SaaS Innovation – Using Broad Markets vs Target Niches

Software as a Service (SaaS) is now becoming a trend in online business. It is a software delivery model wherein numerous applications are provide by a vendor. So the question is should you start with a broad market when introducing SaaS innovation start-up in a saturated market? Or will it be safer and more beneficial to focus on target niches?

One factor to consider is the financial aspect. If you have a big capital, then you can go ahead with broad market but if you have limited resources then it is more efficient to start on target niches.

Anthony Eden of DNSimple.com said that target niches are pretty much the only option available if you have limited amount of cash. He said that by going for specific portfolio, you can be able to more personal with the target market. You can develop the necessary skills and knowledge and be able to talk to your clients where it makes most sense. DNSimple’s target is software developers thus they use technology conferences to widen their customer base.

Danny Boice, co-founder and CTO of Speek, also believes that one should also start with target niches before exploring broader aspects of business. That way, the company will be able to specialize on a product, recognize barriers, and then identify opportunities for growth. Chris O’Halloran of the Striking Group also said to focus on target niches first.

Mike Kennedy, director of Marketing Talent Analytics, on the other hand, said that it will be better to start with a broad market before specializing to a specific niche. Explore first all the opportunities possible then identify the one with most potential and by that time you can already specialize.

If the market is already saturated and with a lot of players, there are various business models that can be used. Mr. Eden recommends bootstrapping; it is an appropriate technique because it will allow you to focus on automating and keeping your organization small. In the long run, bootstrapping will help you outrun other players in the market. Mr. Kennedy reveals that in their line of business, they use a channel approach to help leverage their data among competitors.

A relationship-oriented model is the advice of the managing partner of Chasm Innovations, Mr. Robert DiLoreto. He said that a strategically planned relationship-oriented model should be the first approach on a saturated market. When you have already built customer trust through references and testimonials then you can get into Pricing and Plans or HubSpot. A Freemium model is best approach according to Mr. Boice as you will have two options ahead of you. The “Free” side will allow you to eliminate barriers and grab traction quickly. While the “Premium” side will allow you to turn your free user clients into profit and other viral promotions like referring their friends.

However Mr. O’Halloran states that there is no reason to change your business models unless there is really a need to. He also said that in the market of SaaS, consumers want to see low-cost monthly charges compared to higher priced annual licensing. He also said that you should just take baby steps if you really want to succeed.

Introducing SaaS start-up innovation especially in a saturated market is quite tricky but with the help of the specialists in this line of business, you should now be able to decide what suits you the most.

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Omri Erel
Omri is the Head of Demand Generation, as well as the Lead Author & Editor of the SaaSAddict Blog. Omri established the SaaSAddict blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to SaaS and cloud migration.
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