Today’s technology is immensely geared up to help small and medium-sized businesses succeed. There has been a radical change in the way things have been functioning. With the onset of cloud technology, a lot of conventions have been replaced with contemporary tools and techniques.
One such profound contribution is from the SaaS sector. Eliminating the need for businesses to develop and maintain a software application for their distinct purposes, these Software-as-a-Service companies offer their applications for a fixed price or subscription plans. This allows businesses of all sizes to tailor the application to their requirements and make the most out of the tool.
The other side
If you’ve used tools such as Dropbox, Salesforce, Hubspot, Google Tools and more, you are already familiar with the SaaS technology. And if you’re someone who has identified a crucial business potential in this sector and looking to launch a reliable SaaS product, there are a few things you should consider first.
While statistics would reveal and shed light on the most successful SaaS service providers and that it is a billion-dollar market, you should also look at the other side of the spectrum. For every successful SaaS company, there are a lot of companies that experience a very slow growth rate.
At this point, it is important to understand a term called churn rate, which indicates the number of subscriptions that are terminated over a period of time. Companies that fail have a churn rate higher than their growth rate.
Also Read: Taiwanese SaaS startup mlytics ensures your website never faces internet outage due to cloud failure
To throw some more light on this, understand that:
- Over two-thirds of the SaaS companies in the market have reportedly experienced a churn rate of five per cent (or more)
- Even 34 per cent of the companies with high growth rates have experienced a churn rate of over 10 per cent
- The ideal churn rate for a company is anywhere between five and seven per cent annually
The primary inference here is that even the best SaaS providers would lose subscribers every month. This could be because of competition, redundant features, pricing and more.
However, there is a stark difference between losing a customer and not gaining one at all. That is where most newer SaaS companies mainly fumble. As we mentioned, the market is cluttered with SaaS products with each offering attractive pricing plans and features.
So, in this clutter, how do you find out if there’s space for your SaaS product?
How do you know if the product you roll out would have takers?
Also Read: Customer churn analysis: How can startups get it right?
Do the features you have in mind add any value to your target audience or should you fill the gap between what they require and what you offer?
To answer these questions, you should test the water before you dive in. That’s why we firmly believe in rolling out an MVP for your SaaS products to gauge its stand in the market.
This is a litmus test your product would go through and the results would enlighten you on the actions you should take in developing a full-fledged SaaS product.
So, gear up to find out the fundamentals of building a SaaS MVP
The fundamentals of building a SaaS MVP
One of the primary reasons why certain SaaS companies fail is because they don’t think from a customer’s perspective. When a founder has an idea, the immediate stage is an assessment of the market, competitor analysis, probable valuation, and product development.
Little or no attention is paid to understanding what the target audience wants, the problems users face, whether the existing solutions resolve concerns and more. Even user persona assessment is vague, where the focus is mainly on getting the product out.
This haste will only backfire as you do not just have a half-baked product but an idea. One of the companies that took the ideal approach is Buffer, the popular automation app for social media.
Also Read: Five cornerstones to SaaS startup capital efficiency
When the idea happened, an MVP was created with a flow and tested. When it failed, the founder collected the email addresses of his subscribers and started talking to the users.
As he spoke more, he understood what features worked and what did not, the areas that required more attention and more. It was after all this that the product was finally rolled out.
Product features
Talking to your initial subscribers (testers and first circle contacts) would give you immense insights into what the market requires in terms of a new SaaS product. You have a clearer idea about your product and how it would look and function. You might also realise that the idea in mind would no longer make sense as the demand is completely different.
Once you have the ideas and points in mind, the approach now is to decide on the features that your product would offer. This depends on your product’s market, niche, persona and all the insights you have gathered.
If it is a CRM, you would understand that a pain point is segregating contacts for targeted campaigns and more such insights. Coming up with a product roadmap is ideal to get your features organised for your MVP.
Doing so will not just give you clarity on the functionality and efficiency of your MVP but help you have better control of its development and progress at any given instance of time.
Develop the core feature first
“Feature creep” is a term that refers to the tendency to add several features during the development stage. It happens when you are either aim for perfection or are insecure about your product. Regardless of what it is, this is lethal to your product, especially your MVP.
When you start building your MVP, it’s easy to get deviated and consistently add new features. But the whole point here is to test your idea and see if it works. It is not about showing off your product like in the case of a trialware. As you keep adding features, you tend to lose focus on the primary feature that defines your MVP or product.
It gets cluttered and what was supposed to be an elegant solution is now a tool of chaos. So, the ideal approach here is to first develop that core feature of your MVP and get it out of the way. To avoid feature creep, ensure that:
- The features you think of add value from a customer perspective
- A feature has a demand in the market or is requested by users on public platforms
- You distinguish between essential and good-to-have features
- You never deviate from the usability of your product
Launch The MVP
It is called an MVP for a reason. The whole point is to learn about your idea through the MVP. If you have developed your idea’s core feature, understand that it’s ready for launch. The problem with most founders and owners is that they tend to keep adding features or develop their MVPs even after the rollout. You do not have to focus on its development after you have launched your MVP.
Now is the time to find ways to get more traction to your MVP because the more the testers, the more the feedback. And the feedback and criticism you get for your MVP will help you develop a better product.
So, some of the ways you could get traction are by engaging on some of these activities:
- Blogging about your industry or niche and conveying how your MVP is designed to fill the gaps
- Hosting or being part of a relevant podcast
- Personally reaching out to your target audience
- Using relevant social media to build a brand and generate buzz
- Making the most use of your first circle of contacts
- Reaching out to startup aggregators and more
Developing and launching an MVP is a crucial stage in running a business that defines your venture’s future. You could be patient and learn at this phase so your product is future-proof or you could be hasty and make a mistake that could cost you your business.
Groove, for instance, lost over US$50,000 because it ended up creating the wrong product. It kept adding new features and lost its way of delivering what was required the most by consumers. It took a lot of effort and insights from MVPs to launch the right product with the ideal messaging.
So, if you’re launching a SaaS product, get started with an MVP.
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