Would it shock you if we told you that most companies have no idea what their customers want?
SaaS customer research is among the most neglected opportunities for marketers.
Mind you, we’re not implying that companies don’t try to understand their audiences or their preferences.
While most companies understand the importance of knowing their customers, few have a truly rounded customer research process. They solely focus on a single technique, such as surveys and interviews, to gather insights about their customers.
The result? A massive missed opportunity. No wonder their marketing and sales output lacks the punch that using customer insights can bring.
SaaS companies should focus on building a framework for understanding their customers that goes beyond simple interviewing and includes a qualitative research process. T
That’s where we can help! Today’s blog will discuss SaaS customer research, including a step-by-step guide to conducting research and using the findings to improve your marketing. Let’s begin.
What is customer research (and why does it matter?)
Customer research, also called target market research, is the process of identifying your current or prospective customers’ needs, preferences, motivations, and behaviors.
The aim is to gather valuable customer information so businesses can serve them better.
Customer research involves data and insights into:
- What, when, and how often customers want to purchase (quantitative data)
- The reason behind their decisions or choices (qualitative insights)
Companies use all gathered customer insights to improve their products/services, refine their marketing strategies, and more.
Why does customer research matter?
Let’s start with a simple statistic. 46% of consumers ended their relationship with a brand due to recurrent notifications of irrelevant content.
Not knowing enough about your customers will cost you time and money. It will lead to unnecessary conjectures, which may ultimately annoy your customers.
Customer research is essential for several reasons:
- It helps you learn about your target audience’s demographics, pain points, and interests.
- It lets you understand your customers’ behavior, including what they do online and what kinds of activities they engage in.
- It helps you Identify consumer trends and quickly adapt to shifting marketing scenarios.
- It enhances your customer experience by offering greater personalization.
- It helps you create relevant content and marketing collateral that directly speaks to your customers.
- It lets you create more qualified leads and improve conversion rates.
A step-by-step guide to conducting customer research
Conducting customer research isn’t always straightforward. It is a sequential process that must be well-organized, connected by the right approach, and reinforced by necessary tools and techniques. Without these, you might just land yourself in research chaos.
Here, we will take you through every step in detail, making conducting customer research easier.
1. Define your ideal customer
This is the first step in SaaS customer research. Before anything else, you need to have a fair idea of your ideal customers. This starts with outlining an Ideal Customer Profile, or ICP.
ICP is a comprehensive description of your ideal customer. Such a profile outlines your customer’s:
- Demographics
- Characteristics
- Preferences
- Behaviors
- Pain Points
Let’s take an example:
Hailey is a SaaS founder. She was searching for various SaaS online business ideas, and decided to build a brilliant project management tool. Now she wants to define her ideal customer profile. This is what her ICP might look like:
SMBs with 80 – 100 employees. These businesses are mainly in the IT services and digital marketing firms. They seek ways to improve collaboration, coordinate projects, and track tasks more effectively. Their main presence is in North America and the UK. They allocate a monthly budget ranging from $100 to $250 per user.
Why should you create ICPs?
In today’s competitive world, knowing your ideal customers is crucial. With a well-defined ICP, you can:
- Focus on the correct and most beneficial customer segments.
- Customize your product’s features and functionalities to align with the specific needs of your prospective customers.
- Experience a unique competitive advantage.
- Formulate personalized marketing strategies that connect with your target demographic.
- Offer better customer support and reduce churn.
Building an effective ICP
Follow these steps to create an effective ICP for your SaaS product:
Step 1: Conduct market research
Perform initial market research to determine your specific target market. These individuals have a shared issue or problem that your product addresses.
For example, if your product is a project management tool, your target market might include project managers, entrepreneurs, independent contractors, and small companies, all facing challenges with organizing tasks and collaborating with teams.
Step 2: Segment your target audience
Next, break down your target audience into narrower segments and prioritize them based on their roles, needs, and objectives.
For project management software, your segments can be like:
- Creators: Freelancers, project managers, design teams, marketing agencies
- Businesses: Small and medium-sized businesses, tech start-ups, professional service firms
- Non-profits: Charities, NGOs
Prioritize segments like creators and small businesses if they align more closely with your growth and revenue goals.
Step 3: Create customer personas
Create detailed customer personas representing each segment to guide your product development and marketing efforts. These personas should include the customer’s demographics, interests, behaviors, pain points, etc.
Give each persona a name and backstory to humanize them. For instance:
“Creators” segment – Sophie, A Marketing Manager
Background:
- Age: 28 years old
- Role: Marketing Manager at a creative agency
- Industry: Advertising and Marketing
- Experience: 6 years in marketing, leading a team of content creators and designers
Psychographics:
- Interests: Digital marketing, content creation, social media trends
- Values: Creativity, efficiency, innovation
- Attitudes: Open to new tools that improve team collaboration
- Lifestyle: Thrives in a fast-paced environment, prioritizes work-life balance, stays industry-savvy
Pain Points:
- Collaboration: Difficulty coordinating tasks across multiple campaigns
- Time Management: Struggles to meet deadlines without sacrificing quality
Needs:
A project management tool that helps track progress, allocate resources, and ensure deadlines are met.
Similarly, you can create personas for other segments as well.
Step 4: Create and refine your Ideal Customer Profile (ICP)
Once you have created customer personas, focus on one persona at a time to create an Ideal Customer Profile centered around it.
Talk to your existing customers who fit each persona to determine:
- Their company role
- Firmographics: Company size, industry, revenue, location
- Technographics: Tools or software they currently use
- Specific pain points
This will help to create your ICP.
Use feedback from sales and marketing teams to verify alignment with real-world customer interactions. Monitor product usage and customer satisfaction to assess the effectiveness of your ICP.
Make sure to update your ICP based on market trends and evolving customer needs. This will ensure your targeting remains relevant and effective, driving better alignment between your product and customer needs.
2. Different ways to do customer research
There are many different ways of doing customer research. Let’s look at the most effective ones.
1. Talking to your users
Interviews
Interviews are an excellent way to conduct customer research. The most fascinating thing about interviews is that companies typically begin the process already knowing about the product and its customers.
Yet, most times, customers come up with unfiltered answers and ideas, offering a whole new perspective on the product. Such discussions often reveal deeper insights.
Surveys
Surveys are often considered a less intrusive way of talking to customers. When done correctly, surveys can help to gather tons of insightful data on the product and its customers.
Surveys can be distributed to a larger pool of participants, unlike individual interviews.
Consider using an online survey tool to quickly gather vital customer data.
Review mining
Going through the reviews of your company and its offerings is another great way to get into your customers’ heads, especially for SaaS companies.
Numerous online review platforms exist where customers provide valuable feedback about businesses. If you own a software company specializing in project management software, you should explore websites such as G2 and Capterra.
Alternatively, if you operate an eCommerce business such as best selling print-on-demand products, you can examine platforms such as Etsy and Amazon for feedback from customers. Platforms like Reddit, Quora, BuzzSumo, Product Hunt, etc. are excellent for niche communities and forums as well.
Analyzing reviews on such platforms can help you understand your customer’s friction points and refine your product to meet their expectations.
Usability testing
Usability testing is performed to evaluate how customers use your product. It helps to gather vital data and feedback regarding user experience.
The main objective of usability testing is to evaluate the product’s ease of use and identify any problems that require attention.
2. Analyzing data
Once you have started talking to your users, it’s time to analyze their data. Use analytical tools to track how customers interact with your SaaS product.
Many times, customers don’t know what they want. They may think they need a product but that might not always be true.
Therefore, it is important to track customer behavior. Track important indicators such as user engagement, feature utilization, churn rate, and more. Analyzing this data allows you to determine the areas where users are disengaging, uncover the most popular features, and grasp how often customers return to your product.
3. Looking at competitors
“Analyzing competitors is essential for SaaS companies because it provides valuable information on market trends, customer expectations, and any deficiencies in your product offerings. By understanding your competitors’ actions, you can improve the positioning of your product to cater to your target audience.”
— Vineet Gupta, Founder of 2XSAS
Competitor analysis is another strategic form of B2B customer research where you analyze your competitors.
Compare product features, pricing, and user experience to understand where your product excels and where it might fall short. This comparison helps you to identify your USPs and pinpoint areas that require improvement.
Additionally, look for gaps in the market that your competitors may not be addressing. For instance, this feature could be lacking in other products or any underserved customer segment.
This will further reinforce your brand positioning and create newer opportunities for growth and differentiation in the market.
3. Analyzing and organizing what you find
Arrange your data logically and systematically.
After collecting all customer information, it is essential to arrange it efficiently.
It is a good idea to categorize the data into appropriate groups, such as customer demographics, feature usage, customer feedback, or product performance metrics.
For example, when assessing customer input, you can separate it into various categories, such as problems with onboarding, suggestions for new features, difficulties with product usability, or issues with the app crashing.
Utilize Google spreadsheets for data organization or use visualization tools like Tableau to create visually appealing charts and graphs to showcase important discoveries.
Look for patterns and trends
After sorting all data, search for significant patterns that show customer behaviors and preferences. For example, you may observe customers in a certain sector show greater interest in your product and have a higher chance of renewing their subscriptions.
Alternatively, you might observe a trend where a specific product functionality is not being used to its full potential.
Recognizing these patterns can enhance comprehension of customer actions and help to make better choices regarding product creation and marketing tactics.
Use tools to help with the analysis
You can use various analytical tools to streamline data analysis. For instance, Google Analytics provides insights into how different segments of customers interact with your website.
Kissmetrics is a widely used customer behavior analytics platform that offers detailed insights into user experience with a particular product. You can use it to assess a customer’s complete journey and identify drop-off points on the product.
Mixpanel is another efficient tool that can track user actions within your product. It also identifies which features the customers are interacting with the most.
Image: Source
These tools simplify your analysis and generate valuable insights to guide your marketing and product strategies.
4. Using your findings
Now it’s time to put your findings into action. Use the gathered insights to:
- Take charge of product development: This could entail implementing new features, improving existing ones, or adjusting the interface according to customer feedback.
- Improve user satisfaction: Identify and solve customers’ issues to ensure the product is user-friendly and easy to navigate.
- Adapt your marketing tactics: Utilize insights to customize your marketing communications, pinpoint the appropriate customer groups, and select the most efficient marketing platforms.
- Develop strategies for customer retention: This could involve implementing specialized reward programs or improved customer service to increase customer loyalty and retention.
Using derived customer Insights to improve marketing
If you consistently keep working on SaaS customer research, there will be a point when you have accumulated a formidable amount of information about your customers.
And this will give you a massive competitive advantage!
That said, implementing these insights to improve your marketing is equally important. What is the point of having all this information if it’s not put to any use, isn’t it?
There are three ways you can use customer insights to enhance your SaaS marketing.
1. Personalize your marketing
Understanding customer preferences helps customize marketing messages for specific audiences.
Data demonstrates that 84% of consumers show greater interest in businesses that provide personalized experiences.
For example, if your data shows that most of your clients are technology startups, you can utilize this data to enhance your communication and showcase your product’s unique advantages to new companies.
Similarly, let’s say your data shows that most customers drop off at your pricing page. Now, you can start an email campaign to send tailored pricing plans to customers that better suit their needs.
2. Create content that resonates with your customers
Once you learn about your customers, you can create content that engages them and drives more conversions.
For example, say your data reveals that customers mostly search for comprehensive how-to guides on using your SaaS product. You can create blog posts, video tutorials, or webinars on the same. This will help to boost traffic and keep your customers engaged.
3. Optimize your marketing channels
Another brilliant way to use your B2B SaaS customer research is to identify the most appropriate marketing channels.
Your research can tell you the marketing platforms your customers frequent and prefer. For instance, if your customers are most active on LinkedIn, you can increase your ad spend on LinkedIn while focusing less on less effective channels like Twitter.
Start your SaaS customer research today!
Businesses that understand their customers well enjoy a strategic competitive advantage. Adequate customer research can make business goals clearer and more achievable.
