AT A GLANCE
For a SaaS enterprise to be successful, determining the product-market fit is extremely important. The customers need to perceive a SaaS product’s utility in solving a particular problem to accept it as a viable solution.
The only thing that matters is product/market fit… Whenever you see a successful start-up, you see one that has reached product-market fit.
Product Market Fit is an important aspect of SaaS product development. For a SaaS enterprise to be successful, nailing the crucial facets of the product-market fit is pivotal.
If you are running a SaaS business and it is that time when the launch of your SaaS product is awaiting, do not hurry. Take time to validate your product and then launch it in the market. To validate your product, you must understand if the product is a market fit or not. You need to build a SaaS product that will solve your customer’s pain points and do not need to think twice before understanding the problem your product will solve. To ensure this a proper market research is important, and the launch of a minimum viable product (MVP) to understand the market demand. To ensure that your product has a live market demand that will stay for a long time, you need to know if your SaaS product is a market fit.
If you have nailed your product-market fit, you can be successful in most competitive markets. For instance, let us have at the leading team collaboration SaaS product from Tel Aviv, Monday.com. Despite having more than 750 competitors in the niche, this SaaS enterprise has acquired over 35,000 customers globally with annual revenue of over $500 million. The reason behind its popularity? The incredible user experience that the SaaS product offers to the customers. The software is extremely modular, thereby allowing the users to create customized dashboards, workflows, and reports. It empowers the users to create a project management workflow as required. The drag and drop feature to create custom workflows makes the software easy to use by all the users. As a result, Monday.com has expanded to non-tech fields thanks to its usability and power, which is an area where most competitors falter. The seamless integration that the SaaS product enjoys with any type of organization strengthens its product-market fit.
What Is Product-Market Fit?
If you are a SaaS entrepreneur, you might have heard these words a lot of time that build a solution for your customer’s problem and not try to generate a problem for your solution. For example, you have an incredibly unique SaaS product idea in your mind, and you directly jump into building the product. But, months after your efforts, you realize that your product is not solving any pain points of your customers. This means all your time and money have completely gone in vain. So, before you build the final product and launch it into the market, make sure your SaaS product fits the market.
You might have a brilliant idea in your mind, but before starting the product development, carry out thorough market research to find the target audience. You must understand the market and for how long your product will be in demand or is there any audience base at all or not. After you have landed on an idea, build the MVP as early as possible to check if users like your product. Build your MVP with minimal features and circulate it within a small group to check if it solves any real problem and if people are interested in buying and using it. In this stage, feedback is especially important as you need to mold your final product so that the users want to consume it. After making these changes, when you see that your product is now ready for a wide customer base, it means you have achieved product-market fit.
Importance Of Product-Market Fit
It is important to know if your SaaS product has reached a product-market fit level as before that stage, everything is uncertain. You are not sure if you are going in the right direction with your solution or a large enough user base for the SaaS product.
Before reaching the certainty that your product has reached the market fit, you will not be able to add too many features or shape the final SaaS product. Many SaaS entrepreneurs make a big mistake in spending too much in marketing or hiring employees before the product has achieved product-market fit. When they shape the final product, they realize that it is not commercially viable for the customers or may not solve any legit problem. If this happens, the business is likely to turn upside down and close the company. So, make sure your business does not come at that stage. Proper research followed by understanding your user base and molding your SaaS product is necessary to achieve product-market fit.
Unlike big businesses, SaaS B2B start-ups need a longer time to validate their product. Failing to understand that they cannot proceed as a big enterprise will lead to a gigantic mess. For example, suppose you have a very innovative SaaS idea, and you want to bring something new to the market. It may not directly solve your audience’s pain points, but your SaaS product is better than the existing solutions in the market. To make your potential customers understand this, it will take excessive marketing and in a proper way which means more cash burn. Before you can receive feedback from them and try to understand the market demand, pressure comes from your investor to launch the final product and scale up the market.
Now, if you receive huge pressure and decide to skip proper research and feedback, your SaaS product is likely to fail due to a lack of proper facts and information. This is why it is crucial to develop and make changes to your product accordion to market demand. This may take time, but your product will thrive in the market.
Measuring Product-Market Fit
When you build and launch the MVP, you mostly circulate it among your peers and friends. But, when other external people who are not in your circle start testing and using it, you must track the numbers. You need to notice how many people are interested in your product even after the free trial period is over. Many factors need to be tracked, but you can see the upward trend if conversion rate and usability increase eventually. This will tell you whether your SaaS product is a market fit or not. Make sure that your lead velocity has started growing significantly.
When Will Your Product Be A Market Fit?
This is a quite common question that lingers in the mind of almost every SaaS entrepreneur. You might be taking feedback and making necessary changes in your product, but when does it become a market fit? Here are several factors that will indicate that your product has become market-ready.
- Your inbound inquiries will increase significantly.
- Word of mouth will start acting as a good source of marketing and referral systems.
- More users will sign up.
- Increase in conversion rate.
Getting the product-market fit right is a time-consuming process, and there are many mistakes that a SaaS enterprise will make before reaching the desired level of customer acceptability. Once the product-market fit has been achieved, then there is no stopping the SaaS enterprise from scaling greater heights in the industry.
This article was originally published on SaaS Industry, and republished with permission.