfy your customers’ needs they’ll find it difficult to justify paying for it and leave. On the other hand, when you help clients achieve their goals, they are more likely to stay with you long-term.

Your customers are a barometer showing whether your ideas work and deliver value. They can find out what’s missing and what can be improved, thus showing you where to focus your efforts.

How to acquire valuable feedback:

• Frequently communicate with your customers.
• Ask for feedback when a customer leaves.
• Create a company culture focused on feedback.
• Use scalable, time-tested and easy-to-use communication channels.
• Create a FAQ page or a customer feedback portal.
• Encourage all-hands support.
• Monitor your own channels, as well as third-party review platforms.
• Leverage usage metrics and analytics.

Keep in mind that sometimes feedback can be confusing and misleading. So, before you follow your users’ wishes, make sure to collect their ideas and curate them to spot popular difficulties and problems.

6. Ineffective Client Onboarding Process

Regardless of how good your SaaS product is, if you make it difficult for users to benefit from it, they’ll turn away. One of the main causes for this is the lack of an efficient onboarding process. The success of SaaS products is not contingent solely on the number of people who sign up for a subscription, but on those who continue to use it.

A software solution can often be more complicated than a regular tangible product, and to keep your customers interested you need to give them instructions on how to use it. This includes written guides, tutorials, prompts, newsletters with product experience, and other educational content that can help onboard and retain your clients.

There are many ways to design your onboarding process, but the main steps are:

• Having a clear and simple sign up process.
• Including a welcome email.
• Adding a first login screen.
• Providing product walkthroughs.
• Setting up in-app messaging.

7. Failing to Nurture Your Customers

Acquiring those first paying customers is great, but convincing them to stick around can be a challenge. As mentioned, SaaS businesses’ success and growth rely heavily on users renewing their subscriptions. So, to ensure the long-term profitability of a product, it’s essential that companies nurture their audiences, by providing adequate support that also addresses their concerns.

By implementing effective nurturing strategies you are likely to improve both your renewals and your revenue. The key is to provide your clients with the information they need, build trust, and encourage loyalty.

Here are some ways to achieve this:

• Give your prospects a taste of what to expect before they become clients, to reduce the risk of disappointing them once they convert.
• Make sure to focus on high-quality leads, as those are more likely to find value in your SaaS product and become long-term clients.
• Use lead scoring to qualify potential clients and send them the right upselling and cross-selling messages.
• Regularly create conversion triggers – send reminders for renewal, introduce updates and add-ons, track down inactive leads.
• Track usage behavior and activity to send data-based and targeted messages that may help clients overcome issues.Always make sure to nurture your customers. Simply because they have converted, doesn’t mean your marketing job is done.

8. Underestimating the Power of Referrals

Now that we’ve established that your customers are a core element of your SaaS product success, we’d like to point out the importance of affiliate programs.

When it comes to using a particular product, customers are prone to relying on the recommendations of existing customers, rather than on promotional campaigns and advertising. To capitalize on this tendency successfully, you need to encourage your clients to share their feedback and provide incentives when a referral converts.

Here are a few tips to give your customers a little nudge:

• Ask them to recommend your products.
• Open your affiliate program to users who aren’t your current customers.
• Offer discounts, coupon codes, and special promotions.
• Reward both the affiliate and the referral.
• Make the recommendation process easy.

9. Missing SaaS Product Development Expertise

Having the right product development expertise in SaaS is critical. If you want to disrupt and innovate, you need a team of capable experts who can create a well-functional solution that can successfully meet your client’s needs.

Here’s what to consider when choosing your all-star team:

• Set the computing requirements for your SaaS products.
• Choose your technology stack – front- and backend programing languages, database, hosting provider.
• Hire all the specialists you’ll need – business analyst, designer, software developer, quality assurance engineer, project manager, and so on.

10. Not Learning from Past Mistakes

Last, but certainly not least, you have to learn from past mistakes – both yours and your competitors’. Mistakes are what makes businesses evolve, as they equip owners with the tools and experience needed to grow and improve.

Here are the seven key areas to focus on:

• Adopt a healthy failure-accepting culture – Make your team feel safe to try (and fail) as that’s the best way to learn.
• Encourage healthy and constructive critique – Have regular design reviews and provide thorough and objective feedback.
• Test, refine, and test again – Create prototypes and test for inefficiencies, shortcomings and defects.
• Listen to your users – You need to know where and why a feature fails for users, so you can make adjustments, and provide working solutions.
• Embrace agility – Adopt the values, skills and behaviours that allow you to adapt to and embrace innovation, uncertainty and ambiguity.
• Support shared understanding – Ensure frequent and effective communication across teams.
• Instill accountability – This means that everyone on your team, regardless of their station, should be open to important feedback, and take responsibility when necessary.

Mistakes should be accepted and respected. Quality SaaS product development doesn’t happen overnight, nor is it a static process. Technology iterates and improves, and some bumps along the way are bound to happen. What’s important is how you handle those.

The Takeaway

Developing a SaaS product and bringing it to market is a complex task. This is why you need to be equipped with the necessary knowledge and make sure you don’t miss out on any important steps.

This can be done by making sure you have an expert team that can effectively learn from past mistakes. Chances are that you won’t create the perfect product on the first try, so don’t be daunted to test, evaluate, adjust, and test again.