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In today’s competitive HR tech landscape, it’s becoming increasingly common for SaaS companies to explore expanding beyond their flagship product or service.
In our previous article, "When a SaaS Vendor Should Start Thinking About Going Multiproduct", we helped HR SaaS vendors determine whether they have the foundation to start thinking about offering multiple software products. This article explores the considerations needed to help you formulate a successful multiproduct strategy.
What Factors to Consider When Initiating a Multiproduct Strategy
- Product Compatibility
- Financial Impacts
- Internal Impacts and Organizational Structure
- User Experience
Product Compatibility
Compatibility in this case is two-pronged:
- Your new product is naturally compatible with your current product(s) from a solutions perspective
- Your new product is compatible with your other solutions, from a user perspective
Your New Product Fits With Your Current Solution
Generally, when thinking about new products, it’s easier to expand into related solutions. For example, if your company has already developed a successful messaging app, the next logical step may be developing a video conferencing tool. Or, if you’re a company that does payroll, hiring and employee onboarding solutions may be a natural fit.
You can quickly gain traction in new areas by leveraging existing customer relationships and brand recognition.
You also want to consider how your new solution fits within your stack. Is there brand congruence? Is this something your customers will use in conjunction with your other products? Does it fit into your company mission? Branching out to something completely different isn’t unheard of, but there needs to be a well-thought-over “why” to your expansion strategy to be successful.
Your New Product Plays Well With Others
Another key consideration for a SaaS company when expanding into other platforms is that the new application can run smoothly without compatibility issues. The platform should also be able to support the SaaS company’s feature set and user experience. You should think about what other third-party integrations or products it will most often be used with.
By checking for compatibility issues and ensuring that new applications work well on other platforms, SaaS companies can reduce the risk of losing users to competitors.
Financial Impacts
Multiproduct Strategy Increases Revenue
A benefit of a multiproduct strategy is the ability to capture more value from your existing customer base. By offering complementary products or services, you can increase customer loyalty and drive higher revenue per user.
However, it’s essential to be realistic about the potential revenue impact of new products. It’s tempting to assume new products will generate significant revenue, especially from your current loyal customer base, but you know what they say assumptions do.
It’s important to carefully model the potential financial impact of your new product and ensure it will be profitable in a very realistic way. You also want to consider the potential cannibalization of your existing product. Will this new one draw customers away from core offerings? If so, it may not be worth pursuing.
Development Costs
We touched upon this in the last article of our HR SaaS multiproduct series, but developing a new product from scratch isn’t cheap. Creating a market-viable product (MVP) for a SaaS vendor on average costs between $50-250K. You also need to know that 70% of software development costs occur after implementation, and 53% of projects cost 189% of the original estimate.
Typically, companies looking to add a new solution must add to their team of developers (especially if you don’t want to dilute the teams working on your core product). The average developer salary is $110,140 (plus 15-20% for ER taxes and benefits) and that’s not including the costs associated with hiring for that position.
Here at HiringThing, we white label recruiting and employee onboarding software, allowing SaaS vendors to forgo development costs and still add proprietary new products to their company. Are recruiting and onboarding natural added solutions for your brand? Chat with one of our business development specialists to see how we can work together.
Internal Impacts and Organizations Structures
We mentioned it earlier, but we need to expand on the fact that adding new software products will impact your existing products and team.
Introducing new products can be a significant distraction, both for your existing team and your customers. If you’re not careful, you may dilute your current product offering or confuse customers with a crowded product lineup. You want to ensure you have a strategy and educational content ready to share with customers, providing the benefits of how your new and core product work together to make their lives easier.
It’s also crucial to understand just how this new SaaS product will affect your team. Pursuing a multiproduct strategy may require significant changes to your team structure and processes. It’s important to ensure your team is prepared for these changes. Prioritizations and the workday might look completely different, for example. Additionally, introducing new products may require new skill sets or expertise, which may require hiring or training new team members.
Before introducing new products, it’s important to ensure that internally, you have the resources, bandwidth, strategy, and adaptability required to develop your new product while supporting your core competency(s).
User Experience
User experience is a critical factor when it comes to SaaS products. SaaS companies must ensure their application provides a seamless and enjoyable user experience across all platforms. The interface should be consistent and intuitive, and the application should load quickly and be responsive. A positive user experience is key for retention and engagement.
Some questions to ask yourself when it comes to a changing user experience due to multiproduct expansion include:
- How will this affect customer service? Will it stay the same? Be compromised? Do you have a strategy that will make it better? Remember, today’s customers will pay more for a product with stellar customer service.
- What educational products do you have prepared for your customers? What about a knowledge base? Will there be separate knowledge bases for both of your products?
- What will onboarding look like for your new product? Will it look the same for customers using just one product? Are customers using both?
- Will customers automatically get the new product, or will it be an upsell?
- How will you market your new product to existing customers? How does that look different from your inbound and outbound marketing efforts?
How to Become a Multiproduct HR SaaS Vendor
Since you’ve read why All SaaS Platforms Should Aspire to Be Multiproduct, when it’s time for a Tech Company to Go Multiproduct, and the considerations a vendor must make for a multiproduct SaaS initiative, it’s time to start laying the groundwork to become a multiproduct SaaS vendor.
About HiringThing
HiringThing is a modern recruiting and employee onboarding platform as a service that creates seamless talent experiences. Our white label solutions and open API enable technology and service providers to offer hiring and onboarding to their clients. Approachable and adaptable, the platform empowers anyone, anywhere to build their dream team.
