User Research / Product Innovation
Developing a Successful Second SaaS Product with User Insights
Role: Head of User Research
Designed all research study plans, conducted and analyzed research.
Worked closely with the Design Director, CEO, Head of Data and company partners.
Outcomes
Launch of a new service tier for…
≈57% more than the initial product
3x the profit
20% higher retention
…and better customer reviews!
A business switching audiences
Soundtrack had spent a few years developing its service for major international enterprises, but growth was slower than they had hoped. They shifted from Enterprises to SMBs, but delivered roughly the same product as before. The product became a collection of features made for too many audiences while never perfectly serving any single group.
Designers, developers, management and marketing were all making decisions based on their own, different assumptions about who the customer was. My first objective was to deeply understand the market’s audiences and help them pinpoint the best target.
But I quickly discovered that Soundtrack had a big, related problem: they did not yet have product market fit.
Figuring out who the customer is
The team had switched between Enterprise and SMB targets, and didn’t have a clear picture of the person they were serving. I planned a mixed methods project to figure out who the potential audiences were, which ones had problems we could address, and estimate how close we were to product market fit.
Data indicated high churn early on, while cancellation surveys indicated a major mismatch between what customers expected and what the service provided. I interviewed customers, and tested the live product with non-customers to compare the differences in needs, expectations, and usage patterns between happy customers and non-customers’ early experience. In addition, I ran a survey to gauge product market fit with existing users.
Methods
The “Sean Ellis” Product Market Fit survey
A pricing survey using Van Westendorp and other methodologies
Observation studies with interviews at customers’ and non-users’ business locations
Why haven’t we reached product market fit?
Across all methods, respondents exhibited low loyalty and enthusiasm. Digging deeper, users indicated a few major mismatches between what the product tried to do for them, and the the level of control they actually wanted.
The product was both functioning as and selling itself as something that tried to automate parts of the music experience. But the user wanted to personally control it, not give up control. We were pushing customers into a more automated experience than they wanted.
Secondly, Soundtrack had rebranded from Spotify Business in the hope that new users would eventually stop comparing Soundtrack to Spotify. Research showed that the rebrand didn’t fix this - and new users continued to look for Spotify functionality within Soundtrack’s way of working - eventually finding Soundtrack “disappointing” because it lacked some basic functionality that Spotify offered for a lower price.
Fitting the product to the audience leads to 3x the profit
Members of the Product and Commercial teams pitched a new product idea based on the unmet user needs we consistently heard in research.
The top findings that drove a new product tier:
Customers and non-customers were all more willing to pay higher prices when given more control over music selection
Lack of functionality on par with Spotify and Pandora was a main driver of disappointment and frustration - with the platform and the price
Churn was similarly driven by customers feeling that they get more from Spotify (for a lower price) in music automation because of custom mixes and discovery weekly
As a result, Soundtrack developed a second product that offered more control over curating their own music and custom recommendations. In the first months post-launch, the new product had 20% lower churn, despite the higher price.
The product retains more users and generates more profit per subscription than the original product, though the Essential product is the first entry point for most users.
Soundtrack has been nominated for and awarded various prizes and titles for being one of the most innovative B2B SaaS companies in the world and particularly in the music industry.
Lessons + Constraints
A Lesson in Recruiting
Managers and Owners of small and medium businesses are some of the hardest B2B audiences to reach and recruit. It took significant effort and creativity to recruit enough participants to fill the correct samples for research, but attention to recruiting quality resulted in findings that were impossible to replicate by studying any other substitute audience.
Insights are not always welcome
There was a lot of pushback when I first presented the reasons for the product failing to reach product market fit. Some team members firmly believed that the service should never enable the kind of music control customers wanted, and that we should focus on insights that fit the existing product direction. But the feedback was clear: customers continued to churn, and feedback continued to be painful.
The experience of discovering insights at odds with the vision is not uncommon, but it is part of good research. Innovation stems from acknowledging reality and staying open to hearing truth, not from ignoring the insights that don’t fit our existing beliefs.
I’m passionate about finding the truth about human behavior and needs in any business situation and helping teams fully understand their audiences’ reality so that businesses and their customers can all succeed.