Lean sales: How to validate your SaaS idea with the power of hustle
There are many opportunities to build successful SaaS businesses. Find out if your idea has real potential by getting to know your potential customers in three steps.
Building a SaaS business takes a lot of work. Before you even start investing your time, energy and money into setting it up, spend a couple of days to find out if your SaaS idea has real potential to turn into a successful SaaS company. All you have to do is use the power of hustle to validate your idea.
1. Meet potential customers
Go out and talk to people who could be potential customers. Spend a whole afternoon walking into 10 different businesses, and say, "Hi, I'm [your name], can I talk to the manager/owner." When you meet the owner, say, "Hi, I'm an entrepreneur about to start a new business to fix a problem that I think you have. Can I get three minutes of your time to see if this is something that you might want?"
This is the best way to get started. The big advantage here is that you're going to be able to get very valuable feedback by being able to see people's responses. It's very visceral and you will get a real sense for how they run their operations. Although you can't do this kind of market research on a big scale, the quality of the responses/insights you get is really powerful.
2. Call potential customers
The next thing to do is to call potential customers. Even though you're missing out on a lot of visual clues about them and their business, you still get to have one-on-one conversations that will help you understand their wants and needs really well. This obviously scales better than in person interactions.
3. Email potential customers
The next higher tier is to email people. You can email a lot more people, but the quality of the insights you get will be different.
You'll be able to see open/response rates and read people's responses. Written feedback often times is a bit more "filtered" than what people would tell you over the phone or in person. The great thing is that you can aggregate and analyse results at scale.
4. Separating real buying intent vs. "lukewarm interest"
When you're an entrepreneur just starting out, lots of people will tell you that your idea is great, just because they like you or want to encourage you. But there’s a big difference between saying they would buy your product and actually paying money for it. How do you find out if they would have real intent to buy?
Here’s a simple question you can ask people to find out if they have real buying intent: “What are all the steps I have to take for you to become my customer?”
I call this the “virtual close”.
Listen carefully, watch out for red flags and make sure you get a very specific answer. Once you’ve reached a point where the “virtual close” has occurred, do a test closing.
There are different approaches to do a test close, find one that works best for you:
- "We want to start in 4 weeks—does this work for you?"
- "The beta program is heavily discounted. If you sign up now, you’ll get it for half the price for life."
- "What is the decision making process in your company? How quickly can we make a decision on this?"
And then ask them for money. Tell them: “Can I take your credit card info to process the payment?”
Make it risk-free. Tell them their payment is 100% refundable. If they’re not happy with the product, they can get their money back at any point.
Not everyone will be willing to give you money. But you can get at least some of the people who say they want your product to actually pay you in advance in order to get a discount in return or move the timeline up.
Summary of the four steps to validate your SaaS idea with sales
- Get a deep understanding of the environment your potential customers are working in by talking to them face-to-face.
- Talk to more potential customers by phone to see if the early problems you've discovered are validated with a larger test group.
- Email more potential customers to test your early findings at scale/gather more data and build up a list of prospects.
- "Test close" prospects to determine whether they are just "curious" or real prospects with real pain points and willingness to buy your product/solution.