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How to build actual customer driven
product
Turing Festival 2016
@PriceIntel
http://www.priceintelligently.com/turing
Patrick@priceintelligently.com
@PriceIntel
Building product is getting harder, not
easier…and it’s going to increase in
difficulty.
@PriceIntel
The age of throwing shit against the
wall and seeing what sticks is over.
@PriceIntel
Who in the world are you?
@PriceIntel
Happy customers big and small
ProfitWell
SaaS pricing
software and tech
enabled services
Free financial
metrics for
subscr...
We’ve seen inside more software
companies than anyone else on the planet.
@PriceIntel
The market is becoming saturated.
@PriceIntel
Our world is more competitive, making
switching costs easier.
@PriceIntel
Competition is growing
N = 289 SaaS companies, +/- 3.44% MoE at 95% level
0
2
4
6
8
10
12
5 Years Ago 3 Years Ago 1 Year A...
Competition is here
0%
10%
20%
30%
40%
50%
0 to 2 3 to 5 6 to 10 11+
%ofRespondents
How many competitors do you current ha...
The relative value of features is
declining, making a race to the bottom
for feature based pricing.
@PriceIntel
“Differentiation” isn’t what is used to
be…
N = Varies by line, but minimum of 10,000 customer respondents per line
0%
25%...
CAC is increasing over time.
@PriceIntel
Acquiring a customer is getting pricier
N = Varies by line, but minimum of 453 companies per data point
-25%
0%
25%
50%
75...
“Good”, “Customer driven” product is
becoming exceptionally more
important
@PriceIntel
We’re really ill equipped for the
transition.
@PriceIntel
We don’t really know our buyers
@PriceIntel
Buyer Personas
Table Stakes Tony
• Valued features:
• SFDC Integration
• Chrome extension
• Least valued features
• Analyt...
We don’t know our buyers that well
0%
25%
50%
75%
100%
Thought about them Central document Quantified buyer personas
%ofRe...
We don’t do a lot of cust dev
conversations
0%
25%
50%
75%
100%
Less than 10 11 to 25 26 to 50 51+
%ofRespondents
#	of	cus...
We don’t send any cust dev surveys
0%
25%
50%
75%
100%
0 1 2 3+
%ofRespondents
#	of	cust dev surveys
How many cust dev sur...
We aren’t truly testing that much
0%
25%
50%
75%
100%
0 1 to 3 4 to 10 11+
%ofRespondents
#	of	tests/experiments
How many ...
We’re obsessed with acquisition.
Like stalker level obsessed.
@PriceIntel
Looked at 25,679 blog posts.
@PriceIntel
We love talking about
acquisition
0%
25%
50%
75%
100%
Acquisition Monetization Retention
%oftotalarticles
Category of grow...
Looked at 6,324 B2B companies
@PriceIntel
We love building for
acquisition
0%
25%
50%
75%
100%
Acquisition Monetization Retention
%oftotalcompanies
Category of B2B ...
These are just the acquisition companies
@PriceIntel
Asked Founders/Executives
@PriceIntel
What’s most important?
0%
25%
50%
75%
100%
More logos Making more money per
customer
Keeping customers around
longer
%ofto...
What’s most important?
N = 1,218 SaaS companies, +/- 2.61% MoE at 95% level
0%
25%
50%
75%
100%
Acquisition Monetization R...
If we improve each lever by the same
amount, which lever causes the most
growth?
@PriceIntel
Impact of improving each
growth lever
3.32%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact...
Impact of improving each
growth lever
3.32%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
...
Impact of improving each
growth lever
3.32%
12.70%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebott...
Improving retention and monetization
has 2-4x the impact of focusing on
acquisition.
@PriceIntel
What we find important
0%
25%
50%
75%
100%
More logos Making more money per
customer
Keeping customers around
longer
%ofto...
What works for growth
3.32%
12.70%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact of...
This should be scary.
@PriceIntel
Everything aligns to the customer
Point of Conversion
Drive Customer #1
Offer Product #1
Offer Product #2
Drive Customer #...
How do we fix our customer
development?
@PriceIntel
3 ways to better monetization
• Quantify your buyer personas
• Implement a customer development process
@PriceIntel
Persona-Product Fit
Table Stakes Tony
• Valued features:
• SFDC Integration
• Chrome extension
• Least valued features
• A...
If you don’t know who you’re driving to
your product, how do you know what
build?
@PriceIntel
Let’s walk through an example…
@PriceIntel
ProfitWell
@PriceIntel
“Oh you’re like….”
@PriceIntel
“Oh you’re like….”
37 Other
Competitors
(we know about)
@PriceIntel
Persona-Product Fit
Startup Steve
• Valued features:
•
•
• Least valued features
•
•
• WTP = ~$/month
• CAC = ~$
• LTV: $
...
Go to the customer!
@PriceIntel
For the love of God. Talk to your
customer.
@PriceIntel
Great. How do we do that?
@PriceIntel
1
2
3
Your Process at a High
Level
Buyer Personas
and Design
1
Data Collection
And Segmentation
2
1
2
3
4
Data Consolidati...
Persona-Product Fit
Startup Steve
• Valued features:
•
•
• Least valued features
•
•
• WTP = ~$/month
• CAC = ~$
• LTV: $
...
Experimental Design
@PriceIntel
What type of info do we want?
• Demographic Information
– How often do you look at your metrics? Team size? Revenue?...
• ...
Relative Preference
Analysis
Statistical methodology to
measure preferences for features,
intention, and value proposition...
What do people value?
@PriceIntel
“Please rank the following
features on a scale of 1 to
10…”
0 0.2 0.4 0.6 0.8 1
Accuracy	of	your	metrics
Actionability	fro...
@PriceIntel
What do your customers
value the most?
More on: Relative Preference Analysis
@PriceIntel
What do your customers
value the most?
More on: Relative Preference Analysis
@PriceIntel
What do your customers
value the most?
More on: Relative Preference Analysis
@PriceIntel
Your Experimental Design
More on: Relative Preference Analysis
Main Category
Support
• Phone
• Live Chat
• Email
• …
@Pric...
Your Experimental Design
More on: Relative Preference Analysis
Main Category
Support
• Phone
• Live Chat
• Email
• …
Data ...
Your Experimental Design
More on: Relative Preference Analysis
Main Category
Support
• Phone
• Live Chat
• Email
• …
Data ...
Persona-Product Fit
Startup Steve
• Valued features:
• Price
• Design
• Least valued features
• Actionabiltiy
• Depth
• WT...
Relative Preference
Analysis
Statistical methodology to
measure preferences for features,
intention, and value proposition...
How much are they willing to pay?
@PriceIntel
Basic Plus Premium
$49 $149 $299
I	only	have	one	cool	
feature.
The	same cool	feature. Yup,	same	one.
Oh!	You	can	only	get...
• At what (monthly) price point does [PRODUCT] become too
expensive that you’d never consider purchasing it?
• At what (mo...
How much are your
customers willing to pay?
More on: Relative Price Sensitivity Meter
@PriceIntel
WTP for SaaS Metrics
$0
$50
$100
$150
$200
$250
$300
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
WTP
Size of...
Persona-Product Fit
Startup Steve
• Valued features:
• Price
• Design
• Least valued features
• Actionabiltiy
• Depth
• WT...
Persona-Product Fit
Startup Steve
• Valued features:
• Price
• Design
• Least valued features
• Actionabiltiy
• Depth
• WT...
WTP for Churn Recovery
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$0 - $50k $51k - $100k $101k - $250...
WTP for Rev Rec
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k...
A good entry point
Low CAC
with constant
value
Creates the
Requirement
Path to Share
of Wallet
ProfitWell
Financial metric...
Our current monetization
path
ProfitWell
Financial metrics for the subscription economy
Retain Rec Revenue
Delinquent cred...
12 hours total.
@PriceIntel
12 hours total. $2089.
@PriceIntel
Implement a customer development
process
@PriceIntel
Your Cust Dev Process
Customer/Market
Research
Communication
Plan
Week:
1 2 3 4 5 6 7 8 9
Impact
Analysis
Customer
Advisor...
Customers matter.
@PriceIntel
Building a company is getting harder;
make it easier on yourself.
@PriceIntel
http://www.priceintelligently.com/turing
Patrick@priceintelligently.com
@PriceIntel
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Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)

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Presentation by Patrick Campbell, co-founder & CEO of Price Intelligently. Delivered at the Turing Festival in Edinburgh on Thursday 18 August 2016.

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Patrick Campbell — How to Build Actual Customer-Driven Product (Turing Festival 2016)

  1. 1. How to build actual customer driven product Turing Festival 2016 @PriceIntel
  2. 2. http://www.priceintelligently.com/turing Patrick@priceintelligently.com @PriceIntel
  3. 3. Building product is getting harder, not easier…and it’s going to increase in difficulty. @PriceIntel
  4. 4. The age of throwing shit against the wall and seeing what sticks is over. @PriceIntel
  5. 5. Who in the world are you? @PriceIntel
  6. 6. Happy customers big and small ProfitWell SaaS pricing software and tech enabled services Free financial metrics for subscription businesses @PriceIntel
  7. 7. We’ve seen inside more software companies than anyone else on the planet. @PriceIntel
  8. 8. The market is becoming saturated. @PriceIntel
  9. 9. Our world is more competitive, making switching costs easier. @PriceIntel
  10. 10. Competition is growing N = 289 SaaS companies, +/- 3.44% MoE at 95% level 0 2 4 6 8 10 12 5 Years Ago 3 Years Ago 1 Year Ago Today #ofCompetitors How many competitors did you have during the following periods? @PriceIntel
  11. 11. Competition is here 0% 10% 20% 30% 40% 50% 0 to 2 3 to 5 6 to 10 11+ %ofRespondents How many competitors do you current have? (Companies around for less than 1 year) N = 547 software companies @PriceIntel
  12. 12. The relative value of features is declining, making a race to the bottom for feature based pricing. @PriceIntel
  13. 13. “Differentiation” isn’t what is used to be… N = Varies by line, but minimum of 10,000 customer respondents per line 0% 25% 50% 75% 100% 125% 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today WTPas%ofWTP4YearsAgo Willingness to pay over time relative to WTP 4 years ago Core Features Single Sign On Integrations Analytics @PriceIntel
  14. 14. CAC is increasing over time. @PriceIntel
  15. 15. Acquiring a customer is getting pricier N = Varies by line, but minimum of 453 companies per data point -25% 0% 25% 50% 75% 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today CACas%ofCAC4YearsAgo Blended CAC relative to four years ago B2B B2C @PriceIntel
  16. 16. “Good”, “Customer driven” product is becoming exceptionally more important @PriceIntel
  17. 17. We’re really ill equipped for the transition. @PriceIntel
  18. 18. We don’t really know our buyers @PriceIntel
  19. 19. Buyer Personas 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 @PriceIntel
  20. 20. We don’t know our buyers that well 0% 25% 50% 75% 100% Thought about them Central document Quantified buyer personas %ofRespondents Which single category best describes your buyer personas? N = 1,647 software companies @PriceIntel
  21. 21. We don’t do a lot of cust dev conversations 0% 25% 50% 75% 100% Less than 10 11 to 25 26 to 50 51+ %ofRespondents # of cust dev conversations How many cust dev conversations are you having per month? N = 1,647 software companies @PriceIntel
  22. 22. We don’t send any cust dev surveys 0% 25% 50% 75% 100% 0 1 2 3+ %ofRespondents # of cust dev surveys How many cust dev surveys are you sending each month? N = 1,647 software companies @PriceIntel
  23. 23. We aren’t truly testing that much 0% 25% 50% 75% 100% 0 1 to 3 4 to 10 11+ %ofRespondents # of tests/experiments How many tests or experiments are you running each month? N = 1,647 software companies @PriceIntel
  24. 24. We’re obsessed with acquisition. Like stalker level obsessed. @PriceIntel
  25. 25. Looked at 25,679 blog posts. @PriceIntel
  26. 26. We love talking about acquisition 0% 25% 50% 75% 100% Acquisition Monetization Retention %oftotalarticles Category of growth articles written from 2014 to 2106 N = 25,679 blog posts written between 2014 to 2016 @PriceIntel
  27. 27. Looked at 6,324 B2B companies @PriceIntel
  28. 28. We love building for acquisition 0% 25% 50% 75% 100% Acquisition Monetization Retention %oftotalcompanies Category of B2B SaaS companies N = 6,324 companies currently active @PriceIntel
  29. 29. These are just the acquisition companies @PriceIntel
  30. 30. Asked Founders/Executives @PriceIntel
  31. 31. What’s most important? 0% 25% 50% 75% 100% More logos Making more money per customer Keeping customers around longer %oftotalcompanies C-Level/Founder Growth Preferences N = 1,432 SaaS companies, +/- 2.19% MoE at 95% level @PriceIntel
  32. 32. What’s most important? N = 1,218 SaaS companies, +/- 2.61% MoE at 95% level 0% 25% 50% 75% 100% Acquisition Monetization Retention %oftotalcompanies C-Level/Founder Spend Their Time @PriceIntel
  33. 33. If we improve each lever by the same amount, which lever causes the most growth? @PriceIntel
  34. 34. Impact of improving each growth lever 3.32% 0% 5% 10% 15% Acquisition Monetization Retention %impactonthebottomline Impact of improving each lever by 1% N = 578 SaaS companies, +/- 2.89% MoE at 95% level @PriceIntel
  35. 35. Impact of improving each growth lever 3.32% 6.71% 0% 5% 10% 15% Acquisition Monetization Retention %impactonthebottomline Impact of improving each lever by 1% N = 578 SaaS companies, +/- 2.89% MoE at 95% level @PriceIntel
  36. 36. Impact of improving each growth lever 3.32% 12.70% 6.71% 0% 5% 10% 15% Acquisition Monetization Retention %impactonthebottomline Impact of improving each lever by 1% N = 578 SaaS companies, +/- 2.89% MoE at 95% level @PriceIntel
  37. 37. Improving retention and monetization has 2-4x the impact of focusing on acquisition. @PriceIntel
  38. 38. What we find important 0% 25% 50% 75% 100% More logos Making more money per customer Keeping customers around longer %oftotalcompanies C-Level/Founder Growth Preferences N = 1,432 SaaS companies @PriceIntel
  39. 39. What works for growth 3.32% 12.70% 6.71% 0% 5% 10% 15% Acquisition Monetization Retention %impactonthebottomline Impact of improving each lever by 1% N = Data from 512 companies @PriceIntel
  40. 40. This should be scary. @PriceIntel
  41. 41. Everything aligns to the customer Point of Conversion Drive Customer #1 Offer Product #1 Offer Product #2 Drive Customer #2 Drive Customer #3 Offer Product #3 Justify price #1 Justify price #2 Justify price #3 @PriceIntel
  42. 42. How do we fix our customer development? @PriceIntel
  43. 43. 3 ways to better monetization • Quantify your buyer personas • Implement a customer development process @PriceIntel
  44. 44. Persona-Product Fit 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: $325 @PriceIntel
  45. 45. If you don’t know who you’re driving to your product, how do you know what build? @PriceIntel
  46. 46. Let’s walk through an example… @PriceIntel
  47. 47. ProfitWell @PriceIntel
  48. 48. “Oh you’re like….” @PriceIntel
  49. 49. “Oh you’re like….” 37 Other Competitors (we know about) @PriceIntel
  50. 50. Persona-Product Fit Startup Steve • Valued features: • • • Least valued features • • • WTP = ~$/month • CAC = ~$ • LTV: $ Miderprise Marty • Valued features: • • • Least valued features • • • WTP = ~$/month • CAC = ~$ • LTV: $ @PriceIntel
  51. 51. Go to the customer! @PriceIntel
  52. 52. For the love of God. Talk to your customer. @PriceIntel
  53. 53. Great. How do we do that? @PriceIntel
  54. 54. 1 2 3 Your Process at a High Level Buyer Personas and Design 1 Data Collection And Segmentation 2 1 2 3 4 Data Consolidation And Analysis 3 @PriceIntel
  55. 55. Persona-Product Fit Startup Steve • Valued features: • • • Least valued features • • • WTP = ~$/month • CAC = ~$ • LTV: $ Miderprise Marty • Valued features: • • • Least valued features • • • WTP = ~$/month • CAC = ~$ • LTV: $ @PriceIntel
  56. 56. Experimental Design @PriceIntel
  57. 57. What type of info do we want? • Demographic Information – How often do you look at your metrics? Team size? Revenue?... • Feature/Packaging Information – Which metrics? What features? Value props?... • Pricing Information – How much are they willing to pay? What frequency do they want to pay?... @PriceIntel
  58. 58. Relative Preference Analysis Statistical methodology to measure preferences for features, intention, and value propositions 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. How do we ask the questions? @PriceIntel
  59. 59. What do people value? @PriceIntel
  60. 60. “Please rank the following features on a scale of 1 to 10…” 0 0.2 0.4 0.6 0.8 1 Accuracy of your metrics Actionability from your metrics Beautiful Design Depth of your metrics @PriceIntel
  61. 61. @PriceIntel
  62. 62. What do your customers value the most? More on: Relative Preference Analysis @PriceIntel
  63. 63. What do your customers value the most? More on: Relative Preference Analysis @PriceIntel
  64. 64. What do your customers value the most? More on: Relative Preference Analysis @PriceIntel
  65. 65. Your Experimental Design More on: Relative Preference Analysis Main Category Support • Phone • Live Chat • Email • … @PriceIntel
  66. 66. Your Experimental Design More on: Relative Preference Analysis Main Category Support • Phone • Live Chat • Email • … Data in Integrations Metric Types Data out Integrations Action Tools @PriceIntel
  67. 67. Your Experimental Design More on: Relative Preference Analysis Main Category Support • Phone • Live Chat • Email • … Data in Integrations Metric Types Data out Integrations Action Tools All Demographics and Personas @PriceIntel
  68. 68. Persona-Product Fit Startup Steve • Valued features: • Price • Design • Least valued features • Actionabiltiy • Depth • WTP = ~$/month • CAC = ~$ • LTV: $ Miderprise Marty • Valued features: • Accuracy • Uptime • Least valued features • Price • Design • WTP = ~$/month • CAC = ~$ • LTV: $ @PriceIntel
  69. 69. Relative Preference Analysis Statistical methodology to measure preferences for features, intention, and value propositions 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. How do we ask the questions? @PriceIntel
  70. 70. How much are they willing to pay? @PriceIntel
  71. 71. Basic Plus Premium $49 $149 $299 I only have one cool feature. The same cool feature. Yup, same one. Oh! You can only get this here. Well…and here. Huzzah! I’m the plan with absolutely everything. @PriceIntel
  72. 72. • 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? More on: Relative Price Sensitivity Meter How much are your customers willing to pay? @PriceIntel
  73. 73. How much are your customers willing to pay? More on: Relative Price Sensitivity Meter @PriceIntel
  74. 74. WTP for SaaS Metrics $0 $50 $100 $150 $200 $250 $300 $0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+ WTP Size of Company (MRR) WTP for a SaaS Metrics Solution N = 234 companies @PriceIntel
  75. 75. Persona-Product Fit Startup Steve • Valued features: • Price • Design • Least valued features • Actionabiltiy • Depth • WTP = ~$50/month • CAC = ~$ • LTV: $ Miderprise Marty • Valued features: • Accuracy • Uptime • Least valued features • Price • Design • WTP = ~$150-250/month • CAC = ~$ • LTV: $ @PriceIntel
  76. 76. Persona-Product Fit Startup Steve • Valued features: • Price • Design • Least valued features • Actionabiltiy • Depth • WTP = ~$50/month • CAC = ~$500-600 • LTV: $600 Miderprise Marty • Valued features: • Accuracy • Uptime • Least valued features • Price • Design • WTP = ~$150-250/month • CAC = ~$3000 • LTV: $1500 @PriceIntel
  77. 77. WTP for Churn Recovery $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+ WTP Size of Company (MRR) WTP for a Recovering Churn N = 234 companies @PriceIntel
  78. 78. WTP for Rev Rec $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+ WTP Size of Company (MRR) WTP for a Revenue Recognition N = 234 companies @PriceIntel
  79. 79. A good entry point 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 @PriceIntel
  80. 80. Our current monetization path ProfitWell Financial metrics for the subscription economy Retain Rec Revenue Delinquent credit card recovery through email, in- app snippet, and optimization Algorithmically solved 2-3 days of work amongst accounting and finance team @PriceIntel
  81. 81. 12 hours total. @PriceIntel
  82. 82. 12 hours total. $2089. @PriceIntel
  83. 83. Implement a customer development process @PriceIntel
  84. 84. Your Cust Dev Process Customer/Market Research Communication Plan Week: 1 2 3 4 5 6 7 8 9 Impact Analysis Customer Advisory Panel Implement Changes Step: @PriceIntel
  85. 85. Customers matter. @PriceIntel
  86. 86. Building a company is getting harder; make it easier on yourself. @PriceIntel
  87. 87. http://www.priceintelligently.com/turing Patrick@priceintelligently.com @PriceIntel

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