8 SaaS Mistakes You Need to Avoid

I have been working in the marketing and design industry for over 8 years, have founded several companies, celebrated achievements and - along the way – had ups and downs. As you build your own company or work on your projects, you know it is not necessarily about the end result, but about the resilience you show when things are not working your way.

It is about the mistakes you make, about the learning process. When I look back at my journey (so far), I have made several mistakes. But I always thought they were here for a reason, as hints that show me what to improve on.

I always believed that making your own mistakes is an excellent way of learning, however, you might take some insights from this article, as I share with you the 8 SaaS business mistakes I would not do a second time. If you want to cut the fluff and want worksheets, templates and cheatsheets that help you build a successful SaaS business, get this SaaS bundle.

If you have an excellent idea, people will eventually buy it, right? Unfortunately, often, this is not the case.

I told this story many times. I remember when I joined a startup six years ago. Our team was passionate about the idea we were developing, and we all felt it was worth pursuing. We saw no need to test the concept and continued to invest time and resources.

The worst part?

Our solution failed because of a lack of customers. If we had done market research and validated the idea beforehand, we would have found that the product was not solving a real customer problem. This might have allowed us to change or scrap the idea without major losses. The lesson learned is that no matter how much you believe in your idea, validate it.

When you start your business, it is important to know whether there is a demand for your product. It's frustrating to put effort and resources into developing a product you thought would catch on, only to find out it doesn't. Many people neglect validating their ideas because they focus on other aspects of building their business or consider it as unimportant.

However, validation is the only way to ensure that your great idea has the potential to turn into a successful business. If you don't validate your idea upfront, chances are your business won't be successful in the long run. Either there is not enough demand for your solution, or the competition in your target market is already high enough that your business is struggling to attract enough customers to be profitable.

Remember: Validating your idea doesn't guarantee success, but it gives you the opportunity to evaluate whether it is profitable to invest your time in the business or not.

You should always validate your business idea early on. By testing the viability of your idea and getting early feedback from potential customers, you can better understand the market and determine if there is a genuine need for the product or service you want to offer.

You can validate your idea through market research, customer interviews, or by testing a minimum viable product (MVP) with a small group of target customers. By validating your idea early on, you can identify potential problems or areas for improvement before committing significant time and resources to the business.

But there is another huge upside to idea validation: Validating your idea can help you gain a better understanding of your target market and help you craft a more effective business plan.

Speaking with potential customers is the initial step in validating your idea. If you have an idea of the individuals or groups who would find your solution valuable, approach them and inquire about their needs and interests by asking the following 9 questions:

Dear potential customer,...
‍
• How are you currently … (fill in the problem you are trying to solve)
• What's the most annoying thing about the way you … (fill in the problem you are trying to solve)
• Why didn't you already change it?
• How would it work in an ideal world for you?
• Because I am thinking about creating … (fill in your solution)
• Would that be valuable to you? Why? Why not?
• Are there any existing solutions you have tried for this problem?
• How would my solution fit into your current workflow or daily routine?
• Would you be interested in participating in a beta test or pilot program for my solution?

After a prospect has answered these questions, you'll have a good idea of whether your idea offers value and how you might need to tweak it. Gathering this type of feedback from the very beginning, even before you invest any more time and money in your idea, is the most important part of building your business and the best insurance against failure.

This is probably one of the best marketing tips I have ever received. Often, people feel they have nothing valuable to share – especially early on – when they just founded their business. But don’t let yourself be fooled. I always recommend sharing your story early on. Especially in the beginning, people like to see your progress. They want to give early feedback, want to be part of something bigger.

When you share your journey or your product early on – for example, by sharing new product ideas, showing the challenges you overcame, or by introducing new team members, you will be able to create fans for your product and build long-term relationships with people.

In addition, sharing your journey early on helps you gain valuable customer feedback on your ideas, which in return will help you improve your service and engage with your community.

But how can you do early marketing if your product is not yet available? For instance, let's imagine your startup/SaaS company provides an app. Sharing your sketches, dribbles or wireframes with your social media community could be one approach. This way, people can see your progress and give you valuable feedback right away.

Another good way to start your marketing early on is by providing a landing page where people can sign up for your newsletter to get regular updates on your progress. Then, once you release your service, you can let them know by sending them a special thank-you email.

So, think about what value your product or service provides and start sharing valuable content.

There are 19 proven marketing channels you can choose. All of those have worked before for different companies. However, this does not mean that these marketing channels will bring you the same success. It is therefore crucial to find the marketing channels that work best for your specific target audience.

Even though there are 19 marketing channels, people often use the channels they are familiar with. They have already worked with social media ads before, so they stick to it, regardless of whether they have ever seen success with this channel. What people often miss is that marketing is about testing and – in the beginning – no one can tell you which marketing channel will bring you the results you are looking for.

If there is a guru that tells you otherwise, you better be careful.

I always recommend to first use the bullseye framework to find potential marketing channels and then to evaluate those channels by doing quick and cheap tests – no matter how much experience you have with specific channels. Every target audience is different and there is no one size fits it all. That's why testing is required. By doing quick tests you can find out which marketing channel could provide the traction you are looking for.

Before you design experiments to test, determine the goal you want to achieve. The objective is not to have everlasting experiments but to test at a high tempo and generate insights and learnings to find out, if this channel can bring you closer to your goal or not. Effective testing comprises a hypothesis, action steps and a fixed deadline.

Plan your hypothesis with "If, Then, Because". For example: If we publish ads on Social Media, then we expect 100 newsletter readers in one week, because potential customers told us they would love to get more information about our service.

Your action steps need to be clear, concise and doable for you and your team.

Do not make your experiments everlasting. It is important to fail fast. Get your insights, improve and run the next experiment.

Once you have a list of potential experiments to run, pick the ones with the best ROI and the biggest impact. For this, you can simply use an impact/practicability chart or – to make it even more meaningful – rank experiments based on the following criteria:

• Cost: How much do you have to spend to run the experiment?
• Targeting: How easy is it to reach the desired target group?
• Control: Can you adjust if it is not going well?
• Input time: How much time will it take to launch the experiment?
• Output time: How long does it take to get your experiment's results once it is live?
• Scale: How large an audience can you reach with the experiment?

One thing to remember: When ranking your ideas, it is not about knowing the different criteria-values exactly, but to use them as a reference point. For example, it is difficult to find the exact cost of a Facebook ad, since there are more factors involved besides just the costs of the ad itself (time to research best practices, time to build the ad etc.). Use the values as a reference point to compare them to the other experiments instead.

Once you found your top three ideas to test, define how you can measure success and what metrics are most important to you. For example, if you want people to download your newsletter via the website and you try social ads, click-through-rate, bounce rate, dwell-time and conversion rate are meaningful.

Experiment-frameworks are a potent tool to help you find out if a marketing channel can bring you the traction you hope for. Keep in mind to use a test-mindset and to be ready to make mistakes. Especially in the beginning, you cannot tell which marketing channel works. Test at a high tempo, fail fast and iterate.

Customer feedback is one of the building blocks of every successful service or product. Do you want to retain customers in your business? Get customer feedback. Do you want to build an even better product? Get customer feedback.

The reason customer feedback is so important is because it is one of the most valuable resources for improving your product and can help you not only to keep customers but also to create a community of raving fans, who will recommend your service for free.

When I look back at my first startup story, we gathered no customer feedback at all. It was a black box comprising a hypothesis and best estimates. But best estimates cannot be the foundation of any successful business.

Getting customer feedback is no rocket science. However, you need to be aware of some key principles to get the most out of it. So here are the top 3 mistakes you should avoid when you gather customer feedback, and here you can find the in-depth guide to customer feedback.

Surveys are a powerful method to improve your service. However, if you have no clear purpose in doing the survey and just do it for the sake of it, there is little sense in it. It is much more meaningful to collect feedback after you have released a new feature, after you have reached a new milestone or if you are looking at your roadmap and are not sure which features to prioritize next.

No matter what method you chose, make sure that it is easy for users to provide their feedback. For example, allow them to reply to your email in plain text if they want to, avoid log-in masks for online forms and reduce unnecessary form fields in your survey.

Your product is your baby, no doubt. It's tough to hear that people don’t like your service. However, gathering honest feedback is the only way to keep improving your service and keeping a solid user base. That’s why it is important to never frame your questions in a way, that influence your respondents. Use open-ended questions and keep out all emotions when collecting feedback. It is better to get harsh feedback to improve on than getting the best feedback, but nobody is using your service.

Knowing your goals is the first step to business success. Tracking the underlying metrics to reach your goals is the next step. As Alex Theuma, CEO of SaaStock would say:

Tracking your metrics can become an obsession as you watch your dashboard hourly in hope for seeing an improvement in your metrics. That, however, should never be the goal of it. We will talk about vanity metrics just in a second, but for now, remember that metrics are here to guide you to success. If you have the right metrics in place, you will be able to find out if you are moving closer to your goal or if you are moving further away.

So even if you have a small business, make sure that you track the metrics that impact your success. This not only includes the basic business metrics like customer acquisition cost or customer lifetime value, but also the metrics that are important for your marketing material or your website - for example, bounce rate and conversion rate.

This might sound complicated, but just make sure that you know what you are trying to achieve in the long run and what the underlying metrics are that will help you determine if you are moving closer to that goal or if you are moving further away. More on that in just a second.

Metrics are important, no doubt. If you don't track your numbers, you will not know if you are moving closer to your goal or further away. So what are vanity metrics? Vanity metrics are metrics that look great on the surface but don't have any real business impact. For example, if you have developed an app and have 1 million downloads, it looks great on the surface. However, if you dive deeper and find out you only have 100 active users per week, the amount of your downloads are irrelevant. A classic vanity metric.

There are several metrics to measure for every part of your sales funnel, and in the SaaS industry, there are over 50 metrics you could track. However, tracking all of them is not meaningful, and if you want to monitor them all, you will get lost.

What I have learned along the journey is to not measure too many metrics, but to focus on the ones that have a real business impact. Finding the important metrics is related to your KPIs (key performance indicators).

Remember: Key performance indicators represent the most critical metrics in your company and help you measure your growth. Your goal may be to increase sales, reduce costs, or expand into a new market.

KPIs are metrics that move the needle, therefore keep them limited. Finding the right KPIs is a 4 step process:

1. Define your companies' goal
2. Define what metrics will help reach this goal
3. Rank metrics based on business impact and viability
4. Create action steps to improve the underlying metrics  

When you want to define your KPIs, your business strategy and long-term goals are key. Make sure you are as precise as possible. One example of a poorly drafted goal is "increasing revenue" since everybody has a different opinion of what increasing revenue means. However, if you state it like "increase this years' revenue by 3%, compared to last year", it is clear what you are trying to achieve.

Based on your overall goal, start creating key performance indicators.
After you have defined your KPIs, ask yourself what underlying metrics will help you reach your goal. For example, your goal could be to increase customer lifetime value by 2% by the end of this year. A possible underlying metric that directly influences this goal is the average order size per customer.  

Once you have a list of underlying metrics, start prioritizing these metrics based on impact and viability. For instance, if you measure the effectiveness of your e-mail campaign (which directly affects your sales), it is crucial to measure the open rate, click-through rate, and click-to-open rate. Yet, only the overall conversion rate shows you if you are moving closer to your goal. So keep in mind to prioritize the metrics that support your companies' success.

We already covered the importance of experiments while finding the best marketing channels for your business. But experimenting should not end there. When I talk about experimenting, I am also talking about your website, your app and the service you provide. Let me elaborate:

Back in the day, we created a landing page where people could sign-up for our SaaS product. The product was in the B2B space, so there were no direct sales via the website. People were signing up for the product, so we were quite happy. The website was built based on best practices, a headline that shows the value, a quick introduction video, a call to action that shows people what to do next, you know how it goes.

However, we never experimented with the layout, the color of the call to action button or any other element that could have had a significant impact on our key metrics – the conversion rate.

What I am trying to tell you is this: If you don't test and experiment, you are leaving a lot on the table and you will never know if you could have done any better. I think we often feel that we don't want to experiment because of the fear of losing „the current state“. However, that's an illusion.

If you don't experiment and always strife for improvement, your business cannot grow. By having regular experiments, you will learn what works and what does not work, which is mandatory to better understand your target audience and, in the end, provide a better service people love.

An excellent way to experiment with for example your website or app is A/B testing.

A/B testing is also known as split testing and means to test two or more versions of a variable to see which one performs better. These variables are often the button color, the button wording, or the button placement. But you can not only A/B test buttons. You can also test the headline on your website, the general layout, images, forms, navigation, or graphical elements. We already talked about the importance of using best practices to design effective Calls To Action.

However, only experimenting and measuring the results will take away the guesswork and will show you which version performs best. In A/B testing, version A refers to the original state, while version B refers to the new version of the testing variable. Ideas for testing are often a result of analyzing heat-maps, website analytics, session recordings, user tests or direct user feedback. Based on these, hypothesis are built and then tested.

To find out which version performs better, both variations are shown to website visitors for a specific period. After this period, you can make a data driven decision which version to keep and which version to back off. The goal is to improve your business metrics with minor changes, instead of redesigning the entire website at once.

All websites can benefit from A/B testing, because all sites have at least one measurable goal. Most A/B tests try to improve the conversion rate for the primary Call To Action, because the conversion rate is one of the most important business metrics that directly affect your success. However, with A/B testing, you can try to improve any business metric that you wish. This could be the bounce rate on your website, the click through rate or open rate within your email newsletter or the dwell time on your website.

However, this leads to one of the biggest challenges in A/B testing - the amount of people your A/B test is exposed to. For example, if you just released your website and have very few visitors, your test results might be off because too little people tested it. If you have 10 people in your email newsletter, and you want to test the effectiveness of two different subject lines, there is little sense in sending one email to the first 5 people, and the second email to the second 5 people. The user group is just too little. With only a small user group, it makes more sense to do user research and talk to people to improve your website, instead of A/B testing.

When you have enough traffic, A/B testing is one of the most powerful methods to improve your business metrics and to make thought out, data-driven decisions.

You have been working on a product or a service for a long time. You have achieved successes and celebrated your wins. That's great and you can be proud of yourself. However, what you should never do is to fall in love with your service or product.

Falling in love with your solution brings one major downside, and that is that you are not being honest with yourself in bad times. Worst case, for example, when the numbers don't show the growth you are looking for, you are finding excuses instead of solutions. And that should never happen.

Think of it this way: As a founder, it's ok to be convinced of your offering – otherwise you would not be in business in the first place – however, you should always wear your CEO hat and analyze the business objectively. This means that it is your job to find the issues within your business and to solve them. Worst case, as a CEO, you need to be able to kill your darlings.  

When I look back to the startup story earlier, we should have killed the product once we found out that there was no market for it. However, we were so convinced of the solution, that we couldn't. Don't make the same mistake.

A/B means testing two or more versions of a variable, such as button colour, layout or headline, to see which performs better. The biggest benefit of A/B testing is that it takes the guesswork out of testing and provides data-driven insights into user preferences.

Keep in mind, however, that you need enough traffic to get decent results. If only 100 people visit your website each month, A/B testing would not give you a clear result.

Common launch mistakes include inadequate market research, premature scaling, and overlooking user feedback. I cannot stress enough how crucial it is to thoroughly understand your target audience, iterate based on their feedback, and scale operations proportionately to demand.

The mosts common customer support mistakes are slow response times, insufficient self-help resources, and the lack of personalization. To avoid this, prioritize timely and personalized support, invest in knowledge bases, and empower users to find solutions independently.

Building a successful business is hard. Personas, marketing channels, customer journeys, metrics, no easy task, that's for sure. When I started my company back in the days, I felt overwhelmed. I did not know where to start and I made many mistakes. What I was missing was a clear path, a step-by-step guide, someone who showed me the pro tips when I was stuck.

If you want to avoid the mistakes and learn everything you need to know to successfully build your business, the SaaS bundle is right for you.

Check it out.

The SaaS Bundle is a collection of proven templates/worksheets that show you step-by-step - from beginning to end - what you need to be aware of when you build your business. So here is what you will learn:
‍
✓  How to validate your idea without wasting time and money
✓  Learn who your customers are
✓  How to find the marketing channels that work best for your business
✓  How to reach new customers
✓  How to provide value and retain customers in your business
✓  The best strategies to bring your service to market
✓  The SaaS metrics you need to track and how to calculate them
✓  8 powerful templates: Template to validate your idea, persona template, marketing channel template, customer journey template, go to market template, metrics template, user onboarding template, pricing template
✓  200+ detailed slides