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How to Differentiate Your Business in a Crowded SaaS Market

Want to survive year 1 as a SaaS business? Follow these recommendations.

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BY Sujan Patel - 04 Aug 2016

PHOTO CREDIT: Getty Images

If you're wondering what competition looks like in the SaaS market, consider this: Worldwide spending on public cloud services will grow at a 19.4% compound annual growth rate from nearly $70 billion in 2015 to more than $141 billion in 2019.

Those numbers come from increasing diversity in emerging SaaS verticals with competitors rapidly entering into each vertical.

What's interesting is that we're moving away from the idea of the "full stack" service, much like Salesforce's platform of products. Not that long ago "standing out" was all about owning the customer with a strategic product that catered to all their needs.

But software vendors don't own the customer anymore. Hyper-focused SaaS startups and platforms are making it increasingly difficult to stand out as the marketplace grows and continues to crowd.

Here's what you need to do to keep from getting edged out:

1. Identify your value proposition

Your unique value proposition (UVP) is a differentiating factor that's intended to persuade a prospect to choose you over others in a growing list of competitors. A common mistake SaaS companies make is leaning too heavily on pricing as a UVP. This keeps your company playing defense.

You're at a high risk of being outbid by a new or existing competitor who can easily steal your momentum.

"[Your value proposition is] not a slogan or a catch phrase... it's not a positioning statement," writes Peep Laja, founder of ConversionXL. "It's easy to understand... It communicates concrete results a customer will get from purchasing and using your products and/or services."

Instead, focus on establishing a UVP that transcends pricing and marketing trends. Turn to the benefits the service provides. If you've exhaustively built out a specific aspect because you know it matters to your industry, then emphasize the impact it can have on the user. Whatever your strongest feature set is, turn it into benefit statements.

Other areas to focus your UVP:

  • Customer service
  • Design and user experience (UX)
  • Partnerships and integration

2. Provide incomparable value

If you are already on the SaaS stage, answer this question: Why would your customer stay with you?

Hopefully the answer isn't "It's too hard for them to take their data with them." Vendor lock-in is the wrong answer. Remember what I said about not owning customers anymore?

Lock-in doesn't make you unique in any way. If anything, it frustrates your user base. Frustrations lead to creative ways to solve a problem, which often leads to frustrated customers ditching you for a competitor.

Maybe they found a competitor who created an import tool to save customers from services like yours.

If you want to stand out and retain your customers, growing the lifetime value (LTV) of your customer base, then you need to continually show your customers the value they get from you.

This means constantly providing innovative additions to your service platform. It also means developing stellar, proactive customer service that anticipates the needs of your user base and audience.

Along the same lines, you should develop and maintain a comprehensive content marketing strategy that not only brings and nurtures new leads, but also continues to nurture and educate current customers.

David Passiak, author of Disruption Revolution, writes, "Remember that the first sale marks the beginning of a journey you are taking together with your customer."

Differentiate yourself by giving your customers everything plus everything else via 10x content. Teach them something every day--or every week--that makes it easier for them to do that one task or job where they're struggling.

Value-focused content is how I've been able to grow ContentMarketer.io. Our content brings in hundreds of new leads each month and continues to educate subscribers long after they've opted in.

3. Sell the solution, not the technology

Think about what SaaS is. It's a business tool. That means the audience typically isn't technically focused. More than likely your audience doesn't care about product specifications. They have problems they're trying to solve, including:

  • Workflow optimization
  • Customer satisfaction and issue management
  • Operational infrastructure
  • Marketing
  • Multi-channel demands

They want a solution that helps them build a smoother, more profitable business model. Your marketing should focus on the solution you provide that will appeal to the emotional side of operations. Remember, it might be a B2B industry, but you're still selling to people.

Show them how you can make their working lives easier instead of trying to blind them with science.

"With less market share, and more modest budgets, the challenger brands by nature have to do more with less, and many of them have, on the whole, devised approaches that will best prepare their brands to effectively connect and interact with [their audience] to drive business growth,"writes Scott Goodson, author of Uprising.

4. Win Their Hearts

Of all the vendors within your SaaS category, most are likely to be "me too" offerings that don't do much else beyond making noise while fragmenting the marketplace. They have mediocre offerings, mediocre marketing, and mediocre customer service.

You can stand out above them easily--even the 800-pound gorillas of the industry--by making it your goal to delight customers. When you offer a better customer experience, you'll absolutely blow your customers' minds.

Many customers consider you a revolutionary and "proactive" just because you respond to them on Twitter or Facebook. Think about that--weren't you a little impressed when a big brand like Verizon responded to you quickly on social media?

If you go above and beyond the social posts to deliver the fastest, most direct human-centric customer service possible in the SaaS market, you are going to floor your customers. That's the recipe for turning the average subscription-based customer into a vocal brand ambassador who will carry your name on their lips everywhere they go.

If you're still struggling to get ahead in your category, buy up a few of your smaller competitors, and deliver standout customer service. You'll gain a lot of industry PR, new customers, new tech--and you might spook the other vendors in your vertical.