Forget your feelings: How to actually quantify your buyer personas - SaaSFest 2016

Forget Your Feelings: Here’s How To Quantify Your Buyer Personas

Patrick Campbell CEO @ PRICE INTELLIGENTLY

#SAASFEST16 Brought to you by your friends at@PriceIntel

Our focus needs to shift.


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


The root cause is we don’t know our buyers.


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


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


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%



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%



This should be scary.


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


Your price is the exchange rate on the value your’e creating.


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


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


Let’s walk through an example….


ProfitWell: Eating our own dog food


“Ohhh…you’re like…”


Stop building. Start talking.


For the love of God. Talk to your customer.


Cool? Awesome - here’s how to do that.


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?”


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


Startup Steve • Valued features: • •

• Least valued features • •

• WTP = ~$X/month • CAC = ~$XX • LTV: $XXX

Miderprise Marty • Valued features: • •

• Least valued features • •


Customer development process


Details: What’s our experimental design look like?


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

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Buyer Personas

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Data Collection

2

Data Consolidation

3





• 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


What do people value?


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


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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Startup Steve • Valued features: • Price • Design

• Least valued features • Actionability • Depth


Miderprise Marty • Valued features: • Accuracy • Uptime

• Least valued features • Price • Design




How much are people willing to pay?





• 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


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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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+




• WTP = ~$50/month • CAC = ~$XX • LTV: $XXX



• WTP = ~$150-200/month • CAC = ~$XX • LTV: $XXX





• WTP = ~$50/month • CAC = ~$500-$600 • LTV: $600



• WTP = ~$150-200/month • CAC = ~$3000 • LTV: $1500





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WTP for a Churn Reduction SolutionW

TP

$0

$1,250

$2,500

$3,750

$5,000


$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+




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WTP for a Rev Rec SolutionW

TP

$0

$1,000

$2,000

$3,000

$4,000


$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+


Putting it all together.


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


Start small. You can always test more.


12 hours.


12 hours. $2,089.


Implement a pricing process.


Monetization Matters.


[email protected]


mailto:[email protected]

Forget your feelings: How to actually quantify your buyer personas - SaaSFest 2016

Marketing

Transcript of Forget your feelings: How to actually quantify your buyer personas - SaaSFest 2016