With all the growth possibilities in software, sometimes it can get overwhelming. This is why some SaaS leaders tend to overlook product growth mistakes, which leads to churn. In this episode of SaaS Story in the Making, host Matt Wolach and Growth Sandwich Product Manager Aggelos Mouzakitis discuss the common mistakes in product growth and how you can avoid them, including the six-digit dreaded error. Aggelos dissects the main problem stopping SaaS founders from becoming market leaders and shares helpful tips to overcome these hiccups.
Podcast: SaaS-Story in the Making
Episode: Episode No. 183, “Common Product Growth Mistakes & How to Avoid Them”
Host: Matt Wolach, a B2B SaaS sales coach, Entrepreneur, and Investor
Guest: Aggelos Mouzakitis, Growth Product Manager at Growth Sandwich
TOP TIPS FROM THIS EPISODE
Avoid a Weak Brand Positioning
The root of committing a six-digit mistake is driving the wrong customers to your product. This is why you need to be careful in positioning your business to attract the right people: your target customers.
Aggelos shared a story of how one of his clients accidentally committed a six-digit mistake. This particular client underwent extreme growth, followed by an extreme churn. After getting to the bottom of the problem, he found out that the positioning was so weak that it drove the wrong people.
And then a domino effect ensued: the wrong audience proposed new features to be added to the product, and the company followed. This led to an extreme churn rate.
Should companies build what customers ask them to build? No. Because most of these people are only proposing based on their perception of what the solution is.
To small businesses, this mistake is deadly. It might kill your company to bigger firms by draining your bank account and driving away potential investors. And where did it all begin? From the moment they attracted the wrong customers by having a weak brand positioning.
Dig Deep into Your Customers’ Actual Needs
To avoid a six-digit mistake as such, Aggelos says you have to be highly empathetic. So, if you shouldn’t build what the customers asked you to build, how do you present a solution to their problem?
The answer is by understanding your customers’ real concerns. Find out in full detail not just what your customer is telling you, but what they are thinking.
Speak with all sorts of customers: the happy ones, the unsatisfied ones, the failed ones, and the new ones. Compare their experiences and take note of the real problems they are having.
Do not focus on the features they propose. Instead, look into the problems they are experiencing themselves. Go deep towards what your customers need.
Going back to the story of one particular client’s six-digit mistake, Aggelos says, “You might build a solution for educators, for consultants, for developers, and they want to compare their screens. All three can be very useful. Should we build all of them? No.”
“Because we should decide what is the direction of our product.”
Don’t Build a Solution for One
It’s a common mistake among SaaS founders to build a solution based on one problem from one person, not realizing that it’s just that one customer that really has that issue.
When you build a feature that not a lot of people want, this becomes a problem. That’s why it’s critical to be able to understand your customers at a macro level.
Setting up your sales funnel, channels, sales methodologies, and processes stems from actually understanding your market and the solutions you can offer them.
Create an Opportunity Algorithm
Aside from answering the question “what should I build?” there are bigger questions you should also ask yourself.
“Who are we?”
“What is the opportunity that we are chasing?”
In order to pinpoint the answers, Aggelos gives an insight called the opportunity algorithm.
The first step is to do your research. Collect a list of jobs to be done and a list of expected outcomes you want, as well as outcomes your customers will have with your solution. Moreover, add alternative solutions.
Ask a good number of homogenous users you have chosen to work for: how important is each outcome for you? How satisfied are you with the available solutions?
These steps will lead you to your opportunity algorithm answers. With these answers, you can pick the opportunities you can work on and some you might reject.
The bottom line is to go deeper into what your customers truly need and pick exactly the right features to build.
Understand the Value of Research
Not a lot of SaaS founders understand the importance of research. Based on Aggelos’ experience, some SaaS leaders don’t care much about the study but solve their problems immediately.
Here’s the thing: your problems are symptoms. And how do you manage symptoms? By doing thorough research before jumping to the right solution.
However, in the SaaS world, research can be tough to sell. To avoid making product growth mistakes, SaaS founders should learn to trust analytics and actual research. Even if it shows you output beyond your expectations, even if you’re not ready to hear it, these insights will help you understand the symptoms of churn rate.
Symptoms are Not Problems
Another mistake software founders commit is misunderstanding symptoms for problems. On top of that, having a big ego prevents software leaders from accepting that sometimes, problems are not the marketers’ fault but theirs.
Research helps a lot in identifying your business’ symptoms. The reason why it tends to drive some SaaS leaders away is because of its negative connotation. Research may feel like a very time-consuming process, but it helps you identify the symptoms preventing you from hitting that growth.
According to Aggelos, the symptoms reflect the problem, and a big ego prevents SaaS founders from seeing the real problem. With research, you will understand and figure out how to be better and see the bigger picture.
[02:26] “There is only a minority of founders that understand the value of research.”
[06:31] “[Customers] were proposing [solutions] based on their perception of what the solution is… So, should the company build what the customers asked them to build? No. That would be a six-digit mistake.”
[12:38] “As soon as we pick the direction, then we set up internal processes to go deeper into the user and pick exactly what we’re going to build.”
[14:46] “Research is very hard to sell, but as soon as you manage to sell them, then you have one of the highest redemptions I’ve seen in this job.”
[04:19] “It’s research-based, you’ve got the evidence, it’s data-backed. That’s super important just to give them more confidence that the decision you’re telling them to make… is super critical.”
[13:27] “I think too many times SaaS founders hear one problem from one person and go off and build it, not realizing that maybe that’s just that one person that has that issue.”
[13:46] “All of that is so critical to be able to know, and know at a macro level, to be able to understand how can we develop our products.”
[13:56] “How can you set up your sales funnel and your channels and, and your sales methodologies and processes, all of that stems from really, truly understanding your customer, understanding your market, and what you can do for them.”
To learn more about Aggelos Mouzakitis and Growth Sandwich, visit https://www.growthsandwich.com/.
You can also find Aggelos Mouzakitis on LinkedIn at: https://www.linkedin.com/in/aggelos-mouzakitis-25011218/.
For more about how host Matt Wolach helps software companies achieve maximum growth, visit https://mattwolach.com/.