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Top SaaS Challenges and Mistakes

Not conquering SaaS challenges can take some startup companies down. There are some companies rooted in the SaaS 1.0 era that didn’t make the cut. They had to develop their own delivery capabilities, software development resources, and company architecture. They didn’t have the benefits of companies starting today. Companies now can leverage services and computing power from companies like Salesforce.com and Amazon.com.

SaaS challenges The truth remains that SaaS companies/startups have mushroomed around the world. But, few have been able to keep their front doors open for more than five years.

Today, these companies allow newcomers to reduce capital investment and eliminated operational expenses.  Even though the landscape is favorable for SaaS startups, there are a number that failed.

The truth remains that SaaS companies/startups have mushroomed around the world. But, few have been able to keep their front doors open for more than five years. Cloud computing raised the stake for everyone.

Services offered by SaaS companies included business intelligence, accounting, collaboration, internal communications, and marketing. There are SaaS companies that depend on other SaaS companies. There were solutions for every aspect of business imaginable.

So, what SaaS challenges did these startup companies face that led them to fall? As it stands, only 10% of new startups will ever make it to the finish line. And there are two sides of the coin: SaaS companies that fail to deliver and companies who suffer that depended on their services.

Here's where many companies, both SaaS providers, and their clients, fail to follow through.

saas fails target audience1. Identifying a target audience correctly is one of the biggest SaaS challenges.

Some companies start creating and marketing a product without first understanding market needs. Soon, those companies float away.

While they put a great deal of thought and effort into their company, it was impossible to generate real revenue. They didn’t target their market, and couldn’t get viable feedback which made it impossible to hone their product. Marketing 101: Find a need and fill it.

Some companies start creating and marketing a product without first understanding market needs. Soon, those companies float away.

2. Failure to save resources was another mistake that startups made en masse.

Many companies burned through financial resources without not knowing how much money they would need. The reality is that time and money are finite.

There’s only so much time and only so much money to work with. Companies that failed didn’t have a way to accurately track their spending.

top saas challenges3. Not building a knowledgeable team can take any company down the tubes fast. But what’s the right team?

How does a company know if they have the right players in place? There are no easy answers in this matter.

A good team is one that can collaborate on all matters. And without exceptional communications, a team is dead in the water before it even begins.

Failure to build a knowledgeable team can take any company down the tubes fast. But what’s the right team?

4. Smart companies know they must never take their eyes off what competitors are doing.

It’s not about obsessing with what others are doing. It’s about making sure you have programs and products in place to outpace the competition. It keeps you up to speed in knowing when to roll out new features or new offerings.

5. Many SaaS challenges happen when pricing doesn't reflect the company’s business model.

There will always be that scenario where the price seems too high for some, and too low for others. Successful SaaS businesses have a perfect balance of pricing. This depends on the customer’s business size and needs.

However, each rollout should be as legit as the one that preceded it. Offering a free trial for a product with fewer features may disappoint users.

6. Some SaaS products aren’t user-friendly enough. Every startup assumes it works and people will accept its ideas. Otherwise, the startup wouldn’t exist.

As mentioned, you should know what customers need and want before the doors open. Then, your company should be a keen listener. Find out what’s working and what’s not.

It may be hard to believe, but many startups that failed never created a true business plan.Businesses should consult customers about new ideas and take their advice. They should always be engaged with friendly conversation as well.

7. It may be hard to believe, but many startups that failed never created a true business plan.

A product has to be more than something that is only good for making business. If your company is to grow, it has to have a business plan. This is the only way to build trust with customers and investors.

It may be hard to believe, but many startups that failed never created a true business plan.

8. Another mistake that causes big SaaS challenges is they relied too much on the product to sell itself.

Little effort was directed into marketing their product to ensure audiences were aware of their brand. Remember the old phrase “pain points?” Well, customers still have them.

You should have a marketing plan in place to grab a customer’s attention wherever they are. Your marketing, or a lack thereof, will always move your company in a certain direction. Hopefully, it’s the right one.

9. SaaS failure can be from a lack of vision, knowing where the company is at any given time and where it’s headed.

Keep communicating with customers and incorporate their feedback along the way. Their feedback can be the motivation that inspires you to strive for new heights.

10. Some startups have the right product but fail to release at the right time.

Timing is everything. It’s the one thing that can give companies a competitive advantage. This is one way to capture large market share too. The right release time is critical for helping create a significant first impression.

SaaS Companies That Faced SaaS Challenges and Dropped the Ball for Their Customers

Netflix

Amazon developed an impressive cloud service. One of the first companies to use its services was Netflix. It was praised as the perfect marriage. Netflix (an SaaS company that depended on the services of an SaaS company) saw its streaming services grow at an incredible rate. Unfortunately for Netflix, they experienced a Christmas Eve outage one year. It was so widely publicized and affected so many people that Netflix never fully recovered. The company recognizes this single event as the cause of their business loss. Without questions, this set the company back several years.

In the beginning, Dropbox chose to bypass the need for a password. This was one of the biggest mistakes imaginable.Dropbox

Their biggest mistake was allowing anyone to access customer data just by entering the email address of said customer. They chose to bypass the need for a password. This was one of the biggest mistakes imaginable.

There was a bug in its code update that lasted for almost four hours. No one knows how many accounts could have been compromised in that time. Dropbox fixed the problem, but a lot of damage was done in the minds of customers.


In the beginning, Dropbox chose to bypass the need for a password. This was one of the biggest mistakes imaginable.

CloudFlare

Here’s a service that accidentally brought down 785,000 websites. CloudFlare was an SaaS provider that provided tools to help secure a customer’s online presence. Their product could also improve website uptime.

Sometimes, the SaaS company that provides customer solutions provides the exact opposite. The company’s edge routers were all upgraded at the same time. They all crashed and customers were without a website presence for an hour.

You can only imagine the scrambling that took place to get those routers back online. And you can also wonder how many customers took their business elsewhere.

Office 365 has faced its problems as well. Both email outages and Internet access outages can bring a company to a standstill. Office 365

Office 365 has faced its problems as well. Both email outages and Internet access outages can bring a company to a standstill. Microsoft has been guilty of email problems several times since introducing the software. There was even a joke going around that they should call the software "360" since it’s down for at least five days of every year. A lot of people can relate and have their own stories of frustration.

Office 365 has faced its problems as well. Both email outages and Internet access outages can bring a company to a standstill.

Lastpass.com

When a provider of cloud-based single sign-on passwords gets hacked, a lot of people take notice. Lastpass.com had their network compromised and a huge number of addresses and password reminders were hacked. Luckily, the passwords had adequate encryptions, and there is no sign that customer information was compromised.

It inconvenienced a lot of customers when they logged on and were required to reset their passwords. Customers need to know they can trust their service providers. Once customers lose faith, it’s hard for a provider to reestablish it.

Healthcare.gov

The U.S. Healthcare.gov website, from the day of its launch, was bothered by technical glitches and major security problems. Verizon’s Terremark Cloud looked to be a major contributor for difficulties early on. Healthcare.gov suffered as a result. Here again, SaaS companies that look to provide solutions are often the cause of client failures.

Conclusion

Advancements in technology will always usher in major changes in IT-related architecture. These changes will always arrive with bumps that need to be ironed out. A lot of SaaS challenges have been faced and many more will follow. However, it can all be seen as learning, that’s par for the course.

Hopefully, companies coming up can learn from the failures of some of the great ones. In the meantime, the 10% failure rate looms over SaaS companies entering the market.

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Gene Krause

Gene has been consulting businesses of all sizes for 18 years and providing them with strategic payments and gateway integrations.

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