It’s easy to fall into the trap of thinking that since your product is so good, all you need to do is launch it and people will buy it.
But in order for your product to be successful, there are some things you need to consider first.
Today, the SaaS model is gaining popularity.
It’s because companies that provide SaaS products are popping up in almost every industry. The SaaS market will hit a massive $95 billion by 2022, demonstrating the rapid growth of SaaS-based companies.
One thing you should be aware of is that not every SaaS product will be successful.
The success of a SaaS product is determined by a variety of factors that product success managers must identify and incorporate into their success strategy.
There are a few things you can evaluate to determine the success of your SaaS product. Using these elements, which we are going to talk about, can even help you predict the success of your product before starting to work on it.
It not only saves time but also money.
Let’s take a look at these points:
Identify future customer concerns
To begin with, you must determine the probability of your SaaS product’s success, and the best way to do so is to identify the concerns of your potential customers.
Keep in mind that this isn’t easy – you’ll need to conduct extensive research to allow your development team to identify a problem that requires sophisticated solutions.
You’ll realize there is a market or audience out there that will ultimately be interested in your product after finding the pain points or problems that need solutions. And as you probably know, it’s essential to understand your target market or audience.
As a result, you’ll be able to identify a market niche for your SaaS product.
Remember: The more you know about your customers, the better!
You can conduct this research online, but it is important to follow up with a hands-on approach to give your company an advantage.
If you want to make a SaaS product for the transportation industry, for example, you should spend some time working with car dealerships. This gives you an advantage over your competitors because you have a thorough understanding of your potential customers’ specific needs.
Narrow the scope of your SaaS Product
After learning about your customers’ needs, you should narrow the scope of your SaaS product to determine its success.
For example, make the problem that you solve as specific as possible.
A SaaS company cannot solve all problems at once.
Many failed products have the problem of businesses trying to cast a wide net for their stated goals. They will eventually be unable to focus on the problem and solve each one.
Make sure your SaaS product can solve a specific problem. It is more likely that your product will be successful if you grow it in this way.
To put it differently, always start small and gradually expand your operations. This is the best way to move forward and ensure the product’s success on the market.
Find a niche of people that have a specific problem that needs to be solved.
Simply put, your product, initially, must not be broadly aimed at solving all problems. But it is fine to add more features once you have built a loyal customer base.
Product Leadership and Team Management
If you have even the littlest bit of experience in the SaaS industry, you know that the product’s design is important, but the skillful and experienced leader who can increase the chances of a SaaS product’s success is even more important.
If you’re in charge of a team of developers and product success managers, you need to be knowledgeable and experienced, as well as able to understand the problem so that you can design a product that effectively solves the user’s problems.
Experience matters because those with little or no experience are less likely to achieve success.
An experienced founder will anticipate the different phases of product development – from beginning to end.
Similarly, having a better understanding of the product would enable you to design a perfect product, which will ultimately lead to success.
As a leader or creator, you will not be able to achieve success on your own.
You’ll need a team of product success managers who are highly qualified, knowledgeable, and experienced, and who can recruit employees to carry out the strategy effectively and efficiently.
Improvise and Adapt
The commitment and dedication of your team to show flexibility with the final product is an important indicator of the SaaS product’s success.
In order for your product to be successful, your product success manager must understand the importance of sticking to the plan and modifying the product to solve different problems.
Gain Capital Quickly
Profitability will remain the most important factor in the success of your SaaS product unless something changes in the long future.
When it comes to creating a SaaS product, you must also think about profitability because generating more revenue increases your chances of success.
In general, a SaaS product is not profitable at first, but as you gain customers, you learn what needs to be done to improve the product further.
And you need money to do that.
According to experts, most SaaS companies would lose money in their first year. As a result, determining the amount of capital required to stay afloat is critical.
If you put in the effort, you will face some challenges at first, but over time, you will see a steady stream of revenue and profits.
Metrics you need to understand to ensure SaaS Product Success
Given a growing number of SaaS products on the market and the business’s complexity, it’s essential to understand the types of metrics that matter when measuring the product’s success.
Let’s take a look at them.
1. Revenue and Costs
It is important to focus on monthly and annual recurring revenues. This is a metric that represents the overall business performance.
As a result it becomes a key performance indicator.
You can predict revenue streams from subscriptions and related services by measuring this metric.
- You must also consider the costs of customer acquisition, which provides you with all the necessary information to help you understand the costs of growing the SaaS product and the related payback period.
- You can measure profitability by evaluating the time it takes to reduce acquisition costs and the amount of funding required.
- Similarly, you must calculate customer retention costs, which include all the costs related to customer retention based on the amount of clients retained.
In most cases, the goal is to keep the average retention cost below the cost of customer acquisition.
- Another important metric to track is the revenue renewal rate, which helps you to estimate how much revenue you’ll generate from subscription renewals for a given time.
2. Evaluate Customer Churn Rate
When you look at the customer churn rate, you’ll realize that it’s an important metric for the success of your SaaS product.
Well, the number of customers renewing their subscriptions must be high and this is what indicates your product success.
According to research, a startup SaaS company should have a retention rate of at least 90%.
So, when you have a low churn rate, it indicates that your product is performing well and also shows data on the features that customers enjoy.
You can also use this information to take a few steps forward towards improving your product.
On the other hand, a higher churn rate results in revenue loss.
According to some reports, even a 10% rise in customer retention has improved profitability by 150% for some companies. So, monitoring the customer retention rate would help you keep track of the SaaS product’s overall success.
3. Focus on Onboarding Engagement
- Customer onboarding is vital to the success of your SaaS company and product.
You will get your customers up to speed on your SaaS product use in less time if you have strong onboarding strategies in place.
According to research, more than 50% of consumers who sign up for a free trial use the SaaS product once and never return. This is an alarming situation for many companies.
If you’re having such a problem going on, you should work on your onboarding strategies.
Besides, customer onboarding costs are an important subcategory of customer acquisition costs, which include monthly costs for stakeholders, materials, and tools.
- Time to Value (TTV) is another important metric to consider for the success of your SaaS product. TTVis the time taken by a customer to sign up for your SaaS product.
If there are some delays in providing Time to Value, it can be risky because there is a high probability that consumers will give up and never fully subscribe.
As a result, the product success managers must work hard to improve onboarding processes – and the best way to do so is to increase automation and introduce self-service strategies.
4. Customer Engagement Metrics
Similarly, you must concentrate on customer engagement metrics.
Since the SaaS market is more competitive than ever, adopting and implementing product innovation strategies is essential for your SaaS product’s success.
- Adoption of new features is an important step that helps you ensure customer retention and evaluate whether your customers are following the roadmap you’ve developed and implemented for them.
It’s also valuable to know how many consumers tried out the product’s latest features.
More importantly, when identifying customer engagement and retention metrics, which focuses on active customers, the amount of actions taken or that will be taken, and the average session duration is necessary to take into account.
This will assist you in determining the success of your SaaS product.
Besides that, you must identify which customers do not interact with your SaaS product and why.
The next step in the adoption and retention plan is to set certain triggers, followed by onboarding and activation processes. All these factors have a strong impact on conversions.
5. Product Metrics
You must access the product metrics if you want to determine the levels of engagement and activation.
- This involves calculating the number of active and inactive customers on a regular or monthly basis.
These metrics will help you figure out which customers are more likely to churn.
It also assists you in measuring the number of customers that would be valuable in terms of customer retention.
- As a result, focusing on statistical values will help you in determining the “product stickiness rates” which indicate the degree of customer engagement with the SaaS product.
Customers are more likely to recommend the product to others if it has a high rate of product stickiness.
“Word-of-mouth” advertisement is free advertising done by your existing clients that helps in acquiring new customers.
- You should also pay attention to the net promoter ranking.
This will assist you in assessing the product’s overall success. Referrals are the primary source of leads for a successful SaaS business.
Focusing on the net promoter score while working to produce a large number of evangelists will provide you with quantitative data. You can use this information to figure out how your customers feel about your SaaS product.
To summarize, almost every company today is focused on product success because it is one of the most effective ways to increase profitability.
After all, every company’s goal, including SaaS companies, is to make money.
In this sense, you should be more customer-centric in order for it to succeed.
You should also engage with your customers in order to understand the factors that are directly or indirectly affecting your company’s overall growth.
As the owner or product success manager of a SaaS company, it is your duty to concentrate on all of the above strategies and eliminate silos that separate teams – as a result, focus primarily on implementing a comprehensive strategy that gives you a 360-degree view of your customers.
Only then will you be able to connect the dots and continue on your way to a successful SaaS product.