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

How to build actual customer drivenproduct

Turing Festival 2016

@PriceIntel

http://www.priceintelligently.com/turing

[email protected]

@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

ProfitWellSaaS pricing

software and tech enabled services

Free financial metrics for

subscription businesses

@PriceIntel

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 Ago Today

# o

f C

om

pet

ito

rsHow many competitors did you have during the following periods?

@PriceIntel

Competition is here

0%

10%

20%

30%

40%

50%

0 to 2 3 to 5 6 to 10 11+

% o

f R

esp

on

den

ts

How many competitors do you current have? (Companies around for less than 1 year)

N = 547 software companies

@PriceIntel

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%

50%

75%

100%

125%

4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today

WT

P a

s %

of

WT

P 4

Yea

rs A

go

Willingness to pay over time relative to WTP 4 years ago

Core Features Single Sign On Integrations Analytics

@PriceIntel

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%

4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today

CA

C a

s %

of

CA

C 4

Yea

rs A

go

Blended CAC relative to four years ago

B2B B2C

@PriceIntel

“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• 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

We don’t know our buyers that well

0%

25%

50%

75%

100%

Thought about them Central document Quantified buyer personas

% o

f R

esp

on

den

ts

Which single category best describes your buyer personas?

N = 1,647 software companies

@PriceIntel

We don’t do a lot of cust devconversations

0%

25%

50%

75%

100%

Less than 10 11 to 25 26 to 50 51+

% o

f R

esp

on

den

ts

#ofcust dev conversations

How many cust dev conversations are you having per month?


@PriceIntel

We don’t send any cust dev surveys

0%

25%

50%

75%

100%

0 1 2 3+

% o

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esp

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#ofcust dev surveys

How many cust dev surveys are you sending each month?


@PriceIntel

We aren’t truly testing that much

0%

25%

50%

75%

100%

0 1 to 3 4 to 10 11+

% o

f R

esp

on

den

ts

#oftests/experiments

How many tests or experiments are you running each month?


@PriceIntel

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

% o

f to

tal

art

icle

s

Category of growth articles written from 2014 to 2106

N = 25,679 blog posts written between 2014 to 2016

@PriceIntel

Looked at 6,324 B2B companies

@PriceIntel

We love building for acquisition

0%

25%

50%

75%

100%


% o

f to

tal

com

pa

nie

s

Category of B2B SaaS companies

N = 6,324 companies currently active

@PriceIntel

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

% o

f to

tal

com

pa

nie

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C-Level/Founder Growth Preferences

N = 1,432 SaaS companies, +/- 2.19% MoE at 95% level

@PriceIntel

What’s most important?

N = 1,218 SaaS companies, +/- 2.61% MoE at 95% level

0%

25%

50%

75%

100%


% o

f to

tal

com

pa

nie

s

C-Level/Founder Spend Their Time

@PriceIntel

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%


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Impact of improving each lever by 1%


@PriceIntel


3.32%

6.71%

0%

5%

10%

15%


% i

mp

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@PriceIntel


3.32%

12.70%

6.71%

0%

5%

10%

15%


% i

mp

act

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@PriceIntel

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

% o

f to

tal

com

pa

nie

s

C-Level/Founder Growth Preferences

N = 1,432 SaaS companies

@PriceIntel

What works for growth

3.32%

12.70%

6.71%

0%

5%

10%

15%


% i

mp

act

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N = Data from 512 companies

@PriceIntel

This should be scary.

@PriceIntel

Everything aligns to the customer

Point of Conversion

Drive Customer #1

Offer Product #1

Offer Product #2

Drive Customer #2Drive Customer #3

Offer Product #3Justify price #1

Justify price #2

Justify price #3

@PriceIntel

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• 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

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: $

Miderprise Marty




@PriceIntel

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 Personasand Design

1

Data CollectionAnd Segmentation

2

1

2

3

4

Data ConsolidationAnd Analysis

3

@PriceIntel

Persona-Product Fit

Startup Steve




Miderprise Marty




@PriceIntel

Experimental Design

@PriceIntel

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

Relative Preference AnalysisStatistical methodology to measure preferences for features, intention, and value propositions

Your Customer Development Toolkit

Price Sensitivity AnalysisProven model for gauging customer’s willingness to pay and price sensitivity

Experimental DesignProperly segmenting and breaking down the data.

How do we ask the questions?

@PriceIntel

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

Accuracyofyourmetrics

Actionabilityfromyourmetrics

BeautifulDesign

Depthofyourmetrics

@PriceIntel

@PriceIntel

What do your customers value the most?

More on: Relative Preference Analysis

@PriceIntel

Your Experimental Design


Main Category

Support• Phone• Live Chat• Email• …

@PriceIntel



Main Category


Data in Integrations

Metric Types

Data out Integrations

Action Tools

@PriceIntel



Main Category


Data in Integrations

Metric Types

Data out Integrations

Action Tools

All Demographics and Personas

@PriceIntel

Persona-Product Fit

Startup Steve

• Valued features: • Price • Design

• Least valued features• Actionabiltiy• Depth


Miderprise Marty

• Valued features: • Accuracy • Uptime

• Least valued features• Price • Design


@PriceIntel

Relative Preference AnalysisStatistical methodology to measure preferences for features, intention, and value propositions

Your Customer Development Toolkit

Price Sensitivity AnalysisProven model for gauging customer’s willingness to pay and price sensitivity

Experimental DesignProperly segmenting and breaking down the data.

How do we ask the questions?

@PriceIntel

How much are they willing to pay?

@PriceIntel

Basic Plus Premium

$49 $149 $299

Ionlyhaveonecoolfeature. Thesame coolfeature. Yup,sameone.

Oh!Youcanonlygetthis here. Well…andhere.

Huzzah!I’mtheplanwithabsolutelyeverything.

@PriceIntel

• 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

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+

WT

P

Size of Company (MRR)

WTP for a SaaS Metrics Solution

N = 234 companies

@PriceIntel

Persona-Product Fit

Startup Steve



• WTP = ~$50/month• CAC = ~$• LTV: $

Miderprise Marty



• WTP = ~$150-250/month• CAC = ~$• LTV: $

@PriceIntel

Persona-Product Fit

Startup Steve



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

Miderprise Marty



• WTP = ~$150-250/month• CAC = ~$3000• LTV: $1500

@PriceIntel

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+

WT

P


WTP for a Recovering Churn

N = 234 companies

@PriceIntel

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+

WT

P


WTP for a Revenue Recognition

N = 234 companies

@PriceIntel

A good entry point

Low CAC with constant

value

Creates the Requirement

Path to Share of Wallet

ProfitWellFinancial 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

Our current monetization path

ProfitWellFinancial 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

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 Advisory

Panel

Implement

Changes

Step:

@PriceIntel

Customers matter.

@PriceIntel

Building a company is getting harder; make it easier on yourself.

@PriceIntel

http://www.priceintelligently.com/turing

[email protected]

@PriceIntel

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

Software

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