10 Tips for Building a Successful Software Business

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As more and more businesses warm up to cloud-based services, the software-as-a-service industry continues to grow fast. The Gartner CRM Guide, published in March?predicts, for example, that by 2015, for the first time, more than 50 percent of customer-relationship management?deployments will be deployed as SaaS, and that by 2025 that number will surpass 80 percent.

As Mark Andreessen would say, ?software as a service is eating up the world.?

Consider these 10 tips to create a successful business in this expanding industry:

1. Follow KISS (keep it simple, stupid)

SaaS products are often self served, and as such need to be self explanatory, simple, clean?and highly intuitive. Sales and marketing collateral need to highlight value, return on investment?and use?flows, not features and technology.

2. Offer several packages

The entry-point SaaS offering should almost always be free, but limited in usage volume, functionality?and/or time. It is recommended to then offer two to three paid packages fitted to different customer segments?with different usability, ROI?and willingness to pay.

3. Define, measure, analyze, improve, control

In their actions, SaaS users share with us invaluable information about their use of our products, and their needs and behavior. Data reveals what functionalities are popular?or aren?t being used (and should therefore potentially be omitted per the KISS principle), and also helps to segment users and define packages. It?s important to continuously define tests (wherever possible with A/B testing) and monitor the effective improvement after making changes.

4. Cultivate an ecosystem

Successful products are wrapped with open and flexible APIs that enable easy integration with third-party software. The better ones also amass around them a community of developers, and/or offer a plugin marketplace that enables the development and promotion of third-party plugins. Interoperability increases the value of the product, and also introduces an ancillary source of revenue from referrals, resale opportunities?and equipment manufacturer?deals.

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