How to Nail Product Validation for your SaaS Company

SaaS Validation

Before you launch your next product, consider these statistics:

  • Over 70% of startups that are backed by venture capital fail
  • Over 50% of all US startups fail within five years

Most of these companies are led by very smart teams with revolutionary ideas, so what’s going on? While there are many reasons these startups may fail, problems with a product often fall among the top ten reasons.

If you’re running a SaaS business, you know how time consuming and expensive it can be to develop (and re-develop) and launch a new product. In order to avoid becoming part of these statistics on failure, here are some tips to help you nail product validation.

What is Validation (and What it’s Not)?

Validation is going through a methodical process of identifying which people and how many will actually pay money for your product. It’s easy to believe you have the next big thing when everyone around you is confirming that your gut instinct is on point. It’s easy to get overly optimistic about large amounts of website traffic. It’s easy to get caught up in the hype.

Mentions by leading tech publications, bloggers or social media accounts are exciting, but it doesn’t guarantee that this buzz will turn in to revenue. As Justin Jackson from Product People explained, “Early on, a company I founded received a lot of press (primarily newspaper coverage, magazine articles, blog posts). But we couldn’t convert that hype into paying customers.”

Nailing validation can improve your chance of accomplishing this conversion.

What Do You Need to Validate?

The first step in validating your SaaS product offering is knowing what you need to validate. Here are key categories to include in your process.

  • Audience: Every product needs a pool of users. If you will use it yourself, then your pool is one person. You’ll need to use methods we describe in a later section to find others who will use it too.
  • Problem: The most successful products solve problems or address a pain point in a unique way. Do some research to find your audience’s pain points or back up any assumptions you may have about their perceived pain points.
  • Solution: You need to validate if your product addresses your audience and their pain points appropriately. Further down we’ll review ways to intuit this even before you have a minimum viable product.
  • Perceived Value of Solution: In order for your company to be successful, your audience has to pay for your product. They will only pay if they think your solution is valuable. When it comes to perceived value, many entrepreneurs caution that excitement doesn’t always translate into money.

ConvertKit’s Nathan Barry explains, “Verbal commitments, sometimes even contracts, mean nothing until money has transferred hands.” While product positioning and marketing campaigns can improve perceived value, there’s only so much that word-smithing can accomplish.

Why is Validation Important?

A major part of the adventure of being an entrepreneur is the unknown. You only enter this role if you like taking risks and the thrill of trying something new. Even with this risk tolerance, it’s helpful to have some input and the chance to refine your product along the way.

In any business, you will need to make assumptions. Keep in mind the old business adage, “garbage in, garbage out.” With validation, however, you can base these assumptions on better inputs. It can also give you a competitive edge as many companies often skip this step.

When validation works, and you go to market with a product that truly addresses a pain point your audience faces, it can also help you overcome minor bugs that accompany most product launches. Your audience will be much more willing to stick with you if your product is valuable, but you just need to fine-tune a few things. Validation may just be the difference between success and failure.

How Do You Validate?

It may sound near-impossible to validate the above points before you have a minimum viable product. Luckily there are many online tools and methods for going about validation. As much as our group is an SEO-first organization, when it comes to working on validation it is NOT where you should be looking.

  • Audience: Facebook’s Campaign Builder is one of the best ways to get a reliable idea of how big your audience will be if you were to advertise on Facebook. You aren’t obligated to advertise on Facebook. With more than one billion active users on Facebook, however, if there’s an audience for your product on the social networking site, then there’s an audience for your product in the real world.

The tool can also help you define your audience. If your audience definition is too narrow or too broad, you’ll have a harder time selling your product.

  • Survey: Surveys can provide helpful datapoints to determine if you are on the right path with your perceived pain point assumptions and potential solutions. As we cautioned above, this information may not translate into dollars spent.

Co-founder of KissMetrics and CrazyEgg, Hiten Shah, is one entrepreneur who has had success with surveys as a way of engaging potential customers in conversation to discover more about their pain points. Check out his surveys on Hitenism.com.

  • Competition: Competitive analysis should be a part of your validation strategy or any new business idea. Through online research you’ll get a better idea of the products on the market and their strengths and weaknesses. If there are no competitors, there’s a small chance that you’ve discovered something new. In most cases, you want competition – aka proof that people will pay for the solution you are proposing.

A few sites that can help with competitive research include:

For example, one competitor that Harpoon faces is the popular online invoicing application, Freshbooks. Freshbooks’ existence and large user base confirms there is demand for online invoicing. Research into why users might want to leave Freshbooks and the number of freelancers who don’t know about the platform have given Harpoon confidence that there is ample market potential in the space for a new entrant.

  • Sample Group: There’s nothing quite like receiving feedback via phone calls or in person meetings on your product. If possible, gather 10 or so contacts and discuss your product with them. If you really want to test your idea, you can ask these potential users for pre-orders to you have some proof that people will pay money for your product.

Another way to find potential users is through Meetup. These informal, theme-based gatherings could provide you a venue to have conversations with your target audience. If you’re really bold, you could follow the footsteps of Patrick Mackenzie, founder of the Appointment Reminder app, and employ door-to-door salesman tactics to reach potential users.

  • Landing Pages: If you want to see how interested people may be in your product, even before you launch it, you can build a landing page. These landing pages allow people to sign up to be notified when the product is available.

Of course, you have to get people to the landing page first. To do this, you can follow traditional marketing strategies and post the landing page to the social media sites or online forums where you’re likely to find your target audience. For further reach, you could run a limited advertising campaign on Facebook or Google.

The language on your landing page is very important. If you use phrases like “beta”, “coming soon” or “get on the waiting list”, you may not capture your audience. Instead, call-to-action buttons that encourage users to buy the product will help validate that users are willing to pay for your solution.

Entrepreneur and author Rob Walling offers the following guidance in his book Start Small, Stay Small: A Developer’s Guide to Launching a Startup, “Assume you will convert 2% and 5% of people who clicked “Try now”…Assume 40% of the people who clicked “buy now” would have completed the purchase.”

How to Create Landing Pages?

There are many services out there that will help you build landing pages if you aren’t a developer or if you don’t want to waste time reinventing the wheel. Each service has different pricing, features and complexity, so be sure to research each one to see which best fits your needs.

Some of our favorites include:

Start Your Validation Process Today

Of course, it’s better to validate your ideas early in the process, but this is also a strategy where “better late than never” could apply. Before you continue sinking more hours and dollars into a possible pet project of yours, start with your audience. Get to know their problems. Make sure your product offers a real solution and that your audience is willing to pay for it.

Leverage the several online tools available to make these unknowns a little more tangible. From surveys to sample groups to competitive research to target audience outreach, any steps you take to validate your product are likely to improve your product launch and marketing efforts. Just think, if more entrepreneurs included this important process in their startup approach, the failure rates might be much lower.

Understanding the Pain Points of SaaS Customers
SEO For SaaS

Written by SaaSicorn

Ranking SaaS Websites like it's our job (because hey, it is our job).

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