This post has been updated on November 15, 2023
SaaS offerings fail all the time. In fact, if a SaaS is run by an owner or company with no experience in SaaS, it is overwhelmingly likely that it will crash and burn. Often due to a single problem which is so simple that I’ve dubbed it the “easiest way to fail”.
The Number One Way To Fail Is To Fail To Validate Your SaaS
The mistake that a lot of SaaS businesses make, especially first-time SaaS startups, is skipping the entire validation process, going purely with their gut, and jumping into building the product. Even the best ideas can fail without proper validation – you end up trying to sell to the wrong demographic, at the wrong price point, or your product comes across as tone-deaf because it’s missing vital functionality.
How to Validate a SaaS Idea
SaaS product validation is one of the key steps in the ‘idea’ stage – long before you ever start to build the system. We cover our entire SaaS validation approach in my ‘How To Kick SaaS’ book, but here is the brief rundown. Validation for SaaS means verifying your footing, and there are several key elements to check.
SaaS Validation Checklist
- The niche you’re targeting isn’t too crowded
- You have a unique and compelling selling proposition
- There is a market base for the product or service
- There is a demand for the product or service you’re providing
- Your research confirms that customers have a specific desire for exactly what you’re providing
- You know who your customers are:
- And that you know how to reach them and what to say
- The demand is ample enough that your sales will cover your expenses, with plenty of excess
SaaS Validation Questions List
To help break this checklist down further, I have a list of questions that I ask every customer that comes to us looking to build a SaaS. If you can answer these questions in detail, then you should have all of the information you need to fully validate your product. Obviously, there are a lot of questions that spin off from this list, but this is a great start:
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- Why are you offering this service?
- What are your goals for this offering?
- What is the problem you are solving? What is the solution to the problem? Is there a need for this solution that is strong enough that people are willing to pay for it?
- Can you fill in the blanks: “My company solves ____________ problem for _____________ audience”?
- How well do you know this market?
- What is your timeline to get to market?
- Is it critical that your system gets to market by a certain time, and if so can you make that timeline?
- What are your budgets for build, operations, support, marketing, and sales?
- Do you understand all of your costs?
- How long will it take until you are cash flow positive and do you need investment?
- How will you be distributing this project? Describe your current method as well as other potential distribution channels.
- Who are your buyers? Do you have quantified buyer personas?
- Can you make a list of buyers to call today, including their name, email, and phone numbers?
- Do they want what you’re selling? How do you know?
- Have you thoroughly researched your competition? Who are they? Do you have a spreadsheet of what features overlap with your features?
- How does your price compare to your competitors’ prices?
- What is your unique selling proposition?
- What is your unfair advantage? If you don’t have one, what would it be?
Pre-Sales are the Best SaaS Product Validation
Sales, especially pre-sales, are where the rubber hits the road for any business, but particularly for a SaaS business.If you can convince a cross-section of your targeted base to sign up and be notified of updates or to put money down early, then you know you have a winner.
Finding these people also means you can send them surveys, ask them for interviews, collect metrics, etc., which can help you to determine the best pricing approach and figure out exactly which features need to be included with the initial build versus added later.This way, you can effectively crowd-source a lot of key information so that you can make informed decisions. These are likely things that you would learn later, but at a much steeper cost.
Whatever You Do, Validate Your SaaS Ideas UP FRONT
Up front, it will take a couple of days or weeks (sometimes more) to gather all of the information you need to validate your SaaS. But compare this with the tens or hundreds of thousands of dollars that you will spend building the system, and SaaS validation becomes just a drop in the bucket.
More importantly, validation is an investment. You will learn things that will improve the end-product; OR, quite possibly, you will learn that the system’s odds of becoming profitable are too slim to move forward. In that case, you just spent a few hundred or a couple of thousand dollars in order to save 50 or 100 times that much – and that beats every Black Friday deal you’ve ever seen.
You have to go through a full and complete SaaS validation process if you’re going to be successful. Proper validation doesn’t guarantee success, but it greatly increases your odds. So add this to all of those common sense phrases you hear all the time: Don’t drink and drive. Spay/Neuter your pets. Wear sunscreen. And always, always, always validate your SaaS product.
If you’d like help validating your SaaS business idea, we’re here for you! Contact us today to start leveraging our 20+ years of experience.
