SaaS MVP Development Effective Strategies

The SaaS industry is currently in the midst of an unprecedented boom, anticipated to grow beyond $900 Billion by 2030. Are you ready to seize the opportunities that await your SaaS product in this goldmine? 

Countless trailblazers before you have already triumphed, turning their dreams into fortunes. And guess what? You can too. The proof is clearly in the numbers.

‍But first, you need to validate your idea. And the best way to do this is through an MVP. Why validate?  

Because while your idea may hold immense potential, it's impossible to guarantee how the market will receive it. So, an SaaS MVP helps you to gauge the market's reaction. Is it a good or great product? 

Surprisingly, many of the SaaS driven unicorns that dominate the landscape today initially emerged as MVPs. Their visionary founders never knew their ideas were going to be great, until the MVPs hit the market and gave them validation.

Take Facebook as an example. In 2004, Mark Zuckerberg designed Facebook, which was formerly known as; The Facebook. He was a student at Harvard at the time and his passion was just to connect students. 

The very first version of his product, The Facebook, was actually an MVP or a very basic version. A few days later, people were signing up in large numbers, and that validated his idea! 

As of 2021, Facebook became the biggest social media network in the world.

Dropbox founder Drew Houston's approach was even more amazing. Armed with a three-minute video demo, he showcased the product's core functionality, illustrating how users could effortlessly synchronize and share files across multiple devices. Houston then uploaded the video to the technology-focused news site, Digg, and shared it with the community. The response was overwhelming. Thousands of people viewed the video, expressed excitement, and requested early access to the product. This grassroots approach not only generated buzz but also served as valuable market validation, propelling Dropbox to become one of the most successful file-sharing platforms. Houston's strategic use of a simple yet impactful demo video became the catalyst that ignited Dropbox's meteoric rise.

There are many more examples of great products whose start is as humble as that of Facebook and Dropbox. All these serve as a powerful reminder that sometimes, the most remarkable innovations stem from the elegance of simplicity.

Unfortunately, a common mistake that many make is believing they must wait until their product is 100% complete before launching. There is a pervasive notion that perfection is a prerequisite for a successful launch. However, it is essential to recognize the potential consequences of delaying the public release until the product is fully polished. Do you know what may happen when you opt to wait until every aspect is perfected before introducing your product to the world?

• You may be wasting your time
• You may be burning money 
• You may be losing the opportunity to get real feedback from early adopters
• People may not need that thing you are building, after all!

Those who have been in this game long enough will tell you “better fail first if you are going to fail”. In other words if the product is never going to succeed, you better know this fast enough so you can pivot or go to something else. Only an MVP can let you know this. 

In this article, we'll be sharing the effective strategies that have worked for all the successful SaaS apps you see around. 

How about we start from the base, by defining or reaffirming what a SaaS Minimum Viable Product is. 

Definition of a SaaS Minimum Viable Product (MVP)

A minimum viable product (MVP) is the basic version of a product, with just enough features to validate the idea and attract early adopters. An MVP is used to test the concept.

The idea is to verify if customers are ready to use the product, before you can invest in it in the long run.

That does not mean you should just put out a low-quality product. Instead, you should aim to develop a product that accomplishes an outcome in its most simple and primitive form.  

The key attribute of a good SaaS MVP 

According to Reid Hoffman:

"If you don't launch your product embarrassingly, then you probably waited too long."

The big idea is:

You want to create a product as fast as possible and get it out to customers quickly, so you can get feedback and use that to improve your product.

Just create a small decent product that is the essence of what the product does and release that barebones version. When you get feedback, incorporate that as extra/new features in the form of  iterations. 

The key features of an SaaS MVP

• Fast to build (a few weeks)
• Has limited functionality
• Solves a problem or two
• Doesn't require a big budget
• Only appeals to a small set of users
• It allows you to learn what people think about it.

"You only start learning about your users, when you put a product in front of them."- Michael Seibel Group partner, Y Combinator.

Lean into the fear of the unknown. Just get your product out, get the feedback, and iterate.

The most effective strategies for SaaS MVP development 

Whether you are going to build in-house or use SaaS application development services, the key objective of any SaaS MVP is to incorporate a crucial set of features that offer genuine value to your customers. This approach enables you to learn, iterate, and ultimately develop an enhanced product, even if it leads you in an entirely different direction.

The strategies you are about to learn will help you achieve the following:

• You will launch your product FAST: The main reason you want to create an SaaS MVP is to minimize the time and risk of competitors launching similar products ahead of yours. To get the word out there before everyone else, launch your SaaS MVP then get feedback for improvement.
• You will enter the market with a low budget: You don't have to spend so much money getting ready for a massive launch. You're just getting prepared with the resources available around you. Learn more about budgeting for app development. 
• You will gather high-quality feedback from early adopters: This is the backbone of your whole journey in building a SaaS MVP. Your MVP helps you gather feedback, to know if your product solves a genuine problem and meets customers' needs. Feedback is what helps your product to grow. . 
• You will determine product-market fit: You will validate your product idea in the real market. When you release a minimum viable version of your product with a core feature, you can get feedback on how your product solves the intended problem. 

The strategies: 

1. Perform research to understand the market and target audience

We know this might sound cliché, but it's something that you can't do without.

Ask questions like:

• Who's my target audience? For example, who would be your audience if you're building a workout app for women who want to lose weight? Middle-aged women? Younger women?
• What are their pain points?
• Which is the easiest way to help with the most impact?
• Can they afford a solution tailored to their problem?

When you identify your customer's needs and challenges early on, you can develop an SaaS MVP that addresses their most critical requirement.

2. Define the product

What exactly is your product about? What specific problem will it solve and how?

Using the previous example of the female workout app. It solves the problem of helping women get their dream body shape by providing an app solution where they can commit to working out using specific workout types.

The point is to be as clear as possible. This definition will actually come in handy when you are introducing the product to market. People need to understand what exactly your app will help them achieve. 

3. Decide on the revenue model

You may think it’s not important to think about the revenue model at this stage. Because, well it’s just an MVP.  The truth is you need to. Determining the revenue model you want to employ will help you fine-tune your MVP to reflect this even if it’s in a subtle way. 

Remember some of the people who will be looking at your SaaS MVP are potential investors. They need to know how the product is going to make money. 

By default, the subscription model is commonly utilized by many SaaS products, with the following options being the most prevalent

The freemium model

The freemium model is a popular approach adopted by numerous SaaS products. It offers users a basic version of the software for free, allowing them to experience its core features. 

This strategy entices users to engage with the product, build familiarity, and experience its value firsthand. While the free version provides essential functionality, additional premium features and enhanced capabilities are made available through paid subscriptions or upgrades. 

The freemium model leverages the principle of value exchange, as users can upgrade to unlock advanced features. This approach not only helps in attracting a large user base but also provides opportunities for upselling. It serves as an effective strategy to strike a balance between providing value upfront and incentivizing users to upgrade to a paid plan for expanded functionality and premium services.

Calendly has used the freemium model to dominate the appointment scheduling software industry.

Shopify and Mailchimp are other examples of SaaS companies that use this model. 

The tiered pricing model

Different levels or tiers of service are offered to customers at varying price points. Each tier typically offers a different set of features, and customers select the level that best suits their needs and budget. This model provides flexibility and scalability, enabling businesses to cater to a wide range of customer segments and accommodate different usage levels.

It also encourages upselling as users can upgrade to higher tiers as their needs evolve. 

A popular SaaS product that utilizes the tiered pricing model is Slack, which offers multiple tiers with varying features.

User-based pricing 

This model works by charging based on the number of users. It’s mostly suited for businesses. 

Businesses typically pay a fixed amount per user, either on a monthly or annual basis. The more users a company has, the higher the overall cost. This pricing approach is advantageous for businesses that require different levels of access and permissions for different team members. 

Platforms like Zendesk and Trello use this model.

Lifetime access

This model involves giving the customer complete access to your product by charging them a one-time price.

This attracts lots of customers because there are lots of people who look for deals like this.

4. Define the core features

Begin by outlining the user journey, employing your value proposition canvas, and detail the steps users will take to use the app. Consider all the features that users need to navigate through each step and document them. Lastly, prioritize the features according to user needs and business goals, ensuring that you avoid incorporating all your secret features in the SaaS MVP. 

For example, if you aspire to build a photo-sharing app like Instagram, you don't need to include all the features at once. Instead, write down the most basic features such as login/sign-up page, photo-sharing and posting functionality, messaging system, following mechanism, hashtags, stories, and more. 

Score your features by the degree of relevance, then distill the idea to absolute essence.  The rest of the features can come in future iterations.

Side Note: A value proposition canvas is a visual tool that helps businesses understand and communicate the unique value they offer to their customers.

If you are not familiar with the concept of using value proposition canvas, please check the following as a starting point. 

• Strategyzer
• Canvanizer

5. Decide on the right tech stack

What is the optimal combination of programming languages, frameworks, libraries, and data management systems that will be key to building your MVP?

Consider factors such as scalability, development expertise, compatibility, and the specific requirements of your product.

A popular tech stack for SaaS MVP development may include JavaScript, Node.js, React, and MongoDB.

• JavaScript: Used for both frontend and backend development
• Node.js: A server-side JavaScript runtime environment suitable for handling backend logic
• React: A popular JavaScript library for building user interfaces.
• MongoDB: A NoSQL database suitable for handling unstructured or semi-structured data, especially when dealing with large amounts of data or complex data models.

6. Develop and promote the SaaS MVP FAST!

Always prioritize speed from creation to launch. You want to gauge market interest, ignite motivation, and avoid unnecessary delays driven by fear of initial feedback.

Which MVP type are you going to build? Depending on your envisioned product, you can use any of these MVP types;

Piecemeal MVP

“Piecemeal" means something that is done gradually or in small parts. In the context of an MVP, a piecemeal MVP is developed by building and releasing the product in small, individual pieces or components.

Instead of waiting to build the entire product with all its features before launching it, a piecemeal MVP focuses on developing and delivering specific parts of the product, one piece at a time. Each piece is designed to provide some value or solve a particular problem for the users.

The idea behind a piecemeal MVP is to learn from user feedback and iterate on each component before moving on to the next one..

For example, let's say you want to create a social networking platform. With a piecemeal MVP approach, you might start by building and releasing a basic profile creation feature, allowing users to sign up, create profiles, and connect with each other. Once you gather feedback and make improvements, you can then move on to adding additional features like messaging, photo sharing, or groups.

In simple terms, a piecemeal MVP is an incremental approach.

Single feature MVP

As the name suggests, this type focuses on just one core feature or functionality. The emphasis is on creating a simple version that highlights a specific value or solves a particular problem.

This is similar to the piecemeal MVP, but focuses on launching a single and unique feature. This approach allows you to test the market's response to a specific functionality. 

For example, imagine you want to create a task management application. Instead of building an elaborate app with multiple features like reminders, subtasks, tags, and collaboration, you might start with a single feature MVP that focuses solely on creating and managing tasks. The app would allow users to create tasks, set due dates, and mark them as complete. Additional features can be added later based on user feedback and demand.

What’s the difference between piecemeal and single feature MVP? A piecemeal MVP focuses on developing and releasing the product in small, individual components or pieces, whereas a single feature MVP concentrates on delivering a working product with only one core functionality or feature.

Landing page MVP 

In this type of MVP, you showcase a simplified version of your product on a single webpage.

A landing page MVP can give you the best results if you can successfully guide the customer through the necessary steps and provide vital information about the product. 

A notable SaaS company that effectively employed a landing page MVP is Buffer. They strategically designed their landing page MVP to include a comprehensive product description, an extensive list of features, and multiple pricing plans. Upon selecting a plan, visitors were sent  a notification offering them an opportunity to join a waiting list.  Next, the team would reach out to people from the waiting list to ask them about their needs and expectations. The more they did this, the more they got closer to their product market fit.

Concierge MVP

Think of a concierge as a person who provides personalized assistance and takes care of your needs. In the context of an MVP, a concierge MVP is a way of testing the ideal by manually providing the services or features that the final product would offer.

Instead of building a complete automated system, a concierge MVP relies on human intervention to simulate the desired functionality. The "concierge" essentially takes on the role of the product and manually handles tasks that the final product would handle automatically.

For example, let's say you want to create an online grocery delivery service. Instead of building a full-fledged app with all the features, you can start with a concierge MVP. In this case, the "concierge" would receive the grocery orders through phone calls or messages and manually coordinate the deliveries. It may involve making calls to local grocery stores, selecting the items, and arranging for the deliveries themselves.

Wizard of Oz MVP

The appearance of a fully functioning product is presented to users, but in reality, it is operated manually behind the scenes, allowing for user feedback and validation without investing in full automation.

Users interact with a user interface that appears automated, but behind the scenes, human intervention drives the process. 

There is a thin line between the concierge and wizard of Oz MVP types. So let’s use an example to distinguish these two. 

Let's say you are developing a meal delivery service.

In a concierge MVP approach, you would manually handle every step of the process, from receiving orders to preparing and delivering the meals. You might communicate with customers via phone calls or messaging apps, gather their preferences and dietary restrictions, manually select and prepare the meals, and personally deliver them.

On the other hand, the Wizard of Oz model would involve creating a simulated automated experience for the customers. You might build a website or mobile app that appears to handle the entire process seamlessly, but everything is fulfilled manually. Customers would place orders and specify their preferences through the ‘app’, but you handle everything behind the scenes. 

In the concierge MVP, the users can see that everything is manual. In the Wizard of Oz, the users see that everything is automated, but it’s not. 

7. Always define and analyze metrics

Common metrics include user engagement, conversion rates, churn rate, or revenue growth..

You can use Google Analytics for tracking website and user behavior, Mixpanel for event-based analytics that help measure user actions and behaviors within the product, Kissmetrics for customer journey tracking and cohort analysis, and Hotjar for heatmaps and user session recordings to visualize user interactions.

These are just examples. There are many more tools you can use to actualize this strategy. 

8. Gather and analyze user feedback

Encourage users to provide feedback on their experience, pain points, and suggestions for improvement. Consolidate the feedback and analyze it systematically, looking for common patterns and specific user needs.

Prioritize the feedback based on its impact on user experience and product goals. Additionally, consider qualitative feedback from direct conversations or user testing sessions.

Based on this user feedback, you can now decide to develop the full product, stop it, or pivot. We'll talk more about pivoting, shortly. 

Examples of companies that deployed these MVP development strategies and succeeded big time

Many SaaS companies have used the strategies here to scale their products from tiny MVPs to the iconic products we see today.

Notable examples include Shopify, AirBnB and Stripe.  Here is how they did it. 

Shopify

Shopify built its first product in 2006 with very basic features. Their unique proposition was that everyone should have the opportunity to start their online store, regardless of their technical expertise.

They started by building a Minimum Marketable Product. This MVP allowed users to easily set up an online store. Soon they had real users and a positive response from the market. With that, their idea was validated and Shopify was born.

Their MVP just had a basic interface with simple customization options. As they launched it, people were impressed by its design and user-friendly features. They had validation from early adopters.

Over time, Shopify transformed. They introduced customizable templates that enable sellers to personalize their stores according to their brand identity. They also incorporated secure payment gateways, plus any more features.

With each iteration, Shopify grew, and they continued to innovate. Today, Shopify stands tall as a leading e-commerce platform. 

Airbnb

The founders of Airbnb, Brian Chesky and Joe Gebbia started with a simple showcase website and filled it with pictures of their apartment. 

There were no payment options, no map view. Just a minimalistic website. That was enough. Brian and Joe soon got their first guests and that validated their idea.  Airbnb’s hosts have now welcomed over 1.4 billion guests and are present in almost every country around the globe.

Stripe

At the beginning, Stripe's API offered only a limited set of features. Its simplicity meant that many potential users were unable to utilize it effectively. 

However, this basic functionality proved sufficient for early-stage startups who just wanted to accept credit card payments from their customers. This validation of their initial idea laid the foundation for further iterations and allowed Stripe to establish a prominent presence within the payment software industry.

What if your SaaS MVP fails to gain traction?

If the SaaS MVP fails to gain traction completely, then pivot fast. Pivoting means making a significant shift in your product strategy or direction based on the feedback and insights obtained from the initial release. It’s an opportunity to adapt and evolve. It can take various forms, such as refining the target audience, adjusting the product features or pricing, exploring new marketing channels, or even changing the core value proposition. It requires a willingness to embrace change, be open to new ideas, and take calculated risks.

The good part? You’ll not be alone in pivoting. Many renowned companies have experienced setbacks and pivoted multiple times before finding their winning formula. 

For example, Slack provides a compelling illustration of the power of pivoting. Initially, Slack started as a gaming company called Tiny Speck, developing a game called Glitch. Despite significant investment and high expectations, Glitch failed to gain the desired traction and was eventually shut down.

However, during the development of Glitch, the team at Tiny Speck had built an internal communication tool to facilitate collaboration. Recognizing the potential value of this tool, they decided to pivot their entire business strategy and transform it into a standalone product, which we now know as Slack.

This strategic pivot turned out to be a game-changer for the company. By focusing on providing a robust and user-friendly team communication platform, Slack found its niche and rapidly gained popularity. Today, Slack is widely adopted by organizations worldwide, serving as a central hub for team collaboration.

The secret is to start without FEAR

The journey of creating a SaaS product often brings forth a significant challenge: the fear of venturing into the unknown. Questions like "What if my product fails to resonate with users?" and "What if my carefully crafted MVP falls short of expectations?" can be paralyzing.

However, it is crucial to remember that even the visionaries we admire have largely succeeded by embracing the power of iteration.

It is through this iterative approach that great products are shaped and refined, ultimately paving the way for success.

Understand that it may not be perfect. So just start. Build that MVP. 

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Ready to go? You might want to use this MVP checklist.