Forget your feelings: How to actually quantify your buyer personas - SaaSFest 2016
Post on 10-Jan-2017
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Forget Your Feelings: Here’s How To Quantify Your Buyer Personas
Patrick Campbell CEO @ PRICE INTELLIGENTLY
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Our focus needs to shift.
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Q: Which pillar of your business is the most important to your growth?
A: Founders and software executives overwhelmingly put their support behind acquisition based growth.
N = 1432 software founders and executives
% o
f tot
al re
spon
dent
s
0%
25%
50%
75%
100%
More logos Making more money per customer Keeping customers around longer
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The root cause is we don’t know our buyers.
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Q: What are quantified buyer personas?
A: Quantified buyer personas are data driven profiles of the customers you’re targeting or choosing to ignore.
Table Stakes Tony • Valued features: • SFDC Integration • Chrome extension
• Least valued features • Analytics • API access
• WTP = ~$10/month • CAC = ~$22 • LTV: $160
Advanced Arnie • Valued features: • Analytics • API Access
• Least valued features • Chrome extension • Premium support
• WTP = ~$25/month • CAC = ~$56 • LTV: $325
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Q: Which single category describes your buyer personas internally?
A: When asked, SaaS founders and executives indicated that their company’s buyer personas weren’t well defined or centralized.
% o
f res
pond
ents
0%
20%
40%
60%
80%
100%
Thought about them Central document Quantified buyer personas
6.6%36.6%
56.8%
N = 1,647 SaaS Founders and Executives
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Q: How many customer development conversations (non-sales) are you having per month?
A: SaaS founders and executives indicated that their companies are primarily only talking to less than 10 customers in a cust dev capacity per month.
% o
f res
pond
ents
0%
20%
40%
60%
80%
100%
10 or less 11 to 25 26 to 50 51+
3.9%10.1%17.7%
68.3%
N = 1,647 SaaS Founders and Executives
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Q: How many experiments are you running per month (including marketing experiments)?
A: SaaS founders and executives indicated that their companies are overwhelmingly running less than 10 experiments per month.
% o
f res
pond
ents
0%
20%
40%
60%
80%
100%
0 1 to 3 4 to 10 11+
2.7%12.1%37.8%47.8%
N = 1,647 SaaS Founders and Executives
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This should be scary.
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Point of Conversion
Offer Product #1
Justify price #1 Offer Product #1
Justify price #1
Offer Product #1
Justify price #1
Drive Customer #1 Drive Customer #2 Drive Customer #3
Buyers are the central tenet of your business
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Your price is the exchange rate on the value your’e creating.
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Q: Buyer personas are great, but what about my costs and competitors?
A: Your customers don’t care about your costs and your competitors haven’t likely done their homework. These matter, but they aren’t the central data point.
These are simple ways to set your price,but if used alone, will be ineffective
Ex: price = closest competitor priceCost-plus pricing Competitor-based pricing
Ex: price = cost + 30% margin
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Q: Buyer personas are great, but what about my costs and competitors?
A: Your customers don’t care about your costs and your competitors haven’t likely done their homework. These matter, but they aren’t the central data point.
Costs
Competitors
Optimal PriceHow much your customers are
willing to pay for your product/service?
Value
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Let’s walk through an example….
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ProfitWell: Eating our own dog food
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“Ohhh…you’re like…”
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Stop building. Start talking.
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For the love of God. Talk to your customer.
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Cool? Awesome - here’s how to do that.
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You need the right research question• This is likely the hardest part of the process, particularly because the breadth will impact the research
significantly
• Based on your current pricing, what’s your core research question?
• “How do we increase our ARPA?”
• “How do we increase our LTV/CAC ratio?”
• “Should we monetize a new feature separately? If not, which tier should the feature go in?”
• “Which buyer(s) should we focus on?”
• “What should we build next?”
• “Our packaging is set, where should we price our tiers?”
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Q: How do we collect the right data to quantify our buyer personas and set our pricing up correctly?
A: The data collection isn’t rocket science at a high level, but the devil, as per usual, is in the details.
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Buyer Personas and Design
1
Data Collection And Segmentation
2
Data Consolidation And Analysis
3
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Startup Steve • Valued features: • •
• Least valued features • •
• WTP = ~$X/month • CAC = ~$XX • LTV: $XXX
Miderprise Marty • Valued features: • •
• Least valued features • •
• WTP = ~$X/month • CAC = ~$XX • LTV: $XXX
Customer development process
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Details: What’s our experimental design look like?
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Our Experimental design - the details• We want to focus on a core research question and then expand out utilizing three types of data:
• Demographic data
• Feature value/relative preference data
• Pricing data1
2
3
Buyer Personas
1
Data Collection
2
Data Consolidation
3
#SAASFEST16 Brought to you by your friends at@PriceIntel
Our Experimental design - the details• We want to focus on a core research question and then expand out utilizing three types of data:
• Demographic data
• Feature value/relative preference data
• Pricing data1
2
3Your Customer Development Toolkit
Price Sensitivity Analysis Proven model for gauging customer’s willingness to pay and price sensitivity
Experimental Design Properly segmenting and breaking down the data.
Relative Preference AnalysisStatistical methodology to measure preferences for features, intention, and value propositions
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What do people value?
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Q: Why do traditional survey collection methods fail?
A: We’re bad at collecting the right data, because we don’t focus enough on forcing decisions or asking the right questions.
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“Please rank the following features on a scale from 1 to 10”
Depth of your metrics
Beautiful Design
Actionability from your metrics
Accuracy of your metrics
0 0.25 0.5 0.75 1
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Other issues with survey design• We don’t force people to make decisions or ask too open ended of questions.
• Our surveys are way too long, which creates survey fatigue and poor responses
• Surveys are treated as a reactionary too, not a proactive part of the process
• We think we can A/B test our way to success, which we unfortunately cannot
• We’re cheap and don’t understand the value of quality responses versus build, guess, and check.
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Q: How should we ask a preference or value questions?
A: Utilize a methodology that forces the respondent to make a decision. We believe that the Max Diff methodology gets you the best bang for your buck.
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Q: What type of feedback will you get with max diff?
A: When utilizing Max Diff, you get both rank order and magnitude, which allows you to save yourself from costly false positives on preferences.
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Q: What type of feedback will you get with max diff?
A: When utilizing Max Diff, you get both rank order and magnitude, which allows you to save yourself from costly false positives on preferences.
1
2
3
#SAASFEST16 Brought to you by your friends at@PriceIntel
Q: What type of feedback will you get with max diff?
A: When utilizing Max Diff, you get both rank order and magnitude, which allows you to save yourself from costly false positives on preferences.
1
2
3
#SAASFEST16 Brought to you by your friends at@PriceIntel
Startup Steve • Valued features: • Price • Design
• Least valued features • Actionability • Depth
• WTP = ~$X/month • CAC = ~$XX • LTV: $XXX
Miderprise Marty • Valued features: • Accuracy • Uptime
• Least valued features • Price • Design
• WTP = ~$X/month • CAC = ~$XX • LTV: $XXX
Customer development process
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How much are people willing to pay?
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Our Experimental design - the details• We want to focus on a core research question and then expand out utilizing three types of data:
• Demographic data
• Feature value/relative preference data
• Pricing data1
2
3Your Customer Development Toolkit
Price Sensitivity Analysis Proven model for gauging customer’s willingness to pay and price sensitivity
Experimental Design Properly segmenting and breaking down the data.
Relative Preference AnalysisStatistical methodology to measure preferences for features, intention, and value propositions
#SAASFEST16 Brought to you by your friends at@PriceIntel
Core pricing questions - taking advantage of human psychology• Human beings think about value as a spectrum. We can take advantage of this phenomenon by asking
pricing questions in a ranged manner:
• At what (monthly) price point does [PRODUCT] become too expensive that you’d never consider purchasing it?
• At what (monthly) price point does [PRODUCT] start to become expensive, but you’d still consider purchasing it?
• At what (monthly) price point does [PRODUCT] a really good deal?
• At what (monthly) price point does [PRODUCT] too cheap that you question the quality of it?
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Q: Why is asking in ranges the most effective way to ask pricing questions?
A: Ranged questions allow your to get the best answers from respondents, but also ensure you’re able to properly segment and measure elasticity.
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Q: Why is asking in ranges the most effective way to ask pricing questions?
A: Ranged questions allow your to get the best answers from respondents, but also ensure you’re able to properly segment and measure elasticity.
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WTP for a SaaS Metrics SolutionW
TP
$0
$75
$150
$225
$300
Size of Company (MRR)
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
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Startup Steve • Valued features: • Price • Design
• Least valued features • Actionability • Depth
• WTP = ~$50/month • CAC = ~$XX • LTV: $XXX
Miderprise Marty • Valued features: • Accuracy • Uptime
• Least valued features • Price • Design
• WTP = ~$150-200/month • CAC = ~$XX • LTV: $XXX
Customer development process
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Startup Steve • Valued features: • Price • Design
• Least valued features • Actionability • Depth
• WTP = ~$50/month • CAC = ~$500-$600 • LTV: $600
Miderprise Marty • Valued features: • Accuracy • Uptime
• Least valued features • Price • Design
• WTP = ~$150-200/month • CAC = ~$3000 • LTV: $1500
Customer development process
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Q: Why is asking in ranges the most effective way to ask pricing questions?
A: Ranged questions allow your to get the best answers from respondents, but also ensure you’re able to properly segment and measure elasticity.
1
2
3
WTP for a Churn Reduction SolutionW
TP
$0
$1,250
$2,500
$3,750
$5,000
Size of Company (MRR)
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
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Q: Why is asking in ranges the most effective way to ask pricing questions?
A: Ranged questions allow your to get the best answers from respondents, but also ensure you’re able to properly segment and measure elasticity.
1
2
3
WTP for a Rev Rec SolutionW
TP
$0
$1,000
$2,000
$3,000
$4,000
Size of Company (MRR)
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
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Putting it all together.
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Q: How do you start to put this all together?
A: This is where you earn your paycheck on making hedged decisions based on your research question.
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Low CAC with constant value
Creates the Requirement
Path to Share of Wallet
ProfitWell Financial metrics for the subscription economy
100% accurate SaaS metrics for free
integrating 1-click with your billing system
Central fulcrum to cust success, sales, finance, marketing e-team, and
rest of stakeholders
Allows interface to clearly point to
problems and reinforce value of paid add-ons
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Start small. You can always test more.
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12 hours.
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12 hours. $2,089.
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Implement a pricing process.
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Monetization Matters.
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patrick@priceintelligently.com
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