Product/Market Fit for SaaS
Brad Feld, in his January 20, 2015 blog, cautions SaaS companies against falling under illusions of Product/Market fit. This is a good health check for other companies as well. I am providing a quick synopsis and application - take a few moments today to check yourself against the myths.1
Product/Market fit requires a product that satisfies the market, and Feld essentially argues that companies fall under the illusion of winning the P/M fit fight - won and done, to sum up his point. Feld argues that P/M fit develops in stages, and it is an ongoing effort.
Overall trends to indicate P/M fit: P/M fit requires knowing what the customer wants, and meeting the demand. According to Feld, initial P/M fit is found at the leap from $500k MRR to $1 million MRR, it is demonstrated by compounded 10 % growth monthly, and it is necessary to hold growth steady at a 50-100 % rate.
Companies need to find P/M fit. Tools include constantly collecting data on use and growth as well as surveying current customers.2
How did you find our product?
How would you feel if you could no longer use this product? Why?
What is the primary benefit the product provides you? (Ascertain value of product to customer - explore what, how, when, why).
Have you recommended the product?
Fix problems, optimize the product and marketing based on responses, and raise money for necessary resources and to fuel growth.