Episode 711 | Finding Early Customers, Horizontal vs. Vertical, Prosumer SaaS, and More Listener Questions (with Ruben Gamez)
Apr 30, 2024
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Ruben Gamez, an expert in prosumer SaaS and customer segmentation strategies, joins to tackle listener queries. They uncover tactics for attracting early customers without an initial audience and compare the nuances of horizontal versus vertical product strategies. The duo dives into the pros and cons of no-code development, emphasizing immediate gains versus long-term scalability. Gamez also shares insights on catering to both prosumer and enterprise clients, highlighting the importance of versatile pricing and understanding customer needs.
Finding early customers requires thorough community research to uncover pain points and engaging outreach framed as research instead of direct sales.
Choosing between vertical and horizontal market strategies involves balancing niche advantages against broader reach and potential competition challenges.
The prosumer market demands dual funnels for effective monetization and customer retention, effectively catering to both individual and enterprise needs.
Deep dives
Engaging Early Users Without an Audience
Building a SaaS product without an existing audience poses initial challenges, but effective strategies can help founders connect with potential early users. Rather than relying solely on social media, founders should conduct thorough research within relevant communities, such as subreddits or Facebook groups, to listen and observe discussions about pain points before approaching users with specific questions. Establishing connections through platforms like LinkedIn or Twitter can be beneficial, especially if founders frame their outreach as research rather than direct sales. By engaging with individuals who already possess industry knowledge, including former founders, founders can gain invaluable insights into the market, thereby informing their marketing strategies.
Navigating No-Code Platforms and Scalability
While no-code platforms like Bubble offer powerful capabilities for rapid prototyping, concerns about scalability and code exportability can impact long-term strategy. Founders should focus on developing a minimum viable product (MVP) with no-code tools without becoming overly concerned about future scaling issues. If a product gains traction, a complete rewrite in code is often necessary irrespective of the initial platform used. Instead of fixating on exportability, it's essential to prioritize understanding the market fit and validating the product's demand to ensure sustainable growth.
Choosing Between Vertical and Horizontal SaaS Strategies
When developing a SaaS product based on existing client work, founders face the critical decision of pursuing either a vertical niche or a horizontal market approach. Vertical strategies often provide the advantage of being able to charge higher prices due to lower competition and the specific needs addressed, making them appealing for a sustainable revenue model. However, a horizontal strategy offers the potential for broader market reach and a self-serve model, though it risks intensifying competition. Ultimately, each approach presents unique challenges, and founders must choose one based on their existing expertise, market understanding, and personal preference for sales dynamics.
Understanding the Prosumer Market
The prosumer market straddles the line between consumer and business, presenting distinct challenges in monetization and customer retention. Products targeted at prosumers often require a wide funnel due to their high price sensitivity and churn rates, as they frequently represent individuals engaging in activities for fun or secondary income. Founders interested in this space must consider dual funnels to capture both prosumer and enterprise customers, leveraging content marketing to drive lower-cost user acquisition. However, it is essential to differentiate offerings in a way that can balance the needs of both segments, ensuring sustainable growth and profitability.
Leveraging B2B Strategies for SaaS Success
While B2C strategies can generate interest among individual users, many successful SaaS businesses find higher growth and revenue potential by focusing on B2B approaches. Targeting businesses often allows for larger contract values and better retention due to the exclusive nature of enterprise needs. Founders should also recognize the importance of maintaining a strong association between product quality and pricing to avoid customer churn. By carefully crafting their product offerings and marketing strategies, SaaS businesses can effectively bridge the gap between prosumer-level engagement and higher-tier enterprise sales.
In episode 711, join Rob Walling and Ruben Gamez as they answer listener questions. They chat about finding early customers without an audience, how to approach horizontal vs. vertical product spinoffs, and some considerations for No Code development. They also discuss the challenges of serving prosumer SaaS, the importance of understanding customer segments for pricing strategies, and the dual funnel approach for catering to different customer tiers.
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Topics we cover:
2:00 – Strategies for finding your first users when you don’t have an audience
10:42 – Positioning yourself to compete well against others
12:25 – Jumping into SEO before having a product
18:42 – Exporting No Code projects
24:15 – Choosing between a vertical or horizontal product spinoff
33:55 – Building a B2P, “business to prosumer” product
42:53 – How to make lower pricing tiers work outside of B2B
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
