Developing a software as a service (SaaS) application - 5 simple ways to optimise your SaaS design
The design of your software as a service application (SaaS) is inextricably linked to your business model. You should think seriously about how you’re going to find and sign-up paying customers before development starts. Does your SaaS application make customer acquisition as frictionless as possible? How does the design of the application facilitate marketing, customer feedback and the prioritisation of new features?
- An easy one to start with but not obvious to someone from a non-tech background. Build a multi-tenancy application. This means all your customers sit in the same database and they all use the same ‘instance’ of the application. It goes without saying that hosting and supporting one application (used by multiple customers) will in the long run be easier than trying to support multiple installs. The downside is that development at the start may be harder. You have to build in more configurability - different customers may want slightly different features. The upside is that it will force you to think about the features that are common and valuable to every customer
- Keep your pricing model as simple as possible. The most common SaaS pricing model seems to be three tiers - Basic, Professional and Enterprise - or something very close to that. You don’t have to do the same, but that ‘standard SaaS pricing model’ is a good starting point for further discussion about getting customers to pay for your service. Can you make your new service fit that pricing model?
- Make the customer sign-up process as frictionless as possible. Can you design your service so that new customers sign-up (and pay) without any extra help/intervention from you? It’s great if you can - do all you can to keep the cost of customer acquisition (CAC) as low as possible. There is a really great article by David Skok about sales complexity and how it impacts on the viability of new software. You should read it (and many of David’s other posts) before spending a penny on software development.
- Offer something for free. Can you make the first tier of your pricing model free? Or make the first three months free? Another option is a free mobile/tablet app. Customers download the free iPad app (with minimal functionality) and you upsell them the full online service. EPOS is a good example - a new shop starts with the free iPad app (with card payment device) but then upgrades to the full web based system to get multiple cash registers, stock control and integration with online shopping.
- Start with a minimum viable product and stay close to your customers. The 80:20 rule really does apply to software development - only add features that customers want. Build in automatic monitoring of user engagement with your software. Log customer activity - features used and time spent in different parts of the application. Analyse the data and then talk to customers about why they don’t use some parts of the system as much as others.
Your big challenge is to get new customers on board, sell them new features and to keep the churn rate (customers you lose each year) as low as possible. That challenge should inform the design of your new software service from the start.