SaaS is one of the fastest growing industries worldwide. IDC predicts that nearly 30% of worldwide enterprise applications will be SaaS based by 2019, generating around $112 billion revenue, up from $48.8 billion in 2014 with featured YoY growth rate of 24.4%. With technology moving forward at such a ridiculously fast pace, SaaS market is forecasted to have nearly six times higher demand by 2019, with a compound annual growth rate of 18.3%, over traditional software market (with CAGR only at 3.1%.)
Just looking at these numbers, it’s clear that SaaS is “the thing you want to be in.” However, popularity and potential doesn’t come without a price: with so many SaaS companies, big and small, offering services that are very similar in terms of the core product, how do you make customers choose your service/product over others? The competition is always fiercest in the industries with the most potential and SaaS is no different. Under these harsh circumstances, differentiation is essential for brand recognition, gaining market share and establishing your feet on the ground firmly, if you want to grab a piece of the pie.
A lot of vendors position themselves as a company that offers comfortable services 24/7, which are easy to use, have an intuitive user interface, exceptional customer service and tons of useful features/functionalities. But then, that’s kinda the same thing that everyone is offering nowadays. In fact, it has come to a point where your product won’t even be considered by consumers if you lack any of the features mentioned above. You can’t surprise anybody with that sort of thing anymore: rather, it’s the lowest threshold of survival in the SaaS industry.
The thing is that companies cannot compete on features anymore, while having the same core service. Even if you add cool functionalities, the vast majority of the consumers will be using your product for the core service and won’t even care about the additional stuff. If you want to survive in your niche, you will need to offer, market and promote something more than additional cool features: you need to find a way to make the life of your consumers easier, by providing newer solutions that would address their needs and wants with the help of your core service.
The true differentiation for a SaaS company today, lies in producing innovation or offering something that isn’t being offered by anybody else. This isn’t a completely brand new idea though: there are tons of examples of highly successful SaaS companies that took their niche by storm, while having many other vendors providing similar services at the same time.
Each example illustrates a clear value that it brings to each user. While each of the three products are somewhat similar to other products that were already present in the market, the core value is different and/or advanced: it’s either a combination of different existing tools or services that didn’t exist before or a brand new way to make people’s lives easier.
The value proposition of each product is so simple; it’s hard to add anything to it. You get a tool that will let you share and access all your files from all devices (Dropbox), a tool that will help track all online activity analytics from the same platform (HubSpot) and a tool that enhances team communication and collaboration with everything you need to succeed (Slack).
All three products solve consumer challenges that consumers didn’t realize they faced yet, presumably the most paramount of the similarities. Consumers are mostly unaware that they need something better than what already exists in the market to solve day to day problems and achieve better results. When you look for a tool online, you get to choose from what’s already available and have no other option but to compromise something in exchange for something else. This is the power of differentiation. It’s not about features, or excellent customer support: it’s about positioning yourself in a way that will and make consumers more productive and effective at what they do. Apart from those, there are a few more aspects to differentiation.
One of the important keys to differentiation strategies is advanced consumer targeting. If you mistarget your audience, the news will read “X% of consumers abandoned a brand due to receiving poor marketing messages.” That’s heartbreaking to lose customers just because you didn’t know them well enough. Understanding your consumers should be seen as a continuous process, not just a one time venture. Consumer preferences evolve over time and whatever worked a few years ago, might actually hurt your bottom line today. Another important thing to keep in mind is that your research and marketing activities should be data driven. Knowing some general things about your customer and thinking from their perspective for a few minutes isn’t going to cut it: you need to use and leverage every piece of data available to you in order to create personalized, high quality marketing messages that will really leave an impact on your consumers. Recent studies by the American Marketing Association have revealed that the number one marketing challenge of 2016 is reliable data and analytics interpretation. On the bright side, there is a lot of data hidden all over the web that you can use effectively. The research of eMarketer and Venturebeat reveals the best channels for acquiring historical customer data, which is used for creating personalized marketing messages by brands worldwide.
Social media is widely used by your consumers every day. Statistics by The power of innovation: why ever (finance) executive team needs to visit Silicon Valley at least once a year Ogilvy and eMarketer show that 69% of people go directly to the brand’s website after they hear about it on social media, and 66% research the brand online.
Quora is a social media website where people posts virtually all kinds of various questions and get answers from some of the best professionals in the world around the particular topic. With over 100 million monthly active users, and about half of those being from the U.S. (which means that approximately 350k people from the U.S. use Quora daily), this is a real goldmine for companies. Just pick your topic and scroll through the questions. You will find so much information about what your consumers want and are looking for that you will have a hard time keeping up with the questions and answers. You can also register yourself on the website and answer consumer questions as an industry expert. This will help increase your reach, brand authority and position yourself as a thought leader in your industry.
When you think about “keyword research” likely the only thing that pops in your head is SEO, right? Well, it shouldn’t be. Keyword research isn’t just about driving organic traffic to your website: it’s an essential part of consumer research. Popular keywords give you an idea about what people are searching for, what kind of language they use, with a numerical estimate of how badly are they interested in the topic. Whenever you are trying to interpret data, don’t just go with the obvious route: keep trying to find ways beyond the best practices to extract every benefit from the data at hand. What does this data tell me apart from what I see? This is the question you have to ask yourself constantly.
Exceptional content marketing is one of the driving forces of SaaS businesses. Whenever your content attracts visitors to your blog, you are provided an excellent opportunity to gather consumer habit insights directly from them. To achieve this, encourage users to leave comments at the end of your blog posts. If you already are doing that, awesome. The crucial part that most businesses miss out on though is that you can actually ask consumers to leave comments about the topic you are most interested about. Don’t just ask people to leave a comment, ask them to leave a comment specifically about what you want to know. In this guest post published on Ramit Sethi’s blog, one of the most influential and inspirational entrepreneurs in the world, the author encourages readers to share specific information:
As discussed earlier, premium customer support is something that is expected from all SaaS companies by default. If you aren’t reachable 24/7, can’t solve consumer issues or fail to deliver required help to your consumers, they will be gone in the blink of an eye. In the graph below you will find the major factors for when businesses choose a SaaS CRM company. Customer support only accounts for 8% of respondents, which makes it clear that high quality support isn’t something extraordinary anymore:
Due to the nature of SaaS being cloud-based, your best shot at providing exceptional customer support is via social media. The advantage here is that your customers are most likely using social media channels actively and will be inclined to receive their support through social channels. Social media has a number of advantages over traditional customer support methods:
In this infographic by Kissmetrics, a leading website analytics SaaS company, it’s mentioned that:
Given the fact that an average person has around 250 friends on Facebook and that an average dissapointed customer shares his bad experience with more than 20 people, your company may lose the reputation you spend years on building up overnight, because of a couple of dissatisfied customers’ comments on social media. Don’t let that happen.
One more secret ingredient that brings together all three of the above mentioned examples that we didn’t yet mention is continuous innovation. Even if you did develop something extraordinary, you will have competition spawning out of nowhere within months, even weeks oftentimes. Competition will instantly see the opportunity and try to copy your product in one way or another and improve upon it. This is why you need to constantly innovate and enhance your already existing product, while preserving the core service value. An example of a company failing to innovate and thus, losing relevance during the past few years is Skype. Skype has been around and dominated the video call/sharing (and later mobile messaging) market since 2003, but is now rapidly losing market share to other, similar messaging apps (WhatsApp mainly, which is now the most popular messaging app worldwide) that technically do the same thing, with a couple of additions. Probably the only significant difference between WhatsApp and Skype is that Whatsapp enables people to send SMS/text messages to phone contacts, without charging any money. Let’s face it, this isn’t the most wild feature for a messaging app and Skype could have easily come up with a similar solution years ago. What’s even worse though, after witnessing the increasing popularity of WhatsApp (largely due to the SMS feature), Skype still did nothing to catch up to the new, and now matured, competitor. According to GlobalWebIndex, Skype accounts only for 19% active usage of mobile messaging apps with Facebook Messenger and WhatsApp dominating the market (36% and 34% accordingly).