Have A SAAS App? Do These 5 Items Immediately
One of the primary concerns of SaaS companies is SaaS product success. Many SaaS companies are looking for ways to ensure the success of their SaaS product.
The world is increasingly leaning toward a data-driven future, and thanks to that, the SaaS (Software-as-a-Service) model has started to grow exponentially. Across all industries, SaaS product success rates are increasing. It is revolutionizing the way businesses operate. Take cloud computing for example. It provides a platform where app users can collaborate and manage supply chains remotely.
Not every SaaS product is a huge success. The success of a SaaS product depends on various factors. Anyway, in today’s article, we are going to tell you about 5 important things that ensure SaaS product success. Read on!
The future business world is based on data-driven strategies. The SaaS model is becoming increasingly important today. This is because companies offering SaaS products are becoming more prevalent in almost all industries. By 2022, the SaaS market will reach a whopping $95 billion, showing the rapid growth of SaaS-based businesses.
However, you must understand that not every SaaS product will be successful. The success of a SaaS product depends on different factors and product success managers must determine and implement them into a successful strategy.
There are a few things you can evaluate to determine the success of your SaaS product. Using these elements, which we’re going to talk about, will help you predict the success of your product before you start working on it. Saves not only time but also money. Without further ado, let’s go through these points. Read on!
Diagnose customer concerns or problems
Before developing a SaaS product, it is vital to identify customer concerns and pain points. A solution is only as successful as the problem it solves. Remember that identifying customer problems is not easy and involves thorough research. You need to invest a lot of resources and time in user research and building custom-based SaaS products that solve specific problems.
After identifying the problems or pain points and segmenting the audience according to their personality, you know that a market will eventually become interested in your product. Understanding the market or your target audience is the first step in designing a SaaS solution. This allows you to understand the needs of your customers, and by doing so, you can identify where your product fits perfectly. Additionally, by gaining in-depth knowledge of your customers, you can develop better strategies for your product’s success.
Research can be conducted online, but it is recommended to follow it with a hands-on approach. For example, building a SaaS product for the transportation industry can help spend quality time at an auto dealership. Having knowledge of what your prospective customers want will give you a competitive edge.
Narrowing down the scope of your product
Want to increase the success rate of your SaaS product? After identifying your customers’ concerns and needs, narrow down the scope of your product. For example, narrow down the problem and make it as specific as possible because you cannot solve all the problems at once.
A common problem with many failed SaaS products is that companies try to cast a wide net with specific goals. However, in the end, they focus on each problem and fail to solve them.
So, make sure your SaaS products don’t solve too many problems and confuse your audience. Instead, create a product that is capable of solving a problem and will be more successful. Simply put, start small and gradually increase your activities. It is a way of moving forward after establishing a loyal customer base and a brand name that guarantees product success in the market.
Again, remember to find a niche of consumers with a specific problem and look for solutions. SaaS, but any product succeeds when it has a loyal and strong base of customers. Ultimately, your customers will determine the success of your product, so you can’t keep them out of the fold.
In simple words, initially, your product should not be too broad to solve every problem. Of course, you can start small and add more features as you gain loyal customers. But, first, your product needs to be easy and straightforward to use.
Creating a group
After identifying your customers’ concerns and narrowing down the scope of your product, the next step is to assemble a team of SaaS UI/UX designers, developers, and product success managers.
If you have any experience in the SaaS industry, you already know the importance of product design. But technique alone does not make for a successful sauce preparation. It helps if you have experienced leaders who increase the likelihood of product success.
When bringing in a team for your SaaS product, make sure they understand why you’re designing the product and have the wealth of expertise to deliver it accurately to users.
Compared to other products, SaaS products are inherently complex, and therefore, user experience should be your top priority. Even if your product perfectly solves customer problems, if the user interface is too complex or the navigation is too confusing, your product will be rejected. So, make sure to involve the UI/UX designer throughout the product development process.
After the product is designed and developed, it is the responsibility of product success managers to market the product through the right channels. They need to create appropriate marketing campaigns and choose the right platforms so that your product reaches your target audience.
Flexibility and agility throughout the process
The team’s willingness to be agile and flexible throughout product development and release is essential to the product’s future success. Knowing when to change a project is vital to avoid bottlenecks and adapt to product development as it progresses. Even if you’ve planned everything and every step is data-driven, unexpected things can happen and force you to make changes. For example, the COVID-19 pandemic has changed the way businesses operate, and now everyone must adapt and adjust.
Take Slack, for example. The workplace tool was initially planned as a communication tool for the crisis. But during the development process, they realized that Slack was a truly unique tool, so they stopped tinkering and released Slack.
That’s why flexibility and agility are the two pillars of a successful SaaS product. Sticking to the plan is ideal, but not always possible. Your team must be well-equipped and experienced to adapt to the changes.
Gaining capital quickly to stay afloat
Profitability is one of the most important reasons for the success of your SaaS product. Therefore, it should be the focus of SaaS product development. But SaaS products are usually not profitable in the beginning, and it’s only when you start getting customers that you know what you need to know to improve the product. The more updates and features you add, the more you realize that you care about your customers.
Although SaaS products lose money initially, they make money once they are adopted and have a loyal customer base. But for the first few months, it’s vital to find ways to capitalize to stay afloat. So, make sure you have investors and assets to see you through the early stages when your product may not bring consistent profits and revenue.
5 Things to Ensure SaaS Product Success
SaaS is a turn-on and plug-it-in type of service. Generally, a SaaS product or service provides a holistic approach that allows people to communicate and do business with each other.
Why is it important to ensure SaaS product success and achieve predictable service? Well, changing your SaaS model is not enough to ensure product success. The success of your SaaS product is directly linked to recurring revenues.
Given the growing number of SaaS products on the market and the complexity of the business, it’s important to know the type of metrics that matter when you go about measuring the product’s success.
New customer acquisition, customer retention, and customer monetization are some of the key elements you need to consider. Question: “What metrics should you measure the success of your SaaS product?” Let’s find out!
1. Revenue and Expenditures
It is important to focus on monthly and yearly recurring revenues. It is a metric that explains the overall performance of your business.
Hence, it becomes a key performance indicator. By measuring this metric, you can predict revenue streams from subscriptions and related services.
In addition, you should consider the costs of customer acquisition, which provides the insights needed to understand the costs required to grow a SaaS product and the associated payback period.
You can calculate the profit based on the time taken to improve the acquisition cost to the required amount of funds. Similarly, you should measure customer retention costs, which include all the costs of retaining a customer, considering the number of customers retained.
Generally, the idea is to maintain average retention cost, which should be lower than customer acquisition cost. Another important metric to calculate is the revenue renewal rate, which allows you to calculate the amount of revenue generated by subscription renewals over a period of time.
2. Estimate the customer attrition rate
When you measure customer turn-around, you know it’s an essential metric for your SaaS product’s success. But how? Well, the number of customers renewing their subscriptions should be high, this indicates the success of your product.
Research reports show that a startup SaaS company has at least a 90% retention rate. So, when you have a low ratio, it indicates the performance of your product and also shows your data on the features that customers want. Also, based on this data you can take some steps to improve your product.
On the other hand, high laundering rate leads to loss of revenue. Some research studies show that for some companies, even a 10% increase in customer retention has increased their profits by 150%. Therefore, measuring customer retention rate can help monitor the overall success of a SaaS product. Read on!
3. Focus on onboarding engagement
Your SaaS business and the success of your product is entirely based on customer adoption. When you have solid onboarding strategies in place, you can speed your customers through the use of your SaaS product in less time. Also, since your customer onboarding is already successful, it ensures that you provide minimal assistance to them.
Your customers need to be able to access the SaaS product, understand what the product is intended to do, and they need to know your SaaS product and feel compelled to continue working with it.
Studies show that more than 50% of customers who sign up for a free trial use a SaaS product once and never return. This, for many companies, is a worrying situation. So, if you are facing the same problem, you need to pay attention to your implant strategies.
Additionally, costs of customer onboarding are an important subset of customer acquisition costs, which include costs associated with partners, materials, tools, etc. on a monthly basis.
Another important metric you should consider for the success of your SaaS product is “time to value.” You should keep an eye on this measurement. “Time to value” is the time it takes for a customer to sign up for your SaaS product.
Any delays in delivering “time to value” can be dangerous, as it increases the probability of customer churn as they never return to fully subscribe to the product.
Therefore, your product success managers should work significantly to improve onboarding processes – and the best way to do that is to increase automation and implement self-service strategies, which are essential to achieving success.
4. Customer engagement metrics
Both product management and customer success teams should thoroughly monitor new feature adoption. Likewise, you should focus on customer engagement metrics. Today, the SaaS market is more competitive than ever – therefore, adopting and implementing product innovation strategies is essential to the success of your SaaS product.
Adopting a new feature is an important step that ensures customer retention and allows you to track whether or not your customers are following the roadmap you’ve designed and implemented for customers to follow.
Also, it is important to identify the number of customers who initially tested the new features of the product. Again, you need to check whether the customers are using the features regularly or not. So, you need to constantly monitor the depth of adoption, duration of adoption etc.
More interestingly, it is necessary to identify customer engagement and retention metrics that focus on active customers, number of actions taken or about to be taken, and average session duration. This will help you determine the success levels of your SaaS product.
Also, you need to identify customers who are not engaging with your SaaS product and the reasons why. The next step is to set some triggers in the adoption and retention plan, followed by the onboarding and implementation processes. All these elements directly affect the 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’s success. A successful 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.
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!