SaaS is one of the most rapidly growing industries globally today. In the coming few years, it is estimated to grow at the compound annual rate (CAGR) of a whopping 27.5%. Taking this into account, it is important to remember that the SaaS market is fiercely competitive too. When your business is in a neck-to-neck competition, there for sure are a number of things you do not want to do wrong. If not, you risk falling out of the competition altogether.
When you are growing your Saas business, you have to make sure you do not deviate from your desired path. This is the reason that okr has become very popular amongst SaaS organizations. By working with okr program, you can always keep a tab on whether you are heading in the right direction of attaining growth or not.
In addition to this, you have to ensure that you don’t commit any mistakes, as the SaaS industry has little to no room for error. To ease of your burden, we will make you aware of the common mistakes start businesses often commit and that works like the final nail in their coffin because as mentioned earlier, the SaaS industry is highly competitive.
1. Hiding the price of the product
Being straightforward and honest about your costs is one of the easiest ways to win over a consumer. This is why concealed pricing is at the top of our list of common SaaS blunders to avoid.
Everyone has been there — you become enthusiastic about a piece of software you may actually employ. You are strongly considering making a purchase. Then, you navigate to the price page, nearly ready to purchase, only to see this:
The pricing page contains only a contact form and no actual pricing information.
How would you feel? Frustrated? Prepared to exit the software completely?
Well, you’re not alone. When considering the purchase of software, one of the first things consumers ask is how much it costs. This is why clear pricing is the most valuable feature that SaaS firms can provide to assist consumers decide whether or not to acquire their product. It is known to be more even useful than reviews!
Buyers who are unable to readily locate the pricing of your goods on your website will become upset and move their business elsewhere. For instance, there are many okr platforms in the market, that despite being great, failed to scale as they have not mentioned their price on their website at all. This result for them is quite obvious as concealing your rates is not conducive to a pleasant customer experience.
As far as possible, you should avoid disguising your rates. It will prevent potential clients from abandoning your program before they have ever used it.
2. Expectations of the rule
Having said that, there are circumstances in which it is unavoidable to withhold price information up front. For instance, it becomes increasingly difficult to set a fixed pricing as the complexity of your product develops. Pricing should be set on a case-by-case basis if your product has several features and may be tailored to the client’s specific requirements.
However, when this occurs, it is crucial to make your contact information easily accessible and to have a sales staff prepared to define offers depending on the customer’s requirements. Custom pricing makes sense since enterprise clients frequently want a different degree of service or various product adaptations. Then, users who utilize the basic plan might bypass the sales staff, while larger accounts would be required to go via the sales team.
Price transparency is essential for your users. If you choose to conceal your prices, you must have a valid justification for doing so.
3. Copying the pricing of your competitor
Price setting is one of the most important components of your SaaS business, so we’re going to discuss it in further detail. Examine the graph below to see why this is the case. Clearly, increasing your prices by only one percent can have a significant impact on your profitability.
In addition to disguising your rates, you should also avoid another common tactic that you can include in your okrs: mimicking your competitors’ prices.
Typically, SaaS solutions are priced using one of the following models:
a. Pricing dependent on costs: To determine the price of a product using this approach, production expenses are calculated and a markup percentage is added.
b. Pricing dependent on the competitive landscape: It entails analyzing the pricing of your rivals, identifying your position in relation to them, and replicating the prices of other items that are at your perceived level.
c. Valuation-based pricing: The model that prioritizes the client. It decides the price based on the value received by the consumer.
d. Competitor-based pricing: It may seem like a smart concept at first glance. There is a limited possibility of grossly overestimating or underestimating the worth of your goods.
This is why the technique is prevalent in other businesses.
4. Measuring the wrong metrics
There is an ocean of metrics that can be monitored, and it is nearly hard to keep track of them all. Avoid the error of dedicating a disproportionate amount of time on tracking useless metrics. To tackle this situation, you too can embrace okr program for your SaaS organization. This will facilitate you with the right metrics you need to measure your progress on the objectives.
You can also choose a few measurements that link to actual actions and help you achieve your objectives. Here is a list of features that should be included in every measure you track.
a. Easy to comprehend
b. Easily accessible
c. Actionable
If your KPIs are simple for your whole team to comprehend and available to the entire business, actionable insights are more likely to emerge. Every team in your organization is capable of drawing their own findings and proposing growth and service enhancement measures.
Several Valuable Metrics to Monitor
You likely have a solid understanding of which metrics are most useful to you.
Nonetheless, the following is a collection of KPIs that are typically regarded as success indicators for the SaaS business model.
a. Monthly and annual recurring revenue, or MRR and ARR.
b. Turnover rate As one of the most crucial indicators for SaaS organizations, churn indicates how many customers are departing your product and can suggest preventative measures.
c. CAC, or cost of client acquisition. It makes no difference how many consumers you acquire if the expense of gaining them consumes your income.
d. CLV or LTV refers to the lifetime value of a client. Keep in mind that, in terms of revenue, repeat clients are more important than new ones. This necessitates that the lifespan value be preserved as high as feasible.
These metrics give valuable information for your SaaS business.
5. Working with a content-thin website
The are numerous software solutions for almost every given customer problem. This is the reason that you have to put your best foot forward to impress your potential customers. One of the most effective ways to do so is by enriching your website with high-quality and valuable content that will work to convince your customers to trust you. Through content marketing, you get ample chances to plug your product and encourage users to get the subscription. As customers are fond of content-rich websites, it is vital to include as many different types of content as feasible so that every visitor gets something valuable on the website.
Now that you are familiar with the common mistakes that you were likely to commit in the future of your SaaS company, you have high chances of guiding your business towards growth and success. For more insights into growing a SaaS business reach out to us here!