How to Perform a Market Research for your SaaS
After coming up with a good idea or even beginning on a product, every SaaS founder and team faces the question of: who wants this and are they willing to pay for it? When SaaS experienced its first boom, everyone wanted to create a SaaS solution for every problem but for many there was an issue of if there was even a big enough need for a whole solution to exist and if it truly provided the ease and value founders thought. A good place to start is where we did with Beamer – solving a problem you yourself are experiencing and then sharing and improving it for others. But the due diligence of SaaS market research is still necessary to make sure you’re not making a bad bet or moving in the wrong direction.
Here is how you can perform market research for your SaaS to create a solution that sells:
Identify a pain point that could have a better solution:
Like mentioned before, there may be a pain point you’re experiencing that you see a better solution existing for. Sometimes it can be very simple and direct like Zapier (apps need to connect and communicate) or it can be a complex system of solution that replaces many current processes like Hubspot (emails, landing pages, CRM, etc.). Once you’ve identified a pain point and determined a possible solution, you can take a look at where that solution currently fits into the market.
Identify your potential customers:
With a pain point and solution, you can start to map out exactly who your potential customers are. You can start very simple: write down who you think your customers are and what their pain point is. For example, for Beamer, ours was “our potential customer is a SaaS who needs to find a better way to update users on new features.” A good place to start is with who experiences the pain point the most. The problem for many SaaS companies is that SaaS products are often a potential solution for a lot of people but staying focused on serving one niche, one customer group is more beneficial in the long run. Honing in on one industry and seeing where you can help companies in that industry is a good place to determine your potential customer base. Read more about SaaS market positioning here.
Once you’ve narrowed down who your customer base is, you should determine what your core value is to your customers. What is the biggest benefit of your product that they would be willing to pay for? Why do they choose you over other solutions? This should be the focus of your marketing, sales, and development team. This is what you should be focused on improving and protecting from competitors in order to be the best solution for potential customers. Your product’s development and growth should focus on bettering this value. Your messaging and sales efforts should also focus on and lead with communicating your core value most directly for your potential customers.
“Building a good business involves finding a set of customers that you can serve, however a ‘great business’ is only realised when you can serve that set of customers in multiple ways.”
~ Chris Savage, co-founder, Wistia
Determine your niche and potential market size:
Once you’ve identified your industry and niche, you can better determine the size of your potential customer base. As good as your solution may be, you want to make sure it’s viable to pursue based on the potential for revenue. Once you’ve determined the size of your niche, it’s good to look at what other competitors exist, what share of the market they have, and how much you realistically can take. You also need to look at how much those potential customers will be willing to pay for your product and what you will be able to charge starting out. Without a viable number of payable customers, some solutions will need to be made broader or even more niche to better avoid too much competition.
Analyze competitors and substitutes:
It’s important to look at the existing customers in a space and determine whether your solution does something truly different for them, your directly compete, or if there are potential substitutes. For many SaaS solutions, there are substitutes or direct competitors your potential customers are already using. It’s your job in market research to determine whether you are delivering a better solution and how you are going to be able to take a part of the market share by providing more value. Having this worked out before you build your product is best because you don’t want to end up competing and trying to stay afloat through price cutting alone.
There are a few different approaches you can use to analyze your competition:
- Competitive landscape:
A competitive landscape analysis is essentially competitor research. Your team looks at direct and indirect competitors to put together a comprehensive and comparative view of your industry. You take a look at what your competitors’ strengths and weaknesses are, how they present themselves to customers in terms of branding and language, and compare your competitive advantages to better understand and define what sets you apart.
- Competitive advantages:
Analyzing your competitive advantages in comparison to your competition and potential future competition helps your team learn how to protect and strengthen your position in the market. You want to look at how you can keep barriers to entry high and further improve what sets you apart from competition. You can also take advantage of the weakness of competitors or weaknesses in the market.
- Competitive matrix:
A competitive matrix is a competitor research activity where you literally map where all of your competitors fall in comparison to you based on a few traits. You can create a competitive matrix around pricing, branding, consumer or corporate, etc. to better determine where you are positioned in comparison to competitors. This can make gaps in the market and understanding where your product fits comfortably more clear.
- SWOT analysis:
A SWOT analysis is a strategy where you look both internally and externally at your product to better understand your position. You determine your product’s strengths, weaknesses, opportunities, and threats. Your strengths can be in your product itself, your branding, your barriers to entry within your marketing, etc. Your weaknesses are anything that can be exploited by competitors, make your vulnerable to changing customer demands, or anything that will make customers leave. Threats include competition, changing market demands, changing regulation, etc. This gives your team an idea of what to look out for when building a long term product development and marketing strategy.
- Win/loss analysis:
A win/loss analysis is where your team takes an honest, complete look at how you market and sell your product from the perspective of the customer. What are the points in your messaging or process that make customers convert? Where are the points of friction or comparison where the competition wins? Taking an honest look at this and factoring in your competitors messaging and sales process will help your team fix any areas where you may be losing customers.
A sales battlecard is a competition analysis tool that helps equip your sales team, most specifically, with what they need to answer questions from leads on the competition and substitutes. A battlecard is a comprehensive summary of the current market, competitors, potential substitutes, etc. so that your team is ready to answer questions on customers concerns, needs, and objections.
Speak to your potential customers:
The best way to get to know your customers is to speak to them. The more direct feedback you can get early on the better. Good practice is to get together a small group of potential customers who match your customer personas and ask them simple, direct questions on their processes, their pain points, what would be a better solution for them and test your product or MVP (minimum viable product) with them to see where they experience friction or what features they don’t necessarily see as helpful. They will be the ones purchasing so it’s important to see what they consider to be of value. You can send out short surveys to targeted lists via email or LinkedIn to contacts that match the roles you want to target at companies in your niche. It’s also a good way to get in touch and start building trust with potential leads. People like to be involved and a part of the process.
Determine what is the end goal your customers seek and how you can use your product now and further develop it to support that goal:
Your SaaS product can’t just stop at your MVP. As your customers’ expectations evolve, so does your product. The best way to stay on track with providing value to your customers is determine what is the absolute end goal that customers seek by using your product – not just solving the pain point. For example, for Beamer, we help SaaS teams better communicate with customers about features and updates but the end goals of customers using Beamer is to better engage and retain customers as their product evolves by better communicating with them. So as our product has grown, we’ve made sure that what we create supports that goal for customers. Sticking to serving that end goal as you grow and adapt will ensure that you continue to be the best solution for your customers.
Keep offering new features to stay competitive:
For SaaS companies that are always selling their product over and over to the same customer base while expanding, there is no end to product market research and better understanding what your customers want. There are many ways to do this within your own customer base and product. You can literally ask your customers how they like your product and what they want next through in-app and email surveys. You can use heat-mapping to determine what features customers love and which they avoid to better decide future direction. The market and competition is not always steady and developing new features based off your own customer knowledge allows you to stay one step ahead. You can use Beamer to share new features and updates with users within your app or on your site and get their direct feedback. Beamer is an in-app changelog and newsfeed that opens when customers click an icon in your interface or a “What’s New” tab in your navigation. A discreet, native-looking sidebar opens up with a stream of your latest updates. You can add photos, GIFs, videos, and CTA buttons to your updates. Customers can leave their reactions and comments like a social feed that your team can respond to, opening up a two-way communication with your customers. On the backend, your team can see data on open rates and responses from customers that you can use to better understand what they want next.
Launching a SaaS product is a process of constant market research to ensure your product stays valuable to your clients month over month. Due diligence at the beginning and a steady plan to continue to listen to customers can save your team a lot of backtracking and headaches down the road. For the best way to communicate with your users and keep them engaged as your product grows, try Beamer today.