SaaS Product Management Inside Out

With the SaaS market expected to be worth $195 billion US dollars in 2023, the demand for product managers is only set to grow. But why are product managers so instrumental to SaaS companies? How do they contribute to product success, and what does it take to excel in the product management space? 

What Is SaaS Product Management?

Software as a service (SaaS) product management is the end-to-end process of planning, developing, and scaling software products that are delivered to customers as a service over the internet rather than as a one-time purchase.

SaaS product managers work closely with engineering, design, marketing, and analytics teams to guide a product through its entire lifecycle. However, unlike project managers, they aren't responsible for coordinating day-to-day product development activities. Instead, they will focus on shaping the product vision, designing a strategic plan, communicating the value proposition, and monitoring product health.

SaaS vs. Non-SaaS Product Management

There are some key differences between the workloads and approaches of SaaS product managers and traditional software or hardware product managers. First, the latter typically have to grapple with wider development scope. However, if we compare a product like Fitbit to Strava, it's fair to say that Fitbit PDMs have a bit more on their plates; they must deliver a sleek and highly-functional physical product to users as a full-featured fitness app.

Secondly, SaaS product managers are more likely to leverage agile methodologies (e.g., the Lean Startup model or Scrum) since continuous delivery is standard practice in this domain. SaaS software is typically updated as soon as there is a change. Meanwhile, updates to classic software are less regular. Changes are usually bundled into a major or minor version update.

It's also tricky and time-consuming to iterate on a hardware product. Updates take much longer to be rolled out as there are more moving parts to consider; certain malfunctions can't be fixed with a software patch.

Now, let's dive into the skills that SaaS product managers need to succeed in this career.

Key Skills for SaaS Product Managers

Leadership

Product managers are natural leaders. They trust the expertise of their team/peers, drive positive change within the organization, and inspire others to do their best. At Railsware, we value product managers who lead by example. They should be willing to delegate responsibility, get hands-on when appropriate, and prioritize shared success over personal gain.

T-shaped

It's not enough to be skilled at managing processes and people. Product managers should be proficient in one discipline (data analysis, for instance) yet capable of contributing to activities in other departments. For example, they can create rudimentary product designs in Figma, participate in marketing ideation sessions, navigate AWS payment infrastructure, write spreadsheet formulas to analyze data, or even write basic code. Having a robust set of technical and soft skills – and being a fast learner – are highly desirable traits.

Analytical Thinking

As analytical thinkers, SaaS product managers constantly use data for decision-making. They like to think outside the box and aren't afraid to challenge their own ideas or those of others. They can also analyze a problem from multiple angles, i.e., SaaS PDMs should be able to put themselves in customers' or stakeholders' shoes and spot relationships between seemingly unrelated issues.

Complex Problem-Solving

SaaS product managers use a combination of data, research, team input, and experience to develop innovative solutions. They are good at breaking down problems into smaller pieces and creating a step-by-step plan on how to investigate and solve them. They're also open to adapting their plans in response to new information they encounter along the way.

Decision-Making

SaaS Product managers must be strong decision-makers since, often; the buck stops with them. They must be able to make time-critical decisions even when they only have limited information at hand. Regarding high-level decision-making, product managers shouldn't be afraid to leverage frameworks to dive deeper into the context, invite feedback from stakeholders/knowledge-holders, develop solution variations, and prioritize them.

SaaS Product Manager Responsibilities

Here are some of a SaaS product manager's core responsibilities.

Shaping the Product Vision and Strategy

Product managers are tasked with determining the product vision. They accomplish this by running product discovery sessions, consulting with subject matter experts, utilizing agile startup frameworks (such as Lean Startup or Product-Market Fit), performing competitive analyses, and conducting market and customer research.

Once the vision has been defined, SaaS PDMs are charged with crafting a product strategy that takes it from concept to reality. In addition to building a product roadmap that supports the initial phases of product development, they will also develop a strategic plan for future growth (more on that later). So, it goes without saying that product managers are responsible for aligning all departments to the product vision and communicating it to stakeholders. They will also be tasked with modifying the vision and/or strategy throughout the product lifecycle.

Collaborating With Cross-Functional Teams

Essentially, product managers are the glue that binds cross-functional teams together. On any given week, they will liaise with several members of the engineering, marketing, design, or data analytics departments to share expertise, answer tricky questions, communicate the product strategy, and help investigate or resolve any issues that have cropped up.

For instance, when we are working on a product website redesign, the product manager will coordinate efforts between departments to ensure a cohesive end result. For example, they may collaborate with software engineers to create user stories, with designers to tweak UX flows, and with marketing experts to develop a content strategy.

"Product managers are sort of like spiders at the center of a product ‘web.’ They collect information from all corners of that web — engineering, marketing, design — and use those insights to shape the product vision, design new features, or solve complex problems." —  Sergiy Korolov (Managing Director)

Conducting Customer Research and User Testing

SaaS product managers are responsible for conducting in-depth market research and coordinating user testing. They will gather information on market trends, carry out competitive analyses, and study customer behavior.

Armed with that knowledge, SaaS product managers may run ideation sessions, design user surveys, build buyer personas, or prepare materials for customer development interviews. They will also take the lead in those interviews and ensure that all research/test findings (cust dev or otherwise) are carefully recorded and synthesized.

Identifying and Creating Opportunities

A core aspect of the SaaS product manager role is identifying areas for product improvement and growth. They should keep an eye on industry trends and evaluate which ones are worth implementing (for instance, whether or not it makes sense to integrate AI into the product). Whether it's by running additional product discovery sessions or analyzing the activities of competitors, product managers should constantly seek out new ways to add value to the product and attract new customers.

Now that we've explained the intricacies of the role let's dig deeper into some of SaaS product management's most crucial concepts and processes.

Understanding the Product Lifecycle Stages

The product lifecycle can be defined as a series of consecutive stages that the product moves through, from inception to eventual decline. It's an important concept in product management because the manager role typically evolves in tandem with the product's journey through the cycle.

The traditional lifecycle view has four stages: Introduction, Growth, Maturity, and Decline. However, we've adapted the cycle length based on our own experience in product building. It goes something like this:

1. New Product Development is when the product goes through the conceptual and testing stages: ideation, development, and validation.
2. The introduction is when the product is launched on the market.
3. Growth is when the product establishes its market position and brings profits.
4. Maturity or Stabilization is when the product stabilizes on the market and has the highest sales volumes.
5. The decline is when the product reaches the extent of its growth and begins to fail.
6. Afterlife is what happens after the product dies. There are a few different scenarios – it can immediately die, inspire a new product idea, or simply become a relic.

Here's a visualization of the lifecycle:

What to Remember About the Product Lifecycle

• The lifecycle is simply a guideline and not a guaranteed forecast. There is no predicting when your product will pass through the growth, maturity, and decline stages – for some SaaS companies; it could all happen within a year of product launch; for others, it could take decades. On the other hand, many products die right after their introduction. Therefore, product managers must proceed cautiously when making decisions or forecasts based on the product's position in the cycle.
• The early stages are the most important—namely, New Product Development and Introduction. Of course, when your product is built on a solid foundation, it's more likely to withstand any challenges that come its way. Spend adequate time testing and iterating on your solution; listen to customer feedback and prioritize new features. Rushing to market with an unvalidated product idea could prevent you from ever reaching the growth stage.
• There is no such thing as infinite growth. Every product will reach the limits of success at some point and enter a period of decline. However, this is where product managers can work their magic. They are responsible for creating a new value proposition and finding innovative ways to pivot.
• Countless external factors can affect the product lifecycle. Be it new scientific discoveries, natural disasters, economic instability, or political unrest – there are numerous external factors that can disrupt a smooth lifecycle. Sure, these things are out of a product manager's control. But you still need to be aware of the unwanted impact they can have on your SaaS company in general.

Leadership in Product Management

In product management, there's more to being a leader than simply defining tasks, delegating them, and overseeing their execution. In our view, it's all about finding the balance between authority, responsibility, and accountability. So, what do we mean by that?

Let's start with a brief explanation of each term:

• Authority is about making decisions, telling people what has to be done, and clearly defining the task that is assigned.
• Responsibility refers to the obligation to perform assigned tasks.
• Accountability is accepting responsibility (in relation to job completion) and taking personal answerability for results.

An imbalance between these three interrelated components can lead to serious communication problems and team mistrust. For instance, if a product manager has a lot of authority but little accountability, then they probably micromanage and don't have the respect of their teammates. If a PDM has lots of responsibility but rarely exerts authority, then they probably struggle to delegate tasks and prioritize their own workload.

To help strike this balance, we take a couple of different approaches: horizontal processes (holacracy) and an adapted RASCI model (RatSClur).

In a nutshell, holacracy is a type of flat organization where teams self-organize instead of relying on orders from managers. Authority and decision-making power are distributed amongst the team, and no fixed roles exist. At Railsware, roles are taken rather than assigned.

Meanwhile, RatSClur is a framework for defining those roles. It helps us keep track of who's responsible for what across various projects. Here's a breakdown of what the roles mean and where product managers fit in:

Now, here's how authority, responsibility, and accountability tie in with each role:

Both RAtSCIur and Holacracy create systems that distribute authority and empower team members to make decisions for themselves. Thus, product managers aren't shouldered with all the responsibility for the execution of a project.

A key takeaway here is that good leadership is also tied to healthy communication. So when it comes to cooperating with developers, designers, marketers, knowledge holders, and internal stakeholders, we've got a few tips:

• Set up a clear goal. Meetings without a goal are bound to be unproductive. Before any call, ask yourself: what is your main message? Set aside time for small talk, but quickly get to the point – and stick to it.
• Have a plan. Always come to meetings prepared. Do your homework, gather the materials you will need in advance, and clearly communicate what you need from your colleague.
• Remember the audience. Speak the language of your audience. You will need to present the information differently depending on who you are meeting with (marketers, designers, finance experts, etc.) For instance, finance experts might want to know the costs.
• Doze the information. Don't overload your colleague with tons of unnecessary information. It's totally fine to vent (in moderation). But if you're unhappy with something, provide others with the information they need to help you.
• Respect others' time. Don't waste your coworkers' time by scheduling unnecessary or overlong meetings. Always check whether a face-to-face meeting is really needed; oftentimes, a Slack message will do. At the end of the day, small choices like these can save everyone a lot of time.

Decision-Making in SaaS Product Management

As we mentioned, SaaS product managers are the primary (but not exclusive) decision-makers within the cross-functional product team.

They make day-to-day decisions through a combination of data analysis, research of potential solutions, and knowledge of the product and industry best practices. Sometimes, there is no 'right' decision. For instance, when it comes to choosing a new feature to implement, there might not be an obvious candidate in your roadmap. As a PDM, you must make an educated guess based on your knowledge of what's best for the product.

However, major decisions aren't made in a vacuum. Therefore, our product managers leverage decision-making frameworks, such as BRIDGeS (more on that later), to explore the context and brainstorm solutions with other product experts.

Similarly, product strategy decisions are typically made in conjunction with 3-10 c-suite executives and other stakeholders (product directors, marketing leads, senior data analysts, etc.) Again, the frequency of these meetings depends on where we are in the product lifecycle. At the growth stage, once a month. At the maturity stage, once or twice a year.

How to Make Data-Driven Decisions and Track Product Performance

Throughout the product lifecycle, SaaS product managers will use product analytics dashboards to track revenue metrics, catch fluctuations in user behavior, identify bugs or bottlenecks in user flows, and pinpoint areas for improvement. Some examples of dashboards are product funnel, customer service, or cohort analysis report.

Put simply; product dashboards allow SaaS PDMs to track product performance and make data-driven decisions on the fly. To make the most of them, product managers should review the dashboards once or twice a week. Our PDMs typically dedicate about one hour per week to this task.

Now, product managers are responsible for choosing the metrics that dashboards are built on. Since B2B SaaS products differ in more ways than one (different business domains, feature sets, audiences, subscription models, etc.), it's important for PDMs to create custom dashboards that are tailored to the product. This will ensure that decisions are made using only the most pertinent data.

We often use the AARRR framework as a guideline when creating the initial product dashboard for a new product. The acronym stands for Acquisition/Awareness, Activation, Retention, Referral, and Revenue.

When paired with relevant metrics, this framework helps our product managers understand how well the product is performing on the market. Among other things, it allows them to pinpoint and investigate holes in the conversion funnel, e.g., why are so few users activating their accounts? How can we change that?

In addition to AARRR metrics, here are some of the most common metrics that feature on SaaS product management dashboards.

• North Star: The metric that is most indicative of product success. It might be any of the below, but it is usually a financial or user engagement metric.
• Monthly Recurring Revenue (MRR): The predictable total revenue generated by all active subscriptions in a particular month.
• Annual Recurring Revenue (ARR): The predictable total revenue generated by all active subscriptions over the course of a year.
• Customer Acquisition Cost (CAC): How much it costs to acquire a new customer. 
• Customer Lifetime Value (LTV): Total revenue generated by a single customer throughout the time that they used your product. 
• NPS (Net Promoter Score): Measures user satisfaction; how much users are willing to promote your product to others.
• Churn. Defines users who abandoned the product or canceled their subscription.
• Active Users Per Day (DAU) or Month (MAU). Tells you whether or not users are actively engaging with your product at a sustainable rate. Bear in mind' active user' is defined differently for each product.
• Stickiness of DAU/MAU Ratio. When daily active users are divided by monthly active users, you can find out whether or not your user base is growing and what this means for your product in the long term.

What Is the Balance Between Data-Driven and Vision-Based Product Development?

There's no denying that data has an essential part to play in product development. After all, it's practically impossible to track SaaS product performance and achieve a product-market fit without it. But in the race to become data-driven, product managers shouldn't forget about the importance of vision. In fact, they should know that the two are inextricably tied. A product vision is shaped by data, and without a vision, data is useless.

The folks at ProductPlan have identified five common pitfalls of data-driven SaaS product management, which we would agree with. The risks are:

1. Exclusive focus on the 'north star' metric, which leads to missed information.
2. Too much focus on data leads to analysis paralysis.
3. Cognitive bias can lead to missed insights or incorrect conclusions.
4. Not collecting enough data can lead to decisions that come too late.
5. Misinterpreted data can lead to misguided conclusions.

One of the ways our product managers avoid these pitfalls is by cross-checking the vision with data and vice versa. For example, when we first launched our product, Smart Checklist for Jira, we had big ambitions for its future growth, e.g., adding templates, a progress bar, custom statuses, and much more. Our vision was to become the top checklist add-on in the Atlassian marketplace.

But to get there, we knew we had to start small and take a data-driven approach to product evolution. To this day, every new feature or functionality we implement is backed by data, i.e., what we glean from customer support requests, cust dev, user engagement stats, and competitor analyses. But those features/functionalities are also supported and shaped by the product vision.

Key Approaches and Frameworks for Saas Product Management

The following concepts and frameworks count as some of our organization's key approaches to product development and operations management.

Building a Product Roadmap

As we discussed earlier, strategic planning is one of a product manager's main responsibilities. Roadmapping goes hand-in-hand with both short- and long-term planning. Product roadmaps help PDMs set achievable goals, conserve limited resources, and share information with the development team and other stakeholders. More than just a list of tasks, the roadmap is a high-level plan that displays the workflow and milestones of a strategy-based pipeline.

Some roadmaps are feature-oriented, some are time-boxed, and others are based on quarterly objectives. Here's just one example of a roadmap that is goal-oriented:

Prioritize the Feature List and Product Backlog

One of the biggest challenges when building a roadmap is deciding what features make the cut. But virtually every highly-successful SaaS business – Github, Slack, Trello – got where they are today by prioritizing new features. Instead of wasting time and money on developing non-essential things, they filled their roadmaps with features that would add genuine value to the product.

MoSCoW is one of the most commonly used frameworks for SaaS feature prioritization. So let's break down how it can be applied to the product backlog when building a roadmap. Firstly, MoSCoW is an acronym for Must-have, Should-have, Could-have, and Won't-have. Each of these terms denotes a level of priority from highest to lowest.

• Must-haves are top-priority requirements. These are features that are essential to product functionality. If we take Uber as an example here, then their 'route mapping' feature counts as a must-have.
• Should-haves are requirements of secondary priority. These features are considered important but not crucial, e.g., being able to pay via a corporate account in Uber.
• Could-haves are tweaks that can wait until later in the development timeline for implementation, e.g., a tip jar function in Uber's passenger app.
• Won't-haves (this time) are features that you still want but can't actually afford under your current budget or deadline. An example might be Uber's ride-scheduling feature, which wouldn't have been essential when the app first launched.

Minimum Viable Product

In case you haven't heard of this agile product development concept, the minimum viable product (MVP) is a version of your product that contains the fewest features necessary for release to market. A core component of the Lean Startup Model, the MVP allows startups to create a functional product at minimal cost so that they can quickly gather customer feedback and make valuable iterations. We can personally attest to its efficacy because every one of our full-featured products – Mailtrap, Coupler, and Smart above Checklist – began as an MVP.

BRIDGeS Framework

BRIDGeS is a decision-making and idea-generation framework designed by Railsware. It allows professionals to analyze a problem from various angles, develop targeted solutions, and make a conclusive decision. Sessions can be run either in person (using sticky notes and colored markers) or online with virtual whiteboards (you can try the free Figma template). It takes about 2-8 people to run a productive session. Depending on the issue at hand, attendees may include a product manager and other stakeholders such as software engineers, product designers, marketers, etc.

BRIDGeS is an acronym for Benefits, Risks, Issues, Domain Knowledge, Goals, and Solutions. Benefits are what you will gain from a future solution, Issues are your existing problems, Risks are potential issues you might face, Domain Knowledge is information that helps provide context, and Goals are what you hope to get from the future solution. Each type can be added to the board using a different colored card.

Here's an example of what the Problem Space looks like after a problem has been broken down using these descriptors. We've used the Uber example again here.

In this example, each task has already been prioritized using the MoSCoW method we discussed earlier. So, it is time to move into the Solution Space. This is where we ideate solution variations based on the identified benefits, risks, and issues. We then describe the chosen solution through epics and nested tasks, which can actually be transformed into a product roadmap. 

Lean Canvas

Designed by Ash Maurya, Lean Canvas is a tool for checking the viability of your product idea. It's considered an alternative to the traditional business plan and an adaptation of the Business Model Canvas (the brainchild of Alexander Osterwalder).

The purpose of Lean Canvas is to help product managers and startup founders analyze the strengths and weaknesses of their business model and mitigate the risks associated with launching a new product into a competitive and fast-changing market. However, for existing and well-established businesses, the Business Model Canvas is generally the preferred choice.

In practical terms, Lean Canvas is a single-page document that consists of nine boxes to be filled in. Their headings are Customer Segments, Problems, Revenue Streams, Solutions, Unique Value Propositions, Channels, Key Metrics, Cost Structure, and Unfair Advantage.

Each section allows you to focus on a different aspect of your product offering and structure, to ensure all bases are covered, and the spotlight remains on customer needs. 

Value Proposition Canvas

Created by Strategyzer, Value Proposition Canvas is a tool to help product managers and startup founders get closer to a product-market fit. It can help you understand your customers' needs and pains, find new ways to drive user engagement, and refine your brand messaging and marketing strategy.

The canvas is divided into two parts; traditionally, a square on the left (Value Proposition segment) and a circle on the right (Customer segment). Here's a visualization:

When filling out the canvas, you begin in the customer segment by listing the customer's jobs, pains, and gains. This part helps you define the tasks customers are expected to execute and any negative or positive experiences they might have while doing them. Then you move on to the left side, where you will deal with the product. Here you will break down products and services, pain relievers, and gain creators related to your product offering. Essentially, these are the benefits (or unique value) that your solution offers to customers.

After completing the canvas, you should have a strong idea of how to differentiate your product from others on the market and communicate that unique value to your target audience.

Software that Helps Manage SaaS Products

Here are some applications and tools that our product managers use to plan new projects, manage their daily workloads, collaborate with teammates, and connect with customers:

• Figma: For collaborating with designers, wireframing, creating interactive prototypes, and sketching ideas/brainstorming.
• Slack: For seamless communication with teammates and stakeholders.
• Google Sheets: For product planning activities and organizing market research/customer data.
• Looker Studio: For creating free product dashboards and visualizing different aspects of product performance (customer success, ad campaigns, sales leads).
• Coupler.io: For automating data flows between apps such as Airtable or Pipedrive and destinations like GSheets, Big Query, and Microsoft Excel.
• Notion or Coda: For knowledge storing, project management, and note taking during collaborations.
• Typeform: For creating engaging customer surveys.
• Google Meets and Calendly: For client calls, conducting customer interviews, and meetings with C-suite executives.

Now let's dive into something a little different. This next part is for startup founders who are ready to hire a product manager for their team.

How to Hire a Good Product Manager

Here we'll share our process for hiring product managers who are hands-on, t-shaped, and lead by example. So, in addition to all of the key skills we discussed earlier, there are several others we look for during the candidate screening and selection process.

Strong communication skills are a must, of course, since product managers will be working closely with people from all corners of the product and company, as are strong organizational skills since the role involves juggling meetings, research, leadership duties, and so on. Meanwhile, being attentive to details, curious about how the product works, and having a good memory are also highly desirable traits, though not always dealbreakers.

Here are a couple of other things we take into consideration:

Technical Background

In our experience, product managers with technical backgrounds (think computer science or data analysis) are better equipped for the role than those with experience strictly in product design, sales, or marketing. Knowing how to code, how to break down/organize data, and how to spot bottlenecks in development pipelines are highly-coveted skills.

Real-World Experience

We aren't really interested in management degrees. Instead, we strive to hire PDMs who have experience managing real-world products, preferably in the SaaS space. In addition, they must be able to critically discuss their past experiences and demonstrate a history of problem-solving, decision-making, and true leadership.

Resources for Product Managers

There are no shortcuts to launching a career in product management or becoming an expert in the field. Unfortunately, no single resource — book, course, podcast — can teach you everything you need to know about the discipline. However, based on recommendations from our product managers, here are some useful materials to help you grasp the essentials.

The Lean Startup

Already a modern classic, The Lean Startup by Eric Ries is a must-read for product managers working in the SaaS space. It covers the MVP concept in depth and explains how to leverage the ever-popular Lean Startup framework.

INSPIRED: How to Create Tech Products Customers Love

INSPIRED goes much deeper into some of the topics we've covered here, including the skills product managers need and what processes they should follow. It's suitable for PDMs working at all stages of the product lifecycle, from introduction to maturity and beyond.

The Mom Test: How to talk to Customers and Learn if Your Business Is a Good Idea When Everyone Is Lying to You

Despite its odd name, The Mom Test is considered one of the top manuals on how to effectively validate your business idea. It explains how to go about the customer development process the right way and extract meaningful insights from your target audience.

A note on Mentorship:

"If you’re a software engineer, data analyst, or QA and you’re interested in becoming a product manager, the best advice I can give is to find a mentor. Contact a PDM within your current company who is an expert at their craft, set up a meeting, and see if they can help you evaluate the best path forward. This is a great way to find out if the role is really for you." - Yevgen Tsvetukhin (Product Manager)

Wrapping Up

On a closing note, we asked a couple of our product managers what their favorite and least favorite parts of the job are. Here's what they had to say:

"Experimenting is the most exciting part of SaaS product development. By making small changes to the product and properly measuring the results, you can test lots of hypotheses in a real-life environment. On the other hand, the hardest part is having to make unbiased decisions. You don’t always have tons of data to support your position, and you are dealing with stakeholders who, as all humans, have their personal preferences." - Julia Romanenkova (Product Lead)

"For me, the most rewarding part of product management is getting to see how your product benefits customers. However, the hardest part is all of the work that comes after the product launch, and before its success. It takes more than an MVP to start seeing that impact." - Julia Ryzhkova (Product Lead)

Product managers are strategists. They create data-driven action plans and bring structure to a founder's vision and unity to the contributions of cross-functional teams. In our view, every SaaS company needs designated experts who can answer tough questions and steer a new product along the path to success.