Fail Quickly

This is the tenth post in the series 12 Days of Ideas: Building & Marketing Web Products.
Illustrated by Krista Seidl

Much ink has been spilled on the topic of failure this year, and I can’t get enough.

Failure is scary, inevitable, and endlessly instructive. I’d rather succeed, but I learn more from my mistakes. All the attention currently being paid to this subject helps me squash the fear of failing. I need to embrace it, expect it, even plan for it.

“I think we need failure to keep us adhered to our proper path.”
— Brad Smith, The Great Discontent

“Pixar’s in-house theory is: Be wrong as fast as you can. Mistakes are an inevitable part of the creative process, so get right down to it and start making them.”
— Hugo Lindgren, Be Wrong as Fast as You Can

I love that idea. Start making mistakes immediately. It must become okay to be wrong in our work; ideally you’re surrounded by people who expect it.

“Give people opportunities, cultivate talent, and let people fail while still supporting them. It’s the only way you learn… But people need to be allowed to do that to learn.”
— Gmunk, The Great Discontent

Too often I’ve gnashed my teeth worrying about producing something that might fail. It’s refreshing to think about anticipating and learning from failing, to work without the fear of having chosen the wrong idea, the doomed path. If we can get down those paths quickly and with a little help from our friends, we’ll be on to better things. As one of my favorite pastors writing today puts it:

“Putting one foot ahead of the other is the best way to survive disillusionment, because the real danger is not the territory itself but getting stuck in it.”
— Barbara Brown Taylor, The Preaching Life

Substitute ‘failure’ for ‘disillusionment’, and the idea is the same. Keep working, fail quickly, and move on.

Be Patient

This is the ninth post in the series 12 Days of Ideas: Building & Marketing Web Products.
Illustrated by Krista Seidl

“Put the customer first. Invent. And be patient.”
— Jeff Bezos, Bezos on Washington Post: ‘I’m Not a Magician’

Warning: this post involves a football analogy.

Succeeding in this industry involves a lot of waiting. We wait to launch a product until it’s ready (enough) for customers. Or, we’ve launched, and we’re waiting for traction. Traction achieved, now we’re waiting for funding. Now we’re waiting for the hockey stick of user growth. Now we’re waiting for press. Fame. Fortune.

It just takes so long.

“If your customers are saying you have something and you have some growth, then over time (possibly a long and challenging time), the math of SaaS usually works out in your favor.”
— Gail Goodman, Notes & Summary of Gail Goodman’s The Long Slow SaaS Ramp Of Death

A long and challenging time.

I try to remember that success isn’t an all-or-nothing, ‘you have arrived’ moment. It’s a matter of small degrees. There are distracting exceptions, particularly in this industry. We read and write endlessly about young, hot companies like Buffer and Snapchat, but these are outliers, distractions, showboats. They’re wide receivers snagging a ball thrown 40 yards downfield, making the march to the end zone seem like a piece of cake.

More of us are running backs. We take the ball and crash into the competition, searching for an opening. We fight for each and every yard. Sometimes we break through and sometimes we’re pushed back ten yards. If we can pick up five yards, that is success. The end zone is our destination, but it isn’t the sole indication of achievement. That’s easy to forget. We want to be great, immediately.

But yet:

“The only path to amazing runs directly through not-yet-amazing.”
— Seth Godin, Overcoming the Impossibility of Amazing

The first version of a new feature will need improvement. The fourth version will need improvement. That feature may need to be shelved for a different feature. The new feature might not be received the way you thought it would. And on and on. A long and challenging time. Only one way to get through it.

Keep Customers to Make Customers

This is the eighth post in the series 12 Days of Ideas: Building & Marketing Web Products.
Illustrated by Krista Seidl

It’s so easy to get focused on conversion rates, but gaining customers is pointless if you’re losing those same customers three months later.

Earlier this year I ran across a killer post about retention by Jerry Jao that caused me to spend a little less time obsessing about our conversion rate, and more time watching our retention rate.

Here are my key takeaways:

Existing customers are repeat customers.
Existing customers already like your product, and ideally they like your company as well. What do you have in the pipeline to sell to them? Re-acquire these customers with new products, features or services.

You’re no longer courting customers, you’re maintaining a relationship.
Existing customers have bought into your premise; they’ve purchased your product, or hired your services. Hopefully they have a positive feeling about you. You’re living up to the promise you made to win them over, so now it’s time to do the things that make your relationship with them special.

“When you see our strange billboards that don’t even say our name, or when you see our random “high five” shirts, vinyl toys, or hear ridiculous radio ads, just know that they defy logic because they’re for our existing customers. We’re not going for new leads, let alone conversions…. We’re going for customer service. Which, by the way, leads to leads.”
— Ben Chestnut, Why I Hate Funnels

Customers talk.
Happy customers tell people about your product. Of course, so do unhappy customers. So it’s a good use of your time to keep your active customers in the former camp. From the CMO post:

“A study showed that satisfied customers tell nine other people about their positive experience, while dissatisfied customers are likely to talk about their negative experience with 22 other people.”
— Jerry Jao, Customer Retention Should Outweigh Customer Acquisition

Clearly retention is a major indicator of long-term success, and we should spend more time looking at the people on our accounts list instead of looking wistfully at those who aren’t. It turns out that one leads to the other.

Say No

This is the seventh post in the series 12 Days of Ideas: Building & Marketing Web Products.
Illustrated by Krista Seidl

It’s critical to turn down feature requests to keep your product development focused. In fact, learning how to say “no” may be the most important thing you do when building a product.

No post has influenced my thinking more about this subject than one written by customer development software company Intercom. I believe this is the definitive post about ‘saying no’. In fact, your time today is best spent simply reading this gem:

http://insideintercom.io/product-strategy-means-saying-no/

Your Email List is Your Greatest Asset

This is the sixth post in the series 12 Days of Ideas: Building & Marketing Web Products.
Illustrated by Krista Seidl

It’s a pleasant surprise to reconnect with old friends to discover that you work in the same sphere. My college buddy Stephan Hovnanian is a skilled digital marketer with scads of email and social marketing experience. This summer I asked him to participate in a Q&A about email marketing for my company’s blog, and he gamely agreed.

One thing in particular that he shared stuck with me:

“Your email list is yours, you own it, and it’s portable… Those 100,000 Facebook fans belong to Facebook, and they know this … in the end, if Facebook changed their rules, you could lose everything you worked for. Get those 100,000 people onto your email list, though, and you can pick up right where you left off.”
— Stephan Hovnanian, Uncovering the Hidden Value of Your Email List

This is great advice for individuals and businesses alike, and it strongly supports the idea that companies should build communities.

With all these tools to help us build communities, which ones provide permanence? Which channels create communities that can’t be altered by forces beyond your control? Looking at your marketing strategy with this in mind, it becomes clearer how you should spend your time: targeting the inbox.

It makes sense; email is a familiar and highly personal means of communication. When someone hands you their email address, they’re agreeing to let you interrupt their busy day. They’ve made a contract with you: I’ll let you walk in my digital front door if you make it worth my while.

This idea certainly doesn’t mean you should neglect your social media efforts, but the goal of doing so should change — social channels should become a tool for conversion, rather than being the end itself. And fortunately for me, they also provide a means to find old friends who can provide a small burst of enlightenment.

Make Sure Everyone Understands Your Sales Metrics

This is the fifth post in the series 12 Days of Ideas: Building & Marketing Web Products.
Illustrated by Krista Seidl

For two weeks in July, our CEO diverted one our developers away from product work in order to create a dynamic acquisition metrics report.

Frankly, I was annoyed — product work always stalls when a developer gets pulled aside to assist with the support queue, or start a project that isn’t on the roadmap.

But when they presented the report, I immediately understood why it needed to happen.

This report laid bare the growth and attrition of our company in a way I’d never seen it before, going back all the way to the company’s inception in 2006. It included:

  • Total Revenue
  • Total Monthly Recurring Revenue (MRR)
  • New & lost MRR
  • Total customers
  • Churn rate
  • Reason for churn (cancellations, downgrades, billing suspensions)
  • Cost of Acquiring Customers (admittedly a work in process)
  • Lifetime Value of each customer (also a fluidly changing statistic).

Except for total customers, total revenue and churn rates, I’d never seen this data. It was like waking up with x-ray vision.

When viewed in aggregate, you could spot the months we were killing it, and the months where it was killing us. You could see where a pricing plan change had worked for the better or the worse, when a big customer came on (huzzah!), and when one left (ouch).

I look at this report every single day — and I’m sure that was the reason this report came into being. Everyone can see what’s working, who’s churning, and how the trends are unfolding. The team has great visibility into the metrics that let us know we’re on the right track.

Nothing has shored up our confidence in business decisions like this chart. We can immediately tell if we’re moving the revenue needle with pricing changes, and we can start projecting out growth with more confidence than we ever have.

I generally favor product work over any other task in our queue, but I’ve learned my lesson. Implementing tools to help everyone gauge the health of the business is worth its weight in developer time.

When in Doubt, Raise Your Prices

This is the fourth post in the series 12 Days of Ideas: Building & Marketing Web Products.
Illustrated by Krista Seidl

Pricing a product is so. Damn. Difficult. Are we scaring people away? Are we leaving money on the table? Could we grow more quickly with a lower price point? What’s the product worth?

A company lives and dies by its revenue stream, especially when trying to bootstrap the business. Signal hasn’t taken VC money, so customers who pay are gold. (It seems ridiculous to even write that, but such are the times.)

We’ve tinkered with our pricing as much as we have with our UI. Pay-per-subscriber. Pay-per-message. Offline sales only. Online sales only. Bolt-on features. Comprehensive marketing suite.

A year ago, we wanted to see more traction with online acquisition. More people in the product! Growth! After much planning and discussion, we changed our pricing model from subscriber-based (e.g., $29 for 200 subscribers) to message-based ($.01 per text, $.001 per email), and charged a flat fee of $10 for the platform. The product would be REALLY affordable, and word would spread. Customers would beat their way to our door.

Sure enough, our customer numbers started going up. No surprise, right? People like cheap software.

But here’s the problem: our revenue stayed flat, even as our customer numbers grew. Turns out low price software is easy to buy — and easy to leave. Our churn was pretty bad. When the customer isn’t invested in the product financially, they’re not invested mentally, either. This one thing doesn’t work the way I would like… I’ll just take my business elsewhere.

Pursuing the lowest price point for your product is a race to the bottom. It also cripples your ability to grow:

Making real money as a business changes a lot of things. More revenue allows you to build a real business where you have the resources to invest in things like better support and new features.
— Justin Mares, Why Real Businesses Don’t Charge $5/month

Fast-forward to this year. We bumped the base price of our software 5x and created two more tiers at 10x and 25x higher. We added personalized on-boarding for our top price point, and at the two highest tiers we phased in the features we thought would increase the value of the product.

Our total number of customers immediately began falling; fewer people signed up while our churn rate remained the same. In spite of that, our revenue went up — significantly so for the first time in a year.

Let me restate that: with the same amount of churn and fewer signups, we made more money. Most surprisingly: in the first month of our new pricing plans, we receive more signups at our top price point than we did at the lowest.

Just one of those higher-price customers is the equivalent of 25 previous customers — and it takes us much less effort to make one customer happy, versus twenty five. Will we grow more slowly? Yes. Will our growth be more stable? Absolutely.

“…some people look at a low price and think things like:

‘If they can only charge $x, it can’t be that good.’

‘If they only charge $x, they probably aren’t spending on the infrastructure, backups, etc., we need.’

‘If they only charge $x, they will not be able to afford to give us good customer support.’

‘If they only charge $x, they probably won’t be able to stay in business.'”

— Amy Hoy

Are you waffling on your prices? I’ll make it easy for you: raise them.