It is basic math: new businesses with limited capital need to be as efficient as possible. Further, for them to advance to the later stages of business success, startups in the Software as a Service (SaaS) industry must ensure they are tackling a high-value problem with a unique, memorable, usable product.
This is common sense, of course, but in many cases, common sense needs to be repeated. It is no secret that nine out of 10 startups fail in their first years and this is almost always due to the fact they have not identified a high-value proposition nor run the business in a capitally efficient way.
In this space, many are not realistic about their product nor industry. Therefore, here are five elements for founders to keep in mind as they develop their SaaS business in the most efficient way possible.
Identify a high-value business problem
Will the product adequately solve a problem? And how much is that problem worth? These should be cornerstone questions for each and every founder. The resulting product must tackle a high-value problem, and do it well, to have any chance of gaining an audience.
There are two parts of the brain. There is solution thinking and problem thinking. Founders, often with an engineering background, are great at solution thinking but do not move onto problem thinking. This is where many must develop in nailing their industry and perfecting their problem-solving products.
As Forbes points out, founders are best reminded to deliver products that tackle an issue that is otherwise unworkable, fixing the problem is unavoidable, the problem itself is urgent, and it is also underserved by competitors.
Narrow to one keyword
Simplicity is the aim of the game. Narrowing the offering to a keyword, or picking one niche of one category of one industry will help to specialise in the product. Remember: this part is integral when there are so many startups and so many which fail. Highlight why the product is the best in its specific field.
The answer must be short and sharp. This is especially true when the everyday consumer is bombarded with an estimated 5,000 daily advertisements. People only have so much space in their brain, so ensure the product messaging is concise to its offerings.
Price customer value and not the product
Do not price the product, but rather price the customer. Selling the value of that perception can make big differences to bottom lines. Customer-driven pricing works best in industries like ours where the product or service is customisable as opposed to commoditised. Startups are selling their point of difference – and putting the right price on their customers can be the difference between making the sale and not.
The secret becomes measuring the value provided to customers and moving the pricing model to a point where every unit of value equates to the price target customers are willing to pay.
Deliver a “wow” moment
But remember, the price does not matter if the product is not memorable. Apart from being functional, the product must deliver something of a “wow” moment for customers to come back for more.
Are people instantly hooked on the product? What keeps them coming back? Understand this and use it in subsequent marketing efforts. It is difficult to illicit “wow” moments if the product does not serve the proceeding core elements – so connecting with customers to offer such a moment illustrates the startup is on the road to success.
Pareto rule in channel
Finally, startups are best advised to incorporate the Pareto Rule into marketing efforts. This mathematical theorem states that roughly 80 per cent of the effects come from 20 per cent of the causes, and the same can be said for channel marketing.
Usually, teams end up spreading their marketing efforts across platforms and pray for it to work out. However, marketing budgets must be used efficiently, so look to see what is working and double down on that platform.
This goes back to perfecting the product offering and bringing that to messaging. Right now, many companies hire data scientists or growth marketers or strategists. They talk about high level concepts, yet in 12 months have spent millions of dollars. Startups need to be frugal and spend within their means. Understanding the proceeding points help to answer very basic questions which should form future steps.
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Getting the basics right will ensure that founders are able to get the product market fit and set the foundation of meaningful outcomes. It is up to startups themselves not to become just another failed outfit – and this is attainable by solving a high-value problem, narrowing the solution to a keyword, adequately pricing the consumer, nailing that “wow” moment, and doubling down on the best marketing platform.
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