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SaaS Product Market Fit is the Foundation for Breakout Growth.

Author

Chintankumar Maisuria
September 30, 2024

In partnership with

Read time: 4 minutes.

Welcome to the 66th edition of The Growth Elements Newsletter. Every Monday, I write an essay on growth metrics & experiments and business case studies.

Today’s piece is for 5,100+ founders, operators, and leaders from businesses such as Shopify, Google, Sage, Hubspot, Zoho, RateGain, Zaggle, Servcorp, and Apollo.

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PMF is the foundation for breakout growth.

Product market fit occurs when you’ve built a product that people want, proven by metrics like NPS ≥ 50 and a churn rate of ≤ 5%.

[1] 𝐃𝐫𝐢𝐯𝐢𝐧𝐠 𝐁𝐫𝐞𝐚𝐤𝐨𝐮𝐭 𝐆𝐫𝐨𝐰𝐭𝐡 𝐰𝐢𝐭𝐡 𝐏𝐌𝐅

  • PMF = alignment between product and market needs

  • Once PMF is achieved, you can expand your market share

  • Scale acquisition channels

  • Businesses with strong PMF often grow revenue 10x faster

  • 20% Mom growth becomes achievable

[2] 𝐈𝐦𝐩𝐫𝐨𝐯𝐞 𝐔𝐧𝐢𝐭 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜𝐬

  • Helps lower CAC by 50%

  • Helps improve LTV by 3x

[3] 𝐌𝐞𝐚𝐬𝐮𝐫𝐞 𝐏𝐌𝐅 𝐰𝐢𝐭𝐡 𝐍𝐞𝐭 𝐏𝐫𝐨𝐦𝐨𝐭𝐞𝐫 𝐒𝐜𝐨𝐫𝐞 

  • NPS (target ≥ 50)

  • Retention (churn ≤ 5%)

[4] 𝐈𝐦𝐩𝐫𝐨𝐯𝐢𝐧𝐠 𝐀𝐜𝐭𝐢𝐯𝐚𝐭𝐢𝐨𝐧 𝐑𝐚𝐭𝐞𝐬

  • Identify key actions within the product

  • Users who complete key actions in week 1 are 4x more likely to stay.

  • Find those actions using funnel analysis

[5] 𝐎𝐧𝐛𝐨𝐚𝐫𝐝𝐢𝐧𝐠 𝐎𝐩𝐭𝐢𝐦𝐢𝐳𝐚𝐭𝐢𝐨𝐧

  • A/B PLG onboarding flows to increase activation rates by 15-25%

  • Measure activation success with DAU/MAU ratio (target ≥ 20%)

[6] 𝐆𝐫𝐨𝐰𝐭𝐡 𝐄𝐯𝐨𝐥𝐮𝐭𝐢𝐨𝐧 𝐎𝐯𝐞𝐫 𝐚 𝐃𝐞𝐜𝐚𝐝𝐞

  • Growth has shifted from pure acquisition to retention and engagement.

  • Businesses focusing on retention improve profitability by 25-95%

[7] 𝐃𝐚𝐭𝐚-𝐃𝐫𝐢𝐯𝐞𝐧 𝐆𝐫𝐨𝐰𝐭𝐡

  • Use cohort analysis tools like Mixpanel or GA4 to improve conversion rates by 30-40%.

[8] 𝐕𝐢𝐫𝐚𝐥 𝐋𝐨𝐨𝐩𝐬

  • Products with a viral coefficient >1 grow exponentially.

[9] 𝐀𝐝𝐚𝐩𝐭𝐢𝐧𝐠 𝐭𝐨 𝐌𝐨𝐝𝐞𝐫𝐧 𝐆𝐫𝐨𝐰𝐭𝐡

  • Leverage AI & automation (50% of AI adopters see faster growth).

[10] 𝐏𝐫𝐢𝐨𝐫𝐢𝐭𝐢𝐳𝐞 𝐜𝐨𝐦𝐦𝐮𝐧𝐢𝐭𝐲-𝐥𝐞𝐝 𝐠𝐫𝐨𝐰𝐭𝐡

  • Businesses with strong communities retain 70% better.

[11] 𝐈𝐭𝐞𝐫𝐚𝐭𝐢𝐯𝐞 𝐞𝐱𝐩𝐞𝐫𝐢𝐦𝐞𝐧𝐭𝐚𝐭𝐢𝐨𝐧

  • Conduct rapid experiments using LTV/CAC ratio to ensure sustainability (aim for LTV ≥ 3x CAC)

That's it for today's article! I hope you found this essay insightful.

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Wishing you a productive week ahead!

I always appreciate you reading.

Thanks,
Chintankumar Maisuria

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