The Ultimate Guide to Product Management for SaaS
You know how when you log into a SaaS product, you often notice the UI has changed or there are new options that weren’t there before? That’s SaaS product management hustling in the background to give you the best experience. You don’t have to lift a finger and you get to access the latest updates whenever you log in.
Believe it or not, there used to be a thing called on-premise software that you have to install and upgrade yourself. And you had to own all the servers.
In this ultimate guide to SaaS product management, we’ll walk you through the benefits of SaaS over on-premise software and how you can build a successful product as a SaaS PM.
- SaaS product management refers to software-as-a-service and is cloud-based software that is accessible from any device with an internet connection and web browser.
- SaaS product management is different from product management for on-premise software because it’s much easier for customers to switch products due to the subscription-based pricing model.
- On-premise software management tends to involve more client-specific customization because each client installs their own version of the software.
- With SaaS product management, the product owner can track product analytics to see how customers are using an app and optimize the experience based on user data.
- Release cycles for on-premise software are much longer than for SaaS because the customer only does upgrades a few times a year, which means it requires more stringent planning and less flexibility.
- One of the factors that drive the success of SaaS product management is how aligned the product team is with the customer success team.
- Data-driven growth is an important element of SaaS product management because it can inform your product strategy and also provides you with evidence to back up your decisions.
- To improve your understanding of customer behavior, don’t just focus on demographics but also pay attention to psychographics.
- A best practice for SaaS product management is gathering ideas from multiple sources like team discussions, customer interviews, customer support tickets, and industry trends.
- Thinking strategically about the direction of your product is a best practice for SaaS product management because it helps you weigh the pros and cons of focusing on different initiatives.
- A frightening number of product managers don’t directly speak to customers despite it being a best practice.
- A product manager doesn’t need to understand all the technical details of their product but they do need to take an interest in the technical side of things to make better decisions and bond with their development team.
- Perfection is the enemy of “done”, especially with software – there will always be more bugs and enhancements to perform around the corner.
- Team development is a critical component of building a great product management team and involves gaining trust from your team and leading by example.
- As a product manager, you need to evangelize your product so the rest of your team is more invested in its success.
- Great product culture is the result of how a product team works together, what beliefs they share and what values they align. It is also a key to building a strong product team.
What is SaaS Product Management?
SaaS stands for software-as-a-service. It’s cloud-based software meaning it can be accessed from any device with an internet connection. Saas firms host all the databases, servers, and code for the software application and the software application available to customers through a subscription.
This is different from on-premise software where customers purchase a license, install the software onto individual computers, and host their own servers.
Product management is a function within an organization that is responsible for managing a company’s products throughout the entire product lifecycle from ideation to decline. It sits at the intersection of UX, tech, and design.
The product manager acts as an advocate for what the customer wants and works with developers and designers to build solutions that are business viable.
Cloud-based software has made it so you don’t need complicated hardware to deploy software changes to end-users. You can easily and almost instantly push software changes to the cloud for users to benefit from. This means more frequent software changes.
Now let’s take a look at how SaaS product management is different from product management for on-premise software.
How is SaaS Product Management different from Product Management in other types of companies?
Being a product manager for a SaaS product is very different from being a product manager for on-premise software.
Here are five areas in which they’re different.
#1 – Switching decisions
On-premise software is purchased either as a one-time perpetual license or a license that’s renewable on an annual basis. Once a customer purchases on-premise software, they likely won’t look to switch anytime soon.
This isn’t the case for SaaS that’s purchased as a subscription — most often monthly. With a subscription-based product, customers tend to think about switching to another product more frequently. This can result in churn if they ultimately decide to jump ship.
Product managers of SaaS products, therefore, need to really focus on differentiating their SaaS and pushing users to constantly unlock more value in the product.
The nature of SaaS implies that your customer is constantly re-evaluating your product — weekly, monthly, or yearly. Switching has become easier. And for a PM, differentiation becomes more critical.
—Evan Michner, previously Principal Product Manager at Atlassian
#2 – Client-specific customization
With on-premise software, it’s a lot easier to create custom solutions for individual clients by only making changes to specific versions of the software.
You can provide a custom-tailored version for a key customer and then provide dedicated updates to that version if needed.
—Vazgen Babayan, Senior Product Manager at Adobe
With a SaaS product, on the other hand, the goal is to offer the same version of the product to all customers. This makes it much less complicated to plan and provide software updates. It also helps to create a much scalable product.
We’re not creating one-off versions of software; we’re creating scalable, fast solutions. So as a SaaS PM, you want to build open and flexible products. This way different use cases can leverage the same features, but in various ways.
—Jill Renwick, previously Product Manager at ScribbleLive
#3 – Customer feedback & analytics
With an on-premise software product, you can’t employ product usage analytics and have to rely on interviews to get customer feedback. You also likely need to visit customers in person to observe how they interact with the product. The only data you get without asking customers directly is the number of downloads of the software.
When managing a SaaS product as a product manager, it’s a lot easier to get feedback from customers. You can easily see how they’re using your product through product analytics and even interact with customers from within your app for instant feedback. It’s also possible to use A/B testing to see how customers interact with different features and optimize your product based on your findings.
#4 – Release planning
Making updates to on-premise software takes longer than SaaS because it involves having the customer install updates in-house. For that reason, on-premise products typically follow a waterfall approach to software development with longer release cycles to minimize the number of upgrades the customer needs to make.
New feature releases are based on the waterfall approach which needs much more planning from the PM team and limits their effective added enhancements on the product to once each quarter or two quarters.
—Awni Shamah, Head of Product at Userpilot
The fact the release cycles are longer and the upgrades are done by the customer means you need to be extra careful as a product manager. You need to carefully plan every release to minimize the number of issues the customer might experience because they likely won’t want to perform an upgrade more than twice a year.
When working with a SaaS product, the product manager’s work is more flexible since their control all product updates and deployments. This allows for smaller iterations and more user feedback. You get to test more hypotheses and make incremental changes to your product more frequently.
The biggest difference is development speed and frequency of deploying to customers. Also roadmap flexibility. The roadmap changes more often in SaaS, meaning more communication with stakeholders.
—Ramin Shokrizadeh, Senior Product Manager at Zendesk
How does good Product Management affect the chances of success for your SaaS?
The way you measure success for your SaaS is through the success of your customers.
Here are three elements of good product management.
#1 – Achieving alignment with the customer success team
Both the customer success team and the product management team need to be aligned on the product vision. Although both have an interest in delivering value to the customer, it may not look the same to both of them. So it’s important for the two teams to communicate on a regular basis. And the key is to center discussions around what customers want and are saying.
The customer success team is often on the frontlines and interacts with existing customers frequently. Their feedback must be taken into consideration when building a roadmap and getting ongoing customer feedback on the product.
“Every release must be easy-to-use, provide value for your customers and not frustrate them. When making significant changes to existing functionality, the PM should understand the customer impact so as not to lose any users.”
—Allison Burnett, previously Principal Product Manager at Oracle
#2 – Data-driven growth and product strategy
Good product management is data-driven, both from a quantitative and qualitative perspective. If you want to improve product metrics, you need to first measure the usage of your product.
Once you have the data, you not only can make more informed decisions, but you have more evidence to back up your decisions around the product. Stakeholders generally find it easier to buy into a decision when there’s data-driven evidence that it’s the right way to go.
Bear in mind being data-driven also includes tracking metrics on how you’re performing product management. For example, Sue Raisty, Product Management Consultant and CEO at Sure Product Consulting, recommends tracking the number of meaningful touchpoints a product manager makes with customers per week.
When I help a Head of Product decide which metrics they should monitor, I suggest tracking the number of meaningful customer contacts each PM has per week. It fundamentally changes PM behaviour. Usually they’re not tracking it, so measuring it gets PMs prioritizing listening to customers.
—Sue Raisty, previously Product Management Consultant and CEO at Sure Product Consulting
#3 – Improving understanding of customer behavior
Many product managers think they only need to focus on demographics when creating user personas for their SaaS. But it’s much more effective to pay attention to the psychographics and behavioral patterns of customers.
Psychographics are the personalities, interests, attitudes, opinions, values, and lifestyle choices of your target customers. Understanding what drives customers on a deeper level (e.g. a long-held belief or value) helps you cut through the noise of what customers might want to what they definitely want.
Once you have the psychographics and behavioral patterns down, you can segment your users for research or provide them with the most delightful product experience based on their needs.
Best practices for SaaS Product Managers
With so many different elements involved in SaaS product management, we figured it would be useful to summarize some of the best practices for SaaS product management.
Here are five best practices:
#1 – Gather ideas from different places
The product manager is not the smartest person in the room or the person with the best ideas. Their role is to simply gather, analyze and prioritize the best ideas. And these ideas can come from anywhere, including:
- Customer interviews
- Brainstorming sessions with developers and designers
- Workshops with stakeholders
- Competitive analysis
- Market research
- Customer support tickets
- Industry trends
Your ability to sift through a large number of ideas, identify the best ones and then articulate to the organization why those ideas are worth pursuing will dictate how successful your product will be.
Don’t forget to keep an eye on confirmation bias, the tendency to look for evidence that supports your existing views or hunches. To be truly data-driven, you need to define hypotheses and objectively test them. Instead of proving yourself right, try to prove yourself wrong.
#2 – Think strategically about the direction of your product
Thinking strategically means answering tough questions in the face of incomplete information. No matter how many customer interviews or how much competitive research you do, there will always be an element of the unknown.
Being a good product manager means being able to make decisions around product strategy that maximizes the return on investment. This could mean choosing between:
- Developing a mobile version of your app
- Expanding your app to a new customer segment
- Growing your app internationally
Throw in the fact that you always have limited resources and there’s an endless list of bugs and enhancements to get through, it’s hard to pick a direction. But the key is to make a decision, start gathering data, and pivot when necessary.
#3 – Talk to customers
A frightening number of SaaS product managers don’t interact with their end-users on a weekly basis. Or they do, but it’s only through surveys or chatbots. That just isn’t enough to get to the core of what customers really care about and why they’ll pick your solution over a competitor’s.
You need qualitative feedback. And the best way to get it is through customer interviews. Not only are you able to ask deeper questions but customers are more willing to open up because you’ve taken the time to hear what they have to say.
#4 – Take an interest in technical aspects
You don’t have to know how to code or the details of a technical issue. But you need to be interested in understanding the technical aspects of your product. Not only does it help you make decisions about the direction of your product, but it can do you wonders for connecting with your development team and gaining their trust.
“It’s not necessarily a tool, but staying sharp with technology and having a holistic view of technologies around you. Your goal as a PM is to offer an end-to-end experience.”
—Olexandr Prokhorenko, previously Director of Product Management at Zuora
The best product managers sit through technical discussions with their team and ask questions. Over time, they learn how to pick up on subtle cues from developers about challenges or doubts about the development. This gives the product manager a heads up on what they may have to deal with or whether they need to account for potential delays in development.
#5 – Don’t be a perfectionist
A SaaS product will never be perfect because software is never fully complete. There will always be bugs or features customers think are missing. Or improvements that can be made from a code or application performance perspective. Chasing after perfection is the best way to fail as a product manager.
It’s much better to focus on progress and learning than perfection. Instead of waiting to ship a new product or feature because every edge case hasn’t been accounted for, ship an MVP so you can get feedback and make progress.
And get used to the fact that you will continue iterating the product until the end of its lifecycle.
Now it’s time to take a look at how you can build a great product team for your SaaS.
How to build a great Product Management team for your SaaS?
When it comes to building a killer SaaS product team, there are four core competencies:
- Team development
- Product vision
- Product culture
Let’s dive into each one in detail.
#1 – Team development
A product manager is not the boss of the team but they need to lead a team. This starts with building trust and creating an atmosphere where team members feel empowered to share their ideas and challenges. A feeling of mutual respect.
Here are some things a product manager can do to achieve this:
- Give recognition and praise where it’s due (be specific)
- Be completely transparent about plans and the intent behind actions
- Talk openly about you and your team’s failures
- Identify others on the team with leadership qualities and invest in them
“You’re only as good as what you draw out of your team. The people you work with are experts from their own angle – each of them knows something you don’t. So support them, listen to them and bring out the best in them so they can help you make better product decisions.”
—Janna Bastow, CEO of ProdPad
The key is to lead by example and use the influence that comes with this to develop your team. Over time, your team will align on values and those will dictate the values of the company.
#2 – Product evangelism
The product manager needs to be the biggest evangelist for the product. Because if they don’t believe in the product, who will?
When the product manager is excited about the product vision, the team feels more motivated. There’s nothing worse than working with someone who doesn’t believe in the plan they’ve put together.
Being a product evangelist means looping all team members into productive discussions about the product strategy. To create the very best product, you need your team’s creative ideas and their dedication to solving problems in the best way possible.
#3 – Product culture
Product culture is created as a result of how product teams carry out their work, day in and day out. Here are some things that can drive product culture:
- How product teams measure product success
- Usage of user data by product leaders for a deep understanding of customer demands
- The key metrics the entire company cares about (e.g. customer lifetime value, revenue growth, recurring revenue)
- Whether the SaaS company is sales-driven, executive-driven, engineering-driven, or product-driven.
The history and legacy of SaaS companies can play a big role in product culture too. You can think of product culture as the sum of multiple experiences, influences, and beliefs that are shared among product teams.
Wrapping up – SaaS Product Management
Now that we’ve covered what SaaS product management is in detail, you can see that the job of a SaaS PM is a plethora of so many different skills, responsibilities, and challenges. But hopefully, you can see that you’re not alone — the product management process draws on the skills and ideas of your entire product team.
A word of caution though: because a SaaS PM sits at the center of many moving pieces, it can get tough to find time for independent work (and thinking!) Don’t fall into the trap and make sure to defend your time. One of the most essential qualities of a SaaS product manager is knowing how to set boundaries and protect your mental wellbeing.
A good product manager firefights. They see a fire, they try to put it out. A great product manager surveys, prioritizes and uses leverage to minimize distruction. They let some fires burn while they tackle others.”
—Will Lawrence, Product Manager at Facebook
You can’t lead a team toward product-market fit and build a successful SaaS business if you don’t have enough energy and mental space to do your best work.
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