Starting a successful SaaS (software as a service) product is not an easy task. There are so many cloud-based software companies available in the market that the competition is cutthroat. Along with this, customers’ expectations are increasing – the users expect that they will obtain a highly reliable, straightforward, and cheap solution.
With these challenges, it is no wonder that 9 out of 10 startups fail. While some collapse due to running out of funding, others make critical mistakes during their SaaS launch. These errors prevent them from attracting a solid initial customer base, without which sustainable growth becomes unlikely.
In this article, we will review the most frequent mistakes a startup makes when releasing its first SaaS product. Some of these mistakes include the absence of product market fit, a nonsensical app, poor onboarding, and scaling too early. It’s to provide early-stage founders with some practical tips sprinkled throughout to avoid these all too common traps.
Not Conducting Enough Early Customer Research
The number one mistake most startups make is failing to validate their SaaS idea properly before build-out. In their enthusiasm, founders forge ahead with turning their vision into reality. But this leaves them vulnerable to building an amazing product that no one wants.
Product market fit can be established only through early customer research. So it means to define a clear target customer segment and the main pain points in it. In addition, it involves testing MVPs (minimum viable products) and prototypes with actual users – a phase where SaaS consulting can offer structured guidance and data-backed validation techniques. However, time after time, startups skip over this step and jump to just assumptions about what users want.
Some common research mistakes include:
- Surveying only friends/family members who give overly positive feedback
- Using small, biased sample sizes that aren’t representative
- Asking leading questions that influence users’ responses
- Failing to test MVPs early enough to incorporate findings into development
Without earnestly seeking negative feedback, startups miss crucial insights. And once a product launches, it becomes much harder to pivot based on user input.
Best practices include recruiting a diverse mix of beta testers, even critics. Observe how they interact with the software via user tests. Identify points of friction where they struggle. Also, utilize free survey tools to segment users and uncover their needs.
With these learnings, startups can design products that are really valued by users. This is the must-have foundation for SaaS success – product market fit.
Not Building a Scalable Tech Stack
The second mistake is not architecting SaaS solutions to support rapid user growth. However, most founders spend all their time trying to nail down features for their minimum viable product (MVP). However, they fail to scale building capacity that lies under the surface.
This causes major bottlenecks down the line if the product takes off. Soon after, buggy software, slow load times, and service outages occurred. Abruptly stopping a startup’s advancement is the result of poor user experience. It comes with high prices for companies like Slack and Basecamp, which have had multiple outages.
Some specific areas startups cut corners on at launch include:
- Cloud Infrastructure. Going with a less robust platform to save money initially can cripple the ability to scale smoothly.
- Data Schema. Failing to optimize how data is organized and accessed as usage mushrooms slows systems to a crawl.
- Coding Practices. Taking shortcuts in development leads to technical debt, making upgrades complex and costly.
- Testing Automation. Neglecting automated testing results in bugs creeping in as new code is added.
- Security. Gaping holes left in cyber defenses put customer data and operations at risk long-term.
Startups must architect SaaS products for scalability or risk becoming victims of their own success early on.
Overlooking User Onboarding
According to Business of Apps, new user onboarding is one of the most significant challenges for SaaS companies. Their data reveals that over 25% of users drop off after one day. And within just 30 days, this churn rate doubles.
It is clear that many products are not good at onboarding users at critical early interactions. Basic functionality becomes a game of hunt. The menus are dense, and interesting capabilities are well buried. There is no in-app guidance; users get confused and frustrated.
This swift falloff means startups miss out on higher conversion rates and retention. It also requires dedicating more resources to continually replace customers. Common onboarding mistakes startups make include:
- Forcing a complex initial setup before using the main features
- Providing vague in-app messaging that leaves users guessing
- Removing helpful cues after onboarding instead of optimizing them
- Failing to highlight key workflows during onboarding
- Not tailoring onboarding checklists for different user personas
However, the solution is to analyze funnel data to see where users are struggling. Finally, refine such experience with A/B testing over various onboarding flows. If used well, guides, tooltips, and prompts will help users quickly get value.
By gamifying the initial interactions, it is made more appealing. One thing to do is to offer free trial extensions to users who successfully go through critical setup steps. The objective is to create a frictionless onboarding by delighting the users and speeding up mastery.
Ignoring Key SaaS Metrics
“What gets measured gets managed” rings true for startups. Yet many downplay collecting and analyzing key SaaS metrics in their rush to launch products. However, without these insights, founders are left in the dark.
Critical performance indicators like activation rates, churn drivers, upsell opportunities, and more remain a mystery. Instead, startups rely on vanity metrics like subscriber count, which reveal little about real traction.
This leaves them struggling to diagnose issues driving customer loss. Or failing to double down on the most effective acquisition channels before the funding runs dry.
Some vital metrics startups overlook include:
- Activation Rate. Highlights onboarding drop-off points impacting product-market fit
- Net Revenue Retention. Quantifies expansion within existing accounts
- Customer Lifetime Value. Tracks profitability for guiding sales and marketing
- Subscriber Cohorts. Uncovers trends across customer segments over time
- Churn Drivers. Identifies pain points pushing users to cancel
- Sales Cycle Stages. Reveals bottlenecks hampering conversions
Leveraging tools like MixPanel, Heap, and ChartMogul is essential. Additionally, it is important to build custom analytics to address visibility gaps or specific business scenarios. The insights uncovered form a feedback loop for continually improving products and marketing.
Skimping on Content Marketing
Most startups rightly prioritize sales-focused marketing early on to spur adoption. But downplaying content marketing is an oversight. Developing targeted educational content should begin months before product launch.
Valuable blogs, guides, and videos build credibility and brand awareness with no upfront sales pressure. This inbound marketing warms prospects for future conversion while costing next to nothing. Yet impatient founders put it on the back burner, missing out on owned media’s compounding effects.
Also, relevant search engine optimized content fuels organic growth year over year from continuous traffic and leads. However, getting those long-form assets ready generally requires mountainous initial research and production work. Failure to tackle these problems here added to search visibility lag both at launch as well as later on.
One of the other benefits of content marketing is to tap into user-generated content (UGC). Social proof, in the form of case studies, testimonials, or reviews, will help you convert at higher rates. However, getting happy customers to contribute takes lead time.
In an increasingly crowded marketplace, owned and earned media drive sustainable traction more than ads alone. However, startups need to establish their presence early on, despite limited resources.
Obsessing Over Competitors
“We’re the Airbnb of lawn care!” You’ve likely heard startups make bold claims, positioning themselves as competitors. While analyzing alternatives helps find gaps, overindexing here causes problems.
The first is positioning a fledgling startup against an established one, which feels desperate versus confident. Additionally, it is often not successful to try and outperform competitors in their own domain. All this focus also results in a reactive ‘me too’ product over a new range of products.
Instead, startups should focus on customer needs, not on rivals. The most disruptive products often carve out entirely new categories instead of chasing competitors.
Uber, for example, didn’t just take on taxi and limo services. They redefined ridesharing by unlocking privately owned vehicles as transit. Airbnb transformed travel accommodation by making everyday homes available for lodging.
A better recipe for startups includes:
- Survey a broader landscape beyond direct competitors when researching
- Analyze competitor strengths and weaknesses objectively while avoiding fixation
- Focus on solving burning customer problems in new ways
- Track competitors’ offerings without letting them dictate product decisions
The companies that change the world build what customers desperately want but don’t yet have anywhere else. Such a mindset is a formula for startups to not just survive but thrive.
Conclusion
Planning and executing a successful SaaS product is not an easy task. Startups can overshadow these unnecessary obstacles, namely poor customer research, technical limitations, poor onboarding, metric blindness, delayed content marketing, and overfixation on competition. Every successful business grows not because it is good, but because it builds something users need, does its best, and makes the right decision with data. With the right approach, your SaaS venture can thrive in this brutal market.
Also Read: Is Your Startup Financially Lost? Here’s the Unsung Hero That Could Save It
