I've been working with a young SaaS company as a mentor on marketing and business strategy for a few months, and something's been tugging at me over the last few weeks about their difficulties in identifying UVP for their payor, and it centers around product-market fit. Let me put it this way...
When my business partner and I started Colnatec, we had an international enterprise customer approach us with a specific request: build a manufacturing process control sensor that cost less to operate in the long run. Their annoyance--according to a Product Manager in the company and friend of my business partner who had been in the sensor business his entire adult life and who had built and sold two other companies manufacturing a consumable for those sensors--was that they had to shut down their $100M systems every 100 hours to change the carousel when all 10 of the consumable sensors inside had stopped functioning (equivalent to a dull razor blade). The cost of the shutdown time was anywhere from $10,000 to $100,000 per hour, depending on the process and machine size, and it could take several hours to pump down (from vacuum), replace the carousel, and get back to full operation.
The value, it seemed, of saving them from doing this every few days could mean 10s of millions in savings every year.
But.
While that is true, and the solution we devised was fully functional to what we thought was their greatest pain (a self-cleaning sensor that required no disruption in manufacturing), as it turns out, there were several factors working against us, but among them that is relevant today to my mentee organization was we built for the wrong person's needs.
We didn't realize it at the time, of course, but as we struggled to make sales, we came to realize we built according to what the process engineer wanted, not what the decision maker (and payor) wanted. Other factors played a significant role, too, but if you are building a product for the wrong decision maker, your product will struggle in the marketplace. You lack product-market fit.
For today's SaaS company, the founder built a beautiful, well-designed product based on her own struggles as a consumer. It is feature-rich, easy to use, and functions exceedingly well. Users love it.
But they are marketing to service providers instead of users, and as expected, they're struggling to make sales. Your unique value proposition must fit the person who is paying for the product. Build your product for anyone else, and unless you add features suited to the payor too, your payor won't care enough to pay for it.
So what does it take to get killer product-market fit?
Your product's features and benefits must address a serious pain for your user.
That pain is so great that they will pay almost anything just to have it fixed.
More often than not, your user is your payor.
If your user is not your payor, then he/she is a significant, valued contributor to decision making and has direct influence on a purchase decision.
If your product is completely innovative and nothing remotely similar on the market exists (e.g. iPod), your product must be so novel and address a desire so sexy to the buyer that they will pay just about anything to be in that owners' club.
Absent these principles, your product will struggle. So, be honest with yourself. Who are you building it for? Is that person willing to pay just about anything to have it? Are there enough of those people around willing to pay what it takes to make enough money to achieve your vision?
If you're struggling to identify benefits that your payor lights up about, it's a strong signal that you lack product-market fit. You can change your product, or you can change your business model. Only you can decide which pivot will be best for your business.
Want a market strategy review or some options on GTM strategy? Ping me at wendy @ potentiate.net.
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