3 problems in applying lean startup experimentation in B2B

Introduction

Does lean startup experimentation work for testing a B2B business model?

The short answer is YES.

B2B business model is when you are planning to build a new product that you will be selling to corporate companies. Some examples of Digital B2B products are Salesforce, Microsoft Office 365, Atlassian (JIRA) and of physical B2B products could be connected cars, solar panels or Smart transformers.

Now, let’s see why it is difficult to test new B2B business models through lean startup experimentation. And steps you can take to solve those problems and still validate your idea in the market - fast.

Let’s start with the definition of Lean Startup experimentation in the context of this article.?

Lean startup experimentation is about understanding the unknowns in your new business idea, running rapid experiments that generate market data, using which we can make decisions.?

The goal is to answer:?

1. Is there a real problem, a big headache a potential customer has??
2. Can we solve it in a way that delivers value to them?
3. Can we solve the problem and deliver value profitably?

All this without writing a single line of code. At the end of running 8–10 experiments, you should know exactly the probability of success of an idea in the market. And using this data - you can decide - KILL, PIVOT (change direction) or BUILD product.

You leverage experiments like problem interviews, landing pages, social ads, explainer videos, concierge testing, fake checkouts to create this market data. The goal is to generate enough market data that helps us decide - within a few days and weeks, and WITHOUT spending a crazy amount of money on building MVPs.

We have been using this way of working successfully to help top corporate companies around the world to validate their ideas and bring them to market quickly. We have been able to unlock 2B$+ in new revenue using this.

But every time I speak to a company that is trying to innovate in B2B - they mostly come up with excuses about NOT running experiments. Some of these excuses are: “Our market has a limited size”, “It’s hard for us to access customers” or “it’s hard to test ideas in a multi-stakeholder environment”.?

Yes, these challenges can make it difficult to apply Lean Startup experimentation effectively in B2B, but there is always a way.

Let’s look at these problems first

Problem 1: Testing is difficult, and you might piss off some customers

While experimenting, you’re essentially testing each part of your idea with some early customers in the market, which might upset some of them. In B2C, the size of the market is anything between 50k to a couple million. This means that even if you upset your first 50–100 customers, you still have a major chunk of your market available to target.?

In fact - for B2C, we actually advise startups to be ready to lose their first 100 customers. But make sure you pull out enough market data and learnings from them, that you are fully prepared for your next 10K customers.

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But in B2B, this becomes very difficult. The size of the market could be as low as a few 100 customers. In this case, losing so much as 10 customers could be a bad idea. Also for B2B business models, client relationships are incredibly important.?

And if you decide to kill your idea later and don’t deliver on what you promised, this could potentially damage your brand and could spoil the relationship with those customers. Sometimes news of such bad experiences could travel to other potential customers. It’s vital that you have positive, long-term relationships with your clients. B2B markets need this trust.

But the question is how to balance the building of trust while constantly experimenting with and iterating your value proposition?

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Problem 2: Access to customers is limited?

Access to customers in B2B can be limited, making it difficult to conduct experiments and validate ideas. B2B customers are typically busy professionals who are difficult to reach, and they may not have the time or inclination to participate in experiments or provide feedback. This can be a challenge in B2B because customer feedback is crucial to the success of any Lean Startup experiment.?

Without access to customers, it can be difficult to validate ideas and make informed decisions about what products to build and how to improve them. This can slow down the process of bringing products to market and with limited market data it also increases the risk of failure.

Problem 3: Multi-stakeholder decision-making?

In B2B, the buyer is often different from the end-user, and this can make decision-making more complex. The budget holder may not be the person who will actually use the product, so it’s important to map all stakeholders. And understand the needs, desires, fears, and frustrations of each decision-maker in order to validate the value proposition from different perspectives. In a B2B scenario, the buyer is often different from the end-user and the decision-making process is usually more complex than B2C. This is because there are multiple stakeholders involved, and the product must meet the needs and requirements of multiple departments within the company. As a result, the budget holder, who is usually the decision maker, must consider the opinions and preferences of these stakeholders before making a purchase decision.

Moreover, the decision maker must also weigh the benefits and ROI of the product against the company's existing processes and systems, as well as the additional costs associated with adoption and implementation.?

Therefore, navigating with a large corporation can be a difficult task, where the decision-making process is quite bureaucratic.

How might we solve these?

Solution 1: Testing Off-Brand

In B2B, the market is relatively smaller, and testing a new product or service with existing customers can be a challenging task, as it can potentially harm your relationship with them. However, testing off-brand can help in this situation.?

More and more corporate companies are now ready to collaborate with startups. So you can totally act like one while testing new business ideas. All you need is a new name, URL, and logo. This makes it easier to get feedback from customers without affecting your existing relationship.?

To implement off-brand testing, you can create a dummy company, a landing page, or a survey, and approach your target customers through cold emailing or LinkedIn outreach. This way, you can get feedback on your product and make necessary changes without causing any harm to your existing relationship with customers.

Some other arguments I have heard against this approach is: “Our value proposition largely depends on our existing brand name”. That is a wrong belief. I agree, the Brand name helps in scaling up an already tested business idea - but it cannot create a market for a product that does not meet the real customer need or desire.

If you don’t believe me - try googling “Google Graveyard” or “Microsoft Morgue” and see for yourself - most of the products from top brands of the world also fail in the market. They have the best brand value, the best talent, and tons of money.

Solution 2: Finding Access to Customers?

In B2B, access to customers can be limited, making it difficult to get feedback on a product. But you can solve this. First, you should clearly define which roles within a company are your target customers, and research the job descriptions really well. Then you can focus your efforts on reaching out to them.

Think about places they might hang out. Look for places like LinkedIn, social groups, Slack channels, Meetups, and industry events. We have actually hunted them even in the restaurants near their offices.?

You should also look at your own personal network - can someone you know introduce you to the right role in the customer’s company?

We personally have had huge success with LinkedIn outreach where we intrigue their interest with the right messaging. Other than that, YouTube ads work really well too (if you understand what is your prospective customer interested in learning)

Solution 3: Targeting the Budget holder and understanding Secret Desires

In B2B, decision-making involves multiple stakeholders, and the buyer is usually different from the user. To overcome this challenge, targeting the budget holder first can be effective.?

To target the budget holder, you need to understand the secret desires of the decision-maker. You can do this by understanding how your product can help the target company and also how it can help the target decision-maker. Some of the secret desires of B2B decision makers are: something that could reduce their workload and anxiety, something that helps them in their personal growth or promotion, something that makes them look innovative, or something that improves their personal brand in front of their management and peers.?

We use a perfect interview script to get into their heart (Email us if you want that). By understanding the secret desires of the decision maker, you can effectively pitch your idea and product.?

Also, corporate companies only invest in products that could either increase sales/profit, reduce costs considerably or enhance customer experience. The perfect scenario is when company goals, align with decision-makers' personal desires, and align with your value proposition.

Using this approach, we have many times convinced prospective customers to invest in building the first version of the product.

Conclusion

There are challenges in applying the lean startup experimentation in B2B. A smaller B2B market, limited access to customers, and multi-stakeholder decision-making make it difficult to test business models. But there are ways - to test these ideas in all scenarios.

We live by one mindset - whether it’s B2B or B2C - every product is bought by humans. Humans have secret desires. Experimentation (See our experiment playbook with 25 different experiments) helps uncover those desires. You just have to be innovative with your approach.

Our next post will detail the secret desires of B2B customers and how they make decisions. Subscribe to our bi-weekly newsletter if you want to learn about that