Episode 124 | 8 Ways to Rehab an Application

Show Notes

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[00:00] Mike: In this episode of Startups for the Rest of Us, Rob and I are going to be talking about six ways to rehab existing application. Welcome to Startups for the Rest of Us: Episode 124.

[00:08] Music

[00:17] Mike: Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.

[00:25] Rob: And I’m Rob.

[00:25] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Rob?

[00:30] Rob: I’m doing well. I’m knee deep in MicroConf logistical details and I am super stoked about something we’re trying this year. We’re doing Attendee Talks where we’re inviting people who already have tickets to MicroConf to submit ideas for talks that they want to give. The talks are short. They’re 12 minutes and we have received 21 submissions so far and then we’re – I’m sending out e-mail today or tomorrow to allow attendees to vote talks. They have like eight votes that they can distribute among all the 21 and then the ones that that go to the top will be given during MicroConf. So, I’m kind of knee deep in getting all that set up and we’re surprised there’s no platform really designed to do that like no SaaS app I could just pay for so I’d hacked something to make it work. But I’m stoked about the idea, the talk ideas that came through and the quality, the folks who, you know, submitted them. I know a lot of them by name. It has me excited to hear what’s going to come out with the audience.

[01:23] Mike: Yeah, I think the only downside is that I looked through the list of 21 talks and there’s a lot of really good ones in there. So, you really have to pick and choose which ones that you really, really want to listen to versus the ones you’re kind of lukewarm about and even though you still may want to listen to them. So, it’d be interesting to see what shakes out of the top though.

[01:40] Rob: Yeah, I agree. How about you? What’s going on?

[01:42] Mike: I am neck deep in AuditShark changes for the Linux early access people.

[01:47] Rob: Shifting focus might be a strong word but do you feel like that’s what you’re doing from Windows to Linux or seems to be more of a need in a Linux community for this?

[01:55] Mike: Yeah, I’m kind of back pedaling from my initial thoughts about whether I could just launch with Windows only and it seems like because there are so many people who are out there who are using Linux that it seems like leaving them out would be a poor choice. I’ve got things relatively working at the moment that I added a couple of things in and one of the customers asked me for SSH key support so because before, all I could support was a direct SSH connection and now, I have to support the certificates and everything else. But that’s coming along well that should be done in the next day or so. So, I should be able to hand that off to him ad start running.

[02:29] Rob: And once that’s done, is that when you’re done with early access or is that – does that going for another week or two after?

[02:34] Mike: No, it will go on after that. So, that will –

[02:36] Rob: Okay.

[02:36] Mike: …just kind of be the start of early access for this customer and probably several others as well. Once I get that in place, then I’m going to really hit the e-mail lines and start talking to people and saying, “Hey, you know, now the support is not only Linux but, you know, the keys and everything else,” and kind of see what shakes out of that. I think with the product itself is in a good spot. It’s just a matter of getting people in there to see what things are really interested in finding out about their systems.

[03:01] Rob: Did you hear that Google Reader is shutting down?

[03:04] Mike: I did.

[03:05] Rob: I think there’s an opportunity there. I think there’s an opportunity for someone to do a really niche play and go after journalist or high end power users of Google Reader who are willing to pay for it. I think going for a free plan or a free Google Reader has already not worked. There are several replacement Feedly and a few others and they’ve already shut down their free plans because they were inundated. I think they got like hundreds of thousands of new signups and they just shut their free plan down which is once again it’s like “Don’t start the free plan.” They weren’t listening to us at Feedly I think.

[03:34] Mike: I think that there’s too many people who are already there that I think there’s going to be this gold rush mentality of “Oh, Google is shutting something down and there’s a great opportunity here and let me see if I can exploit it.” But the problem is that there is already a market here that is pretty heavily saturated and there’s people who do this particular thing pretty well and unless they do what you just said which was pick a very niche market and try to exploit just those people, then it’s not going to fly. And in fact is that they could have done that regardless whether Google was shutting it down or not. It doesn’t matter. I mean if you really have a product that is geared for a specific type of person, it wouldn’t matter whether the Google is still running Google Reader or not.

[04:16] Rob: Well, but I think a lot of journalists and a lot of power users of Google Reader just wouldn’t have had reasons to switch but now it’s the big switch where you have literally hundreds of thousands if not millions of people who are suddenly looking for an alternative and you’re right, it is a gold rush. I mean there is going to be this massive switching going on and there’s a lot of opportunity there for someone to take advantage of. The question is whether you could get something out quick enough, right? Because there’s going to be media buzz and there’s going to be people switching for, what, maybe the next few weeks. I bet if you could get something. I mean seriously do like Coding Binge and get something out in a week or two that could at least do the very, very basics but do it really well. Do it similar…very similar to how Google Reader actually does it because that’s a complain I’ve heard is there are these alternatives but none of them do it quite like Google Reader did and I just keep waiting for someone to say, “Ha, here’s the winning ticket, you know, here’s the system that actually is able to do this.”

[05:12] Mike: In many ways, I kind of see it like Microsoft Word where Google docs does an okay job but at the same time Microsoft Word does the job too and there’s this minimum feature set that you have to have and as long as you got that minimum feature set covered, the rest of it is kind of icing on the cake but isn’t necessarily enough to make you want to choose that unless somebody really does get something out there that has some sort of killer feature that is going to shift somebody in one direction or the other, I just don’t see it happening and plus because it is at gold rush mentality, there are a lot of other people who are going to be doing this kind of thing. There’s going to be a lot of competition and you need some way to stand out and I don’t know what that would look like. I think that for every person who does something well here, there’s going to be probably a hundred or 500 who don’t or who [0:06:00] – will make an attempt and it’s just doesn’t pan out for them.

[06:04] Rob: Right, you certainly would have an advantage if you already have an existing codebase that was at least kind of doing this and you could repurpose it because to start from scratch at this point would seriously behind in the race. I also think there’s risk that Google may — due to the public outcry may decide to open source it or maybe they don’t shut it down. I don’t know if that’s going to happen. It seems unlikely but there’s a lot of risk but if you did Binge for a few weeks and try to get something out, you could just be shut down if Google decides to do a 180 on this decision.

[06:32] Mike: Well, I’ve read in some places that the – part of the reason why it’s getting shut down was because they were trying to pull a lot of the features from their – a lot of the social features and put them in to Google Plus and because of that, you know, it makes sense to kind of shut down that project so you have to do something with those people and you can move them in Google Plus or some other things that allow Google to have that social presence and at that point, you’re right, it may makes sense for them to say, “Okay, well we’re going to open source this and if you want to, you can run it on the Google app’s platform but you’re going to have to pay for us for the subscription.” And so, maybe they could turn it in to a money maker at that point but I don’t know.

[07:10] Music

[07:13] Mike: Today we’re going to talk about how to rehab an existing application and taking an existing application that either you acquired or you’ve kind of let fall by the wayside. It can be well worth the effort to rehab that application back to I guess its original roots so that you can actually make money from it. But the key is to know what those things are. And today, we’re going to talk about how to identify the problems with an existing application and how to fix them and essentially break it down in to two main categories and those two categories are cutting expenses and growing revenue.

[07:45] Rob: And I think you touched on some important points there. This isn’t just for people who are acquiring apps. This can very well be for any app that needs to be rehab. So, if you have an app that you’ve either neglected or one that you have been working on but you just haven’t been making the progress you want,  it maybe a good time for you to take a step back, get some new set of eyes on this thing to evaluate the product from this – I think we’re going to look at seven or eight different angles and figure out which of this need improvement and then we’ll get to the rehabbing. So, it’s both for people who acquired and who are just working on existing apps that they already own.

[08:20] Mike: So, we’re going to talk about cutting expenses first. And the first way that you can start cutting expenses is by looking at your products and identifying whether or not it has a free plan. If it has a free plan, get rid of it. It’s essentially baggage that you don’t need especially if the product is kind of limping along and it’s not doing very well. The support cost that are related to a free plan can just kill you and unless you have a really solid understanding of how long it takes to leverage those free users in the paying users, you really need to reduce the distractions and concentrate on delivering value to people that they are going to pay for versus providing a free servers that people are going to use because they don’t want to pay for it.

[08:59] Rob: Yeah, I view having the free plan and anything get rid of it unless it’s a way of reducing expenses and more as a way of ensuring that you are getting revenue from people who value your app because it’s likely that if you do have a free plan and you have several hundred or in the thousands of people using it, that some of those people, a good chunk of them would pay you something for your app if they didn’t have the option or the free plan. And if your app is in need of rehab meaning you either considering shutting it down or it’s just not…not doing the revenue that you need or if you’ve acquired it, then obviously, you need to get it to the point where it’s making enough revenue to basically justify your time in to where you can keep the app up and spend time maintaining it and supporting everyone. And to me, it’s valuable to all the existing users like you owe it to your users who are getting value out of it to continue supporting the app and if you need to charge people money to do that, then that’s how this works. I mean that’s how SaaS apps and for profit software works.

[09:59] Mike: This isn’t  to say that free plans don’t ever work, it’s just that you need to understand all of the numbers behind in order to make something like that work. And if you have a product that is limping along, you need to understand all the underpinnings and make sure that it’s a successful product before you start doing a free plan which is essentially a marketing effort of some kind.

[10:17] Music

[10:21] Mike: So, the second way of cutting expenses is to identify excessive hardware or software cost. If it’s a web app that’s got 200 users that’s running at a dedicated server, you can probably move it over to a VPS. Make sure that you look at the actual consumption of that application and make sure that the hardware that it’s running on is not severely over spec.

[10:40] Rob: I actually got an e-mail question this week from a member of the Academy and he said that he’s heard you and I talked about difficulties we faced with DreamHost and how we’ve moved sites to DaringHost. And my reply to him was we do still recommend DreamHost. DreamHost is not actually a bad host and especially if you get a brand new account on a new server, it will serve you pretty well for quite some time. Eventually it gets older and the hardware starts failing and they don’t really replace stuff in time but the idea is that premature in the optimizing and going with an Amazon EC2 instance that costs 70 bucks a month or you know, going through Rackspace and paying 50 or a hundred bucks a month or like you said getting a dedicated server which is obviously many hundreds of dollars a month and getting that up for a landing page, to have a landing page to sit on it for five, six months while you build your app, it just doesn’t make sense if you have any type of cash constraints. Obviously if you have funding or if you have a ton of money and you’re moving really fast, then this doesn’t count but we’re talking about bootstrappers. So, we’re talking about people where $500 over the course of six months is actually a decent amount of money, right? Like it’s money that you can use to acquire customers to pay to have articles written and infographics built.

[11:49] You know, with all the troubles that we’ve had with DreamHost and you know, a little bit of downtime here and there and some of slowness of stuff, I still have more than 25 websites on it. I still have audio files and video files, this podcast, the audio files anyway are host from DreamHost. There’s a lot of flexibility that it offers that I still recommend and while shared hosting is not something I would run a successful SaaS app from, it’s absolutely a decent place to get started very quickly and inexpensively and to get your code running on a box that’s not your local machine, to start doing some testing on a real server. And then even running, you know, early access and a beta and that kind of stuff, completely acceptable like I could see doing that on shared hosting and from there moving to a VPS either on DreamHost or, you know, potentially if you’re going to move it, I would consider moving it to another host at that point. And once you have people paying money for it and you know that you’re going to be ramping up.

[12:43] Music

[12:46] Mike: So, third place that you can cut unnecessary expenses is looking at the subscriptions that you have that are associated with the application. And there’s a lot of different things that you may be paying for, you may be paying for data fees or customer support software or Analytics, make sure that you take a look at all these different things and add up how much it’s costing you on a monthly basis. Make sure that you really need that subscription that’s associated with the application and one thing that definitely counts in to this is a merchant account. If you have a merchant account of any kind, merchant accounts will run you 50, $75 a month and that’s generally bare minimum just to have the merchant account and on top of that, you’re paying for the transaction percentages on top of that.

[13:25] So, make sure that you take a look at all those subscriptions, add them up, find out whether or not you’re losing money on it because I have seen applications where you start adding up all the subscriptions that are associated with running that application and it turns out that it’s losing money. And just by kind of nitpicking through them and identifying the ones that aren’t necessary, you can save yourself quite a bit of money. And in some cases, you can turn an application that’s not making any money in to something that’s making a couple of hundred dollars a month.

[13:51] Rob: There’s definitely a balance here. If you’re a busy founder and you have a straight path that you can see to growing your app by several hundred or  a thousand dollars a month, then spending a lot of time trying to minimize smaller expenses is probably not warranted. But if you don’t have that path, the app is not growing, you’re still feeling around for the marketing approaches that work, then spending some time in reducing this ongoing recurring expenses like you said can definitely be worth the time. If nothing else, it’s actually an interesting morale boost that month where you break even or that month when you make that first 1, 2, 300 bucks. Down the line, if the app hits 10 grand, you’ll look back and you say, “Boy, I really did need to optimize and save that $50 on the merchant account.” But early on, you need those small wins to kind of build your confidence, get you to profitability.

[14:41] I, for one, have done a number of things like canceling an authorized .NET account that an app I acquired was running on because the thing was it was over 75 bucks a month just to have the account around and by signing up for something like Stripe, you have suddenly know, you know, you have $0 out of pocket per month and you add that up to a couple other expense reductions and pretty soon like you said, you can go from making zero to making 1 or 200 bucks a month and you just feel a lot better about the app at that point.

[15:08] Music

[15:11] Rob: So, the second category of approaches to rehabbing an app is growing revenue and it looks like we have five things outlined for this section. And the first one is if your app doesn’t have a lot of traffic. There are a lot of negative things about not having a lot of traffic. One, it makes it really hard to test. If you want to do any type of split testing of messaging or positioning, if you don’t have much traffic, it’s just – it takes forever to do or it’s nearly impossible. In addition without a lot of traffic, your numbers are skewed in terms of trying to get a percentage of people that convert to trials. If you only get a hundred or 200 uniques a month, you can get 5% converting to trials one month and you can get 0% in X month. And so your numbers are just all over the place until you hit that critical mass.

[15:55] So, it is important early on to focus on increasing traffic to a point  and then iterating through the other four things that we’re going to talk about. Bottom line is if your site has low traffic, there’s a ton of approaches. I mean this is that big question, right, how do I market my app? I would say if you’re wondering how to increase traffic to your site, put together a marketing plan, look at episode 122 where we talk about paid acquisition content marketing joint ventures and we outlined a lot of startup B2B marketing strategies and go from there. Get started. Turning that 1 to 200 uniques a month, you want to get that to 2,000 and then 3 or 4,000 and that’s when you can really start running some test and figuring out what you need to improve on your site.

[16:38] Mike: The key piece of this is that if you have low traffic, you need to identify that as being a problem for the application. It’s okay that if a particular website or a particular application has low traffic as long as it’s converting well. If you don’t have good conversions, if it’s not bringing a lot of revenue and you have low traffic, then you need to identify that low traffic is one of the problems and be able to address that issue.

[17:01] Rob: No, that’s exactly right and you don’t want an app with 500 uniques a month that has never been optimized that has a crappy funnel and that you’re not looking at the key metrics that your churn is high. All those things that has low lifetime value, that app is almost worthless. You’re just – you’re not going to get very many customers. But if you build that app up and you hone all those things I just said, you know, you really dial them in and you focus on them and improve them and you build it up to 5 or 10,000 a month and then eventually for some reason it falls back down to 500 a month, you are going to convert and keep so many more customers from that same 500. It can literally be 5 times more revenue just because your funnel is improved. So, that’s a good point. It’s not that having low traffic is a terrible thing, it’s that without enough traffic you can’t optimize and then cycle back and generate more traffic.

[17:54] So, the second approach to growing revenue is to optimize your customer acquisition process and it’s basically reducing  friction when your customers sign up for your app and when they’re getting on boarded. So, when they’re getting set up with your app, the steps they have to take to get value from the app. You want to minimize friction during that entire process. So, as an example, if you sign a process in multiple pages, look at how that can be trimmed down. There’s almost always room to shrink your registration form. Never ask for the password twice. Let just adds one more element and if they’ve missed enter a password, use the ‘forgot password’ link later. It’s not that important to reduce your conversion rate to make sure that they got it right the first time. Never ask for a user name. Always use their e-mail so that eliminates another form. Never ask for captcha unless you’re receiving 10, 15, 20 spam sign ups.

[18:40] It’s just one more form, so go through your signup process. Have someone else screencast through your signup process. You can use tool like UserTesting or Feedback Army or just ask a friend or colleague to go through it and give you brutally honest feedback. In addition, you can install a tool like CrazyEgg or Inspectlet and record what people are doing in your signup process and see when they’re canceling that has actually been a better help, you know, than Analytics are kind of tricky, right, because they’ll show when people bails but you can’t really see why and adding a better tool to do that will give you some insight.

[19:11] Mike: And as Rob said there are some clear cut ideas about what you should and shouldn’t be asking for in the signup pages. There’s a lot of research that’s been down around what sort of things should be on the signup pages and if you look around in the Unbounce has a lot of good articles and good information on their website about that kind of stuff but there’s definitely whitepapers out there as well. They show a lot of case studies around what changes have been made to a site and what it’s conversion rate was before or after and how well it produced results after the redesign based on some things that they added or took away.

[19:43] Rob: And if you’re on doubt and you don’t know what to put on your registration form, you should make it four or maybe five fields. It should be an e-mail address and a password and their e-mail address, also the services, their username and then you should, assuming you’re asking for credit card number which I would default to if you are a SaaS app to ask for the credit card number before  the trial, you ask for – so the actual credit card number, the expiration date and potentially the CVV and that will you put to five. Sometimes there’s reason to ask for other form elements but to be honest, I’ve seen registration forms like HitTail’s when I first took it over, I think it was 15 fields and it was all types of stuff, company and phone number and even like address that it isn’t actually needed to charge your credit card and unless you’re having problems with credit card fraud, you should enable AVS which is the fraud detection that then requires a zip code.

[20:33] If you are having problems with fraud and you have charged back and stuff and now, you know, that’s the time to optimize on that. But early on, it’s about you’re optimizing for reducing friction and that will help you get more people in to your form process. In addition, while I do default to asking for credit card upfront, it’s absolutely worth testing not asking for it. You know, if you can get more people in to your app and help you reduce some friction in the on boarding process that can be beneficial as well. But by default, people want to take the easy way out, new founders especially, the easy way out is to not ask for that credit card and hope people will convert later and typically, that results in very, very low trial to paid conversion rates.

[21:11] The third approach to growing revenue is to identify your key performance metrics and not just to identify the metrics but actually track them on a daily basis or weekly basis. And so these are things like your conversion rate from visitors to trial, conversion rate from trial to paid, the lifetime value, the customer, the average monthly value of the customer. Churn is the other one and you know those, what is that? Maybe five metrics and you know them cold and you really focus on them and focus on improving them, you’re going to get 80 or 90% of the way there. Don’t actually feel like tracking metrics is this overwhelming process. There are people who make entire careers out of it just like there are people who make careers out of SEO, yes, it can be a very complex thing. Take the 90-20 approach to it and get 90% of the value and 20% of the time by just looking at a few metrics.

[21:57] Mike: One thing to be really careful about when looking for this the key performance indicators is that there are certain types of metrics that don’t mean a whole heck of a lot and one of those for example is the number of people who sign up. That number should theoretically grow overtime the same way with direct traffic measurements. Some people will say, “Oh, well, my direct traffic is going up. So, it’s must be word of mouth that’s spreading my application,” and that’s not necessarily true. The fact is though that you want to concentrate on metrics that actually means something to the business. The number of new signups per day doesn’t mean a whole lot especially if those people cancel a week after they started their subscription. It means a lot more if they stick around for six months.

[22:36] So, you will know things like churn and lifetime value and those things are much more important than these, you know, I’ll call them vanity metrics where, yes, it’s nice to have the number of people signing up on a daily basis increase but what you really looking for is for those people who stick around because it means that the mechanism that brought them to your website means they are qualified traffic and what you really looking for is qualified traffic. And if you can back track from your lifetime value and churn and identify the sources of that traffic, you can double down on them later.

[23:06] Rob: Fourth approach to growing revenue is to reduce churn. Obviously, you have to be tracking churn and looking at it in order to reduce it. Churn is a huge deal and it’s actually really hard to fix. It’s hard to have a blanket answer on how to fix it. Reducing friction can be reduced to, you know, some basic rules of how to get people on board but reducing churn what I found is the best ways to ask people. E-mail everyone who churns for a week or two weeks or a month and you know, you can have a VA do it as I’ve done with HitTail or you can do it yourself. You need to get two groups of people. One, people who try the app but never convert to paid and then you’ll have a whole group, a whole list of why they didn’t convert. Then you ask customers who paid you and then canceled at some point after that and they’ll have a different set of reasons.

[23:53] And basically one by one, you go through and you might have 20 reasons in each of those groups and you try to boil those down in some action steps. And several other reasons will group together in to like the person not understanding how it works and not understanding the value proper, either just spend too much time setting it up or something like that, I recommend just putting together a bulleted list of points that you need to have action item essentially that you need to get done. I’ve called them operation retention in the past. We’re actually just wrapping up operation retention 2, once again to decrease churn with HitTail. What I found overwhelmingly is that there is often a feature or two that is having people churn but a big part of is really getting people to get value out of your app like it’s education. A lot of it is recording new screencast and e-mailing them at the right time.

[24:40] Life cycle e-mails are big win for this kind of thing and touching base with people periodically, you know, really getting them to get value out of the app because that’s going to be the best way to have them convert to paid customers and just stick around. It’s about the beauty of the SaaS model but it’s also the curse of it, right, it’s that someone can cancel at anytime. And so, you really do need to provide value for them and in order for them to get value out of it, they have to be using the app. That’s one of the big ways that I’d see reducing churn.

[25:05] Mike: One of the ways that you can leverage the data that you’re getting out of your application for this churn is to take a look and kind of categorize how long people stick around for it and see if you can aggregate them in to cohort where if people who have signed up, all of approximately the same time, see if they stick around for a varying amounts of time or whether they all cancel it around the same time because it may very well be that you’re introducing things in to your application that are causing them to quit and you happen to see that everyone from this particular point quit and if that may help you as your win on specific changes that are being introduced in to your application that are causing that.

[25:45] Rob: But if you look back at the four points we’ve covered, the first one was having low traffic, so increasing traffic and the second one was optimizing your customer acquisition process. Third one was identifying your key performance metrics and the fourth one was reducing churn. And those go in order like you need enough traffic so that you’re able to optimize your customer process, you’re able to get some metrics that are stable. So, you need enough people going through your funnel to figure that out, then you need to reduce churn to keep enough people there and once you’ve reduced churn to a point where I’ll say it’s reasonable and you aren’t just bleeding new trials or bleeding customers, that’s when you cycle back and you go back to number one and you increase traffic again.

[26:25] So, you take it from that 3 to 5,000 uniques that I talked about earlier. Maybe you try to double it to 10,000 and at that point, you’re going to learn more because your market is going to expand a little bit. And then you come through again and you optimize that acquisition process. You identify your key performance metrics. You reduce your churn again and it is the cycle in each time you go through and I mean this is can be a 6-month cycle, you know, of just stepping through these things. But a mistake that I see people make is they just focus one of this and they just focus on traffic, traffic, traffic but if you’re bleeding customers at the other end, it doesn’t help where if you’re always focus on reducing friction or reducing churn but you’re not driving enough traffic, then you don’t have enough data and you aren’t optimizing that whole cycle of it. And like I said, you can literally get 5X out of the cycle maybe even 10X because if you double each of this which is not that hard to do especially early on they multiple each other. It’s not additive. It’s actually multiplicative. So, a 2X improvement in 1 step is then times to 2X times to 2X, you’re looking at in 8X improvement, that is honestly it’s kind of trivial especially early on in an apps lifetime.

[27:27] Mike: It definitely helps significantly more and then overtime as you grow the application, you get more customers, you know, it multiplies in to a larger number.

[27:35] Music

[27:38] Rob: So, the fifth and final approach to growing revenue we’re going to talk about today is selling more to your existing customers and by that I mean providing more value to your existing customers that they are then willing to pay more for. And examples of this are building new add-ons to your app. I talked about this last year on my MicroConf talk but in essence with DotNetInvoice, we added a QuickBooks module that allows you to live sync with QuickBooks and it was at a lot of development time but on a $300 like DotNetInvoice, we’re able to charge another 99 bucks for that module. So we’ve, you know, increased our lifetime value by 33% in that case. With HitTail, talked about adding the one-click articles and that has created a lot of value for people and not only has that generated revenue but it is helped tremendously with retention because people feel like they’re getting more value out of the app and you can find an approach like that but actually gives you double value. It actually retains people and generates revenue even better.

[28:34] In my mind you should always be thinking of how to move up the chain in terms of providing that next level of value for customers. So, if I had an app that was to help people build documentation for their software, I would launch the app, have people using it and then as soon as people, I would try to figure out how to concierge service where we would actually write their documentation for them and I would find someone, contract them, hire them, whatever it took but have that next price point because there’s probably going to be someone willing to pay a pretty penny for that and it’s going to make a way, way more likely, you know, to use your app and to stick with it.

[29:07] Mike: One of the things that goes along with that is that it’s very difficult to move somebody from paying nothing for something to even paying a dollar. So, whether your price point is a dollar or, you know, a hundred or a thousand dollars doesn’t really matter. The point is that there’s this huge amount of friction that’s in the way between them pulling out their credit card and actually signing up for your service. Once they’ve decided to do that, then it is significantly easier to make upsells to them and that’s a lot of what Rob was talking about was providing them opportunities to buy more stuff. So, whether you do it right at the point of sale or whether you do it afterwards where Rob did that with HitTail where he’s providing value to customers with the keywords suggestions and then offering to write articles for them that will help them with their SEO.

[29:50] Those are two different ways to do it but at the end of the day, it’s the same thing. I mean you’re basically increasing the lifetime value of those customers and because they are already being charged for the service, because they’ve already made the conscious decision to move ahead and actually pay for it, they’re going to be much more likely to do that than if they were on a free plan or just trialing the software.

[30:09] Rob: The fact is a lot of it is about building trust. If someone pays you a few bucks a month to use your app and they are getting some value of it and then you add a new service that it may costs double, double what…what you’ve already provided them but they trust that you are solving their problem and that what you provided them so far has been relatively low friction, it has provided a lot of value for them, they either save time, they save money or they make money, then it’s kind of a no-brainer, right? It’s like the big trepidation with signing up from a new app is like you said it’s giving your credit card to a new company. It’s entering your log in credentials and figuring out your log in credentials. It’s just getting ramped up and figuring out, spending the 20 minutes to get set up.

[30:48] But if you already somewhere and you already set up and someone says, “Hey, with this one-click, you can get even more value out of the app and of course you charge something less than of how you’re going to get out it,” then hopefully, build the trust in your customers that it’s worth their while. And that’s the idea like I said going up the value chain. It’s like how can I provide my customers with more value and make a little more money in the process but really provide them with way more value than I’m charging them for because that always has to be the equation.

[31:17] Mike: So, just to recap the eight ways to rehab an existing application is that they fall in to two different categories. The first one is cutting the expenses. If they has a free plan, cut the free plan. Step two is to analyze excessive hardware cost and get rid of them. Step three is to analyze any unnecessary subscriptions and get rid of those. The second category is growing revenue. If you have low traffic, then you need to address that issue. Step two is to optimize your customer acquisition process. Step three is to identify the KPIs that are associated with the business and step five is to sell more to existing customers.

[31:50] Rob: If you have a question or comment, call it in to our voicemail number at 888-801-9690 or e-mail us at questions@startupsfortherestofus.com. Our theme music ] is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

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3 Responses to “Episode 124 | 8 Ways to Rehab an Application”

  1. Matthew Paulson March 26, 2013 at 11:46 am

    Any thoughts on whether or not to collect a CVV code along with credit card information?

    Stripe does not require a CVV to do a charge, but it could help reduce fraudulent transactions (although, that hasn’t been a big issue for me).

  2. One of your best shows yet, I have 2 SaaS apps that both need rehab! I’m taking all your advice starting with getting rid of the free plans.

    How do you transcribe your shows so quickly, is it manual or do you use an automated transcription service?

  3. >>Any thoughts on whether or not to collect a CVV code along with credit card information?

    Yes; do this. It will cut down on the number of rejected charges each month, which becomes a big problem as you grow.

    >>How do you transcribe your shows so quickly, is it manual or do you use an automated transcription service?

    We use a manual transcription service. They turn it around in 24-48 hours.