[00:00] Mike: This is Startups for the Rest of Us: Episode 176.
[00:10] 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.
[00:18] Rob: And I’m Rob.
[00:19] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Rob?
[00:23] Rob: Things are good. I got two good pieces in use this week. One is we confirmed our final speaker for MicroConf. Many of you know Brennan Dunn from Planscope and he had done an attendee talk last year at MicroConf that got good reviews and then he had one of the highest voted antendee talks of this year and we decided to kick him up into the main stage. So he’s going to be talking about six tricks that helped him triple his SaaS growth rate and he sent me an outline of it and it looks pretty good. So I’m excited to have that nailed down and of course to have Brennan up there. So we have a good lineup this year.
[01:01] And then the other thing that’s going on is HitTail has just been doing really good in the past three weeks since I was able to get kind of the rewrite or the revamp done where I pull a Google web master tools keywords and work around the whole not provided thing. So I pretty much had a solid uptick in all metrics across the board. Trials are up, trial to paid conversion is up. Number of paying customers is up. Churn is down, all the things that you hoped for. So it feels good to have a win. I felt like I hadn’t one in a while. Good growth projected this month after maybe 4 or 5 consecutive months of either flat or minor decline.
[01:37] Mike: Very cool. I saw that HitTail started having a lot more I’ll say relevant keywords terms that it was suggesting because I hooked up mine to the Google web master tools and it pulled out something like 80 or 100 different terms that it said that I should take a look at whereas before it’s just not turning out very many.
[01:55] Rob: Right because there wasn’t enough traffic that was provided. Most of your traffic’s not provided so wasn’t able – didn’t have any data to work from. So it’s definitely way more valuable. Like I said its way more valuable to me in my own sites so I know it’s more valuable to other folks using it. So that feels good. How about you? What’s been going on?
[02:12] Mike: I want to issue kind of a correction from a couple of weeks ago. There was a website that I mentioned that I came across where I discovered the momentum plug-in for chrome was Scott Watermasysk. So we’ll put that in the show notes but I wanted to make sure we give credit where credit was due because I’m fairly certain that he was his. He did mention it on Twitter so I apologize for not saying it but at the time I just couldn’t remember.
[02:32] The other thing is that the inbox pause plug-in, it went haywire on me today so I couldn’t unpause my email and I freaked out because I had the check box clicked where it says hide the label that we put on all of the folders. So I couldn’t even go there to find it and I had to dig through the Gmail settings to figure out how to get my email back.
[02:53] Rob: Were you ever able to fix it?
[02:55] Mike: I guess the way that it works is when you click on the pause, what it does is it creates a rule. It removes the inbox tag from all of your incoming emails and then it adds them to this other inbox-pause-whatever the date is and it applies that label to it. But it hides that label if you clicked the checkbox. So I was able to go in and find it just by looking at all the tags and I said okay well, first of all delete this rule that is moving things over there and then I went in and took everything that was in there, moved it back into inbox and then I deleted that label and then everything showed up and then it said oh its unpaused. So I don’t know what happened. It just went haywire and it would not unpause for some reason. It just kept giving me this error message in Gmail. It was kind of freaky.
[03:38] Rob: Sure. So a warning to folks using inbox pause, it may not work all the time.
[03:42] Mike: Yeah but there is a way to get it back so it’s not a total loss. And then last thing is in terms of the marketing stuff for Audit Shark I think I’ve identified at least part of my marketing problem and I think that part of the issue is that I need to niche it down a little bit. One of the things that I found in talking to people is that Audit Shark is really implemented as a compliance product. And I’ve been kind of pitching it as a security product but security and compliance aren’t exactly the same thing. I mean there’s overlap but security’s much bigger market and compliance is just like a really small subset of it but a lot of my marketing materials talk about security.
[04:19] I mean if you go to my website there’s a drip campaign there for talking about securing your severs and it’s not about compliance or anything like that. And really, security in general is not what Audit Shark is good at. It’s good at compliance. So compliance is the name of the game that my target market is playing and I’m not speaking the same language. So I have to dig in there and start fixing that is really what the issue is.
[04:44] Rob: Yeah and I think this cropped up because you’ve done like a market. Originally it was going to be more about bank compliance and then you started looking into SaaS and kind of online businesses that have servers and that market is like larger and potentially easier to access and so I think probably those two messages have gotten mixed up in your marketing as you have attempted to make that switch.
[05:10] Mike: Yeah. That’s absolutely right. And there’s a lot of my site that needs to be updated and I’ve gone through and looked at my metrics and stuff for the SEO and things that I’ve done and I get a lot of traffic for compliance but once you get to my site it talks a lot more about security. So the reason you would click around on the site would be different that the reason you ended up on the site. So my bounce rate is probably higher than what I would like it to be.
[05:33] Rob: Right. So you mentioned that you’re going to niche it down to compliance from the larger security and compliance. What brings you to that?
[05:41] Mike: I have prospects who I’m talking to right now and in fact I have a demo for one tomorrow that they’re specifically looking for a compliance product. I’ve had conversations with some people who are in my early access program and try to figure out why it is that they’re not interacting with their software as much as I would’ve thought that they would or they’re not taking actions on things. Some of those conversations have really kind of lead me to the conclusion that what they’re looking for is security versus what the product provides as compliance. So do I educate them? I need to kind of figure out what the direction is going to be there. And I have some ideas about exactly what I’m going to do.
[06:16] Rob: Yeah and we talked a little offline. It seems like we should dive into that a little deeper in a couple of weeks I think just an episode where we really dive into where Audit Shark is. Be looking for something here and sometime in April where we will actually dive into this stuff deeper and address – there’s been some comments posted on the blog people asking what’s up with audit shark? What’s the status? And we’ll carve out a whole 30-40 minutes and really dive into that.
[06:42] Mike: Today we’re going to talk a little bit about troubleshooting customer engagement. One of the issues is if customers aren’t engaging with your product especially when you’re kind of in an early access phase, you really need to find out why. And it’s not just about learning what sorts of thing that they’re having challenges with. It’s about understanding it and figuring out where those customers fit into your future plans because obviously you want to make money from them but at the same time learning information from them is a lot more valuable than any money that they could give you. So if they’re pointing you down the wrong path, its probably worth a heck of a lot of money to find that out before you go too far down that path.
[07:21] Rob: So this is troubleshooting the lack of customer engagement is that right?
[07:24] Mike: Correct.
[07:25] Rob: So you mentioned early stage customer engagement. Is that what we’re going to focus on with this or do you think it applies even later once you’re already scaling up?
[07:32] Mike: I think that it applies much more when you’re early on because once you’re scaling up, you’re trying to do more optimization of where things are at and what things you can do to improve some of the different conversion rates and the different metrics that you’re looking at. But when you’re early on, you’re really trying to figure out is this the right messaging at all and are these the right people who are in my target market because there’s a difference between getting 5 or 10 people to pay for something and getting 500 to 1,000 people to pay for something.
[08:01] I mean once you’ve kind of gotten to that point where you have a critical mass, it’s not really a question of are you talking to the right people because you’ve kind of got the proof that you are talking to the right people. But before that point, there is that open question is like what are these people actually interested in and what’s the messaging you can or you should be using for discussing it with them and attracting people to your website and push them through you sales funnel and all that other stuff.
[08:26] Rob: Very cool. So it looks like we have 10 points of discussion here.
[08:29] Mike: The first one is that even before you started talking to them you have to clearly identify the problem that your product is trying to solve. List the specific pain points that your customers are having and try to map out what your application does and how it applies to each of the pain points. Because if you can’t map your product and the solution that you have on to their pain points, then chances are good that there’s going to be some sort of disconnect that you’re going to need to be able to deal with.
[08:57] And when you identify what your solution does before you talk to the customers, then you kind of have it in your head exactly how it maps for you and when you start having these conversations with them you can figure out from their standpoint whether it does or doesn’t do that because just having that in your head doesn’t necessarily mean that its true or they may see it very different than you do.
[09:19] Rob: I think that’s something that a lot of us miss because we have a vision for our product. We have a vision for what we think it should do and the problems that we think it should solve. And that’s all good but you need to hold that very loosely, really view it as a hypotheses and always be asking is this actually the pain point it solves? Is this actually how its going to accomplish the end goal? If you have verbiage that you’re using incorrectly you can really drive people away even if your suffer does actually solve their pain point.
[09:50] If you niche it down to the point where you say hey this is more for salon owners and then you realize oh there’s actually this other market that’s using it and they’re being driven away, it’s really important to find out. So that’s where keep it as a hypothesis not until you really find that fit where you know your product is being actively sought by a market and you can start scaling it up that I think that’s when you lock it into place.
[10:16] Mike: So the next step is once you’ve clearly identified the problem, you reach out to each perspective customer individually and you start asking questions. And I think the email is good but if you can get them on the phone that’s infinitely better because you can ascertain certain things about how somebody feels about some aspect of their product or their solution based on whether they pause for example.
[10:36] If you ask them a very direct question and they say “well…” and they pause for a couple of seconds before really giving you an answer then you know that you’re off base. You know that there’s something wrong and you need to start digging. Your goal here is to just get information. You want to ask questions and shut up. Because I had a conversation earlier today with somebody and I was talking to them and I asked a question and they said well it does this but it’d be nice if it did something else. It was just a slight variation on it.
[11:03] And I could’ve opened my mouth and started saying well I can do this, this and this. But then at that point you’re kind of talking them into what your proposed solution is rather than really listening to them and figuring out what their problems are with the software, with the solution that you have. Because the fact is that you can probably talk them into thinking that you can fix everything. The reality is some people are just not going to be a good fit for your product and you need to figure that out. And the only way you’re going to figure that out is to shut up once in a while.
[11:31] Rob: Man, I got into long email conversations with several early Drip customers. Some of them were 20-30 emails long back and forth. I jumped on the phone with a few of them but I learned a lot about the ideal market or at least what I currently think is a good market for Drip. And I also learned that there were some specific markets that I probably wouldn’t have entered into but it was some folks that were recommended from another Drip user. This is when I had about 10 people using it. I let the guy in because he was a higher profile person.
[12:05] I had a feeling it wasn’t going to be a fit and sure enough the feature request that he made were stark contrast to the software and SaaS entrepreneurs that are already using it and getting enough value out of it that they were willing to pay for it. I think that one on one stuff especially early on it gives you such insight. Way more insight or way more value than any money they would pay you. I do think you should charge folks that are using your product in the early days because you want them to have some skin in the game because if you just comp everybody then you don’t know whose feedback is more valuable. You don’t know who’s willing to pay for it or not.
[12:35] But with that said, you’re not charging them for the revenue itself. You’re really just doing that so you know their feedback is valuable enough that you should consider it. The idea is that if you’re in kind of early access or you’re in a beta and you have customers that are using it but they’re not really using it, they’re not actually doing that much n the app and you kind of feel like everybody’s just drifting away, you’re not learning much, that’s really when you start working down these steps that we’re talking through.
[13:00] Mike: So the third point is that you don’t need to ask the same questions of every customer. And in fact, asking the same question in different ways to different people can yield different answers. It’s one thing to ask the same question to five different people because you will get five different answers but you can take what you learned from the first person that you asked the question and use that to tweak the question and ask the second or third person something that is a little bit different or dives in a little bit further.
[13:26] Because once you get to a point where you are learning the same things, then you can ask the fourth or fifth person a variation of that question. You can start drilling in to find out additional information. Because you don’t want to overload those people. You don’t want to go back to the first person and say well I talked to these other two people, let me find out some more information about this one piece. Because the reality is that the context of that conversation is gone so it’s going to take you a little while to kind of get back into it and you don’t necessarily want to overload any given person who was in your early access especially if you want to be able to keep them around as a customer.
[13:58] Rob: The questions you asked will depend on the answer to the very first question which will typically be something like hey, so is product name working for you? Right? And you’re just trying to find out kind of a general thing. If you’re on the phone, this works really well because then they can respond and you can dive in and they might say no I haven’t really had the time to check it out. Oh you haven’t. Did you know it only takes 5 minutes to get setup? Would you like to do it o n the phone or on Skype together?
[14:24] And then you’re going to start seeing where they say well I would love to. I’d love to see the value it provides and then you get them to that next step, they’re a little more engaged and then you can find out if there’s kind of a deal breaker down the line. But if they say no, I just really – I don’t really have time to invest in the next – then you know that it’s probably not an aspirin pain point for them. It’s not something they need so desperately. It’s a lower priority thing. On the other hand if you say is product working for you and they say yeah. It’s doing a great job. It does exactly what you said. And then your next question is cool. Is it worth X dollars a month? And x dollars is your price point obviously and then you get to see what they say to that. And that will take you one of two directions.
[15:01] If they say yes then bam, you have your first paying customer. And if they say no then you try to dig in to why not? There’s probably some alternative solutions that they’re coupling together that are cheaper or it solve a pain point but the pain point isn’t worth your price. Maybe you have to lower your price or consider at least for this person lowering the price. There’s a lot of different rows you can go down but that’s how it spiders out kind of as a decision tree and those are the kinds of questions that they work really well on the phone. The amount of learning you do, you can do it in a short period of time even with half a dozen or a dozen people answering these questions is just mind blowing.
[15:34] Mike: So one of the things that Rob just brought up which kind of leads into the fourth point is what types of questions you should ask them. Because obviously you’re going to start out with is the software working out for you? But if people are not using your software, the thing that I found that works really, really well is to ask why using you software hasn’t become a priority for them. And there’s a lot of different reasons that they could give you. I mean it might be because you’re not solving their problem. You’re solving a related problem. It’s not quite what they need or just not a present issue for them. Maybe they don’t understand your products and are confused and in which case getting on a Skype call could probably walk them through the product and then you can use that as a learning experience to figure out what sort of help and tutorials or maybe video intros that you need for them.
[16:16] There was a blog post that one of their biggest competitors for fog bugs was actually just spreadsheets and pencil and paper because people just have that stuff readily available and it’s easy for them. If they have that as an alternative then you have to figure out how you’re going to overcome those challenges. But that comes back to the marketing that you put forth and how you portray that to the people. The last thing that asking that kind of question brings to the surface is they may have realized that they just don’t need it. And as you phrased it it’s a vitamin. It’s not necessarily an aspirin for them.
[16:47] Rob: And point five is to identify common themes across the customers that you speak with. So things like the customer size, customer industry, there’s specific needs or used cases for your solution, how badly do they need it? Is this a required task they have to do everyday and you’re going to save them 50% of their time or is this something that it’s nice to have that every once in a while they might need to do and it would make them sleep better at night but it’s not a requirement.
[17:11] There’s a lot of different examples of this. I think with my apps drip has worked out well with SaaS providers and software companies that are selling downloadable software also some information product folks that are using it. And it hasn’t particularly worked out well with bloggers and people who are used to getting stuff for free or people who are really price sensitive and it’s not worth the convenience factor to use Drip and HitTail is in a similar boat but I can pretty well nail down size and the industry and the use cases for my apps.
[17:46] Now in terms of HitTail, since it’s so much more mature, I have a much more concrete idea of who that is. But in the early days it’s hard to know. It’s hard to know who to listen to and so trying to identify common themes of people who are having success with your app and really going down that road is a big deal. It just gives you a lot of insight into who’s using t, who’s getting value out of it? Who’s not? Who’s willing to pay X for it and who’s not?
[18:12] Mike: And that kind of leads into a couple of other things, not just identifying common themes across the customers but identifying common phrases they use, common terminology because when you’re talking to people you need to be able to speak the same language and if you’re not speaking the same language then you either need to establish that with them and say this is what I mean when I say X and this is what I mean when I say Y. But the reality is you’re probably better off changing your terminology to match what your customer’s is rather than trying to educate them about what your terminology is. It’s just going to be easier.
[18:43] Your SEO’s going to be easier. Your marketing is going to be easier because you don’t have to try and educate people in your SEO campaigns for example. And then the other thing is that does your solution meet a very specific paying point is a necessarily thing or is it just nice to have? And I think these ties back really well to the talk that you gave in 2012 at MicroConf about the different types of apps and you kind of gave four different I guess categories that they fell into. There was an aspirin, a vitamin complex or new or entertainment.
[19:16] And depending on where in those categories your app falls, people are probably going to be willing to pay more or less for it or they’re going to view it as something that’s absolutely necessary. So aspirin type products, they absolutely need them. They have to have them in order to run their business. Versus the vitamin type product which it’s nice to have but not necessarily. They can probably get away with it. So very similar to bug tracking software. You can get away without a bug tracking software if you’re diligent about it or if you’re the only person using it then you don’t necessarily need it. You can get away without it. But obviously as your company grows you kind of need something like that.
[19:50] And then there’s the complex or new solutions that don’t really have an existing competitor that you can map it against and they’re so new that nobody’s able to compare your product against others because there’s just nothing else there. And then there’s the entertainment where the people are using it to waste time. It could be movies or songs or it could be games, those types of things.
[20:14] Rob: And figuring out how to make your software product an aspirin product if possible is a big win. If you find out that you’re in the vitamin zone and you can somehow move it into the aspirin area, it can have a stark impact on not only your ability to market it, to get more people interested in it but your retention rates. Because if you’re an aspirin app and people are already using it, they’re just so much less likely to cancel.
[20:42] Mike: I think that’s something important because there are definitely cases. Basically the early access in customer development that you did with Drip which was you found that there were certain types of people that Drip was a really good fit for and for them it was more of an aspirin. And then there’s other types of people that you found that it didn’t work as well for and those people kind of fell into the vitamin area. The product itself is not different in any way, shape or form. It’s just that how they view it is different. And that kind of falls into making sure that you are pitching your products to the right types of people.
[21:15] Rob: Yeah and this holds true no matter what you’re selling, if you’re writing a book or creating a course or writing software or throwing a conference, certain people are just going to be right in your core demographic and they’re going to absolutely love it and need it and certain people are going to be on the fringe right? It’s that vitamin area of like they’re interested in it but it’s just not critical to what they do and then other people, it’s not going to be good for them at all.
[21:40] So the idea is how large can you make that inner aspirin circle? That inner circle of folks who really need access to this or who really need the information that you’re building. That’s really the art of all this is figuring out how to build something that enough people want really badly that you can build a viable business out of it.
[22:00] Mike: So when you’re talking to people, that’s something you need to keep in mind is that are the people who are in your early access program or in your beta program, are they the right people or are they the wrong people? And if they’re the wrong people, how is it that they ended up in there? Is it because of your marketing? Is it just because you were comfortable talking to them? Is there a right person that you need to target instead? You can do that in some respects by making customer profiles and I think there’s a lot of different companies who’ve had different ways of setting up customer profiles or customer personalities.
[22:32] I think that Atlassian uses like a monkey that sits at their table at every meeting. They’re like that’s the customer. What would they think of this? That can certainly apply back to when you’re talking about the things that you do for the early access customers and the things that you’re putting on your website or your marketing materials like are you talking to the right people? Are you targeting the right people? Or – and this is kind of the worst case scenario. Is the product that you’re building simply not necessarily for any of them and is it a dead end?
[23:00] Rob: Yeah. And there are a lot of roads to go down before you get to that dead end place. I tell people if you still have motivation and you’re still interested in this product, don’t give up yet if you’ve maybe launched and you don’t have a bunch of interest but you really haven’t pounded the pavement to find out if with just a minor feature tweaks to the product, you can satisfy a different market’s need for that or with a few tweaks to your marketing, the exact same product could satisfy a different market’s need.
[23:29] Obviously if someone’s done that over and over and still is not finding it then that’s at the point where A) if you’re losing motivation that you should consider throwing in the towel. But I have to admit like five years ago I didn’t really understand the whole kind of pivot thing where you pivot a product from market to market or you’d even add features to kind of try to find a new target audience but I totally see that now of how a single product can provide different amounts of value to different markets if you look for them and if you talk about your product using the right language.
[24:01] Mike: So some things to keep in mind when you’re going through this process though is that this is time consuming. It takes time to schedule calls with people and get the emails out and even sometimes just to get responses. I mean there will be cases where you can send an email to somebody 2, 3, 4, 5 times and not get a response at all. And then suddenly somebody emails you back or they give you call back. It’s definitely something that is time consuming but at the end of the day you really need that information if you’re kind of floundering in terms of getting people to use your product and figuring out why.
[24:35] Because if you do need to make a pivot, you do need to know what it is that turned them off and kind of categorize them as a prospective customer and say okay, how do I tweak my marketing to avoid that type of person or avoid attracting that person initially so that I don’t waste a lot of time with them and classify people kind of across your customer base.
[24:55] Rob: Yeah. You’re going to need at least I would say 10-15 hours a week depending on how many customers you have and how in depth you’re interacting with them. That’s what I was spending during that early access time. A lot of emailing and some Skype calls and a lot of thought. Because then you take that data and you have to kind of look at it and analyze and figure out what to build or how to change the verbiage. You’re doing a lot of talking so it’s not something you can cram into 2 or 3 hours a week. It really is quite a bit of effort to go through this process and really try to figure out who’s engaged? Who’s not? How can you make those who aren’t engaged more engaged or are they just not a good fit?
[25:34] I guess that wraps us up for today. If you have question or comment, call our voice mail number at 1-888-801-9690 or email us at firstname.lastname@example.org. 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.