With a 9% CAGR, the global market for SaaS products is estimated to be worth $60.36 billion. With established giants like Microsoft and thousands of new SaaS startups emerging every year, it’s hard to get a SaaS product noticed and accepted well by customers. As a result, the concept of MVP has emerged as an integral practice to avoid wastage of resources. With an MVP, SaaS startups can test the viability of their idea and build a more efficient final product. So here’s my two cents on how to build a SaaS MVP the right way.
1. To build a SaaS MVP, define the problem first and solution later
Of course, the very reason you are thinking of building an MVP is that you have a solution to a problem in mind. However, the success of your SaaS MVP is more about the problem than the solution.
Don’t expect to develop a Superman-like SaaS product that will be an ultimate savior of the world. Instead, take a micro look at the problem and aim to solve it as best as you can.
Before you begin to work on your MVP, define your problem as clearly and specifically as you can. Only then will you be able to find the right solution to the problem.
2. Understand customer needs and pain points to build the right SaaS MVP
Once you have a clearly defined problem, create a buyer persona for your target audience. Building a successful SaaS product requires you to prioritize your end user. It’s important to first understand the people whose life your SaaS product aims to improve.
In order to accurately determine your buyer persona, go beyond the basic market research practices. Of course, data is valuable and significant here but the most important thing is to talk to people.
“So many teams focus on product because one team member claims to know where the market is. The reality is the market has moved dramatically in the past couple of months and will the next few months. Every team needs a north star; let that be the voice of your market. Remember this, people don't want to talk about your solution, they do however love to talk about their problems. If you are having a hard time getting people to talk about the problem you solve, then it might be that the problem is not big enough.”
- Tom O'Malley, CEO, Currnt.com
Try to get honest and detailed feedback from a few people who fit your buyer persona. Ask open-ended questions to determine what aspects of your SaaS product will really help them. There are many ways to collect feedback. Create an email list, roll out feedback forms, and use social media to get as many diverse opinions as you can.
3. Find the simplest way to solve the problem
“MVP doesn't always mean that you have to build something real or write code. Your first MVP can be as simple as an excel sheet. If you know to code, you can build a very basic product that does that one thing that your business idea promises. If you don't know how to code, you can take the help of numerous no-code tools available in the market to put together your first version.”
- Gaurav Sharma, CEO, JustCall.io
The responses you get in step 2 will form the foundation of your intended solution. However, you must know how to use those responses in the right way. Remind yourself that you are building a SaaS MVP for a niche audience.
Accordingly, you have to envision a SaaS product in its simplest form. Plan an MVP that is just enough to test the viability of your solution and satisfy the core need of your buyers. You can go all fancy with features and scale of your product after you have tested the main assumptions with your SaaS MVP.
4. Watch out for competing SaaS products
The most successful products of all time are rarely the ones based on original ideas. We had My Space before we got Facebook. eBay was already there before Amazon entered the market and became the number one eCommerce giant.
The lesson here is that the success of a software product, including SaaS products, is majorly based on how the idea is executed. If you have a groundbreaking, unique idea that nobody has ever thought of, it’s great! However, that will be rare. In most cases, some version of the same idea is always existent. It’s vital that your SaaS MVP outperforms your competitors.
“Analyze your direct and indirect competitors. Numbers such as market share per competitor, market capitalization, competitors pricing structure will help you determine if the MVP is worth pursuing.”
- David Morneau, Co-founder, inBeat
Do your homework and see how your competitors are being perceived by your target audience. If a product is already doing fairly well, the smart thing to do is to build a better version by implementing their features that are working well and ditching the ones that aren’t.
However, if there is a good number of other companies that are successfully pivoting the same SaaS idea, you should reconsider proceeding ahead unless you have a solid marketing strategy to capture sufficient market share.
Tools like CrunchBase and Product Hunt are great for effective competitor analysis.
5. Prioritize features for your SaaS MVP
Too many features will end up complicating your MVP. Moreover, the benefits facilitated by additional features rarely outweigh the costs associated with them. Naturally, filtering out the core features from marginal features is an important consideration while building a SaaS MVP.
Categorise your product features into must-have features and nice to have features. Forget about nice-to-have features in the MVP stage, and start evaluating the must have features. Out of those essential features, find out one or two core features that your target audience need and will pay for.
“Building an MVP is not only about stripping secondary functionality but it’s as much about enabling encapsulating user experience, so that customers can fully explore the core features of an app.”
- Joe Tuan, CEO, Topflightapps
To make the right choice at this stage, it helps to have a feature approval process in place. For example, you can set criteria that each essential feature must fit into. Was this feature requested by my target users during the research phase? Was this feature a part of our original product vision? Will this feature have a significant impact on my revenues? If a feature doesn’t do any of these things, drop it for now and move on.
6. Develop a product roadmap
A product roadmap is an integral part of any tech startup, particularly when there are various stakeholders involved in the outcomes. Once you have finalized on the essential features for your SaaS MVP, chalk out a plan for each development and marketing stage.
You can either have a time based or a progress based roadmap for your SaaS MVP. Time based product roadmap helps visualize how the product will progress over time. It mainly consists of broad deadlines in terms of development and testing of features including the UI a SaaS MVP. However, this type of roadmap may prove to be ineffective if you work in a dynamic business environment.
A more commonly used model is the progress based product roadmap. It essentially involves categorizing each task into phases like To-do, in progress and completed. This SaaS MVP roadmap works on agile principles and is more effective for MVPs than full-fledged products. Using efficient agile project management tools are greatly helpful to stay on track under a progress based roadmap.
While making a product roadmap, ensure that you include only the necessary details relevant for each stakeholder. Unnecessary details may lead to confusion or divert discussions into unfruitful goals.
7. Don’t look for efficiency
A finished SaaS product must be built in the most efficient way if you want to maximize your profits. However, you don’t have to worry so much about it when you are just building an MVP.
Think of your MVP as an investment that may or may not give you returns. So, to reduce your risks, aim to build an MVP that minimized development effort while also solving the critical problem at hand.
There are many ways to do this. You could opt for shorter development cycles with various sprint hacks. Try to make the most out of open-source codes as much as you can. Go for a minimalistic user interface and simple design. MVPs can do away with aesthetics as long as the UX of your SaaS product isn’t harmed.
8. Build, measure, learn
With a clear product roadmap and technical requirements in mind, it’s finally time to begin developing an MVP for your SaaS product. However, MVP development is not a one time task unlike final product development. To build a SaaS MVP the right way, validate the product you are building multiple times until you come up with a polished version.
SaaS MVP development stage comprises a feedback loop wherein you build, test and learn and build your product again.
“Develop a user base by using the right metrics and make it easy for users to contact you. With usage information and customer insights, you'll be able to work out which aspects of your minimum viable product are a resounding success, and which need some further improvement.”
- Shiv Gupta, CEO, Incrementors Web Solutions
Customer feedback holds the highest value in this phase. Keep updating your MVP constantly based on the user insights you receive. These insights are what make MVP the most beneficial for building a successful finished SaaS product.
9. Test pricing models
In addition to serving as a foundation for the final product, a SaaS MVP is also an opportunity to figure out the best monetization strategies. After you are through with the feedback loop in the development stage, start testing various pricing models.
Again, extensive customer insights collected for each pricing model will help you determine which pricing model you should go with. It’s ideal to talk to both the kinds of customers, the ones who have never used a similar product and the ones who use a directly/indirectly similar product. Based on these insights, you can gauge whether your product is underpriced or overpriced compared to competing products.
10. Launch your SaaS MVP and stop developing
“Our VP of Product regularly tells us that if we wait until a product is completely ready before launching it, then we've waited too long. And I've started to agree with that more and more. This attitude helps us get to market faster, and also initiates that valuable customer feedback earlier on as well.”
- Chad Reid, VP of Marketing and Communications, JotForm
At this point, you will have identified a core feature, developed it and priced it appropriately. Now it’s time to launch it. Many SaaS founders can’t help but keep developing additional features if they get an underwhelming response for their MVP. That's not always the right way to go
Even if you manage to get just 2-3 customers who are ready to pay for your SaaS MVP, you stop developing it further. The fact that a few people are paying for it is proof enough that you have developed your MVP well. May be the problem behind an underwhelming response is the lack of marketing efforts.
Instead of continuing to improve your MVP, use your resources to get more customers for your MVP. Tap into your immediate network and encourage them to share their feedback with their audience. Reach out to relevant influencers in the industry and promote your product on their social media channels or podcasts. Quora ioo is a great platform for product placement.
Until a good number of customers have tried your MVP, you shouldn’t believe your MVP is not up to the mark. However, when a good number of users tell you that they didn’t like your product, it’s time to make some changes and pivot your SaaS MVP.
“You might find out that what you build is nice to have, but instead there is a greater problem for you to solve. You'll only learn this by getting your product in your customer's hands.”
- Neal Taparia, CEO, Solitaired
The Bottom Line
Although MVP is just a basic version of your SaaS product, it’s the most influential in your product’s success or failure. It’s a great way to test and further polish your idea. Often, the right way to build a SaaS MVP is to focus more on market research and less on actual development. Getting a deep understanding of your target audience’s needs and pain points holds the key to your SaaS MVP success.