Applying Jobs to be Done to Packaging and Pricing
Innovation is about creating and capturing new value. We often focus on the creation of value: that’s the world of designers and developers, the darlings that make software companies grow.
But let me give a shout-out to the marketers in the room: those responsible for taking the wonderful THING that now exists and getting into the hands of the right people.
Recently I was working with a team on their marketing and product strategy. It was a mature product, and we conducted Jobs to be Done interviews to learn more about their customers, what progress they were trying to make, and how this product helped them make that progress.
We quickly realized that this product was serving two distinct audiences. There were buyers from two different departments in companies buying this product, and they were using it very differently.
My client had a robust product, with some really critical features– for ONE of these use cases.
The problem was that they weren’t able to charge what that feature was worth to those who would pay it, because of how the product was packaged.
Imagine this: You create something really great….for a subset of your users.
You ask 100 of your users what they’d pay for Feature B. 95 of them say zero. 5 of them say $2000/month.
Now imagine you’re trying to sell the same package to both of them. What value do you try to extract for that feature?
If you charge $2000/month, you’ll probably lose many of the people who don’t value the feature. But if you charge anything less than that, you’re missing out on maximizing your revenue from those willing to pay for it.
Disaggregating features is how we buy plane tickets and cell phone plans. I want to pay for what I’ll use, and no more.
When it comes to consumer products like cell plans, we may not easily be able to segment users into meaningful groups to create custom packages. But if the case of this product/feature specifically, we knew it was a particular vertical that highly valued this feature (in fact, it was a requirement).
This is why we have to consider the 4-Ps of marketing (Product, Price, Place and Promotion) as a set. Once you start to tease apart certain features that are valuable to a segment, you can develop much more targeted, compelling positioning. What are those specific buyers hoping to achieve? What Job are they trying to get Done? What are they struggling with, and how can your product help them?
When you have a single product that’s trying to meet the needs of very different buyers, you end up with a generic product, a ho-hum package and a lackluster price.
Remember our feature valued by a subsegment?
By splitting the price and positioning of the product, you are satisfying the customer segments and not devaluing your feature.
As an aside for those of you struggling with limiting your product to a specific type of user. I’ve heard startups asked (more often than I ‘d care to admit): “couldn’t Google do this and kill your company?” A huge company like Google doesn’t dabble in niches. It expects massive returns from its investments. So by developing very targeted, valuable solutions for a specific target market, you may actually insulate yourself from ‘the big guys.’
Yes, designing and building your products such that certain features can be turned on or off for different segments may increase the technical complexity.
But our goal as product innovators should be to create value for our customers and capture value for our shareholders.
If we look at product features and start assigning them to different use cases, it may come out pretty quickly that you’re designing one products for many different people. The danger is that what you’re end up with is not serving any of them well.
The word “persona” has a negative connotation because we worry that it’s a made-up description of a fictional person. But having an idea of who your customer is — stemming from research– and designing for him is going to help you tell a much more convincing brand and product story.
Earlier in my career as part of the Innovation team at LexisNexis I was working on a product concept for employment lawyers. We had our concept and shared it with seasoned professionals. “Good idea… but not for me” was a frequent response.
“Lawyer practicing employment law” was a segment, but we needed to dig past the demographics and get into what they were trying to get done and where they were struggling. Our concept would benefit more junior professionals. Hearing “not for me” — really hearing it — was critical. Not the “good idea” part. People don’t buy good ideas. They buy products and services that help them get jobs done.
The $2000/month feature was created to help segment B get their job done. But it held no value for segment A. So what’s the value of the feature?
You can’t say. Because if you consider your product is a tool to keep customers get a job done under certain circumstances, you have two different circumstances here that require different solutions.
Once you understand the customer’s desired progress and what it’s worth to him to make that progress, you can start to understand the value your feature offers. This is a much better anchor of price than any sort of cost- or market-based calculation.
Do your customers a favor, and give them a clear solution to help them make progress, without extra complexity. They will reward you for it.