Understanding the various roles that constitute a customer in the Sweet Spot is critical prior to defining product and commercial strategy.
No matter the offering and the type of customer, the buying decision is complex. Every customer – a company or a consumer – has a buyer, a user, and an approver hidden somewhere. These three roles are not necessarily separate individuals. But designing, building, and selling any offering should take all three roles and their needs into consideration. Although this consideration is easier to grasp where customers are companies, the same principle applies when customers are individuals.
Importance Of Understanding The Customer
Different stakeholders at the customer have different product and commercial needs and those should be built into Product and Commercial Strategy. i.e. without understanding the customer better, there is no Product Strategy or Commercial Strategy.
Misunderstanding who the customer really is and how the customer thinks is a common slip-up on the path to defining corporate strategy. Common mistakes include:
- Thinking about a customer as one blob: An unsophisticated way of thinking about the customer is to assume that every individual on the customer side has the same needs and criteria, and that they all agree on buying decisions. This is almost always an incorrect assumption.
- Thinking about one specific stakeholder as the customer: All of us have proximity biases. We are naturally inclined to think that the entity that is closest to us or most visible to us is also the most important one. By extension, we are likely to think that the entity that we touch most often on the customer side or the person that holds the purse as ‘the customer’. However, this is also often misleading.
Understanding customers involve developing objective hypotheses that are validated by analyzing behavioral data and having structured and planned discussions with customers that are unbiased, deep, and well-documented. Every company should be constantly talking to their customers and looking at available data; and most companies do. However, to really understand customers’ needs and mindset, the company has to go well beyond asking superficial questions and working with biased hypotheses.
- Customers are normal human beings. They are often polite, guarded, and very busy. Asking customers unsophisticated questions allow them to provide unsophisticated answers and get back to their lives.
- Additionally, it is easy to fall prey to biases. Working with biased questions often leads to incorrect learnings.
The Three Roles
Broadly speaking, there are three roles that collectively form a customer – the buyer, the user, and the approver. To be clear, these are roles; not necessarily three individuals or three teams. Let’s unpack these.
Hands down, this is the most important role. The buyer holds pretty much all the cards in terms of first-time and ongoing buying decisions. On the customer side, the buyer is usually the party responsible and accountable for addressing the specific problem that the company has developed a solution for. The following traits characterize the buyer:
- The Buyer is usually responsible for and closest to the problem in question, and best positioned to assess the overall value of solutions. In other words, the Buyer is most capable of discerning the true return on investment.
- In a rational customer environment, no purchase happens without the buyer agreeing that the solution meets the expected needs.
- Once the purchase is complete, the buyer keeps a pulse on the ongoing value of the solution and dictates longer term loyalty.
What should the company deliver the Buyer? Comprehensive and quantifiable short-term and long-term value of the solution.
The second most important role is the User. This role derives tactical value on a day-to-day basis or is directed to leverage the offering by the Buyer. On many occasions the User and the Buyer are the same individual, especially in cases where there is only one individual User. Although the Buyer drives buying decisions, the User provides direct feedback to the Buyer. Where there are many Users, the User needs are very significant. The User can be characterized by the following traits.
- User touches or is touched by the offering most often
- User has the ability to assess the day-to-day experience and convey feedback to the Buyer
- If different from the Buyer, the User is often not heavily influenced by the overall value proposition of the offering
What should the company deliver the User? Features and functions that bring tactical value to the User on a daily basis.
The Approver is the role that looks to others for a buying recommendation and takes the final step of releasing the finances for the purchase. Usually the Approver is the most senior person in the buying cycle and is often mistakenly considered the most important. Product designers, sales reps, and marketers often make the mistake of focusing heavily on the Approver as the Customer and ignoring the Buyer and the User. The Approvers interest revolve around:
- The Buyer’s and User’s acceptance of the offering
- Validating the business case created by the Buyer (in a B2B environment)
- Ensuring that the deal is optimal and that the pricing and contractual terms are reasonable
What should the company deliver the Approver? Support the Buyer in articulating the offering’s value to the Approver and benefits of the pricing structure.
The customer breakdown for a Customer Relationship Management (CRM) software sale is a great case study as it is a highly complex offering that impacts many stakeholders within the customer.
A CRM requires centralized administration, user training, data management, and many other ongoing central activities and these efforts are usually managed by a Sales Operations Manager. This person usually doesn’t hold the budget for such an expansive offering and is only one among many users at a customer. But this position will make or break the sale because the Sales Operations Manager is considered the topical expert on the software, is expected to be able to synthesize differing opinions across the organization, prepare the business case after considering many vendors, and recommend the final choice. The same role is also likely to recommend canceling a contract and look for alternatives, if a CRM vendor doesn’t deliver on promises. The Buyer in this scenario is the Sales Operations Manager.
A CRM is used by Sales Reps and Sales Managers on a daily basis to do every aspect of their jobs. Each individual rep and manager will have personal preferences and those will be passed on to the Sales Operations Manager who administers the CRM. It is critical for the company that is offering the CRM to ensure that the features and functions of the software is best-in-class and meets the Users’ needs.
The budget to approve this software likely sits with a Head of Sales – The Approver. However, in a well-run organization, the Head of Sales should only be interested in seeing the business case presented by the Sales Operations Manager and validating that the company is getting the best deal possible. Apart from pricing negotiations, the Approver is likely to delegate all decision-making responsibilities to the Sales Operations Manager.
To conclude, once Market Position and Sweet Spot are defined, a deeper assessment of various roles at the customer – Buyer, User, and Approver – is important to begin tallying customer’s product and commercial needs.