Why a SaaS Company Should Understand Its Users and How To Do So
A successful product is the one customers love to use. Building a product without having customers’ needs and preferences in mind is like throwing money out of the window. You’ll end up with a product you love, but no one finds it useful.
Ignoring users is the fastest way to fail. This is why SaaS companies must feel the pulse of the users and understand what they expect from the product.
Customer experience is the new battlefield. Today’s customers are comparing you to the best experiences they’ve ever had, constantly raising the bar around expectations. If you fail to deliver an engaging product experience, customers won’t hesitate to replace you with your competitors.
It’s easier than ever to build a product and get early traction. However, in this hyper-competitive SaaS industry, staying relevant is hard.
According to G2 Research Hub, 73% of organizations indicated that nearly all their apps will be SaaS by 2021.What’s more: The SaaS market hit $141 billion in 2019, and in 2020 is expected to hit $157 billion. Back in 2014, the industry size was $63.19 billion, which means that the market has more than doubled in just six years.
So the question is:
Many SaaS companies underestimate the power of retaining users, and they focus too much on acquiring new users. According to Invespcro, for 89% of SaaS businesses, new customer acquisition is the top growth activity. However, it can cost five times more to attract a new customer than it does to retain an existing one. Plus, if you don’t manage to keep your users, you’ll fail to scale.
The best way to retain users is to listen to them. Having tunnel vision and not gathering user feedback can be fatal for SaaS companies.
Always being under pressure to innovate and introduce new products faster can sometimes force companies to have an inside-out approach without even realizing it. As such, we often see products developed by engineers in a vacuum without taking into consideration what users actually want.
Other businesses base their decisions on what founders believe users want, instead of genuinely listening to the users. A founder develops an idea and starts a company. As the originator of the idea, the founder tends to attach to the product and is involved in every detail of the process, thus getting stuck in the Product CEO Paradox.
So instead of relying on users’ feedback, founders rely on their beliefs. This can be a double-edged sword. On one hand, they build a product that doesn’t fit users’ expectations, and on the other hand, they’re so involved in micromanaging that they put the CEO role aside.
According to CBInsights, not paying enough attention to customers is one of the top 20 reasons startups fail. If you want your SaaS business to succeed, make sure to avoid the Product CEO Paradox and adopt a customer-centric approach in developing new product features. Data from Microsoft shows that 77% of customers have a more favorable view of brands that ask for and accept customer feedback.
Don’t put your product on a pedestal. Keep customers front-of-mind and ask them the following questions:
- What problem are your users trying to solve?
- What product features are most important to them?
- What solutions did they use in the past, and why they didn’t work?
Understanding and building upon your customer knowledge will help improve your SaaS product in the long run.
7 Tactics To Incorporate UX to your SaaS Product Design and Development
Now that we’ve talked about the importance of customer-centricity, let’s go through seven tactics that’ll help you create an outside-in approach to your SaaS product development.
1. Understand user needs
Understanding user behavior is the foundation of building a product that users love. If you’re willing to go down this path, you have to know that understanding users requires empathy. Put yourself in their shoes; think about their needs, problems, and challenges. It’s not enough to know who your users are. Instead, you want to dive deeper to get insights that’ll help you deliver the most effective user experience.
The process of creative problem solving based on understanding users and challenging assumptions to design innovative solutions it’s called design thinking. This framework can be broken down into five stages:
1. Empathize—The first step of the design thinking process requires defining the challenge and understanding of users’ needs. To do so, you have to empathize with them and get a clear picture of who your end users are and what challenges they face. Depending on whether you’re building a product from scratch or you already have an existing product, some techniques can help you get the most out of this step. When it comes to new products, you can discover who your users are, using tools like questionnaires, user interviews, and focus groups. On the other hand, for existing products, besides these tools, you can also rely on metrics and feedback from existing users, and even organize user testing sessions.
2. Define—In the second stage of the design thinking process, you should organize the information gathered in the first stage, analyze the observations, and create hypotheses. During this step, using tools like customer journey maps and user personas can help you define the core problems in a customer-centric manner. One interesting concept that can help you scrape personas and identify what is that customers need from your product is the Jobs-To-Be-Done (JTBD) framework. The essence of this approach is that customers are not buying products just for the sake of buying. They expect that the product will solve their needs. So, they “hire” the product to get the job done. There are two types of JTBD. The main job, or the task that customers want to achieve with your solution, and related jobs, that customers want to achieve together with the main job. On top of this, for every “job” your customers expect to get done using your solutions, there are functional and emotional aspects. The functional aspects are connected to the objective customer requirements, and the emotional aspects are related to subjective customer perception.
3. Ideate—This is the phase when it’s time to challenge assumptions and create ideas. Since you have clarity about your users and their needs, it’s time to use that knowledge and think out-of-the-box. Look at the problem from different perspectives and identify alternatives and innovative solutions. At this point, you should focus on generating ideas by using tools such as brainstorming, collaborative sketching, and worst possible idea.
4. Prototype—Now that you have all those ideas, it’s time to create prototypes and validate the results from your ideation sessions. The two key things to have in mind while creating prototypes: they should be fast and inexpensive. The idea here is not to waste a ton of money, but to use prototypes to investigate the ideas gathered up to this point.
5. Test—The final step of the design thinking process is testing the prototypes with users to find out if they would use your solution and if they recognize the value in it. It’s essential to test the prototypes with real users. This is an iterative process, so don’t despair if the end result turns out to be more problems that need to be solved. Going back to previous stages to make refinements will eventually lead to creating a solution that offers real value for the users.
UX Designers are essential for this process.
Although User Experience concerns everyone on the team, designers play an important role in facilitating the user understanding phase because of their specific skills and knowledge. Other professionals in the team should look to them to get these discussions started.
Another important thing that you’ll learn during this process besides who your users are, and what are their needs, is the fact that you’ll also get clarity on who is not your user. Being focused on a niche that sees true value in what you have to offer is essential for all the companies working in the SaaS market, as it’s already saturated and highly competitive.
2. Build an effective onboarding process
Creating an onboarding process is a critical stage of the product development process. If you fail to make a good impression during onboarding, you may lose users—and your previous efforts will be in vain. On the other hand, building an effective onboarding process will result in reduced churn rate, higher engagement, and eventually turning your users into brand advocates.
Not sure what is the best way to approach the onboarding process? Here are some tips to get you started:
- Start simple, improve along the way—Don’t overcomplicate things. Launch your product with simple onboarding and make improvements based on your users’ feedback. Don’t overwhelm users with too much information. Start with basic information, and then expand on that when users get more engaged and start using more advanced features.
- Be creative when collecting information—It’s vital to know when and how to solicit information, especially one that is not specifically needed for the user’s task at hand.
- Get users hooked on your app—The onboarding is all about demonstrating your solution before users decide to upgrade to a more complex plan. Using strategies to hook users early in the process will pay dividends in the long run. Here are some strategies that you can use during the onboarding process to demonstrate value to the users:
- Simplify the login—By giving users the option to log in with social media or email accounts, you’re making it easier for them to get started with your product faster, thus avoiding drop off.
- Offer freemium options—This business model allows users basic services for free, but if they want to use more advanced features, they need to upgrade and pay. The logic behind this model is to attract users quickly and offer so much value that they want to upgrade and pay for premium features.
- Provide animated examples—Another way to make it easier for users to visualize how the app’s flow works and get them interested in your solution
- Suggest demos—This is a great way to give users hands-on experience. By using a self-service product demo, you give users the idea of what it is like to use the solution. The product intelligence platform Amplitude has a great demo, where users can explore different dashboards.
- Show parts of your final product—This strategy lets users explore the solution before buying. Teasing them by revealing segments will help you build interest in your product.
At this point, your team should be familiar with the concept of friction: It’s anything that takes too long or requires too many actions from the user and ultimately causes drop off. In order to ask for something, you need to offer something in return and make sure users recognize its value. The more complex your information request is, the more valuable the reward should be.
To sum things up, during the onboarding process, it’s essential to show the benefits your product offers and to do so in a creative way avoiding friction.
3. Encourage frequent team communication
You can’t understand users if you don’t understand your team. Having a clear and transparent team communication and a collaborative environment is the foundation for growth. Developers, designers, and product managers have different perspectives, so even though they have a common goal, often there is a misunderstanding. To overcome this common issue, encourage frequent and transparent team communication, led by a shared purpose.
Here are some tips and best practices on how to foster teamwork and offer the best product experience:
- Set up collaborative goals and KPIs that include different areas—Keeping employees engaged is one of the biggest pain points for companies. According to Gallup, only 15% of employees are engaged in the workplace. One of the proven tactics for increasing employee engagement is a collaborative goal setting. In a nutshell, this is deciding on goals through a process of identifying, listening, prioritizing, and assessing data, while everyone is involved.
- Try the vertical slicing approach—The way you approach project planning, and software architecture can have a significant impact on the software development process. Each application has three layers:
- Presentation layer – the user interface (UI), also known as front-end, or what users see;
- Business layer – the logic behind the application which contains the core functionality of the application;
- Data layer – the database/data storage system and the data access layer.
- The concept of vertical slicing means that the project work is divided into vertical slices so that each slide includes all the functionalities of a particular feature from the back-end to the front-end. The benefits of this end-to-end agile approach include adaptability to changes, quick feedback, and effective defect discovery and removal.To sum it all up, the collaboration between designers and developers generates a better product. Image: https://agileforall.com/
- Implement a dual-track agile methodology—The essence of this agile development methodology lies in dividing daily activity into two tracks: discovery and delivery. The discovery track is focused on identifying problems, designing solutions, and testing prototypes. The delivery track works on turning those validated prototypes into actual products. The philosophy behind this approach is data-driven development and enabling quick iterations on a product. The end goal is to reduce release cycles, thus continuously providing value to your users.
4. Use education to engage users
If users don’t understand the real value of your product, they’ll leave, or stay on the freemium tier forever. Educating them about the product and its features is key for outstanding user experience. Creating relevant content with use cases, tips, and best practices will help them unleash the true potential of your product, and keep them coming back.
The main goal of educating users should be helping them achieve their goals by using your solution. Users trust educational content. According to Demand Metric, 82% of consumers feel more positive about a company after reading custom content, and 90% of consumers find custom content useful.
Companies that understand the value of educating users, offering value throughout the app, blog, knowledge center, and forum, eventually become a community, which is the ultimate form of engaging with users, as they have a feeling of belonging.
There are several tools that can help you scale your SaaS business through users education:
- Chatbots and other AI tools—Besides the fact that chatbots are great to communicate with users and answer their questions, you can use this tool to share news from the app, provide recommendations and offer support. Pipedrive uses smart notifications to increase user engagement.
- Newsletters, content, education center—Remember that education should go beyond your solution, and focus on the skill. Note how CoSchedule wants to help users become better marketers, and Adobe educates users on how to take better photos. Later in the process, they talk about their solution and how it can help you get the job done.
- Explainer videos—When introducing new features to the platform, sometimes it’s hard to explain them. The easiest and the most effective way to show new features is by using explainer videos. Unlike traditional ads, explainer videos are informative and offer value for the users. One of the SaaS companies that use explainer videos to introduce new features is Airtable.
5. Harness the power of customer success
There is a substantial difference between customer support and customer success. Even though they are both focused on serving customers, they are based on different philosophies and goals in mind.
- Customer support is a reactive approach, whereas customer success is proactive—One of the most obvious differences is the fact that customer support responds to questions and issues that users face. On the other hand, customer success offers proactive guidance and helps customers reach their goals.
- Customer support helps users solve issues in a timely and efficient manner, and customer success has a long-term business impact—When measuring the results from the two separate activities, there are different metrics that you should take into consideration. Customer support is all about speed and effective problem solving, and customer success has a more strategic business impact for the users.
- Customer support is perceived as a must-have, and the power of customer success is not fully explored by companies—The fact that customer support is a term known for over a quarter-century, and customer success is a philosophy that exists for around a decade, it’s no surprise that companies are still not fully aware of the positive impact that customer success can have for SaaS businesses. However, if you want to nurture a customer-centric culture, having a customer success mindset is one of the vital components of your future growth.
User’s goals evolve with time. Having a dedicated team that is committed to empowering users’ growth can be a game-changer for your company. Being at the forefront of your SaaS business, the customer success team is in charge of:
- turning free trials into active users
- understanding users
- helping them get the most out of the product
- increasing customer lifetime value
- collecting user feedback and
- turning users into brand advocates
Having a proactive customer success team is one of the key ingredients for good user experience and lasting customer relationships.
Another crucial aspect for your customer success team is a fast response to user feedback. In a world where we expect instant gratification, reacting to user feedback quickly and efficiently will help you create a pleasant user experience.
6. Collect user feedback
The process of collecting user information doesn’t stop when you build the product. Only by soliciting user feedback, iterations, and constant improvements, you’ll be able to stay relevant and create an unparalleled user experience.
As Seth Godin says:
Don’t find customers for your products, find products for your customers.
The easiest way to create a product that users love is to ask for their honest opinion. Even though you have to start with a minimum viable product (MVP), you should always try to add new features and create different use cases for your users.
SaaS companies that are not ready to implement user feedback and improve the product will eventually be replaced by someone genuinely interested in listening to users and adjusting.
Here are some best practices for collecting and utilizing user feedback that you can apply to your business right away:
- Start with what you already have, collect feedback along the way—Making decisions based on data is crucial for every business. However, sometimes companies feel that collecting data and user feedback is too expensive and complicated, and choose to make assumptions. One thing they forget is they already have data that they often ignore. Start with simple tools like Google Analytics, and then you can upgrade to more advanced, cost-effective tools like UserTesting.
- Don’t underestimate the will of users to give feedback—Despite the widespread myth that users don’t want to share feedback, the truth is they appreciate when you ask for their honest opinion, and even more when you act upon that. Don’t be afraid to ask your users for feedback.
- Use feedback to improve your solution—Product development based on user feedback takes a startup to the next level. An insurance startup Branch set new directions after having user testing sessions, where the team found a lot of areas for improvement. Once you’ve used the provided feedback, don’t forget to highlight the new functionality you added or the adjustments you made. It’s important to show users you listened and acted upon their needs.
- Leverage user feedback for marketing purposes—There is no better marketing than positive user feedback. Customers, and people in general, trust other people’s opinions. Don’t forget to use the feedback that you receive to attract more users.
- Don’t just ask for feedback, foster a feedback-friendly company—Asking users for feedback is great. What’s even better is to create an environment where users are willing to contribute with feedback and ideas for improvement. How? Be transparent and make sure to respond to questions, opinions, and ideas. Communicate with your community and encourage them to reach out whenever they feel that there is room for improvement.
7. Measure user engagement
We live in a data-driven world. Making your decisions based on your gut feeling is the shortest way to failure. Instead, some user engagement metrics can help you improve, thus shifting into high gear.
However, when it comes to metrics and analytics, companies get stuck in overanalyzing and overthinking, and they face an analysis-paralysis situation. Instead of measuring everything, focus on the metrics that are most important for your business, and that will give you valuable insight for your users.
Remember that the purpose of analyzing data is to understand user behavior and improve user experience. The product is just one puzzle of the bigger picture, so make sure to set metrics that are aligned to your business KPIs and OKRs.
To keep track of user engagement, make sure to monitor the following metrics:
- Usage frequency—low usage frequency is the first red flag that shows that your users are not getting the most out of your product. If you fail to improve this metric, you’ll face a higher churn rate.
- Time spent within an application—this metric can give you essential information about user engagement. Make sure to monitor the duration and keep users engaged. If they are spending a very short time, it means they don’t see value in using your product. However, beware that sometimes when they are spending too much time, it may be a sign that they’re having a hard time navigating through your product.
- Number of active users—it’s not enough to attract users on your platform. If they’re not actively using it, they’ll eventually churn. Being mindful of the number of active users can help you act on time.
- License utilization—users that pay for a license they don’t utilize to the fullest will soon downgrade their license or walk away for good. Monitoring the license utilization and reminding users of the untapped potential they’re already paying, will increase customers’ satisfaction and improve user engagement with your product.
Using data-driven metrics is a powerful way to evaluate whether or not the team (and even the company as a whole) is fulfilling its goal, which is managing a successful product.
Data is a strong feedback source that can be used to determine if the hypothesis you created at the beginning of the UX process is accurate or not. Using key metrics, you can evaluate your whole process from ideation to features development and spot opportunities for improvement.
5 Benefits of Working With A User-Centric Team
When it comes to SaaS businesses, user-centricity is not “nice to have”—it’s a must.
Companies that don’t put users at the core of everything they do risk being replaced by their competitors. Develop a user-centric team that places users at the front of the organization from product development to the post-sales process—as developing a product is a never-ending process that requires constant improvements.
Working with a user-centric team that places users at the front of your organization from product development to the post-sales process, will make your life so much easier. They understand that for SaaS companies developing a product is a never-ending process that requires constant improvements, and they’re eager to work on features that matter to users.
Here are five benefits that make user-centric teams the driving force behind a successful SaaS business:
1. Multidisciplinary skills that work in synergy—building a best-in-class SaaS product requires a combination of different skill sets that work together, thus creating a synergy that can fuel your business.
2. User-centric—user-centric teams are used to walking in users’ shoes, and they are well aware of what users expect from the product they’re building.
3. Focus on the product’s user experience (UX)—users today compare experiences (not features) because they’re buying a product, not a feature. No matter what unique features your product may have, if you fail to deliver an engaging user experience, you’ll end up losing users. That’s why the best SaaS companies are focused on UX.
4. Robust technological skills with a disruptive design approach—the best part about working with this kind of team is that you don’t have to choose between tech skills and innovative design. You get the best of both worlds.
5. Great engagement with the client—with a team that focuses both on performance and user experience, you can be sure to have a high engagement with the client and increased CLV.
To create a user-centric team that brings all these benefits to the table, it’s crucial to empower people, motivate them to take ownership of the product, and give them the freedom to test and improve along the way. This is the core of UruIT culture and something we truly believe in.
In a world wherein product features can easily be copied, focusing on user experience can distinguish you from the competition to future-proof your SaaS business.
Looking for help to apply these concepts in your project? Let’s talk. Our team can help you reduce operating costs and boost productivity while delivering high-quality products.