Customer demands are constantly evolving, with new trends emerging every minute. Businesses in the SaaS sector must adapt to these changes to maintain competitiveness. A SaaS product has the potential to elevate a startup into a highly recognised enterprise. However, if not scaled appropriately, it can be more detrimental than beneficial.
Hence, scaling this web-based solution should be a carefully considered process. Every company requires a dedicated development team to strategically plan the scaling of their SaaS products according to the demands and timing.
In this article, we will explore the process of scaling your SaaS product with the aid of a dedicated development team.
What will you learn from this article?
- At what point in the business lifecycle should a SaaS company consider scaling their development team, and what are the key indicators for this decision?
- How can SaaS companies penetrate their products in highly competitive markets and ensure their offerings stand out?
- What measures can be taken to enhance operational efficiency in SaaS businesses?
- What are the critical steps that SaaS companies lacking in marketing and sales expertise should take to improve their capabilities in these areas?
- What are the best practices for SaaS companies in terms of talent acquisition to ensure the right cultural fit and skill set for their teams?
Table of Contents
9 SaaS Growth Challenges
A company will face a lot of challenges while scaling its SaaS development. Here’re the nine biggest challenges and how to address them.
1. Lack of Experience and Resources to Scale
Many SaaS companies are young and lack several resources and experience needed to scale. It is a significant dead-end as the company will fail to address the changing trends and changes.
Another challenge a SaaS company may face is age-related factors such as inexperience or being too risk-averse. Focusing on developing a solid foundation and then scaling gradually is essential. A company using SaaS solutions can hire a dedicated development team to scale the product.
2. SaaS Market Penetration
Penetrating your SaaS product in the market is another tough challenge. Getting more people to notice your product needs expert marketing tactics which involve partnerships and collaboration.
There is a lot of competition in the market, and with the right strategies, it is possible to make headway. If you have a solid product that's truly innovative and solves real problems for people, then you already have the edge over your competitors. You only need to get the word out and tell people about your product.
You can also reach out to potential partners with your business proposal and collaborate with them to get your product in front of more people.
3. Operational Efficiency
Operational efficiency is a tricky job for SaaS businesses. SaaS businesses involve large and complex moving parts which are hard to track and optimize for performance. On top of that, SaaS businesses need to ensure that the company's revenue is maintained by providing its loyal customers with reliability and maximum uptime. The scaling of the SaaS product heavily depends on the knowledge of the market and its demand. Otherwise, you will be over or under-invested in an infrastructure that does not generate revenue.
To improve Operational Efficiency, here are a few things you can do.
- You need to make sure that services are well-defined and easy to use. You need to optimize the internal processes so tasks can be completed quickly and efficiently.
- By scaling infrastructure, you need to be prepared for spikes in demand – make sure it can scale with demand.
- To achieve this, ensure that every member of your sales and marketing team understands which SaaS sales metrics to work on and optimize.
4. Adopting Latest Technologies
Adopting the latest technologies is another challenge for SaaS companies, as they need ambassadors who act as product champions. These people help evaluate the current offering of the product and what needs to be added based on the customers' feedback.
You can find these ambassadors easily by adding a feedback button on your product where they can submit the goods and bad about the product.
You will need to ensure that products are user-friendly with an easy onboarding process that helps new users set up quickly.
As a business, you must create compelling content to explain the product's benefits and actively reach out to potential customers and evangelists to help promote the tool.
Using webinar software, you can gather a specific target audience and engage them with your presentation. This will make it easier to suggest your SaaS product to your audience.
5. Lack of Marketing and Sales Expertise
The primary cause of failure for firms is a lack of marketing and sales competence. Having a top-notch product or service is indeed just as important for success in a competitive market as having these competencies. But in today's business environment, it's quite challenging to succeed if you lack marketing and sales skills.
Because it can be challenging to identify the target consumer and determine the best way to contact them, SaaS companies frequently struggle with marketing and sales. Furthermore, differentiating your product in a highly competitive market might be difficult. Because there are so many possibilities, clients may be picky about their selected service. However, you may always think about outsourcing your marketing to a digital marketing agency that can assist you in developing a plan and has experience in the area.
There are several things SaaS organizations can do to enhance their marketing and sales capabilities, but competence doesn't happen overnight. For the benefit of their team members, they must invest in training. Everything from understanding how to create persuasive content to cultivating connections with potential clients can be covered in this.
Additionally, they must schedule time for marketing and sales activities that generate leads for sales. To do this, they must provide content, contact potential clients, and go to events where they can socialize with other business people.
Make every effort to increase your knowledge of efficient and effective sales processes and marketing techniques. You could hire a capable mentor or coach who can point you correctly. Practice, practice, practice is the last thing to do! You will improve with more expertise in promoting and selling your goods or services.
6. Lack of Infrastructure to Handle Large Customer Base
Any business that grows rapidly will require the development of an IT infrastructure that can accommodate that expansion. This calls for various services, including customer support, IT service management, accounting, financial structures, order fulfilment, shipping, exchange of information, and enough cloud and computer disc space to maintain and update customer and other work-related information and documents, among other items.
To keep up with client demand, a business may find it difficult to scale up its infrastructure rapidly enough. This frequently results in delays or issues with clients' orders. A strong customer service team is required to investigate and solve these problems as promptly as possible.
The success of any business is largely dependent on its infrastructure, and building one successfully may be time- and labor-intensive. However, the expense is justified given that happy customers are more likely to become loyal supporters.
7. Lack of Funds
Long-term growth issues affect all firms, even SaaS providers. Even the most prosperous ones risk getting stuck if a business is not cautious.
There are two levers we may use to think about financial security in life and business. Management has two options: raising income or cutting costs. Naturally, pre-revenue enterprises will need to take the latter into account.
SaaS companies must invest in sales and marketing if they want to expand. If not much money is left over at the end of the month, the company will have to seek methods to cut costs (i.e., reducing the burn rate). Doing this will ensure the company has a solid basis on which it can expand.
Here are four places a SaaS business can look to save money
- Negotiate better deals with suppliers and providers. Startups frequently receive discounts from vendors, as do customers who pay early or accept extended payment terms.
- Reduce the cost of employee benefits by reducing the number of employees who get benefits or finding more affordable health insurance policies.
- Energy-efficient equipment is an investment that will help you save money on energy in the long run.
- Reduce the number of office supplies you buy by buying only what you need in bulk.
A company might use its newly acquired capital to boost sales by exercising frugality and decreasing costs where possible.
8. Problems in Expanding to New the Markets
For a SaaS business, entering new markets could be an excellent strategy to stimulate growth. However, conducting preliminary research is crucial to confirm that your product or service would be a suitable fit for the new market.
Don't hurry about anything. Spend some time learning about the market and locating possible clients. Additionally, confirm that you have the necessary funding to enable a profitable development into other areas. This includes departments like marketing, sales, web development, and customer support teams that may connect with potential clients and build connections.
The cultural distinctions between your business and the new market must also be considered. To avoid making cultural errors, ensure you are familiar with the regional customs and etiquette. Considering this will enable you to choose wisely between using email for communication and podcast promotion. To find out if your prospects are amenable to such choices, all you have to do is ask.
Be prepared for some difficulties if you decide to enter a new market. There is no assurance that your product or service will be successful in a new market; in fact, you may encounter some rivalry from regional businesses. But you can establish yourself in a new market and see considerable development with a little luck and a lot of hard work.
9. Talent Acquisition
I believe a few things are critical to remember when hiring talent. You must first have a solid grasp of the culture of your business and the type of team you wish to create. Conflict will result from an enticing talent that doesn't match your culture.
Second, you must be prepared to make financial commitments to your attempts at the hiring process and training new employees. Companies frequently attempt to save costs regarding hiring, staff training, and employee retention, but this is a mistake. Instead, you must devote time and resources to building your team by hiring the best candidates.
Even though most SaaS roles are digitally oriented, offering tangible rewards to your staff is crucial. Little expenditures like ergonomic office chairs, standing workstations, gym memberships, and other stipends can make a big difference in attracting top personnel.
Last but not least, you must have patience. Don't lose hope if it doesn't happen immediately, since finding the ideal person might take some time.
When is the best time to grow your development team?
Before you scale, you need to complete 3 tasks:
- Validate your market: you found a solution for a problem people are dealing with and they are willing to pay for that solution. This is a pre-startup stage.
- MVP: you built the minimum viable product and are ready to get testers, gather feedback and finally gain customers.
- Customers: you acquired some customers that use your software. This is where scaling comes into the picture!
After these 3 stages, you are ready to begin the initial process of SaaS scaling. It is important to view scaling as a gradual process rather than diving into it with all you’ve got. You should not scale your entire business at once. Scaling will cost you money and time, so it is important to prioritize.
The growth process in SaaS development includes stages like establishing a sales process or ensuring product development and marketing are coordinated. Browsing the net you can find several articles discussing these topics. I would like to focus on key elements of scaling back-end improvements or improving UX/UI design. People. Developers who are a crucial part of any SaaS business. There is a great programming team behind each great software. If you scale and would like to keep application quality on the same level you need greater capacity. Based on our experience of collaboration with SaaS companies I would point to some places where additional team members can boost development speed.
3 areas where developers can help you scale faster
Billing, payments and subscriptions
Most Saas businesses choose the subscription billing model. When your process of invoices and customer reminders is ready to get automated, you should start with scaling your billing system first. Billing becomes complex when the subscription management process does. When you experiment with pricing strategy and expand into new locations, your subscription will get complicated. If you fail to acknowledge how heavily billing is influenced by subscription you will be stuck with a recurring billing system that will not be able to serve your company well and the customer experience will drop.
Automation of billing processes and customer outreach is what makes scaling successful.
Development of new features
To scale well means to aggressively attack the market. You should have as much of the market share as possible before your competitors take it from you. Leaders always have an advantage in front of the press, influencers, analysts. The customers also pay more attention to the market leader.
Saas applications aim to eliminate the need for backward compatibility and customer support, so the developers can move much faster in order to add features, improve the user experience and eliminate bugs. You should always stay focused on improving the performance of your app.
Many believe that the core of successful SaaS development is the ability to reach the market as soon as possible. With additional developers, you can ship features faster and execute them quicker.
Deployments and cloud management
Scaling and automation of deployments require planning and proper architecture.
You should focus on the following steps:
- containerizing application - Docker is the standard for containerizing applications. Before deployment, you have to make sure your applications are containerized.
- Cloud management - use cloud management software, like Kubernetes, to manage your cloud resources and automate deployments
- Continuous Integration and Continuous Deployment - a strategy in which you develop, test and release new versions of the software continuously. This will be the most important part of your SaaS processes while scaling.
Your minimum viable cloud infrastructure should be both stable and secure. Functions like automatic restart, and restoring from failure are what makes your cloud infrastructure stable. On the other hand, data security is another important aspect as any security breach will result in not only the loss of the data, but also of customer trust.
Scaling your development team: when and how to start
When your SaaS project is growing, at some point, you will have to think about expanding your team of trusted developers. It is extra important to find the right people who can handle team management and take over product development. The better people you choose now, the better the future work will look as they will be the ones handling customer experience and overall product satisfaction.
Here are some points to consider when hiring the engineering team:
- In DevOps/TechOps you will probably need 3-4 people to ensure 24x7 support and coverage. If you count DBAs here, increase the number to 6-7 people.
- In engineering, you can go as far as 20 people including 2 designers. Some of them will do the mundane work while a few of them will focus on the back-end, refactoring and doing amazing things to your project.
- You also need somebody for Quality Assurance. You will be more than fine with 8 engineers and a manager.
How to know when to scale a software development team?
Scaling a technical team, like scaling any other team, is heavily linked to how operations are going in your company. As a result, to determine whether you need to grow, you must first evaluate your company's current position.
If you own a service company
A service provider employs software developers and other members of the software engineering team. The number of developers you may provide the customer and your income, as a result, are entirely dependent on the size of your team.
When marketing produces demand exceeding supply capacity, this sort of business requires scaling. It is time to consider increasing the team if a marketing team generates more orders than the current team can handle.
If you are a product company owner
A product company concentrates on producing a product. If this is the case, the scale of your team and its technical proficiency define the rate of product development and its distinctive value proposition about the competitors.
Scaling may be necessary for these businesses if the team fails to meet the deadlines for delivering a different project or if the product development goes as planned. Still, the extra staff is needed to stay on schedule. If you find yourself in one of the above mentioned situations, scaling is an option.
Things to do before you start the scaling process
Let's take a closer look at why these problems occur and how to prepare for scaling to avoid them.
From a Business Standpoint:
Focus on the Essentials
Focus first on the fundamentals of your business. Establishing a successful company is almost unachievable if you don't clearly know who you are and where you are headed. Even while you may not be experiencing any issues at the moment, it doesn't guarantee they won't arise as the business grows.
Define the strategy and determine the key metrics
Once the mission, vision, and culture statements are complete, decide on the development plan for the business. The approach and scaling should be compatible. In the long term, making poor judgments and losing money will result from not knowing "why" you are scaling within the plan's framework.
Establish performance measures for each department to monitor progress and coordinate with coworkers.
Assign the Roles
To make the project manager a sort of "mini-CEO," it makes sense to combine the product owner's duties with the project managers as the number of projects increases. These additional duties include conducting target market research and looking for methods to increase the value of products for consumers, which will promote corporate expansion.
The product owner will be the conduit between the company's domestic and international expansion and product development.
Define the team and its size
The organizational structure of your business will vary as you scale. Always keep in mind how much simpler it is to manage small teams.
You should break up the team and form a new one if it expands. The "rule of two pizzas," popularized by Jeff Bezos, is the ideal illustration of how it should operate. According to the rule, the team needs to be big enough to feed everyone two pizzas.
Find the best communication channels
Revision of the improve team communication channels is required due to the expansion of the business and adjustments made to the organizational structure. This is especially true given that many people work remotely.
You know how quickly information can be lost if you have ever dealt with remote workers. Redesign the communication routes to ensure each team member gets the information they want quickly and with the least amount of digital noise possible.
Automate business processes
It is far more difficult to scale a manual operation. As the development team expands, some tasks become costly and have little impact.
Automate as many of your business's procedures as you can. This will enable you to allocate your resources as effectively as possible.
Synchronize teams
Coordination challenges may arise when product development teams grow. For example, although the second team is still working on the project, the first team has already completed its portion. Due to the interdependence of all the components and the inability to move on without completing the second component, the overall development cycle decelerates.
Scale the team based on the volume of work it can do to prevent this. When required, reallocate resources and discuss plans with other team leaders.
Hire the right people
Any company's foundation is its workforce. Without the appropriate individuals, none of those mentioned suggestions will provide the desired outcome.
The concept of "the right person" might mean many different things to different people. First and foremost, it is based on the culture you established for the business. Do not undervalue the significance of business culture. The scaling stage is when the culture is most severely tested.
The majority of people find it challenging to notice changes. The team's efficacy may be negatively impacted by abrupt changes in the team's environment. Therefore, it is crucial to consider the human element while making scaling decisions.
From a Technical Standpoint:
Plan your product
Sometimes, the scalability of a team doesn't produce the desired outcomes because of poorly designed infrastructure and application architecture.
As soon as you begin creating additional features, you notice that the infrastructure cannot support the increased load. Or the architecture is built so that some application components just cease working.
Consider the design of the scaled-down product before scaling. This will also enable you to calculate the precise number of human resources required to complete this.
Apply best practices
The performance of an application is directly impacted by code quality. Consequently, producing an excellent MVP in the early phases is essential. The project will become a nightmare as it scales if the code is of low quality.
MVP should be developed by skilled individuals familiar with the best practices of the chosen programming languages to avoid issues.
Build a dedicated team
The time required for small adjustments is greatly increased by scaling. A different team might be assembled to deal with this issue.
Rotate team members every two weeks or once a month by progressively adding and deleting developers from different teams. Avoid replacing the entire team at once; the changeover should go smoothly. The other teams will be able to concentrate on the essential duties.
Pair programming can be used to minimize the difficulty of integrating new team members. At Selleo, we apply this concept on our teams and it works really well both for us and our clients.
The basic idea behind this strategy is that a more seasoned employee will collaborate with a newbie during the initial weeks of employment. By cooperating with others, a newcomer can become more accustomed to the organization's procedures, resources, and team coding style.
Because newbies have a lot of important jobs to do, don't assign the finest developers to work with them. The ideal match is between developers who are a little more advanced than the other parties in knowledge and abilities.
Common mistakes in SaaS development scaling
Here’re some of the common mistakes companies make while scaling SaaS development.
Long sprints
Long sprints break the developmental rhythm. Two weeks is the recommended sprint duration. Fast feedback loops and project adjustments are made possible by short sprints, which is particularly useful for new businesses. They also convey the idea of steady, progressive advancement, which produces quicker outcomes.
More people don't mean faster development
This error frequently happens to "non-techies." Building an application is similar to building a house. The growth in the number of developers accelerates development to a degree, but it has a cap.
Many methods demonstrate how to distribute resources during the project in the most effective way. One of them is the best resource allocation plan for the project based on Boyle's theory (*COCOMO).
You can choose the best timetable for your project using our diagram. Check the distribution of resources at each stage of the project as well.
Team division is not the answer
It is not recommended to divide teams into front-end and back-end teams since no particular squad can fully deliver each functional increment. As a result, there is fragmentation, communication is difficult, and teams become reliant on one another.
Hard skills are not the only thing that matters
Undoubtedly, hard and technical skills are crucial, particularly for technical jobs like those of a developer or quality assurance engineer. However, don't undervalue soft talents.
Flexibility, teamwork skills, curiosity, and the capacity to do atypical jobs are also crucial, particularly while working for a startup. It's critical to choose individuals with strong, soft skills who can adjust to changing circumstances since, when scaling, your teams will frequently shift, and new people will join.
Summary
The overall lifecycle of a SaaS business model project can be divided into 4 parts:
- pre-startup
- where you prepare yourself to enter the market, researching problems and solutions,
- startup
- with product development, growth - this is the phase where you start scaling and handling many complicated processes and finally,
- maturity
- where your position on the market is stable, your client reach is constantly expanding and there is nothing holding you back.
As it can be challenging to find proper developers in the local market some companies decide to use seasoned remote teams. They become a vital part of their development or help gain time for finding local talent.
