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Tech-Enabled — 08.02.2018

The Future of B2B Software is B2U

Mike Reynolds, CEO

The concept of “get out of the building” has been hammered home in entrepreneurship and product management circles so often and so loudly that it’s become a cliché. But in the world of innovation, research takes on a slightly different form.

Research is the bridge between an innovator’s dream and the real world. For that digital product to actually live and thrive, it needs more than just code. For it to actually solve pains, hook users, provide delight, become minimally viable, and capture imagination, it needs something that’s not inherently hard to create, but definitely challenging to get right: context.

We must understand and model the world the product is going to live in, from the user’s perspective as well as the buyer’s perspective. So how does research build context for product management, design, and product marketing?


Context for Product Management

Every innovator wants to build something that changes the world, but what are the right features that will solve the right person’s problem? At its simplest, research helps product management figure out what to build, for whom, and how to prioritize.

What are the right demographics to target out of the gate?

People experience a given problem in different ways, and research can help reveal whether a problem is more or less painful for a given group of people. Because demographics determine who we’re actually researching, we need to identify the hypothesized factors up front and plan research candidates accordingly.

Gender and age are obvious factors for a more consumer-oriented solution, but there are endless ways to slice up potential users or buyers. For example:

  • User Geography
  • Job Type
  • Urban vs. Rural
  • Experienced vs. Novice
  • Education Level
  • Family Size

How do users experience the problem and how often?

A new innovation is essentially a hypothesis that a given user has a problem that needs to be solved. We need to determine how that hypothesized problem actually surfaces for users.

With research, we can explore in concentric circles around the problem: They might not even realize that they have a need for a solution. However, most of the time, they will recognize that they are affected by the negative side effects of a given problem.

What do they do about it now?

Anything that a buyer or user uses to solve a problem today is competition (and inspiration) for the new innovation. Research should probe into the steps users take today, the tools they use, what they enjoy about that process, and what’s frustrating or expensive about that process.

What’s their environment like? Do they have access to wifi? A mobile device?

Digital solutions have to fit into a specific environment with specific requirements, and research will help determine the final form a solution should (and will) take. Research should help determine which tasks a user is completing, and in which environments they will occur.

What’s their dream for a magic tool?

Users often have some idea of their ideal world, even if it’s not practical. Giving users or buyers the freedom to dream will help to reveal creative solutions or features. Focus on why they’re asking for it, not what they’re asking for.

Imagine you are Dropbox, and you hear customers asking for larger storage plans. As you learn why, you discover they want more storage because they save a new document copy for every version they make of a file when collaborating with their team. By digging deeper into the why, you prioritized building better collaborative document collaboration (Dropbox Paper) and file versioning (Smart Sync).

Dropbox two most recent products are smart decisions.

 

Caution: It’s tempting in this type of research to describe the potential solution and ask, “Would you use this?” Nine times out of ten, the answer will be YES because people are generally nice and want to be helpful to you. It’s fine to ask questions around a potential solution, but save it until the end when you’ve exhausted all other questions, and make sure you’ve gotten good information:

– Have they used anything similar in the past?
– What would their concerns be about using a solution like that?

Looking ahead: Beyond the product itself, research helps determine a model the innovator can use to expand and scale, whether the user vector is demographic, geographic, or something else.


Context for User Experience

Knowing what the user’s world is like now will help establish some pillars for the user experience:

What is their exposure to and relationship with technology?

You might think of this being an issue just for particular demographics – maybe older people don’t have as much attachment or experience with technology.

The truth is, even for B2B solutions, different industries approach technology differently. Certain industries have been slower to pick up newer UI patterns and SaaS conventions, so it’s good to find out how new innovations might affect their experience.

What are the key workflows and metrics that matter most to them?

At a minimum, research should show the steps users take to accomplish a task today. It should also reveal what is most important to the different roles who might interact with the new solution:

  • What are they measured on and held accountable for?
  • What do they do to be successful?
  • What is keep them from being successful now?

What’s the right tone for this product?

Friendly vs. clinical, cheeky vs. serious – research can help show the most effective tone for this particular set of users.

Cautions: It’s important to remember that a given product might have very distinct user groups which interact with the product in completely different ways. This is particularly common with B2B2C products where the consumer may interact with a completely different product than that back-office users. As a result, you may end up with vastly different tones and workflows for one product.

Looking ahead: As this product grows to encompass more functionality, research will help to reveal and plan for the ways the UI needs to scale to accommodate more modules or menu items.


Context for Product Marketing

Developing the right positioning, messaging, and visual identity for a new innovation requires insight into the buyers’ frame of mind, particularly when the buyer persona is different from that of the user.

What are they measured on?

The metrics that matter to the buyer are often very different than the ones that matter to the user, and research here will empower product marketing with the right information to speak effectively to those metrics.

How does the user’s problem surface for the buyer?

What are the negative effects that a buyer experiences? While a user might have a tactical problem that we can solve with a solution, getting a buyer to purchase that solution means that we have to learn the buyer’s language for those problems, how it helps (or hurts) them, and what they ultimately care about.

How does the buyer approach purchases?

Research is also a great opportunity to find out potential barriers to making a purchase – what are some common objections? What is the process they have to go through to make a purchase? How long is that process?


Most Importantly, Aim for Action

Research can be paralyzing and keep you from making progress, so it’s important to recognize when you start seeing diminished returns. The key

A few years ago, Slack grabbed attention by plastering billboards across the country with pictures of office workers surrounded by unicorns, rainbows and ice cream cones. The campaign itself was delightful. But more significantly, it highlighted a huge change in the way companies buy and sell software. Slack wasn’t targeting bosses; it was targeting employees.

These days, tech adoption goes bottom-up, not top-down. Execs aren’t the ones choosing software; employees are. In fact, since founding my company in 2014, I haven’t bought a single piece of software from a salesperson. I’ve never had to—because my employees discover products for themselves. If we graduate to need the paid version, that’s when it’s brought to my attention that we need to start paying for the software (some examples we use are: Trello, MixMax, Dropbox, Pipedrive, Slack). At that point, value is derived and the decision is easy.

I’m not alone in this. The business-to-business sales model is rapidly being supplemented with a new paradigm: business-to-user. This shift is flipping the software industry on its head. Everything from initial development to lead conversion and customer support is changing. It’s no longer a B2B world. And if you haven’t clued into the B2U mindset yet, you might be building your product the wrong way and marketing to the wrong audience.

Okay, what does “B2U” really mean?

It used to be that if you were selling business software, you focused on winning over corporate decision-makers. You’d try to land meetings, then pitch them on your product—sometimes a long, involved process. But if your prospect decided to buy, it was a big deal. Your onboarding team would help with the rollout (which could take weeks to months), and you’d have just won a long-term customer.

But that’s not how it works anymore. The B2U model bypasses traditional sales channels. Instead of pitching decision-makers, a marketing department directly targets the end user. One employee starts using the software, then shares it with a coworker, who shares it with another, and so on until critical mass is reached. Soon everybody’s using it and asking for the premium version until decision-makers implement the software company-wide and pay for premium features.

Think of it like the cereal aisle. In a B2B model of cereal, you make your case to parents—selling them on nutritional content, price and quality. In a B2U model, you market first to kids, wowing them with the features they care about (in this case, bright colors and good flavor). Then they make the case to their parents, saving you the time and energy of a pitch. Ultimately, parents still call the shots, so nutrition, price and quality do matter. But they’re no longer your point of entry.

So how does the B2U model change the product?

When your primary audience changes, so does everything else. There’s plenty of variation in the way B2U companies operate, but most share these traits in common:

  • Online conversions: The website clearly explains features and benefits, and a user can sign up without talking to a sales representative.
  • Personable branding: In general, a B2U brand is more playful and conversational, almost like a consumer brand. In contrast, traditional B2B brands tend to be formal and professional.
  • Plug-and-play setup: There’s no lengthy onboarding process. Getting started is quick and painless.
  • Tiered features: The product has both free and premium versions, so users don’t have to get the expense approved before they sign up.
  • In-product upsells: The product acts as its own sales channel. It tells users about paid features and prompts them to sign up for the premium version.
  • Viral adoption: The product is so helpful that users want to share it with coworkers and friends.

Does the B2U model make sense for me?

I can definitively say: maybe. I’m not going to sit here and pretend that every client industry is ready for B2U software. In fact, some industries may never be. And some products simply can’t be sold to the end-user first.

You’ve got to know your industry and your own product to say for sure. But here’s a list of questions to help you get started as you evaluate whether or not the B2U model makes sense.

1. Can your onboarding be simplified?

In the B2B model, purchase and implementation can be an extended process. But in the B2U model, users expect fast service. They don’t want to get on the phone, meet with a representative or wade through a long setup.

If they’ve got to import tons of data or customize a lot of settings before they can even begin a trial, users will probably jump ship. Your sign-up should be entirely online, and onboarding should be intuitive—with tutorials and templates, if applicable.

2. Can users see benefits immediately?

If time-to-value is measured in days or weeks, a B2U model makes sense. If time-to-value is measured in months or years, think B2B.

Whereas executives can be slow to make up their minds about software, users adopt tech quickly. But that also means they’re quick to abandon what’s not working well. If you go the B2U route, your product has to prove its worth before users grow impatient. I use this rule of thumb: If time-to-value is measured in days or weeks, a B2U model makes sense. If time-to-value is measured in months or years, think B2B.

3. Can your features be tiered?

For the B2U model to work successfully, users have to be able to get started without committing to an expensive package or long-term contract. They’ll want to try out a service before going out on a limb and asking their employers for funding.

That means you’ve got to be able to scale your product from a free or very inexpensive tier to a premium version. Ask yourself: Would your product still be useful if it were just the top 2-4 features or if you limited the number of boards, documents, users, etc.? And if so, is there sufficient incentive for a company to pay for the premium version?

4. Can you make a viral play?

Like consumer products and services, B2U software lives or dies by word-of-mouth. If only one guy at the office is using your product, his boss probably won’t spring for the premium version. You’ve got to be able to turn users into fans and fans into ambassadors.

You can make your product more contagious by embedding prompts to invite friends, or creating incentives to recruit new users. For instance, Dropbox gives away additional storage space when a user gets a friend to join. Ultimately though, your product needs to be so excellent that users want to share it in the first place.

You’ve got to be able to turn users into fans and fans into ambassadors.

5. Are you targeting small-to-medium businesses?

The B2U model makes it possible to target several smaller businesses at the same time. And once your product has grown its user base and demonstrated success, you’ll find it’s easier to land the big fish.

It’s not that it can’t work for enterprises, but if you pursue enterprises, you’ll typically have to follow-up with more direct sales activities and customization. Though, the B2U model can get your foot in the door at large enterprises.


Of course, some industries and companies still function with top-down tech adoption, and certain kinds of software can’t really have the kinds of features and setup you need for a successful B2U product. So if you answered “no” to those questions, don’t despair.

But if you answered “yes,” it’s time to take a hard look at the way you’re doing business now and consider big changes. For many companies, a B2U model can speed growth dramatically. Converting prospects into users online takes less time and energy than pitching to corporate decision-makers. And when it’s easier to expand your customer base, it’s easier to achieve that coveted hockey stick growth.

A B2U model also allows you to stay nimble without sacrificing scalability. With so much of the sales and support processes digitized, B2U companies can operate with much smaller teams. And of course, lowering overhead reduces risk because it requires a much smaller upfront investment.

A B2U model also allows you to stay nimble without sacrificing scalability.

Most importantly, the B2U model is what today’s customers expect. Users are more sophisticated, and they want to be able to buy software for work the same way they buy software for personal use. That means it’s more important than ever that your product be useful, intuitive and delightful. It also means that the best products are the ones that succeed. You get to make your case directly to users, and if you can make their jobs easier, they’ll choose you every time.

as with any agile process, is to do just enough: document just enough, communicate what you learn regularly with stakeholders and the team, and iterate often.

But most importantly, turn what is learned into concrete progress. While research sets you up for success, it’s actually bringing a product to market that will determine success. The truth is, every new product and innovation is just an educated guess, but research will arm you with the proper knowledge to eliminate most of the wrong or misleading information in your way. By using the right research techniques to build context, we’re making the most educated guess possible.

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