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6 Steps to Validating Your SaaS Idea

Cloud computing is everywhere these days, and when most consumers talk about the cloud, they're really thinking of software-as-a-service, or SaaS, solutions. There plenty of benefits that companies and individuals can gain when they engage in SaaS, like reduced expenses, a limited learning curve, scalability and integration, and simple, hands-off upgrades. Because SaaS is so useful and easy for consumers, it's no wonder there are all kinds of opportunities to build a successful SaaS business.

But to differentiate your product from the competition's and find out if your offering is really all you think it could be, you have to validate your SaaS idea. Take your time to find out whether people will actually buy and use your product before jumping into production to make sure your business won't go under. Here's how.

1. Find a potential customer pool
Your first step toward validation is figuring out whether there's a group of people out there who would be interested in your SaaS solution. According to tech entrepreneur Ryan Battles, Facebook's Campaign Builder is a great tool to use to figure out how many people you may be able to reach if you decided to advertise your business on Facebook. Even if you don't decide to utilize Facebook in your marketing efforts, the tool can still clue you in as to whether or not there is a valid customer pool. After all, if there's a decent number of people on Facebook who could potentially be interested in your SaaS idea, that means there are potential customers outside of Facebook too.

"Once you find out what the competition is like, you can tailor your business plan to address what they're not."

2. Evaluate your competition
Once you've determined that there is a potential customer pool, you can further validate this point by doing a little business market research to see what your competitors are doing. If you find that people are already paying for products and services that address the problem your SaaS idea is meant to solve, your business could have a shot at success. Battles recommended searching sites like Amazon to look for products that are centered on your target customers and the service they need. You can also look in mobile application stores to see whether there are already companies offering solutions. Once you find out what the competition is like, you can tailor your business plan to address what they're not.

3. Conduct some surveys
After validating your target customer base, it's time to start talking to them to gauge their interest. This will help validate whether they really do need your SaaS solution to solve a problem they have, as well as whether they would be willing to pay for that service. Make some calls and send out emails asking some important questions that will help your business.

4. Talk to a sample group
Now it's time to really sit down and talk to a few potential clients who you think are representative of your target consumer pool. Go on some in-person visits to talk with businesses that you think could benefit from your SaaS idea, then get their input. 

5. Make a website
Generate some buzz about your idea by making a website and tracking who visits it. Include an option for people to sign up to receive updates about your product to determine whether there is genuine interest. Drive traffic to the site by posting links on the social media sites that your target customers frequently use, whether it's Facebook, Twitter, LinkedIn or Tumblr.

"Make it risk-free by telling clients that their payment is 100% refundable."

6. Collect cash
Your SaaS idea won't truly be validated until you know that people really are going to pay for your solution. Open up the opportunity to preorder your product before it officially launches so you know there's a genuine interest. Steli Efti, CEO at Close.io, recommended making it risk-free by telling clients that their payment is 100 percent refundable. Selling your SaaS before it's ready will ensure that your company is going to have legitimate business once you're ready to roll out your product.

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