Below Water Level

TLDR
At my first product job, I learned that an acute focus on three things is critical to cause a switch for customers:
(a) who makes the “buy” decision and what are their goals.
(b) what are the forces in support of your offering
(c) what are the forces working against your offering

Back in 2012, I was in my first ever product job at Unbxd. I was learning the ropes, figuring it out on the job, making a lot of mistakes, failing, questioning, reflecting all at the same time. Heres the journey of discovering what really motivated the buyer to solve a problem.

The Problem

E-commerce sites and online retailers must help users find what they are looking for on the site. Without a search feature, visitors would not find what they were looking for and the sites would not make any money. Unbxd provides a plug-and-play e-commerce search. With a few APIs, e-commerce sites can transform the quality of their search results. Good search results help increase click-throughs, which increase orders placed.

Searching through a large product catalog is a difficult problem. Simply looking for string matches in the database does not provide high relevance results. For example, if a visitor searches for “Brown Shoe”, should the search results show products that are brown or shoes or “brown shoe”. What if there are no brown shoes, should it show other brown products or other shoes or nothing.

So, for sites to provide high quality search results, they have to invest in building a search system. But building search is neither cheap nor easy.

The Customer

Through some iteration, it had become clear to us that an ideal customer would be small and mid-size e-commerce sites. I use the term “ideal customer” as if it meant something to me back then, but I had no idea about this concept until much later. This discovery was more intuition-guided than guided by strategy.

Small and Medium sized sites might not be huge businesses but still had significantly large product catalogs. They could contain millions of SKUs and varieties. Without great search results, visitors would have a hard time finding what they were looking for.

Forces Against Solving Search In-house

Not having great search results wasn’t enough to motivate the need for a solution. As in the case with all B2B offerings, different forces need to be in play if a switch has to take place to a new solution. The actual pain, the motivation for Unbxd’s solution was based on the following challenges.

The technical challenges in search were beyond the resources of the customer segment addressed by Unbxd. Building and operating a search infrastructure was expensive. It was more than what these small and medium businesses were willing to invest in this area.

The building part is even more expensive because of the need to hire and run a product team. For the over-stretched IT and Tech teams, this is yet another complicated technical problem to address while they are already swamped with keeping the site up.

Even when resources are plenty, these customers did not have the “product” and “tech” mindset to solve this for themselves. That itself would rule out attracting and hiring the talent needed for solving the problem in-house.

The sites are already spending marketing dollars in bringing visitors to the site. Lacking good search functionality, they were bleeding money due to poor conversion rates. They needed a solution yesterday and had no patience for the lead time needed for developing a solution in-house.

The gross margins for these sites were not high enough to invest in long term engineering RnD. Instead, they spent most time and management attention on operations and marketing. Operations and Marketing would keep merchandise turning over through their system, however inefficient the flow may be due to poor search conversion. Operations and Marketing in a way were the higher priority, existential problems for this segment.

Discovering The Real Buyer

Another thing we learned over time was about the person making the buy decision.

Unbxd Search, the core search functionality, was offered as an API. The customer’s engineering team had to do light-weight development for integrating the API into their search box. So we had initially assumed that the main buyer would be the VP of Engineering. A VP of Engineering would be responsible for:

(a) reducing the cost of building the feature,
(b) reducing the time to market,
(c) reducing the operational cost of running the search infrastructure,
(d) ensuring search results were of high quality.

What we learned is that although these outcomes were important to the VP of Engineering, they figured in the company’s outcomes only AFTER the company had decided to invest in the search problem. That is to say, that the primary motivation to invest in Search was coming from elsewhere and not from Engineering outcomes.

We dug deeper to find out where this higher-leverage interest in search was coming from. We learned that investment in Search was motivated by ROI on the CAC. That is, the conversion rates on search results pages were so low that the marketing spend on top-of-funnel to bring visitors to the site were not resulting in adequate orders, leading to wasted CAC. This was the higher-leverage, CEO-level or at least a VP of Marketing-level outcome. This became a far stronger indicator of interest in solving for search page conversions.

Forces Supporting External Solution

Once we figured that the VP of Marketing is the buyer persona, we were surprised to get even stronger and deeper signals of the pain from this person.

Engineering and Marketing did not collaborate. These smaller businesses did not have a mature enough org. structure, cadence, integration and language to collaborate. Neither did they share a common purpose of improving ROI on CAC. That was considered a purely Marketing outcome.

Many of these sites used third-party e-commerce platforms like Magento, Prestashop, etc, increasing the distance between the outcome owner and the provider of the technology solution.

Product Managers(PM) could be a bridge between Marketing outcomes and Engineering and Design outcomes. But, the cost structures of these companies did not support hiring and staffing a team of PMs.

We also learned that Search is not a one shot integration exercise. Originally we thought that the Marketing-Engineering friction would be restricted to the API integration step only. After all, once the API is set up, the site can operate hands-free sending queries to our servers and receiving search results back. This turned out not to be the case.

The Marketing-Engineering friction was continuous because search results required constant tuning and configuration, which required even more detailed and nuanced collaboration between Marketing and Engineering. Also, this is not the type of work that was considered high ROI for the precious little engineering time that was available.

These companies were stuck in a continuous cycle of Marketing Spending -> Low Search Conversions -> High Engineering Cost -> Low Engineering Investment -> Low ROI of Customer Acquisition Cost. Ultimately, it was this that prompted the VP of Marketing and sometimes the CEO to invest in Search and switch from current solutions.