[2024] key to achieving product market fit in SaaS startups

Who should read “Key to achieving product market fit in SaaS startups”?

If you can’t get to product market fit with your SaaS startup:

  • If you can’t acquire,
  • if you can’t convert,
  • if you can’t retain users
  • if you can’t build enough traction to get investor attention.

    If you know, you have a good product, but somehow, the users just don’t see it. 

This blog is for you. 👇

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1 month ago

[…] I blame Marc Andreessen – the creator of the product-market fit model, for the bad statistics the startups get. Not properly defying product-market fit, not specifying the metrics, even the name, I think a lot […]

TL;DR

Product market fit in a SaaS business is difficult to build because:

  • there are a lot of moving parameters, but mostly,
  • we think about the products too much, and we don’t think about the value enough.

    👉 We should be focusing on building value-first startups, which means finding one unique value that your startup delivers to the customer and then building the product around that value. That’s what will get your SaaS to product-market fit every time. Use the framework in the article to find that value.

The Importance of Product-Market Fit in SaaS Startups

Feel free to comment on whatever you agree or disagree with.

We’ll have a conversation about the startup statistics because 90% of startups fail. And I believe there is a simple solution to revert that statistic. To have 90% of startups succeed. 

So, throughout the article, you’ll learn why, but we’ll start by looking at what product-market fit even is, why it’s so difficult to build, what some common mistakes are, and how to solve them. By the end of the article, you’ll know exactly how to build product-market fit for your startup, + I will be sharing templates and resources at the end. 

What is Product-Market Fit?

Ok, let’s get started. What is product market fit?

Well, let me tell you. Marc Andreessen, who is credited with coming up with the model, didn’t really think about that one. He didn’t come up with a good definition of product market fit. It’s usually described by people who have achieved product market fit with: “You’ll know when you have it” with a smirky face.

gipfaahy

But I don’t like that definition, so for me, product market fit means you have found a good market that wants a solution, and your product is that solution. But the solution to come to product market fit is not actually to improve your product, so let’s leave product development on the side for a moment and take a look at what it will look like when you will have reached product market fit for your SaaS business.

Challenges in Achieving Product Market Fit in a SaaS Company

Having a strong product market fit means that the buyers are coming into your product, they use and buy your product, and potentially, they are even vocal about it on social media and with their friends.

How does that feel on the company’s side? You know what to say to the customers to get them to buy, your onboarding works, your sales numbers are good, and people use your product and are leaving positive reviews. Read how we achieved product-market fit in my SaaS here.

So, in short:

  • No acquisition problems, 
  • no conversion problems, 
  • no retention problems, 
  • and a Lambo in your driveway. 
giphaaay

Right. Sounds easy enough. So why is product market fit for SaaS so difficult to build?

The Value-First Approach in SaaS Startups

For one, there are tons of moving parameters like your audience and the target market; everything is constantly changing, so it’s difficult to get to the right audience with the specific need at the right time. But most importantly, in my opinion, we are building the startups upside down or the wrong way around. Our step-by-step instructions are in the wrong order.

Because here is a typical founder story. Imagine a startup founder like yourself. You probably found a problem that you decided it was worth solving, right? You see that there is a problem in the market. Something about the customers doing things in a certain way. They have a job to be done that’s not done well. Or you found a problem with a product and thought: “Oh, we could do this so much better.”

And so you built a product around that. But surprise, surprise, the customers don’t come on their own. So you’re now trying to find the market for that product, right? You have a good product, but you don’t know who the target audience is. You don’t know if the market even exists. The problem is that 42 percent of startups fail because the market simply doesn’t need their solutions.

A further 29 percent of startups fail because they run out of money, which means people aren’t willing to pay enough money for the product to be turned into a sustainable business. So, 71 percent of startups fail because they never achieve product market fit.

Why startups fail to achieve product market fit in saas

And I think we could turn that around by simply reordering the way we do startups – by building value-first startups.

So, to build a value-first startup, here is what you do:

1) You find your value proposition first,

2) then you build the product around that value.

So we don’t start with the product and then find a market for it, but we find a value, something that the users are prepared to spend money on, and then build a product that delivers that value. This is how we are getting to product market fit in SaaS.

old vs new way of building a saas startup to get to product-market fit faster

In that case, the focus is on creating value, and the product is a tool that delivers that value. And if you have a value at the core of your business, this helps you stay focused on the value. So that means you create a better product because the product’s job will be to get users to the value or to the aha moment, right?

– So with value-first startups, you have a shorter time to that aha moment where the user experiences the value and converts, so it helps with customer acquisition.

– You also have no problems creating a killer value proposition because you already did that before you even started building the product, right? So the most difficult part, how to attract customers, is solved for you before you even start.

– The same goes for investments. You can clearly articulate where you’re providing value. This means that you can easily explain why VCs should invest in you, which means getting money is that much easier.

All your metrics would be better from the start, the business model would work better, it’s easier to attract a customer base, because a good value proposition that you have from the start helps with attracting potential customers, then it’s easier to convert them to paying customers, you are ensuring less churn, a lower churn rate from your users. All this helps you with finding that illusive product market fit in SaaS and scaling.

benefits of value-first startups

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So, all parts of your job when trying to find product market fit for your saas product, getting customers, converting customers, retaining customers, and getting money from investors, would be easier if we built value-first startups.

How to build product market fit in SaaS – w/o the product example

And imagine making money without even having a product. You could easily create value without even having a product, without building an MVP. For example, I was speaking to a friend of mine, a consultant, and he has a friend who ran a marketplace on Facebook manually before building it into a product. So you can be profitable, making money, and with that money, you create the product to help you expand.

And what prevents us from doing that is that we are focused on products, right? We think we’re searching for product market fit, and we think that product-market fit has something to do with the product because it’s in the f*cking name, but the reality is that the product really doesn’t have a lot to do with the actual sales and conversions. The product just has to be good enough to deliver value for the customers.

The customers don’t give a shit about your product. They are there for the benefits. They are there for that value, for that unique value that your product is giving them, not for the product itself.

Customers don’t give a sh*t about your product

For example, at my last startup, we were working on a mobile app that helps dyslexic children learn to read. Our project leader had a good method that helped dyslexic children read fluently and faster. And we delivered that by color-coding some of the texts in a mobile app, right? So, you had a text, and the software would color some of the letters so that dyslexics would have an easier time identifying the letters.

Now, we could easily have done this in a newsletter format as well. So, our product could actually have been: We send weekly stories with color-coded texts to our subscribers on a Saturday morning. That would provide the same value to the users. Would they care if the product is a weekly newsletter versus a mobile app?

Book Mockup stack whiteBCKG 1 1024x838 1

I don’t think so. Because the value is still the same for them, they would still be prepared to pay the same 10 bucks a month just like they did for the mobile app. But the mobile app allowed us to reach more customers faster. So, the mobile app was the optimal way of delivering the value. But the customers didn’t actually care whether that was a mobile app or a weekly newsletter.

So, you can see how the product doesn’t really make that much of a difference. It’s just the most effective way of delivering the value. So, we should really focus on building value-first startups.

Reframing the Startup Strategy

Now, does that mean that you’re f*cked if you already built a product?

No, it just means that now that you have a product, you’ll need to find what the real unique value of your product is and communicate that.

You’ll need to make sure that the specific customer segment you want to attract sees that value and position the product for them. Potentially, that means that you’ll need to make some adjustments to the product, adjustments that wouldn’t be necessary if you built the product around that value in the first place.

I’m here to help you out; here is a link to my positioning framework, where you can use the framework to find your unique value. It’s free on Miroverse, so just follow the link and give it a like.

The Key to SaaS Success

Product market fit in a SaaS business is difficult to build because there are a lot of moving parameters, but mostly, we think about the products too much, and we don’t think about the value enough. We should be focusing on building value-first startups, which means finding one unique value that your startup delivers to the customer and then building the product around that value. That’s what will get your SaaS to product market fit every time.

If you want to find your unique value for an easier way to product market fit:
Book a call or contact me at: grow@apersolja.com and let’s talk about your challenges.
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1 Comment
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1 month ago

[…] I blame Marc Andreessen – the creator of the product-market fit model, for the bad statistics the startups get. Not properly defying product-market fit, not specifying the metrics, even the name, I think a lot […]

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