Competing in SaaS by Leading With Product
In an earlier post about how to compete in SaaS, I shared a sentiment that’s also consistent inside most high-growth SaaS companies:
We believe that to compete in SaaS today and for the future, you have to create an organization that can make a product customers are always in love with that also gets high retention from them.
With so much SaaS, it’s often necessary to make sure you have differentiated your ideas in the right ways so your product is the best compare to any alternatives.
There’s a lot of content written about early stage SaaS product development processes from design to launch. This includes important topics such as how to measure product/market fit and successful SaaS product management.
What’s not discussed much is the real process of coming up with a great idea. You can conduct customer development interviews and launch MVPs but how do you actually build the conviction in what you are doing when you have a limited amount of qualitative data or real user behavior to analyze?
Creating Innovative Products
If you don’t come up with the best solution to your customer’s problems someone else eventually will and put you out of business. If you’re big enough it’ll be a slow death and if you’re small it’ll feel like having a front row seat to watching your competition dominate.
As we’ve developed new product ideas to test at Quick Sprout, we’ve discovered a few uncommonly shared resources. They’ve helped us build conviction for the product we’re creating.
A Technique for Producing New Ideas
Eoghan McCabe is the CEO of SaaS customer communications platform Intercom. Based on his twitter bio, he is a self-proclaimed aspiring inventor. In one of his few podcast interviews, Eoghan suggested this book from the 1900s that gives a universal explanation and framework for producing new ideas.
It’s called A Technique for Producing Ideas and it was originally written by American advertising executive James Webb Young back in 1939. Brain Pickings has a great summary of the book and it’s five-step technique:
Step 1: Gather Raw Materials
Step 2: Digest The Materials
Step 3: Unconscious Processing
Step 4: The A-HA Moment
Step 5: Idea Meets Reality
My favorite thing about the technique is the clarity that comes from recognizing when I’m still in the mode of collecting raw materials. I now consciously spend time finding more “raw materials” earlier on in the process of developing a new idea. The results have been that the idea is more thorough and requires less frequent data gathering later in the process.
An example of this process at work for me is the presentation I shared last week about the rise of all-in-one SaaS. That was an artifact from the process of gathering and synthesizing raw material for ideation of our new Quick Sprout SaaS product.
Assume You Are Wrong
David Cancel has been building software products for almost 20 years and he’s got strong opinions about creating SaaS products. David says that the one mistake that all product teams make is that they don’t follow this simple framework.
Your assumption should be that every idea, every release, every attempt is WRONG.
It’s a framework for ensuring the most creativity for your new ideas. He calls it the “customer-driven” framework. Internalizing this and remembering it when you testing your product ideas can help you accelerate towards discovering great opportunities.
When releasing products it’s common to think positively instead of critically. By assuming that you are wrong, you’ll be more likely to learn from your early product ideas and experiments instead of getting discouraged too early.
It’s likely that David knows something many of us don’t. He understands that by setting your expectations low for what you create, you’ll learn the most from it and maximize your creativity. I’m excited to ask David Cancel more about his thoughts on SaaS product development while I’m chatting with him on stage at SaaStr Annual 2016 in about a week!
Blocks before Lego
Since having kids, I’ve played more with Lego blocks. This video that shares examples of the blocks that came before Lego blocks was recently posted on YouTube:
With the enduring popularity of Lego blocks, it’s a surprise that Lego did not come up with the original idea. The reality is that they weren’t the first company to create these fun toy blocks. It seems like a lot of the inspiration and “raw material” that the early Lego team used came from similar products created just a few years before Lego released their blocks. They popularized the blocks and continue to find creative ways to use and distribute their blocks.
Most new ideas are derivative of things that came before. Both of our previous SaaS businesses, Crazy Egg and KISSmetrics came to become a reality because of the market of products that already existed. We discovered and exploited the deficiencies of existing analytics tools to create new products that when first introduced to customers were clearly better than the alternatives.
Early stage SaaS product development in mature and / or competitive markets requires innovation in product or with distribution. If you can reach more people than competitors with an inferior product it’s still possible to lead your market but in today’s hyper-connected world having distribution as a competitive advantage in a SaaS business is rare. The biggest risk is related to your ability to create a product that people love to use.
It’s hard to compete in SaaS today by just being world-class at one business discipline such as sales or marketing. There’s simply a lot of SaaS businesses out there vying for the customers’ wallets and the pace isn’t slowing down! So, I believe that creating an awesome product first is the best way to start your SaaS business on the right foot.