For me personally, my journey wasn’t about turning something we were already doing for our clients into a SaaS product. Instead it came about as the result of something we’d been working on in another of our products. But for many SaaS companies who started as agencies or consultancies, it’s the client work that is the catalyst for their idea. In this article I look at the clues that indicate you may have a brilliant SaaS product hidden in plain sight, some of the companies that have done it that way and what steps you could take to test the water.
Clue #1 - You’re doing the same thing for different clients
Are you starting to get that sense of déjà vu? Yes, your clients are all different and they have interesting and unique businesses but fundamentally there is something(s) you do for them that is pretty much cut and paste. Maybe you’ve built some modules that you keep reusing more or less, or maybe there is a process that you take people through that creates great results.
Pixl8, a web design and build agency based in the UK had developed a specialism in the Membership Organisation space and found that after several years of creating websites for them, there wasn’t a customer requirement that they hadn’t already built. As a result, they were able to productize the modules they had created and turn them into a product, ReadyMembership. ReadyMembership is now a SaaS platform for Membership Organisations to manage their entire digital presence.
If that sounds a bit like you, and you want to test it out, it could be that you ‘SaaSify’ what you are already doing for clients where you still build them a website using the modules you have built, but present it as part SaaS, part Professional Services. In that way you don’t need to do anything too radical, rather see if clients are open to a different way of packaging what you do.
Clue #2 - Part (or all) of your services could be self-serve
You could be doing the same thing for your clients, but rather than the whole service, maybe there’s one part that is something that people really need but for you, it’s a fairly standard task that could be automated.
I would hasten to say here, it has to be something that solves a genuine problem. About 10 years ago, me and my cofounders wasted a year and a load of money building a solution to a problem that was a bit of a pain for us, but not for many others. The idea was a way to automate buying a domain, setting up hosting, MX records etc and even creating social media accounts simply by entering the name of the company into a box, making a few selections along the way and letting the product do all of the set up. It was something that we found tedious but that often came with the territory if we were building a website for a new business. And that was the problem, it was at most, a nice-to-have for us and for our clients it was something they expected us to do anyway as part of the overall price. So yes, it was a standard task that could be automated, but it wasn’t a problem anyone cared about paying to solve.
Mailchimp, on the other hand, realised that they could automate the process of setting up and sending bulk emails on behalf of their agency clients. They had built themselves an email distribution tool but it was very manual. The founder had to log in and send the emails on their customers’ behalf. And then he would have to bill them $50 or $100. His simple thought was “what if we could get customers to login themselves and manage it without our intervention? And what if we could just bill their credit cards instead?” (bear in mind this was all before SaaS was mainstream).
Spinning a SaaS out of your agency or consultancy based on a process that you can automate and allow customers to self-serve is how you scale quickly. It may be that something that is wholly self-serve is also lower value and so your recurring revenue per customer will be smaller than agencies who SaaSify an element of their professional services, but at scale even $50/month quickly adds up. Eighteen months after launching our self-serve SaaS we were at $1m ARR and six months later we reached $2m, all with an Average Monthly Contract Value of about $65.
Clue #3 - Your customers are all using a tool that they hate
They may hate something but it’s the only thing available to them for their industry sector, or maybe they hate just how expensive it is to roll out across their company. There are still industries that use antiquated paper-based tools to manage a part of their business. Maybe it’s a mandated industry requirement to use that tool to be compliant, or maybe it’s just that nobody has been bothered to fix it yet.
37Signals (who started as an agency) have just relaunched their product CampFire as a rival to Slack and Teams. But whereas Slack is almost $9/person/month, meaning that if you were a company with 2,500 employees you would end up spending over $250k annually, they are charging you a one-off fee of $299. The only catch is you have to host it yourself. But even so, you can see there is considerable value in large companies deciding they are done with Slack and slashing their costs.
If you are an agency or a consultancy with a particular sector niche, the chances are you might have a better insight into this than even the companies that work within it. After all, they know just one company, you speak to many of them all the time. You will be able to detect where there are recurring themes and what those frustrations are. Maybe you are the one to fix it? Speak to them and find out.
Clue #4 - You have a micro-niche that you are the world’s best at
If you’ve developed a specialism for, say, developing iOS apps that integrate with AI technology for companies without the expertise in-house, and you’re the only company in the world that exclusively does this (ie everyone else is a generalist), then maybe there is a product there that helps companies build their own AI-driven iOS apps. You can already point to the great list of happy clients you work for. People can download their apps and see just how great you are. And you know what companies, who don’t have that in-house expertise, really need. If you want to scale beyond your current capacity then maybe you build AI iOS tools for non-AI experts and never look back.
Submarine is a platform for building bespoke customer payment experiences on Shopify Plus. which has a simple charging mechanism of 1% of the transactions that use it. But the founder started with his agency that specialised in building customised applications for Shopify stores.
Often we don’t realise the value of our specialist expertise: the stuff we know that hardly anyone else does. We’d built an app called Flow for Instagram which took your Instagram feeds and elegantly displayed them on an iPad. Nobody else was doing this and it wasn’t a simple technical problem to solve. It did relatively well. Some of that knowledge and experience was what prompted us to think about how we would approach developing a digital signage platform that used consumer hardware.
Next steps?
There are, they say, many ways to skin a cat. When I speak to agency owners who haven’t started the journey of spinning out a product business, they often have an idea bubbling away in the shadows. And often it’s coming from one of the clues I’ve just described.
But for others, there is a sense that they would love to launch a product but they haven’t had time to come up with a great idea yet. I’d say, look to see if any of the clues I’ve mentioned are there in your business. You may be surprised.
Figuring out how you can turn what you know into a product is the very first part of the journey and it’s surprisingly easy to validate that idea by following some simple steps.