One of the primary concerns for SaaS companies is SaaS product success. Many SaaS companies are looking for ways to ensure their SaaS product success.
Well, it is important for your product to be 100% technically sound. It needs to be stable and provide scalable solutions to your customers. It is essential to have a SaaS product, which is economical and scalable as this allows you to execute your SaaS model with precision and accuracy.
Also, many SaaS companies believe that when they reduce burn, it will automatically lead to SaaS product success – which according to experts is a myth. Instead, it is important to follow a balanced middle way concerning the initial capital. The balanced way is to avoid underspending and overspending.
Anyway, in today’s article, we are going to tell you about 5 important things that will ensure SaaS product success. Read on!
The future business world is based on data-driven strategies. The SaaS model, today, is gaining more prominence. It is because companies offering SaaS products are becoming widespread in almost all industries. By 2022, the SaaS market will reach an enormous $95 billion, which shows the rapid growth of SaaS-based businesses.
However, you need to understand that not every SaaS product is going to be successful. The SaaS product success depends on different factors and product success managers need to determine them and then implement them in the 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. Not only does it save time but also money. Without further ado, let’s look at these points. Continue reading!
Identify future customer concerns
First, you need to find out the likelihood of your SaaS product success and the best way to do it is to identify your future customers’ concerns. Keep in mind that this is not easy – and you have to carry out thorough research – allowing your development team to find an issue, which requires sophisticated solutions.
After identifying the pain points or problems, which require solutions, you come to know that there is a market or audience out there who will take interest in your product eventually. It is important to understand your target audience or the market.
This allows you to know the requirements of your customers. Doing so allows you to identify a niche where your SaaS product can fit perfectly. The more you know about your customers, the better you can plan strategies for your product success.
You can do this research online – however, it is important to follow up with a hands-on approach, which gives your company the edge. For instance, if you want to create a SaaS product for the transport industry, it is important to spend some time working on vehicle dealerships. This gives you an edge over your competitors because you have an in-depth understanding of the specific requirements of your future customers.
Narrow the scope of your SaaS Product
If you want to determine the success of your SaaS product, you need to lower down its scope after discovering the concerns of your customers. For instance, narrow down the problem and make it specific as possible.
A SaaS company can’t resolve every problem simultaneously. An issue with many failed products is that companies try to cast a wide net with stated objectives. Eventually, they can’t focus on each problem and solve them.
Make sure your SaaS product is capable of solving a specific problem. If you develop your product in such a way, it is likely to be more successful. In simple words, always start small and then gradually increase your operations. This is the actual way of moving forward and make your product thrive on the market.
Again, find a niche of customers who have a specific problem, which requires solutions. A SaaS product becomes successful when it has a strong and loyal base of customers who decide ultimately whether or not the SaaS product will be a failure or success.
Simply put, your product, initially, must not be broad to solve everything. It is fine to add more features with time once you have acquired a loyal base of customers. Therefore, initially, it is important to keep your SaaS product simple and easy-to-use by the customers.
Leadership and Team Management
If you have experience in the SaaS industry, you must know that the design of the product is important – however, something more important than this is the skillful and experienced leader who can increase the likelihood of SaaS product success.
If you are administering a team of developers and product success managers, you must be experienced and have a wealth of information as well as understanding the problem so that you can design a product that can accurately solve the problems of the user.
Experience is important because those who are inexperienced are less likely to achieve success. So, an experienced founder can foresee the various stages of product development – from start to end. Likewise, when you have more understanding of the product, you can design a perfect product, which will eventually lead to success.
In addition, you, as a leader or founder, can’t achieve success on your own. You need a team of highly qualified, skilled, and experienced product success managers who can hire employees to execute the strategy effectively and efficiently.
Improvise and Adapt
An important indicator of the SaaS product success in the commitment and dedication of your team to show flexibility with the final product. When your product success manager understands sticking to the plan and adapting the product to solve different problems, it can lead to product success. Here, it is important to clearly define boundaries for failure and success.
Gain Capital Quickly
Unless some changes in the future, profitability remains the key reason for your SaaS product success. Talking about the development of a SaaS product, you must also focus on profitability because when you are adept at generating more revenue, you will higher chances of achieving success.
Basically, a SaaS product is not profitable at the beginning and when you begin to acquire customers, you come to know what needs to be done to further improve the product. This shows your customers that you care for them, making substantial efforts to solve their problems, and providing value through value-add features.
Experts say that most SaaS companies are likely to lose money in the first year. Therefore, it is important to ascertain the amount of capital to stay afloat. If you make good efforts at this, you will see some difficulties initially but with time, you will see a steady stream of revenue and profit.
5 Things to ensure SaaS Product Success
SaaS is a turn-in-on and plug-it-in type of service. Usually, a SaaS product or service offers a holistic approach, which allows people to interact with each other and do business.
Why it is important to ensure SaaS product Success and achieve a predictable service? Well, just changing your SaaS model is not good enough to ensure product success. The success of your SaaS product is linked directly with recurring revenues.
Concerning the increasing number of SaaS products on the market and the complexity of the business, it is essential to know the type of metrics, which matter when you go for measuring the product’s success.
Some of the major elements you need to consider are new customer acquisition, retention of customers, and monetization of customers. The question remains: “what metrics you must assess for your SaaS product success?” Let’s find out!
1. Revenue and Costs
It is important to focus on monthly and annual recurring revenues. This is a metric, which illustrates the overall performance of your business.
Thus, it becomes a key performance indicator. Measuring this metric, you can predict revenue streams, which come from subscriptions and related services.
In addition, you must take into consideration the costs of customer acquisition, which provides insights required to comprehend the costs needed to grow the SaaS product and the associated payback time period.
You can calculate profitability based on the time taken to improve the cost of acquisition to the amount of funding needed. Likewise, you must measure customer retention costs, which include all costs that are directed towards customer retention considering the number of retained clients.
Typically, the idea is to maintain the average retention cost, which must be less than the customer acquisition cost. Another important metric to measure is the revenue renewal rate, which allows you to calculate the amount of revenue generated via subscription renewals over a specified time period.
2. Evaluate Customer Churn Rate
When you evaluate the customer churn rate, you come to know that it is an essential metric for your SaaS product success. But how? Well, the number of customers renewing their subscriptions must be high and this is what indicates your product success.
Research reports show that a startup SaaS company has at least a 90% retention rate. So, when you have a low rate of churn, it indicates the performance of your product and also shows your data on the features liked by the clients. Also, you can take a few steps forward to improve your product based on this data.
A higher churn rate, on the other hand, leads to loss of revenue. Some research studies show that for some companies, even a 10% increase in customer retention increased their profitability by 150%. So, measuring the customer retention rate will help you monitor the overall success of the SaaS product. Continue reading!
3. Focus on Onboarding Engagement
Your SaaS business and the success of your product is completely based on customer onboarding. When you have solid onboarding strategies in place, you can bring your customers up to speed with your SaaS product usage in less time. Also, this ensures you to provide them with less help because your customer onboarding is already a success.
Your customers must be capable of accessing the SaaS product, understand what the product intends to do as well as they must know your SaaS product and compel to work with it continuously.
Research studies show that over 50% of the customers signing up for a free trial use the SaaS product once and never come back. This, for many companies, is an alarming situation. So, if you are facing the same problem, you need to focus on your onboarding strategies.
In addition, the costs of customer onboarding are an important subcategory of customer acquisition costs, which consist of costs associated with stakeholders, materials, tools on a monthly basis.
Another important metric that you must consider for your SaaS product success is “Time to Value.” You must keep an eye on this metric. “Time to Value” is the time taken by a customer to sign up for your SaaS product.
If there are any delays in delivering “Time to Value,” it can be risky as it increases the probability of customers dropping off and not returning to fully subscribe to the product.
Therefore, your product success managers must work substantially to optimize the onboarding processes – and the best way to do it is by increasing automation as well as implementing self-service strategies, which are essential for getting success.
4. Customer Engagement Metrics
Both product management and customer success teams should thoroughly monitor on new feature adoption. Likewise, you need to focus on customer engagement metrics. Today, the SaaS market has more competition than ever – therefore, it is essential to adopt product innovation strategies and implement them for your SaaS product success.
New feature adoption is an important step, which allows you to make sure customer retention and find out whether or not your customers are following the roadmap that you have designed and implemented for customers to follow.
Also, it becomes important to find out the number of customers tested the new features of the product initially. Again, you need to check whether or not the customers are continuously using the features. Therefore, you must consistently monitor the depth of adoption, the time period for adoption, etc.
More interestingly, it is essential to identify customer engagement and retention metrics, which focuses on active customers, the number of actions taken or that will be taken, as well as the average session duration. This will support you in finding out your SaaS product success levels.
Moreover, you need to identify customers who do not engage with your SaaS product and the reasons for it. The next step is to set certain triggers in the adoption and retention plan followed by onboarding and activation processes. All these elements have directly influence conversions.
5. Product Metrics
If you want to determine the engagement and activation levels, you must access the product metrics. It involves considering the number of daily or monthly active and inactive customers.
Evaluating these metrics can help you determine which customers are prone to churn. Also, it helps you measure the number of customers who will be high-valued when it comes to customer retention.
So, when you focus on statistical values, it will help you determine the “product stickiness rates,” which shows the level of customer engagement with the SaaS product. So much so, a higher rate of product stickiness means that the customers are likely to recommend your product to others. The “word-of-mouth” is a bonus advertising done by your existing customers that helps in acquiring new customers easily.
Moreover, you need to focus on assessing the net promoter score. This will help you evaluate the overall effect of the product success. A success SaaS company shows referrals as its main lead sources.
Therefore, when you work to generate a large number of evangelists by focusing on the net promoter score, it will provide you with quantitative data. Using this data, you can determine what your customers feel about your SaaS product.
Likewise, what features make them happy, what features need to be improved, and what steps must be taken to make improvements, as well as will these steps make the SaaS product more attractive for adoption.
Wrapping up, today, almost all companies are focusing on product success because it is one of the core strategies to boost profitability. After all, the objective of every company including businesses focusing on SaaS is profitability.
In this sense, for product success, you need to make it more customer-oriented. Also, for this, you need to interact with your customers to comprehend the factors, which are directly or indirectly impacting the overall growth of your business.
So, as a SaaS company owner or product success manager, it is your responsibility to focus on all the aforementioned strategies and remove silos, which divide teams – therefore, lay emphasis on adopting a comprehensive strategy, which shows you the overall picture and 360-degree view of your customers. Only then, you can connect all the dots and continue your SaaS product success journey. Good luck!