As they say, what a difference a year makes. Quite a few people have been asking me how my experience with the Foundation has gone, what I’m up to now, how is my SaaS business? Rather than go through and answer them all individually, I thought I’d take a deep dive into how the last 12 months have been since launching my Software as a Service business, and talk about the things I’ve learned in those 12 months.
Where I am at now.
If you were to hear the numbers for my SaaS, you may think my business has flat lined for the last 12 months. I launched my product, WaveReview, in June of 2013 with a committed $3,500 per month in recurring revenues, and I’m now closing in on $4,000 per month in recurring revenues.
But let’s take a closer look.
My product launched in June, 2013. There was a 2 or 3 month long beta period in which my customers could use the product for the collected amount of pre sale value (2.5 month average). So what happened to the revenues? They plummeted as I bumbled and fumbled around trying to learn how to run a SaaS business on my own, so I wanted to pass on some of the biggest and most hard won street knowledge I could to upcoming and current SaaS entrepreneurs.
Lesson 1: Launch with credit card information either saved, or already built into the product.
This was HUGE for me. I launched without any credit cards saved, and I likely lost nearly ALL of my clients because of it, and subsequently my monthly recurring revenues. I had to chase each one of them down, and they always had an excuse about - well, I’m still deciding if I want to move forward, there’s this bug here, can you fix this, and then I’ll pay? yada, yada. This mistake likely cost me $15,000 in lost revenues and I basically had to rebuild all of my customers and revenues from scratch.
Take Away: Do NOT make this same mistake, check out swipebox.io or put your customers on paypal recurring, launch with Stripe or Braintree payments built into your MVP.
Lesson 2: Your success as a SaaS should rely on your relationship with your customers, not your customers’ customers.
WaveReview solves the core problem of how to get people to leave reviews. The problem is it’s a results based sales model which relies 100% on the whims of my customers’ customers. Something I have very little control over. What does this mean? WaveReview asks my customers’ customers to leave reviews, so I’m actually trying to get their clients to do something, and I don’t have any relationship with these people. Oh how jealous I have been of my peers that had a metrics, reporting, or some other type of SaaS which simply provided information directly to their clients, and not one more hop down stream to people that I had no relationship with.
Take Away: If you are thinking of going into a SaaS where you need your clients’ clients to do something, think long and hard about this. Of course, it can be done, but keep in mind how you will be able to effectively communicate with these people that you do not have a relationship with, and subsequently, have little influence over.
Lesson 3: Client Retention IS SaaS.
When I first launched WaveReview everything was great, for about 4 months. Then one by one my clients stopped using. Sure, I could sell my solution all day long, sales was not a problem. My monthly revenues remained flat for nearly 6 months, even though I was gaining 3 or 4 new clients per week. Why? Because my Customer Life Time retention was only 4 months, and so while I would add 3 or 4 new clients per week, 2 or 3 existing clients would leave.
To be completely frank, there were some dark months when I even questioned whether I had a viable business. Two things saved me and allowed me to push on. 1) I had a core group of 5 or 6 clients that used my product on a daily basis and loved it (there must be more) 2) The sales process was easy, the problem I was trying to solve was very real.
I have partially solved this problem (I can still do better) by switching my focus from sales, to customer relationship and did Idea Extraction on all of my existing clients, and their clients (the people that were meant to be leaving reviews) to find out what was wrong. I still have clients dropping off but it’s 1 or 2 a month instead of 2 or 3 a week and I now have some clients that stay on 8 or 9 months and a core group that have remained since we launched.
Take Away: A core part of your day should be speaking to your customers and folding in features that are important to them, and make your tool become an ESSENTIAL part of their daily productivity, marketing, or business. This will not ever go away.
Lesson 4: Remove the weak link, or biggest barrier of resistance to your application being used.
After 4 or 5 months, I was able to develop some rudimentary statistics which showed last client logins, who was using and when. It became apparent that if my users weren’t using my application, they wouldn’t have success, and would eventually drop off as a paying customer. In order to fix this problem, I needed to integrate with other applications that removed the human element (weak link) to manually upload data for the application to deliver its core features. I chose some applications that have a large user base, and started to think of integrations with other software companies instead of niches like plumbers, doctors, hotels and spas. My marketing is now to large companies like Amazon, Mindbody Online, Spabooker, Ultracart, etc. Now my users can sign up, complete a 5-10 minute long integration setup process, and never come back and still see immediate results on auto-pilot as I email them reports on a weekly basis that show those results.
Take Away: Take emotion out of your problem solving. Figure out where each weak point in your solution is, and plug those holes one by one. Speak to your clients to find these holes, and make it as easy as possible for your customers to tell you their problems.
Lesson 5: If you don’t measure, you can’t improve.
Everyone says this, but I can’t stress how important it is. Whether you manually track problems with your SaaS in a spreadsheet, use Google Analytics to track your conversions, measure Customer Lifetime Value in Kissmetrics (or a spread sheet), or monthly revenues in Stripe, if you don’t measure, track and monitor key stats that you’re working on, you will not improve.
Take Away: Take your metrics deadly serious.
Something else I learned?
I can’t public speak to save my life, or even speak in a group…what I’m going to do about it.
Had I the guts to simply walk up to Dane and say - “Hey Dane, I’ve got some quick tips to share on the last 12 months of running a SaaS, here they are… “ this is what I would have said on the share sessions.
The good news on all of this is that I have identified a large fear or flaw in how I am able to conduct business, and that’s the paralyzing fear of public speaking. Just as I have one by one found, solved and corrected problems in my SaaS, I’m now going to attack this fear of public speaking.
Hello Toast Masters… and maybe next year, I’ll give a post on how I was able to go from extreme stage fright to walking on stage like I’m walking up to chat with a good friend.