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A Completely Different way to Look at Customer Fit for SaaS Startups ft. @LincolnMurphy

There are so many ways businesses segment customers, and many of them are useless: demographics, location, purchasing histories, size of company, how much the customer pays, and so many more.

But there’s one method of segmentation that tends to be overlooked. And overlooking it will lead, invariably, to churn.

It’s called Appropriate Experience (AX). And I guarantee it’s not what you think.

What is Appropriate Experience?

Appropriate Experience is an extremely customer-centric idea, because it’s all about them. The customers. Their experience. But this isn’t “customer experience.” Forget CX and customer satisfaction. No, no. This is completely different.

Appropriate Experience is about how the customer needs to be treated and supported by you so they can reach their desired outcome.

But what is it really – in practice?

For SaaS, a good example of Appropriate Experience might be customers who need high-touch customer support vs. low-touch. Maybe the customer’s Appropriate Experience is self-service, because they have the expertise and technical abilities to figure out most things for themselves. Or maybe the customer’s Appropriate Experience requires some hand-holding, a designated customer-success manager and 24-7 help desk.

Lincoln Murphy, who championed AX, explains it this way:

You see, a customer has a required outcome. A thing that they need to achieve… And they have a way that they need to achieve that Appropriate Experience. That Appropriate Experience – AX as I call it – goes across the entire customer lifecycle.

He mentions Appropriate Experience within the context of the checklist he recommends using to see whether a customer has “success potential.”

Here’s that checklist (view full descriptions on his article about success potential.)

  • Technical fit
  • Functional fit
  • Cultural fit
  • Competence fit
  • Experience fit
  • Resource fit

In many ways, Appropriate Experience (aka. Experience fit) is the flip-side of Resource fit. Resource fit asks the customer if they can spare the resources to put in the time/money/manpower to succeed with the product. Experience fit asks you – the SaaS company – the same question.

The question you need to ask yourself is…

Do you have the resources to ensure that this customer has the experience they need to reach their ideal outcome?

What experience are you able and willing to provide?

You may not have the resources to serve customers who need the high-touch approach.

And that means that you can’t give that particular customer segment their Appropriate Experience, and they won’t be successful with you.

You can’t afford not to identify your customer segments by the experience they require.

Yes, that also means you can’t afford to keep customer segments to whom you can’t deliver an Appropriate Experience. Even if they’re paying you.

It sounds crazy to turn away good money, I know.

But these are people who will never be satisfied with what you offer. They won’t refer you business. They’re highly likely to leave lackluster reviews. And they will churn – after wasting a tremendous amount of your time and resources trying to make them happy when that was never gonna happen.

What happens when you segment your customers and find that a lot of them could use a different experience? Well, then it’s…

Problem-solving time

When you use Appropriate Experience as a factor in customer segmentation, you may find that a large part of your customers demand a type of experience you’re not currently providing.

Uh oh.

You have a few options.

You might consider expanding your services and scaling to meet that need.

If this is a possibility, you’ll want to first survey that segment and ask them what experience would most help them achieve their desired outcomes. But when you do, keep Lincoln Murphy’s checklist in mind. Are these customers who have success potential, if only they had a slightly different experience?

Also keep in mind that Appropriate Experience isn’t limited to how much help a customer gets. It’s not just a high-touch/low-touch issue. If my desired outcome is to go out to dinner with my significant other for a romantic evening, there is a very specific experience I need to achieve that, and Burger King isn’t going to do the job. Think holistically.

Another option, of course, is to not scale or change the experience you provide. You could decide to focus on the customer segment whose Appropriate Experience matches what you’re prepared to offer.

Both are actually good options.

The only bad option is accepting the business of someone you can’t really serve.


Let’s Get SaaSsy – I’m offering a limited number of SaaS consulting engagements.

Products

10 of My Favorite Products in 2015

10-products-2015

I’ve shared some great products in my Product Hunt collections for art, music, and cooking, and here are my favorites for this year.


APOD Daily

nasa-apod

I love keeping up with NASA’s Astronomy Picture of The Day and APOD Daily is the most convenient way to do it. It auto updates my Twitter banner every day with the most recent picture.

Blue Apron

blue-apron

Cooking is one of my favorite hobbies, and I’ve learned so much about it this year from making Blue Apron recipes. I’ve especially learned that vegetarian dishes can be super yummy!

They deliver three recipes + all the ingredients once a week. What’s great about Blue Apron is that they send the ingredients in exactly the right proportions, so I don’t have anything left over that might get thrown out from not being used in the recipe.

Seven (out of ten) of my favorite recipes from this year are ones I learned from Blue Apron:

Electric Sheep

electric-sheep

Electric Sheep is a screensaver and collaborative abstract artwork founded by Scott Draves. I’ve been using it for about ten years.
Fandor

fandor

Fandor is basically an alternative to Netflix. It has “exceptional handpicked stories of all lengths and genres from around the world.”

What I love about their service is the categories make more sense than those on Netflix. You can browse films by country, year, and length, and they indicate whether films pass the Bechdel test. They frequently feature films from The Criterion Collection and have a community for film enthusiasts.

Check out how Erik Martin (former GM of Reddit) described his experience with Fandor on Product Hunt, “Huge fan. It takes out the pain of ‘what should we watch?’ Just give control over to Fandor and trust them to pick out something good. There’ll be some films that you like more than others, but the overall experience is so much better. To make it even better, don’t read the description for what they suggest you watch next. So much more fun when you have no idea if you’re watching a black comedy or Finnish melodrama. Give up control for a couple hours a week and just let a film wash over you.”

Hipstamatic (& Instagram)

Hipstamatic

I use Hipstamatic to take beautiful, artistic photos and use Instagram to share them.

Here’s my 2015 in photographs.

 

Philips Hue Lights

hue-lights

These smart lights illuminate my home every day. They’re perfect for people who love to have control over their lighting, and they can be controlled wirelessly. They are supported by a wide range of apps that can be set up to react to music, sports scores, weather, traffic, and more.
See Hear Party

see-hear-party

See Hear Party is one of the best ways to entertain party guests (or, in my case, potluck guests). With it you can can personalize GIFs dubbed to your favorite music on SoundCloud.

 

Slack

slack

I use Slack every day to communicate with my friends in Unicorn Think Tank and with my team at Inturact.

Slack brings all your communication together in one place. It’s real-time messaging, archiving and search for modern teams.

SoundCloud

soundcloud

SoundCloud is super useful for keeping track of music releases from lesser-known artists that aren’t on Spotify, and for discovering those types of releases being shared by friends.

I also find tracks on Hype Machine, look them up on SoundCloud, and save them there.

Spotify

spotify

I mostly use Spotify to create and share collaborative playlists. Ryan and I used it to create a playlist of tracks we enjoyed this year: