Understanding Customers, Buyers, and Users

Let’s examine the difference between customers, buyers, and users for a B2B startup.

• Customer: Your customer is, in broad terms, the business or organization that uses your product. If you defined your beachhead market as “small to mid-size municipal water/wastewater teams in the Midwest,” for example, one of your customers might be “The City of Andersonville, Indiana.” The customer is not a monolithic entity, however. Your true “customer” consists of multiple roles that constitute a Decision-Making Unit (DMU).

• Purchaser: Your purchaser has the decision-making role and authority. Sometimes it’s tied to a particular title—but not always. In our example, the purchaser might be the Director of the Water Department for the City of Andersonville, or someone in Engineering, or the Board of Public Works. Often the purchaser has specialized understanding that will help them understand and evaluate relevant products—but not always. Take a startup like Ziptility, which sells infrastructure management software. They have to identify who, exactly, in each municipality, will understand the need for and benefits of their product, and who will actually buy it. The “primary economic buyer” within a DMU pays for your product.
• User: Users use your product, obviously. Users may not have any purchasing power. They may not even have a say in whether they use your product! But you can bet their satisfaction with your product plays a key role in customer retention.

The Champion

There’s another role to consider, as well, a very important role for most startups. Champions are advocates for your product. Champions could be change agents on the leadership team who recognize the value of your product’s innovation. They get you on the schedule for a demo with the right person. They fight to include your product in the budget. Champions might be influential end users who have the respect of the leadership team. They could be existing customers who are so passionate about your company and your product that they are willing to give you testimonials, introductions to other potential customers, and important feedback to make your product and your startup successful. They can be investors and mentors with industry connections who can get you a coveted slot to pitch your product to the right person in a key organization. The champion role is highly variable.

Champions can arise in unexpected ways. For Ziptility, for example, architecture and engineering firms who work with municipalities are important champions. Why? Cities with aging infrastructure hire these firms to help them plan and execute multi-million-dollar improvements. Those firms need city field staff to gather a lot of data on the layout and condition of decades-old systems like water and sewage. It’s typically a time-consuming, frustrating process for everyone. For this reason, engineering firms can act as a champion for Ziptility within city bureaucracy. They recommend that their clients purchase Ziptility’s software, because it helps the firm fulfill its own contract with the city faster and better. And once the city’s purchasers sees how the software will help them in other ways, and the city’s end-user teams see how much better it makes their daily work, it’s a win all around.

Re-Envisioning “Customer-Centered”

The bottom line is that the greatest sales and marketing strategies and tools in the world won’t work if they’re aimed at the wrong target. The quality of your product is irrelevant at this stage. If your sales meeting is with someone with no purchasing power or specialized knowledge to understand how your product solves a pain point, you’re dead in the water. If your presentation spotlights end user needs, but doesn’t address unmet management needs, you might not be focused on the right pain point for the DMU.

And to be successful at acquiring and retaining sales, your customer-centered business must meet needs at every level. It must meet the customer’s broad business needs, appeal to the primary economic buyer’s decision-making needs; and fulfill end user functional needs.

Keep in mind that “user” also encompasses tiers of different needs. Let’s say Users 1, 2, and 3 use your product to collect data. User 4, at another tier of management, may need reports not only on all the aggregate collected data, but also on how often Users 1-3 are using your product. In a B2B2C model, users are even more tiered.

An Exercise to Explore Customers, Buyers, and Users

Let’s look at another example of roles and how they influence marketing and sales. If your product is Lucky Charms, Happy Meals, or Build-a-Bear, kids are the end user. Your marketing probably is directed at them, using cartoons, songs, and “kidspeak” to extoll the awesomeness of your product. You want kids to “have to” have it.

The parent, however, is the economic buyer. They don’t need your product, but they want to make their kid happy (and stop the whining!). The kid is an influential end user in this case. If the price point is right, among other factors, parents decide to make the purchase for their kids. The champion for your product could be someone on YouTube explaining why it’s awesome, a kid telling their friends about it, or a parent endorsing it to other parents.

If, on the other hand, your product is an app that teaches kids how to manage money through a game, even though kids are still your end user, and parents are still the primary economic buyer, kids probably won’t be the target of your marketing or your product champions—unless the game is really, really fun.

Identifying the DMU will help you understand how to sell your product and will influence your marketing plan. First things first—you’ll need to answer the following questions:

• Taking into account your Customer POV, who is the end user of your product?
• Who is the economic buyer?
• Who is the champion?

Once you’ve identified your end user, economic buyer, and champion, it’s time to map out what a potential sale would look like. When acquiring a new customer, consider:

• Who is involved from the DMU? (Hint: It could be more than one person!)
• What are the budget limits and other considerations for the DMU?
• How much time will this sales stage take? (Ziptility, for example, has a long sales cycle because government entities, like school systems and hospital systems, go through an extensive approval process. The sales stage for something like signing up for Netflix is much faster.)
• What are the risks?
• What is your risk mitigation strategy?
• What is your action plan to accomplish this stage in the most efficient and effective way possible?

For the action plan, just write a first draft that includes the DMU, how you’re going to get their attention, and how long it will take to close the sale. Organize your answers, and give it a little thought, but it’s only a draft. You can iterate this plan along the way.

In our next post, we’ll talk about how to use these insights and develop a marketing strategy and a sales and distribution strategy.