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
%oftotalrespondents
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
• Analytics
• API Access
• Chrome extension
• Premium support
• 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.
%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

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%

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%

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 price
Cost-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 Price
How 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.
1
2
3
Buyer Personas
and Design
1
Data Collection
And Segmentation
2
Data Consolidation
And Analysis
3

Startup Steve
•
•
•
•
• WTP = ~$X/month
• CAC = ~$XX
• LTV: $XXX
Miderprise Marty
•
•
•
•
• WTP = ~$X/month
• CAC = ~$XX
• LTV: $XXX
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 data
1
2
3
Buyer Personas
1
Data Collection
2
Data Consolidation
3

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

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.
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

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

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

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

Startup Steve
• Price
• Design
• Actionability
• Depth
• WTP = ~$X/month
• CAC = ~$XX
• LTV: $XXX
Miderprise Marty
• Accuracy
• Uptime
• Price
• Design
• WTP = ~$X/month
• CAC = ~$XX
• LTV: $XXX

How much are people willing to pay?

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

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

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+

Startup Steve
• Price
• Design
• Actionability
• Depth
• CAC = ~$XX
• LTV: $XXX
Miderprise Marty
• Accuracy
• Uptime
• Price
• Design
• WTP = ~$150-200/month
• CAC = ~$XX
• LTV: $XXX

Startup Steve
• Price
• Design
• Actionability
• Depth
• CAC = ~$500-$600
• LTV: $600
Miderprise Marty
• Accuracy
• Uptime
• Price
• Design
• WTP = ~$150-200/month
• CAC = ~$3000
• LTV: $1500

1
2
3
WTP for a Churn Reduction Solution
WTP
$0
$1,250
$2,500
$3,750
$5,000
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+

1
2
3
WTP for a Rev Rec Solution
WTP
$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.
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

Start small. You can always test more.

12 hours.

12 hours. $2,089.

Implement a pricing process.

Monetization Matters.

patrick@priceintelligently.com

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

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