Blog Startup Journey

If You’re Selling SaaS, Then You’re Selling a Commodity

wrote this on

How to differentiate your business when a great product isn’t enough.

If you’re selling SaaS, then you’re selling a commodity.

While that may not have been true ten years ago, today, it increasingly is.

Sure, there are exceptions; but they are few and far between.

For the overwhelming majority of us: if your product isn’t already a commodity, it will become one in the next few years.

Today, I’m going to discuss why I believe that to be true, and what you can do about it.

Why Your Product Isn’t Special

It has never been easier and less costly to build SaaS products.

Sure, it was a big deal when the cloud made it possible to start up without needing to buy your own physical servers.

But that’s just one huge example that everyone points to.

The reality is that these sorts of technical and operational advancements happen every year, making various parts of running a business cheaper and easier.

Each one may be on a smaller scale than cloud computing, but there are thousands of them, and together, they’ve combined to create a snowball effect where building a product is getting tremendously easier and cheaper with each passing year.

Anyone who builds a successful product now risks commoditization from two directions:

  1. From below, where new startups can quickly “copy” the product you’ve validated in the marketplace.
  2. From above, where cash-rich businesses who can’t (or won’t) acquire you can throw money at the challenge and build a similar product.

Of course, there are a few exceptions, like exceedingly sophisticated technical products and unique products with defensible IP, but even those will become commoditized, just on a bit longer timeline.

That’s the bad news. Here’s the good news.

While it’s easier than ever to build a product, it’s still not easy to build a healthy business.

That’s the reason why so many startups still fail, and it’s the reason why so many ripoff initiatives from large companies still fail (see: many of Google’s greatest product flops).

So while your product is certain to become a commodity, that doesn’t mean that your business will fail.

You just have to work on building and defending the aspects of your business that won’t be commoditized: your brand and your culture.

The 2 Keys to Standing Out in a Commoditized Market

First, a disclaimer: some may read this post and think that what I’m saying is “product isn’t important.”

That couldn’t be farther from the truth. I’ve spent my career deep in product development, and I know that building a great product is absolutely imperative.

If your product sucks, none of this matters, and you’ll fail.

But what I hope I can convince you of is that having a great product is no longer enough.

Technological advancement is a rising tide that lifts all ships, and more and more, most of the products that we see (by the time they get filtered through our various social filters) are great.

Building a great product, in most cases, only puts you in the middle of a crowded field of other great products.

Here’s how to stand out:

1) Your Brand

While the term has been co-opted often and turned into a fluffy, meaningless cliche for some, your brand goes far, far beyond the “look and feel” of your website and marketing collateral.

Think of your brand as everything that people see and believe when they think of your company.

It’s your positioning in the marketplace.

ConvertKit isn’t the only great email marketing product. But it’s the only one that has so effectively carved out a brand as being specifically for professional bloggers.

It’s your approach to sales and marketing.

Unbounce isn’t the only great landing page software. But it’s known for having an incredibly rich blog and resource center that helps online businesses, whether they use Unbounce or not.

It’s the story you craft around why you’re in business.

Basecamp isn’t the only great project management tool. But tens of thousands of paying customers choose it for the deep resonance of the founders’ beliefs in calm, bootstrapped companies.

And if done right, then it’s unique to you, and much harder⁠—if not impossible⁠—to copy than your product.

Building Your Brand

You can’t build your brand if you can’t define it first. Start by filling out the Vivid Vision survey I mention in this article: The Most Important Skill for Any Entrepreneur (And How to Develop It).

Once you’ve defined what you want your brand to be, it’ll become much easier to reverse-engineer the result.

2) Your Culture

Don’t confuse culture with “employees.”

Your employees, like it or not, can be both replaced or “copied.”

Sure, it would suck, in many cases badly, to lose any of them.

But ultimately, you can recover, if you’ve gotten culture right.

Think of your culture as your internal brand. It’s everything your team sees and believes when they think about your company.

It’s your core values.

Not just BS motivational words that you stick on the wall, but real values. The very best qualities of your team, distilled into a rubric that you can use to make better decisions, hire better people, and pass on the culture of your business to future employees.

It’s your shared vision.

Are you all working toward the same north star? Do you agree on what the future should look like? And are you working every single day to create and strengthen alignment across your team?

It’s the fabric you weave that connects all of your employees and makes your team, as a whole, stronger than just the sum of its parts.

Does your team feel like a family, rather than a group of independent hired guns? Because employee happiness can’t be copied.

These are things that no other company can hope to replicate.

And not only will a strong culture help you out-think, out-produce and outmaneuver your competition, but it’ll help to ensure that the very best employees (for your business) will want to work for you over the rest.

Building your Culture

A great culture starts with a shared belief in why you’re doing what you’re doing.

Use the Vivid Vision doc in the article linked above, and then follow our step-by-step process for creating a genuine set of core values that will push your team closer together and forward as one: How We Developed Our Business’s Core Values (And Why You Should Too).

Is your team remote? Then see our tips on remote culture here: How We’ve Built a Remote Company Culture to Be Grateful For.

How to Apply This to Your Business

This isn’t intended to insult you or your product.

On the contrary, it’s intended to be most useful if your product is already great.

I hope that, if you’ve neglected brand or culture in the past, that this post has convinced you to spend some time on them.

Because as time goes on, they’ll become the only things that truly set you apart.

968 Shares
← Older Post Newer Post →

From “aha” to “oh shit”, we’re sharing everything on our journey to $10M in annual revenue. We’re learning a lot and so will you.

2016 Annual Revenue
  • $0
  • $2.5M
  • $5M
  • $7.5M
  • $10M

About the Author

Alex Turnbull is the CEO & Founder of Groove (simple helpdesk software for small businesses) who loves to build startups and surf.

You might also like: