I find that people often misunderstand the “learning versus pitching” metaphor for customer interviews. Yes, your objective in customer interviews is to learn versus sell, but you can’t learn effectively when you’re too vague or open ended either. You have to go into interviews with clear falsifiable hypotheses that may very well be shattered. That’s okay.
What you intend to charge for your product is such a hypothesis but how you test it is a little different. Unlike a “must-have” problem hypothesis where you attempt to uncover an inherent “truth about customers” through probing, pricing is a lot more “gray” and needs to be tackled more directly.
You can’t (and shouldn’t) convince a customer they have a must-have problem, but you often can (and should) convince a customer to pay a “fair” price for your product which is usually higher than what both you or the customer think.
The mindset most of us have during Solution Interviews is one of “lowering sign-up friction”. We want to make it as easy as possible for the customer to say yes and agree to take a chance on our product – hoping the value we deliver over time will earn us the privilege of their business.
Not only does this approach delay validation because it’s too easy to say yes, but a lack of strong customer “commitment” can also be detrimental to optimal learning. Your job is finding early adopters who are at least as passionate about the problems you’re addressing as you are.
Don’t Lower Signup-Friction. Raise it.
I know this may run counter to your intuition. It did with mine. Here’s a social experiment I ran recently during one of my customer interviews (and have repeated several times since then) that changed my perspective (I’ve left out the names of the product and customer):
Me: So lets talk about pricing…
Customer: Do we need to negotiate pricing right away?
Me: This is not really a negotiation. While we have been using this product internally ourselves, we need to justify whether it’s worth productizing externally.
Customer: Oh ok.
Me: So what would you pay for this product?
Customer: I don’t know – probably something in the $15-20/mo range.
Me: Well, that’s not the pricing we had in mind. We want to start with a $100/mo plan. I can understand why you don’t want to pay a lot (because you are pre-revenue) and it’s possible that we’ll offer a freemium or starter plan in the future.
Right now, we are specifically looking for 10 [define early adopters] who clearly have a need for [state top problem]. We will work closely with these 10 companies to validate [state unique value proposition] within 30-60 days or give them their money back.
You mentioned that you’ve spent several developer hours a month building a homegrown system and still haven’t been happy with the results. This product is our third attempt. $100/mo is less than 2 developer hours a month and the product itself will have a much bigger impact on the company.
Customer: Yes, that makes a lot of sense. We want to be on the shortlist. I can justify paying $1200/yr. It’s just a fraction of what we pay our developers. How do we get on the list?
Me: We’re still finalizing some product details and I’ll get back with you once we’re ready.
Customer: We seriously want to part of the initial customer list. I’ll run upstairs and get my checkbook if you want me to…
So what happened there? Why did the customer agree to paying 5x their original amount?
There were a number of principles in play that I’ll summarize:
Prizing: Oren Klaff discusses this framing technique in his book: Pitch Anything. He describes how in most pitches, the presenter plays the role of a jester entertaining in a royal courtyard (of customers). Rather than trying to impress, position yourself to be the prize.
Scarcity: The “10 customer” statement was not a fake ploy. The first objective with your MVP is to learn. I’d much rather have 10 “all-in” early adopters I can give my full attention than 100 “on-the-fence” users any day.
Anchoring: Last time, I illustrated the relativity principle in action using Steve Jobs’ iPad keynote. Even though pricing against “existing alternatives” might seem logical, the customer might not automatically make the reference themselves.
Confidence: Most people are reluctant to charge for their MVP because they feel it’s too “minimal” and might even be embarrassed by it. I don’t subscribe to this way of thinking. The reason I painstakingly test problems and reduce scope is to build the “simplest” product that solves a real problem. I have enough confidence in our ability to build and am willing to put my money where my mouth is.
The Solution Interview as AIDA
AIDA is an marketing acronym for Attention, Interest, Desire, and Action. I find it a useful framework for structuring solution interviews.
Attention: Get the customer’s attention with your unique value proposition – derived from the number one problem you uncovered during earlier Problem Interviews.
Interest: Use the demo to show how you will deliver your UVP and generate interest.
Desire: Then take it up a notch. When you lower sign-up friction, you make it too easy for the customer to say yes, but you are not necessarily setting yourself up to learn effectively. You need to instead secure strong customer commitments by triggering on desire. The pricing conversation above generated desire through scarcity and prizing.
Action: Get a verbal, written, or pre-payment commitment that is appropriate.
How is this Different from a Pitch?
While this might look a lot like a pitch, the framing is still around learning. A pitch tends to be an all or nothing proposition. Here, you lead with a clear hypothesis at each stage and measure the customer’s reaction. If you fail to illicit the expected behavior at each stage, it’s your cue to stop and probe deeper for reasons. For instance, you might have your positioning wrong or be talking to a different customer segment.
The AIDA framework used here is also applicable when designing your future landing page or other sales collateral. Over time, you tend to rely on other elements like social proof, brand, etc. to generate desire but never under-estimate the power of incorporating strong emotional triggers.
For more on this, I’ll leave you with this Copyblogger article:
How to Sell Like Steve Jobs.
Until next time,
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