They want to see proof before deciding to use a product. They’ll put off using it until it’s really easy to adopt.
They might know of your company or have become aware of it through their early majority contacts, but they’re quite different from them.
At this point, you’ll definitely know of a few prospects that seemed like perfect fits as customers, but were just not ready.
Revisit those organizations:
Have they become familiar with your product? Do they know of other organizations using your technology? Has the problem evolved? Is the timing better? Can you provide sufficient proof to de-risk implementation?
You’re looking for your tipping point, when – based on word of mouth and market share – your niche market segment dominance becomes inevitable.
When’s the Right Time to Enter a New Market Segment
More specifically, you want to consider expanding into new market segments when:
You’ve captured the largest market share within your beachhead – Are you at 30, 40 or 50% market share? Don’t stop until you dominate the market.
All prospects have at least heard of your product – Do you have good brand awareness? Can you do a market survey to find out?
You’ve already taken away the best opportunities – the most profitable, the fastest growing, the best customers. You want to make this an un-assailable position. Let competitors fight for scraps.
You have resources that can be freed up without reducing your grip on the market – You can service the late majority while expanding into new market segments.
You have the cashflow to build other salesforce, support teams and marketing pipelines.
When the momentum from capturing market share in your beachhead is felt, you can leverage it to expand into new market segments.
Expand gradually, and takeover more market opportunities.
In B2B, you need to change your mindset to truly dominate your beachhead market.
Your marketing, your distribution, your whole product, your focus — everything has to change.
Your value proposition has to change from ‘look at all the great things that can happen with our product’ to ‘here are the specific problems we can solve’.
It’s a very different game.
You need your one sentence benefit; it has to be crystal-clear.
As entrepreneur and author Tim Ferriss says, “People can dislike you or your business but they should never misunderstand you.”
You only get one shot at positioning per prospect. Your positioning should answer: How do we help customers like them. What’s so great about it? And so what?
The great thing is that once your message is consistent and targeted, it becomes a lot more impactful.
Once you’re able to take on your prospects’ perspective, wants and challenges, you can speak to their reality.
At LANDR, where I used to work, it was not uncommon to see the performance of messages and landing pages double when switching from generic messaging – speaking to all customer types – to speaking to a targeted audience.
You can do the same.
At this point – and based on your new positioning – you’ll want to do a complete rework of your website, your sales collaterals, your ads, your landing pages, your social media accounts, your whitepapers, your testimonies, your client lists and case studies.
In all likelihood, you’ll need to go a lot further than that.
How to Find Candidates for Case Studies in Your Beachhead Market
Now, getting case studies won’t always be an option. Some clients – even real early advocates – are limited in what they can say or share publicly.
In those scenarios, you can negotiate to use the company name and logo on your website, write a short testimony, publish a joint press release about the deal, write a blog post or technical paper about the experience, get the customer to take occasional calls from prospects or do a joint presentation at a conference.
There’s many ways to get creative here.
But even after having created compelling case studies, you’ll want to go deeper:
When we were targeting our security beachhead market at Psykler, the name of a certain security specialist kept popping up.
It was clear that a lot of our prospects looked up to this person and that he had a lot of influence on the market we were targeting.
We invested a lot of effort in convincing that influencer to join us as an advisor. We made some headway, but it was still a work in progress when Psykler ran out of money.
Experts and salespeople selling or working in your beachhead market – There’s most likely people already selling to your prospects or working in other capacities to service those customers.
They already know what’s sellable; they know the levers and pain points. Chances are, they also have connections. They’re the people you want to hire to speed up market dominance.
Other companies selling in your market – You may be the first with this solution in the beachhead market, but there’s certainly other companies servicing the same customers. Get close to these companies.
They can help open doors, provide insights and, maybe, even partner up to help you capture market shares.
It can be a conference, tradeshow, seminar, restaurant, bar, hotel or professional association networking event.
Swedish data visualization startup Spotfire even set up their company’s sales office in the same building as the two restaurants where their targets – energy industry executives – met for lunch and drinks.
You need to go to the places where your target customers already are and piggy-back on those places to attract them.
A lot can be learned by studying B2B SaaS pricing pages.
Once you’ve honed in on a market, you can find business opportunities by analyzing the technology landscape, looking at what business customers are already buying.
You can speed up product-market validation by identifying gaps in the product offerings on the market and capitalizing on those opportunities. This is what this post is all about.
What You Can Learn by Analyzing B2B SaaS Pricing Pages
B2B SaaS pricing models are usually representations of the company’s business model.
The features, plans, price points and omissions all say something about the way the business delivers value to its customers. In other words, every line in a pricing table is intended to get a certain reaction from prospective customers.
By going through different pricing pages in the market you’re targeting, you can learn about:
The features that are most-valued by customers;
The “whole product”, or the features that customers expect;
Customer segments and the functionalities they value and pay for;
Typical engagement length and churn rates.
How to Analyze B2B SaaS Pricing Pages
You’ll need 3 things to successfully analyze pricing pages in your market:
A clear definition of your vision: When you know what you’re trying to achieve it’s easier to define competitors and solutions worth including in your analysis;
A list of the players in the space: You can find B2B SaaS products competing in your space (or related spaces) using Google or by querying sites like AngelList and Crunchbase;
An idea of which businesses are successfully selling in the space: For this analysis, it’s best to focus on businesses generating actual money. You can use directory sites like Capterra, G2Crowd or GetApp to get a feel for a business’s customer base. Alternatively, some businesses might have published revenue numbers you can use.
Select the 10 to 12 most relevant products’ pricing pages. For each of these pages, we’ll look at value metrics, expected features, plan differentiations, add-ons and price points. It’s all below.
How to Find the Value Metric in a Pricing Table
A value metric is the main reason why customers buy a subscription (e.g. number of users). It’s also often the reason (e.g. ‘we need more user accounts’) why they upgrade to a higher-priced plan.
In the context of a multi-axis pricing model (e.g. number of users and features), it tends to be the main axis along which customers make purchase decisions.
As an example, project management tool Wrike (below) has both feature and seat differentiations for each of its plans:
To find the value metric, look for the main benefit that fluctuates in either quantity or quality from one plan to the next.
Knowing what the value metric is tells you what businesses expect to pay for (e.g. users), and how they evaluate purchase decisions for this type of software.
How to Define “the Whole Product” with B2B SaaS Pricing Models
Typically, the common functionalities across the different pricing plans are part of the whole product – the things that must be put in place just so your startup can be considered a valid vendor by your prospects.
Those features are important enough to be listed, because they have an impact on the buying decision, but they’re not strong enough to get customers to upgrade to a more expensive subscription.
You’ll probably have to build all of these features just to be able to compete with the specific product.
How to Analyze Plan Breakdown
A well-designed pricing page helps prospects quickly self-qualify:
A well-designed pricing page also makes it easy to understand the transition from plan to plan, by making the differentiating features and benefits crystal clear.
For the above example (Leadpages), a company would upgrade from Standard to Pro for:
Unlimited A/B Split Testing;
Online Sales and Payments;
They would also upgrade from Pro to Advanced for:
More SMS Campaigns;
SMS campaigns seem to be a distinctive feature (possibly the value metric) that helps move customers from one plan to the next. For larger organizations, deeper integrations, advanced support and personal customer success drive upgrades.
How to Recruit Participants for Customer Exit Surveys
It’s notoriously hard to recruit customer exit survey participants.
Because they’ve already expressed dissatisfaction with your product (they left!), a lot of churners won’t want to engage further with your team. Chances are, the participants you’ll get will be either early adopters or the angry-type. It’s something to keep in mind when analyzing survey data.
The best time to ask churners to take your survey is at the time of cancellation – when they’re still thinking about your product – as part of your downgrade flow or via email.
You’ll get the best response rate by asking the following question during the downgrade flow:
“What’s the single biggest reason for you cancelling?”
[ ] I don’t understand how to use your product
[ ] It’s too expensive
[ ] I found another product that I like better
[ ] I don’t use it enough
[ ] Some features I need are missing
If email is the best option for you, you’ll want to contact churners right after cancellation with a low-friction exit survey.
Some businesses incentivize their churners with gift cards (e.g. Amazon gift cards) to increase the number of responses they get, but this is often unnecessary, and can lead to biases in data collection.
How to Analyze Customer Exit Surveys
Once you know why your customers are leaving, it’s not hard to realize that some cancellations could have been prevented.
However, to truly understand what the data means for your product, you have to segment responses using key criteria:
Subscription plans (e.g. Basic vs Pro, Monthly vs Yearly);
Contrary to customer discovery interviews, Jobs to Be Done interviews focus on a single story. In this case, it’s the story of what led your users to stop using your product and start using another. Because of this, these interviews are often call “Switch” interviews.
Here are a few customer exit survey questions I like to use in these interviews:
WHAT IT TELLS YOU
Why did you initially sign up for [PRODUCT]? Did you evaluate other tools?
What was your previous experience with [SOLUTION SPACE]?
These questions help you understand your customer’s expectations coming in, and what convinced them to give your product a try. They help you understand whether the customer was a good prospect to begin with.
What were you using [PRODUCT] for? How often were you using it?
When was the first time you had the first thought that maybe [PRODUCT] wasn’t going to work? Or realized that you weren’t using it?
These questions help you understand the Job they were hiring your product for, and what sparked their cancellation.
What happened the last time that you used [PRODUCT] for [JOB TO BE DONE]?
What happened the first time you had [JOB TO BE DONE] that you didn’t use [PRODUCT] for?
Why did you cancel the day that you cancelled? Why that day, and not the day before or after?
What are you using now? How do you feel it compares to [PRODUCT]?
What happened the day you started to move to the new [PRODUCT]? Why did you start that day and not after?
These questions help you understand whether the customers are actually better off with a different solution. It also gives you good insights into the actual switch.
Among the happy discoveries that followed the publication of the book was the realization that the second largest group of buyers (after B2B founders) was innovation consultants and intrapreneurs. Not only did they buy the book, they also found a lot of value in the content.
Innovation and entrepreneurship often go hand-in-hand in these organizations: To build or to buy is a question innovation managers have to answer. Businesses need to decide which innovation projects to fund.
To help assess innovation projects, I have put together a list of the 9 best books on innovation:
One of the most important early innovation books, and the only book about farming on this list. Diffusion of Innovations is a great example of how technological changes impact all sectors.
The book introduced the different categories of adopters (innovators, early adopters, early majority, late majority, and laggards), on which Geoffrey Moore expanded in Crossing the Chasm. It also created some of the early theories around innovation adoption in large organizations.
A global bestseller among business leaders. Blue Ocean Strategy introduced a useful framework to understand the relative positioning of offerings and businesses.
Blue Ocean Strategy draws a comparison between the way businesses compete in red oceans, where companies compete in an existing market space and work to exploit existing demand, and blue oceans, where companies capture new demand by creating (and competing on) new parameters.
The first book to define entrepreneurship as a systematic discipline. Innovation and Entrepreneurship remains as relevant today as it was 30 years ago when it was published.
The book advocates focus, building from a position of strength, and being market-driven. It’s a great read to understand the differences in the practices of innovation and entrepreneurship and create the processes to make innovation projects successful in organizations.
One of my favorite innovation books. The Innovator’s Dilemma demonstrates how incumbents have historically been disrupted by more focused and nimble technology companies.
The theory behind the book was widely adopted by the tech sector. Some of the largest technology companies today, like Facebook, now actively seek out products, platforms and companies with the potential to disrupt them (e.g. WhatsApp and Instagram acquisitions).
To effect change in an organization, intrapreneurs need buy-in from management and processes to quickly respond to market changes.
Lean Enterprise looks at how The Lean Startup can be used to change processes and influence upper-management. It offers a lot of valuable advice on how to move fast at scale and change the organization. It’s a must-read if you’re in charge of an innovation project within a large organization.
Creativity, Inc looks at the creative and innovation processes of Academy Award–winning animation studio Pixar.
The book looks at the unique environment that Pixar built to maximize creative throughput and become one of the most profitable movie studios. There’s a lot to learn from this book in terms of leadership and creativity management, which are both key in innovation.
Subject to Change was written by the partners of Adaptive Path, a now-defunct experience strategy and design agency.
The book explains why companies need to develop qualitative customer research capacities to understand customer behaviors and inform innovation projects. It’s a great primer on making an organization more customer-centric and market-driven.
Innovation won’t succeed without good execution. If your organization has great ideas, but doesn’t have the processes and people in place to realize them, it won’t be able to make a dent in the market.
Making Ideas Happen will help you build the capacity to make ideas happen. The book offers a lot of actionable advices to improve productivity and create better products.
Do you agree with my list? What are your must-read innovation books? Tweet at @LeanB2B.