Grow Your SaaS Startup: About three-fourths of Software-as-a-Service companies reported negative impacts on sales in 2020, according to a webinar from Bain & Company. Considering that companies around the world moved to virtual work in droves and many prioritized technology investments to maintain smooth collaboration, the downward trend for SaaS is surprising.
The good news for SaaS entrepreneurs is that tech startups usually have the unique benefit of being nimble by nature, which means they have the logistical capabilities to scale faster and serve larger clients than businesses in many other sectors.
That flexibility is often what makes them so valuable to clients, as I’ve seen while evolving my company Gremlin Social from a social media solution for community banks into Denim Social, a multifaceted enterprise solution. I’ve watched bankers increasingly turn toward fintech to build the tech solutions they might lack the talent and resources to efficiently create on their own. It pays off: Mobile banking customers believe 8 percent more than traditional banking customers that their financial service provider knows their needs and are 15 percent likelier to recommend the service, according to Deloitte research.
Enterprise businesses have different buying behaviors from small or mid-market businesses. Whereas smaller businesses may look to buy primarily based on product features and capabilities, enterprises have plenty of high-quality product options at their disposal. So what sets an SaaS provider apart in the eyes of the big dogs? Relationships.
A SaaS startup trying to sell to an enterprise client might have products that are up to par or even better than the competition vying for the sale, but it takes more than product to catch attention. The reality is, enterprise clients are likely to go with the established business that has relationships in the C-suite.
These are often the providers that have been around longer and have had more capital to build trade partnerships that offer strategic introductions and relationships. Startups, on the other hand, are seen as riskier investments because they haven’t yet had the chance to prove their value over time.
1. Don’t try to boil the ocean
My company, now Denim Social, began as a solution specifically geared toward community banks, but over time, we grew to provide solutions for more complex use cases, typically around larger, customer-facing teams at the financial institution.
Salesforce is another great example. Today, the company may be a well-established vendor to many enterprise clients. When it launched more than 20 years ago, it had a much narrower focus. The website in 1999 outlined four standard aspects of customer relationship management tools: accounts, contacts, opportunities, and forecasts and reports. Those functions grew increasingly complex to accommodate bigger businesses over time.
Starting with a niche is a good idea because it helps keep entrepreneurs focused from the beginning. Solving for specific challenges in pinpointed areas of one industry can help validate the business case and build fine-tuned solutions. Niche markets can also quickly reveal if the business case is not valid. Startups have finite resources to work with, so if one solution doesn’t work, it’s time to move on quickly and build one that does.
2. Learn from the inevitable failures
Some losses are inevitable, of course, but it’s important to not fail on the same thing twice. The need to realize shortcomings and pivot quickly is universal to startup success.
Consider the story of how Instagram came to be: Kevin Systrom first created a prototype as an app called Burbn that allowed users to check in, post plans and share photos. Through reassessment and researching similar platforms, Systrom and his partner recognized the need to simplify. They focused on photos taken on mobile devices, and they studied photography apps at the time. What the market was missing, they found, was the connection between photography features such as photo editing and sharing on social media. They recognized the potential to build that connection, then stripped it down to only the most basic functions of posting photos, commenting and liking. They renamed the app Instagram, launched it and sold it to Facebook for $1 billion just two years later.
3. Find valuable human resources
According to a survey by QuickBooks Time, 26 percent of small business owners turn to the internet as their first source of advice. Although the internet might be a valuable source for facts, opinions and general advice, it won’t account for the goals, challenges and intricacies of a business, as well as a dedicated group of trusted advisors, would.
Look for established organizations in the field and try to build partnerships that will give strategic advantages when growing the company. For me, the relationship I’ve built between my company and the American Bankers Association has helped me better understand the needs of financiers and allowed the company to engage in regular dialogue outside of sales. Additionally, relationships with accelerators like SixThirty and industry leaders like RGAx or FIS have helped refine our pitch and propel more complex business relationships.
4. Don’t pitch at the first handshake
Sales is a bit like dating: Never propose on the first date. First, build some rapport. The first few conversations with an enterprise prospect shouldn’t be about the product and services. Instead, focus on listening actively to get the fullest possible understanding of their challenges to ensure the product will be the right fit.
Then offer educational resources about what it is the company does, but don’t focus too heavily on products and features. Make sure that marketing materials focus on education and tell the story of why the product or service matters to the client’s business. This helps demonstrate expertise in the market and a genuine interest in helping clients succeed.
For SaaS entrepreneurs looking to grow their businesses by delivering value to increasingly large clients, it’s important to recognize that the leap from niche fix to enterprise-level solution requires strategic planning from the very beginning.