Three reasons people buy your product, and why they should guide everything you do: A reminder to high-tech startups

In my technology startup journey, I’ve noticed that buyers choose companies and products for three reasons: 1. Use cases; 2. Competencies; and 3. Credibility.

For use cases, buyers ask: Does the company’s product address my unique challenges now and in the future? Rather than start by talking to me about their product features and benefits, can they articulate my challenges in a deep and convincing way? And do they do so in my language, demonstrating that they have put in the time to understand ?

For competencies, buyers ask: What are the company’s competencies, and are they a fit for my most pressing needs? For example, if what I really value is great customer support, is that what the company is great at? Or if I require ease-of-use, is a simple interface what the company is known for?

For credibility, buyers ask: Are there trusted third parties and company actions that signal credibility and trustworthiness that I can rely on to validate my choice or justify it to others in my organization?

I have concluded that a company’s or product’s success or failure really does come down to these three things, and that CEOs and their teams should focus virtually all of their attention on them.

In this article, I will endeavor to define each of these three elements, detail what goes into each (and what doesn’t), and provide real-world examples of them.

We’ll start with my favorite: Use cases.

Use cases

The most important thing you can do as a startup is understand what use cases you’re solving. Before you tell your audience about your “…revolutionary machine learning research platform that harnesses the power of algorithmic science and artificial intelligence…” (geez, really people?), you need to convince your customer that you really (and I mean really) understand their problem. This is foundational to talking about the use cases your product addresses.

Precursor to use cases: Customer empathy and intimacy

How do you demonstrate that you understand your customer’s problem? First, real understanding only comes from extreme empathy and customer intimacy. Please do not confuse sympathy for empathy. I’m not talking about having compassion for your customer’s plight. I’m talking about knowing your customers, walking in their shoes, understanding what drives them, recognizing what can derail them, and being in tune with their areas of focus. Here are some things we mistake for customer intimacy, but are not:

• A CEO who spends all of her time on the road pitching prospects and customers, and “knows what messages resonate”
• A popular product manager whom the sales team brings into accounts two to three times a week to answer the tough questions
• A marketer who has great rapport with the company’s customers, and frequently takes them to dinner

These interactions are all nice to have, and indeed can be informative in the customer discovery process, but they are not really listening, are often tainted by happy ears, and conclusions from them are usually over-weighted in the company’s decision making.

Real empathy and customer intimacy comes from many, MANY interactions with customer decision makers, practitioners, and other stakeholders in which the direction of the conversation is heavily skewed in one direction: from the customer to you. Let me repeat that. You need to spend tons of time with your customer in which THEY are talking and showing, and YOU are listening and watching.

One way we sought to make this happen in my prior company, Netskope, was through the boringly, yet aptly-named “cross-functional check-in.” (By the way, First Round Capital talks about something like this in their article, “Get in the Van,” which I LOVE, and you should read!). After a period of time following product deployment (usually a couple of months), we would gather representatives from around our company — including product, engineering, marketing, user experience, customer success, and sales — and sought anywhere from one to two hours (ideally two) with at least two roles from our customers: the champion and the practitioner. We started out by asking these folks to talk about their priorities and projects in general and drilled down from there. When we touched specifically on their project involving our product, we asked them to open up their product console and we WATCHED as they stepped through their typical usage scenarios (my only complaint about the First Round Capital article is that it doesn’t emphasize the importance of watching). From there, we asked question after question about why they performed a certain task, clicked on a certain button, or bypassed a certain feature; who at their company were stakeholders in the project, how they would convey information from our product to those parties, and what impact that information would have; what they would do next after learning what they learned from our product; what actions they would take in our product as a result (policies or otherwise); what they loved and hated about our product; what their “wish-I-hads” were; and more. We wanted crystal clarity around not just how our customers used our product, but how they went about their day generally, and the role that actions and information from our product played in it.

If you collect usage data from all users of your product (and you should if you possibly can!), your cross-functional check-ins will complement these data in all of the best ways. The rich insights from those data, coupled with stories and observations from check-ins such as the above, will complete your picture. More importantly, having many sets of eyes and ears from your company in the room (or on the web meeting…not every interaction needs to be perfect, so take the web meeting if the in-person isn’t coming together quickly enough…the key is that you do many of them!) will reduce your reliance on one person’s filtered viewpoint and give all of your team members a common reference point from which to have a conversation or make a decision. It will also make all of your team members smarter and give them a bigger stake in making your customers successful because they will all have heard and seen the customer problem first-hand. They will be bought in!

Use cases: What’s involved?

A well-developed use case includes the following:

• In-depth description of the customer problem or pain point, ideally revealed as a scenario or story that is common to customers in a particular segment
• Quantification of the customer problem and what is lost or not achieved as a result (lost revenue, time to market, competitive advantage, operating cost, unmitigated risk, opportunity cost, etc.)
• Functional requirements that must be met for the customer problem to be addressed
• Technical and/or architectural requirements that enable the functional requirements to be met, or make them particularly effective

Here’s a compelling example of a company showcasing the use cases they address: DataVisor, a big data fraud detection company, enumerates use cases such as “account takeover” and “mass registration” in the solutions section of their website, not only describing the situation customers face, but also clarifying the way attackers go after their targets.

Source: www.datavisor.com (hover over the solutions section on the navigation)

Beyond describing the use case, DataVisor publishes a report to quantify the problem in their DataVisor Online Fraud Report (see infographic here). In the report, they cite third-party sources that estimate global fraud figures, as well as measure the problem in various ways based on their own data, such as the portion of fraudulent accounts that originate from various platform vendors and hosting providers, likelihood of fraud scenarios by industry, hosted fraudulent accounts by region, and other relevant data such as the duration of a fraud account “sleeper cell.” This isn’t just interesting stuff — it’s a way to help a prospective customer understand what the problem is, where it’s likely to occur, and what’s at stake, in essence quantifying the problem for his or her organization.

Use case development for product management and engineering

Developing use cases isn’t just a good marketing practice; it’s a critically important process for product managers and engineers to deliver products that hit the mark.

A cautionary tale: Early on in one of my prior companies, we were tasked with developing a feature to measure a certain kind of risk. Rather than start with real-world use cases observed by us and confirmed by our customers, we jumped to conclusions about what the feature needed to entail and dove straight into building it. Had we started with customer-validated use cases, we would have found out quickly that the feature needed to be a simple risk baseline from which customers could track progress over time, benchmark against their peers, and understand major risk contributors. So simple! Instead, we built a convoluted, over-engineered feature that nobody could understand, explain, or use. Happily, we figured it out before too long and fixed the feature…and got more rigorous in our use case development process at the same time!

By the way, this process has another — blinding-flash-of-the-obvious — benefit: Have you ever discussed a new product or feature with a team member, only to have one of you put pen to paper on it and realize that you were NOT. AT. ALL. ON. THE. SAME. PAGE? By using the above framework, collaborative teams across product, engineering, marketing, and sales can get crystal clear on their shared vision and what they’re actually solving for, and rapidly identify misunderstandings.

Now that we’ve beat use cases to death (really, I could go on and on), let’s move on to the next topic: Competency.

Competency

Beyond assessing whether your product can solve their problem, would-be customers also make decisions based on what your product or company is good at or known for, and whether that aligns with their needs today and over time.

Let’s examine some examples of competencies that might influence a customer’s buying decision, but aren’t necessarily tied to a specific use case. One such competency is customer success. My former company, enterprise mobility company Zenprise, had a well-run customer success organization with a strong business leader. The group consistently posted top customer satisfaction (CSAT) and Net Promoter Score (NPS) numbers and, over time, customer success became an important differentiator for the business. Why did this matter? We were not the product leader, nor were we the sales leader, but as the market matured and fewer differences existed between the top players, customer success became essential in customers’ minds. Buyers of enterprise mobility solutions were under the gun to choose and implement a solution quickly and successfully. Oftentimes there were important corporate mobility initiatives — with board-level visibility — that were dependent on the purchase. Despite this urgency, there was disagreement among customer stakeholders about which solution to purchase, so the decision makers had to work extra hard not just to choose the right vendor, but also to justify their choice to the other stakeholders and corporate leadership. This dynamic put added pressure on the post-purchase deployment and ongoing project. In short, there was a target on buyers’ backs, and they needed to feel that the vendor they chose was going to be there for them in a big way when the inevitable hiccup arose. That’s when CSAT and NPS scores really started to matter, and customer success became a critical competency.

Another example of a company’s competency is customer community. Gainsight, the leader in customer success software, is known for this. If there ever were a segment that would benefit from having a vibrant customer community, it’s customer success. If you think about it, customer success epitomizes the guardian function, with a thankless, work-is-never-done, asymmetric risk-reward tradeoff model. Customer success leaders usually have an extremely broad purview (support, training, success management, professional services, and more), too many stakeholders to keep track of, a jillion measurements to stay on top of, a shocking shortage of talent, and urgent need for process automation. The list of needs goes on and on for these poor, beleaguered folks!

Moreover, customer success as a function has experienced a massive shift over the past 5–10 years brought on by the more general market shift from enterprise software and hardware to cloud services. It’s markedly easier to procure, deploy, manage, and switch cloud services than legacy IT products, and that often translates to services that are less sticky (and buyers that are more fickle). This means your product’s long-term viability is at risk, and (a lot of) the responsibility rests on the shoulders of customer success. It’s their job to keep your customers engaged and thriving with your product, having their backs when things go wrong, and sounding the alarm to the rest of your organization when customers are not happy. (Enlightened leaders believe this is the whole company’s responsibility, but often the customer success organization is at the tip of the spear.)

Gainsight probably recognized these market characteristics early on and realized it was an impossible task to support their customers in all of the ways that were required. So, the company made the strategic decision to invest in and nurture its customer community, where customers could help each other. Indeed, the company’s community site (and user event, Pulse) is held up as an example of how to do communities right. Gainsight’s community has become a differentiating competency for the company, and while it may not always be THE top buying consideration (although my guess is that is for many), buyers almost certainly take it into account when deciding which customer success software to invest in.

Source: https://community.gainsight.com/gainsight/categories

Can companies develop a competency in their product, or does competency always have to be external to product? I’ve seen a ton of examples of in-product competencies that are distinct from use cases.

Marketing attribution vendor BrightFunnel is a great example here. With 60–80 percent of the buyer’s journey now occurring online and would-be buyers performing most of their due diligence prior to contacting a salesperson, the onus is on the marketing team to shuttle that customer through the (mostly electronic) discovery and research process, and TRACK their own success in doing so. This has given rise to a slew of data visualization software vendors that help organizations make sense of their business data. But BrightFunnel (and later-stage competitor Bizible) saw an opportunity to build an in-product competency to target marketing leaders and practitioners by helping them optimize these visualizations FOR the specific questions that marketers care about, especially with a focus on calculating lead and pipeline attribution in meaningful ways (first touch, last touch, 40/20/40, and even weighting).

Source: http://www.brightfunnel.com/data-optimization/

BrightFunnel does this by trading off more general, flexible data visualization choices with served-up views that answer common marketing questions within one or just a couple of clicks. While organizations that have the manpower to make the most out of broader packages might pass on BrightFunnel, marketers who measure programs in a standard way, are time- and resource-constrained, and have an urgent need for common answers presented drop-dead simply are clear targets for the solution. By developing and signaling this in-product competency, BrightFunnel is speaking directly to — and attracting buyers in — this (rapidly growing) market niche.

Now let’s take a look at the third and final critical element in customers’ buying decision: Credibility.

Credibility

Part and parcel of the due diligence process that most technology buyers undergo is the search for credibility signals. Buyers are essentially looking for trusted third parties and/or signals from the vendor that can help them decide whether the company is worthy of consideration, as well as validate their decision to themselves and other stakeholders once the choice is made. These signals include obvious things like customer references, analyst reviews, press coverage, investors, and superstar executives, board members, and advisors. There are some less obvious ones as well, such as quality of marketing collateral, company presence at conferences and participation in trade associations, quality and impact of thought leadership artifacts, and even performance in Google search rankings for key terms associated with the market segment. Vendors that really have their eye on the ball are exacting across all of these measures and don’t leave anything to chance. But vendors that are sloppy in even one or two of these areas can give would-be buyers pause during the discovery and research process, making those buyers question what else the vendor skimped on.

The best and most obvious credibility signal is the customer reference, and we’ll drill in on that in this section. You need several references at launch (ideally three; two means you only have two, three means you chose the three best from a group, and four means you only have four), and as you grow you need to add fresh references, ideally in every important vertical you serve. You’ll have to do some fancy footwork on your website as you grow, so when you have six motley references in different formats, or eight in one vertical and one in another, you still look like you have a credible customer line-up.

Many a marketing battle scar was earned in the quest for public customer references! Companies with stringent legal and compliance requirements, or simply ones with valuable brands, are loathe to put their stamp of approval publicly on a vendor’s product, especially a startup. One way around this is to get your senior-level customer champion bought into the reference (typically only senior folks — or at least ones with clout in their organizations — are able to shepherd customer references through their corporate legal and PR departments, two entities that always seem to put the brakes on a reference, especially if it’s five minutes before a critical pre-launch press interview with your customer!). A few tactics that sometimes work for ensuring the public reference include: 1. Make a discount available to customers who agree to be public references (and insert language into the sales contract). This only works if the CEO and sales leaders are fully bought in and the process becomes standard in your company; 2. Use your board and advisor connections to encourage your champion to be a reference. A few VCs here in Silicon Valley have this practice really nailed by creating informal CIO and CISO networks with an implied quid-pro-quo in the relationship — access to new technologies, networking boondoggles, and career-enhancing relationships for the customer in exchange for being a public champion for investee companies. Of course, there’s a line to be walked between creative and sleazy, so be thoughtful up-front and smart about what you want to achieve and what you’re willing to trade off to get there; 3. Proactively reach out to your customer’s legal and PR folks (through your champion) to suss out objections and understand ground rules ahead of time (it’s best to do this when you’re really depending on the reference so there are no last-minute surprises); and 4. Before you even ask your customer to be a reference, always do a web search to find precedents for your customer doing references for other companies. This will both help you convince your champion, and your champion convince his or her legal and PR teams, to do the reference activity. All the better if those references are for companies in a similar industry (e.g., information security) and for a similarly-sized vendor (e.g., a startup). A distant second to a public reference is an anonymized case study (it’s fine to have a mix of the two available on your website, and in fact, you’ll probably have to as you bridge the gap between the three you have at launch and the 15+ you’ll have in steady-state).

Of course, if you can’t get your customer to speak publicly, how about a private, invite-only roundtable reference call in which you invite 10–20 of your top prospects for a closed, one-to-many webinar. In my experience, these sessions can be fantastic; they are intimate, they kill many birds with one stone, prospects actually WANT to attend them because they know they’ll get the straight scoop from your customers, and — best of all — there are no legal or PR people to slog through. Hallelujah! On that second-to-last point about getting the straight scoop, I know this seems counter-intuitive, but my STRONG recommendation is for you (the vendor) NOT to attend the session. Set up the call or webinar to make it easy for your customer to run, prepare them ahead of time so they are organized and know what to say, but don’t attend (and make it clear to the group that you will not be there). The call will be far more authentic for both your customer and prospects, will put them at ease to speak freely, and their praise without you there will weigh far more heavily in prospects’ minds.

Here’s another idea: Some customers have strange policies that allow them to be interviewed by and quoted in the media but NOT appear as a reference on your website (I know, go figure!). If the press story paints their company in a positive light, this can be an easier sell internally for your champion, while also giving you MUCH more marketing mileage (because many more people read news stories than come to your website…and oh, by the way, you can put a news story on your website). Check out this (old) story we pitched to the CIO Journal at enterprise mobility vendor Zenprise. The story was all about our customer and how forward-thinking they were (which was totally true), and we took a backseat as the enabler. And that is was just what you want! If the story’s about how great the customer initiative is (vs. how great your technology is), it’ll be a bigger, more credible story. What prospect CIO wouldn’t look at that and want the same for themselves?

And the drill-down in which Zenprise and another of our customers were mentioned…

Continuing the theme of “the customer is the star and the vendor is the enabler,” here’s another idea: Showcase the fantastic projects your customers are doing, and make your champion (or practitioner) the star of the show! Mobile defense company Skycure does a good job of that in their customer reference below. Rather than showcase Aetna’s CISO, Jim Routh, who serves as a reference for tons of startups, the company features the program director who’s actually using Skycure’s product. In the video, the director comes across as authentic and knowledgeable. The video also paints Aetna as a forward thinker when it comes to mobilizing their workforce. Farther into the video, they probably spend a little more time than they should on Skycure’s awesomeness rather than the customer initiative, but it nevertheless does the trick — makes the customer look proactive and modern and allows the vendor to bask in reflected glory of enabling a successful project.

Source: www.skycure.com/resource/skycure-aetna-success-story/

Some additional ideas include asking customers to talk about you to their trade groups and professional inner circles, submitting customers for awards and speaking gigs (even if the speaking slot is not ABOUT YOU because — if your customer is classy — they will talk about you in the presentation), and creating incentives for references (such as with Influitive, which I’ve heard works well for some audiences, though I haven’t used it for my senior security or IT customers).

Just as Malcolm Gladwell examines in Blink how experts just know —even in a split-second glance — whether a work of art is a fake, your prospects are experts who almost unconsciously rely on dozens (and maybe hundreds) of credibility signals to help them calculate the risk and reward of doing business with you. From obvious ones like customer references and analyst reviews, to less-obvious ones like your online presence and sales tactics, being vigilant about all of the ways you convey credibility will help your customers make that critical decision to give you a chance…or not. And from there, these signals help them validate and justify their decisions to the many stakeholders and corporate leadership within their organizations.

Summary

If you’ve hung on with me this far, bless you! Or if you’ve just skimmed this article in search of the “Cliffs Notes,” here they are:

• Companies buy products for three reasons: 1. Use cases; 2. Competencies; and 3. Credibility.
• Use cases should have these four things: 1. In-depth description of the customer problem or pain point; 2. Quantification of that customer problem; 3. Functional requirements; and 4. Technical and/or architectural requirements.
• To really understand use cases, you need customer intimacy and empathy, and that comes from MANY customer interactions, walking in customers’ shoes, listening to, and even more importantly, WATCHING customers.
• Competency can be company- or product-related. It is that thing about your company that you are especially good at or known for, like customer success, user community, or simply a target focus in your product. By being deliberate about your competency, you can position yourself to buyers whose needs are aligned with what you’re good at.
• Credibility is a mix of obvious (customer references, analyst reviews) and less-obvious (online presence, leadership) signals that give your would-be customers an indication of how credible and trustworthy you are, which helps them decide whether to move forward with you, and then validate and justify their buying decisions once they do.

What have you found to be the most important reasons customers buy your company’s product?