Tips to Create a Software as a Service Business Opportunity
In today's digital world, online-based tools are becoming increasingly popular as traditional IT systems are being outdated by the cloud. According to Cisco, 59% of all cloud workflows will be delivered as software-as-a-service (SaaS) by the end of this year. This integration and flexibility that online tools provide are what draws more companies to transition each year.
What is SaaS?
Software-as-a-service (SaaS) is a software delivery model that allows users to access data through a web browser from any device with an internet connection. Provided by third-party vendors, these hosted platforms are used to provide ready-made software solutions that are maintained and updated, usually through a subscription-based fee. The software provided stores all data within the cloud, allowing users accessibility wherever an internet connection is available.
Help your company seize the business opportunities the SaaS market has to offer.
Flexible payments and packages
When incorporating SaaS into your business, you will be able to hit various target markets based on the services they are willing to pay. By forgoing a one-time purchase that may be out of range for smaller companies, customers can instead subscribe to your SaaS at a lower price.
The entry-level point of your SaaS should begin free, with limited functionality, usage, and time. It is recommended that various package tiers should then be offered, each with different levels of usability and functionality. Subscriptions to the various tiers of SaaS are a way to drive competitive differentiation among different customer segments. This recurring revenue system will also allow your company to focus on delivering higher customer service to an increasing customer base.
Keeping your SaaS services constantly updated with the newest technology will help to ensure new and current customers stay. By augmenting your in-house team with a nearshoring team, your business can deliver updates that keep up with evolving technology. These experts of newer technology will be there to supplement your in-house with better efficiency. Working with a nearshore time will help reduce the cost, time, and risk that comes with the delivery of a product or service.
Related article: Software Development: Do It In-House or Outsource?
Features and services are easily accessible when hosted on the cloud. As long as there is an internet connection, your SaaS customers can use the products you have to offer. Instead of manually updating and maintaining software, customers have updated versions of products each time they access it via the web. Your business is providing the customer with quick and easy access that will keep them subscribing to your on-demand features and services.
A successful SaaS product will have flexible API's that ensure their integration capabilities are easily adaptable with third-party and in-house software. Using an application programming interface (API) that is well thought-out makes it easier for new SaaS customers to integrate the new product with current applications in use.
If you want to stay updated about how your business is doing, monitor your dashboard closely. Use your organized dashboard to constantly monitor and track the key performance indicators (KPIs) and metrics of your SaaS business.
Some important measurements to keep in mind are:
- Churn rate - The percentage rate customers stop subscribing to a service.
- Cash flow - Total amount of money transferred in and out of a business.
- Customer lifetime value - The total net profit the company will make from a customer.
- Annual contract value (ACV) - The average annual revenue per contract.
- Monthly recurring revenues (MRR) - Recurring revenue that is normalized into monthly amounts.
SaaS is sold on a subscription model, unlike traditional software, which has a large up-front fee. This subscription means that users pay smaller amounts during a regular period of time. Although your SaaS business begins with a low revenue stream, it will have a healthy growth potential. For example, if you have 5 customers signed up with your subscription in one year, and then 10 additional customers the next year, your business will still be earning money from the initial 5 customers that are subscribed. This cumulative revenue will eventually add up.
Listen to the customer
SaaS users are constantly sharing valuable information regarding their experience with SaaS products. Their feedback, use of a product, needs, and behavior is all data that could reveal changes that need to be made with the SaaS product or service. It is important to listen and continuously make appropriate changes that will keep your product effective to new and current users.
This is a guest post by Nick Andrew Rojas. Nick is a self-taught serial entrepreneur who has worked with various startups as a business consultant. He's also a journalist focusing on technology, marketing, and social media. He loves meeting new people online and being challenged with new projects. He loves to connect, so reach out on Twitter! @nickarojas.