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

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As an industry we've been talking about buyer personas for over a decade, yet few of us are actually using them in the proper manner. Instead, we create cute avatars and pretty names to characterize our personas without getting into the nitty gritty of who these people are on a quantified level. In this presentation at Price Intelligently's SaaSFest 2016, Patrick Campbell walks through a step by step process for actually quantifying your buyer personas to accelerate your learnings and growth.

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

  1. 1. 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
  2. 2. Our focus needs to shift. #SAASFEST16 Brought to you by your friends at@PriceIntel
  3. 3. 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 %oftotalrespondents 0% 25% 50% 75% 100% More logos Making more money per customer Keeping customers around longer #SAASFEST16 Brought to you by your friends at@PriceIntel
  4. 4. The root cause is we don’t know our buyers. #SAASFEST16 Brought to you by your friends at@PriceIntel
  5. 5. 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 #SAASFEST16 Brought to you by your friends at@PriceIntel
  6. 6. 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. %ofrespondents 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 #SAASFEST16 Brought to you by your friends at@PriceIntel
  7. 7. 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. %ofrespondents 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 #SAASFEST16 Brought to you by your friends at@PriceIntel
  8. 8. 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. %ofrespondents 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 #SAASFEST16 Brought to you by your friends at@PriceIntel
  9. 9. This should be scary. #SAASFEST16 Brought to you by your friends at@PriceIntel
  10. 10. 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 #SAASFEST16 Brought to you by your friends at@PriceIntel
  11. 11. Your price is the exchange rate on the value your’e creating. #SAASFEST16 Brought to you by your friends at@PriceIntel
  12. 12. 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 price Cost-plus pricing Competitor-based pricing Ex: price = cost + 30% margin #SAASFEST16 Brought to you by your friends at@PriceIntel
  13. 13. 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 Price How much your customers are willing to pay for your product/service? Value #SAASFEST16 Brought to you by your friends at@PriceIntel
  14. 14. Let’s walk through an example…. #SAASFEST16 Brought to you by your friends at@PriceIntel
  15. 15. ProfitWell: Eating our own dog food #SAASFEST16 Brought to you by your friends at@PriceIntel
  16. 16. “Ohhh…you’re like…” #SAASFEST16 Brought to you by your friends at@PriceIntel
  17. 17. Stop building. Start talking. #SAASFEST16 Brought to you by your friends at@PriceIntel
  18. 18. For the love of God. Talk to your customer. #SAASFEST16 Brought to you by your friends at@PriceIntel
  19. 19. Cool? Awesome - here’s how to do that. #SAASFEST16 Brought to you by your friends at@PriceIntel
  20. 20. 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?” #SAASFEST16 Brought to you by your friends at@PriceIntel
  21. 21. 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. 1 2 3 Buyer Personas and Design 1 Data Collection And Segmentation 2 Data Consolidation And Analysis 3 #SAASFEST16 Brought to you by your friends at@PriceIntel
  22. 22. 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 #SAASFEST16 Brought to you by your friends at@PriceIntel
  23. 23. Details: What’s our experimental design look like? #SAASFEST16 Brought to you by your friends at@PriceIntel
  24. 24. 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 data 1 2 3 Buyer Personas 1 Data Collection 2 Data Consolidation 3 #SAASFEST16 Brought to you by your friends at@PriceIntel
  25. 25. 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 data 1 2 3 Your 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 Analysis Statistical methodology to measure preferences for features, intention, and value propositions #SAASFEST16 Brought to you by your friends at@PriceIntel
  26. 26. What do people value? #SAASFEST16 Brought to you by your friends at@PriceIntel
  27. 27. 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. 1 2 3 “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 #SAASFEST16 Brought to you by your friends at@PriceIntel
  28. 28. 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. 1 2 3 #SAASFEST16 Brought to you by your friends at@PriceIntel
  29. 29. 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. 1 2 3 #SAASFEST16 Brought to you by your friends at@PriceIntel
  30. 30. 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
  31. 31. 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
  32. 32. 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
  33. 33. 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 #SAASFEST16 Brought to you by your friends at@PriceIntel
  34. 34. How much are people willing to pay? #SAASFEST16 Brought to you by your friends at@PriceIntel
  35. 35. 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 data 1 2 3 Your 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 Analysis Statistical methodology to measure preferences for features, intention, and value propositions #SAASFEST16 Brought to you by your friends at@PriceIntel
  36. 36. 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? 1 2 3 #SAASFEST16 Brought to you by your friends at@PriceIntel
  37. 37. 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 #SAASFEST16 Brought to you by your friends at@PriceIntel
  38. 38. 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 SaaS Metrics Solution WTP $0 $75 $150 $225 $300 Size of Company (MRR) $0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+ #SAASFEST16 Brought to you by your friends at@PriceIntel
  39. 39. 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 #SAASFEST16 Brought to you by your friends at@PriceIntel
  40. 40. 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 #SAASFEST16 Brought to you by your friends at@PriceIntel
  41. 41. 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 Solution WTP $0 $1,250 $2,500 $3,750 $5,000 Size of Company (MRR) $0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+ #SAASFEST16 Brought to you by your friends at@PriceIntel
  42. 42. 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 Solution WTP $0 $1,000 $2,000 $3,000 $4,000 Size of Company (MRR) $0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+ #SAASFEST16 Brought to you by your friends at@PriceIntel
  43. 43. Putting it all together. #SAASFEST16 Brought to you by your friends at@PriceIntel
  44. 44. 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. 1 2 3 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 #SAASFEST16 Brought to you by your friends at@PriceIntel
  45. 45. Start small. You can always test more. #SAASFEST16 Brought to you by your friends at@PriceIntel
  46. 46. 12 hours. #SAASFEST16 Brought to you by your friends at@PriceIntel
  47. 47. 12 hours. $2,089. #SAASFEST16 Brought to you by your friends at@PriceIntel
  48. 48. Implement a pricing process. #SAASFEST16 Brought to you by your friends at@PriceIntel
  49. 49. Monetization Matters. #SAASFEST16 Brought to you by your friends at@PriceIntel
  50. 50. patrick@priceintelligently.com #SAASFEST16 Brought to you by your friends at@PriceIntel

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