“People’s reasons for buying things often don’t match up with the company’s reason for selling them.” – Jason Fried, Basecamp CEO & Founder
There’s a reason why hiring a bunch of salespeople or scaling sales often fails at this stage. The Growth Stage is about learning, but it can easily be mistaken for a process problem.
Many businesses set up processes, hire sales staff, and expect sales to start rolling in. Salespeople, used to selling well-defined products with clear benefits, then fail to meet expectations.
The reality is that there are big differences between the people who first figure out the sales strategy, and those who execute it.
As Jason M. Lemkin says: “You can’t hire some magic salesperson to “get you more sales”. You have to figure it out first yourself.”
Misunderstanding Why Customers Buy
Unless you know why customers buy, and then buy again from you, you’re not ready to scale.
There are countless examples of businesses that misunderstood the real reasons why customers were buying their products. As a result, they sold to the wrong customers, and eventually, growth stalled.
In our interview, demand generation expert Rene Bastijans shared the story of an e-Learning business he was working with. This company had marketed its product as a platform to help share knowledge internally.
Through interviews, Rene realized that buyers were struggling so much with finding time to do their work that they were using the software to onboard new employees, so that they could have more time to do their work. Employees were leaving all the time, and buyers were looking for a platform to onboard employees, so that they could focus on getting things done.
Very different, right?
April Dunford explains: “Often, the product we end up with is not what we started out to build. Our email system seems more like group chat, our database seems more like an analytics platform and our cake has become muffins. This transformation happens so gradually that we, the product creators, often don’t notice it. We still see the product as the thing we set out to build. What else could it possibly be?”
Understanding Product Value
To be able to operationalize your sales process, you have to understand why prospects buy. The best way to do this is through Switch interviews, which evaluate purchase decisions.
Recruit a random sample of 15-20 customers from your best-performing segment. Ask questions like:
- How did you first hear about [ Product ] ? What did you know about it at the time?
- What was going on in your life at that time?
- Did you imagine what life would be like with the product? And what were you expecting?
- What made you decide to sign up and try the product?
- Did anyone else weigh in on the decision?
- Did you evaluate other products?
- Once you signed up, how did the product compare to your expectations?
- Did you feel you had all the information you needed to get started?
- What made you decide to buy the product in the first place?
- What was the main thing that convinced you?
- Did anything make you hesitate in buying [ Product ]?
- Now that you have [ Product ] what can you do that you couldn’t do before?
- What is the main value you feel you’ve received from the product?
What were they hoping to get done? How do customers want to feel or avoid feeling? How do they want to be perceived by others?
By asking about the Job they were hiring your product for, and asking what specific value they got from the product, you can compare expectations with reality. You’ll also be able to get a feel for the real value drivers.
Understanding Repeat Purchase Behaviors
It can be a good idea to compare their answers to those of re-purchasers—customers who have been subscribed for several months (monthly plan), several years (annual plan), or who have bought several times (one-off purchases).
Repeat purchases are a great sign that your product keeps delivering value to customers.
For interviews with re-purchasers, you can ask questions like:
- What made you decide to buy the product in the first place?
- What was the main thing that convinced you?
- Why did you decide to buy again?
- What were your criteria for this decision?
- What is the main value you feel you’ve received from the product?
- Did that change over time?
- Now that you’ve used [ Product ] for [ X ] months, do you feel that the product value has increased or decreased? Why?
- Have you recommended the product to anyone else? Why?
- Have you evaluated going on the annual plan?
- Why did you decide for/against that?
Finding Opportunities to Improve Product Value
By contrasting expectations with the reasons to buy and rebuy, you can start understanding how the perception of product value evolves over time.
Do these reasons align with the reasons why you built the product? Are there patterns you weren’t aware of? Are you discovering new reasons why customers use your product?
Founder of OpenView Venture Partners Scott Maxwell, says that “50% of startups have an inaccurate understanding of why customers buy”.
Dig through product usage: Do the users you interviewed use your product in the way they say they do? Can you notice anything else from the data?
Once you begin to figure out what customers buy, then you can start thinking about ways to drive more revenue per customer through expansion revenue.
As Pardot co-founder and ex-CEO David Cummings says: “The Holy Grail of Software-as-a-Service (SaaS)[ is ] a business that grows year-over-year without signing any new customers.”
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This post in an excerpt from Solving Product. If you enjoyed the content, you'll love the new book. You can download the first 3 chapters here →.