Software as a Service (SaaS): How to Be Sure of Success

Paul Boag

Too many people launch into building software as a service platforms without first testing whether people are willing to pay for it. Fortunately, there is a way to test that presumption first.

The audio version of this post is sponsored by Express VPN.

Web designers and developers everywhere dream of launching a successful software as a service platform. They dream of being able to give up the day job or finally fire those irritating clients.

However, trying to build a software as a service platform can lead to much heartache, wasted hours and crippling financial loss. Trust me, I know.

My Software as a Service Nightmare

When I ran a successful web design agency, we often daydreamed about launching a SaaS application. We loved the idea of having some more stable passive income and to be able to either dump client work or at least be more picky about who we worked with.

In the end, back in 2008, we settled on a tool to help fellow web designers get sign-off on design concepts. We quickly moved from initial sketches, through designs and into development.

Progress was slow to start with as we tried to build it alongside client work. Eventually, we hired somebody just to work on the platform. However, despite our best efforts, the idea failed after two years of effort. We wasted hundreds of hours and over £50,000.

Get Signoff website.
Back in 2008, I made a disastrous attempt to build a software as a service platform.

If you are reading this, then the chances are you probably have an idea for a SaaS platform just like we did. Also, like us, you are probably keen to get started building it (if you haven’t already).

Now, after my failure, you might be thinking I am here to discourage you and tell you that software as a service is harder than you think. But that is not my aim.

Learn From My SaaS Mistakes

What I am suggesting is that you learn from one big mistake we made. We failed to test the market first. People were not willing to pay for our idea despite it seeming like an indispensable tool to us.

We also realised that although we were fantastic web designers, we didn’t know the first thing about marketing and selling a software as a service platform. We built the entire platform before we even considered how to market it.

I would, therefore, encourage you to take a breath. Step back from building the software as a service platform and first consider the marketing and selling of it. At the same time, you will have an opportunity to gauge just how much demand there is and even how much people would be willing to pay.

You can do this by running a fake marketing campaign.

Validate Your Idea With a Fake Marketing Campaign

Since my epic failure, I have gone on to coach dozens of web agencies, many of which had similar aspirations to us. Over the years, I have adopted a simple technique to establish whether their great ideas for software as a service platforms are as good as they believe.

It begins by building a landing page.

1. Build a Landing Page

Instead of building the platform itself, we start by creating the page that will sell it to prospective customers. We make the entire thing as if it is the final marketing site, including:

  • Sales videos.
  • Features.
  • Copy.
  • Pricing.
  • Screenshots (which of course we will mockup up).

Most importantly, the page should have a call to action inviting people to purchase the application. If you intend to offer a freemium model, then, by all means, make that call to action the option to sign up to a free account.

If, or when, users click on the call to action, you should show an overlay explaining that the product is coming soon and provide them with an opportunity to join a waiting list for an exclusive launch discount.

Leadpages Homepage
You can build a landing page in a couple of hours using a tool like Leadpages.

However, until somebody clicks that call to action, we don’t want to provide any indication the SaaS application is not already live.

The idea of the landing page is to judge whether users would be willing to take action based on your description of the SaaS platform. If they are not, you either need to get better at selling the concept or there just isn’t demand. In either case, it is not time to start building yet.

Of course, clicking a call to action is not the same as parting with money. Also, we need to do something constructive with the email addresses users are adding to the waiting list.

The next step is, therefore, to create a series of emails that get sent out to subscribers.

2. Create an Email Series

Now that you have some people interested, we need to find out just how keen they would be. Would they be willing to part with real money?

To test this, we are going to send them a series of five emails over the five days after they signup to the waiting list.

  • On day one, we are going to recap for the user exactly what the application can do for them.
  • On day two, we will focus on the benefits that it will provide them and also say that you will give them an exclusive discount tomorrow.
  • On day three we will offer them 50% off the monthly fee for the product for its lifetime if they preorder now. They will be expected to pay the first month upfront.
  • On day four, we give them one last chance to take you up on the 50% off offer.
  • On day five, we ask them to complete a survey, which I will come onto in a moment.
Sample email preorder offer.
By giving people the opportunity to preorder you discover if they are actually willing to pay for your service.

The critical day is day three. That is where we see whether people are keen enough to preorder the product and pay the first month upfront. A 50% discount should be a tempting enough offer to offset the fact that the product isn’t yet available.

Whether somebody takes the offer or not, on day five, we want to send them a survey to better understand what is going on.

3. Set Up Three Surveys

Broadly speaking, people fall into three categories during this experiment.

  • They visit the website but fail to click the call to action.
  • They click the call to action and join the mailing list.
  • They preorder the product and part with real money.

There is a fourth group who click the call to action, but don’t sign up to the mailing list. However, as the mailing list is an artificial step that wouldn’t exist at launch, we don’t need to be too concerned with this group.

For each of these groups, we need to understand their decision better. To do that, we are going to create three surveys.

First, we are going to capture the opinions of those who visit the website but fail to act, using an exit-intent survey. That survey is going to ask a single question.

Exit intent survey on the software as a service landing page.
We can use an exit-intent survey to better understand why people didn’t act on our landing page.

“We would love to know why you decided not to sign up today.”

We can then offer them a set of multi-choice answers and an open text field if none of the options fit. Typical options might include:

  • The price was too high.
  • It didn’t do what I needed.
  • I didn’t understand the concept.
  • The website didn’t feel trustworthy.
  • I am paying for too many services.
  • Other.

However, you can add anything else you feel is relevant.

Second, we need to understand why some people signed up for the mailing list and yet wasn’t willing to preorder the product.

We can include this in a version of the day five email that only those who failed to preorder will receive. As before it is a single question survey with multiple choice answers:

“We would love to know why you decided not to preorder.”

Answers might include:

  • I never preorder products.
  • I wasn’t convinced you would deliver.
  • It was too expensive for a preorder.
  • I wasn’t convinced it was worth the money.
  • I was concerned it wouldn’t do what I need.
  • Other.
Email Survey for SaaS waiting list emails.
We can use an email survey to better understand why users choose not to preorder.

The survey that those who preorder will receive on day five will be subtly different:

“What concerns did you have about preordering?”

Answers might include:

  • I don’t like to preorder products.
  • I was worried you might not deliver.
  • It felt expensive for a preorder.
  • I wasn’t convinced it was worth the money.
  • I was concerned it wouldn’t do what I need.
  • Other.

It is useful to know what might have stopped somebody from acting. Because although it didn’t stop them, it might stop somebody else.

With all of that setup, all that remains is to drive traffic to our landing page.

4. Drive Traffic to the Landing Page and Measure

You might be wondering how you are going to drive traffic to your new landing page, and that is fair enough. However, this is a problem you will inevitably face whether or not you carry out this initial experiment.

By carrying out this test, it forces you to start considering how you are going to promote your software as a service platform before you even start building it.

If you were anything like me when I attempted to build a SaaS platform, you would be much more confident about the build than the marketing. It, therefore, makes sense to address this weakness now, rather than when you have invested a lot of time and effort in building the final product.

I am not going to get into marketing your SaaS platform, as that is a post in its own right. However, once you have driven as many people as possible to your platform, you need to pay close attention to the results.

Most importantly, we want to pay attention to the percentage of people we drove to the page who were willing to preorder for our substantial discount. That will give us an indication of our conversion rate. Would the product be profitable at that level of conversion?

We also need to pay attention to how easy (or otherwise) we found it to drive traffic to our landing page. How much did it cost and how long did it take? Would that be sustainable when you launch the product? If not, you will need to identify ways of driving more traffic for less cost and effort.

Finally, you need to understand why people didn’t preorder. That is where your survey results come in. Looking at the answers people give should help identify ways you can improve your landing page and marketing methods.

Hopefully, by now, you can see that an approach like this allows you to know whether you have a viable business idea or not.

That said if you want to go ahead and build a software as a service platform as a fun side project, knock yourself out. But, do not delude yourself that it is a viable business idea without testing it first.

Of course, my method for testing your idea is not the only one. There are other approaches, such as running a crowdfunding campaign. However, they are not necessarily a realistic reflection of long term success.

Launching a software as a service platform via Kickstarter.
Crowdfunding services like Kickstarter are another alternative approach to testing the market for your SaaS idea.

Why Not Run a Crowdfunding Campaign?

Don’t get me wrong; I love the idea of a crowdfunding campaign. Without a doubt, a site like Kickstarter or Indiegogo is an excellent way not only for testing the interest in an idea but also raising capital for its creation.

However, these sites attract a specific type of person who is willing to take a risk on a good idea. That is not always reflective of the broader market.

Also, crowdfunding isn’t particularly suited to software as a service because it is more focused on single payments, rather than subscription services.

That said, launching a crowdfunding campaign is a valid alternative. What is important is that before you pour money and time into a software as a service platform you hope will generate a return on investment, it is worth testing whether that is likely to be the case.

Photo by Christina @ on Unsplash