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How SaaS Companies Build an Initial User Base

Published on 08 August 19

The software-as-a-service (SaaS) business model has been popular for many years, and for good reason. Unlike traditional software companies, which only require a one-time payment, the SaaS model typically comes with a monthly subscription, leading to more consistent ongoing revenue (and the capacity to make regular updates). Plus, with a robust enough user base, you can have a reliable system for getting more referrals and more visibility for your app.

The problem comes with getting an initial user base. Attracting your first 1,000 users or so is exceptionally challenging, since you won’t have much brand recognition, and you’ll be competing with thousands of similar businesses. So how do successful SaaS companies do it?

Creating an App Worth Using

First, you need to make sure you have an app worth using. If people don’t have a good reason to use (and keep using) your service, it will be practically impossible to generate a decent following. There’s no surefire formula for success, but you’ll at least need to address the following:

  • High-level business plan. Your SaaS company needs to have a solid business plan in place. Most notably, you need to identify a problem, and solve that problem with your software. Ideally, you’ll do it in a way that’s better and/or different than the majority of other solutions currently on the market, and you’ll have a target audience in mind.
  • Design and usability. Once you’ve solidified a foundational business model, you’ll need to polish the design and improve the usability. Your app needs to be welcoming to new users, and intuitive to use.
  • Price. Finally, you’ll need to think about price. You may have the best app on the market, solving a problem that everyone faces, but if it’s too expensive, nobody’s going to buy in.

Marketing Fundamentals

The bulk of your work will come in the form of marketing and advertising your business. Once you have the app developed, and in a place that people will pay for it, you’ll need to spend time introducing it to new users and convincing them of its worth.

You’ll have to start with a solid branding strategy, with a good vision statement and mission statement, as well as documented brand characteristics that can be used across all your strategies. It’s also a good idea to have customer personas, so you can get into the mindsets of your target demographics.

From there, you’ll need to choose a collection of strategies that have the best chance of supporting your brand. Though SaaS companies in different industries will have different needs, strengths, and weaknesses, one of the best options for the long term is SEO for SaaS. Search engine optimization (SEO) relies on a combination of tactics, all designed to help your site rank higher in search engines for queries related to the brand. This can help you ensure a practically endless stream of inbound traffic, so as long as you have compelling calls-to-action (CTAs) onsite, you can keep collecting new users.

SEO is ideal for SaaS companies because of its potential for growth and staying power. It takes a long time to develop the content and build the links necessary to improve your domain authority and search engine rankings, but once you have higher rankings, you can stay there with relatively little maintenance. SEO also works well with other marketing strategies, serving as an ideal complement to approaches like content marketing and social media marketing.

One of the only weaknesses of SEO (and other long-term inbound strategies) is the fact that it takes so long to develop. SaaS companies can make up for this by pairing their SEO strategies with an advertising strategy more focused on the short-term, like pay-per-click (PPC) advertising.

As long as you’re paying attention to your performance and gradually optimizing your approach, your marketing strategy should eventually pay off.

User Retention

The last element in attracting an initial user base is user retention. It doesn’t matter if you can attract hundreds of new people if most of those people end up abandoning the app after a month or two. You need some kind of plan to keep them around, above and beyond making sure your app is functional and usable. This looks different for every company but could involve discounts or other incentives for sticking around for the long haul.

Attaining an initial user base is the most challenging phase of development for any SaaS company, so don’t be intimidated if it takes some trial and error to find the right combination of strategies to succeed. But with a good business model, a strong marketing approach, and a user retention strategy, you should be able to compete with the best of them.

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