Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Marie Poulin, chief designer and digital strategist at Oki Doki, about her journey from consulting to products and services.
Items mentioned in this episode:
Episode 259 | Making Your First $2k from Products, Whether to Look For a Co-Founder, Rehabbing an Existing Product, and More Listener Questions
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike take a number of listener questions including talking about making your first $2k from products, whether to look for a Co-Founder, and rehabbing an existing product.
Items mentioned in this episode:
Transcript
Rob [00:29]: In this episode of Startups For the Rest of Us, Mike and I talk about making your first $2,000 from products, whether to look for a co-founder, re-habing an existing product, and more listener questions. This is Startups For the Rest of Us, episode 259.
Welcome to Startups For the Rest of Us, the podcast 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 Rob.
Mike [00:30]: And I’m Mike.
Rob [00:34]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike [00:39]: Well, tomorrow at precisely 4:29 p.m., Marty McFly arrives from the past.
Rob [00:46]: Very nice. I’ve heard a lot of folks talking about it, and then asking where the hoverboards and the nuclear fusion thing that straps to your car.
Mike [00:47]: And the fax machines, you know, don’t forget those.
Rob [00:49]: Indeed. What else is going on?
Mike [01:40]: So I spent the past couple of weeks doing, essentially market validation for a couple of the different ideas that I’ve had, and I’ve been focusing really in on the one-to-one email sequences. And so far I’ve had 23 conversations with people, and of those 23 conversations 11 people have said that they would pay me for it. So I’m still trying to work things out because from one person to the next there seems to be a lot of variation between the specifics of what they are looking for and the problem that they’re trying to solve. They’re all very, very similar, but trying to nail down exactly what would work for the vast majority of them is, kind of, the hard part. I’m figuring out where that is and where I can get the most traction, I guess that’s the challenging part right now. And people are using different terminology for the same types of things, too. So that makes it even harder.
Rob [02:15]: For sure. For sure. And that’s the hard part about customer development is that you’re either going to get 20 different opinions, or you’re going to get several opinions that are the same but you don’t realize they’re the same because they’re using different vocabulary. And it’s hard if something doesn’t exist and you can’t just show it to them to figure out if it’s actually A, going to do what they want, or B- the little subtleties with email. It could be cold email, it could be warm email, it could be bulk email. There’s so many things. So until you can figure out which stage they’re using it at and how much value it has to them. Like, have you talked price point at all?
Mike [02:19]: I have. I’ve talked price point with virtually every single one of them.
Rob [02:19]: Good.
Mike [02:38]: So I have a ballpark idea so far of where the MRR would come from if they were all to sign up today. But I’m at the process where I’m still just gathering information right now, and then once I have a better idea of what it is that the solution would look like, then I’m basically going to draw up the designs, go back to every single one of them and say, “Can I get a pre-order for this?”
Rob [02:45]: Mm-hmm. You said you have 11 commitments, how many are you going for before you start moving forward?
Mike [03:12]: I want to be able to get to the point where I have at least 10 who are willing to move forward on that commitment. So it’s kind of nebulous as to how many I have to get to. Is it 15, is it 20, is it 25. It really depends on one, how far I want to take it, how much variation I see between people. If I think I have something that is going to fit for at least 12 to 15 people, then I’ll probably start moving forward. But, again, like I said, some of them are all over the map, so it’s still up in the air right now.
Rob [04:21]: For sure. Well while you’re in the process of adding to your product portfolio, I’ve actually been in the process of paring mine down so that I can focus on, essentially, on Drip and MicroConf and the podcast, and my blog and the other stuff. But really have been either selling or I’ve actually given, DotNetInvoice to my business partner. And HitTail is up for sale right now through Thomas Smale at FE International. If someone is interested it is still on the market. So it feels good to be able to focus more on the things that are really working. Double and triple down on Drip in essence, because that is where I’ve been spending the bulk of my time, and it’s where I think it should be spent for the next “until it’s done”, is what it is. And if that’s five years or ten years, that’s where I’m at. I’m not in the mode anymore of the “starting the next one after one to two years”, which I was for a while, and building up the portfolio. I think I’m ready to head in the opposite direction and really build this one up. There’s just a lot more opportunity and a lot more growth going on than anything I’ve done in the past. So I’m doubling down on that.
Mike [04:30]: Do you think that’s a byproduct of the type of product this is in relation to some of the previous ones, or is it more of a career trajectory sort of thing?
Rob [05:05]: Yeah, you know that’s a good question to ask. I think it’s partly both. Certainly, I’m at the point in my career where I do want to focus on some things that I really enjoy, and I kind of want to take things to the next level because it allows me to learn and that’s when I’m happy. That’s one of my definitions of success is learning a lot of stuff and being in control of what I’m working on. But I also think that if you look at Drip, and you look at how large the market is, and if you look at the opportunity here and the price point, the average MRR per customer. Just all these things are completely different than everything I’ve done in the past. So I think it’s some of both, to answer your question.
Mike [05:06]: So what are we talking about this week?
Rob [06:16]: We have a slew of listener questions. We’re actually backlogged. Some of these are from almost a year ago. And apologies to folks who sent them in and haven’t had us answer them yet. But we still want to answer ones that are general enough that I think they’ll apply to most folks listening. Our first question is from Daniel McCraty and it’s actually not a question. It was just an email to say thank you. He says, “Hi Mike and Rob. I really wanted to say thank you. I’m a long time listener who’s starting to see some success from your advice. As a full-time developer and now a technical lead, I don’t get a lot of experience with marketing in my day-to-day job. Listening to your podcast has helped fill in some gaps and kept me from going down the wrong path. I’ve created a minimal product and nice clean landing page that people actually purchase my product from, and I’m getting great feedback on feature enhancements that the customers want. I know I have a lot of work to do but 20 sales in the first two months is a success in my book.” And his subject line was “I made $2,000 in the first two months.” Yeah, thanks a lot for writing in, Daniel. His app, if you want to take a look at it is at Woo Ticket Studio, that’s W-O-O, ticketstudio.com if you’re interested in checking it out. And thanks, as always, for writing in with success stories. We love to hear from folks who have been long time listeners and have implemented what we said, whether to launch product, make the first couple thousand online or to quit your job.
Mike [06:17]: Yeah, great job, Dan.
Rob [06:37]: All right. Now let’s queue us up for our first question. So this is from Justin McGill and he sent it over a year ago. Sorry about that Justin. But he asked us “What do your daily and weekly schedules look like? Rob with his multiple projects and Mike with whatever he’s working on at the time. I think both perspectives would be helpful.” Why don’t you kick us off, Mike.
Mike [07:42]: I guess, in terms of my daily schedule, I try to get up before eight o’clock, and there are definitely days where that just simply does not happen. A lot of times, my schedule for the day tends to be dictated by how late I worked the previous day. So if I were working until five or six and then spent time with the family, and then if I decide for whatever reason to go back and sit on my computer and do some work or fool around or anything, there are definitely times where I stayed up until 12, one o’clock in the morning. And that will have a severely negative impact on my following day. So I try to avoid it as much as I can, but it does still creep in there one and a while. And then for the rest of the time, I try to stick to a schedule where roughly from eight to five I’m working, and then after that lately it’s been up until about three to four o’clock, where after that it’s been difficult to get things done, just because my office has now moved upstairs. So the kids get home at three, so there’s definitely a lot more pressure to get everything done by three o’clock or four o’clock because the kids will start to interrupt. So that’s generally what my schedule looks like. I try to avoid working on Saturdays or Sundays, just kind of out of matter of principle. What about you?
Rob [09:56]: I think I’m pretty similar to you. My schedule used to be very different. Obviously it was all nights and weekends for a long time, for the first several years, because I was typically doing salary work, or in the later days, consulting, you know, in 2000, let’s say, 5, 6, and 7. I was doing 30, 40 hours a week consulting during the day, and then working on products on the side. And then I hit a certain point where I just decided I really didn’t want to do that anymore. I didn’t want to do the night and weekend stuff. And so I will do some work in the evenings, sometimes. And especially if Sherry’s out with the kids and I’m home alone, unfortunately, I will tend to veer by the computer and either do email or work on something that needs to get done. I’ve been trying lately to not do that, because I find that if I work too much, I just become not productive. Your work expands to fill whatever time you give it. And so I’ve really been trying to avoid that. I listen to a lot of audio books, I read a lot. I listen to a lot of podcasts and I do find myself thinking about work, jotting notes down, doing a lot of strategy type stuff in the evening if I have free time, or on the weekends if I’m out and about running errands or just doing stuff around the property. I wind up coming up with a lot of, what I think, are my best ideas when I’m not sitting behind my desk – because that’s when you’re actually getting work done – but I’m out and about, I’m doing stuff. So I wouldn’t say I work on the weekends or the evenings, but I do get kind of strategic thinking done. In terms of the daytime, I’m up by 7 a.m.. I make breakfast for the family and then take the kids to school, one or both of them. And then I head into the office two days a week, three days a week, it depends. And work from around 8:30 until whenever it’s done, which is between 3 and 5 depending on the day. And so if I don’t get a full workday in during that time I will add a little time in the evening or on a weekend to make up for it for sure.
Our next question is about entering a competitive SaaS market. And it’s from Scott Underwood and he said, “Here are some podcast ideas for you.” He says, “Do you have any thoughts or tips on entering a SaaS market with large competitors?” Meaning you take someone else’s SaaS app or niche and you innovate on it?”
Mike [11:32]: I think there’s some interesting opportunities in going into these types of markets because you can essentially build, not necessarily features, but add-ons or plug-ins for other vendors and essentially build on top of their platform or on top of their application. And there’s lots of people who’ve done this very successfully. I think the one thing you have to really be careful of is, I think, what Joel Spolsky at one point called “snatching nickels from a steamroller.” And his reference point was the fact that people were building a lot of copy-paste applications back when iOS was first released and it didn’t support copy-paste. And then all it takes for that entire business to go away is for them to implement that one feature. So there’s got to be a compelling reason for them to not do it. And if it’s a feature that is compelling enough for them to implement, you have to be careful just because they will eventually kill your business. So if you’re bolting something onto those larger applications, you do have to be a little bit careful of that. The other thing I’d say is if you’re taking a much larger application and just taking off a tiny little slice of it, you could probably do a much better job then they are. But you also have to find people who are willing to pay for just that tiny slice of the solution as opposed to the entire thing. So those are the caveats around it, I think. In terms of my general thoughts on it, I don’t think there’s anything inherently wrong with it, but you do have to pick and choose which of these battles you fight, because some of them are going to be worth it, some of them aren’t. And there’s going to be some where that larger competitor comes in and essentially, squishes you just because they come in and they have the resources to bare on a problem, and if it’s important enough to them and to their customers, they’re going to do it.
Rob [12:14]: So you were taking that from the angle of building like add-ons for larger products or in their ecosystem. I would look at this, I mean he’s asking more about how to take on a larger competitor. Yeah, obviously marketing automation would be an example. I’m not building add-ons for HubSpot or Infusionsoft or one of those guys, but we are taking them on kind of directly as a one-on-one competitor. So actually I do have a lot of thoughts on this. I got an interesting email. It was probably about a year and a half ago, from Drew Sinaki, a long time listener of the show. And he asked are you trying to do an innovators dilemma to Infusionsoft? And I thought that was a really interesting way to put it. Have you read that book?
Mike [12:15]: Yes, I have.
Rob [14:13]: So the “innovators dilemma” is where you’re a big company in a market that’s existed for ten or 20 years and the market’s starting to shift and there’s a lower cost or an easier solution that’s coming in front of you, but you won’t cannibalize your business in order to take advantage of that new market opportunity. And so IBM has seen this, Microsoft is seeing this. It happens with a lot of larger technology companies, in general, as the technology changes. And I thought it was a really interesting way Drew put that in the email. It got me thinking. I actually went back and listened to the book again. I hadn’t listened to it in a few years. And I think that that’s the tactic that you need to take if you’re going to go after. Or I think it’s probably the optimal tactic. There’s probably many that you can do, but that’s the approach that I would look at doing is to basically [couch?] yourself as the opposite of whatever they are. So if they are big and cumbersome and clumsy and they don’t have a lot of features and they’re expensive, well, start off as being the opposite of all that. And you can be pretty intentional about marketing yourself as that. If you go to the Drip homepage, there’s a couple thousand words on that page that really are positioning us as the opposite of the larger players. And after that, it’s execution, right? I mean you actually have to really build a better app. You can’t just build a clunky app and expect that since you have fewer features you’re going to be easier to use, because that’s not the case. So you need to focus a lot on usability and really double down on your differences and also try not to get the feature bloat that a lot of these larger apps have. So you can’t build everything that everyone’s asking for. So those would be my thoughts about kind of early advantages when heading into a market with heavy competition.
The other question Scott had for us, he said, “Do you have any data or lessons learned from Drip for the most effective opt-ins for building an email list? I know you don’t like the exit pop-up forms but I’ve seen several people tweeting how effective they are.” He’s talking like a bounce exchange exit intent pop-up. Do you have thoughts on those? Do you use one of those?
Mike [15:28]: I have tested them. I’d have to go back and look. I think that I might actually have it on my blog. I don’t remember if I ever went back and either disabled that or changed it. But I do remember testing it. And now that you bring it up, I don’t remember if I ever actually went back and looked at the results of that test, because I probably got distracted so that’s totally on me. I’ve heard similar things like people have said over and over and over again that the exit intent pop-ups convert better. Now I think the one point of caution I would say is they get you more email addresses, they don’t necessarily convert to sales any better. They may, they may not. I think that it depends on what your industry is. But at the same time if you don’t get an email address then you have no opportunity to sell to them. So in a way it makes more sense to get as many email addresses as you possibly can. There are, I’ll say, certain people, myself included, who kind of feel like, “Well I don’t want to be too intrusive about it.” But at the same time, if you’re offering a product of a solution that is extremely helpful to that audience, then it’s kind of an obligation to get in front of those types of people in any way, shape or form because you can give them a lot of value. So there’s different schools of thought on that. I’m kind of in the middle. I think that it really depends on what type of product that you’re selling as to whether or not I’d do it.
Rob [18:00]: Yeah, I have a personal take. I don’t like them as a user, and so I won’t put them on my sites because I find them irritating and I have heard that, like you said, you get more emails, but I use the justification of they’re probably not going to convert as well because you kind of forced people into it. I haven’t tested it. It’s just one of the things that I’m not willing to do. I think when I was back in the day, reading a bunch of Dan Kennedy stuff about copywriting, he’s a very good copywriter, I adopted the things that I was willing to ethically take on and the purchases I was willing to do and feel good about myself. I never say something in a sales letter or on a marketing website that I wouldn’t say face-to-face to someone at a conference or at a cocktail party, frankly. And that’s just a personal thing so that everyday I wake up and I feel good about myself, and I can tell my kids and my wife that this is stuff that I’m- I’m really proud of what I do and the value I give back. Now in theory, are you leaving, perhaps, something on the table by not using one of these exit intents, or by not using a more aggressive form of marketing? Yeah, in theory, sure. Is that extra five percent or ten percent or 20 percent over the course of your life, is it going to make a huge difference if you feel like you are sacrificing something internally? Whether you call it like a moral code or just something that you’re not comfortable with, that you don’t feel good about. It’s your choice. Different people have different lines. I think there’s a lot of things in business like that, right? There are some absolute lines of legality and illegality, and then a lot of things that have gray areas. And I feel like this is one of them. So certain people shout from the rooftops that exit intent is the way to go. And obviously they feel comfortable with it. Now when I visit their sites and I get irritated by it, I’m much, much less likely to go back to their site. And I also have never, I don’t think ever in my life, entered my email address into an exit intent pop-up. And I typically make a note like, “All right, this is definitely a site that I’m not in love with.” I don’t feel like they treat me with respect when they use it. I feel like they’re interrupting my flow and they’re bothering my flow of web surfing and consuming content on the Internet. But maybe the site owner doesn’t feel like that. And to kind of wrap it up, for a long time we didn’t build an exit intent pop-up, or exit triggered pop-up, in Drip. But we found that in certain industries and certain niches and just based on different marketers, certain people like them, and they work for them. And so I realize that applying that piece of judgment on exit triggered stuff wasn’t necessarily the way to go. And so we do offer it as a service if you enable it in Drip, but it’s not something I would personally use myself.
Mike [18:31]: Yeah, I went back and just double checked while you were talking. I disabled it. I don’t recall whether or not I looked over the details of what it was, but I definitely tried it out. I don’t think that there was a massive increase for me. It just didn’t seem worth it for wrecking the user experience, as you said. Because I’m kind of in the same camp as you, like when I start seeing those exit pop-ups, I just close the browser or if it’s an article I really want to read then I’ll read it or click by it. But if I have to enter an email address to read, out of principle, I just won’t.
Rob [20:32]: Yeah, and there may come a time when it’s the norm and you have to deal with it. There may be a backlash at some point. I mean ad blockers are coming up because of this type of thing. Because of the more aggressive advertising and these marketing approaches, ad blockers are being used by more and more people. And I think that’s kind of a shame, frankly. I think that if we were able to all agree on a decent level of advertising and marketing, I think that the Internet becomes a better place, and I think people don’t necessarily use that kind of stuff. I’ve been trying to go to just some basic news websites. Drip got written up on the Huffington Post yesterday. And just surfing around that site, it’s like there’s so much stuff. The site is slow. There’s Javascript, there’s videos autoplaying in front of me. It was crazy. I really haven’t read news online in a long time, because I consume most of it via podcast, but I hadn’t realized the state that we’re in and now I realize why these pop-up blockers are becoming so prominent.
Our next question is from Richard Garside. And his question is on breathing life into an old product. He says, “I really love the show and I find it very interesting. I’m setting my goals for the next year and one thing I’m thinking about is whether or not to breathe life back into an old software product of mine called Font Picker, Thefonticker.net. I created it when I had some spare time and it did quite well. Since then I have not had as much free time and I’ve just left it for almost two years. Sales have slowed and they continue to do so. I think I could both improve the product and the marketing. I continue to get good feedback and feature requests from customers and the app has a really good ranking in the Mac app store. In some ways, this is kind of like buying an existing product that you think you can improve. I think you’ve covered everything I need in various shows, but how would you approach saving an existing product from a slow death and bringing it back to full glory? Some things I’m thinking about are : improving the user interface design, improving the website, adding more features and just improving my marketing ability. As a developer, I want to get stuck into new features but perhaps that’s not the most important thing. I’m also fighting the urge to rewrite it in Swift. Time is limited and I don’t have time to do everything I want to do. Thanks for the shows and everything.” What do you think?
Mike [21:23]: Well I think the first thing I would say is do not rewrite it. If you’re trying to breathe life into an old product, especially one that’s on the decline, then I don’t think that rewriting it is going to make any difference. Your customers are not going to care that it’s rewritten. Unless you’re looking for some wholesale, complete UI redesign, which I don’t think entails a complete rewrite in a different language, then that’s probably not the way to go. In terms of a lot of the things that you mentioned, improving the UI, improving the website, I’m not so sure about adding new features but definitely getting better at the marketing aspect of it. Obviously, those are all good things to pursue. But I think at the end of the day you also have to ask yourself is this something that you really want to do, because if it’s not something that you want to do then you’re basically either going to half-ass it or just not be committed to it. And at that point the product itself is going to suffer.
Rob [25:21]: Yeah, I’d agree with Mike. I would not rewrite it yet. If you decide to get into it and it starts making quite a bit of money and you decide that it really is a hassle to add features, you could consider it at that point. But at this point, all you want to do it figure out, can you even rehab this thing? Can you get more sales out of it? Because if you can’t then none of the other stuff is worth doing. So the first thing I would look at is how are you going to drive more customers to it? That’s really what I would think. It’s like if you get a lot of your leads from the web, then I would probably redo your marketing website or at least improve the copy, make it look more modern. And if you have enough traffic to split test, that’s fine, but if not, just go with your gut on this and try to improve it there. Or if you get most of your customers from the Mac app store, then do some research on how to get your rankings up there. And if it’s releasing new features gets you mentioned or gets you reviewed or gets you whatever, then I’d do new features. But if not, then I would not be writing any code at this point. I would purely be looking at how to take the existing channels that are already driving customers, double down on those. How could you grow those by 50 percent, 100 percent, 200 percent, over the next three months without writing any code, right? Any production adjustments to the app. You can obviously write web code if you’re redoing the marketing side. So that’s the first thing I would do. Second thing I would think about is are there other marketing channels that you can start looking at? So with a small price point, obviously you’re not going to be able to do something like advertising, but if you’re not ranking well in Google, is there an SEO play here? If you’re not ranking well in the app store, obviously, that’s kind of a no-brainer to do it. Or there’s some JV partnerships where you could email your list and someone else emails their list. These are the types of things that I would start off right off the bat and attack. These are your early wins. It’s your low hanging fruit. Some of it’s not going to scale, but if it gets you a nice little bump in sales it all just aggregates and will build up over time. And then, if you’ve proven that you can grow this thing and it is doubled, tripled revenue, it’s making enough money to make it worthwhile, then you can think about, “I’m going to add a bunch of features,” and then you have something to talk about to your list. That’s the other thing I would do. I would definitely get – I don’t know if you’re already collecting email addresses – but build the list, right? Build the list on fontpicker.net for something really cool that folks would want to know about. They’re looking for font pickers then I’m assuming it’s a design audience so add a five day mini-course on how to pick the best font or how to have fonts interact with color, whatever it is. There’s certainly something off the top of your head that you’ll be able to do because that list will be huge for you. If you get a few thousand people on that, every time you release that new version you can email that list and get that bump in sales. But that’s probably where I would start. There’s obviously a lot to it.
Our next question is from Josh and he’s asking for some advice on either starting up a UX productized service, or buying an existing business. He says, “Hey guys. I love the show. Started dipping into old episodes and saving out things that you’ve talked about recently. Namely what to not focus so much on when you’re just starting out, etc. Here’s my dilemma. I used to run a UX consulting firm. It wasn’t scalable, and if I did it today I would do it way differently. I would offer it as a productized service to startups and small businesses. So I’m considering that as one route. Then I was listening to one of your episodes which mentioned buying existing business. I did some research and found that I would need around three times my salary to make this happen. This shouldn’t be an issue as I have some money saved up from investments that I can use and I can get 50 percent as a loan from the bank. So I’m debating either starting a UX productized service, or buying an existing company for cash flow and running both of them in tandem.” He has, “And/or, buying an existing company and running both in tandem. My question is, how do I structure this as a business? Right now I have a LLC and have it registered as doing Internet services. Would I be able to buy a company and roll it into the existing LLC or should I do another corporation?”
Wow, actually I don’t think that’s your question. I think your question is should you do the UX consulting thing or acquire a business. I obviously have a lot of thoughts but why don’t you kick us off, Mike.
Mike [26:12]: Yeah, I wouldn’t do both of them at the same time. I think the big red flag that pops out at me is buying something for three times your current salary when it seems to me like you’d also have to get a loan. I think that’s what he said, is that he’d also have to get a 50 percent loan from the bank. And that seems to me to be a huge chunk of money to go out and plunk down on something where typically the returns on those, you’re not going to get a full return on that for quite a while because you’re probably going to buy it for 3x the annual revenue or something along those lines. So I would have a really hard time going out and plunking down that kind of money for something that either I wasn’t necessarily passionate about, or didn’t necessarily know enough about. And I haven’t bought anything at that level. I think Rob, you, back in the day, you bought HitTail and that was for a good chunk of money, but at the same time it still had a lot of potential to it, I think.
Rob [26:14]: Yeah, it wasn’t nearly that amount.
Mike [26:43]: Yeah, so like the dollar amounts, I think, are significantly different. I wouldn’t personally feel comfortable dumping that much money into something if I wasn’t really, really sure. And for me to be really really sure, it would probably take a lot more than just a month or two or even six months of looking at the books and stuff. I’d want to be involved with the business before I bought it. I don’t have any good advice on that other than don’t do both at the same time. The other thing that does come to mind is look for something smaller to buy that you could run on the side.
Rob [26:43]: And grow it.
Mike [27:07]: Yeah, that seems to be like a better way to go because then you could at least learn, too. I think the last thing you want to do is essentially learn on a bigtime production app. I mean you’re basically saying, “I’m going to go play in the majors when you haven’t even really played around in the sandbox.” so to speak. It seems to me like a big risk. I wouldn’t be comfortable with it. Your mileage may vary on that one.
Rob [28:26]: Right, yeah, it’s funny. The corporate structure, I think, is certainly the least of your worries. I’ll talk a little bit about that in a second. I’ll cover it last because it’s the lowest priority. I wholeheartedly agree absolutely do not do both at once. Pick one and go all in on that thing and grow it and grow it as large as you can. And then either have an exit from that or use the cash flow to do your next thing. But I really, really would encourage you not to try to do both at once, to grow two things. It just does not work. In terms of acquiring, I agree, buying something for three times your salary, if you’re not already versed in marketing products, is quite a risk. I wouldn’t say never do it, but it’s a big risk. Probably bigger risk than I would be willing to take. It doesn’t feel like you’re stair-stepping up, you know. If you already had a few WordPress plugins or a small SaaS app and you were looking to buy something for $200,000 or $300,000, I’d say well you have the experience to do it. But just jumping up and trying to do that is really a big deal. I do know that in terms of, Mike you were concerned about the numbers not being valid or maybe the revenue not being there or whatever, I know that when the reputable brokers like FE International, they do a ton of vetting. So I think the odds are pretty good. Obviously it’s possible that there be an error and not have it actually be as successful as you want. But in my experience, the risk is going down now that these brokers are in here and actually doing a lot of vetting.
Mike [29:03]: Yeah, I don’t think it was the risk. For me I don’t think it’s the risk so much of like you getting ripped off or not a good valuation. But just the time that it would take to get a return on that, it seems to me like if you’re looking for something to just provide you with a stable income that you can grow incrementally over the next several years, great. But somebody got out of that business for a reason, and it may very well be that they took the business as far as they could and what guarantees do you have that you’re going to be able to do any better with it. And it’s not saying that you can’t. I’m just pointing out that there is an inherent risk that says that you can’t.
Rob [32:30]: But I think that’s kind of the entire opportunity of buying a business is that you may get someone who, like me is selling HitTail to focus on other things. I’ve seen HitTail do three or four times the revenue it’s doing right now. It was very successful, but I haven’t had time to focus on it. So the potential is there. I think you could also get someone selling- like a lot of the ones I’ve acquired where someone built it and it had a single traffic source and the developer didn’t know how to grow the thing. They didn’t know how to 5x it or 10x it. And that could be an opportunity. So I think that’s just part of the process of buying something based on an opportunity that you see. And so if you know how to do SEO or AdWords or content marketing or you have a skill that you can apply and you see that someone’s not doing any content marketing in a niche where it totally makes sense to do so, I think that’s an opportunity. That’s how I used to buy and grow things. But with that said, we don’t know Josh’s toolbelt. And so Josh, if you don’t have any marketing skills that are proven at this point that you’ve done really well in the past and had success with, then it is a bit of a risk. Now I will say that I’ve been surprised- you can actually take out an SBA loan, at least in the U.S., there’s a small business loan, and they just changed the rules in the past year to where you can now take it out to buy software products, or I’m assuming income generating online stuff. And the loan payment on a loan for, let’s say 200 or $250,000 is a lot less than the revenue, or even the net profit you’re going to make, from an app that costs that. So there is margin there. I don’t know if it’s enough to live on, but it’s an interesting approach. Personally I’m not the type to take out a loan to buy a business. It’s just not my style. I’m going to be more stair-stepping up to doing it. But if you’re all in and you need to go towards it right now, I do think it’s an interesting and/or creative way of doing it. The other approach I saw recently is someone actually raising a small seed round from friends, family and a couple more notable kind of adviser folks. Basically like a little angel round to go acquire a SaaS app that has a ton of potential. And I know about this because I talked to him as a potential investor. And it’s really interesting because the app already has product market fit, and with the team I think there’s a lot of potential there, and so it’s kind of a no brainer. Because getting to that point is always costly and takes a lot of time, but if you can buy something that already has it, I think you’re in a good boat.
I think to wrap it up, the product, as consulting, to be honest, is probably – I don’t know that I’d say your best bet – but I think it’s more of a sure thing. And I actually think that waiting around and trying to find something to buy, it could take a while. You can’t just make something appear in a niche that you want to be in. So if you’re in a hurry I’d probably do the productise. If you’re willing to wait around and take the risk, you could consider acquiring the app. The last piece of your question was, “How do I structure it as a business?” You said, “Would I be able to buy a company and roll it into the existing LLC?” Don’t buy the company. You don’t want to buy a company because a company comes with liabilities, meaning if someone did something, got sued later on for that time period, you now have taken that on because you own the company. All you want to do is buy the product, essentially the assets of the company. And so once you have a product you can of course roll that under an LLC or an existing corp structure. I am not a lawyer so you’ll want to consult one, but that is how I’ve seen it done many times here in the U.S..
Mike [32:51]: Thanks for the question, Josh. I think that about wraps us up for time today. If you have a question for us you can call it into our voicemail number at 1-888-801-9690. Or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Out of Control by Moot. Used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 246 | 9 Reasons Why People Won’t Buy Your Product (And How to Fix Them)
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about reasons people won’t buy your product and how to fix it. They discuss common objections people have about products and why it prevents them from making a purchase.
Items mentioned in this episode:
Transcript
Mike [00:01]: In this episode of Startups for the Rest of Us, Rob and I will be talking about reasons why people won’t buy your product and how to fix them. This is Starters for the Rest of Us, episode 246.
Welcome to Startups for the Rest of Us, the podcast for developers, designers, entrepreneurs in all software products, whether you’ve built your first product or your just thinking about it. I’m Mike.
Rob [00:25]: And I’m Rob.
Mike [00:26]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Rob?
Rob [00:30] I’m doing pretty good. I’m ramping up for a bunch of webinars. I’m doing a webinar with lead pages this week following up on the contest that I did a few weeks ago giving away some lead pages for Drip, and then we’re ramping up a couple Drip webinars. There’s an educational one, one that’s further down the funnel for people who are already using Drip or more curious about how it actually works. So, this is the fun part, this is where as creative people we get to kind of dive into outlines of things and figuring out what we’re going to say. It’s kind of like writing a talk but it’s a lot shorter and you’re going to be doing it online. So, it’s also fun to look at the whole funnel and figure out where we need a little few emails here and a few mini courses here and how to integrate Drip with whatever we’re going to use for the webinars and all this stuff. So, it’s exciting. I like launching new experiments like this.
Mike [01:21]: The best thing about doing those kinds of things is that you don’t have to get it right on the first time because it’s not like a talk where you go out there and you give the talk and essentially it’s over with. You might or might not be able to reuse it, but like with a webinar you tend to do those repeatedly so you can errate on them over time and find out more information about what worked and what didn’t. And that’s what I really liked about those things, it’s just the re-usability of it and the fact that it doesn’t need to be perfect the first time and even if you completely screw it up you can always try it again the next week.
Rob [01:51]: Yep, I totally agree. And the webinars I’ve done so far have been kind of third party things, drip hasn’t put on our own webinars yet, but I’ve still had a really god time just interacting with the people on the calls, and the questions that come out of it are intelligent and challenging. So, it’s been fun. It’s kind of like you know when we go to MicroConf, when you speak at a conference it’s always kind of exhilarating to do it. You get a little nervous, you deliver and then you have a Q&A part and then it just winds up being fun in the end and that’s kind of how webinars have been for me so far.
Mike [02:23]: Very cool. Well, I’ve been trying to adjust to the kids’ schedule while they’ve been home for the summer and it’s proven to be bit of a challenge because my wife, she owns her own fitness studio so she does some personal training, she also does group exercise classes. And because the kids are home for the summer and there are certain weeks where they are at different activities, whether it’s art camp or karate camp, some of those things are all day affairs and some of them are not. So, sometimes they’re home for half a day, sometimes they’re home the entire day, and going back and forth between my wife and I trying to figure out, “Okay, who’s watching the kids, who’s going to be able to do work?” We actually kind of broke down. Earlier today we had somebody come over and watch the kids for a little while. There’s another family who lives in the area and we hired somebody to come watch, not only our kids but their kids at the same time because their parents, they both work from home sometimes. So when the kids are both home- and they’ve got three kids, so when the kids are home you’re just not getting nearly as much work done. So, hopefully that issue will resolve itself sooner rather than later.
Rob [03:25]: Yeah, I never try to work with the kids at home. That’s catastrophic. I get too frustrated, and I guess I should say I never try to work with the kids at home when I’m watching them. Like, we have a nanny essentially that watches the kids a couple hours a day and also picks them up from camp. Because my five year old is in a camp that ends at noon every day and so she picks them up and watches them for a few hours and then picks her son up at four and it allows me to have a full workday. So that’s a no-brainer man, I think you made the right choice. I think if you’re listening to this and you find yourself in this situation, go back and listen to “Zenfounder”, episode 1, because Sharon and I delved into this. We talk about our Sunday huddle approach, how we hire people to kind of drive our kids around. It’s essentially a nanny, but part time is not necessarily the best quality time, so try not to drive all over town picking kids up. Rather we try to spend time when we can with them in the afternoons and evenings. So, what are we talking about today?
Mike [04:20]: Well, today’s topic comes from Niles. I met Niles over at MicroConf Europe last year and he says, “Hi guys, I just came across this post and thought it would make s great topic for the show.” And I run over and read the post and it was over on inbound.org and it was a post called “Nine Reasons I won’t Buy Your SaaS Tool”. And I read through the article, it was interesting but I also felt like it came from the perspective of somebody who doesn’t make the decisions about it based as if they were the business owner; it was more like personalized objections to it than anything else. I just felt like there was a different take that we take on this article and use it to come up with our own ideas about what sorts of objections people have about different products and why they wouldn’t come through and actually do a purchase. Whether it’s just going from a trial to actually purchasing it as a SaaS product or just if you have a book or something like that and if you’re selling it and it’s a one-time purchase, just buying that whether it’s downloadable software or book, etc. But I think that there’s a lot of different objections that people have and what I wanted to do was go through a list of what those objections are and then kind of highlight how you would go about overcoming some of those different objections.
So, to kick us off, the first reason why a prospect wouldn’t buy a product is that they don’t understand what it is that you’re offering. So, in this case they come to your website and they are looking at your product offering and they don’t really understand what it does or how it works or what it does for them. And sometimes this is just a problem with the marketing messaging itself. If you’re not really clear about what the value is that they get out of it. If you’re talking more about the features and the functionality than what it is that they get out of it, the results they’re going to get, those are places where they’re not going to understand what it is that you’re offering and what the benefits that they’re going to get from it.
Rob [06:02]: It’s easy to err on two sides of this coin and go too far to an extreme, and if you go too much into the features too quickly then people don’t understand the real value their getting out of it; and if you go too much into the value their going to get out of it and the benefits then it can actually be hard to figure out what your tool actually does. So, imagine if we had a social media tool like Hootsuite: right on the home page you could say these are the features it has and just start listing them down and people are going to have a tough time absorbing all that information without some type of context. So, that’s a mistake. Or if you went to the other side and you could say, “It makes social media effortless”, or, “It makes all you social media interactions like a dream or something. And you’re almost like too high level at that point. It’s like, what does that even really mean? And unless you dig down quick on that page and start explaining how it does that then look at a few features. I believe you need a nice balance of those things. You can’t just go after benefits, benefits, benefits because it’s just as easy to lose someone going that direction as it is to lose someone by getting out into the weeds of features too quickly.
Mike [07:15]: So, in your mind, what is a good mix between those two things? Is it 50/50, is it 70/30? Are there any sorts of rules of thumb that you can come up with that kind of guide you in terms of the number of benefits or the amount of benefits you should talk about versus the feature?
Rob [07:20]: Yeah, the rule that I use, or kind of my loose rule of thumb, is that the headline should be, I want it to be a promise rather than a description of the product. Sometimes you can put a description and it works. Drip, I do that with, right. It says, “Light weight marketing automation that doesn’t suck”. Now, that’s not a promise; that’s actually a description of the tool. That’s typically not the way I would go. There are some reasons that I’ve done that. But if you go to the homepage of HitTail the headline is a promise. It says, “Guaranteed to increase your organic search traffic”. Okay, so that right there is a benefit; it’s not a feature. So, I start with that so I typically would want some text digging down into that, of how it does that. So, it’s still benefits. You’re not talking about features yet, but you’re now talking about more specific. Like with HitTail’s example we unearth the keywords that you should be targeting but aren’t. Then I like to start digging into a couple of features and those are typically in some bullet points or in short snippets and on the homepage I believe that having maybe three features kind of digging into those, three to six features, is not a bad way to go once you’ve made kind of that nice promise at the top. Especially if you have- I typically have some testimonials above that before I dig into features, and I also like to have some prominent press links above that of folks who’ve written articles of that. So, I wouldn’t say I have mixed, like you say 50/50, but that’s how I think about a page in terms of first make a promise, then talk a little bit about how it’s going to do it and always keeping in mind that you’re trying to use “you” language, like “you, you” the prospect rather that “me, me”, the person who’s selling something and then slowly digging into more and more details. So, it’s that inverted pyramid idea of starting fairly broad and then working down into the features. Now that’s a homepage or a landing page. Obviously I think you should then have a full features page that digs into the nitty gritty of what your tool does, because that’s where you can go off in the weeds and if you don’t have a features page people can have the question, really basic question of like, “So then what does your tool actually do and how does it do it?” And I think that’s a benefit of having that features page that the people can dig into it if they have more questions.
Mike [09:24]: The second reason people won’t buy your product is that they’ll look at the website that you have and say I don’t have that problem. And this really just a fundamental problem with the traffic sources that you have. So, whether you’re targeting the wrong people in AdWords or whatever paid advertising you’re doing or if you’re advertising for your product using the wrong social media or the wrong blog articles, any sorts of news outlets where it’s just not applicable or if you are trying to get from like Digg or Reddit and it’s just not the right audience. There’s lots of different ways to get a lot of traffic to your website but just because you get traffic doesn’t mean that it’s targeted traffic and you have to get that targeted traffic because if the traffic is not targeted they’re probably not going to have that problem and they are going to have absolutely no reason to stick around or buy your product.
Rob [10:12]: Yeah, targeting traffic is hard especially if you’re sending a bunch of stuff to your homepage. I think the less traffic you send to your homepage the better and the more traffic you send to individual landing pages that essentially look like you home page but that you’ve changed the headline to really resonate with the traffic source that’s hitting it, but you can’t always do that, but certainly if you are running paid acquisition, if you’re doing SEO, you can set up separate pages that target certain keywords. There’s a lot of ways to do this, and what’s interesting is your tool probably solves a bunch of different problems, but you can’t say that in a headline. And if you say the wrong one to the wrong audience then they will wonder off and have this objection of, “I don’t have that problem.” And so, the more specific you can get with your headline and you can say, “Boom, do you have this problem? Do you spend way too many hours managing your social media? Or do you no have enough organic search traffic?” Very specific thing that’s targeted to those people, you’re just going to stand a better chance of them continue to read the page which eventually often leads to them converting for you.
Mike [11:16]: And I think you can have this problem on any given page on your website. As you kind of indicated, the homepage is not often the best page to be converting people into trials or customers because it’s too generic, you don’t know the type of person who is going there. They may have just heard about your tool from somebody else or just typed it into a search engine or something along those lines. But if they come to a specific page, especially if you’ve optimized that page using SEO you can generally get a good idea of what type of person is coming to that page. So, obviously there’s bit of a difference if you’re using paid advertising because then you can have a little bit more fine-grained control over it versus if somebody writes an article about your website or your application, you don’t always have as much fine-grained control over what it is that they say or how they pitch it to their audience or how they talk about your product. But if you find that those links are coming back to your site you can certainly morph your pages to talk directly to that audience especially if you’re seeing that there’s a lot of traffic coming from some of those different sources.
Rob [12:15]: A third reason why people might not buy your product is that they don’t trust you. I think there’s a number of ways that someone could mistrust you. They could look at the site and think that it’s just a little too slimy or that it’s a little too, it looks like a scam, right. And I think that comes to a design problem. Your language could be over-sales-y, you could be pushing too hard and it could feel like you’re trying too hard and that could be a copy-writing problem. I think aside from those, a big one is that someone might not trust that you can deliver on the promises you’re making on that homepage or on that landing page. And probably the best way I know of to get around that is to use, essentially lead nurturing right. Instead of getting someone to sign right up, because they may not trust that you’re going to deliver or it may take too long to get set up or whatever they’re not believing that you’re saying, but you offer something very small in exchange for an email address. And so you can do an email mini-course educating them on how you’re going to solve their problem or how they could solve it by themselves on their own without buying your software. Or you can give them a tools list or PDF or why paper or something. And then once you have their email address you can email them a small min-course once a week and build that trust up.. Build up the knowledge to them that you’re an expert and that you can solve this problem and that you have done it. You can send them case studies, you can send them your credentials, quotes and testimonials, all that kind of stuff. I mean you just have so much more time to do that if you have the email address than if you try to pitch everything on a webpage while someone is skimming through that between their lunch hour and their one o’clock meeting.
Mike [13:50]: I think in addition to some of the things that you talked about, the lead nurturing thing I think historically has been overly simplified. I think in the past if you looked even five years ago or so, if you looked at the basic sales fall for any given product on the internet it was somebody comes to your website, they sign up for a trial and then they purchase the product or they don’t. The overly simplified piece of it was that lead nurturing that you talked about where they come to your website and you just met them. They don’t know anything about you yet, yet you’re trying to sell them on a product and they just don’t have that trust yet. And I think that’s- you talked about it pretty in depth- but I think that that’s the piece that a lot of people miss when they are trying to set up their website. They’re skipping over that piece and they’re not thinking about what it is that I can offer people that will help establish that trust before we even get to the point where I’m asking them to sign up for a trial. And like I said, that’s just something that I think people have kind of glossed over. I’d say it happens a lot less now than it did three or four years ago, but it’s starting to come to the forefront, like this is an important piece. And I think a hard part about that is just the length of time that it takes to go from, “This is a new lead and I’m nurturing that lead”, but it’s hard to tell how long that lead nurturing is going to take. Sometimes it can take days, sometimes it can take six months and sometimes it can take a year. And that nebulous piece of it, the time frame for that, is what makes it so difficult for people.
Rob [15:12]: Our fourth reason of why people won’t buy your product is that they are happy enough with what they currently have. And this is a tough one to get around. I think it’s pretty common that there’s going to be an incumbent in pretty much every market that you enter into, and frankly most people don’t enjoy change, and they are not going to go out of their way even if they can get some type of incremental benefit, they’re not going to go out of their way to switch to your product. And you know, Mike, as you noted here in the outline, the biggest competitor to most bug tracing software is probably spreadsheets, it’s probably some hacked together thing that people have done and if it works well enough then why would someone change? And so to think about getting around that objection you really have to show not just incremental value but you have to show dramatic savings of time, dramatic savings of money or how you can make someone a lot more money or how you can really remove the pain from their life and I think that’s a big thing. We talked about this B to B pain thing, right? You really have to figure out what that pain is, and you have to go after it, and you have truly understand what the pain is, why they’re feeling it and you have to talk about that on your homepage and in your marketing and in your copy. And if you’re kind of vague around that and you feel like you’re kind of solving a problem for a certain group of people that’s not good enough. You have to be a lot more specific about it or you have maximize folk trying out your app or becoming customers of you, you really need to understand that pain.
Mike [16:41] And number four is closely related to number five which is that it’s too hard to switch from what I’m doing today. And if what they’re doing today currently is just they are trying to sign up for a bug tracking software and all they are using is spreadsheets, one of the ways to overcome that is having a mechanism to load that spreadsheet into the software. There’s technical ways to do this particular piece of it ,and you can say, “Okay, I’m going to build an import mechanism for all of my competitors and allow then to upload a spreadsheet that will import stuff.” But you’re still asking them to do work in some way, shape or form. They have to figure out what that export process is, they have to make sure the data is formatted properly, and then imported into your system.
The other way to go about this is to offer some sort of a concierge on-boarding service where you offer to, either for free or as a paid service, import the data in some way, shape or form. And I distinctly remember Patrick McKenzie talking about this for appointment reminder where he offered a free data import regardless of what type of system you were currently using. And some people would send him spreadsheets, some people would send him PDF files, and he would just take that data and import it into an appointment reminder. And sometimes he literally had to sit there and copy paste things, sometimes he had to type things in, but at the end of the day what he was doing, he was removing the pain of switching from whatever their current system was to using his software. And I think that that pain of switching is very underrated. I mean, most people heavily discount on how much effort and mental overhead there is to getting rid of that because signing up for a new service is basically asking somebody to do work, and that’s not what they signed up for. They signed up to get rid of some of the work that they have to do and some of the pain points that they have. By forcing them to do this stuff manually, it is just a barrier for them to sign up for your service. So, if you can remove that barrier in any way, shape, or form then it’s going to get you to do it. My wife’s evaluating some different options right now because she has one, and the problem that she has is, “Oh, I’m going to have to take all my existing appointments and everything else and I’m going to have to move them into this new software and I don’t want to have to do that.” So, it’s definitely a real thing that people have to deal with and they do take it into consideration.
Rob [18:53] Yeah, in launching Drip, Derek and I sat down and said, “What are people biggest switching cost and how can we get around those?” and concierge service is one way, doing it for them. Building importers is another way. Even helping prepare people, like creating internal marketing docs. Let’s say it’s a doc that allows a developer to sell the product to convince his boss that they should be able to use this. Something your future customer can use to convince their higher ups, I’m getting all of these things work and I’ve seen them all done but to sit down and really give thought how is it to switch, why is it harder to switch and what is in our power to offer folks to try to eliminate that switching cost, and it’s very powerful.
Mike [19:37]: Yeah, which you’ve kind of alluded to and I’ve seen this done in the enterprise world where they have these kind of marketing documents where they will talk about what sort of problems are that people are facing and how to overcome those challenges with a new piece of software. Some of those things are as you said, you do it for them and you can talk about those things, but giving them the tools that they need to be able to justify internally because they’re going to ask the question “how do we going to go about switching and what are the pain points going to be of switching?” and if you can provide them that information and give some ammunition and be able to say, “Hey, let’s take this tool that isn’t doing the job for us and get rid of It and this is exactly how we are going to switch over, this is our road map to moving over into this new system.” If you can get that, and sometimes it takes standing up for your competitors, but at the end of the day sometimes you have to do what you have to do.
Rob [20:22]: Our sixth reason why people won’t buy your product is if they can’t figure out how to use it. And this is a pretty common one, right? Someone downloads a trial or they sign up for a trial and they can’t figure out how to enter stuff or they don’t know what they should do or they just kind of give up. And that typically means your product is too complicated or your on-boarding isn’t good enough. If it’s on-boarding that’s a fixable thing, there’s kind of a formula for this right. You’re going to want to send folks some emails on how to get on boarded, preferably very timely and spell out things they’ve already done and what they have left to do and obviously having some kind of walk through or some kind of setup within the app as well. If an app is just too complicated and software isn’t the answer, then you may need high-touch sales to explain it. If you’ve solved a complicate problem, you’ve built a complex solution, and you’re selling in to folks where the price point is worthwhile then people aren’t going to on-board to something like that when it’s really hard to get set up. And that’s why Enterprise Tools sells for so much money right. They sell for a $100,000 or a million dollars often because there’s so much effort, I mean there’s so much effort involved in building, there are so much sales effort involved in getting people on-board and it’s such a lag. And so I kind of think of it as one of those two things, either your product is too complicated in which case you need to up your game and go high-touch or you’re just not on–boarding well enough and you need to look at that.
Mike [21:44]: Yeah, I think what the misconception with some of the Enterprise level products is that people look at the price and say, “Oh, that product is so not worth that.” And in most case they’re right, the software isn’t worth that. It shouldn’t take that much effort to build the software, but what you’re paying for isn’t the software; you’re paying for the sales effort that is required to get in front of the customers and do the work to get them set up. That’s definitely something that heavily factors into the price in there. But, if software becomes shelf ware then it’s not providing any value, so you definitely need to figure out how it is you’re going to demonstrate that value. Because if it’s a SaaS product for example and people are signing up for a trial, if they can’t figure out how to use it and they are not getting the value out of it, they’re definitely not going to pay for it. You have to go through and figure out what those pain points are for them and why it is that they’re not able to use the software. And maybe it is too complicated, maybe you need to switch it to much more of a service-based offering rather than a software offerings. Sometimes that’s the answer. But at the end of the day as the entrepreneur your job is to figure those things out, it’s not to build a certain type of product or a certain type of company. It’s to figure out what those types of problems are and then fix them with the business.
Rob [22:52]: And that’s where the old-school, big ticket price, enterprise sales had an advantage because they didn’t have subscribers and when you’re providing a subscription service you have to deliver to the customer every month or they will cancel. And so if they are not using they are going to cancel. Whereas if you were Oracle or Ceeble or People Soft back in the day or even today I suppose, you can sell a six-figure or a seven-figure deal and all the effort is upfront convincing them to buy it and you don’t have to follow through and actually provide that much value. Obviously that sucks, I mean but I’ve seen it happen. I’ve been at large enterprises where there’s been this great sales job and then folks don’t follow through but the value is kind of provided all upfront and so was most of the money, aside from kind of the annual maintenance twenty percent that is typical.
Mike [23:40]: The seventh reason why somebody might not buy your product is that they forgot about you. They came to your website, they looked around a little bit then somebody walked into their office, and they got busy and they closed down their laptop and walked away or closed their browser and went to do other work that came up and they just didn’t sign up for anything, they didn’t download anything. So, by the time they get back to their desk and they decide they have a free minute, at that point they’ve forgotten what it is that they came to your website for to begin with. So, in cases like that you need to use something like re-targeting to help bring them back. If you were lucky enough to get their email address because they did sign up for something then you need to actually go through the process of actually emailing them on a regular basis. And I’ve done this in the past where I’ve collected email addresses and then just not emailed people for like two or three months and that’s the worst thing you can possibly do because they were interested at one point but two or three months down the road, unless you are getting in front of them and talking to them chances are good they either forgot about you or the problem was just not high enough on their list of priorities to come back to you, or they found something else to solve the problem and you weren’t it because you weren’t talking to them. So, making sure that you’re going back and getting in front of those people and getting either a yes or a no is, that’s essentially you job. It’s not your job to kind of self-select and say, “Oh, this person didn’t email us or sign up for a trial so I’m not going to bother them anymore,” and that’s absolutely wrong, that’s the wrong approach to take. You need to get through to them and you need to talk to them until they either say yes or go away.
The eighth reason why somebody might not buy your product is that they’ve tried similar things before, and those things didn’t work for them. And I’ve done this myself where I’ve signed up for a product and it didn’t work out and then I maybe signed up for one more and that didn’t work out, and suddenly I just give up on the whole genre of that particular type of product. You might have found this with something like Time Tracking or To Do lists. People switch to those types of applications on a fairly regular basis, and at some point I think people just get frustrated and they decide, “Look, none of these products work so, none of these products I’ve tried so far work so none of them are going to work.” And this isn’t necessarily true, especially if you’re taking a different approach to a particular problem. And if you’re taking a different approach than other people and other competitors in your space, what you need to do is educate people about why your approach is different. Maybe the competitors you’re looking at are doing it wrong. Maybe they’re not telling the story about how they went and decided to create this product because they were having that particular problem and nobody else was solving it for them and show people that the process needs to be molded to fit into this software. And sometimes that’s just the case, the vendors will create a product based on their own internal ideas of how a particular process should work and it’ll educate their customers as they’ll come on board about how they can modify their own internal processes tobe more efficient and to get more things done and then when the customer’s trying out the software, because there’s a mismatch between what the customer’s process is and what the vendor’s process is, those things don’t mix so they don’t work and eventually the customers get frustrated and they say, “Look, I’m done with this,” and they do the same thing with the next product, and the next product and the next product and eventually they kind of just check out of the whole thing. You can use education marketing to help correct this, but sometimes there’s also a problem with the problem solution fit. Maybe you’re not solving the right problem. Maybe the customers have a slightly different problem, and that takes customer development and you have to talk to people who’ve signed up, people who just cancelled and verify that you actually do have that problem solution fit. Because sometimes your promises don’t match what the customer expectations are and you need to know that earlier and sooner rather than later.
Rob [27:22]: I tend to think about this in two ways: if you’re in kind of a new space or a new market then the odds of them, of your customers having tried so many things that their tired of it are pretty low. And so I wouldn’t typically use this as a factor unless you’re hearing this from people who are canceling. My guess is you won’t be. But if you’re in a mature market where there are a lot of tools, or it’s been around for ten, fifteen, twenty years, then there probably are going to be some older tools, some incumbents that are higher priced, that’s real hard to use, that are cumbersome, it’s kind of the same story we see with QuickBooks or Quicken and accounting space and the big marketing automation tools or email marketing software. I mean you really see as tools get older they just get cumbersome. In that case it’s probably a good bet that people have in fact tried other tools and really don’t like them. We’ve used this term of “refugee” from Exproduct, Infusionsoft Refugee or Quickbooks refugee. It’s someone who is trying to flee that product that product because they don’t like it so much that they’re willing to use kind of anything else. And in that case that’s actually a really interesting marketing angle. It’s a really interesting copy-writing angle. It’s an interesting touch point that you can use in an email course, in a headline, in a sales letter, on a homepage, to basically call it out, just, “Have you tries a bunch of different products and they haven’t worked for you? Are you tired of this incumbent software that’s really expensive and hasn’t worked for you?” And you just tackle it head-on and then you present why your software isn’t that and how you’re kind of of a new paradigm.
Mike [28:54]: And the ninth reason why somebody might not buy you product is that they look at it and they say it’s too expensive. And in these cases, I think that if somebody looks at the product and says that it’s too expensive it tends to be an objection but it’s coming from some other place. Either they’re not seeing the value in it or there are features that they’re specifically looking for that are in a pricing tier that they’re not comfortable paying for that pricing tier because maybe it’s a one person sho pand the specific feature that they want is in a $100 tier versus the $20 tier. There’s a lot of different reasons why they may not be able to see the value. They also may not even believe that the value is there. And that might be an education problem, but it’s rarely the case that you’re offering the product and somebody looks at it and says out of hand that that’s too expensive. My guess is that there’s something else at play. It’s not necessarily that it’s too expensive, it’s more that they don’t see the value or they’re not looking at the right things and it’s up to you to kind of correct what it is that they’re looking it or educate them. I just don’t think that in most cases, unless your product is completely outrageously priced in comparison to all the competitors out there, it’s hard to overprice something if you’re not also delivering the value.
Rob [30:05]: Yeah, you’re always going to have some pricing objections to what you billed. I don’t think I’ve ever had a product priced even as low as you can possibly go and still not have someone tell you that it’s overpriced. But the point at which you might actually think you might be overpriced is when fifty percent of your people are canceling because of that. You really have to hear it a lot in order to actually start thinking about lowering prices in my opinion.
The other thing is, I talked about this last MicroConf, and it was in reference to Drip and it was in reference when we first launched, we had a bunch of people using it and cancellations were coming through and a number of people said very similar things. They said, “this is a great tool, I love the usability, it’s easy to use but I just couldn’t justify it in light of the price,” and they would say that, it was very similarly, it was too expensive for what it does, that kind of stuff. Now, you could look at that one way and say, “Wow, that’s too expensive. We need to lower our prices.” Derek and I looked at it another way. I wanted to go after something called aspirational pricing, which is basically saying, “I don’t want to charge less that $50 a month.” It was at the $49 a month price range, so how can we build enough value in the product that we are worth $49 a month? And these days that’s more how I think about rather that trying to lower prices to meet expectations, how can you build enough that their expectations are met at or above your current price point?
Mike [31:26]: Yeah, I think that exact topic came up in one of my mastermind group discussions which was, don’t drop the price, add value to it. And I think that you can probably generically apply that advice across the board to virtually any product on the market. Don’t discount the price, always add value.
Rob [31:43]: So, to recap our nine reasons why people won’t buy you product. Number one, they don’t understand what you offering. Number two, they don’t have that problem. Number three, they don’t trust you. Number four, they’re happy enough with what they currently are using. Number five, it’s too hard to switch from what they’re using today. Number six, they couldn’t figure out how to use your product. Number seven, they forgot about you. Number eight, they’ve tried similar things before and they didn’t work and number nine, you’re just too expensive.
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