Mar 18, 2022 11 min read
10 Key Steps to Developing a Successful SaaS Product
Learn how to build a SaaS product that delivers customer lifetime value and more revenue to your business.
SaaS product development has become a staple of digital transformation across organizations. With features and benefits that make life easier for their end-users, the need for SaaS applications is only going to continue its growth. In fact, Gartner estimates that global end-user spending on public cloud services is expected to exceed $480 billion in 2022.
The idea for many SaaS applications start the same way. Someone sees a problem in the world or uncovers a gap or process inefficiency and says to themselves “Wouldn’t it be nice if…"
On the surface, it seems like a simple proposition. Identify a problem, determine the needs of people that share that problem, then begin building the solution to that problem. While the path from good idea to successful market entry might not always be this linear, there are some guiding principles along SaaS Product development process that can prepare you to successfully launch a product. In this blog, we’ll look at 10 key steps you need to take to set yourself up for success when building a SaaS Product that delivers customer lifetime value and more revenue to your business.
What is a SaaS Product?
The simplest way to think about SaaS, is that it is an online software that all users have access to. Most SaaS products are web and mobile apps that do not require installation and users pay a monthly/yearly fee for using the product. To use SaaS platforms, users do not need to install anything on their devices since the application is hosted by the server provided by your company. To give you an example, the most popular SaaS companies are Dropbox or Google Apps.
A crucial component in making a SaaS business model a success is to clearly understand your current customer needs and/or would-be user needs, and to accurately identify which needs are most valuable to solve, so you can target them in your product.
Building a Successful Product from the Ground Up
Many SaaS products start out as good ideas, but can come across bumps and changes to the roadmap that impact a successful product launch. Here’s how you can improve outcomes.
Determine if Your Users Exist and Validate your Idea
This may seem like an obvious step, but long-term success of your product depends on making sure you actually have users that will benefit from your product. A user is a person or organization that has the right mix of incentives to take action and spend money or resources to engage with your SaaS app.
This is a big component in Highland’s Research practice, where we dig deep to learn about the forces at play in the lives of would-be users and narrow down your target audience. You want to make sure your target customers are willing to pay for your product and that your offer meets needs they are actually motivated to solve. These kinds of things can be tested and refined through market research and prototyping so that potentially painful lessons can be avoided before a line of code is written. No matter how big and obvious the problem is, don’t skip this step. It's common to assume a buyer exists for your imagined product, when in reality, they may not have the same motivations that you predicted them to have.
Study Your Competitors
How closely have you observed competitors in your space? What are other ways companies are approaching solutions to the problem you identified? Have you analyzed why users switch products to buy yours instead?
It’s important early in the process to determine if your product is attractive enough for users to spend money and adopt. This is especially true as you conduct market research to assess how your product will stack up against competitors and where you will fit in the market. We use the Jobs to Be Done methodology to help organizations understand the forces for and against customers choosing your product. Typically you will want to focus your new product strategy on taking a feature that your competitor offers, but finding solutions to do it better and more efficiently to meet the needs of your users.
Choose the Right Pricing Model
As you work on your business plan, organize a structured and detailed scope of operational and financial objectives that you plan to reach within your SaaS product launch. You’ll want to include all the building blocks that should be clearly answered to better realize how to build your SaaS app and earn profits.
There are different pricing models for your SaaS solution monetary strategy. You can choose from:
Usage-based pricing - when users pay by amount of product usage
Pricing per feature - offering features your users can choose
Freemium - a free version with limited features with the ability to upgrade
Flat rate - offering the entire product or bundle of features under one price paid monthly or yearly
Pricing per user - charge by number of users for the product
How to decide what model to implement goes back to bullet point number 1: adjust to your target user’s needs.
Define your SaaS Requirements for your MVP
This tip builds upon the importance of needing to understand your user needs. To define the minimum viable product (MVP build) you want to figure out basic core features that bring value to your customers with minimal costs from you, collect feedback to verify your business idea, and test different approaches. If you have a great product roadmap as a result of your strategic planning and stay within scope, you’re on your way to a focused MVP build.
Say “yes” to new features that are laser-focused to your defined set of users and “no” to unnecessary functionality that may derail you. Early focus and discipline is crucial to get to market with real users sooner. If you haven’t built a SaaS product before, it can be challenging to manage the project internally with so many stakeholders at the table. You may want to look for external support in SaaS design and development to lead the entire SaaS product management lifecycle.
Choose the Right Features
Your primary goal in assessing the market is finding how you can differentiate. SaaS products will always have some commonalities, so a clear plan of features, customization, integration options, and security is essential. In a SaaS model, it is crucial to always have:
Security - SaaS cloud-computing implies you store end users' data in the cloud which requires high security against hack attacks and other vulnerabilities.
User-friendliness - Your product should be simple to use, clear, and have an intuitive user experience that makes users feel empowered to use your product.
Performance - choose a technology stack that allows for future scalability as users and requirements grow.
Be mindful of not falling into a feature parity trap, where you may be adding components to your product just because your competition is doing them. It’s a subtle shift, but falling into this trap often means that you have taken your eye off of customer value and have started to focus instead on comparing yourself to your competitors.
Get Your Product to Real Users ASAP
Despite how well planned and thoroughly researched your idea, people can be tricky. They can showcase user behavior or give you feedback that you did not expect. While initial strategic planning can reduce errors along the product roadmap, there is simply no substitute for learning about your users behavior in the real world. Thinking that you understand your users better than you actually do is a tremendous risk that needs to be mitigated as soon as possible because there are simply limits to what can be learned without actually doing.
During this process, you're able to iterate and improve what you've built by better learning actions users are taking (or not taking) to solve their problems and if your solutions are connecting to their needs.
I recommend you be disciplined about how you are flexible in your SaaS product management process. It's common to feel intense pressure to be “successful” and make adjustments for the sake of expediency. Shifts to your product roadmap should be done based on the best available data and ensuring your product aligns with your user’s behavior.
Chances are, even if you have a really nicely defined target market, you will still encounter variables in each user’s needs. This means that your product will need to be able to adapt and you want to take it slow and thoughtful. If you find every feature of your product having 100 variations, it's a red flag that you need to make sure there is a clear picture of your product’s value proposition. Sometimes having too much multiplies your SaaS app development team efforts more than you realize and dilutes the economy of scale... and in the end you may have gotten quite off course from your original vision and likely from your target market as well.
Deliver features that align with KPIs and Metrics
By setting clear KPIs and metrics on which you will measure your product success, you are able to stay focused on the end goal of your product launch. Small adjustments to your roadmap, if done too often, can add costs and slowly put you off course from the project scope. Before you know it, you’ve built an entirely different product for a different target market. Here are some metrics you can use to define required features and stay aligned pre- and post-launch:
Revenue - could be monthly, quarterly or annual revenue
Market Share - how is your product performing against the competition?
Customer Acquisition Cost - the cost of winning a customer
Customer Churn - the percentage customers that unsubscribe in a specified time frame, usually monthly
Customer Usage - determine what features your users are utilizing and truly need
Launch to Market
After all of the work to research, design and build your SaaS product, it’s time to launch! Developing and launching a SaaS product is really a matter of company strategy and will require that business processes, product, marketing, and sales teams are all in sync with each other to do it well. It’s just as important to pay attention to how you can provide value to your users as it was throughout the development process. What you emphasize in this step will vary if your SaaS Product is marketing-led with digital sign-up and conversion or sales-led with a traditional sales focus
Customer Onboarding: Providing initial training and support to you users will ensure users feel supported
Products Demos: A video or sandbox version of your product that users can interact with can help users u explore features and better understand how to use your product
Sales: Develop materials like a sales deck that your sales team can use to showcase important messaging and product features
Marketing: Whether its content marketing and SEO, paid advertising or offering free trials, a strong marketing plan will help you get your product into the hands of your users
Gather Feedback and Measure Success
Once you’ve brought your SaaS product to market you will have to make decisions based on your product successes and user feedback. Because you have built your SaaS product with KPIs and metrics in mind, it is important to measure and report on those data points post-launch. Do any of the metrics you originally established need to be updated? Measuring items like customer acquisition cost, churn, and revenue will provide important insights into the success of your product.
It is also crucial to listen to the feedback of your users just as you have throughout the build process. What features are working well? Are there updates you can roll out over time? The key to a successful product and user adoption lies in your ability to generate value for your users.
Developing a SaaS product is complex, creative, and iterative. There are no hard and fast rules, but these tips and guidelines will help set your product up for success. On one hand launching a successful SaaS product takes a herculean amount of discipline to stay the course and stick to a vision. On the other, it requires being adaptive and learning as you go. Oftentimes you need to adjust the vision, be creative, and make pivots to build a product that successfully meets your users’ needs.
Choose a SaaS Software Development Team to Lead your Success
At Highland, we are a digital innovation and custom software development company that builds human-centered SaaS products that both you and your customers truly need. Our goal is to learn about your business, identify the problem you want to solve, and implement a strategy-informed solution that works for your users and continues to propel digital transformation in your organization. From exploring and validating marketing fit, to generating meaningful product ideation, to building innovative SaaS products, we’ve helped hundreds of companies translate ideas into opportunities that fuel business growth.
Need help building your own SaaS product? Get in touch with us!