6 Leaders Share the Secrets to SaaS Startup Success From being the face of your startup to not just focusing on the freemium model, six leaders share what it takes to make it.
By Aaron Orendorff Edited by Dan Bova
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In the introduction to their modern classic The Startup Owner's Manual, serial entrepreneurs Steven Blank and Bob Dorf describe what they call "the path to success":
What makes some startups successful while others sell off the furniture often seems like luck. But it isn't. … the outline is always the same. The path to startup success is well-traveled and well-understood. There is a true and repeatable path to success.
In that spirit of success, here are six insights from industry leaders who have been through fire, tasted success and are ready to share their knowledge.
1. Build relationships.
"Neither your logo, blog or any press release is the face of your startup: you are. Whether you're an extrovert or introvert, as the CEO and face of your company, you have to find interesting ways to connect with your audience and customers or build the team that has a passion for doing it and make them highly accountable. Be accessible and transparent, even if it immediately means lost business. The respect, trust, and presence you'll gain are priceless and build a foundation where many leaders are lacking; an authenticity the markets are hungry for.
--Daniel Kushner, CEO of Oktopost
Related: 5 Tips for Entrepreneurs to Keep Moving Forward
The takeaway: You are your brand. Being a real person who's really available to other real people is foundational to any business, but it's especially vital in the first stages of your startup.
2. Don't just focus on the freemium model.
"With notable success stories such as DropBox and Evernote, many SaaSs adopt the freemium approach as a fire-starter to get things rolling. But freemium wins can be misleading. Freemuim is a stellar way to test your product, find out what your customers really want, and build your list but free users don't pay the bills. Master the foundations first, learn how to sell and deliver the product efficiently, then dive into freemium. Only then will the greatest rewards be most tangible."
--Arie Shpanya, CEO of Wiser
The takeaway: Focus on transforming freemuim users into paying customers early and only open the floodgates when your funnel is mature enough to handle it.
3. Concentrate on churn.
"It's not difficult getting to $2,000 a month; it's staying there that poses the challenge. Unlike a coffee shop or bakery that may provide more predictable and stable cash flow, successful SaaS products require a deeper understanding of client behavior and what they desire from the online experience. Your channels for client retention and maintenance and acquisition via marketing should be managed separately, each having its own dedicated team. Don't mix the two."
-Simon Grabowski, CEO of ClickMeeting
The takeaway: Acquiring new customers is seductive and exciting, but your most consistent, easiest and by far most profitable source of revenue are the customers you already have. Separate acquisition from retention, and if you have to choose one, make it retention.
Related: 5 Reasons Why Being Unrealistic Is a Good Strategy
4. Realize it's all about first impressions.
"A large part of retaining customers for your startup is delivering an experience that is so natural and intuitive for them that they don't even think about doing it. It's now a part of their DNA, it becomes habitual. We cannot deny that us humans are visual creatures and we judge things based on appearances. Regardless of how functional and ingenuous your app or service might be, beautiful design creates appeal, a sense of pride for users and makes the experience complete."
--Jonathan Saragossi, CEO of IM Creator
The takeaway: Approximately 48 percent of users say that if they arrive on a business site that isn't working well on mobile, they take it as an indication of the business simply not caring. In other words, customers are more critical of what you do and how you deliver your company and products. So, don't skimp on visuals and UX. Seek out experts because an ugly, hard-to-use SaaS isn't one anyone will buy.
5. Security needs to be a priority.
"The cost of recovering from a [security break or] attack goes far beyond removing malicious code or securing weaknesses that have been exploited to destroy a business's reputation. Sensitive client data can be exposed, which places companies at severe financial risk for having their services unavailable, while also destroying trust and the prospect of winning new clients. As we launch into 2015, web security is one of the biggest challenges SaaS startups will face. Nowadays, sophisticated attacks are becoming more frequent, and so too must be the solutions in our arsenals.Cloud security services guarantee the reliability and security that SaaS startups require to deliver profitable online software solutions."
--Igal Zeifman, Product Evangelist at Incapsula
The takeaway: B2C ecommerce sales are set to hit $1.4 trillion this year. Unfortunately, as commerce increases so does the frequency of malicious web security attacks and data breaches. With a 62 percent increase in breaches in 2013, it should be assumed that your startup and its customers are at risk unless proficient threat mitigation systems are employed. Security ain't sexy, but it is essential. Invest early in protecting not only your own platform and data but your customers as well.
6. Perseverance is key.
It's often very tempting to tweak and optimize the business to respond to every move and shake markets make. But be careful not to make too many changes too quickly since more often than not, real and measurable impact takes time to show its true colors. Spend a great deal of time understanding the various metrics and signals within your startup to better understand how your business will react to not only your changes but also the market. Sometimes, it's better to follow your gut based on what you know and trust about your niche than responding to everything that happens in the news.
--Simon Yencken, CEO of FanPlayr
The takeaway: One of the great things about the SaaS business model is that startups have the ability to respond quickly to market shifts and customer demands; more so than traditional businesses. They're fast and nimble. However, sticking to a select few ideas and paths may be better. So, Never be afraid to stick to your passion. Build something you love … and the money will follow.
As Blank and Dorf put it, "The path to startup success is well-traveled and well-understood. There is a true and repeatable path to success."
As you proceed to launch or even further build your startup, keeping an eye on your foundational principles. Once calculated, measuring one step at a time while keeping your audience and customers' needs close at heart, creates companies that don't just get the job done but people love.
