Many entrepreneurs see a highly competitive marketplace as a deal breaker for startups, but a saturated market also means there is high demand. People like having choices—this is true for both B2C and B2B SaaS.

While a large number of competitors in your marketplace shouldn’t end your startup dreams, entering a competitive market isn’t easy. In today’s blog we’re walking you through actionable ways your SaaS startup can standout in a saturated market, including:

  • Knowing your competition
  • Identifying your unique differentiator
  • Carving out a niche
  • Capitalizing on marketplace changes and trends
  • Creating effective branding
  • Engaging with customers

Understand your competition.

In order to compete, you need to have a deep understanding of your competition.

“Everything is online nowadays, and you can readily visit competitor websites, storefronts, and social media sites to see what initiatives they’re pursuing. As they make moves to promote their business, you can learn from both their successes and their failures while you’re working on your own product development and marketing strategies,” advises entrepreneur AJ Agrawal.

With tools like SEMrush you can even analyze your competitor’s Adwords content and strategy.

 

How do you capture a market that doesn’t need you? The answer is by adding value to the product or service offered by your competitors. And how do you add the value? By finding out customers’ pain points related to that particular product or service.
Manish Bhalla, Founder of FATbit Technologies

 

Below are examples of the other types of questions you should be answering when analyzing competitors already in your market:

  • What is the competition doing badly?
  • Where are the competitor’s products lacking?

“Sometimes, a business does not need to be disruptive to be successful. You just have to look at the things that need to be fixed. Your product/service may be similar, except for a few factors. Filling in a gap in the market by addressing problems faced by customers that is not being answered or attended to by current industry players can help you capture the market share,” explains outsourcing company Supahands.

In Groove’s early days, any time CEO Alex Turnbull received support from a company and saw they were using Zendesk, he would ask about their experience:

alex conversation with zendesk user

“I absolutely recommend having conversations with your competitors’ customers about their experience, especially if they’re avid fans of the product. You’ll learn a lot,” writes Turnbull.

He also notes it is not ok to use this method to attempt to poach customers from competitors. We agree—don’t be that guy.

Identify & clearly articulate what makes your SaaS unique.

 

Think about it: There are tons of companies that sell virtually the same product. Many of them are merely treading water. The ones that are really able to penetrate their respective industries, exert influence, and see profits increase year over year are the ones who create an important differentiating factor. You can’t penetrate the market with sameness.
Gwen Jimmere, CEO & Founder of NATURALICIOUS

 

Often when a SaaS startup founder is asked what will differentiate their product from competitors, the answer is “a better product.”

This usually refers to creating a product with features or capabilities the competition’s product lacks. While it is true that creating a better product is key, offering unique product features isn’t the only way to stand out in a competitive market. Other ways to differentiate yourself from competitors include:

  • Targeting a different audience segment
  • Offering better customer service or support
  • Offering a more seamless experience (examples: a seamless sales to customer success handoff or a seamless user experience across multiple devices)
  • Providing a signup or purchase flow with less friction than the competitors offer
  • Making the upsell path easy and convenient

“You have features that no other solution has. You might have a business model, a set of supply chain relationships, a proprietary process or other intellectual property that you and you alone can deliver. This is what you want to capture,” explains April Dunford, CEO of Sprintly.

Pricing

Many SaaS startup founders make the mistake of identifying price as a competitive advantage. Don’t make the same mistake. What happens when another startup enters the marketplace with a lower price tag? Getting into a pricing war and being forced to continually lower your price isn’t a feasible business plan.

“Don’t assume you’re going to be the next Dropbox. The truth is, very few startups can survive a marketing plan centered around being cheap,” says Steli Efti. Efti goes on to explain smart startups don’t decrease their price, they increase the value of their product to match the price.

One way to use pricing to stand out in a saturated market is to include a free offering such as a free trial or freemium plan. We go into depth about how to determine if a freemium plan could be the growth lever for your startup in SaaS Freemium: How to succeed and how to fail…

Carve out a niche.

Large companies often target large audience segments, so your SaaS startup can stand out in a competitive marketplace by targeting a small niche.

 

There’s value in finding an untapped market, but you don’t have to toss your dreams aside just because you’re not the first person to have an idea. Startups are emerging as industry leaders in saturated markets by carving out a niche.
Angela Stringfellow, Chief Ideation Officer at CODA Concepts, LLC

 

Hiten Shah suggests carving out a space for your startup by building “SaaS for niche markets that don’t have a lot of software available to them yet. Just like HubSpot and New Relic, you can build attention by being early to the market.”

Another innovative way to carve out a niche is to build a “micro-SaaS” product on top of existing platforms. Nerd North Inc. founder Justin Jackson shares these “micro-SaaS” examples:

  • Expedited SSL. They were able to leverage the Heroku app store, and offer developers a quick way to add SSL to their web applications.
  • DBinbox. This founder built on top of Dropbox’s platform, giving Dropbox users an easy way to receive files from their clients.

Capitalize on changes in the marketplace.

New companies often recognize the gaps that established businesses don’t. The challenge is not to become like the established businesses who think they know better than the customer. This applies to B2C, B2B and nonprofits.
Seena Sharp, Founder & Managing Director of Sharp Market Intelligence

 

Even in highly competitive marketplaces, trends will evolve and changes will take place. SaaS startups can stand out by keeping a pulse on market trends/changes — and then capitalizing on those changes.

Doorbell is a great example. Initially, some billed the startup as a competitor in the property management space — a very saturated market. Doorbell is capitalizing on the co-living trend and has created a “multifaceted property management platform [with an] emphasis on facilitating quality co-living experiences among building residents,” explains BostInno writer Olivia Vanni.

Doorbell me Co Live Anywhere

While the SaaS startup allows property managers to handle logistics such as collecting rent and handling maintenance requests, it stands out amongst competitors with the focus on connecting building residents to create a unique community. Via the Doorbell platform people can coordinate events (building-wide or individual playdates), share goods and services (such as babysitting services or simply borrowing a vacuum),  and privately message others in the building. Additionally, the platform gives local businesses in the near vicinity the ability to offer exclusive discounts directly to residents.

Branding.

 

When Product A and Product B are nearly identical, customers are relying on something else to aid in the decision-making process. That’s where branding comes in. Customers aren’t just making a transaction; they’re looking for a service, platform or product that solves their problems and fulfills their needs. In addition to your product, they’re considering your reputation, your technical support, your thought leadership and how your brand makes them feel.
Andrew Stanten, President of Altitude Marketing

 

According to Daniel DiPiazza, “if you’re launching a startup that caters to human beings (umm…this is probably everyone), then you can leverage considerable influence over even the most vicious competitors by creating a more compelling story than them. A story that sparks feelings and emotions in the potential customer.”

Consider Microsoft and Apple. Apple was at the top of Interbrand’s 2016 Best Global Brands report. It’s a spot Apple has claimed for 4 years in a row. Microsoft was ranked #4 on the 2016 report. What makes one brand more loved than the other?

“Apple has a branding strategy that focuses on the emotions. The starting point is how an Apple product experience makes you feel. The Apple brand personality is about lifestyle; imagination; liberty regained; innovation; passion; hopes, dreams and aspirations; and power-to-the-people through technology,” explains Marketing Minds.

Microsoft’s positioning has frequently focused on a direct comparison with Apple products. That tactic keeps Apple at the center of attention and doesn’t provide consumers with a Microsoft story that resonates with them. This Microsoft commercial is a good example:

The takeaway for SaaS startups is the importance of creating a story or personality around your brand. Branding is an important aspect of standing out in a saturated market.

Engage with customers.

If you don’t have customers yet, our post 8 Actionable Ways to Get Your Startup’s First 100 Customers is a must read. If you do have customers, here’s how engaging with them can help your startup stand out in a saturated market:

 

Offer opportunities for customers to give feedback about areas that may need improvement.  Not only will you remedy an existing problem, it makes your business look customer centric, which is important in the saturated startup marketplace.
Kevin Price, Host of “Price of Business”

 

If you’re a regular reader of our blog, you know we’re big fans of talking to and getting feedback from your customers.

This point ties in with several we’ve already discussed: understanding your competition, determining what will make your SaaS startup unique, carving a niche, and keeping a pulse on trends in the marketplace are all things you can learn more about by getting feedback directly from your users.

In the early days of Airbnb, the co-founders flew to New York every weekend. “We would reach out to the very few people we had and get to know them, figure out what products they needed and what we could offer them. We tried to build loyalty knowing that if we did that, they would tell their friends,” explains Brian Chesky, co-founder and CEO of Airbnb.

It worked. The images below show Airbnb listed residences in NYC in 2008 and 2009:

When you go out of your way to engage with your first customers, you not only get great feedback to improve the product but also can end up creating product champions.

“I have noticed that almost every successful SaaS business has customers who vouch for it. They will stick with the company and defend it. They are also the cheerleaders and promoters of the product,” advises Pushkar Gaikwad, founder of AeroLeads.

Wrap-up

 

More competition doesn’t mean we’ve hit peak SaaS; it means we’ve hit an inflection point in the space. Over the next decade, we’ll see many more different types of SaaS emerge, from market network companies to products built entirely on APIs.
Hiten Shah, Co-Founder of Quick Sprout

 

Don’t let a saturated market scare you out of moving forward with your own SaaS startup. A competitive market indicates there is a strong demand; use the points outlined in this post to help your own startup stand out and succeed.

It’s your turn: how did your startup stand out in a saturated marketplace? Share your experience and tips in the comments below.

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