How To Find Product-Market Fit For Your SaaS Business


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The success of any business relies on how well you can supply enough of your product to meet your market’s demand.

For consumer goods, that means producing enough units of whatever merchandise you are selling.

But SaaS works a little differently since you’re not selling a tangible object.

SaaS focuses on the quality of the product, not quantity. Your solution must adequately address a pressing problem within your target market.


Market First, Product Second


Creating a product before knowing your market is like building a key then looking for the lock later. It’s tedious, costly, and there’s a chance the lock doesn’t even exist.
It doesn’t matter how much blood, sweat, and tears you’ve put into your product. If your market has no need for it, brace yourself for a flop.

On the other hand, knowing your buyer persona first before creating a product is like the reverse. You choose a lock then build a key for it. You identify a problem and come up with a specific solution.

Having a deep understanding of your market enables you to build a product that would perfectly fit your potential customer’s needs. The more problems your product solves for them, the higher the chances of them buying it.

What’s more, the market is constantly changing. Trends come and go. People adjust their priorities.

But when you tailor-fit your product around an evolving market, you evolve with it. You’ll have a SaaS solution that is consistently relevant to your customers. And as a result, they will stick with you.

That is the beauty of product market fit.


What Is Product Market Fit?


Product-market fit is defined as having a product of high enough quality to satisfy the needs of your target market.

Trust me, it’s easier said than done. Sure, there are some companies lucky enough to get a good product market fit on their first go. But for others, it takes a lot of research and testing.

What kind of research, you ask?
It depends on whether you already have an established customer base or not.

If you already have existing customers, that’s your target market right there. All you need to do is find out how well your product is meeting their needs and whatever pain point they may have.

There are several ways to ask for customer feedback. One is asking them outright. If your relationship with your customers gives you opportunities to meet with them, you can use that avenue to know them better. The more you know about them, the more you can develop your product according to their needs.

If you don’t have such an opportunity, you can send out surveys and customer feedback forms to get the pulse among your users. But you may need to offer discounts or bonuses to give them incentives to answer.

Or you can simply monitor your customers’ usage and see which aspects of your solution are popular with them.

If you don’t have existing customers, there are still ways to research your market. One of the most strategic methods is listening to your competitors’ customers.

Software review websites like G2 and Capterra often have unbiased and some pretty juicy comments from users themselves. Sites like these make it easy to spot patterns that indicate your competitors’ strengths and weaknesses.

But more importantly, software reviews are solid insights on what your market finds useful and what features are lacking.

Developing your product around those needs will take you further down the path to product market fit.


Importance of Product Market Fit


Product market fit for SaaS means that you have a solution that your target market would consider a must-have for their work or their everyday lives.

Additionally, when you know your target audience’s demands, you have a good basis for scaling your solution. You’ll know what new features to introduce and how many new users to expect.

But aside from its obvious significance, the process of identifying product market fit in itself offers a few side benefits:


Personalized marketing strategies


Building a content marketing strategy can be hard if you don’t know anything about your target audience.

The research that comes with product market fit gives you deep insights into your potential customers. It tells you a lot, including their demographics, preferences, and even their location.

With this kind of information, you can personalize your marketing strategy for each group of people you are reaching out to. It’s almost the same concept as behavioral marketing, where you base your strategy on your website visitors’ activity on your site.


Easier sales forecasting


If you are gathering data from your current customer base, you can also use that for sales forecasting.

After all, you’re trying to find out how satisfied your customers are with your product. That will give you an idea of how many users will renew, upgrade, or cancel their subscriptions.

Moreover, there are certain product market fit metrics that would help you forecast your sales.

That brings us to our next topic.


Product Market Fit Metrics


There is no single way to measure product market fit. But there are metrics that measure customer experience and value.

At best, these metrics serve as indicators of whether or not your product performs well in your target market.


40% Rule


This is one of the simplest ways to measure customer satisfaction. It works by launching a survey to your customers, asking how they would feel if they no longer had access to your product.

If at least 40% of them say they would be very disappointed, it may indicate that there is a high demand for it.

Another version of this survey is asking your customers how helpful your product is to their lives. If more than 40% say that it is a must-have, it also signifies a high demand for it.


Net Promoter Score (NPS)


“How likely is it that you would recommend this product to a friend or colleague?”

Have you ever encountered this question before?

Well, that’s the key question involved with Net Promoter Score. It measures customer experience and forecasts business growth. It’s one of the most widely-used metrics for customer experience management.

Like the 40% rule metric, it involves a survey. But this one would ask that famous key question and having respondents rate the likelihood from 0 to 10.

Depending on their response, customers are grouped into three:

  • Promoters (9-10 rating): These are loyal customers who will likely renew their subscriptions and bring in referrals.
  • Passives (7-8 rating): These users are satisfied but may still be swayed by competitive offerings.
  • Detractors (0-6 rating): These are disappointed customers that can harm your brand and growth by telling others about their negative experience.

Net Promoter Score is calculated by subtracting the percentage of detractors from the percentage of promoters.

NPS = %Promoters – %Detractors

The resulting score can range from -100 (if all respondents are detractors) to 100 (if all of them are promoters).


Customer Lifetime Value (CLV)


CLV is a metric that predicts how much total revenue each customer can bring into your business. Like NPS, it’s one of the metrics used in sales forecasting.

It has three factors:

  • Order Value: This refers to the average worth of each transaction.
  • Number of Transactions: For SaaS, this depends on the type of subscription. For example, if your customers are paying monthly, that’s twelve transactions per year.
  • Retention Period: Calculated from your historical data, this is the average length of your relationship with a customer.

Customer Lifetime Value is computed by simply multiplying all these factors.

CLV = Order Value * Number of Transactions * Retention Period

If you get a considerable CLV with a high number of customers, it may indicate a good product market fit.


Returning Visitors


Another way for you to assess your product’s relevance in the market is by monitoring your website visitors. The easiest way to track this metric is through Google Analytics.

When someone views your website, Google Analytics generates a unique number for them. The platform combines this number with the visitor’s first timestamp to create a User ID. And that User ID enables you to identify returning visitors.

Regardless of whether or not these visitors are purchasing your product, it is still a good indication of product market fit. If you have a high rate of returning visitors, it means that your product is getting people’s attention and maintaining their interest.


Media Interest


Technically, this is not a metric since it doesn’t deal with numbers. But you know you’re on the right track if your product starts to get featured in various media, such as blogs and YouTube.

One easy way to always be on the lookout for mentions of your product is to set up Google Alerts. You just set up a keyword (in this case, your brand name), and you will start receiving notifications whenever it is mentioned on a website.

And how can I forget about social media? It’s a good place to check if people are talking about your product. So it’s good to check for mentions from time to time.


Examples of SaaS Product Market Fit


Now, let’s learn by example. There are several SaaS companies out there that made it. They have successfully established a good product market fit and still continue to dominate their markets to this day.

Let’s take a look at a few.




Monday.com is a workflow management platform that enables users to build customized task managers, dashboards, and reports.

This flexibility makes it possible for users to utilize the software for various purposes. It can be a customer relationship management (CRM) software. It can be a project manager. It can even be an inventory tracking platform.

If you look at the markets for CRM and marketing, you’d see that they are teeming with competition. But this level of customizability makes Monday.com stand out.

See what they did there?

Monday.com ensures product market fit by allowing its customers to tailor-fit the product themselves according to their own needs.




When a business gets separate SaaS solutions for marketing, sales, and customer support, it can be hard to track customer data. The gaps in this data can eventually damage your overall selling efforts.

That’s where Segment comes in.

Segment is a customer data management solution that centralizes data from multiple software. It provides a way to integrate data from these platforms without the need for if/then statements.

Like Monday.com, Segment’s product market fit comes from its flexibility. What’s more, it provides a user-friendly interface for performing what would otherwise be a highly technical task.




AI is one of the technologies that are revolutionizing businesses today.

Companies look to AI more and more to make their work faster and their lives easier.

Gong capitalizes on that demand.

It offers advanced AI tools to salespeople. Just by analyzing customer interactions, the platform points out deal risks and problems that can lead to customer churn.

The result is more than 1,300 sales teams wanting a piece of that technology.


Final Thoughts about Finding Your Product-Market Fit


Establishing product market fit is essential in launching a startup or a new product. It’s important to listen to your target market and make sure that your product addresses a need in that market.

But to balance all this, you need to always stay true to what your product is about. As your customer base grows, you will receive a lot of feedback. There might even come a time when you are getting more feature requests than you can handle.

At the end of the day, you can’t please everyone. Nor should you.

It may be tempting to cave into every demand knowing that it would bring in more revenue. But that may not be sustainable in the long run.

Go back to the main problem that your product is trying to solve. Review your value proposition. Maintain your product strategy.

Create a product roadmap that defines clear goals and milestones. If you receive feature requests, assess if it indeed has a place in that roadmap.

That way, your product market fit won’t be a one-hit-wonder, but a lasting position of strength in your target market.

If you want more strategies to grow your SaaS business, click here.


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Ken Moo