It’s an exciting time to be launching a SaaS company, but like any endeavor worth doing, achieving success doesn’t come without its challenges. Here are 3 common hurdles faced by SaaS startups looking to create sustainable growth and profit, along with insider tips on how to overcome them.

1. Conquering 3 Common Challenges Faced
by SaaS Startups
David Stack

2. As an ever-growing number of companies shift to Software as a Service
(SaaS) models for their infrastructure needs, a growing number of
entrepreneurs have taken their startup ideas to the cloud, offering
solutions to everything from customer service to supply chain
management. The cloud computing model makes sense, considering it’s
more affordable, scalable and reliable than traditional onsite IT. It aims to
simplify functionality so that a company or individual can drive their
service with a dashboard (as opposed to needing an advanced computer
science degree).
Here are 3 common hurdles faced by SaaS startups looking to
create sustainable growth and profit.

3. 1. Conducting Cohort Analysis
There’s a lot of data to analyze when trying to get a SaaS
startup off the ground, but some of the most important
information to be gleaned comes from cohort analysis.
Cohort analysis takes the data from a given platform or
application and rather than looking at all users as one
unit, it breaks them into related groups for analysis. This
provides great metrics on improving user onboarding,
free trial conversion rates, churn, and customer lifetime
value. With payback periods often longer than startups
would like, it’s essential to retain as many early free-trial
customers as possible.

4. 1. Conducting Cohort Analysis, continued
A study found that 80% of a SaaS startup’s
future revenue will be generated by just
20% of current customer base, meaning it’s
critical to identify the correct 20% as early
as possible. Cohort analysis is the best way
to do that.

5. 2. Onboarding Users
Another common hurdle in SaaS territory is
onboarding users through free trial conversions. The
goal here is to have as little product abandonment as
possible. Successful SaaS startups convert a high
percentage of free trial users for long-term paid
recurring subscriptions.
So how do you do this?

6. 2. Onboarding Users, continued
Your free trial should demonstrate to a potential subscriber
why they need your product in their life. Your user interface
should be designed to communicate sufficient value for a
customer to convert to a paying user. You need to be able
to define what success looks like for your customer base.
What are they hoping to achieve through your product?
Identifying these desires will help you achieve a higher trial
conversion rate.

7. 3. Creating Buyer Personas
Buyer personas are fictional, generalized representations of
your ideal customers that are a key tool in inbound marketing
efforts. Creating personas is essential for understanding and
attracting the kinds of customers you want. From product
design to marketing, having a deep knowledge of the
audience you’re targeting allows you to tap into the narrative
you want your company to tell. Pulling users into your story
leads to greater engagement, which leads to more growth.

8. 3. Creating Buyer Personas, continued
So who are your ideal customers? What are their buying
habits? Their backgrounds? Their pain points? The more info
you compile on them, the better. Strong buyer personas are
based on market research as well as insights you gather from
your actual customer base through outreach like conducting
surveys and interviews. Get to know your ideal customers like
the back of your hand, and you’ve got a much better shot at
speaking their language.

9. You can read the full article on david-stack.com