I’ve mentioned how important that building a strong foundation is for SaaS companies. But for any young digital business, from a single consultant to a funded eCommerce/SaaS company, you need to know what one looks like from a makeup point of view.
Where do you start? Establishing if you have product/market fit.
How do I know if I have product/market fit?
When the market accepts your product as a solution to their problem, you have product/market fit. Sounds like some textbook stuff right?
The practicality just isn’t in that definition. There’s subtlety with every business, yours is no different.
Your Customers are Growing for the last 3 months
When you’re stressed about whether or not your business will make money or any of the other 100 thing founders and marketing leaders worry about, you often forget to simplify your marketing–that includes how you measure success.
Is your business growing? Darn good way to figure out if you have product/market fit.
Seeing this from both the funded and bootstrapped perspective, you’re really looking at growth in volume and percent growth. Does the volume allow your company to pay the bills? Does the percentage growth align with your expectations and your investment in marketing and your product?
Growing from 1 to 2 to 3 customers looks great at 100% MoM growth, but certainly not from a volume perspective.
While we could look at volume as the KPI, there’s a chance that churn is high. While it looks like your clients are growing, you may be hemorrhaging customers. The curse of great marketing!
Churn is one of the metrics that you should be reporting on as a foundational element. It’ll also tell you if you’re heading in the right direction.
Talking to other SaaS founders will help give you amazing context as well.
Your Customers Tell You…All the Time
With the ubiquity of social media and the empowerment of the individual, you can listen to the conversation that’s happening about your product without having to do a thing.
No focus group. No survey. Nothing.
Now with early stage companies, you likely haven’t spent the time to build the community that rallies around your brand just yet. You still need to do some manual outreach to your customers.
You can talk to your customers in many ways, the key in figuring out product/market fit is that they gush for your brand.
The one thing that you need to understand about talking to customers is that they won’t always have nice things to say. And when they say nice things, they may not mean them. NPS can be a great tool and one-on-ones are something that I am a HUGE fan of, but look at how you respond when approached in a similar way. Think of all the personality types that your customers may have. Think of the day they may have had that could have changed their perspective.
These things influence their opinion when you ask them. Detach yourself from your product while doing this kind of research and make them feel comfortable. If you have a strong mission that they identify with, reinforce that mission. Ask probing questions but don’t be accusatory.
Remember that if you haven’t felt product/market fit yet, uncovering a new need from a customer could be an opportunity for your business.
Your customers are growing. Your customers are gushing about you. Product/market fit!