February 26, 2020

How to Make Your Saas Platform, App, or Software Stand Out from the Competition

Even experienced innovators can feel intimidated when they realize that someone else has already found the gap in the market they were hoping to fill. Especially in the tech world, how can an entrepreneur make their SaaS platform, app, or software stand out from the crowd? When it comes to developing your product differentiation strategy the following best practices will help you position your digital product for success.

If you feel a bit overwhelmed by the level of competition in your target marketplace, you’re not alone. It’s rare these days to find a naturally occurring “blue ocean“: a truly uncontested market. Though we revere the famous “disruptors” who seem to create new products and markets out of sheer genius and will power, the truth is, both for these titans of tech and us mere mortals, success demands a persistent commitment to finding the little patches of blue sea amidst the feeding frenzy of fierce competitors.

Delivering measurable value to a well-defined customer is the mark of real innovation. The key is to clearly define the problem your product can solve, and to look beyond your current experiences, skill-sets, or even your first great idea to find those solutions. At the end of the day, customers want products that solve their problems, and businesses with staying power are the ones who stay in touch with those problems and imagine creative yet workable solutions.

Three Product Differentiation Strategies to Make Your Digital Product Stand Out in a Crowded Market

1. Validate the problem your digital product will solve.

Your first task as an entrepreneur is to test your understanding of the opportunity you see in your industry against the real experience of the people who might benefit from your solution. Differentiating your product is more about listening to the people who are experiencing the problem, and especially listening for how the other solutions on the market are not solving the problem.

Depending on your resources and the nature of the market you wish to enter, surveys, interviews, and other research tools can be invaluable. Even free and informal research like reading app store reviews can reveal weaknesses in competing products that a problem-focused entrepreneur can leverage into market share.

Imagine, for example, a small town with three established plumbers, all of them equally skilled in the subtle art of the pipe and wrench. One is hard to track down because he works by referrals only, one has a habit of surprising customers with charges in the bill that weren’t in the estimate, and one is just a mean son-of-a-gun who’d as soon cuss you as look at you. If you’re a new plumber in town looking to cut out a share of this market, plumbing per se is not your opportunity. Your opportunity is delivering comparable service with a clean but inexpensive website, up-front pricing, and a big smile on your face.

If your solution is a SaaS platform, app, or software product, the opportunities may be more subtle than this. Perhaps one incumbent in your target market offers an ugly website with limited features and only supports PayPal. Another uses a gorgeous native app but with a hefty monthly subscription fee. A third competitor has a respectable set of features and an attractive platform but also gets middling customer service reviews in the App Store (which you confirm by checking out their Twitter feed). Your opportunities for innovation go beyond the product itself: maybe what you have to offer customers is a web-based platform with a smaller subscription fee, payable with integrated payment options, and an online chat support feature. But whatever the specific solution, your product will find customers if it solves their real problems, and the only way to see those problems is to listen to them.

2. Look beyond your first idea for other opportunities for innovation.

Especially in the digital sector, when the best innovators are often the technicians themselves, it can be really hard to let go of an elegant technical solution that doesn’t necessarily translate into a profitable product. Even if your first great idea is what brought you to the market in the first place, you may need to be willing to change or even scrap your idea if it doesn’t solve the problems people are actually experiencing, and do it better than the competition. It’s important to look for several possible solutions, especially “outside the box” and “what-if” possibilities that go beyond your skill set. You may be able to handle part of an ambitious solution, then fill in the gaps with help from people with other skills and experience.

We really like the “Ten Types of Innovation” as a starting point for imagining alternative solutions to common problems. The list is based on the principle that developing a brand new product provides the least competitive advantage over other “red ocean” market problems. The Ten Types are divided into three categories of innovation:

  • Configuration: These innovations target your business practices rather than the features or performance of the product itself. Maybe it’s finding a new way of profiting from an existing type of product, connecting with other companies to build mutually beneficial offerings, reimagining your infrastructure or personnel to save costs or improve service, or streamlining one or more core processes.
  • Offering: Tellingly, the Ten Types only include two innovations directly related to the product itself, as compared with four apiece for the other two categories. But if you can make your product bigger, stronger, and faster, or perhaps build a whole ecosystem of interrelated products (like Microsoft has done with its ever-expanding Office suite), you may be poised for a rare sort of breakthrough. But these innovations come along a lot less frequently than most people realize, and they are the most likely to be matched by your competitors after a short-lived competitive advantage.
  • Experience: As in “customer experience,” these innovations deliver comparable products in new ways that customers appreciate. They include customer service improvements relative to the competition, new channels for delivering comparable products, viral branding campaigns, and even a savvy social media presence that gets customers engaged with your product in fun and productive ways.

Using the Ten Types to make a list of potential competitive advantages is a great way to find your niche in the market. Even if some of the innovations are aspirational—maybe you keep a working list of potential partners for a time when your market presence has expanded enough to make you an equally attractive partner—they will keep you anchored in the foundational principle of all innovation, which is finding real solutions to real problems.

3. Compare yourself to the competition, but don’t simply copy them.

Even setting aside intellectual property issues, merely copying the successes of your competition, without understanding what made them successful in the first place, will only saturate the market further. Any success you enjoy will last only until the market changes, which in the tech world could be the very next day. Unless you’re continuing to solve problems for your customers in a unique and valuable way, you’ll always be playing catch-up with the real innovators in your market.

Ultimately, there’s no replacing Key #1: talk to the competition’s customers about how well incumbent products are meeting their needs. And especially when you have customers of your own, ask them how well your solutions are working, and listen like your business life depends on it—because it does! Still, “benchmarking” is vital. No one has ever created anything in a vacuum. Allow yourself to learn from the successes and failures of your competitors. We keep a browser tab open to Failory’s “Start-Up Cemetary,” a running list of failed start-ups with insightful write-ups about why they failed.

As for your competitors, they will copy your successes, too, if they’re smart. And that’s ok. If you want to be a thought leader—and you do—you have to maintain the problem-focused approach that led to those successes. Good marketing may be able to overcome some of these gaps, at least temporarily. Marketing is even an opportunity for innovation in its own right. But if you’re leaving it up to marketing alone rather than addressing real, felt problems for your customers, you’re always working from a disadvantage.

So remember, you’re not in the tech business, you’re in the problem-solving business. The market is full of products developed by smart people and capable technicians who nonetheless forget that basic truth. If you want to stand apart in a crowded sector, remember to constantly validate the problems your customers are experiencing, even if they’re not your customers yet. Look beyond your first idea (and even beyond the product or service itself) for opportunities for innovation and competitive advantage. And always keep a watchful eye on your competition, both for the problems they are solving and the ones they are generously leaving behind for you to solve instead.

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