Most of us want to take the high road, and let the best product win.
Sometimes that does work, and it’s a place to start from. But here are 5 “cut-throat” tactics that do work in SaaS — again and again:
- Steal some of their top customers and do a ton of PR around it. I know you probably want to just focus on winning new customers, but this is a top way to create “FUD” (Fear Uncertainty and Doubt) in a very competitive and evolving market. And you may need to do buy-out deals where the stolen customers pay basically nothing for a few years, but you still pay the sales rep a full commission.
- Compete in areas you are weak. This won’t make a lot of sense to you at first. If competition is weak, it makes more sense to just focus on where you have a competitive advantage. But in a brutally competitive market, the winner will try to compete in every segment. This is very, very expensive. More on that here: Why Competition Is So Bitter in SaaS: Oligopolies and Dominant Strategy Equilibriums | SaaStr
- Get very good at FUD in general. You’ll need to get very good at the weaknesses of your competitors if you want to execute this strategy. When they are running out of money. Their downtime issues. Their security gaps. Sometimes, a prospect will simply pick the less scary vendor. You may need to learn to make the competition more scary.
- Buy out the top partners and box out the competition here. Boxing out your competition through semi-exclusive relationships with the top partners in the industry works. Let them invest. Give them special treatment in exchange for semi-exclusive relationships. Etc.
- If you can, raise infinite capital. Dilution is tough to take as a founder. But in a cut-throat space, $100m can buy a lot of customers than you may never get to close. If competition is slow and limited, maybe avoid the dilution. Build the Atlassian way. But if competition is brutal, maybe raise every nickel you can. The Slack way. More here: Why You’ll Want to Raise $100,000,000 for Your SaaS Start-Up: The Incremental Customer | SaaStr
You probably don’t like this stuff. Personally, I wasn’t good at this stuff. And done wrong, all this can damage your brand. You have to be very careful.
But what if they do it all — and you don’t?