About three-quarters of software-as-a-service(SaaS) companies reported negative sales impacts in 2020, according to a Bain & Company webinar.
Considering companies around the world have moved to virtual work in droves and many prioritized technology investments to keep collaboration seamless, the downward trend for SaaS is surprising.
The good news for SaaS entrepreneurs is that tech startups generally have the unique benefit of being agile by nature, meaning they have the logistical capabilities to scale faster and serve larger customers than companies in many other industries.
That flexibility is often what makes them so valuable to clients, as I’ve seen in evolving my company Gremlin Social from a social media solution for community banks to Denim Social, a multi-faceted business solution.
I have seen bankers increasingly turn to fintech to develop the technology solutions that they might lack the talent and resources to efficiently create on their own.
It pays off: Mobile banking customers 8 percent more than traditional banking customers believe their financial service provider knows their needs and are 15 percent more likely to recommend the service, according to Deloitte research.
Entrepreneurial businesses have different purchasing behaviors than small or medium-sized businesses.
While smaller businesses may look to buy primarily based on product features and capabilities, businesses have many high-quality product options at their disposal.
So what sets a SaaS provider apart in the big eyes? Relations
A SaaS startup trying to sell to an enterprise customer may have products that are on par with or even better than the competition vying for the sale, but it takes more than a product to get noticed.
The reality is that enterprise customers are likely to go for the established business that has relationships in the C-suite.
Often these are the vendors that have been around the longest and have had the most capital to build trade associations offering introductions and strategic relationships.
Startups, on the other hand, are considered riskier investments because they haven’t yet had a chance to prove their worth over time.
1. Don’t Try To Boil The Ocean
My company, now Denim Social, started as a solution geared specifically toward community banks, but over time we’ve grown to provide solutions for more complex use cases, typically around larger, customer-facing teams at the financial institution.
Salesforce is another great example. Today, the company can be a well-established provider for many enterprise customers.
When it launched over 20 years ago, it had a much narrower focus. The website 1999 outlined four standard aspects of customer relationship management tools: accounts, contacts, opportunities and forecasts, and reports.
Those functions became increasingly complex to accommodate larger companies over time.
Starting with a niche is a good idea because it helps keep entrepreneurs focused from the start.
Solving specific challenges in identified areas of an industry can help validate the business case and create refined solutions.
Niche markets can also quickly reveal if the business case is invalid. Startups have limited resources to work with, so if a solution doesn’t work, it’s time to move fast and create one that does.
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2. Learn From The Inevitable Failures
Some losses are unavoidable, of course, but it’s important not to fail at the same thing twice. The need to notice shortcomings and pivot quickly is universal to startup success.
Consider the story of how Instagram came to be: Kevin Systrom first prototyped it as an app called Burn that allowed users to sign up, post plans, and share photos.
By re-evaluating and investigating similar platforms, Systrom, and his partner recognized the need to simplify.
They focused on photos taken with mobile devices and studied photography apps at the time.
They found that what was missing in the market was the connection between photography features, such as photo editing and sharing on social media.
The recognized the potential to build that connection, then pared it down to just the most basic functions of posting photos, commenting, and liking.
They renamed the app Instagram, launched it, and sold it to Facebook for $1 billion just two years later.
3. Find Valuable Human Resources
According to a QuickBooks Time survey, 26 percent of small business owners turn to the Internet as their first source of advice.
While the Internet can be a valuable source of facts, opinions, and general advice, it won’t take into account a company’s goals, challenges, and complexities like a dedicated group of trusted advisors would.
Look for established organizations in the field and try to build partnerships that provide strategic advantages when growing the company.
For me, the relationship I’ve built between my company and the American Bankers Association has helped me better understand the needs of financiers and has allowed the company to engage in regular dialogue outside of sales.
In addition, relationships with accelerators like Six Thirty and industry leaders like RGAx or FIS have helped refine our discourse and drive more complex business relationships.
4. Don’t Throw At The First Handshake
Sale is a bit like dating: never propose on the first date. First, build a good relationship.
The first conversations with a business prospect should not be about the product and services.
Instead, focus on actively listening to gain the best possible understanding of their challenges and make sure the product is the right fit.
Then, offer educational resources about what the company does, but don’t focus too much on the products and features.
Make sure marketing materials focus on education and tell the story of why the product or service is important to the client’s business.
This helps demonstrate market experience and a genuine interest in helping clients succeed.
For SaaS entrepreneurs looking to grow their businesses by delivering value to ever-larger customers, it’s important to recognize that the leap from a niche solution to an enterprise-grade solution requires strategic planning from the outset.
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