I created a four-part series for SaaS technical and non technical leaders outlining a framework for building, aligning, or pivoting their SaaS software product business model.   Evaluating a new or existing venture, planning a product launch, or pivoting from high growth to profitability, requires a thorough understanding of the framework for SaaS business modeling.  This series is intended to provide guidance and provoke thought and discussion.  It is not an all inclusive guidebook. 

Over the last 25+ years developing software, the last 10 years as a SaaS software advisor, Chief Technical Officer or Chief Product Officer I have learned many lessons. Some of them the hard way.  I hope to share some of the key learnings in this series. I am often approached by leaders of SAS software companies, SAS software entrepreneurs, or service company service or product companies that have built or intend to build a SaaS software solution to accompany the product or service.  

SaaS product model framework provides focus and understanding of the many facets of SaaS software development, release, and commercialization. The model also embodies an understanding of the resourcing and time required to build a solution. Resources are defined as money, technical resources, tooling and, of course, time. The feedback from technical and non technical leaders is overwhelmingly positive.  They report that the time spent was immensely valuable to understanding how to conceptualize a SaaS product or consider avenues to scale more profitably.

I will examine “fit for purpose” for the four critical SaaS pillars:

1. Product market fit. Defining and validating
2. Market SaaS model fit. Pricing the product for scale and maximum profit.
3. Channel product fit. Go to market at scale.
4. Channel SaaS model fit. Sell to, sell through or sell with.

The four parts of this series are the SaaS product, channel, model and market.  

 For more detail, reach out to me directly:  https://criticalgoals.com/about/saas-therapy/ or https://www.linkedin.com/in/andrewbourne/ or alb@criticalgoals.com

The Market (problem)

“The Market is the final Arbiter of value”

This series is about the SAS product platform growth framework for scalability and resilience. The series will start with a focus on the market problem and then the product leading to analysis of the product / market fit.  Understanding the business problem to be solved as a direct relationship to the SaaS product solution.  How big is the market? measured by Total Addressable Market (TAM) and Service Addressable Market (SAM).  Who will benefit from the SaaS software solution?  Typically called the “persona(s)” or the person(s) or type of person(s) who will buy that product,  and  what are their motivations.  How big is the problem?  Is it a consumer issue that could be sold to millions? Or an enterprise level need that, while only experienced by a few thousand corporations, would result in huge additional profits, or, operational savings.  Pin that distinction for later discussion as the model for SaaS sold to enterprise is much different than the consumer model.

Other considerations include geographic scope, current and expected competition, vertical versus horizontal, dynamic nature of you market, and, of course, need.  The road to ruin is paved with solutions looking for a problem.  The money spent on these windmills is tremendous.  Don’t get caught in the trap.

“Every feature function built into that product will be prioritized by the value generated in the market.”

Real World… “I was giving a talk a few years ago in Mountain View, California. At the end of my talk, Martin, an engineer came up to me and asked if we could have a chat. Martin stated, Andrew, I’m down to my last $800,000. And I don’t have a user on my platform yet. As I dug deeper with Martin on process, methods and experience, it was evident that 1) Martin had not released his company’s software to the market. 2) They were still mired in debating what the real business problem was,  and 3) how to code a solution to the problem for the business user in the market.

The end result: the company didn’t have any early adopters and  had not tested their solution with business users.  I have yet to hear successful SaaS leader say ‘I should have waited to release.’

In all cases, release and test in market as early and often as possible. Don’t be afraid of failure.   The business world is merciless.   You’re bound to hear one of three categories of feedback from the market, 1) the software works great, 2) the software works okay, but I wish it did X, Y, and Z, and 3) It doesn’t work, I won’t use it,  I hate it. Successful SaaS software companies know that and focus on #2 and #3.   This feedback is considered golden as users are telling you how to prioritize near term product development.   Case #1 is fodder for marketing.”

To fully understand the business problem and market dynamics, be prepared to verbalize the problem back to the market.  I wrote a blog called “selling the problem ” It is an effective way to start an investor presentation.  Understanding and communicating the pain of the user in such a way that everyone around the table is left with a visceral sense of the issue.  “A day in the life” of the person experiencing this problem is a great start.  Content management solutions marketing materials will speak of the many hours employees waste searching for, editing or recreating documents that they can not find in email, google drive, one drive, slack messages, dropbox, etc.  It’s 25% of their day.  Who has not experienced that frustration!  Now they have your attention.  For only $20/month, that problem goes away with XX software!  Sold!  Selling the problem is the critical part of the business value proposition of your SaaS solution.  To do that, an in depth understanding of the market problem, the persona, and the magnitude of the problem is required

A savvy SaaS entrepreneur or tech leader building a SaaS product should be able to verbalize the market problem back to the market participants in sufficient and convincing detail so as to be 100% credible. You will know when you’re there when you give a presentation, and heads around the room are nodding in agreement.

How do you define the business market you intend to serve? What is the market problem you are trying to solve? A wise man said “the market is the final arbiter of value.”  So understanding basic market problems should drive your product development. In fact, if you understand the market problem in depth, then the solution will become evident. And by solution I mean the SAS product that you intend to build or are building. Every feature function built into that product will be prioritized by the value generated in the market. The product must connect to the business user in such a way that they experience tremendous business value with each user journey*

Bottom line: Know the market problem better than your customers. Build your SaaS product to solve that problem and provide tremendous business value to the market.

*User journey and user journey mapping are important components of SaaS product development.