How to Perform Market Research for SaaS Companies
It’s important to understand your target market and their needs. After all, if you don’t know who your customers are and what they want out of your product, how can you expect to make sales?
According to CBI Insights a lack of customer interest is a leading cause of SaaS startup failure, with 42% of startups ceasing operations due to the issue.
This indicates that before starting a cloud-based business, it’s essential to ensure there is market demand for it and potential customers are willing to invest in that type of SaaS product.
That’s why performing market research is such an essential part of launching a successful SaaS business. Knowing who your competitors are, understanding user trends in the industry, and uncovering customer pain points are all keys to creating a successful SaaS product that solves real problems.
In this blog post, we’ll explore the fundamentals of market research for SaaS companies so that you can create the best possible experience for your users with confidence and ease.
What Is Market Research For SaaS?
Market research for SaaS companies is the process of gathering and interpreting data about customers, competitors, industry trends, and market opportunities to inform strategic decisions.
By focusing on target markets, analyzing customer feedback, testing product-market fit, understanding pricing strategies, and assessing competitive threats, SaaS businesses can work towards gaining better insights into the market they operate in.
Gathering customer feedback through surveys, interviews, and focus groups can help identify unmet customer needs which in turn provides an opportunity for developing further features that add value to existing SaaS products.
Combined with trend analysis and a thorough understanding of competitive offerings, market research can be a powerful tool to help a SaaS company stay ahead of the pack.
SaaS Market Research Vs Technology Market Research
Market research in the SaaS industry differs significantly from those conducted for other technology firms as it focuses more on the SaaS tool being offered than the technology behind it.
For instance, a technology market research survey may ask questions about the features and usability of an online platform, while SaaS market research is likely to focus on the customer experience surrounding that platform.
SaaS market research focuses on the customer journey and offers insight into how customers use and interact with SaaS solutions, as well as how to optimize their value.
Additionally, SaaS market research dives deeper into what customers need and why they are using particular solutions. Technology market research is mostly based on gathering information about how a product works or is developed, which does not necessarily take into account customer behaviors or needs.
Importance of Market Research For SaaS companies
SaaS companies are turning to market research like never before, and for good reason.
Market research provides invaluable insight into the customer base and data that can help inform better business decisions. It can help identify industry trends early on as well as uncover insights around customer preferences and needs.
That way, SaaS companies can tweak their product offering to meet customer demand, develop messaging that resonates with consumers, and maximize their budget for one-on-one outreach. Ultimately, market research is an essential piece of the puzzle when it comes to achieving success in this competitive space.
Which Research Methodologies to Use
When it comes to research methodologies, there can be a lot of confusion. Which one should you use? It really depends on the type of research you’re doing. Here are the most common research methodologies used in SaaS market research:
A. Primary Sources for SaaS Market Research
When conducting market research, accessing primary sources can be invaluable in validating existing data and uncovering new trends. As a business leader in the SaaS industry, you’re likely to benefit greatly from using quality primary sources that provide accurate and timely information on your target consumers.
From market surveys to interviews, customer feedback, and usage data analysis, these primary sources can often help you gain valuable insights into the SaaS market.
Additionally, analyzing public press releases, reports, white papers, and news articles can also provide helpful additional data to supplement your findings.
B. Secondary Sources for SaaS Market Research
Secondary sources enable you to access data collected from more than one person or source, making sure that the information is reliable.
Secondary SaaS market research often focuses on topics such as customer needs and preferences, competitive analysis, industry trends, financial performance, and challenges within the industry.
This can be incredibly beneficial if you’re trying to gain an understanding of the intricate workings of the SaaS market or want an insight into how your products or services compare to those already in existence.
While primary sources are vital for obtaining first-hand facts and feeling closer to the subject matter, secondary sources provide a great avenue for truly comprehensive research that is backed by evidence.
Examples of secondary sources are:
- Government Reports
- Industry Studies
- Academic Journals
- Online Databases
- Blogs and News Articles
How to Conduct Market Research for a SaaS Business
Below are some key steps to follow when conducting market research for a SaaS business:
1. Set Your Market Research Objectives
Establishing clear objectives or goals early on will help ensure you’re focused and focused on the right questions that will yield meaningful results. Start by thinking about the bigger picture – what’s the purpose of your research?
Knowing this, you can then break down your objectives into smaller chunks. Think about the specific insight or information you wish to gain from the exercise, and then refine it further until your objective is crystal clear.
Some examples of research objectives are:
- Identifying key buyer personas
- Understanding customer preferences and needs
- Establishing market demand for new SaaS products or services
2. Identify a pain point that could have a better solution
Identifying a pain point, meaning a specific problem with a SaaS tool, can help you get to the source of why customers are unhappy. This involves conducting interviews and surveys, as well as using data from tracking platforms like Heatmaps or A/B testing tools.
The most effective way to identify these problems is to interview your existing customers and find out how they are interacting with the SaaS tool – what they struggle with or dislike, what their overall experience has been like, and whether they would recommend it.
After all this data is gathered, you can then look for common user issues that lead to pain points.
3. Identify your potential customers.
Identifying your potential customers can be done through various methods, such as surveys, interviews, and analysis of existing customer databases and sales channels.
When conducting market research, look beyond your target group for customers who are likely to purchase your product. Take into account demographic factors such as age, gender, and income level, as well as psychographic traits like lifestyle and values.
Additionally, identify any current gaps in the market that your product could potentially fill — this will help you better understand what potential customers may want from your SaaS tool.
4. Identify your niche and potential market size
Identifying your niche and figuring out the potential size of your target market will help you identify the most effective approach to marketing your product. There are several steps to help with this process – start by researching other existing SaaS businesses and think about how yours will differ from theirs.
Develop a well-defined target persona, analyze what type of products or services are already in the market, and then develop a marketing strategy to target those customers who could use your offerings.
Finally, you’ll have to assess the size of the potential customer base and come up with an intelligent estimate. To help with that, you can use predictive analytics tools to gain an in-depth understanding of the market and its size.
5. Analyze competitors and substitute
There are many online tools and analyses that you can use to evaluate your competitors and substitutes. This type of information is key in understanding which areas the business may need to focus on in order to remain competitive and successful.
Market research will help you gain insight into what competitors and substitutes may be doing differently, as well as how they are pricing products or services that you may offer.
Additionally, analyzing competitors and substitutes will enable you to identify any potential issues or barriers that could prevent your business from reaching success in your industry.
6. Speak to your potential customers
Market research for a SaaS business can be conducted by speaking to potential customers directly. It’s important to ask the right questions and listen objectively in order to get the most helpful responses.
Try using an informal, yet professional and conversational tone—one you would use when talking with a close friend or family member—while expressing genuine interest in what potential customers have to say about your service or product.
This approach allows you to build rapport with the community as well as gauge their feelings, opinions, preferences, trends, and needs.
7. Define Your Research Questions
Defining your research questions before conducting market research for a SaaS business can be a challenging task. It’s essential to ensure that you create structured and well-thought-out questions that allow for actionable insights and have the ability to answer your research objectives. A great way to get started is:
- By breaking down each of your overarching critical paths and tasks into a set of short questions, to grant yourself the most suitable answers.
- Make sure each question you ask is underlying the main goal of uncovering trends in customer behavior and preferences within the entire landscape of SaaS solutions.
Doing this effectively should help develop confident decisions that will be beneficial in the long run!
8. Understand the Four Types of Market Research
Market research for a SaaS business can be done by breaking down the four main types of market research. These are:
- Primary Research: Generating first-hand information by conducting surveys, interviews, focus groups, and field experiments.
- Secondary Research: Collecting data from existing sources such as reports, publications, and other databases.
- Qualitative Research: Gather qualitative data through informal conversations with customers and stakeholders.
- Quantitative Research: Analyzing quantitative data to gain insights into customer preferences and market trends.
9. Develop a research plan
A well-thought-out plan outlines the objectives, timeline and budget for your research. It should also include a detailed description of the methods and tools that will be used for gathering data and insights.
To develop a research plan:
- Firstly, identify your target customer groups and the most important market segmentation criteria such as location, age range, gender, and job title.
- Secondly, determine which types of data you need to collect to understand customer behavior, preferences, and purchase journey. Accurate primary data collection techniques such as focus groups and surveys can be used to get first-hand knowledge of customer trends which can help inform product development decisions.
- Finally, analyze the gathered data to generate insights about potential customers and make proposals for product feature implementation.
10. Create a research design
A research design is an outline of the research process that provides structure and guidance while collecting data.
When creating a research design:
- First, identify the purpose of your research. Specifically, what do you want to learn from the respondents of your survey?
- Narrow down exactly what outcomes you are hoping to achieve.
- Begin formulating questions that will help you meet those objectives.
- When writing questions, be sure to create questions that are applicable to both your target audience and the research goals.
- Keep in mind that any information or data gathered should be verifiable and reliable.
- After finalizing all of the components of your survey design, it is important to pilot-test it for internal feedback before launching the survey to real respondents in the actual market.
11. Collect data
Collect data that helps you to understand the needs of your target customers and what motivates them to make a purchase. Gathering customer data through interviews, surveys, and competitor analysis can provide valuable insights into the current market. Before beginning any research, it’s important to:
- Define clear objectives and research questions so that the results are actionable.
- Surveys are an especially effective way of collecting data due to the speed of receiving results, while interviews can provide a more in-depth understanding with follow-up questions.
- Analyzing competitors can offer additional information on how similar companies approach customer acquisition and loyalty programs that you could use for your own strategies.
12. Organize and Analyze Your Findings
Organizing your data into specific categories and trends can help you understand customer behavior, preferences, and the effectiveness of your current strategies. Analyzing this data will help you gain more insight on customer expectations, pain points, and possible solutions for product development.
While it can be overwhelming at first, it doesn’t have to be! Start by:
- Breaking down your research into different segments that are easy to identify.
- Make sure you include all the key information such as company stats, customer types, product pricing, and promotion strategies.
- As you organize your research location-wise, consider any additional economic factors that could impact its overall success.
- Once you have a handle on the big-picture trends related to your SaaS business, dig further by analyzing customer reviews, surveys, and sales reports to gain more insight into individual customer needs.
Always keep in mind the goal of offering genuinely helpful services or products that meet customers’ expectations—rather than sticking to a pre-planned strategy only—to ensure that your research will pay off in the end.
13. Review Your Conclusions and Take Action
It is important to thoughtfully consider the data you have collected and reflect on what it typically means. For example, if your target customers said that the cost of a product was too high, then you may want to develop a pricing strategy or look into bundling services to make your product more affordable.
Additionally, if you find that customers don’t know about certain features they’d be willing to pay extra for, then you should focus on telling potential buyers about those elements of your service.
Finally, if potential buyers seem hesitant because of poor customer experience elsewhere in the same sector, then you should consider how you can differentiate yourself from competitors by providing a better customer experience for users.
By taking the time to review conclusions and account for customer feedback responsibly, you can launch new initiatives with confidence and increase your chances of success.
Market research is an essential process that can help you gain valuable insights into customer needs and behaviors. Taking the time to properly execute a customer research strategy can ensure that your product or service meets customer expectations and provides them with the best possible user experience.
From defining clear objectives to analyzing competitors, making sure each step of research will have an impact on decisions in later stages should be kept in mind throughout the entire process.
As long as you take action based on your findings, you will be able to increase sales and better engage with customers from both online and offline channels.
Hopefully, this post has given you some key things to think about as you begin or continue your market research journey. For more tips on growing your SaaS business, visit our blog.