Why building the wrong features impacts growth and valuations
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It’s all in the execution
Most SaaS business start with a great idea. A problem to solve. A different way of looking at an old problem or a completely new innovation. After this, it’s the execution that counts. Businesses succeed on considered plans and data is the most useful tool we have in aiding our daily decisions.
Working out which features to build in SaaS is one of the most critical business decisions we all take; time and resources are finite and no one wants to waste money or time creating features that don’t grow revenue, increase retention or fail to deliver strategic value.
The simple truth is that building the wrong features negatively impacts growth and valuations yet making informed product decisions in SaaS is a real challenge. In the midst of competing voices from your customers and internal teams all pulling product in different directions, the proper gathering and understanding of data is critical. Getting it wrong and building features that don’t count are an insanely huge opportunity cost on your business - just think what you could achieve if you knew that every feature was really going to count.
One of the misconceptions is that data gives you the answer but it’s not that simple. What data does is allow you to make informed decisions. Where gut feeling and conflict once reigned, data is the calm voice in the room bringing hard facts to ease decision-making.
Why it’s easy to waste time & resources in SaaS
There are many factors which can stop you building features which are really going to move the needle. Just a few examples are the whale customer…
Our fear of losing a customer that didn’t actually have a big impact on revenues meant that we made irrational decisions on what features to build for months.
…people with the loudest voice…
…when you start valuing the feedback of one person too highly, it is often at the expense of the weight of evidence and data.
…and the power of impression…
…noise from demanding customers, pressure from your boss to implement certain features and external forces (such as a change in legislation affecting your product) all leave an impression and skew product decisions.
These pitfalls (a few of many) mixed with customers & internal teams all having demands on product driven by their own requirements, mean it’s tough to work out which areas of product development will have the highest impact on your business. In fact, it’s incredibly easy to waste your scarce resources building features which give a suboptimal outcome with a massive, associated opportunity cost.
No single person is able to get a balanced view of feature request demand and understand them within the overall strategy of the business regardless of how many spreadsheets and votes you gather.
This is where data comes in.
How to make data-driven decisions
Having a method to gather, prioritise and validate feature requests with customers and internal teams is vital for any SaaS business. Introducing these steps will revolutionise your product roadmap overnight.
As SaaS businesses, we have so much data and analytics available to us in the marketing, financial and sales functions yet there can often be little around development resource and the understanding of feature requests, yet we’re constantly amazed by the value that gathering this type data gives us. It doesn’t prescribe the path we should take but it gave us validation and understanding so we can build a clear roadmap that’s aligned with the needs of our stakeholders and our business.
With the data we gather, we are able to bring key insights into our product decisions. Some examples include the ability to see:
- What’s important to our biggest versus smaller customers (spoiler alert - they are usually very different things!)
- How feature demand changes throughout the lifecycle of product use
- Upsell opportunities in the existing customer base
- What triallers and churned users wanted and why
- What’s important to customers, new opportunities and the individuals within those organisations
- How to support sales team by incorporating development that will help close sales
- Which features align with our business strategy
- Areas that are going to have the biggest ROI based on development effort
Here’s more on understanding prioritisation and segmentation will help you work out what are the highest impact features you can build right now.
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