I have made multiple attempts at starting a successful SAAS business. This time I think I have been able to do it. I am running sumtracker, an inventory and operations management software for product brands. We are still early but I am very confident about what we are doing. We have paying customers who are happy with the service and have got real tangible results from sumtracker.
In this post I want to talk about the genesis of a SaaS business, which is the customer. Yes, not the product or the problem. They come after we have defined who is the customer. You might get the idea first but it is not a business without the customer. In the context of a SaaS business it is important to define the problem and the customer together in the same sentence.
In late 2018 after various attempts at building a SaaS business I took a break to think about other businesses I can do. Like starting an ecommerce business or a software consultancy or even finding a remote job. None of the options seemed better to me when compared to a bootstrapped saas business. When I was on this break, we still had paying customers with us for sumtracker. And they did not want us to go. So I decided to take another shot at building sumtracker. I went back to our customers to understand what do they like about sumtracker because we as founders did not have any clue. You ask why didn’t we have any clue? Because we never defined who is our customer. We sold sumtracker to anyone who was willing to buy it. And each customer was buying to solve a different problem. And soon enough we lost track of what we were building.
When I asked one of our top paying customer what problem did we solve for them they told me 2 things; daily operations management and inventory planning. Being a product brand who also manufacture they had a huge team and stock in hand. Managing both was a challenge which we partially solved for them. This feedback was what we wanted to hear. My co founder, Ankit and I then decided to find 1 more product brand as a customer and try to onboard them. In about a months time we found another product brand and took an advance from them to start the work. We wrote the whole software again to target problems which only direct to consumer (D2C) brands face. Since then we have onboarded several major growing brands as our customers. I am very confident now that we are very near to achieving product market fit (PMF).
Finding the customer profile starts with a lot of assumptions. Then you have to hustle to test those assumptions. This is essentially the journey of the company. But the initial part of the journey is so much tougher.
I can think of 5 main learnings that made the difference in our approach and helped us find our target customer. Read the below points assuming you already have chosen a customer profile. The trick is to test if the chosen profile is correct and change it as you find more information.
- Make a list of your potential customers and figure out how to talk to them. Before you can do anything you need to know who to connect with. I am selling to D2C brands so I went to amazon and made a list of top selling brands in India who are selling D2C. Then made a list of their founders and connected with them on LinkedIn. Most of the D2C brands are startups so talking to them was much easier than talking to traditional businesses. This was the real game changer for us. Before this we always had to find early adopters among traditional businesses, which are too few to start anything.
- Talk to your customers to understand their business. This is important when you have no experience in that line of work or industry. I talked to customers about what are the hurdles in growth. Having that discussion opened up a lot of complex problems. Figuring out growth is tough. From the growth conversation we moved to the topic of margins. Margins are equally important as growth in the long run. My conclusion was that I need to build something which protects the margins first. If that works we can move to getting growth too.
- Figure out what problem you will solve. Now you can start building a solution and sell it. If the problem you have choosen is real you will be able to sell the product even if it does not exist yet. Selling before building is the best method to verify if the problem is real.
- Continue building the product with your early adopters. For us it was very important to satisfy the early adopters to get real amazing results before trying hard for more sales. It takes a lot of effort to close a sale and onboard a new customer. We did not want to waste our time selling a product which does not solve anything. Instead we decided to work with our initial 5 customers to get a full confirmation on the results they have got are real.
- Be flexible and open minded in your approach. Remember that most of things about your business are assumptions when you start. So keep iterating. You have to find a way to trust your instinct and of course data when deciding which is the right direction to take. It is better to do research and then decide. A lot of times I made excellent decisions because I took a pause and did research on the problem we were facing. You might even have to pivot. I am much more empathetic to customers with our ‘be flexible’ mind set.
The above learnings helped us navigate the market and get feedback to decide the customer profile.
For us at sumtracker the most important part has been to choose a specific customer profile. Every aspect of building the company is driven by who is the customer. We are still very young as a company to declare PMF. But I know it is just around the corner.