SaaS CEOs: Consider These Five Product-Market Fit Essentials Before Going To Market

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Guy Tytunovich is the founder and CEO of CHEQ, the leader in Customer Acquisition Security. 

CEOs of aspiring SaaS companies often struggle to figure out when they’re ready to go to market and begin scaling. This is a huge question in the lifecycle of tech companies, as those that begin scaling before they have good product-market fit will end up hitting a brick wall while wasting time and money in building the infrastructure to support scaling an unsalable product.

In fact, a study by the Startup Genome Project found that 70% of startups scale prematurely. Product-market fit entails a large number of elements that must be fine-tuned, but to provide a more workable framework, here are five absolute PMF essentials that SaaS executives should be considering before taking any SaaS product to market.

1. Easy To Explain

Ask yourself which of the following best characterizes your product or service:

1. Hard to explain, easy to do;

2. Hard to explain, hard to do;

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3. Easy to explain, easy to do;

4. Easy to explain, hard to do.

If one of the first two best apply, that’s a giant red flag. Offerings that are hard to explain are almost impossible to sell and are usually indicative of poor focus or unclear value propositions. Regarding options No. 3 and No. 4, one isn’t necessarily better than the other; they just make for different kinds of companies. Think of Google — easy to explain, very hard to build. More companies, however, succeed in the easy-to-explain, easy-to-do bucket. A few examples that come to mind are Airbnb, Dropbox and Doordash. These naturally have to endure more competition, because the technological barrier of entry is lower, but they are so easy to explain that the selling process is smooth and natural.

2. Easy To Use

When defining usage, you should look at the three stages of a client’s engagement with the product: the test stage, implementation stage and post-sale stage. As a rule, your SaaS product should be easy to test, easy to implement and easy to manage. If any of these aren’t easy, you’re likely to fail. At the testing phase, this is where you have the absolute minimal attention of the prospect. They are testing several products at any given moment and have very little patience.

Any complications will immediately make them feel that this product is going to suck up their valuable time and energy. At the implementation phase, if you require complex integrations and dev work, you will either get stuck in an endless dev queue or worse, the prospect will stop the process because they don’t have the resources to allocate for the project. At the post-sale stage, if your complicated product ends up consuming too much of the client’s energy, then you’ll struggle with renewals.

3. Easy To Demonstrate Value

Consider how selective a prospect needs to be when assessing new SaaS solutions. Some companies are approached dozens of times a week by companies they’ve never heard of. The chance of getting their attention rides entirely on your ability to simply and clearly demonstrate value. Not just provide value, but actually demonstrate it. If you can show the client from within the platform that you’re saving them money, improving their key business metrics, reducing labor or any other tangible value that they care about, then your path to closing is much smoother. However, if the demonstrating of value is an effort, then the likelihood is that the client won’t ever see it.

4. Easy To Close

Complex deal-making and long sales cycles are a nightmare for any SaaS company aiming for rapid growth. It is extremely important to make sure the deal closing on your product is swift, simple and frictionless. How? First off, make sure your product doesn’t require multiple stakeholders to sign off. In adtech for example, some companies need both the advertiser and their media agency to approve the deal. This immediately makes for an excruciating closing process and increases the chances of a deal falling through.

Security reviews are another deal killer. Make sure to have clear documentation demonstrating the relevant compliance, whether it’s SOC 2, GDPR or whatever your clients are concerned about, so that the process is smooth. Also, make sure your rate card is aligned with your clients’ needs. If they’re used to a fixed annual fee, then offer them that. If they’re used to paying a usage fee, then that’s the way to go. Don’t try and reinvent the wheel when it comes to rate cards. This is the last place you want to start getting creative.

5. Hard To Leave

Once your SaaS product is generating paying customers at scale, one of the crucial things you’ll be measuring is customer churn. Nothing bodes worse for a startup’s future than bad churn numbers, so you really have to make sure your product has stickiness from day one. To do this, first, you must make sure that the value your product drives, whether it’s savings, threat prevention or performance boosting, is clear to the customer. This can be done through periodical reports, executive business reviews and smart communication. On a more strategic level, the stickiest products are usually part of the customer’s infrastructure.

Think of Salesforce, for example — your CRM is such a core infrastructure, containing all your sales data and integrated into your marketing automation and sales engagement platforms, that switching becomes a huge organizational task. Now while not every company can be a “Salesforce,” it’s important to try and design your product in a way that it becomes baked into the customers’ infrastructure, making it much harder to leave.

With all this in mind, my key takeaway for success is to approach the market with a mindset that addresses two crucial components: need and friction. Product-market fit is only achieved when you meet that clear market need while providing a frictionless product. The above essentials are key to this approach and if you nail them, you’re definitely in a good position to take your product to market and begin scaling.


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