Essentials of B2B Customer Discovery

Frequently, founders ask me to talk about the differences one encounters when building a venture that serves business customers instead of non-business consumers. While the overall process is somewhat agnostic for the target customer or business model, there are certainly differences to explore. This post will focus on the customer discovery process, starting with customer profile development and the interview process.

Identifying Your Target Business Customer

On some level, the criteria for selecting a B2B “beachhead” customer is similar to any segmentation decision. Many of the same questions apply as you would answer for a consumer: What is the problem your business customer is trying to solve, how important is it to find a solution, and how dissatisfied are they with existing solutions?

To answer the first question, you need to have an excellent working knowledge of the target business. This knowledge begins with many of the same things you need to understand for your venture. What industry sectors are your target business customers currently operating? Are you focusing on a specific industry, or do your potential customers cut across several industries? Are your target businesses of a particular size in terms of revenues or employees? Is the firm been operating for a long time, or is it an emerging enterprise? Firms have their demographics, and you need to focus on who you want to serve in the early stages.

As part of this working knowledge, you need to understand how companies with a specific industry conduct business. It is imperative that you clearly understand their primary business, who their customers are, what performance outcomes matter the most, and any particular nuances to operational or procurement calendars.

What adds to the complexity and the overall effort is that you have to understand their customers with depth. This knowledge includes what problems they are solving for their customers, who their customers are, and what outcomes their customers hope to achieve from an effective solution. A key question: Does your target business have a compelling reason to buy your product or service? Is the need urgent? While these questions are also essential to answer for a consumer-focused venture, it may be more important to assess with a business customer. As I will discuss later, it can be very challenging to find the right people to speak with within an enterprise and the purchase decision (sales cycle) is almost always longer than expected. 

One aspect that makes B2B services unique is that the end-user of your product may be either internal or external to the company. For example, are your products designed to support employee needs, the firm’s customer’s needs, or both? Does your target firm sell to both enterprises and consumers? Will your product support both types of customers?

Businesses purchase internally focused solutions to improve revenues, decrease costs, save time, increase productivity, and improve employee morale. Investing in externally focused solutions is typically customer-driven to enhance customer engagement, satisfaction, and retention. These business decisions focus on the return on investment purchase outcomes.

Another significant difference when selling to businesses is that the sales cycle is more complex and time-consuming than selling to a consumer. The reasons for these sales cycle differences vary. Still, it greatly depends on the number of people involved in the purchasing decision, various stakeholder motivations, and organization policies and procedures regarding procurement. The last factor alone can add months to a final purchase decision.

An associated challenge for a B2B focused entrepreneur is that you most likely have to establish strong relationships with many stakeholders with each client organization. This fact adds to the amount of time you and your team need to spend on each candidate. The longer and more complex sales cycles are something that you must plan for both operationally and financially. Long sales cycles impact human resources and cash flow.

For B2B customers to feel comfortable working with a new enterprise, you have to demonstrate that you have the solution they need and you can deliver. It’s not enough to have a good solution. I will spend more time on how minimal viable products fit into this context, but for now, you need to know what minimum feature set is required for the business to decide to select you as a solution provider.

Deep customer understanding is vital for any startup to succeed. However, there are areas of knowledge to juggle in the B2B space.

Defining B2B Stakeholders

When you target businesses to service, it quickly becomes apparent that you may have to navigate with a mix of organizational stakeholders. This stakeholder may include end-users, decision-makers, internal champions, and external influencers. In smaller enterprises, this may be one individual. But in most cases, these roles will be played by multiple people.

Understanding your target market includes determining with whom to speak first. When your target customer is a consumer, you create a profile of an individual who is:

  • experiencing a problem,
  • aware they have a problem,
  • actively trying to solve the problem,
  • unhappy with current solutions, and
  • able to pay for a new solution.

In a B2B context, you may need to profile multiple individuals. For example, in many businesses, the person who experiences that problem may not have the time to pursue better solutions or the authority to spend funds on said resources.

There are many approaches to categorizing B2B customers and stakeholders. I tend to break them down to end-users (which may include early adopters in the organization, main purchasing decision-maker, and any internal or external champions. 

Generating a profile of an end-user or early adopter will be similar to any customer archetype. There will be specific demographic and behavioral attributes that you will be looking for in this business stakeholder group. For example, if you are selling a software service to help analysts create due diligence reports more efficiently, you will want to profile the individuals that serve this specific role. Are they a certain age, education level, etc.? Additionally, you may look at specific behaviors that make them a good target as early adopters. Do they look for ways to do things more efficiently? Do they sign up for free trials and betas of other software products? Do they mind trying new products that are in early development? Do they have any influence on the firm’s purchasing decision-makers?

When you focus on these end-users, you are hoping for several outcomes. First, you want to learn if your solution works within a firms’ environment. Does it function in a way that fits within the task requirements? Is it readily adaptable to the end-users functional needs and work styles? Secondly, you hope that the end-users communicate their success with your product to decision-makers. This dynamic depends on individual behavior and organizational culture. Is it common for end-users to advocate for new solutions? And does it happen often?

The following stakeholder profile focuses on the decision-maker. In smaller firms, the decision-maker may also be a user. However, in many cases, the individual that makes the purchase decisions is someone other than the primary user. For decision-makers, the profile is less concerned with individual demographics and more about the person’s position in the firm and the intricacies of the purchase decision itself. For the decision-maker, you want to understand how they see the problem, the goals for the solution, and any criteria for the solutions’ success. Be forewarned that sometimes the decision-makers purposes may be different from that of the end-user. You will have to understand the differences and find a balance to please all involved.

The last category is the champion or influencer. Often, you will find that there are specific individuals or parts of the organization that understand the problem at hand and, while not directly associated with the situation, are willing to advocate for you and your solution. In many cases, these individuals are in senior positions and may influence other stakeholders.

A founder must decide whether to start the sales cycle at the decision-maker level or the end-user. Each approach has merit. Many advise working both bottom-up and top-down. I usually recommend that if you have already validated the solution for the end-user and have testimonials of success, then going directly to the decision-maker might be most effective. In this case, you can demonstrate that the solution works and is popular with other end users. However, if you don’t have such evidence, you may want to build relationships with a firm’s user community to demonstrate product efficacy and build early advocates for adoption enterprise-wide. Several products have applied this bottom-up approach, such as Dropbox or Slack. However, keep in mind that this can take time, and you need to have the funds to navigate a prolonged sales cycle while demonstrating product efficacy.

If you take this bottom-up approach, you will want to create a customer profile of these early adopters, including their degree of influence with colleagues and senior decision-makers.

Demonstrating Founder Credibility

One of the challenges for any startup that aspires to serve a business customer is to make a compelling case that you can provide the solution consistently over time. Demonstrating that you and your team have the right domain expertise and resources to provide desired customer value is vital for your market positioning. Without a compelling case, it can be challenging to get an appointment with an important stakeholder. And suppose you are lucky enough to score an appointment. In that case, there is no guarantee that you will be able to ascertain all the information about any problems and associated needs in a first meeting.

Business customers are looking for domain expertise – do you understand the problem with great depth? Are you committed to staying the course and helping the company solve the problem and handle any challenges? Are you reliable and responsive, doing what you say you will do and responding to any inquiries promptly? Finally, do you have any evidence of these characteristics? Do you have someone that knows you and the industry who can vouch for you?

Many startups will struggle with credibility, either lacking the domain expertise or having little evidence that the solution works. Not all is lost. There are a few things you can do while you build your credibility. First, I find that being humble and transparent about any limitations goes a long way to building personal credibility. This approach tends to work well at the early product testing phase. You don’t want to overhype your product and what it can do. You want to carefully manage customer expectations deliberate about what the product can and cannot do at the current stage of its development. I find that end-users, especially early adopters and decision-makers, will be flexible at this stage, but you need to be transparent.

As founders assess their domain level and technical expertise, it is vital to identify the gaps in knowledge and access. Once you know what is missing, you and your team should leverage your professional networks and look to add a small number of recognized advisors or strategic partners that possess the required knowledge and skills. Having this extended team will help with messaging credibility.

Soliciting Business Discovery Interviews

I always tell founders that as you plan for your first customer engagement, it is essential to remember that it is game on as soon as you take the first step. Every touchpoint with your customer will influence how they think about your venture, and your brand. These early customer engagements are genuinely the start of your brand identity.

The first thing I have founders do is create a spreadsheet breaking down your engagement activities based on what you assume is the sales funnel associated with this business customer. You can always start with the customer sales journey – awareness, consideration, purchase decision, and post-purchase. See my earlier post on sales cycle promotional strategies. Then for each phase of the sales funnel, decide on what your messaging and content will be at each stage. How do you plan to capture the business customers’ attention? What is the message you want to convey? What is the call to action necessary for the customer to move to the next funnel stage? What promotional channels will you use to create awareness? Finally, how do you plan to measure success at each stage? 

Once you have established the basic funnel information, generate a list of the business customer stakeholders you want to reach and engage. Depending on the industry and strong demographics, list up to ten firms you believe are part of your target segment. Based on how you have planned to start the engagement via your sales funnel strategy, arrange to reach out one at a time over a short period. Leave yourself enough time to respond to any requests as you attempt to reach the right stakeholder. You have a plan to move the engagement step by step. If you start with an email, your goal is to schedule a phone call, followed hopefully by an in-person meeting, and so on.

Generally, establishing these early business customer engagements takes time which is one of the first reasons a typical B2B sales cycle is longer than B2C. As mentioned earlier, finding the right person to speak with is challenging enough. Now getting on their calendar is another mountain to scale.

The most important thing to do is to record each step of the process, including the time between each step. You need to see this as a pipeline, and you want to document each step. Your experience with engaging B2B customers can be an authentic learning experience for you. The responsiveness or lack thereof are data points and early feedback for you to assess. It would be best if you did not jump to immediate conclusions. You will be looking for evidence of the business’ interest in solving the problem. Is there a strong interest and immediate need to solve the problem, or is it low on a priority list? Are you targeting the right business segment, or are you reaching the right decision-maker? Again, don’t jump to conclusions; take early responses as data to be interpreted as you solicit more and more information. In the end, this information will be invaluable for future marketing strategy and financial planning.

Conducting B2B Interviews

Similar to a consumer-focused discovery interview, you need to prepare a semi-structured interview protocol to ensure that you optimize your time with a business decision-maker. You want to make sure that you cover all critical assumptions you want to validate. You also want to present your venture most professionally.

As with any discovery protocol, I suggest that you create a short series of questions that guide the business customer to describe their experience as a story. For example: Tell me about the last time you experienced said problem or job-to-be-done?. As the customer describes the background, probe for details about the problem, its timeframe, the severity of pain points, specific actions, and the customer’s emotional state throughout the experience. Your questions should be mostly open-ended, allowing the customer to openly and freely drive the conversation without being led by any of your preconceived notions. 

There are some differences in the types of questions you will ask in a B2B context. I have listed some starting questions for each area to get you started. See the table below. 

As is common practice, you want to start with questions that help you validate that the business and associated stakeholders meet your targeted segment. For example, in the first category of questions, you want to confirm firm demographic information such as company size, the number of employees, types of customers served, and products sold. 

Secondly, you want to learn more about the firm’s overall objectives. What business goals are they hoping to achieve both short and long-term? You also want to learn more about the value they provide to their customers and what outcomes their customers want to achieve with their products? 

Thirdly, you want to make sure that you have a good understanding of the position and role of your business stakeholder. Here you can probe for information about their role and responsibilities in the firm. For example, who do they report to, and how many direct reports they manage? 

In the next section of the interview, you should move to the problem you hope to help the firm solve. This question can take several forms depending on the context. For example, you may start with the standard opening, “Tell me about the last time you did X” The “X” will relate to the job or task that the business customer is trying to accomplish. For example, “tell me about the last time you needed to recruit a person for your department.” 

I find this initiating probe about the problem challenging, so make sure you have the question prepared beforehand and some variations in case one is needed. 

Once the business customer responds to the lead question, deep-dive questions focus on the challenges encountered while working on the specific job in question. During this phase of the interview, you should assess the severity of the difficulties in terms of frequency, intensity, time lost, and impact on the individual or organizational performance. Then, depending on the problem, you can ask how much time it takes to solve the problem and what are the current costs associated with its solution. One way to approach this is to ask how many person-hours it takes to accomplish a task or solve the problem now? 

During any customer discovery interview, one of the most critical questions is understanding how the firm currently solves the problem. Here you are listening for a few major data points. First, are they actively trying to solve this problem? If they are not, then this is not your target customer. Secondly, what solutions have they tried? This response will provide valuable information on competitive solutions. Third, what firms are providing current solutions? What does your potential customer like and dislike about these solutions? Finally, you should be able to ask for some information about how much they are currently spending on these solutions. This answer provides you with a range of what they are willing to pay based on actual behavior. Sometimes, you will see a question like, would you be willing to spend XXX for an effective solution? These “would you” questions lead to hypothetical responses and not evidence of actual behavior. 

Next, it is essential to solicit how decision-makers determine whether the solution is successful. Finally, what are the criteria for a successful solution, and what metrics are applied to measure and monitor solution performance? This last set of questions helps you understand expected product performance, whether it be for your existing or developed product offering. 

After you have learned about both the problem and current solutions in the last section of questions, you can ask questions about the decision-making process. As a starting point, you can ask how widespread the problem is across the firm? Next, you are looking for who else may benefit from a solution, and are there others you should be speaking to within the firm.

Additionally, you can ask how decisions are made about what solutions are purchased and what the approval process looks like for this kind of product. As part of this inquiry, you want to learn the typical length of time it takes to get purchasing approval. This information will provide you with insight into the size of the sales cycle for financial planning purposes. 

B2B MVP Practices

There are many B2B challenges that founders face as they develop and test solutions with business stakeholders. I will explore how to best design and test your minimum viable product with business customers in a future post. 

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