Patrick Campbell – How to Build Actual Customer-Driven Product (Turing Fest 2016)

Transcript

1. How to build actual customer driven product Turing Festival 2016 @PriceIntel
2. http://www.priceintelligently.com/turing Patrick@priceintelligently.com @PriceIntel
3. Building product is getting harder, not easier…and it’s going to increase in difficulty. @PriceIntel
4. The age of throwing shit against the wall and seeing what sticks is over. @PriceIntel
5. Who in the world are you? @PriceIntel
6. Happy customers big and small ProfitWell SaaS pricing software and tech enabled services Free financial metrics for subscription businesses @PriceIntel
7. We’ve seen inside more software companies than anyone else on the planet. @PriceIntel
8. The market is becoming saturated. @PriceIntel
9. Our world is more competitive, making switching costs easier. @PriceIntel
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 # of Competitors How many competitors did you have during the following periods? @PriceIntel
11. Competition is here 0% 10% 20% 30% 40% 50% 0 to 2 3 to 5 6 to 10 11+ % of Respondents How many competitors do you current have? (Companies around for less than 1 year) N = 547 software companies @PriceIntel
12. The relative value of features is declining, making a race to the bottom for feature based pricing. @PriceIntel
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 WTP as % of WTP 4 Years Ago Willingness to pay over time relative to WTP 4 years ago Core Features Single Sign On Integrations Analytics @PriceIntel
14. CAC is increasing over time. @PriceIntel
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 CAC as % of CAC 4 Years Ago Blended CAC relative to four years ago B2B B2C @PriceIntel
16. “Good”, “Customer driven” product is becoming exceptionally more important @PriceIntel
17. We’re really ill equipped for the transition. @PriceIntel
18. We don’t really know our buyers @PriceIntel
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. We don’t know our buyers that well 0% 25% 50% 75% 100% Thought about them Central document Quantified buyer personas % of Respondents Which single category best describes your buyer personas? N = 1,647 software companies @PriceIntel
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+ % of Respondents # of cust dev conversations How many cust dev conversations are you having per month? N = 1,647 software companies @PriceIntel
22. We don’t send any cust dev surveys 0% 25% 50% 75% 100% 0 1 2 3+ % of Respondents # of cust dev surveys How many cust dev surveys are you sending each month? N = 1,647 software companies @PriceIntel
23. We aren’t truly testing that much 0% 25% 50% 75% 100% 0 1 to 3 4 to 10 11+ % of Respondents # of tests/experiments How many tests or experiments are you running each month? N = 1,647 software companies @PriceIntel
24. We’re obsessed with acquisition. Like stalker level obsessed. @PriceIntel
25. Looked at 25,679 blog posts. @PriceIntel
26. We love talking about acquisition 0% 25% 50% 75% 100% Acquisition Monetization Retention % of total articles Category of growth articles written from 2014 to 2106 N = 25,679 blog posts written between 2014 to 2016 @PriceIntel
27. Looked at 6,324 B2B companies @PriceIntel
28. We love building for acquisition 0% 25% 50% 75% 100% Acquisition Monetization Retention % of total companies Category of B2B SaaS companies N = 6,324 companies currently active @PriceIntel
29. These are just the acquisition companies @PriceIntel
30. Asked Founders/Executives @PriceIntel
31. What’s most important? 0% 25% 50% 75% 100% More logos Making more money per customer Keeping customers around longer % of total companies C-Level/Founder Growth Preferences N = 1,432 SaaS companies, +/- 2.19% MoE at 95% level @PriceIntel
32. What’s most important? N = 1,218 SaaS companies, +/- 2.61% MoE at 95% level 0% 25% 50% 75% 100% Acquisition Monetization Retention % of total companies C-Level/Founder Spend Their Time @PriceIntel
33. If we improve each lever by the same amount, which lever causes the most growth? @PriceIntel
34. Impact of improving each growth lever 3.32% 0% 5% 10% 15% Acquisition Monetization Retention % impact on the bottom line Impact of improving each lever by 1% N = 578 SaaS companies, +/- 2.89% MoE at 95% level @PriceIntel
35. Impact of improving each growth lever 3.32% 6.71% 0% 5% 10% 15% Acquisition Monetization Retention % impact on the bottom line Impact of improving each lever by 1% N = 578 SaaS companies, +/- 2.89% MoE at 95% level @PriceIntel
36. Impact of improving each growth lever 3.32% 12.70% 6.71% 0% 5% 10% 15% Acquisition Monetization Retention % impact on the bottom line Impact of improving each lever by 1% N = 578 SaaS companies, +/- 2.89% MoE at 95% level @PriceIntel
37. Improving retention and monetization has 2-4x the impact of focusing on acquisition. @PriceIntel
38. What we find important 0% 25% 50% 75% 100% More logos Making more money per customer Keeping customers around longer % of total companies C-Level/Founder Growth Preferences N = 1,432 SaaS companies @PriceIntel
39. What works for growth 3.32% 12.70% 6.71% 0% 5% 10% 15% Acquisition Monetization Retention % impact on the bottom line Impact of improving each lever by 1% N = Data from 512 companies @PriceIntel
40. This should be scary. @PriceIntel
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. How do we fix our customer development? @PriceIntel
43. 3 ways to better monetization • Quantify your buyer personas • Implement a customer development process @PriceIntel
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: $325 @PriceIntel
45. If you don’t know who you’re driving to your product, how do you know what build? @PriceIntel
46. Let’s walk through an example… @PriceIntel
47. ProfitWell @PriceIntel
48. “Oh you’re like….” @PriceIntel
49. “Oh you’re like….” 37 Other Competitors (we know about) @PriceIntel
50. Persona-Product Fit Startup Steve • Valued features: • • • Least valued features • • • WTP = ~$/month • CAC = ~$ • LTV: $ Miderprise Marty • Valued features: • • • Least valued features • • • WTP = ~$/month • CAC = ~$ • LTV: $ @PriceIntel
51. Go to the customer! @PriceIntel
52. For the love of God. Talk to your customer. @PriceIntel
53. Great. How do we do that? @PriceIntel
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. 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. Experimental Design @PriceIntel
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. 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. What do people value? @PriceIntel
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. @PriceIntel
62. What do your customers value the most? More on: Relative Preference Analysis @PriceIntel
63. What do your customers value the most? More on: Relative Preference Analysis @PriceIntel
64. What do your customers value the most? More on: Relative Preference Analysis @PriceIntel
65. Your Experimental Design More on: Relative Preference Analysis Main Category Support • Phone • Live Chat • Email • … @PriceIntel
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. 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. 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. 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. How much are they willing to pay? @PriceIntel
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. • 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. How much are your customers willing to pay? More on: Relative Price Sensitivity Meter @PriceIntel
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. 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. 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. 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. 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. 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. 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. 12 hours total. @PriceIntel
82. 12 hours total. $2089. @PriceIntel
83. Implement a customer development process @PriceIntel
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. Customers matter. @PriceIntel
86. Building a company is getting harder; make it easier on yourself. @PriceIntel
87. http://www.priceintelligently.com/turing Patrick@priceintelligently.com @PriceIntel