Validating Your 4 Customer Types
Advice on Discovering Your Buying Team for New Ideas
When creating a new product or service, it’s essential to take a “demand-first” perspective. That means finding someone who is enticed by your idea BEFORE trying to make it a reality. Not to convince everyone you’re right, but to find a passionate niche of people who can become early adopters and inform the strategy you design to pursue your vision.
Customer Validation
This Wednesday, I’ll be on Zoom leading the first workshop in a first-time founder learning series out of Fuse Accelerator, Launch University: Ideation. The first session is always on Customer Validation. Per standard practice in startups, it’s about coming to a hypothesis then immediately testing it in the real world by “Getting Out of the Building.” Conventional strategies include interviews, surveys, and pre-pitching the idea (before you even have a product) to prospective customers.
Over the last five years, I’ve delivered the session many times, but this year — for the first time — I’ve included a vital perspective on the reality of selling: Customer Types. Many entrepreneurs think of their “customer” as one type of person. Still, for most products and services, especially those selling to a business, it’s essential to conceive of a way to navigate situations where there is a team of buyers considering your idea.
There are many systems I’ve encountered to do this separation, from quadrants analyzing psychology vs. authority to the behavior-driven bucketing of customers by class. In my eyes, the most useful systems are the ones that enable you to drive sales, product, and marketing deliverables. If there is a class of customer that needs different materials to greenlight you during evaluation (EG, marketing flyer vs. technical documentation), then you need to recognize that category in some way.
Customer Types
In my time at LiveTiles, there was about a two year period where I not only led the US Product team but did a lot of sales engineering. Sales folks loved talking about the Budget-Authority-Need-Timeliness (BANT) of an opportunity. I most often saw that checklist play out across a team of buyers — sometimes called a “jury” — in different roles across the table or on the Skype call (remember Skype for Business?). From Enterprise Architects worried about the uptime guarantee to managers mulling over their budgets, there was always more than one kind of customer at that table.
Here are my classifications, based on the Miller-Heiman Buying Influences:
User
The individuals who benefit from the product or service. These are the folks a layperson would consider “The Customer,” and whoever invented the phrase “Customer Obsession” was talking about them. They need to understand how it fits in their habits, fits in their brain, and benefits their life. They will absolutely have an ongoing relationship with your company, and most innovation of your offerings and processes should center on their feedback.
Decider
The individual — often just one key person with apparent authority in the org chart — who makes the final decision on acquiring your offering. They are the ones who sign the Purchase Order. They may also lead the buying team members in some capacity. In my experience, it was often the department head of the Users and potentially the boss of the Technical customer. They need to have analysis and intuition that makes success likely and risk low. They may have an ongoing relationship with your product in the hopeful capacity of becoming a “Champion” for your company. Deliver success to a decider, and later they’ll repay you with influential recommendations to their colleagues and bosses.
Buyer
The individual, or potentially department, tasked with managing the finances and budget. They likely don’t influence the selection process, but they have a significant weight on the decision and negotiation of acquiring the product. On a good day, this is the same as the Decider, but sometimes it’s a separate procurement department that can squash the deal, or at least drag it out. You need to prepare your sales team on how to overcome challenges from these folks, but from an idea standpoint, you don’t need to validate much about how people buy aside from having a compelling answer to the question “is the price worth the value?”.
Technical
Technical customer, or just “the Tech”, evaluates the product across many dimensions before recommending to the Decider. They may give specific accreditation to your offering before it is accepted by the Buyer (EG, IT categorization in preferred security rating of a product). Creating a relationship with them can be intensely valuable in some industries. For instance, cloud providers like Amazon and Microsoft offer contracts starting in the tens of thousands of dollars just to keep Technical customers looking competent to their shared Users.
Customer Types By Example
Even if you think your primary consumer product only has one type of buyer, I think you’d be surprised by what involves a team. For instance, imagine the very pedestrian activity of a family and a birthday present. Can you have a buying team before you know it?
It’s almost time for the kid’s birthday. Grandma wants to get them a bike. Who is the customer here? Grandma? The kids? All of the above?
Grandma is the Buyer. She is going to open up her purse, pull out her credit card, and hopefully remember to get helmets as well. She will also take the time required to deploy the solution by teaching the kids how to ride.
While a buyer is necessary, they are rarely sufficient. Grandma doesn’t know what kind of bike the kids want, if they’re old enough, and who is going to fix the tires if they run over anything sharp — help!
The kids are the Users who will ride around on the bicycles, but they also have no money and can’t get to the store by themselves (hence why they need bicycles!). In this case, they may also evaluate the style of the item, but overall, they’re just excited to get any bike as long as their parents say yes.
In this family, Mom is the Decider. While her spouse’s opinion is an influence on her decision — to the point where he could be either a “champion” or “saboteur” on the deal — she is the assertive leader of this family.
Dad is the Tech. He has to figure out the bikes fit in the car on the way home, find a place for them in the garage, and keep them in working order from pumping up the tires to tightening the bolts.
Who knew birthdays were so complicated?
Where to from Here?
Recognizing that finding your customer is the key to success and realizing how complicated it can be to understand each type of customer you have, you should be ready to start discovery by “Getting Out of the Building.”
You can now build a Persona for each customer — in the very least the user — as a way to test your assumption and challenge your hypothesis. If you can connect with people who share your vision and would rapidly adopt your idea, then you’ll be able to make a learning loop to take your product or service forward to success.
The first week of Launch University: Ideation deals with “Customer Validation,” delving into the why, how, and what of finding the people willing to pay for your idea. Register now to join the class of 2020 on July 22nd.
One Last Thing
One that last thing to keep in mind: there is also the concept of “segmentation” that can apply to customers or markets. Once you start examining segments, you may swiftly realize there is more than one set of customers that interact with your offering. In the realm of technology, I’ve seen this play out many times where the small and medium-size business (SMB) tech teams have very different demands and perspectives compared to Enterprise IT organizations.
Categorizing, prioritizing, and keeping that hyper-focus the early-stage ideas need is the most important thing. First, nail a single customer in a single segment, but certainly document any ideas along the way since that may be your pivot or push outward in the future. Creativity requires copious input: pan enough dirt, and you’ll find gold — talk to enough people, and you’ll find evangelists for your new vision.
Erik Ralston is an innovator with 17 years of education and experience, having spent the last five years in leadership at the fastest growing tech company in Australia. Erik is also co-founder of Fuse Accelerator in the emerging community of Tri-Cities, WA, where he works on connecting people and sharing knowledge to turn new ideas into growing startups. You can find him on LinkedIn, Twitter, or the next Fuse event.
