How To Do SaaS Market Research for Startups?

Updated on December 15 2023
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In the SaaS business, SaaS market research stands as the cornerstone of triumph. A recent Gartner study shows that the global expenditure on SaaS by end-users is projected to surge to $197 billion in 2023, marking a remarkable 17.9% expansion from the preceding year. 

Have you ever imagined why big companies are successful? The key is to know the target market through market research. 

Here is a step-by-step guide on how to do SaaS market research for your startup.

How to Do SaaS Market Research for Your Business?

Market research is essential for any SaaS business. It helps you understand your target market, identify competitors, and develop a product that meets your customers’ needs.

Here are the steps on how to do market research for your SaaS business:

1. Set Your Market Research Objective

SaaS Market Research - Set market research objectives
SaaS Market Research – Set market research objectives

A market research objective concisely outlines your specific aims within resource and time limitations. This initial clarity entrusts marketers to gather pertinent and valuable data, avoiding the confusion that excess information can bring.

To set objectives, reflect on your desired research outcomes. Amidst the data overflow, the focus is important. You must streamline the process by clarifying the core motive behind your market research and posing the right questions.

For instance, queries like “Which product/service features matter most to clients?” illuminate preference hierarchies. Alternatively, delving into “What prompts customer segments to seek products/services like ours?” unveils common search triggers.

When formulating your statement, you need to keep in mind about consistency. Ensure alignment with your overall marketing strategy, whether competitor analysis, brand awareness, or product launch. Collaborate with your teams to harmonize research intentions. Direct your attention to one user segment at a time, promoting depth. Incorporate quantifiable aspects, like their sentiments, behaviors, or frequencies.

Choose a distinct user action for your focus—purchase, ad click, or website navigation. You should know that conciseness matters; hence you must disregard assumptions, honing in on one or two key outcomes. 

Consider a SaaS enterprise aspiring to revolutionize workflow processes. Their objective might read, “Comprehend end-to-end user rationale and method in selecting workflow management software.”

Precision reigns supreme in crafting your market research objective, steering your exploratory journey with unwavering purpose.

2. Defining Your Niche and Assessing Market Potential

While your solution might be great, feasibility pivots on revenue prospects. Once niche dimensions are established, scrutinize competitor presence, market share, and the attainable slice. You must also delve into the price point your potential patrons are willing to meet and what your initial charges might entail.

No matter how impressive your offering is, you must ensure a vital group of paying customers as important. In scenarios where viability is strained, recalibrate by broadening or refining your scope—evading excessive rivalry.

This multifaceted assessment encompasses the following:

  1. Industry Sizing: Discerning the potential customer count within your chosen niche.
  2. Competition Analysis: Scrutinizing existing competitors, their market share, and your strategic room.
  3. Pricing Strategy: Probing customers’ willingness to invest and devising initial pricing.
  4. Sustainability: Ensuring an adequate number of paying customers to sustain operations.

This systematic inquiry will align your enterprise’s direction with tangible market realities, optimizing your approach to a rewarding niche in the landscape.

3. Identify Potential Customers

After pinpointing your industry and niche, the following stride is gauging the extent of your potential customer base.

Begin by jotting down your envisioned customer profile and their predicaments. For instance, try to focus on SaaS entities seeking improved means to apprise users about new features. Initiate by zeroing in on the individuals most burdened by the pain point.

However, the challenge often lies in honing your focus—while SaaS products could cater to diverse audiences, channeling efforts toward a specific niche reaps long-term rewards. Specialization within an industry paves the way to understanding and assisting companies. For a comprehensive perspective on SaaS market positioning, delve deeper here.

Upon clarifying your customer base, the next step is defining your paramount value. What pivotal benefit pushes them to invest? Why does your solution need alternatives?

Such questions become the core of your marketing, sales, and development works. Your growth scale encircles around enhancing and safeguarding this value, setting you apart from competitors and yielding you the ultimate solution. Concentrate your developmental efforts on amplifying this value. Align your communication and sales endeavors to spotlight and directly convey this central value to potential customers.

Also read: Use these Best SurveyMonkey Alternatives to find Potential Customers

4. Analyze competitors and substitutes

Thoroughly scrutinizing competitors and potential substitutes forms a cornerstone of strategic market comprehension. The intricacies of your industry’s existing landscape unfold as you determine your role—be it distinctive, competitive, or akin to alternatives. This market research phase isn’t limited to only recognition but also entails strategic positioning for value-driven engagement.

Navigating this realm encompasses several key facets:

  1. Assessing Differentiation: Delineating how your solution benefits customers or where direct competition arises.
  2. Unearthing Substitutes: Pinpointing alternatives that prospective patrons might already use to comprehend your strategic place.
  3. Evaluating Value Proposition: Establishing the value you bring, surpassing competitors, to grasp your potential in seizing market share.

This gives your market strategy insights to outperform the competition, strengthen your abilities, and navigate gaps, ensuring a well-informed course toward market success.

5. Defining Your Research Questions

Having marked your marketing objectives, the subsequent stride entails carving a roster of research inquiries, encompassing your target audience, customers, and competitors.

For your target market, questions traverse the realms of demographics, psychographics, and behavior:

  1. Demographics: Seek age, education, location, and occupation insights.
  2. Psychographics: Unearth passions, pursuits, aspirations, and hurdles.
  3. Behavioral: Probe past product use, motives, preferences, and satisfaction with support.

Surveying your customers demands queries that delve into their product/service journey:

  1. Assess their product experience and its impact on their problems.
  2. Ascertain the alignment between product performance and their needs.
  3. Uncover standout product attributes and likelihood to advocate.

These well-assessed queries form a compass to improve marketing, operational efficiency, and customer satisfaction, thus improving your overall market prowess.

6. Conducting Customer Interviews

A direct dialogue emerges as important to grasp your customers’ core truly. Swift access to candid feedback stands invaluable, particularly in the nascent stages. A prudent approach is assembling a select group of potential customers mirroring your customer personas. Try to engage them with straightforward queries, diving into their operational workflows, pain points, and yearned-for solutions. This proactive exchange facilitates testing your product or MVP, pinpointing areas of friction, and uncovering superfluous features.

These customers (the planned purchasers), exert the key to perceptive value. Their perspective becomes the compass directing your trajectory.  Try and employ varied strategies such as – composing succinct surveys required at targeted lists via email or LinkedIn. Contact corresponding to the roles you’re targeting within your niche. This approach ignites not just engagement but also the foundation of trust.

Customer interviews emerge as an engagement alarm, channeling insights to fine-tune your offering and promote genuine participation.

7. Organizing and Analyzing Insights

SaaS Market Research - Organize Market Research Findings
SaaS Market Research – Organize Market Research Findings

The need arises to systematize and study your findings after collecting a vast collection of data through primary, secondary, qualitative, and quantitative research. 

Navigating this process requires astute analysis sans being engulfed by the data deluge. Here’s how to chart your course:

  1. Flow Model: Emerge equipped with a visual depiction of your amassed information. Not only does this provide insight into customer needs, but it also reveals how they engage with your products.
  2. Affinity Diagram: This tool adeptly arranges and clusters voluminous data. Your strategic compass gains clarity as patterns and trends emerge in user behavior.
  3. Customer and User Journey Maps: These maps illuminate a prospect’s sequential stages—evolving from a potential customer to an engaged user.
  4. SWOT Analysis: Evaluate your strengths, weaknesses, opportunities, and threats, mapping them against competitors’ dynamics.
  5. VRIN Analysis: Employ this to discern your product’s superiority—its value, rarity, inimitability, and non-substitutability.

Align your data with your established research objectives, optimizing information and improving your grasp on market possibilities. This strategic composition concludes in actionable insights that lay the groundwork for informed decision-making.

Also read: Here are some free Project Management tools stay organized

8. Reviewing and Taking Action

Upon amassing, structuring, and deciphering your findings, the final lap entails translating insights into action—an essential juncture for your SaaS business. Here’s how to harmonize your discoveries and directives:

  1. Reflect on Main Objectives: Return to your core research goals, grounding your analysis in initial intentions.
  2. Persona Segmentation: Organize your research participants into distinct target personas, amplifying tailored insights.
  3. Craft an Executive Summary: Distill key observations into a brief executive summary, accentuating the most captivating revelations.
  4. Revisit Research Motivation: Restate why you launched this research journey, solidifying its relevance.
  5. Distill Main Themes: Extricate prevailing themes from your exploration.
  6. Construct an Action Plan: Develop a strategic blueprint containing timelines, priorities, and potential impacts on your business.

Ensure your deductions align seamlessly with your foundational objectives and overarching business aspirations. Data collection is crucial, as it enables insightful trend identification and industry problem evaluation.

9. Defining Customer Objectives and Product Evolution

The journey doesn’t halt at your MVP; it’s a dynamic continuum. Just as your customers’ needs progress, so should your product. To ensure perpetual value provision, it’s paramount to discern the ultimate goal your customers strive to achieve through your development—a goal surpassing pain point resolution.

Steadfastly anchoring your growth to nurturing this consummate customer aspiration guarantees sustained relevance. As you expand and adapt, the unwavering commitment to fulfilling this definitive objective keeps you optimally aligned with your clientele’s ever-evolving needs.

10. Continual Innovation

The search for insights always continues in the business of SaaS, where customer retention and expansion are interwoven. Endless product market research remains key to understanding the ever-evolving customer desires. Within your customer base and product ecosystem, numerous roads await exploration.

Directly engaging your customers proves priceless. Employ in-app and email surveys to get firsthand feedback and show preferences. Heat mapping reveals user tendencies, guiding feature development amidst shifting market dynamics, creating novel features, and leveraging your customer insights positions you ahead.

Launching a SaaS product initiates an ongoing market research journey. Consistently attending to customer input ensures perpetual value. Foundational perseverance and an unwavering commitment to listening create the way for seamless product evolution, avoiding potential pitfalls.

Also read: List of SaaS AI Tools to Research your Customer Base if you are a Amazon Sellers

Final Words

The significance of SaaS market research cannot be overstated. It offers a profound analytical grasp of customer preferences, market standing, and the keys to your competitors’ success. Through the assimilation of primary, secondary, qualitative, and quantitative data, a comprehensive evaluation of your SaaS product’s performance against competitors emerges.

However, the journey doesn’t end with the conclusion of your research. Given the ever-evolving trends, preferences, and demands, constant data collection and periodic reassessment are imperative. SaaS market research remains an ongoing imperative, perpetually positioning your company at the forefront of prevailing industry marketing currents.

Always remember your journey toward SaaS success is enriched by vigilant market understanding, safeguarding your offering’s lasting relevance.

What is SaaS Market Research?

SaaS market research is an elaborate journey that identifies the uses, revolutionizing accessibility and operational efficiency. This research incorporates secondary and primary approaches, unraveling industry trends, demographics, and competitors.

Why is market research necessary?

Market Research acts as a compass that helps you or, rather say, guide you through vital insights while you make informed decisions. It helps understand if your business idea or new product/service has potential, guides you to assess customer satisfaction with your solution and identify areas for improvement.

What are SaaS Marketing Metrices?

B2B SaaS marketing metrics provide invaluable visibility into customer engagement across all company touchpoints, enabling data-backed refinements to strategy for optimizing expansion. Some metrices for SaaS Marketing are Monthly Recurring Revenue (MRR) , Customer Acquisition Cost (CAC) and Conversion rate.

What is the rule of 40 in SaaS?

The Rule of 40 states that for sustainable growth, a SaaS company’s combined revenue growth rate and profit margin should equal or exceed 40%. This tells that a SaaS company that are above 40%, are generating profit at sustainable rate a companies below 40% may face cash flow or liquidity.

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