How to validate SaaS idea in 2022: complete guide

After killing 3 SaaS and 2 apps I came to a conclusion that if you want your startup to make money, it should make money. Many of us procrastinate by adding more features to the product and hesitate with talking to potential users. This ends with SaaS dying in a couple of months from not finding any users.

I used to think that collected emails equal validation, but getting 0 paying users from 160 emails proved me wrong.

I don't want you to give up on your ambitious product. That's why I wrote this step-by-step guide, explaining how to validate your SaaS idea by closing sales as quickly as possible.

Start with a problem

At the start, some startups get obsessed with pleasing a certain customer group. The issue is that it’s tough to identify the customer group before we realize what we want to do. It’s unclear how broad it should be, and that we’re talking to the same audience throughout our validation stage. When we talk to 10 b2b salesmen and get various results, it’s unclear if we should group them by experience, salary, number of calls they have each week, or something else.

Other startups stick to the product. They ship the prototype and then start pushing it to potential customers. I usually lasted for 4-8 weeks before I dropped my products using this methodology. I shipped something I’d partly use myself, and something I thought people would use. As a result, no one did. 90% of products die after founders ship them into nowhere and don’t find any customers within a few months.

I always prefer to stick to the problem: “difficulty in finding b2b leads”. There are thousands of profitable products solving this issue for dozens of customer groups. When we focus on solving 1 problem, it’s a higher chance we’re going to find the proper solution after a few iterations. It’s best when the founder experienced the problem too. In this case, we’ll need less time to validate that it really exists.

We shouldn’t jump from one problem to another every 6 weeks. Instead, we’ll focus on a single issue we’re confident about and will pass half of this milestone before even building anything, by doing presales.
Put down your ideal customer profile

Validating SaaS idea starts with finding our ideal customer profile, ICP. ICPs are people who need our solution so badly they’re ready to pay for it. We’ll try 3 different segments and see which one converts easier. After we put down hypotheses of our potential buyers, we brainstorm where they hang out and plan our outreach strategy.

Sell it even before you start coding

Yes, you read it right. Before we spend weeks coding our MVP, we want to close 3 sales. This takes 1-2 weeks but gives us great market knowledge. If people buy the product before it's even ready - imagine how easy it will be to convert others once we have our MVP.

We make a product demo with Figma. It will have 3 screens showcasing our 3 core features. It’s important we don’t embed extra stuff into our demo because we want to know exactly what people need.

I included community, extra APIs, and other stuff into my demos, which resulted in me misunderstanding what people really bought from me. The retention rate dropped within weeks and the product was gone. Success of our startup begins with getting the core 3 features right.

Go where they are

Our first 20 sales will be super personal outreach. The majority of founders are shy to call their potential users. They run ads, get the offer wrong and drop their startup after 4 ad campaigns. It’s better to overcome shyness and jump into 40 calls than gift our $3000 to Facebook and $30k to the software development agency. I've been there too. But look at it differently: you aren't a needy guy bothering people, you are a doctor. People are struggling with a problem, what you want is to find out more about the problem, make a right pill and make their life easier.

We’ll look for groups, subreddits, Twitter accounts where our ideal customers hang out and send 20-100 messages daily. We won’t be trying to sell anything in our first message, because our current aim is to get insights in a call. We have to answer if our problem is a problem at all, who has it, when they experience it, how much they currently pay to solve it, and if our MVP is useful. For two of my products, I tried to answer these questions in surveys. I spent months building something that 8/10 respondents never opened, and others wondered how I thought it would help them.

In case our SaaS is B2B we use Sales Navigator + Phantombuster + Hunter.io to send thousands of emails and schedule loads of calls quickly. My products were B2C and I did Reddit outreach myself. Now there are products that automate Reddit DMs like prospecdit.com.

How to write the outreach message for B2C

In our message, we outline where we found the person, how we want to make their life better, and show that we’re struggling without them. Here’s the message that got me 13% of people into calls:

Hey! I've found your profile in r/startups comments and decided to reach out. I want to create a product that will help entrepreneurs overcome challenging periods, and want to make sure I'm building something useful. Earlier I was adding features relying on my own perspective, but got lost. As you hang out in this subreddit, your ideas could really help me cut through the fog. I'll ask a few questions to see what works/doesn’t work for you. How about we have a Zoom chat so I learn your way of going through challenges?

How to write the outreach message for B2B

Our B2B message should be super short and bait interest. This one got us 5 meetings for each 100 emails:

subj: Want to share experiences

Hi,
Came across your school's profile and wanted to reach out. I run a language school (link) and thought it will be great to share experiences. Always nice to connect with other founders. What do you think?

Talk soon,
Mike
Director at German Language PH LLC

Handling calls

Everything gets easier when we run our call like an interview, not like a sale. We ask questions to validate there is a problem, when they experience it, and how much of a problem it is for them. It’s important to ask if they’re currently paying for a solution because they’ll be more likely to pay for ours. Here’s the list of questions we used with the founders of the language learning app who partnered with me:

What do you do?
Are you learning German? Why?
How long have you been learning German?
What worked/didn’t work for you? Why?
Describe the ideal way of learning German.
What were the top 3 obstacles when learning a language? Why?
What’s the biggest struggle you face, that costs you a lot of effort and nerves?
(!) What have you done to solve these obstacles? + Have you paid for any of the solutions?
9, 10,11 - are follow-up questions for the 7th.

When we feel that the person may benefit from our product, we simply show it to them and ask for their thoughts. If they like it - we offer the first 3 months for the price of 1. Yes, I remember that our product isn’t ready yet. I told about it to all my early users and sold it for 25% of the price, which gave me bad data. In case we sell it as a complete product, we “apologize for the bug” and offer to return the money or wait for “a few weeks” till we fix it. It’s ok to return the money because we tested the main thing: there are people who’re willing to pay for it. We build the MVP while collecting money.

SEO vs direct sales

Some founders try SEO before having 5 paying users. But how can you plan your SEO strategy without knowing who needs your solution most? Going after our first users is the fastest way to get traction.

First startup that partnered with me for founder coaching was Feedbucket App, SaaS helping web developers manage client feedback. Product had 0 users, and it was the first SaaS for the founder. We identified top 3 buyer personas, laid out our call structure and sent messages. We closed the first B2B sale in 17 days, 7 of which were their free trial. Then we got 4 more by the end of the first month. We closed all these while founder was working on startup part-time.

Original post with pics and vids:
https://denisshatalin.com/how-to-validate-saas-idea-2022-complete-guide