Why Your SaaS Product Needs to Target 3 Personas, Not 1

Everything You Think About Your Customer Is Wrong

For SaaS companies looking to grow, there’s a more effective way to find product/market fit.

There is no such thing as a single customer.

Imagine you’re driving down the road with your kids in the car. One of them sees a lemonade stand coming up. They decide they want some. Now their job is to convince you to stop and pay for it. After you do, everyone gets to enjoy some lemonade.

This is a simple example, but raises an important question: who is the customer of the lemonade stand? Is it the parent who was convinced to stop and pay for the lemonade, or is it the kids who convinced the parent to stop and actually drink the lemonade?

The answer is both, and neither. The “customer” is a concept. Your customer changes depending on the context. While the traditional customer definition is “someone who buys a product or service”, it is so lacking in context that it misses the forest in favor of the trees.

Look at a lemonade stand “customer”. The child in the car sees a lemonade stand. They need to convince their parent to stop and buy the treat. Finally, they enjoy the lemonade.

This scenario highlights three distinct “jobs” or roles: deciding, paying, and using. We may be tempted to think those three roles coincide with what we would traditionally call a customer, but this isn’t necessarily the case. The parent was the decider and payer. The child was the user.

And this split is more common than you think. Facebook’s users aren’t their customers. 80% of a keynote speaker’s audience doesn’t write the check. And parents often go to Disneyland for their kids, not themselves.

Understanding customer roles has huge implications for businesses, all of which live or die on their ability to define, find, and win “customers”, especially when those customers may not exist.

A More Useful Paradigm

With the recent Venture Capital slump, SaaS companies can no longer afford to focus on aggressive user acquisition at the expense of profitability. And for startups that want to bootstrap, it’s not possible. It’s just too expensive.

It’s no longer viable to think of your business as having a singular “customer”. For early-stage SaaS companies, where profitability and growth are critical, it’s far more useful to separate the customer into an ecosystem of Deciders, Payers, and Users. By clearly defining, researching, and addressing the distinct needs of each role it becomes easier to find and fix the gaps in your current business model.

It’s easier to market and sell to deciders, collect revenue from payers, and build sticky products for users. You stop throwing spaghetti against the wall and focus on what works to help your most profitable deciders, payers, and users make progress.

In short, it shows us a road map for profitable growth and long-term product/market fit. Here are some ways this has played out.

“The Doctor Will See You Now” – Defining Roles in a Medical Business Model

A few years ago, I worked with a highly specialized medical practice that had grown to low 7 figures and then plateaued. The owners quickly realized if they didn’t resolve the issue soon, they would have to close up shop. Their survival relied on their ability to identify their “customer” that didn’t exist. Instead of focusing on the patient, we split their model into the three roles of decider, payer, and user and realized they were focusing on the wrong things.

DECIDER | The Referring Physician. Patients went wherever the referring doctor sent them. Insurance providers influenced the decision but didn’t make it for them.

USER | Patients. They directly interfaced with the medical practice in search of a specific outcome.

PAYER | Insurance Companies. Unless the patient was self-pay, which is a rare occurrence for this medical practice, the insurance companies covered patient bills.

Armed with the new focus of deciders, payers, and users, we did customer research to uncover the unique needs and desired outcomes of each role. Then we built a growth strategy on that data. Sales and marketing focused on the referrers. Operations focused on patient outcomes. The billing team focused on improving their claim efficiency.

By giving the deciders, payers, and users the outcomes they specifically wanted, we created 40% year-over-year growth rates for 4 years; increased per-claim revenues by 30%, and grew the organization from low 7-figures to mid 8-figures in billable revenue.

Nailing Your Product/Market Fit

For businesses with limited resources in a race against time, thinking about sales, growth, and revenue in terms of an abstract “customer” you can’t pin down is risky. Instead of focusing on locating a “customer” that is unlikely to exist, it’s better to focus on locating and understanding the needs of users, payers, and deciders.

Clearly defining and researching the distinct needs of these roles highlights the gaps in your current business model. By fixing them, you start addressing the needs of your customer ecosystem, creating raving fans and sticky products people love to pay for.

In other words, you build a profitable business model that has longevity because it’s giving deciders, payers, and users what they want and need. I don’t know about you, but I’ll raise a glass of lemonade to that.

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