saas company stages of growth

4 SaaS growth stages to achieve T2D3 growth

Adriana Rubio
Jun 7, 2021

For B2B SaaS start-ups, what you do in your early days of marketing and sales can set you up for long-term success (or send you back to the drawing board). 

As you begin your GTM strategy and marketing mix, startups face two different challenges. You’re often in an underdeveloped or new market, or you’re in a well-established market with heavily funded competitors. 

Understanding MVP and PMF for B2B SaaS Startups 

Regardless of market definition, you must bring your minimum viable product (MVP) to market and achieve product-market fit (PMF). 

Before we get any further, let’s break down these two acronyms:

MVP: Minimum Viable Product

A minimum viable product is the most basic version of your SaaS product that you are able to put in front of your core customers. It may not look pretty, but customers should find it useful enough to use it on a consistent basis in order for you to gather data and receive feedback. 

Pro tip: An easy way to determine whether your MVP is actually viable is by simply asking those customers: “Would you pay for this product?”  If they say yes, then you now have a viable MVP. 

PMF: Product-Market Fit 

Defining Product/Market Fit is simple to identify: you have customers who pay and stay. Companies that achieve PMF likely have around 5 to 10 customers, which typically equals out to $1M in ARR. See the shortest definition of PMF here.

saas-growth-stages

To best understand which stage your product falls under, it’s important to learn about three things: 

  1. What happens before reaching MVP
  2. What happens in between MVP and PMF
  3. What happens after PMF

Four stages of SaaS growth

Here’s a high-level overview of what this process typically looks like for SaaS start-ups. 

  1. Prototype Stage. You know now the pain you’re addressing and can start putting together a product that addresses that pain. Begin with the preliminary model, usually, high-fidelity wireframes, of the product you’re planning to build that will best fit your ideal customer profile (ICP) and their needs. If you have trusted customers or prospects that fall under your ICP, gather their inputs at this stage of the process. If you can do that, you’ll be smooth sailing in the next few stages of SaaS growth.   
  2. MVP Stage. It’s now time to test your hypothesis with a bigger customer group. You build the most basic version of your product you feel is ready for your core customers to use and provide you feedback on. In this stage, customers are paying with their time, not money. Also note that it’s important you don’t spend too much time creating your first MVP because it’ll likely be based on assumptions. There’s no sense in building out a sophisticated MVP that might be quickly shut down or invalidated by your customers. Keep in mind, it may take several iterations of your product for your MVP to actually become viable.  
  3. MMP (Minimum Marketable Product) Stage. Based on the customer feedback you've received on your MVP, you’ve now iterated a version of your product that customers find valuable and will pay for. This means you’ve confirmed your SaaS MVP is viable and it’s now ready to be marketed to the masses--thus becoming an MMP. In this stage, your sales team, i.e. you, should start reaching out to their network for leads. Here, marketing should start foundation setting such as creating content, building out your website & landing pages, creating your brand identity, etc. Your goal should be to get your first customers at this stage.
  4. PMF (Product Market Fit) Stage. Once you’ve gotten your first 5 - 10 paying customers, you’ll need to make sure they stay (your customer success strategy needs to be on point here). These customers will become your advocates, so ensure they receive the best possible customer experience through onboarding, education and support. These customers will kick-start your referral loop and strengthen your marketing initiatives with quotes and testimonials that add credibility to your brand. During this stage, you should focus on reaching these 10 PMF milestones.  

Once you’ve reached PMF, take a breather and pat yourself on your back. That is no easy feat, and you deserve to celebrate. However, make sure you come back with a renewed sense of vigor because you’re now ready to scale

Scaling your SaaS offerings

Going from MVP to PMF and PMF to T2D3 growth are two of the biggest challenges B2B SaaS companies face and oftentimes fail to achieve. This tends to happen because they either rush through the process and move onto the next step before they’re ready or they end up focusing on the wrong KPIs to signal success like the number of leads instead of feedback from leads. 

That’s why understanding this entire process and where you currently stand in the process is extremely important as a leader. It will help you set realistic goals for your team and ensure they are spending their time on the right priorities. 

Becoming a unicorn doesn’t happen overnight contrary to what it may seem like on the outside. It usually requires dedication, commitment, and it doesn’t hurt to have a team of professionals who have experience working with B2B SaaS startups

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