Purchasers vs. Users… & startups that know the difference

Below is the “Tip of the Week” transcript from the Podcast Episode 6:  Deal-flow…  How do investors find startups?  (feat. Charlie O’Donnell)

Consider the difference between users and buyers…  I frequently see during the Q&A evaluation of a startup that one of these two groups is completley ignored… and it’s often the buyer.  Naturally, we all see a product, we consider it’s use and think about the key benefit to the end-user.  However, this fails to acknowlege a key component of success…  the purchase process.

Let’s consider some examples:
  • When hospital procurement purchases a new device to be used by doctors
  • When a wife purchases new deodorant to be worn by her husband
  • When corporate selects a new Sales CRM for their organization
In each of these situations, the purchasers and users are different and their motivations are different as well.  If we think about the medical device, the hospital may care about cost and data collection… while doctors, care about ease-of-use and efficacy.  A wife purchasing deodorant may care about price and branding, while her husband likeliness to use depends on the smell and length of protection. For the CRM example, a CEO and head of sales may care about measuring leads, conversions and sales effectiveness while the sales people using the program consider the usability, time spent recording activities instead of selling and the platforms accurate reflection of sales effectiveness.
The reality is that if users reject a product, the product may sell initially but it’s likely to die a slow death.  If purchasers reject a product, it may never get off the ground in the first place, no matter how beneficial it may be to end-users. 

So, when evaluating startups for investment, keep in mind the following:

  • the branding, positioning and ideal of the product has to appeal to the purchaser
  • the usability, appropriateness and key benefit needs to appeal to the user
  • The marketing, promotion and messaging needs to appeal to the purchaser
  • The functionality, efficiency, unmet need fulfillment needs to appeal to the user
Often startups neglect the difference between the two… maybe b/c they haven’t analyzed the workflow from the beginning of the purchase process until the product’s end-of-life… and b/c of that they’re either trying to sell to the wrong person or the end-user is receiving benefits that aren’t designed for them.
Ultimately both the purchase process and user experience must be positive, or it’ll be another great investment that, for some reason, just never panned out.