If you are a sales leader looking to get ahead of the competition, enhancing your personas with pricing metrics could be your secret weapon. According to a recent study, about 1% of B2B SaaS companies can describe their buyer personas beyond a few generalities (1). Pricing-Enhanced Personas include detailed pricing metrics for each buyer. These metrics allow customization of sales and marketing efforts to extract more value from the market.
How do you know if you are in the 1%?
If you can answer these questions you are in the 1%. If not, your personas need to be enhanced:
- Do you know what each persona is willing to pay for your product?
- Do you know the customer acquisition cost (CAC) for each buyer persona?
- Do you know the lifetime value (LTV) for each buyer persona?
- Are you able to name the top valued features for each buyer persona?
- Are you able to name the least valued features for each buyer persona?
- Do you know the churn rate and total market potential number of buyers?
If you know these metrics for each market segment and buyer persona you are in the top 1%. If not do not worry, we will walk through how you can get there.
What do I need to know to enable me to create Pricing-Enhanced Personas?
You will need to know your market segments, personas and attributes for each. You will need the following information:
- Market segments – usually these are defined by vertical (healthcare, government, etc.), company size (SMB, Mid-tier, Enterprise), geography, use-cases or others
- Value features – these are what attributes of your SaaS offering the buyers and users value. Examples of features are APIs, analytics, clean interface, integration with CRM (or other platforms), etc.
- Buyers – these are 3-5 identifiable people within each market segment, identified by role or responsibility. For example, Marketing Manager vs. the IT manager
- Costs per buyer along with number of existing and new customers for the last 12 months
- Number of churned customers by each buyer type
Pricing-Enhanced Persona in Action
Here is an applicable example. A SaaS marketing data software company sells into the enterprise market segment. There are two distinct buyers for their product in this segment, let’s call them “Marketer Mary” and “IT Ivan”. Each has a specific use case and value different features of the software.
Marketer Mary’s use case is very simple. She wants the SaaS data service to integrate with the CRM and provide timely updates. She does not value having several API integrations, premium support, multiple system integrations or data security. Marketer Mary’s willingness to pay is $25 per month based on the perceived value she receives.
IT Ivan use case is much more complex. He would like the data service integrated with the ERP, CRM, data warehouse, which includes multiple API calls and near real time updates. Ivan’s use case is integrating the data service across many functions within the company. Ivan is willing to pay $200 per month based on the perceived value he receives.
The IT Ivan buyer has a 10% churn rate and a CAC of $3,750. Mary has 20% churn rate and a CAC of $500. According to these numbers, Ivan is over twice the return on sales & marketing investment as Mary.
Common missed opportunities many companies make:
- Having one standard pricing and packaging for all personas. In our example we could charge Ivan up to $200 per month. One flat price would likely be close to $25. For Ivan you would only realize less than 13% of his potential lifetime value ($3,000 vs. $24,000). Having an Ivan package, value proposition and pricing well enable capture of this additional value
- Focus on Mary at the expense of Ivan. There is a great quantity of Mary in the market and has a shorter sales cycle for her use case, therefore she gets the attention. This is a mistake because each Ivan will bring in over twice the enterprise value as Mary
- Using the same marketing campaigns for both personas. Ivan and Mary value different features, if you design campaigns to target both you will satisfy neither. Customizing content, message and campaign will allow higher engagement of both personas
How do you put this into action and enhance your personas?
- Download the Pricing-Enhanced Buyer Persona Tool
- Follow the steps in the tool to identify persona valued features, sales & marketing costs, customers gained & lost, and WTP
- Evaluate LTV/CAC payout for each persona, how do they compare?
- Assess needed updates in pricing, packaging and messaging
- Invite an SBI pricing strategy expert to visit your company for a complimentary workshop where we will review your results together
Further details in pricing strategy can be found here.
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