How to find product-market fit with your SaaS startup


I assume you've heard of the expression "product-market fit." It's definitely a buzzy term in the business world. But what does it really mean? Generally speaking, product-market fit is when your product resonates with customers and they can't live without it (and they're willing to pay for that privilege). Finding product-market fit is a big challenge for SaaS startups. It's not just coming up with an idea, building a prototype, and then sitting back and waiting for the revenue to start piling up. That's one reason why 90 percent of SaaS startups fail. Many entrepreneurs think their products are awesome—and maybe they actually are—but that doesn't necessarily mean people will pay for them or use them regularly. So how do you know if you have found your product-market fit? Here are some quick tips:

Get feedback from potential users early

One of the most important things you can do is to get feedback from potential users early and often. To do this, ask customers for specific suggestions on how to improve your product. You should also be sure to include non-customers in this process: maybe your target market isn’t even aware that they need what you have to offer yet!

A great way to do this is by setting up an NPS survey—Net Promoter Score surveys are usually short and easy, but they can help you identify customer pain points and turn them into actionable items for immediate improvement.

Use metrics to measure product market fit

Once you've figured out what your product market fit is, you can use metrics to measure it. This will allow you to see how well your product is doing against the requirements of the market.

Here are some metrics that we recommend:

  • Customer Satisfaction: Your customers should be happy with their experience. If they're not happy with it, they won't use it regularly and that means no one is using it at all! So make sure that your customers like what they're getting for their money. If not, try improving the experience so that more people will continue using the product over time (and keep paying).
  • Customer Acquisition Cost (CAC): CAC measures how much money was spent per new customer acquired during a specific period of time such as one month or quarter etcetera depending on how long ago this data was collected (if its outdated then don't rely on this metric). For example if Company A has $3 million in revenue but spends $4 million on advertising alone then its CAC would be 100%

Analyze the competition to identify your competitive advantages and disadvantages

Now that you have a clear idea of who your target customer is, it’s time to look at the competition.

It’s important to understand their strengths and weaknesses, as well as their customer base and pricing model. This will allow you to identify any competitive advantages or disadvantages for yourself.

Also consider:

  • What is their product like? Do they have any notable features that are missing from yours? If so, do those features help them stand out from the rest of the field? If so, then include them in your product roadmap! You want to make sure your offering stands out among competitors because this will help attract new customers who might not otherwise have been interested in it before seeing these new capabilities added on top of what already exists today.
  • How does marketing play into all this? Is there anything unique about how other companies market themselves compared with yours (i.e., social media presence)? Does theirs seem more effective than yours when attracting potential customers? What could be done differently here without spending too much money upfront (and thus risking losing money on failed efforts).

Look at the reviews of your products on app stores

The App Store and Google Play are wonderful sources of feedback on your products, but don't forget about the reviews that you get directly from your customers. Your SaaS startup's app store ratings can be a good indicator of whether or not you have product-market fit. If people are giving your app negative reviews, then it may mean there are problems with your business model or pricing strategy. If people are giving you positive reviews, then this is good news! It means they're satisfied with what they're getting out of using your service, which means they'll stick around long enough to become paying customers (and hopefully advocates).

It's important to respond to any complaints that come through via app store review systems so that users know that their concerns have been heard and addressed by someone who works at the company itself rather than just some anonymous developer somewhere else who probably doesn't even care much about their problems anyway! The same goes for thanking happy customers—this kind gesture will help keep those positive vibes flowing into all corners of social media because everyone loves feeling appreciated by businesses!

Consider your own experience using the product. Do you enjoy using it?

As a user, you should enjoy using your product. If you don't enjoy using it, there's a good chance others won't either. To ensure that your users have an enjoyable experience with your SaaS product, ask yourself:

  • Do I understand how to use the product?
  • Is the user interface intuitive and easy to navigate?

If all these answers are yes (and if you're not sure about one of them, there's probably something wrong), then congratulations! You've found product-market fit with your startup!

Focus on customer retention. Your onboarding process is key.

Customer retention is one of the best indicators of product market fit. It's a measure of how many customers are using your product again after their first purchase, and it lets you know whether or not your users are satisfied with what they're paying for.

For instance, let's say that you make a SaaS app to help dog owners manage their pet's diet and medication schedule. The onboarding process involves collecting information on each pet owner and the type of animal they have—but if only 10 percent of those who sign up end up actually using the service again after their first purchase (defined as logging into their account), then something needs to change.

Focus on learning about how customers use your SaaS startup as a way to find out if you have truly achieved product-market fit.

  • Focus on learning about how customers use your SaaS startup as a way to find out if you have truly achieved product-market fit.
  • This is especially important at the beginning of your software business and early on in the life of the product itself, when you're still figuring out how to market it effectively. You need an understanding that will help guide your marketing efforts, so that you can get as much traction as possible right off the bat.

This will also help give insight into what kinds of marketing tools are most effective at increasing customer retention rates and lead generation—which means higher lifetime value for each customer signing up for your service or buying from you again in future (and hopefully more).


I hope this has been helpful and given you some ideas on how to measure the success of your product. Finding out if you have achieved product-market fit is not always easy, but it is a necessary step in order for any business to grow. The good news is that there are many ways to do this, including using metrics and reviews from customers, analyzing competitors' products in detail, and even looking at how often people use the product themselves. Hopefully by now we've covered some tips that can help you determine whether or not your SaaS startup has achieved its goal of getting into a good market. If not - don't worry! There's still time! Just keep working hard and doing what makes sense for your company.

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