The B2B SaaS PMF Spectrum: Are You Weak, Strong, or Somewhere in Between?
For a founder, achieving product-market fit (PMF) is a critical milestone in their entrepreneurial journey. It marks the point where the product's potential market niche, pricing strategy, target customer, and sales and marketing tactics align, resulting in strong customer demand and growing revenue. But determining whether you have achieved PMF is not a straightforward yes or no answer. It's a spectrum that ranges from weak to strong PMF, and it takes time and effort to navigate through it. In this blog post, we will explore some of the stages and signals that indicate a good PMF, using B2B vertical SaaS companies as an example.
Stage 1: Selling the Product
The first stage of achieving PMF is being able to sell your product to a customer. This may appear to be a straightforward step, but it's a monumental hurdle for a startup; it means that enough pain is being addressed for someone to pull out their card and make a purchase. However, the customer's relationship with the founder is also an indicator of PMF's strength. For example, if the customer was not previously acquainted with the founder and still purchased the product, it is a strong indicator of PMF. Furthermore, early adopters' feedback is essential in this stage to ensure that the product is addressing their pain points effectively.
Stage 2: Multiple Similar Customers
The second stage of PMF is when a startup starts gaining traction with multiple customers who look similar. Identifying similar customers means that the company is targeting the right niche and delivering a product that resonates with them. These customers should have the same pain points, price points, average contract value (ACV), and decision-makers. Furthermore, they should be using the product in the same way, which indicates that the company is delivering consistent value to their target market.
Stage 3: Non-Founder Salespeople
The third and most significant stage in achieving PMF is when a startup has non-founder salespeople who can sell the product. Customers usually want to buy from a founder who can articulate their vision and passion for the product. The ability to sell without a founder's involvement is a strong indicator of market demand and attraction. However, the sales team should thoroughly understand the product and its value proposition to sell effectively. Additionally, the sales team's feedback can be invaluable in improving the product-market fit.
Stage 4: Referrals and Repeat Business
The fourth and final stage of PMF is when customers refer others to use the product and make repeat purchases. Referrals and repeat business are strong indicators of the product's ability to solve customer pain points and generate value. Furthermore, they help a startup build a strong customer base, increase market share, and create brand awareness. A company can leverage its satisfied customers to act as its unpaid salesmen and achieve exponential growth.
Achieving PMF is a crucial milestone for any startup, but it's not a binary outcome. It's a spectrum that ranges from weak to strong PMF. A founder needs to navigate through this spectrum to achieve a strong product-market fit that resonates with the target audience. In this blog post, we have explored some key stages and signals that indicate strong PMF for B2B vertical SaaS companies. By understanding these stages and signals, founders can evaluate their startup's PMF and make informed decisions to achieve their entrepreneurial goals.