Top Ten Dos and Don'ts of SaaS

Build a successful software-as-a-service business

Copyright 2009 by Joel York at Chaotic Flow.

saas top ten dos and don'ts

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The Top Ten Dos of SaaS Success

SaaS Do #1 - Choose a Large Market

SaaS Do #2 - Create a Hub on the Web

SaaS Do #3 - Accelerate Organic Growth

SaaS Do #4 - Craft a Compelling Story

SaaS Do #5 - Build the Business into the Product

SaaS Do #6 - Reach across the Firewall

SaaS Do #7 - Monetize Creatively

SaaS Do #8 - Enable Mass Customization

SaaS Do #9 - Open Up to the Cloud

SaaS Do #10 - Leverage Your Community

The Top Ten Surefire Ways to Fail at SaaS

SaaS Don't #1 - Chase Elephants

SaaS Don't #2 - Waste Money Marketing Offline

SaaS Don't #3 - Launch without Online Trial

SaaS Don't #4 - Cover up Shortcomings with People

SaaS Don't #5 - Invest in Channel Partners too Early

SaaS Don't #6 - Bleed Cash Indefinitely

SaaS Don't #7 - Ignore the Long Tail

SaaS Don't #8 - Think You Can Control It

SaaS Don't #9 - Fail to be Creative

SaaS Don't #10 - Depend on Network Effects

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Software-as-a-Service Success

The Top Ten Dos and Don’ts of SaaS Business Success

The Dos: Ten Proven Strategies for Software-as-a-Service Businesses

SaaS Do #5 Build the Business into the Product

Because B2B SaaS roots lie in office and enterprise software, which have traditionally been delivered on a CD, i.e., like any offline commodity that is physically separate from the business itself, the opportunity to change the game by building your business into the product is one of the most overlooked by SaaS vendors. When you move your software product online into a software-as-a-service delivery model, it enables you to connect the product directly to your customers out on the Web and directly to your internal systems across your firewall, thus allowing you to reengineer your fundamental business processes by building them out from your product.

A great role model for building the business into the product is one of the earliest Internet success stories: Although most of what you can buy at Amazon is a physical product, the fact that it gets shipped to you is almost an afterthought–you could achieve the same purpose by ordering through a direct mail catalog. What you are really buying when you shop at Amazon is convenience and credibility, and these benefits derive from features of Amazon’s software-as-a-service: The features include affiliate referrals, product search, offers, recommendations, one-click checkout, order management, support and nurturing. More specifically, automation facilitates the purchase process. Amazon’s affiliate programs spread points of entry (links!) all over the Web, and when you reach, you are naturally led through every stage of the purchase cycle. As a Web-based business, you have the same opportunity to facilitate purchase, service, support, etc. through automation that you build out from your product—driving up revenue, and driving down costs.

Chances are that your business is different from Amazon’s in some fundamental ways, e.g., target customers, product complexity, community involvement, etc. and you will need to tailor your approach to your market. However, the study of other successful Web businesses regardless of their nature offers powerful analogies that you can apply to your own business. For example, crowd-sourcing has become a very popular approach to international translations, but Amazon was building automation to crowd-sourcing the decision stage of the book purchase process ten years ago by encouraging customers to create reviews and top ten lists.

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