10 Key Steps to Developing a Successful SaaS Product

Software as a Service (otherwise known as SaaS) has emerged as a game-changing way to access software in recent years. It’s inherently scalable, user-friendly, and generally cost-effective. And the industry is growing rapidly. According to Gartner, it grew by 17.4% in 2022 to reach $154.6 billion.

Businesses use SaaS products for customer relationship management (CRM), project management or human resources management for example. They’re utilized by start-ups, entrepreneurs, large and small organizations.

But underneath all of that, the idea for many SaaS applications starts 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. You need to think of the end users’ needs and the problem that they need your application to address.

While the path from good idea to successful market entry might not always be this linear, there are some guiding principles along the 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 taps into market demand whilst delivering decent revenue for your business.

What is a SaaS product?

The simplest way to think about SaaS, is that it’s an online software product that all users can access via an internet connection. Most SaaS products are web and mobile apps that don’t require installation and users pay a monthly/yearly fee for using the product. Unlike traditional software, users of SaaS platforms don’t need to download and 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 successful SaaS business model is to clearly understand your current customer needs and/or would-be user needs, and to accurately identify which of those needs are most valuable to solve, so you can target them in your product.

Key steps to building SaaS products successfully

Many SaaS products start out as good ideas, but can come across bumps and changes to the roadmap that impact a successful product launch. It’s really important to do your market research, identify your potential customers and devise a robust strategy before you start writing any code. Here are 10 ways to improve your outcomes.  

1. Do your market research to validate your idea

This may seem like an obvious step, but the long-term success of your product depends on making sure you actually have potential customers that’ll benefit from your product. Is the problem that you’re trying to solve with your SaaS product actually needed by them? Is there a genuine need and desire for your product, and by whom?

This is a big component in our Highland Research practice. We dig deep to learn about and identify your target audience or potential customers. You want to make sure your target customers are willing to pay for your product and that your offer meets needs they’re actually motivated to solve. Create a prioritized list of your target customers needs, and look honestly at how important the needs are that your product will solve. Look for their behavior to uncover the truth, not their opinions. Then look at the context of their lives and where the use of your product will fit. Does it go together? You can think of this mix of needs and context as similar to a user persona, but more specific to new product research.

Market research and prototyping can avoid potentially painful lessons before a line of code is written. No matter how big and obvious the problem is, don’t skip this step. It's easy to assume a buyer exists for your imagined product. In reality, they may not have the same motivations that you predicted them to have. This can be an expensive assumption to make.

2. Study your competitors‍

How closely have you looked at the competitors in your space? How are other companies approaching solutions to the problem you identified? Have you analyzed why users switch products to buy yours instead?

With many businesses vying for success in the SaaS market, it’s important to learn from and about your competitors. Assess how your product will stack up against competitors and where you’ll fit in the market. We use the Jobs to Be Done methodology to help organizations understand why customers do or don’t choose your product. Typically you’ll 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 user base.

3. Choose the right pricing model‍

What’s your pricing strategy for the product? As you work on your business plan, develop a  scope of operational and financial objectives that you plan to reach with your SaaS product launch. Include a structured and detailed framework of how to build your SaaS application and earn profits.

There are different pricing models for your SaaS solution monetary strategy. You can choose from:

  1. Usage-based pricing - when users pay by amount of product usage
  2. Pricing per feature - offering features your users can choose
  3. Freemium - a free version with limited features with the ability to upgrade
  4. Flat rate -  offering the entire product or bundle of features under one price paid monthly or yearly
  5. Pricing per user - charge by number of users for the product

How to decide which model to implement? Once again, it’s all about your target user’s needs.

4. Define your SaaS product development requirements

Rather than starting with a product with all possible functionality, start with the basic set that serve the core purpose. Again, it comes back to understanding user needs.

Define the minimum viable product (MVP) - the core features that bring value to your customers with minimal costs from you. Start by collecting potential customer 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 your product to market with real users sooner. If you haven’t built a SaaS product before, internal project management with so many stakeholders at the table can be challenging. You may want to consider outsourcing the SaaS design and development to external specialists who lead the entire SaaS product management lifecycle.

5. Choose the right features ‍and technology stack

It’s really important to work out what makes your product stand out from the crowd. What’s your UVP (unique value proposition) to new customers? SaaS products always have some commonalities, so a clear plan of specific features, customization, integration options and security is essential. In a SaaS model, it’s crucial to always have:

  1. Security - SaaS cloud-computing implies you store end users' data in the cloud which requires high security to protect against hack attacks and other vulnerabilities.
  2. User-friendliness - Your product should be easy to use, clear and have an intuitive user experience that makes users feel empowered and confident to use your product.
  3. Performance - choose a tech 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. This often means that you’ve shifted your focus from customer needs and demands to comparing yourself with competitor products. Keep the target audience front of mind and visualize their user journey with wireframes and prototypes.

The technology stack is highly dependent on what you're building, particularly if it involves a native or hybrid mobile app. Typically there are multiple best-in-class technologies for any given application, and all of the major cloud players - Amazon, Google, and Microsoft - provide many accelerators and tools for software built in their environments. At this stage you want to build for speed while making wise long-term technology decisions that can scale when they need to but don't require too much heavy lifting early on.

6. Get your product to real users ASAP‍

No matter how well planned and thoroughly researched your idea, people can be tricky. They can showcase user behavior or give you feedback that you didn’t expect. It may have been tested by your entire product development team for quality assurance, but it’s feedback from your potential customers that will prove invaluable. Strategic planning can reduce errors along the product roadmap, but there’s simply no substitute for learning about your users’ behavior in the real world. Never believe that you know better than your users.

During this stage of the SaaS project, you'll learn from your use cases and become able to iterate and improve what you've built. You’ll identify their pain points, see how intuitive they find the user interface and find ways to create a product that meets your users’ needs better.

7. Be flexible‍

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.

Even if you have a really nicely defined target audience, you’ll likely still encounter variables in each user’s needs. This means that your product will need to be able to adapt and you’ll 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’s 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 user base as well.

8. Deliver features that align with KPIs and metrics‍

By setting clear KPIs and metrics on which you’ll measure your product success, you’re able to stay focused on the end goal of your product launch. Small adjustments to your roadmap, if done too often, can add development 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 audience. Here are some metrics you can use to define required features and stay aligned pre and post-launch:

  1. Revenue - monthly, quarterly or annual revenue
  2. Market share - how is your product performing against the competition?
  3. Customer acquisition cost - the cost of winning a new customer
  4. Customer churn - the percentage customers that unsubscribe in a specified time frame, usually monthly
  5. Customer usage - determine what features your users are utilizing and truly need.
  6. Customer retention - how many customers return to your product over a set time period.

9. Launch to market‍

After all of the market research, UX design and build of 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 and workflows, 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:

  1. Customer onboarding - Providing initial training and customer support will ensure users feel looked after
  2. Products demos - A video or sandbox version of your product that users can interact with can help users to explore features and better understand how to use your product
  3. Sales - Develop materials like a sales deck that your sales team can use to showcase important messaging and product features
  4. Marketing - Whether its content marketing, social media and SEO, paid advertising or offering free trials, a strong marketing plan will help you get your product into the hands of your target users

10. Gather feedback and measure success‍

Once you’ve brought your SaaS product to market you’ll have to make decisions based on your product successes and user feedback. Because you’ve built your SaaS product with KPIs and metrics in mind, it’s 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’s also crucial to listen to user feedback just as you have throughout the build process. Which 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 through regular optimization.

Developing a SaaS product is complex, creative, and iterative

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.

Launching a SaaS product doesn't need a big team. In fact, it's much better if the team is small. Our experience suggests 3-6 people is an ideal product team size for a MVP. But it’s crucial that the team includes all of the skills needed for a digital product: research and strategy, UX designers, frontend and backend software engineers, DevOps, a product manager and project manager.

Work with a SaaS software development team to lead your success

At Highland, we’re 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. We can help you too! Get in touch to discuss your business needs

Download “The Essential Guide to Launching a Digital Product for Experts & Expert Firms”

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