SaaS Product Development Strategy and Business Plan

PESTLEanalysis Team
PESTLEanalysis Team
SaaS Product Development Strategy and Business Plan
Photo by Alena Darmel
Table of Contents
Table of Contents

Implementing a SaaS product-led approach to growth can be daunting. This becomes easier only with the right strategy and a professional business plan.

SaaS product development providers are working hard to develop authoritative solutions for businesses looking to enter the SaaS market in order to keep up with these market trends. Moreover, cloud services have proven increasingly beneficial during the pandemic as they have enabled business continuity when many operations had to stop. SaaS developers can create a comprehensive SaaS development stack with the right hosting technology, database engine, and programming frameworks that foster innovation and scalability for success in the long run. However, all this becomes possible only with the right strategy and a professional business plan. This includes some key aspects that you need to pay attention to.

Steps to Building a SaaS Product Development Strategy and Business Plan

To make product strategies a success, SaaS companies should set a meaningful vision and North Star. By this, they can assess know what goal they are aiming for and work towards it in an organized manner. To ensure that the desired outcome is achieved, they can apply behavioral science to their decision-making process by analyzing customer interactions, feedback, and insights. To ensure accountability for the plan's successes or failures, SaaS companies need to measure results-oriented metrics based on customer behavior.

#1: Set the Right Goal

A successful Saas product strategy starts with a clear vision, which is the measurable world that we want to create. It's not enough to just create a vision; having an understanding of the North Star Metric is key in order to measure the value your customers receive from your SaaS service. A clear vision can suggest which tactics are going to drive desired outcomes and help create valuable customer experiences.

Your North Star should be specific, measurable, and supportive of overall company goals so it can be used to motivate team action and work towards measurable progress. It’s important that your North Star reflects what success looks like on an individual level as well — you can use it as a motivational tool to keep employees focused on the bigger picture.

Based on what you should choose your project goal:

  • Measure customer value. One of the most important things you can do to measure customer value is to align your product with its vision. Identify what it takes for a user to achieve the target level of service interaction and use that as a metric for gauging success.
  • Leading revenue forecast. You should not put income as a guiding star, because this indicator is very far behind. It is worth estimating revenue based on the key user action that ultimately leads to revenue.
  • Looking at revenue can be useful, but it is a lagging indicator, so consider using a product outcome that will eventually lead to revenue instead.

Selecting appropriate input metrics is vital to get the most out of your North Star. Input metrics are critical indicators of your current performance and typically lead to the ultimate outcome, influencing your final score and winning strategy — each quantifying success one benchmark at a time.

#2: Creating a Strategy

Setting a strategy to reach the North Star is an important step.

Measuring input metrics, such as breadth, depth, frequency, and efficiency will help you understand if you are on the right path.

What are we talking about:

  • Latitude - the number of returning and regularly active users.
  • Depth - how deeply users interact with your product.
  • Frequency - how often the user uses the service.
  • Efficiency - the speed at which a user achieves a goal.

Having more active/returning users taking action is important for breadth, while depths look at their engagement levels. Frequency measures how often each user takes this action. Lastly, understanding how efficiently a user is allows you to determine if the strategy effectively achieves the desired goal. By breaking down your North Star into these four metrics and analyzing them together, you can get a clear picture of how far along you are and make informed decisions to achieve product vision.

Product strategy examples:

  • Spotify. The breadth for them is active listeners as well as premium subscribers and free users. Depth - how much time users spend in one session. Frequency - the number of sessions per week. All activities of the company revolve around these parameters.
  • Netflix. For them, breadth is the number of subscribers, depth is the duration of viewing, and frequency is the regularity of viewing. The subscription price increase in 2022 resulted in a churn of 200,000 users and a projected decrease in the number of active users by another 2 million in 3 months. The competition should be noted here, but nevertheless, this decision turned out to be repulsive for users. That is, a price reduction could lead to an increase in the number of users.
Photo by Austin Distel

#3: Measuring Results

Companies who are looking to grow product-led must do so with results in mind. Directly measuring success through an objective measure is key - and that's why Objectives and Key Results (OKRs) can be incredibly helpful for a SaaS. However, it is important to approach implementing OKRs with the right mindset - objectives should be the driving factor first, with key results helping to measure whether or not you're on the right path. When working to facilitate product-led growth, this is an essential piece of information that must never be forgotten.

When it comes to evaluating product experiments and measuring OKRs, not all companies should subscribe to a once-a-quarter approach. While it's undoubtedly convenient, it doesn't always make sense for the type of work every company is trying to do when it comes to innovation. In practice this means that many teams have just a month or so before the start of the next quarter – weekdays only – to come up with experiments, measure their results, and analyze the data. This can lead to rushed projects and missed OKRs, a cycle that can get tiring and frustrating quickly. The solution? Take a step back from this quarterly pattern and view product experimentation in terms of longer-term goals.


Implementing a product-led approach to growth can be daunting. However, by breaking down each goal into smaller objectives, creating an effective strategy, and measuring the results properly, you can maximize your chances of success. By leveraging metrics such as breadth, depth, frequency, and efficiency in your product experiments, it is possible to achieve measurable progress toward the goal. A product strategy also includes a business plan, as these are interrelated documents that cannot exist without each other.

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