How Do SaaS Product Managers Decide Which Customer Segment to Target for New Product Releases?

How Do SaaS Product Managers Decide Which Customer Segment to Target for New Product Releases?

In the dynamic world of SaaS products, pinpointing the right customer segment is crucial for the success of any new release. We've gathered insights from an Associate Director of Product Management and a CEO, among others, to learn how they tackle this challenge. From identifying customer segment needs to analyzing data and conducting beta-testing, explore the varied strategies these four leaders employed and the outcomes they achieved.

• Identify Customer Segment Needs
• Engage Target Audience in Development
• Consider Lesser-Known Targeting Aspects
• Analyze Data, Conduct Beta-Testing

Identify Customer Segment Needs

The decision of which segment to target is one that essentially kicks off the whole problem decision. This, in essence, is the starting point for problem discovery, solutioning, and everything downstream.

A solution to a problem built for SMB could look very different from one built for Enterprise, or even across two different industries. These things need to be thought of, outside-in.

With some of our latest releases, we started with framing what the problem was, and which segments of our customers faced it the most. That drove a deeper understanding of the problem, and later influenced how we went about solving it as well.

Impact for a well-aligned solution is always seen in the way the market adapts to the solution, which we continue to see a good trend in, in some of our recent launches.

Engage Target Audience in Development

For our latest product release, we decided to focus our efforts on mid-sized healthcare providers. This customer segment kept highlighting major pain points around securely managing and accessing patient data efficiently. We dug deeper—analyzing internal data, customer interviews, you name it. It became clear this was a huge opportunity. There was sizable demand, but not many good solutions tailored specifically for their needs. So we made it a priority to nail the new features and user experience for this segment. We brought in some target customers to an advisory panel, did tons of usability testing iterations. Their real-world insights were invaluable.

When we launched, the go-to-market strategy was completely centered around this mid-market healthcare audience. Everything from marketing campaigns to sales enablement materials to customer support resources. The impact's been fantastic so far. We've landed over 50 new logos in that segment in just six months, a huge boost to our ARR. And customers in that group have been raving about how well we addressed their core challenges. It really validated our hyper-focused approach. The big lesson? Don't just assume you know what customers want. Actually loop them in throughout the whole process. That's what allowed us to deliver a release that crushed it for our target audience.

Consider Lesser-Known Targeting Aspects

When targeting a customer segment as a SaaS Product leader, there are several finer points and lesser-known aspects to consider. To simplify things, I have listed these below:

Competitive Analysis: Conduct competitive analysis not only to understand how competitors are serving different customer segments but also to uncover underserved or overlooked segments within the market.

Behavioral Segmentation: Analyze how different customer segments interact with our product; thereby, identifying patterns in usage, feature adoption, and engagement.

Leveraging Early Adopters: Helps with identifying needs, pain points, and motivations. Their feedback and insights can help us to align with market-evolving demands.

Micro-segmentation: Micro-segmentation techniques identify niche groups with highly specific needs. This helps to tailor our messaging and product features to resonate deeply with these subsets of customers, driving stronger conversion rates and customer satisfaction.

Apart from the above, establishing feedback loops ensures an iterative approach for being responsive to evolving customer needs; and localized customization caters to the unique preferences and requirements of different geographic regions within the targeted segment.

Analyze Data, Conduct Beta-Testing

With our latest product release targeted at logistics companies, we conducted a thorough data analysis process to track usage patterns, client engagement levels, and their willingness to pay. The results from that data analysis were positive and allowed us to embark on the next stage of beta-testing the product. The beta-testing aimed to collect feedback on usability, features that target clients needed, and our value proposition to them. The impact of these two processes was an increase in logistics service provider clients by 10%.