Once you taste candy for the first time, you want to buy it only so often. Candy is something that people can live without (“want to have” rather than “need to have”). They may even consider it bad for them in the long term. However, candies are rare in the B2B SaaS space. Games, for example, are candies. They are pleasurable and fun, but they don't solve an urgent problem for the customer.
We all love inspiring startup quotes, but we can probably agree the product below is a candy.
A vitamin, on the other hand, is a nice to have. It is often something people should use but do not ‘need’ to use, which is the case with painkillers.
An excellent way to think about this is that people set reminders to take their vitamins, whereas painkillers are kept close at hand. Below is an example of a SaaS company for each of these two principles.
At this moment, one can already see that how a product is perceived is dependent on the users’ work context. Often it can be a mix of all three types, like Instagram.
For the small business owner, it’s a marketing painkiller, an empowering and effective marketing tool.
For the globally-connected family, it’s a nice-to-have vitamin that brings them closer together and fills in the gaps between lengthy video calls.
Finally, for the meme-aware, dog-obsessed, working-from-home multitasker, it’s pure candy joy and entertainment.
You probably want your product to be perceived as a Painkiller. Why? Because companies that have “vitamin products” need to allocate budget in convincing and educating their prospects of a possible non-urgent problem they could face in the future and that their product is the solution. Whereas with painkillers, the problem is clear and urgent, and clients are ready to spend their money right away to solve it.
We took a look at the SaaS unicorns announced in Q1 of 2022. Logically, most of them (80%) can be labeled as painkillers, whereas less than 20% as vitamins. (see the graphs below). No candies here.
Am I a painkiller?
Finding the answer to this question is critical for every company, as many startups fail because they waste money on products that no one wants to buy. If you’re doing customer research and you find yourself convincing the prospect that they’ve got a problem you can solve, chances are you created your solution too early and probably created a vitamin (Read more). However, in most cases, your SaaS product may feel like a vitamin to most of your current website visitors, but in all likelihood, your product relieves someone’s pain. The key is finding these pain points:
1. Financial Pain Points: Your prospects are spending too much money on their current provider/solution/products and want to reduce their spending.
2. Productivity Pain Points: Your prospects are wasting too much time using their current provider/solution/products or want to use their time more efficiently.
3. Support Pain Points: Your prospects aren’t receiving the support they need at critical stages of the customer journey or sales process.
4. Process Pain Points: Your prospects want to improve internal processes, such as assigning leads to sales reps or nurturing lower-priority leads.
If we look at the SaaS unicorns announced this year already, 40% of them address financial pain points, whereas 40% focus on process-related pain points. Interestingly, just 10% of the recently-minted unicorns position as productivity pain-solvers.
Is there a framework for this?
There is. We've built a framework that lets B2B SaaS founders ask the first principle questions about the pain that they are solving for their customers.
How to become morphine among painkillers?
Kevin Fong, a well-known venture capitalist in the Bay Area, said:
“We divide business plans into three categories: candy, vitamins, and painkillers. We throw away the candy. We look at vitamins. We really like painkillers. We especially like addictive painkillers!”
For B2B software, it’s important to remember that while companies may buy your product, it’s their people that use it. Becoming the morphine among painkillers means increasing your product’s stickiness with these users. Furthermore, addictive or “sticky” painkillers can differentiate themselves from the competition through lower churn and higher retention rates, making them more attractive to investors.
Becoming sticky/addictive in 4 steps:
Make the product part of the users’ daily routine. Read further on The Secret to Successful SaaS Habit Formation.
Reduce time to value. See How to Reduce Time To Value For SaaS Products by Improving User Onboarding Experiences.
An amazing UX design. See here for SaaS UX Design Best Practices.
Add-on Features. A good framework to understand what features are basic necessities that your product must fulfill and what features are value adds is the Kano Model. Kano classifies features into four categories, depending on how customers react to the provided level of functionality.
Another interesting read is the best-seller “Hooked” by Nir Eyal. In the book, Eyal explains the Hook Model: a cycle of events engineered to keep users coming back. This Hook cycle consists of 4 stages: trigger, action, variable reward, and investment.
I am neither 100% Vitamin nor Painkiller, what then?
Sarah Tavel, current general partner at Benchmark, refined the notion of painkillers and vitamins. She argues that, like vitamins, drugs can’t harvest existing demand — they must sell a person on how their solution will make the person’s life better. However, unlike vitamins, drugs become as addictive as painkillers. Two benefits distinguish a drug from a vitamin:
Accruing benefit. The more you use the product, the better it gets. This is mostly because a consumer adds data to the product, either passively or actively, and then the company uses this data to improve the experience for the user.
Mounting loss. The flip side of the accruing benefit is that the longer you stay with the product, the more you have to lose by leaving the product. It becomes a product you depend on, or it becomes a product on which you’ve accrued value of some sort.
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