Expanding your SaaS company into a multi-product business is a major decision, and like most strategic choices, the answer isn’t straightforward. It depends on various factors, and there’s no one-size-fits-all approach. However, here are a few critical questions to consider before taking the leap.
Before diving into a new product, ask yourself: What are you hoping to achieve? Are you looking to improve your unit economics, increase your Total Addressable Market, or strengthen your overall product offering? Expanding into a new product line should give you a considerable advantage. If your primary product or operations still have significant issues, it might be wise to avoid chasing the shiny object syndrome. Focus on fixing existing problems before adding new complexities.
The next big question is whether you plan to build the new product in-house or acquire an existing solution. Building in-house carries significant execution risks, from development challenges to product-market fit uncertainties. On the other hand, acquiring a company requires cash, debt, or valuable shares. Post-acquisition, integration becomes a major hurdle. Ensuring that the acquired product fits seamlessly into your ecosystem is crucial for success.
Consider how many of your existing customers would actually need your potential second product. Are they already using a competitor’s solution, or is the market mostly untapped? Is it a greenfield?
Also, assess how much this new product could increase your Average Order Value. The opportunity must be substantial enough to justify the investment and effort.
Is the buyer for your second product the same as for your first, or at least similar? Crossing into entirely different departments can be challenging and may complicate your sales process. If the buyer is different but within the same department, it might work. Ideally, the same buyer would be the target for both products, making the sales process smoother.
Consider how customer support will differ between your existing product and the new one. Self-service models are vastly different from high-touch service in terms of how you cross-sell and support the product. If your new product requires a completely different support model, you’ll need to ensure you can manage both effectively.
Will you bundle the new product with your existing offering or primarily cross-sell it to current customers? Think about the onboarding and implementation processes for each product. Can your team handle the demands of launching and supporting two products simultaneously? It’s important to ensure that your sales and onboarding teams are equipped to manage the increased complexity.
Your reputation will be judged by your weakest product. If the new product doesn’t meet or exceed the quality of your original offering, it could damage your brand and customer trust. Make sure that your second product can stand on its own and deliver just as much value—or more—than your first.
There are many factors to consider when deciding whether to go multi-product in your SaaS startup. It’s not just about expanding your offerings; it’s about doing so in a way that enhances your business and meets the needs of your customers without overwhelming your team or diluting your focus.
If you’re considering this move, take the time to evaluate these questions thoroughly. And if you need more in-depth guidance, reach out to our team at ShoutEx.