It's never been easier to start a SaaS company. It's never been easier to get an MVP off the ground. It's never been cheaper. Yet, it's never been harder or more expensive to grow. Everyone is trying to find the next hidden growth channel in sales and marketing tools/tactics. But what if I told you that the data suggest that customer research is the most effective. And that no one is really doing it.
With CAC growing 50% in the last 5 years, everyone is looking for the hidden growth hack that will change the trajectory of their business. Search "growth hack" and you'll find millions of fluffy articles like "5 growth hacks that work magic."
Magic... Sure. Just like a crappy infomercial selling you a Rejuvenique Electric Facial Mask that will make you better looking. Happy Halloween 🎃
There is one thing that seems to get overlooked as a growth factor. THIS growth channel is not simple. It takes time. It takes thought. It takes process. It takes effort.
The number #1 action you can take to grow your SaaS business is to invest in customer feedback or research.
I'm not saying that because Userfeed is a customer feedback product. Many successful SaaS companies point to customer research as their key growth channel:
"Across every industry, almost nothing will have a bigger impact on your business than listening to the people you serve. When you listen to your customers, you can create new opportunities on your own terms, instead of fighting for space in a crowded ring." - Aytekin Tank, CEO @ Jotform
This idea is also backed up by data from over 3000 SaaS businesses.
The data on customer research
The Profitwell, a company that manages the SaaS growth metrics, has done some amazing studies on customer research. Here's what they found when studying over 3000 SaaS businesses:
- Executives state that 7 out of 10 of their organizations are speaking to less than 10 prospects or customers in a non-sales research capacity per month
- SaaS companies that invested in customer research grew 2-3x faster than companies that didn't
Profitwell also asked product managers to rate their most recent features on a value matrix. Then asked their customers to do the same. There answers couldn't be more different.
To distill that: product managers seem to be confident they're building the right things, but according to their customers, they're not. To make things worse, they don't seem to know it, because aren't talking to their customers. Or, they don't have a process to manage the feedback they're getting on the front lines.
"As CAC increases, the relative value of features declines, and growing a business just becomes that much harder, we’re in a world where we’ve literally been given the answer to success - understanding our customer - not always agreeing, but at least understanding, and for the most part we’ve turned our noses up at the notion of actually talking to the people that are ultimately paying us. That’s a scary thought." - Patrick Campbell, Founder & CEO @ Profitwell
Why is this happening
It actually isn't that surprising. Most SaaS businesses fail. Around 99%. So, if most companies aren't talking to their customers, and they aren't building the right things, it seems to suggest that may be why they're failing. Then why not talk to your customers all the damn time?
- Laziness: Customer feedback isn't easy. It takes time and effort. There's no hack to getting quality feedback from your customers. A bunch of surveys or a public voter forum isn't going to cut it. It's not your customer's job to give you feedback. You've got to have real conversations with real customers. You've got do it throughout the full customer lifecycle.
- Too much focus on the competition: If your focus is on what your competitors are doing, then you're not focused on the customer. The customer is the only one that matters. Shoot, look at the data. Your customers are likely building the wrong things. Don't follow their mistakes.
- Not enough constraints: This is for those of you raising all that money. When you have a lot of $$ cushion, it's easier to focus on building ONLY based on your vision. Making money isn't a top priority at the moment. Based on the data above, your vision is likely to be wrong in at least some areas. Talk to your customers. They'll help you make your investors happy 😊
- No process for your front line teams: Talking to customer takes a lot of time. Don't fool yourself. You can't talk to all your users. But, guess who already is? Your sales and/or customer success teams. Let them scale your customer research effort by implementing questions to ask, processes, and tools. Empower them to provide you with customer feedback gold 🥇
- Fear: No one wants to hear the bad things about their product/service. Especially if you're a PM or a founder. It's your baby. It hurts a bit. You can't let fear of hearing all the customer's problems and pains, stop you from talking to them about it. This is the best type of feedback anyways. "Problem statements" are gold. Gather it. Iterate on the product. Your customers will never be happier than when you do.
Where to go from here
Get out there and talk to your customers. Encourage everyone in the business to do it and come up with best practices on how to gather quality feedback. Make data-informed decisions about what to build next instead of gut feel, or what your competition is doing.
Treat customer feedback for what it is: the #1 potential growth channel for your business.
Userfeed enables companies to gather, manage, and derive product insights from customer conversations in Intercom. Give it a try for free!
To subscribe to other posts like these, drop your email and we'll keep you in the loop (No spam, we promise 👍):