Avoiding the SaaS startup graveyard
There are three strategies for avoiding the SaaS Startup Graveyard, all of which amount to aligning price and complexity, so you can gravitate safely toward a viable SaaS sales model.
- Increase Velocity: The goal of this strategy is to reach a customer self-service SaaS sales model by holding your price point low and driving out complexity to build volume rapidly. To succeed at this strategy, you business must be capable of overachieving on both SaaS Do #1 Choose a Large Market and SaaS Do #3 Accelerate Organic Growth, and you must absolutely avoid SaaS Don’t #3 Launch without Online Trial.
- Increase Value: The goal of this strategy is to reach an enterprise SaaS sales model by adding value through product innovation and restricting your market to target prospects that see the most value in your offering. To succeed at this strategy, you business must innovate as in SaaS Do #6 Reach Across the Firewall without falling prey to SaaS Don’t #1 Chase Elephants that ruin your economies-of-scale, and preserve the core SaaS cost advantage through SaaS Do #8 Enable Mass Customization.
- Increase Profit: The goal of this strategy is to reach a transactional SaaS sales model by finding balance between ASP and CAC (customer acquisition cost) through operational efficiency and focus on the most profitable market segments. To succeed at this strategy, you should follow SaaS Do #4 – Craft a Compelling Story to attract only the prospects you really want to sell to, and then make it easy for them to find you by SaaS Do #2 Create a Hub on the Web and get them through the purchase efficiently by SaaS Do #5 – Build the Business into the Product.
Most relevant during:
PMF phase
GTM Fit phase
Scale phase
Most relevant for:
ACVs < $15K
ACVs $15K-$50K
ACVs > $50K