Kate Matsudaira, founder of PopForms, Spark Notebook, and keynote speaker at this year’s Future Insights Conference, talks with us about taking ownership over your future. She talks about working backwards from where you want to be in 5 years (career, family, etc.) and doing the small things every day that will actually get you there.
“Hello. My name is Inigo Montoya. You killed my father. Prepare to die.”
You might not realize it, but this famous quote from the Spanish swordsman in The Princess Bride has all the ingredients you need to make great welcome emails.
Hello — the Greeting
My name is Inigo Montoya. You killed my father. — Who you are: a name and identifying information that provides the context (what you do, your interests, cares, and concerns) required to make a connection
Prepare to die. — What comes next.
Let’s examine the 3 elements of the welcome email, go through some ideas for what to say, and see how to tie it all together (without threats of revenge).
1. The Greeting (and gratitude)
The greeting is quick moment simply to say “hi” and “thanks.”
This is the one spot governed by convention, so don’t think too hard about the basic social act of acknowledging other human beings — “hello” or “welcome” will do just fine. Follow through with an indication of happiness or gratitude that someone expressed enough interest to grant you entrance into their inbox.
Hi, nice/great/lovely to meet you, welcome, hey
We’re happy, glad, excited, thrilled, delighted that you joined our app!
Thanks for subscribing/signing up for our list!
Gain your advantage by breaking away from the generic. Add some specificity.Personalize using first names and other relevant details — and make the reader feel special or part of something larger than themselves.
Thanks for joining our newsletter community of thousands of people who love email!
It’s exciting that you’re one step closer to mastering how to play the ukulele!
2. Who are you (and why is that important)?
Now this is your big chance to stand out. Anyone can say “welcome” and “thank you.” It’s who you are and why you exist that makes you distinctive. Strangely, this is the one element that’s most often missing in welcome emails, making them feel as if they could have come from anybody. Organizations overlook this step or just assume you’ll remember who they are.
What makes you worthy for people to trust and connect? What do you do, why are you here, and why should the reader care?
Here are a few snippets I pulled from real welcome emails:
what you do
GetFeedback makes it easy to create mobile-ready surveys.
share your origin story
We started Karma with one simple idea: everyone should be able to get online, everywhere they go.
specify your mission
We’re on a mission to make your working life simpler, more pleasant and more productive. [Slack]
show people better versions of themselves
You just joined thousands of people who take control of their work and save valuable time using automation. [Zapier]
how it works
Watch a video to quickly learn how to make the most of your Inbox.” [Google Inbox]
Timeful’s email verification message hits many of these points elegantly:
What’s going to happen after this welcome conversation?
Newsletter welcomes often describe what type of content and frequency to expect.
Grubhub’s welcome email explains that subscribers will get discounts, prizes, and restaurant recommendations.
Blue Apron explains: “each week, we promise to bring you the best, fresh ingredients along with new and imaginative recipes to enjoy.”
Asana notifies you of 2 more emails to follow in its welcome series: “Welcome to Asana! This is the first of three emails we’ll send over in the next week to help you transition from email to Asana.”
Then, be clear about what you want readers to do next. Often this is framed as how to get started, the best suggestion for success, or ensuring you get the most out of the service or product. Some common goals for your call to action:
download or install something like an app, browser extension, or code snippet
watch a walkthrough video
perform a task, like create your first project, fill out a profile, or set preferences
reply to the email or set up a phone call
make your first purchase (using this incentivizing discount coupon!)
Finally, inform your new signups that they’re in good hands if they need help with any questions or concerns that come up. Be clear about how to get in touch, whether that’s a support site, email, or phone number.
If you require assistance, have a question, or would like to suggest new features, please visit Todoist Support at https://todoist.com/Support. We’re happy to help you anytime!
We’re here to help. If you have any questions about getting started, setting up your first automation, or saving time with Zapier, just reply to this email. Our friendly support staff will point you in the right direction, free of charge.
We would love to get your feedback and learn about how we can help you to best manage the web apps you work with every day. Just reply to this email anytime. [Meldium]
4. Tying it all together
Editing is especially important for your welcome emails. You don’t have much of a window to make a great first impression. Your message should be clear, concise, and distinctive.
Do a final check to make sure every sentence and image serves a purpose by asking whether it meets any of these goals:
building towards a particular action
showing personal context
Now let’s see how some companies combine all the elements of the Princess Bride welcome formula:
Gilt’s welcome email is straightforward, quickly setting expectations of how its emails and sales work and getting you to browse and shop right away.
Greeting:Welcome to Gilt! We’re thrilled to have you as a member.
Who you are:Learn how to shop like a pro…Then get ready to score some amazing deals from hundreds of top designers and brands. We don’t want you to miss a thing…
What comes next:be on the lookout for our daily emails — most sales start at noon ET every day. SHOP NOW.
Buffer is a tool that helps you share social media content. Here’s the welcome email sent by CEO Joel and the team.
first part of Buffer’s welcome email
A huge part of Buffer’s company identity is its emphasis on amazing customer service and personal touch — and you can tell by the way that priority is woven throughout this entire welcome email: Every single one of us is here for you … drop us a line anytime. The whole postscript is devoted to explaining that the whole team participates in support around the clock and sets up the high and valuable expectation that you’ll hear back within hours if you reach out.
second part of Buffer’s welcome email
Farmigo is an online farmers' market that delivers locally grown and produced food directly to your community. It’s all about the farm-to-neighborhood connection.
Greeting:Dear Janet, Thanks for joining Farmigo! Clearly you’re someone who loves delicious, fresh-from-the-farm food, and we’re happy to offer you a new way to get it.
The greeting here does a great job of making me feel part of the local food movement, enriching my sense of self-identity — which starts creating emotional affinity for a company I’ve just met.
Here the what comes next is brought to the forefront. The service involves a fair amount of logistics so the email makes clear what I have to do to get my first (incentivized!) order delivered and where to pick it up.
Shoeboxed is a tool for scanning, organizing, and keeping track of receipts and expenses for reports and taxes. Unlike Farmigo, Shoeboxed’s welcome email is extremely succinct but it includes all the necessary elements.
Personalized Greeting:Welcome to Shoeboxed, Violet!
Who you are: This part might have used some beefing up, but you get an idea of what Shoeboxed does because they encourage you to submit receipts.
What comes next: The best way to get started is to download the mobile app or launch the web app.
Don’t make your welcome email sound like an impersonal, automatic form letter. Otherwise, you’re wasting an opportunity to continue making your pitch to a willing audience and saying something to be remembered by.
Want a free, friendly critique of your welcome email(s)? Send them along with a note to janet[at]customer[dot]io!
Customer Success is the foundation of our growth. Here’s how we track and improve on it to keep growing.
Much like “growth hacking,” “customer success” is one of those vague terms that seems like it was invented when we needed a buzzword to describe what successful businesses have been doing forever.
But just because it’s a buzzword doesn’t mean that it’s not absolutely critical to focus on.
Almost every successful software company that I can think of has gotten to where they are – or at least to initial traction – on the success of their customers.
To head off a common misconception, when I say customer success, I’m not just talking about customer service or support.
We believe deeply in customer support, and believe that one of the primary functions of a great customer support team is to ensure that customers are successful, but customer success – as a concept – is broader than that.
We think of customer success as everything we do, from marketing to sales to onboarding to support to hiring to operations, that helps our customers get significant value out of Groove.
(We define “significant value” as at least 5x what they pay.)
I’ve seen a lot of different ways that companies track and measure customer success. Some of them very basic (just use Customer Lifetime Value), some of them quite complicated (10+ complex metrics pushed to a “customer success dashboard”).
For our purposes, we’ve gotten a lot of value from a simple-ish approach that’s somewhere in the middle.
Below are the things we consider when we think about – and measure – customer success at Groove, along with some of our own metrics from some sample segments for each.
The onboarding period is, for a business, perhaps the most critical time in a SaaS customer’s life.
It’s during those initial sessions that the customer either “gets” the product and begins getting value from it, or they leave, usually forever.
When a customer signs up for Groove, they get a series of onboarding prompts in their Groove inbox.
Free users who complete the prompts within 24 hours are almost 80% more likely to convert to paid customers than those who don’t. That’s a massive drop-off, and we use the 24-hour mark as a benchmark for early customer success.
The next step in the customer lifecycle where we measure success is free-to-paid conversions.
If a customer upgrades to a paid account, that’s an obvious indicator that they’ve gotten enough value out of the product that they feel it’s worth paying for.
Sessions Per Day
Beyond the initial month or so of a customer’s use of Groove, we track “sessions per day” as an ongoing customer success metric that indicates how engaged customers are with the product.
The numbers here can swing pretty wildly depending on whether the customer is a full-time support rep or a higher-level manager or executive, but we like to see this number at least above “2”.
Because of the nature of our product, we segment this metric in a few different ways, but I’d start with simply measuring it across all of your customers.
One of the “traditional” customer success metrics, churn is an extremely important measure of the health of your business.
If customers are leaving, then we’re not achieving customer success. It’s natural for some customers to churn, but we keep a close eye on this number; if it begins to creep higher, it means that something is up.
We measure monthly customer churn, for which a simple formula is the number of customers who churned in a given month divided by the number of total customers at the end of that month.
We measure our net promoter score once every quarter, and it’s the most important benchmark for customer sentiment and qualitative feedback that we use.
An improving NPS score means that our app and business are performing better and becoming more valuable to our customers.
There are a number of other huge benefits to NPS, including getting honest feedback to inform our product roadmap and giving us tangible goals to aim for each quarter, but it’s a really strong customer success metric too.
Improving Customer Success Metrics
By optimizing for customer success, you’re more than likely optimizing for growth. And if your revenue doesn’t grow along with your customer success metrics, then you’re probably doing something wrong (and need to re-visit pricing, operations, etc.).
Nearly everything that we do from a customer-facing standpoint is about optimizing for success. Some of the ways that have worked well for us include:
If you’ve never watched someone (who’s not on your team or a friend of yours) use your product, then you likely have user experience blind spots.
While not the most scientifically sound experiment design, I’ve gotten a lot out of simply asking customers to take a few minutes to walk me through how they use Groove via screen share. It’s helped us identify points of friction and improve both the onboarding flow and the general UX.
You can also use tools like Inspectlet to better understand user sessions and see where people are spending their time within your app.
It was one of the most time-consuming things I’ve ever done as a founder, and yet was also one of the best investments of my time. I still do it today, and likely always will.
What I learned amazed me. Not only did I better understand where people struggled and what we needed to do to increase retention and reduce churn, but we learned valuable insights about the words that are important to people.
By understanding key words and phrases (for example, many customers asked about “filters”, whereas in Groove we call a similar feature “rules”), we were able to improve our onboarding flow to make more sense to our users.
Excellent customer service really is one of the biggest driving forces behind customer success.
If a customer is stuck, getting them unstuck in a way that not only satisfies them, but makes them excited to keep using the product is one of the most powerful things you can do to increase retention.
While testing is a critical part of conversion optimization to make sure we actually made things better and by how much, it’s also the tip of the iceberg of the full CRO picture. Testing tools are affordable (even free), and increasingly easier to use – so pretty much any idiot can set up and run A/B tests. This is not where the difficulty lies. The hard part is testing the right things, and having the right treatment.
The success of your testing program is a sum of these two: number of tests run (volume) and percentage of tests that provide a win. Those two add up to indicate execution velocity. Add average sample size and impact per successful experiment, and you get an idea of total business impact.
So in a nutshell, this is how you succeed:
Run as many tests as possible at all times (every day without a test running on a page/layout is regret by default),
Win as many tests as possible,
Have as high impact (uplift) per successful test as possible.
Executing point #1 obvious, but how to do well for points #2 and #3? This comes down to the most important thing about conversion optimization – the discovery of matters.
Some things and places matter much more than others
Let’s say you run a B2B site, and drive your visitors toward a quote request page. You might spend your precious testing time experimenting with different headlines, only to find that there’s no or very little difference between them (no impact on the final conversion).
You might be optimizing the wrong thing. Spending your time on something else is where the gains are. Maybe it’s the form, maybe it’s the pages they were on before they got to the quote request page, maybe something else.
Or you might spend tons of effort on your ecommerce product pages, only to find that even if you get wins, the financial impact on your business is negligible. You might be optimizing in the wrong place. Significant gains would be had if you’d spend your time fixing your biggest leaks instead.
This is why the discovery of what matters is important. If you figure it out, you know WHAT to optimize, and WHERE. One huge step closer to more winning tests with bigger impact.
You can learn what matters through testing and research. But testing without research will result in tons of wasted tests.
It’s not about a list of tactics
Let me make this clear: conversion optimization is not a list of tactics, or a list of best case practices. Best case practices are mostly common practices anyway – not the best. You won’t increase the amount of tests that win by maintaining a list of tactics, and then trying them out on your site. Tha
That’s the quickest way to figure out whether someone’s an amateur or a pro: amateurs focus on tactics (make the button bigger, write a better headline, give out coupons etc) while pros have a process they follow.
If you can’t describe what you are doing as a process, you don’t know what you’re doing.
– W. Edwards Deming
Why people think it’s about tactics is obvious: lots of blog posts out there tell you so. Make the button bigger/orange/round and you get 212% lift on average! Some blog posts even give you complete lists of conversion optimization techniques (never mind that there is no such thing as a CRO technique).
Conversion optimization is being SEO-fied more and more: rubbish content is starting to be more widespread than high quality content – and people looking get into CRO can’t tell the difference. There are 2 reasons for this:
most content is written by writers, not practitioners – and they don’t know what the f they’re doing
people writing the content are doing it for the sake of ranking better (get conversion optimization keyword traffic, backlinks), and not to actually add value to the community.
It’s hard to fix this issue, so be careful whose advice you buy. A good start would be to ignore / be skeptical of advice given by writers / professional bloggers.
Note that I’m not saying that tactics don’t work, but you shouldn’t think in terms of tactics. Tactics come later – first you need to figure out what are the issues with your website.
You don’t have generic problems. You have specific problems
Following global marketing trends, copying your competitors and implementing best case practices don’t work for this reason: websites are highly contextual.
What works for a website, doesn’t work for another. If copying Amazon would be all that it takes to grow your ecommerce business, there would be many more Amazons around. Doesn’t work like that.
You sell to trendy high school kids with very little money, I sell yachts to millionaires – highly different context, right? Well what if we both sell food items? But you are Wal-Mart, and I am Whole Foods. Highly different context. Even if we sell the same products to the same demographic, many things can be different – traffic sources, relationship with the audience, customer support etc. It’s almost never apples to apples.
This is also why it’s useless to copy A/B tests from sites like WhichTestWon, and hope for the same result. Stop that. Websites are highly contextual.
You don’t have generic problems, nobody does. You have highly specific problems.
The good news is that you can know exactly what those problems are, where they are, and how large sample of your visitors are (negatively) impacted by it.
How? By using methodical research process, and data.
The problem with being “data-driven”
We should all be more data-driven (or data-informed), right? Well the truth is data doesn’t tell you anything. It’s not like you open up Google Analytics and the data will come telling you stuff. No.
You have to ask questions first, and then you can seek for the right data that might help you find an answer. Data is just there, it’s up to you to interpret it and to pull insights out of it. It’s a skill. Work hard to get better at it. Google has a course on making sense of data, that’s a great starting point – but there’s no substitute to real world practice.
How much data do you need?
Let’s say you want to cross the road. If you have all the information you could possibly have, you’d have data on the shapes of leaves on trees across the street, air humidity, colors of the houses around you, hair styles of people standing next to you and so on and so forth. But what really matters is whether there’s a car coming, and how fast.
It’s the same with conversion optimization. You could have an in-house user research lab with fancy neuroscience technology and 25 researchers, actively track 5000 metrics across 500 segments and what not – but it would not only cost a lot (likely way more than the profit from testing wins), it would be distracting and silly. The more research activity you add, the higher the cost – and inevitably the law of diminishing returns kicks in.
The opposite of course is just going by gut feeling, opinions and best case practices. That’s equally stupid.
The golden path is in the middle – do enough research that gets you the insights you need to find opportunities for growth without the high cost.
Introducing: ResearchXL™ framework
The art and discipline of conversion optimization is a very new field. Until recently, you couldn’t really learn it anywhere (this monster course now available). When I got started in CRO, I read all the books and blogs like other people, but my biggest source of learning was other people. People who had been doing this for a while with great success.
Of course, there’s no substitute to actually doing it. My own real-world experience combined with the teachings of others lead me to a conversion research process that I’ve been now using for the last 3 years. It’s proven to work across industries and business models. B2B and B2C. SaaS, ecommerce, lead gen, affiliate models. It doesn’t matter which vertical you’re in, you can use it to find great insights to lead to better test hypotheses.
ResearchXL is a framework that will help you discover what really matters, so you can increase the number of winning tests, and increase the impact per successful experiment.
There are 6 steps of data gathering and analysis, followed by creating a master sheet of all found issues that we then turn into action items.
It might looks scarier at first glance than it really is. Go through it once, and it will be so much quicker next time. It just makes sense. (If you want me to teach it to you, sign up for my next coaching program).
Use the framework as your tool, your guide, your process map. Customize it and improve however you see fit. This is where you start, not where you end up.
Step #1: Heuristic Analysis
Let’s start with a definition: heuristic analysis is an experience-based assessment where the outcome is not guaranteed to be optimal, but might be good enough. It’s main advantage – speed. It can be done fairly quickly.
This is as close as we get to using opinions to optimize. But – there’s a difference between an opinion and opinion. Opinion of an experienced optimizer matters a lot. The sheer volume of pages and tests a person sees over the years makes a difference. An analogy: an art dealer who sees and sells thousands of paintings over the years will have a much better guess at a painting’s value than a random person on the street.
That’s why heuristic analysis done by an experienced optimizer is way more productive than just randomly sharing stupid ideas. But even without the experience is productive because it’s structured – not random commentary or criticism.
In essence this is us – optimizers – reviewing a website, page by page, based on our experience of what we’ve seen work before, “best practices” and stuff like that. BUT – we do it in a very organized, structured manner.
AND – most importantly – whatever we identify or discover through heuristic analysis is not the truth (since it’s still kind of an educated opinion). The outcome of it is what I call “areas of interest”. And in our next phases of conversion research – qualitative and quantitative research – we seek to validate or invalidate the findings.
What does the structured website review look like? We assess each page for a certain set of criteria:
Relevancy: does the page meet user expectation – both in terms of content and design? How can it match what they want even more?
Clarity: Is the content / offer on this page as clear as possible? How can we make it clearer, simpler?
Value: is it communicating value to the user? Can we do better? Can we increase user motivation?
Friction: what on this page is causing doubts, hesitations and uncertainties? What makes the process difficult? How can we simplify? We can’t reduce friction entirely, we can only minimize it.
Distraction: what’s on the page that is not helping the user take action? Is anything unnecessarily drawing attention? If it’s not motivation, it’s friction – and thus it might be a good idea to get rid of it.
During the process of heuristic analysis you have to avoid random comments, and strictly stick to assessing the page for named criteria – writing down your “findings”.
Heuristic analysis works best when done in a group – include fellow optimizers, designers, usability people, copywriters, and janitors. Just remember to explain the rules to everyone at the start.
And remember – whatever you write down is merely “areas of interest”, not the absolute truth. When you start digging in the analytics data and putting together user testing plans and what not, make sure you investigate that stuff – with the intention to validate or invalidate whatever you found.
Step #2: Technical Analysis
This is a low-hanging fruit, one that you can make a lot of money on (think 12 month perspective).
Conduct cross-browser and cross-device testing
Open up your Google Analytics and go to Audience -> Technology -> Browser & OS report.
You will see conversion rate (for the goal of your choice) per browser. Note: You must look at the one device category at a time – so apply a device segments first: desktop only, tablet only and mobile only. You can’t pile all device categories into one, or you will be fooled by averages.
You need to drill down to a specific browser version (e.g. IE8, IE9 etc) – and see if a particular browser converts less than others. When looking at the report below, we can see that IE9 and IE8 convert less than IE11 and IE10. What’s up? While it could be that people using older versions of IE are just some stupid old people not spending money, but it might also be that you’re the stupid one losing money due to some bugs or UX issues.
“But no one uses IE8 (or whatever lesser used browser)!”
That’s an opinion. If you find a low-performing browser that’s not used very much, do this:
Look up the number of IE8 visitors per month.
Look up the average transaction amount. Let’s assume it’s $50 for this example.
Calculate: if IE8 (currently converting at 2%) would convert the same as IE10 (currently 5%), how many more transactions would we have over 6 month period? Let’s pretend that we’d get 200 transactions more over 6 months.
Multiply that number with avg transaction amount ($50), so 200×50=$10,000
How much time will it take to identify and fix the bug? 3 hours? Is 3 hours of developer time more or less than $10k? If less, fix the damn bugs!
Repeat this flow with each browser that’s converting sub-optimally.
If your site it too slow, it might have a negative impact on your results.
Key thing to know – there’s a difference between “page load time” and “page interactive time”. The first one means “seconds until every element on the page has done loading” and second one means “seconds until the site is usable”. The latter is much more important, it’s the key metric you want to pay attention to.
If the site loads within 3 seconds, you’re doing fine. Up to 7 seconds? Quite typical, can be improved. More than 10 seconds? Gotta do something!
Where to look for site speed data: Google Analytics: Behavior → Site Speed → Page Timings. Turn on the ‘comparison’ to easily spot slower pages:
You want to look at page load time and page interactive time per page – starting with the ones that have the most traffic (== affect the largest number of users).
Mark down all URLs that load with sub-optimal speed. Use Google PageSpeed Insights (can also be accessed from within GA). Enter every URL you wrote down, and it will list all the found issues.
When doing optimization work, Google Analytics is your best friend. If you’re not very skilled at it – most marketers aren’t – you’re missing out. You need to take the time to learn. Your career depends on it.
Gone are the days when a brilliant idea – a result of a brainstorm in the marketing department – was enough. Now you need to know the specific impact of every idea.
You have a strategy? Great, measure it. You added a new feature to your website. Well – how many are using it? Are people using it more likely or less likely to convert?
If your Google Analytics skills max out at checking how much traffic you’re getting, which country they’re coming from and how many minutes on average they spend on your site, you know nothing. This is useless for CRO purposes.
Note for analytics newbies: Google itself has released a pretty good introductory course called Digital Analytics Fundamentals – I suggest you take it.
What can we learn from Google Analytics? This topic would take a three day workshop, but for this essentials course I will point out the key stuff.
Always approach analytics with a problem: you need to know in advance what you want to know, and what are you going to change / do based on the answer. If nothing, then you don’t need it.
In a nutshell, we can learn:
what people are doing,
the impact and performance of every feature, widget, page,
where the site is leaking money,
… but we won’t know why. Heuristic analysis and qualitative research are your best attempts at figuring out the ‘why’. Analytics is more like ‘what’, ‘where’ and ‘how much’.
Follow the data!, they say. Well, truth be told, data won’t tell you anything. It is up to you to pull the insights out of the data. And this requires practice. As with everything – the more time you spend at looking at data, and trying to make sense of it, the better you’ll get at it.
Before the analysis, make sure the data is accurate and that everything important is being tracked
If you work with a Google Analytics setup that was done by someone else, you need to start with an analytics health check. In a nutshell: health check is a series of analytics and instrumentation checks that answers the following questions:
“Does it collect what we need?”
“Can we trust this data?”
“Where are the holes?”
“Is there anything that can be fixed?”
“Is anything broken?”
“What reports should be avoided?”
The truth is that nearly all analytics configurations are broken. Take this very seriously.
Setting up goals and measurement, using the interface
We can record what people do with their mouse / trackpad, and can quantify that information. Some of it might be insightful.
Very important: like with A/B testing, you need enough sample size per page / screen before you can trust any results. A rough ballpark would be 2000-3000 pageviews per design screen. If the heat map is based off like 34 users, do not trust any of it.
Two most interesting types of heat maps to look at are click maps and scroll maps.
A click map is a visual representation, aggregated data of where people click. Red equals lots of clicks.
So there is one useful bit here I like – you can see clicks on non-links. If there’s an image or text that people think is a link or want to be a link, they’ll click on it. And you can see that on a click map.
This shows you scroll depth – how far down people scroll. Can be very useful.
It’s absolutely normal that the longer the page, the less people make it all the way down. So once you acknowledge this, it makes it easier to prioritize content. What’s must-have and what’s nice-to-have. Must have content must be higher.
Analyzing the scroll map will also help you decide where you need to tweak your design. If you have strong lines or color changes (e,g. white background becomes orange), those are called ‘logical ends’ – often people think that whatever follows is no longer connected to what came before.
So you can add better eye paths and visual cues to spots where scrolling activity seems to drop heavily.
User session replays
You can record video sessions of people going through your site. It’s kind of like user testing, but has no script and no audio. But people are risking with their actual money – so it can be more insightful.
You don’t need a million visitors to record user sessions – this is almost like qualitative data. Use tools like Inspectlet (great), Hotjar (great) SessionCam (terrible UI, but a workhorse), or Clicktale to record user sessions, and watch your actual visitors interact with your site. Some basic heatmap tools like Crazyegg don’t even have this feature.
Session replays are extremely useful for observing how people interact with your site.
Not exactly mouse tracking, but several mouse tracking tools like Hotjar, Inspectlet or Clicktale have this feature. Or for more powerful form analytics use a standalone tool like Formisimo.
These tools will analyze form performance down to individual form fields.
Which form fields cause the most error messages?
Which form field people hesitate to fill? Hesitation measured in milliseconds
Which form fields people leave empty, even though they’re required?
And so on.
If your goal is to make your forms better – and form optimization is a key part of CRO – it really adds a whole new layer of insight where you have data about each and every form field.
Step #5: Qualitative Surveys
Most people on your site will not buy anything. How can we get more people to buy? One thing that helps us figure that out is website surveys.
There are 2 ways to survey your web traffic:
Exit surveys: hit them with a popup when they’re about to leave your site.
On-page surveys: ask them to fill out a survey as they’re on a specific page
Both are useful.
There are many tools to use that, I usually use Qualaroo (most advanced) and Hotjar, but there are many other tools. The tool itself doesn’t matter as long as it gets the job done:
Configure which page(s) will have the survey on
Set your own questions (no pre-written template bullshit)
Determine the criteria for when to show the survey
If these 3 criteria are met, you’re solid.
Aren’t surveys annoying to people? Sure they might be to some – but the data you get out of it is well worth it. And you typically only run the surveys for a limited period of time.
What should you ask?
Remember the key: actionable data. We need information to act on.
Since our goal is to get more people to take action, start with learning about friction. What are the FUDs (fears, doubts, hesitations) they are experiencing – while on a specific page?
Every page on your site has one job – and your survey question should be about that one page, one job.
Send an email survey to recent first-time buyers. These are people who still freshly remember their purchase, and the friction they experienced in the buying process. Only survey people who have no previous relationship or experience with you that might affect their responses (you want to filter out repeat buyers or people who bought a long time ago).
Try to get in ~200 responses. If you get more than that, the answers tends to get repetitive, and don’t offer additional insight. Remember – this is a qualitative survey, not quantitative (like opinion poll). Any less than 100, and there might not be enough answers to draw conclusions from.
If you have less than 100 people who recently bought from you, then you do with what you can get. 10 responses is better than zero.
Important: the quality of the questions will determine the quality of the insight you will get. Don’t ask Y/N questions, avoid multiple choice.
The premise is simple: observe actual people use and interact with your website while they’re commenting their thought process out loud. Pay attention to what they say and experience.
User testing gives you direct input on how real users use your site. You may have designed what you believe is the best user experience in the world, but watching real people interact with your site is often a humbling experience. Because you are not your user.
Note: the quality of the tasks you give testers will determine the qualify of insight you will get.
In most cases you want to include 3 types of tasks in your test protocol.
A specific task
A broad task
Don’t ask for their opinions, just observe what they do and voluntarily say.
Step #7: Put everything together in a master action sheet
Once you go through all 6 steps, you will find identify issues – some of them severe, some minor.
Next: Allocate every finding into one of these 5 buckets:
Test. If there is an obvious opportunity to shift behavior, expose insight or increase conversion – this bucket is where you place stuff for testing. If you have traffic and leakage, this is the bucket for that issue.
Instrument. If an issue is placed in this bucket, it means we need to beef up the analytics reporting. This can involve fixing, adding or improving tag or event handling on the analytics configuration. We instrument both structurally and for insight in the pain points we’ve found.
Hypothesize. This is where we’ve found a page, widget or process that’s just not working well but we don’t see a clear single solution. Since we need to really shift the behaviour at this crux point, we’ll brainstorm hypotheses. Driven by evidence and data, we’ll create test plans to find the answers to the questions and change the conversion or KPI figure in the desired direction.
Just Do It – JFDI. This is a bucket for issues where a fix is easy to identify or the change is a no-brainer. Items marked with this flag can either be deployed in a batch or as part of a controlled test. Stuff in here requires low effort or are micro-opportunities to increase conversion and should be fixed.
Investigate. You need to do some testing with particular devices or need more information to triangulate a problem you spotted. If an item is in this bucket, you need to ask questions or do further digging.
Next: issue scoring, ranking them.
We can’t do everything at once and hence need to prioritize. Why?
Keeps you / client away from shiny things
Focus is almost always on biggest money / lowest cost delivery
Helps you achieve bigger wins earlier in projects
Gives you / the client potential ROI figures
Keeps the whole team grounded
Once we start optimizing, we start with high-priority items and leave low priority last – but eventually all of it should get done.There are many different ways you can go about it. A simple yet very useful way is to use a scoring system from 1 to 5 (1= minor issue, 5 = critically important).
In your report you should mark every issue with a star rating to indicate the level of opportunity (the potential lift in site conversion, revenue or use of features):
This rating is for a critical usability, conversion or persuasion issue that will be encountered by many visitors to the site or has high impact. Implementing fixes or testing is likely to drive significant change in conversion and revenue.
This rating is for a critical issue that may not be viewed by all visitors or has a lesser impact.
This rating is for a major usability or conversion issue that will be encountered by many visitors to the site or has a high impact.
This rating is for a major usability or conversion issue that may not be viewed by all visitors or has a lesser impact.
This rating is for a minor usability or conversion issue and although is low for potential revenue or conversion value, it is still worth fixing at lower priority.
There are 2 criteria that are more important than others when giving a score:
Ease of implementation (time/complexity/risk). Sometimes the data tells you to build a feature, but it takes months to do it. So it’s not something you’d start with.
Opportunity score (subjective opinion on how big of a lift you might get). This depends on how many users are exposed to the issue, and how close to the money the issue is. Let’s say you see that the completion rate on the checkout page is 65%. That’s a clear indicator that there’s lots of room for growth, and because this is a money page (payments taken here), any relative growth in percentages will be a lot of absolute dollars.
Essentially: follow the money. You want to start with things that will make a positive impact on your bottom line right away.
Be more analytical when assinging a score to items in Test and Hypothesize buckets.
Now create a spreadsheet with 7 columns, and add every issue you’ve identified in there. Give more weight to issues
Google Analytics bounce info is wrong
Google Analytics script is loaded twice! Line 207 and 506 of the home
Remove double entry
Missing value proposition
Give reasons to buy from you
Add a prominent value proposition
Product images too small
Can’t see the product properly
Add more bigger images
Most conversion projects will have 15-30 pages full of issues. “What to test” is not a problem anymore, you will have more than enough.
By using this approach, you can dramatically increase the number of winning tests.
Your execution velocity comprises of the number of tests run (testing volume) and how many tests will win (quality of your hypotheses). By using ResearchXL framework you will have more tests that win, and bigger impact per successful test.
Want to learn more about how to use ResearchXL framework? Download my book “Essentials of Conversion Optimization”
Customer acquisition cost (CAC) is a metric that has been growing in use, along with the emergence of Internet companies and web-based advertising campaigns that can be tracked.
Traditionally, a company had to engage in shotgun style advertising and find methods to track consumers through the decision-making process.
Today, many web-based companies can engage in highly targeted campaigns and track consumers as they progress from interested leads to long-lasting loyal customers. In this environment, the CAC metric is used by both companies and investors.
CAC, as you probably know, is the cost of convincing a potential customer to buy a product or service. In this article, we will explain the CAC metric in more detail, how you can measure it, and what steps you can take to improve it.
What the CAC Metric Means to You
As mentioned above, the CAC metric is important to two parties: companies and investors. The first party includes outside, early stage investors who use it to analyze the scalability of new Internet technology companies. They can determine a company’s profitability by looking at the difference between how much money can be extracted from customers and the costs of extracting it.
For example, in terms of the upstream oil market, if an oil supply is in an area requiring heavy infrastructure investments, the amount applied to extract the oil may be greater than its market price per barrel.
Investors view Internet-based companies through the same lens. They are concerned with the current relationship, not on future promises of improving the metric, unless they can be justified.
The other party interested in the metric is an internal operations or marketing specialist. They use it to optimize the return on their advertising investments. In other words, if the costs to extract money from customers can be reduced, the company’s profit margin improves and it makes a larger profit.
Then, investors are more interested in providing the company with the resources it needs, partners are more committed to growth, and the company can use the improved profit margins to pass the value to its customers for a greater market position.
How You Can Measure CAC
Basically, the CAC can be calculated by simply dividing all the costs spent on acquiring more customers (marketing expenses) by the number of customers acquired in the period the money was spent. For example, if a company spent $100 on marketing in a year and acquired 100 customers in the same year, their CAC is $1.00.
There are caveats about using this metric that you should be aware of when applying it. For instance, a company may have made investments on marketing in a new region or early stage SEO that it does not expect to see results from until a later period. While these instances are rare, it may cloud the relationship when calculating the CAC.
It is suggested that you perform multiple variations to account for these situations. However, we will provide some examples of calculating the CAC metric in its most pragmatic and simple form with two examples. The first company (Example 1) has a poor metric. The second (Example 2) has a great one.
Example 1: An ecommerce company
In this example, we take a fictitious ecommerce company that sells organic food products. The company spent $100,000 on advertising last month, and its marketing team says 10,000 new orders were placed. This suggests a CAC of $10, a figure that has no meaning in itself.
If a Mercedes-Benz dealer has a CAC of $10, the management team will be delighted when looking at the year’s financial statements.
However, in the case of this company, the average order placed by customers is $25.00, and it has a markup of 100% on all products. This means that on average, the company makes $12.50 per sale and generates $2.50 from each customer to pay for salaries, webhosting, office space, and other general expenses.
While this is the quick and dirty calculation, what happens if customers make more than one purchase over their lifetime? What if they completely stop shopping at brick and mortar grocery stores and buy from only this company?
The purpose of customer lifetime value (CLV) is specifically designed to resolve this. You can find a CLV calculator by simply searching in your favorite search engine. In general, this metric helps you form a more accurate understanding of what the customer acquisition cost means to your company.
A $10.00 customer acquisition cost may be quite low if customers make a $25.00 purchase every week for 20 years! However, in this ecommerce company, they are struggling to keep customers and most of the customers make only one purchase.
Example 2: An online CRM (SaaS) software company
The company in this example provides an online system for managing sales contacts for customer relationship management. The cost of distributing the software is low since it is cloud-based, and customers need little support. Moreover, it is able to easily retain customers because of the pain customers would experience uploading all the contacts, tasks, and events they are tracking onto a new CRM software.
The company has worked its way up the search engines and has an expert sales support team working for minimum wage, based out of their call centers in a rural Midwestern town. The company also has many strategic partnerships which provide a steady supply of customers. In fact, they spend only $2.00 acquiring a new customer with a lifetime value of $2,000. Here is the calculation:
Total cost of new customer sales support call centers: $1,000,000/year
Total cost paid to strategic alliance partners per customer: $1.00
Total monthly spending on search engine optimization: $20,000/year
Total new customers generated in the year: 1,020,000
As in our previous example, the amount is worth only the money extracted from customers. This company has used a customer retention calculation to determine that its customer lifetime value (CLV) is $2,000. That means this particular company is able to turn a $2.00 investment into $2,000 of revenue! This is both attractive to investors and a signal to the marketing team that an effective system is in place.
What About CAC Per Marketing Channel?
Knowing the CAC for each of your marketing channels is what most marketers want to know. If you know which channels have the lowest CAC, you know where to double down on your marketing spend. The more you can allocate your marketing budget into lower CAC channels, the more customers you can obtain for a fixed budget amount.
The simple approach is to break out your spreadsheet and gather all your marketing receipts for the year, quarter or month (however you want to do it) – and add up those amounts by channel. For example, how much did you spend on Google Adwords and Facebook advertising? In this case you might put this in a column called “PPC” or “Pay-Per-Click”. How much did you spend on SEO and blogging? This might go into a column called “Inbound Marketing Costs”.
Now that you know how much you spent on each channel, you can apply a simplistic formula and assume each channel “worked” to get the same amount of customers as the next channel. This would be an averaging method. The only issue is that it can be difficult to know what channel is responsible for which customers.
You can easily see where this approach becomes futile. Say you only ran one Pay-Per-Click advertisement on one day – just as a test. You spent $10 total and that’s all. When you look at your spreadsheet, it will appear Pay-Per-Click would be the best marketing channel because of it’s extremely low CAC. It would be unwise to double down on Pay-Per-Click, because you know you really didn’t utilize it all for that period of time.
Where the “simple approach” to calculating your CAC per channel breaks down.
For ecommerce companies that sell physical products, it’s easy to know what Pay-Per-Click advertisements lead to direct sales because of the conversion tracking the advertising platform provides. In this case you can determine that value and note this in your spreadsheet. This will give you a better idea of how your Pay-Per-Click campaigns are doing relative to the rest of your marketing spend.
Also, with tools like KISSmetrics you can trace paying customers back to their “last touch” attribution source. This means you can see the last channel the customer visited before doing their first sales with your online business. For example, if a customer came from an organic search result, you would know that SEO would be responsible for that customer acquisition.
Now this is where marketing gets philosophical :).
One school of thought is that each marketing channel supports the next channel – it’s a combined effort. Your blog posts reinforce your Pay-Per-Click ads, and all channels work together to bring in customers. This is a common notion in outdoor advertising. Billboards reinforce T.V. campaigns, which reinforce radio spots and so on. Ultimately it comes down to your own company’s philosophy on how to attribute customer acquisition. If you feel that last touch is “good enough” you can use that model for your CAC calculations.
However, you may have wildly popular viral videos (think Dollar Shave Club) or a blog that drives a lot of word-of-mouth referrals. These obviously support your overall marketing efforts and tend to be more difficult to track and attribute to customer acquisition.
How You Can Improve CAC
Let’s face it, we all wish that our company was like Example 2. The reality is that our advertising campaigns can always be more effective, customer loyalty can always be improved, and more value can always be extracted from consumers. There are several methods your business can use to improve its CAC in its industry:
Improve on-site conversion metrics: One may set up goals on Google Analytics and perform A/B split testing with new checkout systems in order to reduce shopping cart abandonment rate and improve the landing page, site speed, mobile optimization, and other factors to enhance overall site performance.
Enhance user value: By the highly conceptual notion of “user value,” we mean the ability to generate something pleasing to the users. This may be additional feature enhancements/qualities that consumers have expressed interest in. It may be implementing something to improve the existing product for greater positioning, or developing new ways to make money from existing customers. For instance, you may realize that customer satisfaction ratings have a positive correlation with retention rate.
Implement customer relationship management (CRM): Nearly all successful companies that have repeat buyers implement some form of CRM. This may be a complex sales team using a cloud-based sales tracking system, automated email lists, blogs, loyalty programs, and/or other techniques that capture customer loyalty.
Customer Lifetime Value
In addition to knowing your customer acquisition costs, you’ll probably be interested in knowing your customer lifetime value as well. This infographic created by KISSmetrics will help you. Click on the graphic below to see an enlarged version.
About the Author: Chase Hughes has six years of experience working in the consulting sector and three years in the private equity sector for large multi-nationals and emerging startups. He is the founding partner of a service that writes business plans for debt and equity capital for startups.
The other day as you may have seen Michael Krigsman from CXO Talk and I did an in-depth sessions about learnings about the next great generation of SaaS companies, and how they are scaling. The video is embedded below and got 5k+ views just over the weekend so it seems to have hit some nerve.
And for those of you that don’t video, the transcript is also below, and on Michael’s site here.
CXOTALK.COM – Transcript
Build an Enterprise Software Startup
Jason Lemkin, Managing Director, Storm Ventures
Michael: (00:03) Hello
Jason: (00:05) Hello
Michael:(00:08) Yes hello. The world of enterprise software and enterprise start-ups is a pretty rarified one. Everybody wants to be involved, and yet selling to the enterprise is really quite challenging. Today on episode 107 of CXO-Talk I am thrilled to welcome Jason Lemkin who is a company founder. Runs one of the most popular entrepreneur blog sites, Start for SaaS Founders and has done a lot of other things. I’m here with my glorious co-host Vala Afshar, except Vala’s actually not here. Vala wherever you are out there in the ether I hope you are doing well and Jason how are you?
Jason: (01:06) I am on top of the world thank you very much.
Michael:(01:11) And I assume that everywhere you go you get royal horns.
Jason: (01:17) I hope so.
Michael:(01:18) I think you should expect nothing less. So Jason, you have a pretty broad background tell us about your professional background.
Jason: (01:29) So I have been founding, running on the management team and now for the last 17 month investing in start-ups my entire career. But I’ve done all different pieces of it right, from being an advisor to a consignary to on the management team of start-ups to founding two of my own companies that was sold to the enterprise. The last was EchoSign which was required by Adobe on July 15th 2011, and now I just invest and work in SaaS company.
(02:03) I’m done trying anything new. I just was to harvest and help other SaaS entrepreneurs do even better than me. And kind of in a nutshell after EchoSign was acquired in 2011 I came to the conclusion that I no longer had anything to hide. I didn’t have to pretend I knew anything. I didn’t have to cover over my mistakes and all the things I screwed up, like hiring the wrong the DP in sales or screwing up a sales com plan or not even knowing what a DP in marketing was supposed to do or what (?02:36) Gen was and I decided I would just share everything, right. I had nothing else left to hide.
(02:41) In fact a story a few years we got 1300 answers on Quora, 250 blogposts and we got about a million views a month and we sort of accidentally created this pretty fun community called saastr, which I think a lot especially first time founders to learn and repeat folks for reasons are pretty eclectic today.
Michael:(03:04) So you started saastr with – well first off, what exactly does saastr mean?
Jason: (03:11) So I don’t know, but I reserved the URL way back in 2010 when everyone thought the enterprise was really boring.
(03:19) You may remember in 2011 when SuccessFactors was bought, (the title and tech zzzz 03:24). Like was like the most boring thing in the world that there was $3billion acquisition. So back then SaaS was not sexy and hot. It was not 60% of the latest (licom later class 0:35).
(03:36) So I’m full of bad jokes so you know the last thing I thought a hipster would do in 2010 was be into SaaS. So SaaS was what a SaaS Hipster would be. I reserved it for fun, I thought I might use it as something to do at EchoSign and never used it. But then after the acquisition I decided I would just share out my learnings and do it under this URL.
(03:55) So it means nothing other than people having fun, learning and growing SaaS things together.
Michael:(04:03) So you’re having fun but you’re getting a million views a month. And you’re the top person answerer on Quora as well.
Jason: (04:11) I don’t know if at the top, but we’re definitely in the top few every month. Especially given how niche the content is, I think is pretty cool.
Michael:(04:19) So what are the kinds of issue that you’re discussing on Saastr.
Jason: (04:25) Yeah, so let’s step back for a minute. My most profound insight, having done with a couple of start-ups and sold millions and millions of dollars to big companies, enterprises and small companies as well.
(04:36) What I sort of knew but I didn’t understand more empirically, is that once you get the initial traction, that first million, million and a half of revenue. Once you do, basically all these companies scale the same way for a given ACV, right.
(04:52) So companies with the 5K ACV pretty much all do the same thing once they get to (? 04:57) revenue companies which is 20K ACV. ACV I mean Annual (? 05:01), how much for your average customer pays you for a year. So they’re sort of premium like DropBox and you know maybe the customer has 600 bucks a year
(05:09) There’s high velocity inside sales at $5,000 a year. There’s sort of lower velocity inside sales at 20K. You get into field sales at a 100K or above. And where ever you are, whatever your average ACD is pretty much sell market the same way as the next guy. Your product may be different and we all tend to get to that first 1 million in revenue in very different ways based on the backgrounds of the founders which we can talk about, right. Like if you know how to sell, you’ll get there buy selling, right.
(05:38) If you know how to sell yourself, maybe you’ll get there through PR and inbound leads. There’s different ways to that first million. But because we all scale the same way after that, if we just share the operational learnings of how we do that, it becomes wildly applicable to SaaS startups who do 10,000 different things and 5,000 different verticals.
Michael:(06:02) So we have a question from Twitter and I hope I pronounce his name correctly Bartolome Rodriguez and he asks, do you usually like to see the growth of your business or investment through any specific tool.
Jason: (06:20) Through tools, boy I don’t know. I mean it’s. let me step back for a minute. What I do think is important is these days whether your using better metrics which a lot of start-ups use or other similar tools, I think transparency is the normal in 2015, right.
(06:38) So I think best practices is what every start-up should be doing is sharing with their investors, advisors or others. The metrics, each month, every month, regularly and interestingly, the longer the lag time it is, I find in has a strong inverse correlation to the quality that starts, right.
(06:59) The best start-ups that I have invested or work in is I advise the best ones, get there monthly metrics out in whatever email whether fair metrics or Excel or whatever it is they get it out within a week at the end of the month, and the longer it takes, usually the lower relative quality at the start-up.
Michael:(07:17) We have another question – so as people ask questions let’s just do that. How’s that for you.
Jason: (07:24) Sure yeah. We’ll dig in on of a few of the good questions you and I had chatted a little before, but let’s get some questions from the audience for sure.
Michael:(07:30) Alright, so Vasu and again I apologize. I hope I’m pronouncing your name correctly, Prakapati is, are SaaS sales based on a hard ROI standard and expected. Do these expectations vary by deal size?
Jason: (07:59) You know it’s interesting. I was having a conversation yesterday. Yesterday I was at a company called BetterWorks and I’m on the board and had a Goal Summit and they had about 300 C-level executives to talk about enterprise goals and I met with the C-level, maybe a CIO of a pretty large financial services company and you know what he said. He said the first year we don’t even bother to calculate our ROI and I don’t think he meant – what I’m talking about is high end enterprise. We’re talking about financial services, right, and Fortune 50 companies’ right.
(08:33) And obviously he didn’t mean that they buy products and they don’t care about ROI, right. And what he meant and what we we’re talking about true enterprise. And we confuse the term ‘enterprise’ with business, right.
(08:43) When you’re selling to the Fortune 500, the Fortune 100 you know what you really are buying is business process change, right. And bringing in a tool to change the way I do business. So I’m bringing in workday to change the way that we can track and manage our people or interact with this. And so the idea of ROI calculator is mission critical to that, I think it’s a bit apocryphal right and a little simplistic.
(09:12) But I do think ROI calculators, (net hold?) trend are very important air cover, especially the person you’re selling to and you’re deal champion has to sell it out to the organization. Right, because if you’re selling straight the the CIO, they’re going to figure out their own impact on the enterprise, right. But when you’re selling to the Director of IT, who has to go to the CIO to convince her to buy this product right, which may not be budgeted. The the ROI calculator, as silly as it is sometimes becomes mission critical, right. But you’ve got to do it but understand that it may really be really be air cover.
Michael:(09:49) So you mentioned you defined enterprise software as essentially being business process change. Maybe you could elaborate on that, because I think many founders, who especially come out of the consumer world don’t have a full appreciation of what that actually means. And it is fundamental to sell successfully to the enterprise.
Jason: (10:13) So let’s step back for a minute. I think when the main stream tech media went from that 20/11 example that we talked at that point thinking that you know, quote ‘enterprise software was so boring’, it was all z’s and (head of tech crunch) is interesting today right. The challenge for founders is that the term enterprise kind of got redefined, right, and so in the old days enterprise meant selling to big companies, pieces of software. And let’s talk about this, that were you know change the way your business did, took a lot of implementation and a lot of overhead and a lot of change right. And enterprise software was never something like (free end?) or low end like Dropbox, that was never to be considered enterprise software five or seven years ago.
(10:56) Today, these terms have got all mixed up and anything that were business pays money is now called enterprise and I think it creates a lot of confusion. I don’t know how to solve it, that train has already left the station, right.
(11:10) So what I’ve tried to help people understand is break B2B products or software to service products into tools and solutions, okay. And tools are generally inexpensive, easy to adopt, right. Slack is amazing, but slack is a tool okay for the most part, but we’ll talk about it if you want, why for many folks it can become a solution. But DropBox is a tool, Slack can be a tool, Evernote can be a tool, it’s easy to adopt. Often it comes out of your own credit card and does not fundamentally change the way the business works.
(11:46) And CIO’s don’t buy those things and those are not how six figure and seven figure yet deals get done, right. Solutions are something that changes one of the core business processes of a company.
(11:59) So, let’s step back a minute, whether it’s a tiny company or large company, if you are one of the core systems that that company runs on, you can charge a lot of money. You’re replacing people, right. The average person – my brief as 10 years as a corporate VP at Adobe, the average fully burden cost of a person was $250,000 a year, right. You save me the cost of a couple of people and make my organisation run 10 times better, I can write you a half $1 million cheque a year, it’s no big deal.
(12:28) But even as a corporate VP, me getting DropBox at five dollars a month expense was torture, right. So tool versus solution is people get confused on the difference, and then s a founder and another interesting question is can you go from one to the other, right and Box is a great case study, right, because we all know Box, very visceral. Box started off as a low-end premium tool and migrated to become a solution for enterprises to manage their content, right. It became an enterprise content management solution.
(13:01) When in the beginning it was a cheap and free tool way to stick files on the web. And so I just think understanding the difference is important and understanding the pricing and understanding who you’re selling to. It’s understanding for value, and ultimately even if you’re killing it and doing well, you need to understand that once you get to a $1 million, at least in theory how you’re going to get to $100 million right and you are probably going to become more of a solution like Box, rather than stay like a tool like Dropbox.
Michael:(13:27) So this notion of solution then seems to imply that you are doing something that is core to some process or some organizational function that’s not just an individual as you said using your tool, but that’s actually changing how the corporation works.
Jason: (13:54) Yes, and so that has good and bad. The good is if you’re changing the way the corporation works, they can pay more money. I don’t just mean literally that in the Fortune 100, I’ve met many start-ups selling the small businesses. But even relatively small businesses can pay 20 or $30,000 a year for one app. I call the app that runs on the monitor on the shop floor. The one app that every single person in the business runs their business on – except the tiniest businesses, I’m not talking about independent contractors.
(14:27) But even the smallest businesses can afford to spend $20,000 a year on one app. So five figures is a very interesting sign in S&B sales, you have a real solution that you’re really solving a problem.
(14:39) So good news for solution, you can make 5 to 20 times more money. The bad news is sales cycles are longer, because you have to think about it more and quoting bad news, although this isn’t really bad news is that your average enterprise is only going to buy so many solutions. For a given business process they’re only going to buy one. So I may collude together seven or eight little sales widgets for my sales team, but I’m only going to buy one for my sales team. So there are going to be fewer apps that are solutions versus tools. But if you hit it you can get 20 to 50 times the revenue.
Michael:(15:13) The implications of this however, and correct me if you see it differently. The implication seems to be that as you said, the planning and the building of this solution is far more complicated, because if you’re building a solution, you’re not just building a feature. So it means you have to have very significant domain expertise. And then the sales process is also very complicated, because you’re not just selling to one person in a single department necessarily, but you’re now selling to a team and you have to satisfy all of their constraints.
Jason: (15:54) You do and that’s why if you look at a lot of SaaS apps that are started by first-time founders, they usually don’t have domain expertise. They don’t know how to sell the power. They don’t know how to sell a solution. They don’t even know what a business process change is. So many, at least by number most of the SaaS apps that we see today start from the bottom. They start either with small businesses, or individual users, silos, or groups or individual application.
(16:21) And you know when Aaron Levie started Box he was 20 as a sophomore who dropped out of USC, and he was never a CIO to the enterprise now CIO’s love him. So that migration path is the way the majority of SaaS vendor’s do it because they can’t do it any other way.
(16:36) But interestingly a lot of the repeat founders skipped that step. If you look at Josh James at Domo, he’s not messing around this time. He sold Omniture, for 1.5 million last time and he is going for 15 billion this time and he’s skipping straight to the enterprise. But most of us founders don’t have the skillset to do that. So you have to start as a tool with premium, with SMB and then learn like Aaron Levie with Box in how to go up market over time.
Michael:(17:00) And how common is the ability for a founder to be able to make that leap.
Jason: (17:08) Well all of it is uncommon, which we can chat about. Success is celebrated far more often than it occurs. But you know with the companies that I work with and the CIOs that I know, it’s relatively common that you can do that. I invested last year in a company called TOPdesk, just last July it was doing about 1 million ARR. By this July they will do over 10 million in ARR, so one to 10 in 12 month and that’s not quite slack but it’s pretty breathtaking.
(17:43) And in that time TOPdesk has quickly grown in many many six figured deals, and six figured deals are routine, so it happened a lot, and I can give you many other examples.
(17:54) You know, we had a company called GuideSpark that represented the SaaS and they went two to 20 million in two years in ARR. They ended up by driving their ARR average deal size from about 20K to 300K. So it’s pretty common, but success is always uncommon no matter what it looks like in the media.
(18:13) But my learning from all of this is that if you haven’t done it before and you’re a first time SaaS founder, the most important thing I’d say to you then is listen to that when you get one or two big customers so don’t dismiss them. So if I go back in our top 20 of 100 mistakes in my first year as a SaaS founder, you know what one of them was? When we closed our first couple of enterprise customers, some of the folks on the (? 18:38) thought they were anomalies. They didn’t want to support them. Those aren’t anomalies, those are the future.
(18:44) So in your first year as a paid product and you can get a Fortune 100 customer, that is the future. So if you haven’t sold to the enterprise before – to the true enterprise, big companies with business process exchange, and you get a five or six figured deal your first year, don’t view it as a pain in the neck. Don’t view it as a distraction. Don’t view their future request as annoying. View it as a gift from heaven as a chance to learn. That’s the way you can go that value chain and into a solution by taking advantage of anything you can get.
(19:14) If you’re out there for a few years as a SaaS founder, and it’s been 24 months and you haven’t had a single like big company customer or enterprise, maybe you’ll never get one. Maybe that’s not your product that you’re leading, or you never will be a solution.
Michael:(19:26) So the path to (Ca-ching!!) That’s supposed to be a cash register but it sure doesn’t sound like one. That sounded like pennies dropping. So the path to revenue and to really some meaningful revenue. Then based on what you were saying it depends on being adaptable to take what is coming and evolve yourself on the basis of it. And yet at the same time, how does a founder or team discern whether or not this flexibility is just chasing rainbows and in fact is distractedness. How do you make the determination?
Jason: (20:19) Well let’s step back for a minute. So in this age of 120 folks in the last (20:25 ? Class) and every single person we know becoming a founder. Let’s step back for a minute. One of the big things that’s different in 2015, even from the last wave of 08 or 09, let alone that first wave me and Box in ‘05 and ’06, is there are 10 bijillion web apps today and nobody needs another web application – no business, right.
(20:48) Look at all the businesses in your block on your Street. Are going out of business because they don’t have a web app? No. Every business is doing just fine. So the last thing that anybody needs is to invest a whole bunch of time to find another web app. Maybe if your insecurity and you work with Target or Sony it’s different, right. That you’re desperately looking for security solutions that work better, but for business process no business is going out of business because they don’t have your new web app that no one’s heard of.
(21:14) So what does that mean? What it means to me is that if you have what I call 10 unaffiliated customers, if you can close 10 customers that are not your ex-bosses or friends from the enterprise irregulars, from the whatever – 10 folks from the ether, even if they only pay you 20 bucks a month you have something. Because no one has ever heard of you and if you can get 10 you can get 20, and you can get 100. And if you’re tenacious you can get 1000, right.
(21:43) So I say ignoring money and all the stresses of surrounding a company and everything, just see if you can get 10 unaffiliated customers, and then do whatever you can to just double down and keep going. Because it’s impossible to get 10 unaffiliated customers, and then just don’t quit.
(21:59) Then what commencing with that is the other mistake that a lot of founders make is because it’s so hard to get 10, and because it takes so much time and so many iterations. If the founding team is not sufficiently committed, you have almost 100% chance of failing. The initial founding team has to commit for 24 month to have any meaningful revenue. We just talked about TOPdesk, it’s going to go from one to 10 or more in 12 month, but it took them 2½ years to get there to get to that first one. We talked about GuideSpark, 2 to 20 in two years, but it took the entire team four years to get to that first 2 million.
(22:38) Slack, you know Slack we had an amazing explosion, three billion-dollar valuation yesterday after only being in business as Slack for a year, but it’s predecessor company and all this around 4 to 5 years. This overnight success in SaaS often is preceded by 2 to 3 years of desperately trying to get that first million in revenue.
(23:00) So, get to 10 unaffiliated customers, don’t quit, and make sure your founding team is willing to commit to 24 month to the first million in revenue, then you’ve got a shot.
Michael:(23:10) What a tough potential road to hope because you’re absolutely committing – based on what you were saying, 24 month into the unknown and absolute uncertainty of any type of meaningful resolve.
Jason: (23:29) Yes, if you can’t do that, go and build Instagram. I was invited to speak at the Stanford Business School a couple of months ago, and this is when I had this 24 insight. I mean I knew it but I didn’t know how to summarize in a sentence. And I got up and I said, well most of the folks in the room wanted to do B2C. But a lot of them wanted to do B2B or SaaS or enterprise, and I said, the one thing I can tell you, is going to take you nine months to figure out if your product worked, and then maybe another couple of months to get those first 10 unaffiliated customers, and then you wouldn’t be doing anywhere near 1 million in revenue. It may take you another 6 to 9 months, that’s 20 months total just to get to that million, and then you may need a blog post, so that’s 24 months. And if you don’t commit for 24 month like you have no chance for success.
(24:12) And these aren’t 20-year-old out of MIT going into YC and they are a older now, but they are still relatively young kids in school and all of them were like, well what am I supposed to do. I can’t afford to live for 24 months or I lose my company. Not my problem.
(24:31) I mean, then you shouldn’t be an entrepreneur. Go and work at Salesforce or Facebook, or Google they’re still amazing jobs, right. Go and work at Zenefits or guide spark or TOPdesk or better works, don’t start your own. It’s not meant to be easy. Right, it’s supposed to be hard.
(24:46) So yeah, go solve that problem. Raise extra money, work on (Ramen?), Do whatever it takes. It’s not my problem. What I can tell you is that all the great companies find a way to commit to 24 months to the first meaningful revenue in B2B.
Michael:(24:59) We have an interesting question from Alex MacLaverty, who asks what are the signals he used to identify a dead in the water or zombie SaaS start-up.
Jason: (25:22) So let’s step back for a minute. Let’s define what a dead in the water zombie start-up is, because all occurring revenue companies should always grow. I’ve talk a lot about this concept of you know we’ve talked about second order revenue, we’ve talked about upgrades, up sales all of this. You know, there is always churn in real occurring revenue, but you should always have more growth in your churn.
(25:55) So a true zombie is a SaaS company that’s not growing, that’s just awful. That’s a crime. But maybe the bar is higher than that. I’m going to say once you’re at – even just a million in revenue, you know if you’re not doubling every year you’re a borderline zombie. You’re growing too slowly to ever get there. Because the key to making the whole SaaS thing work is getting from one to 10 as quickly as you can. Your average SaaS business, it seems the whole sales team like we talked about. You need customer success, unique product management, you need marketing, you need demand Gen. You need basically 50 people to make a SaaS company work.
(26:40) And think about what that costs, especially in California, (the barrier?), it cost you $10 million a year so you have got to get to that 10,000,000 to make viable business, and if you’re at 1 million and you’re not even growing 100% every year, I’m not sure that in 2015 you’ll ever get there fast enough.
(26:57) So given that, how do you know if it zombie if you don’t – if you have the numbers you’ll know from the numbers. If not and I think if you look at their LinkedIn, and you see that they’re not adding headcount with that growth rate than they’re probably a zombie. You can learn a lot, and that interestingly sucks us in as a core data point, but if you are not seeing at least 60% of employee growth year after year, you’re probably a zombie.
Michael:(27:23) So what’s the set of criteria then that you use to evaluate an investment, and I’m asking really from the point of view of the founder to help expose these lessons to SaaS start-up founders.
Jason: (27:42) Yeah I can tell you exactly what I’m looking for and it’s kind of sad because I didn’t achieve it so listen, I had a great exit. You know return 5X to my investors, it was good and always great and especially by 2011 standards. But I’m looking for companies that did better than me. And what I’m actually looking for, let me quantify and then I can give you some other characteristics.
(28:06) In today’s world of Slack and Zenefits and TOPdesk and other hyper growth companies that we talked about, looking for companies that can, and I’m often going to invest before the stakes so we can chat about that. I’m looking for customers, at least in theory who have a shot from going from one to 10 million ARR in 5 quarters or less.
(28:30) And to summarize that, is not quite here but that really means once you hit 1 million revenue, you have got to be growing at least 15% month over month. Even if that doesn’t quite compound to that number but its close enough, but most of the companies haven’t hit $1 million in revenue yet; I’m an early-stage investor. But if I have, and they hit 1 million and they are growing five or 6% a month, which in classical times would be okay. As a VC now I can’t invest, there’s no way I would make enough money.
(29:01) So the bar has gone up and you know we’re not going back in time like box when these companies got started back in the day, we didn’t see that type of growth. Salesforce did but no one else did. You know, Slack is 3 billion, but it ain’t 3 billion because it’s going 6% month after month. It’s 3 billion because the investors are expecting Slack to go from one to 100 million in two years.
(29:24) Zenefits, that I spoke that’s in the SaaS triangle, they are apparently raising around 3 million now to and Zenefits is projecting 1 to 100 million run rate in two years. I’m not asking all start-ups to do that, right but I think the bar is one to 10 million ARR in 5 quarters, or at least if you are investing earlier like I often do. At least you hope they can, right. You try and read the tea leaves, is the team strong enough. Is the early customer growth good enough. I look for deal sizes going up, because even if your customers are only $5000 here today and if some of them are 20 or 50K, I know you have a chance to drive deal sizes is that which makes the physics of recurring revenue easier.
(30:02) But all boils down to hoping and you know as a VC most of them will work out, but hoping you do one to 10 in 5 quarters or less.
Michael:(30:09) So Jason, what happens in the example of a company that can achieve the kind of revenue that you’re talking about, and yet maybe not at the growth rate that you’re describing. Any other world then than the VC investing world, such a company would be considered wildly successful.
Jason: (30:55) It would.
Michael:(30:36) And so the situation that you’re describing
Jason: (30:39) That’s why I said it’s kind of sad I didn’t even get to 1 to 10 in five quarters, so I don’t judge anybody, but keep going.
Michael:(30:45) So basically then what you’re saying is that there is only room in the market for either a small VC non-refundable business or lifestyle business which people call, and I don’t mean that in any negative sense whatsoever at the low-end. Or these hyper growth companies at the high end, and anything in between basically seems impossible based on what you were describing.
Jason: (31:13) I think so. It’s confusing. You see all this press on tech crunch and Dan preMax and all these funds are getting raised an bigger funds whenever right and you see all monster rounds every day, right. 80 million to this, 50 million to this and whatever it was to Slack, 160 million and that’s happening but no one is dumb. People think people are dumb or investors are dumb. No one is dumb, the bar is going up. But the thing is when you hit it, and the valuation is much higher to reflect the higher growth rates. So our jaw drops, it’s slack and its 3 million, but if Slack can do one to 100 million in two years, I would say based on current multiples and the current crazy world we live in 2015, I’d say is justified.
(32:00) And Slack goes from one to 20 million in two years, then that evaluation is insane. So yeah, it’s tough. If companies had a matrix of a Box or an EchoSign then maybe Gamma, or Evernote – pick your brand name I don’t think they get funded that. They couldn’t get funded and it just sucks.
(32:19) But on the other hand it makes sense because what’s different today – two things are happening that are different and the first one you’re very familiar with Michael from everything on CXO-Talk. So much more of the CIO’s budget is being migrated to SaaS.
(32:37) So if you hit it and selling to the CIO or the true enterprise, you should go faster because there’s more budget than a few years ago. The overall’s CIO budget hasn’t changed much other than from inflation. But the percent of a $1 trillion budget going to SaaS, it doesn’t take too many basis points for that to create 50 ideas.
(32:56) So that trend is accelerating and the other trend that’s accelerating outside the CIO’s office in SaaS is that more and more segments of the market and businesses are getting Saasified at a much higher rate, right. So because all of that is accelerating, the best companies should grow faster and if you’re not somethings not quite right. You do not quite have the product market fit you think, right or somethings off because all the markets are bigger than they were just a few years ago.
Michael:Okay, you’ve been talking revenue and growth have been at the center of the points that you have just been making.
Jason: (33:42) Growth solves all Ills in referring revenue businesses. Growth SaaS business say have 80% plus margins. Growth can solve all of your problems.
Michael:(33:55)Okay, so let’s talk then about how do you achieve growth, and let’s talk specifically about selling to the enterprise because I think again it’s one of those areas that’s unless you’ve been involved with large organizations and this dynamic, it’s not intuitive at all in how you sell to the enterprise.
Jason: (34:17) So let’s step back a minute and this doesn’t help founders who are desperately trying to hit numbers this month, right. But when you’re taking a longer term view and trying to build a unicorn or (deco corn?) or $100 million business, understand that at the end of the day almost every great business period, and almost every great software company has been built on word-of-mouth, okay.
(34:44) The most extreme version of word-of-mouth is virility, right. So you see a what’s app and this is B2C, you see a what’s app or a snapshot or Instagram explode or Facebook. Because that word-of-mouth becomes a piece of technology, right.
(34:58) But everyone grows through word-of-mouth once they have a brand, right. So once you have – and even what I call a mini brand. A mini brand is – it’s not Coca-Cola, it’s not Salesforce. It’s not Workday, right. But once you have a brand just for your core customer that they would have heard about that I call a mini brand and that can happen as early as one or 2 million ARR, then those customers start to get you more customers, right. So to give a personal example, let’s step back.
(35:29) It took us 18 months to close Google, it was a lot of work, right. From Google, I think it took is 90 days to close Facebook, right. And after Facebook I think it took is 30 days to close Twitter, right so you see that happening, right. We did it in insurance to, and it took was like a year to close Aetna, and I think it took is 90 days to close (Signa?) From that right. Then they just kept getting faster and faster and faster, and it wasn’t because we got better at knowing how to sell these verticals, although we did, right. It’s a mini brand, right.
(35:58) And so if you abstract everything away, what’s the game plan here, right. First, I figured that I have to sell something to those 10 and 100 unaffiliated customers, which has got to be hustle and Chutzpah because no one’s heard if you, right. It’s some kind of hustle and Chutzpah whether it’s outbound sales, the press, or PR, or add words, or product hunt, somehow getting out there right and connecting with hyper early adopters.
(36:21) And then what people tend to do in different ways the underinvestment the net brand in what I call the second order of revenue. And they underinvestment in the customers that they have, and the overinvest in trying to get new customers, which is natural right. And as soon as you have even 100 customers, I would argue especially as a CEO, you should spend at least half of your time with your existing customers not with prospects. Okay, and then you can figure out everything else once you have a brand that people love that people are paying for, right.
(36:48) That’s the real secret to this whole thing, is getting the mini brand, and then over investing not under investing in the mini brand, and that’s why I say overinvest in customers success, right make them happy here. And as the CEO, get off your back and get out of chair and go and visit your practicing customers wherever they are. They will get you more customers, right. Have a customer conference, like we did at BetterWorks yesterday, right. Even if you’re only a year and a half old, have 200 customers come there.
(37:15) Do this stuff because you can figure out the rest of enterprise sales, you can hire talent, you can hire folks that have sold you to the enterprise for a week and chat about that, right. But this key is the mini brand and second-order revenue, and the thing is the bigger your deal size is and enterprise is it just takes longer. Right, it takes longer, the larger the deal size is the more money you get, but the longer the sales cycle.
Michael:(37:58) So Jason what you’ve just said at the beginning it’s hustle and Chutzpah that’s how you sell. However, once you’ve built that mini brand then your sales approach is going to be very different, which implies that the activities that a SasS start-up team must undertake change quite dramatically as the life cycle of the company evolves.
Jason: (38:09) Yes, and hopefully from a sales strategy that you’re able to sequence a couple of things at the same time. Hopefully, usually whether you’re any good at it or not every great founder CEO has to have a hustle and Chutzpah in trying to get those customers right. And then hopefully by then, you’ve hired – even if you’ve never done this before as most of us haven’t, you’ve hired 2 to 3 sales reps and you knew were successful. Right, and maybe they’re bit quirky and they are going to be very different from sales reps 20, 200 and 300. But 2 to 3 folks that you trust that you believe in and can work with you, and they can replicate a little bit of the secret sauce that you’ve figured out at hustle and Chutzpah.
(38:47) Right, and usually those 2 to 3 plus you will be structurally sufficient to get you to that million – million and a half in revenue, which also will equel your mini brand, right. So if you are able to do all that, usually the perfect timing to bring in a VP, or senior director of sales or whatever, to help take that mini engine that’s just starting to work, right. It’s just starting to come together and then help you just run that things faster.
(39:14) Right, so that’s the playbook right and the mistake that a lot of us make is that we bring in the VP of sales to early, right before the wheels are starting to turn and that’s never ever never ever works, right.
(39:26) You want to bring the VP of sales in, when the wheels on this train or heavy steam engine is just starting to turn on the rails, right. And all your VP of sales is going to do is this and that’s all they do right. The VP of sales are not magicians and they don’t create customers out of thin air. A VP of sales cannot sell an unsellable product. If your product is unsaleable, the VP of sales will not solve that problem.
(39:50) A VP of sales is a manager, a process manager and a recruiter. Right, and the good thing is if you can get 2 to 3 reps under you working to get to a million, you will have the mini brand, right. You will start to get pearls, you’ll start to get second order revenue. You’ll start to get people talking about you and you’re ready to go for it.
Michael:(40:09) Okay, we have another question, an interesting one from Sachta Gani, who asked what do you value more highly, product market fit or execution capabilities.
Jason: (40:25) It’s interesting, you know we were just having this discussion last night. It depends what whether your pre-or post-initial retraction. Whether you are a before and after a first million, or maybe even earlier. Let’s call 20K MRR, paying $250,000 here as annual revenue.
(40:44) Because no one in the world needs another business product out there, right. If you’re before 20K MRR, a quarter of 1 million year revenue, all I care about is (market fit? 40:54) I care about nothing else, because no one needs the product.
(40:59) As soon as you have a statistically significant number of customers, which is probably 50. Then the execution engine becomes incredibly (supportive?) right. So I would say the the dividing line is probably 50 customers, before 50 I’m not sure if your product market fits, so all I care about is product market fit. After 50 customers I don’t need to see a demo of your product. I don’t need to see it to invest. Then I want to know how you’re going to execute and get from 50 customers to 5000.
Michael:(41:26) Okay, so to put it another way in the early stages up to say 50 customers, all you are trying to really figure out is can you build shit people want to buy?
Jason: (41:38) Yes.
Michael:(41:40) And then at some point that changes and now you’re building the machine, and can you build a machine to do this over and over and over again.
Jason: (41:48) Yes, and I can help you build that machine. I can help you recruit to people and figure out the right people, right. Personally, I can’t help you with the product market fit. If it ain’t there, it ain’t there right. There’s 100 new web apps built every month and maybe one of them is going to have product market fit, right. Not one, but 1%, I can’t solve that problem, I’m not that smart.
Michael:(42:08) So basically what you’re saying as far as you’re concerned stars are born, not made.
Jason: (42:15) Yeah, or even personally I’ve done pre-revenue and post revenue investment, but if it’s pre-revenue I don’t need to see a deck, I don’t need to see slides, I don’t need to see a demo. It’s just the team, right,. Before those 50 customers I’m just betting in a great amazing team, pointing in a pretty good direction and decent space, right.
(42:37) Post initial attraction, then – Post 50 customers are just trying to hope that that 50 can come to 5000, and hopefully because I’ve gone from 50 to 5000, maybe I have a slightly more better insight than someone else. Or I will see less risk than someone else and be able to pull the trigger on one of those deals that the other people see as too risky.
Michael:(43:00) You know, we only have a couple of minutes left, you’ve been doing this for so long and you’ve had so much experience, drop on our is some advice for founders just deep from your heart.
Jason: (43:25) Just two things, I think the most important thing is you know if you don’t have an A+ team fix it, right. Because the difference between a good and great company is orders of magnitude from financial and life experience returns, right. So let’s break it up into two phases, you know founding team and layer, right.
(43:53) If you’ve got a set of founders and they may be individually extremely talented that they are, but if you don’t have this great team that is going to go into battle together every single day for the next 24 months to get toinitial traction, take a pause. Don’t launch, find a new founder, find a new something. Don’t start something without a great founding team that that’s committed for 24 month, you’re just going to fail.
(44:15) So then you are into it for 24 month of initial traction, right. And then my other bit of advice is just you know if you don’t have the perfect set of founders, go bring those people in. It’s never too late to add an amazing person to the team to carry some of that load. And whatever you do, once you have someone, even if it’s just those 10 customers, 50, a million revenue or 2 million, make sure you’re not turning all the load yourself. It’s too much, right. And if you don’t have a co-founder at that point that you carry load with you, it’s okay.
(44:48) You can find one or two amazing people on your management team that are almost what I call (Expose facto? 44:53) founder, right they care so much about the product, the passion, and they are A+’s that they can do it, right. For me, my VP of sales, VP of product, even my head of customer support, and others. All of them cared so much about what we are doing it are hard and the VCO is the hardest job on the planet. Man, it 50 times harder than anything I’ve done, right.
(45:16) Whenever VCs complain about how hard their life is, I just like want to roll my eyes and blow my brains out. They don’t know what it’s like to be a CEO, it’s 50 times harder than being a VC and it’s 20 times harder than VP. So find an expo facto founder or colleague to help you carry the load, because you’ll never make it otherwise. So from the heart, those are the two things and there are very few of us that can do it on our own, right. That’s why they came up with the term called partners.
Michael:(45:42) All right, Jason you have really given our is a lot to think about this afternoon.
Jason: (45:50) Good, well thanks for the time Michael, it’s good we got questions from Twitter, we went a little off the script which is always more fun, so thanks for having me it was great.
Michael:(45:59) Well thank you. You have been watching episode number 107 with really the great Jason Lemkin, and Jason I give you a big hand.. Everybody gives you a hand. My co-host Vala Afshar has been out somewhere in the ether and I hope you come back next week for episode number 108 of CXO-Talk. And Jason, I hope you’ll come back and be our guest another time.
Jason: (46:33) That would be great, thank you.
Michael:(46:34)Alright, thanks everybody for watching. See you next time.
Have you ever wondered if your blog really needs a sidebar? And if you need a sidebar, should it be on the left or right side?
Sadly, the answer isn’t a simple yes or no. But with some testing, I’ve figured out the optimal layout for a sidebar on a blog.
So, should you be using a sidebar? Well, it all depends…
Does your blog need a sidebar?
People come to a blog to read content. Their main purpose is to devour your information and ask you questions through commenting.
If they really like your content, they may share it on the social web, but you don’t need a sidebar for that. You can add social sharing buttons throughout your post or use plugins like Flare.
So, what’s the purpose of a sidebar? Well, it’s an area you can use to promote products or services as well as to get users to do anything else you want.
I’ve found that including your bio on every page of your blog, within the sidebar, is a great way to connect with your readers. This helps build a loyal community, which is the main reason I have a sidebar.
Sure, you can add a bio at the bottom of each of your blog posts, but you have to keep in mind that most people don’t read your blog posts in their entirety. And adding it to the top of each blog post is distracting as people are mainly coming to your blog to read the content—they don’t want to continually have to read about you before they are able to get to the content.
In addition to that, if you are trying to get repeat visitors, a sidebar is almost a necessity. Why? you may ask. Because within it, you can put links to all your social profiles and add an email opt-in box.
If you don’t think it is effective, just consider the fact that Quick Sprout received 145,971 visitors from email over the last 30 days.
That’s not too shabby. Plus, you have to keep in mind that a lot of the emails have been collected within the sidebar. For that reason alone, I have a sidebar.
And the best part about having a sidebar isn’t even the email traffic. It’s the ranking lifts it provides in search engines.
Look at the Quick Sprout sidebar…what do you see?
I link to all the popular guides and posts on Quick Sprout. Why do you think that is? It helps pass search engine juice to all those pages, and it causes them to rank highly in Google. For example, if you search for “online marketing,” you’ll notice that this guide ranks on page one.
Should you always use a sidebar?
Although I recommend using a sidebar, you don’t need one on each of your pages. For example, the homepage of Quick Sprout doesn’t have a sidebar, nor does this page.
Consider not having a sidebar on the pages you are trying to improve conversions on or make money from. Why? Because it makes people focus their attention on the area you want—the area where you make money.
So, for my “money” pages, I tend to have no sidebars.
Also, for any page that has a defined goal, you should consider removing unnecessary distractions such as a sidebar. For example, with my guides, my whole goal is to get you to read each of them from cover to cover. That’s why you won’t find a sidebar on my guides.
The majority of your blog pages should contain a sidebar. For the pages that are focused on a specific goal, consider removing it as it will help boost your conversion rate.
Should you place your sidebar on the left or right side?
I’ve actually tested this one a lot. I prefer the look of a blog where a sidebar is on the right side, but it tends to convert better when it is on the left.
Here’s what I learned…
When you place your sidebar on the left-hand side, you will get more email opt-ins, and more people will read your bio and do whatever else you promote through your sidebar. But you will also get fewer people to read your content.
I’ve found that having a sidebar on the left side of Quick Sprout causes a 9% drop in people reading the blog posts. On the other hand, it increases the number of sidebar opt-ins by 13%.
Overall, I decided to place my sidebar on the right-hand side even though it generates 13% fewer opt-ins.
Why did I do it anyway? Because it increased the number of blog post reads by 9%. In the end, the purpose of a blog is to educate you through content… so why would I take that away?
In general, you should consider keeping your sidebar on the right-hand side even though it will cause fewer conversions. People are coming to your blog to read, so your primary goal should be to make your content as easy to read as possible.
If you don’t have a sidebar on your blog, you should consider adding one right away. And if you already have one, make sure it is on the right side and contains important elements such as email opt-ins and your bio.
If you are running a corporate blog, instead of your bio, you can always put a quick blurb about your company in the sidebar.
Lastly, you don’t want to have a sidebar on every page of your blog. Consider removing the sidebar from the pages you want to boost your conversion rate on.
What do you think about sidebars? Are you going to have one on your blog?
A massive rain storm blew through San Francisco in the middle of last year’s Lean Startup Conference. We woke up to a city-wide power outage, and Day Two of the conference had stopped before it started. No lights, no wifi, and no A/V.
What could have been a disaster evolved into a valuable, unplanned MVP: attendees embraced the three hours of darkness, while we organized unconference sessions and Q&A discussions, and gathered people in windowed rooms for impromptu meetings.
These community-led experiences were so much fun -- and became a source of such serendipitous, fruitful connections -- that we’ve decided to iterate on the idea for the 2015 conference and make it a core part of our program.
Why You Should Join Us in 2015
Since 2011, The Lean Startup has helped countless ventures transform ideas into thriving businesses. The movement has inspired a powerful community that includes leaders from enterprise organizations, government agencies, nonprofits, and early stage startups.
Like previous years, the 2015 conference will feature 100+ expert speakers on topics ranging from corporate entrepreneurship to analytics, product development, engineering, sales, marketing, and design. Our ‘power outage MVP’ has inspired us to offer five new reasons why you should attend the conference (again) this year:
We’re hosting more meetups, peer discussions, and expert Q&A sessions.
We’ll be delivering more in-depth case studies and advanced lessons in experimentation, measurement, team enablement, MVPs, and innovation accounting than ever before.
We’re creating hands-on sessions with leaders who are tackling the same challenges as you. Share your toughest problems, and we’ll help you solve them.
We’re creating opportunities for startup and corporate leaders to collaborate and connect with each other.
We’re hosting the conference one month earlier this year to avoid a big storm (lesson learned) and well before your holiday travels.
Whether you’re attending for the first time or the sixth, we’ll make sure you meet great people, tackle your biggest business challenges, learn, and have a blast. You’ll go home with actionable takeaways to implement—immediately—with your team.
The 2015 conference will be held from November 16th-19th at historic Fort Mason in San Francisco. Register today to take advantage of our Spring sale prices. Prices increase on June 30th.
Check out some of our favorite attendee stories from 2014:
“I went to the Lean Startup Conference because we were having challenges figuring out how to apply the principles in practice and were getting sidetracked with many different ideas and various ‘shiny objects’ that distracted us from engaging with customers. During the conference I took lots of notes on customer conversations through the sessions, asked tons of questions during the after-hours 1-on-1 sessions with experts, and received direct feedback from Eric Ries on the final day of the conference. Since then we've been able to have hour-long conversations with more than 20 of our customers, have designed scripts that allow any member of our team to have a quality conversation, and have designed three new products that came directly from customer feedback and are proving popular in initial testing.”
“The Lean Startup Conference has been instrumental to helping my team, one unit within a large organization, stay innovative. I’ve had my team attend the past three years, and we plan to attend again in 2015. There were two big lessons that we learned in 2014. The first was to remember the real reason that our customers come to us—and to add tools for our internal teams to build upon our core product faster. The second was to remember that we’ll never really innovate if we don’t keep trying new things and its my job to protect the new by creating a culture of experimentation.”
- Darin Foster, director of product at Disney
“Our firm specializes in product development. We are also on staff at the University of Chicago Booth School of Business as project coaches for the Product Development and Market Research Course. We work in the medical device and industrial sectors, and our clients have expressed dissatisfaction with the traditional phased and gated approach. My business partner, Kathy Morrissey, and I went on a search for a more flexible and lean approach to getting product to market quicker. Specific challenges for our firm is the cultural piece of implementing these types of practices in a large company. We attended in 2013, and we enjoyed it so much that we attended again in 2014. Our favorite sessions in 2014 included a session on leading by asking questions, in addition to a panel discussion on the challenge of implementing Lean Startup within large, complex organizations like GE. We’ll be back in 2015!”
15 Slides. 30 seconds each. Your Subject. Our Stage. Haven’t worried you yet? Great!
Lightning Talks are always one of the highlights of BoS and this year will be no different. We are pleased to say the BoS Lightning Talks are open for public application now.
If you want an opportunity to talk at BoS about a topic that interests you, send us an application. Lightning Talks follow a simple format – every speaker gets 15 slides and 30 seconds per slide to talk about a subject of their choice. The slides advance automatically. Warning, they are a challenge! But one worth taking: Lightning Talkers have a special place in the hearts of the BoS audience, not to mention a free pass to BoS, and many people have made the jump to more speaking gigs at BoS and other events.
But the fun does not stop there. Oh no! Lighting Talk Competition entrants receive a free pass to the Business of Software Conference where they will speak, the chance to share an idea they care about with a live audience of 200, and the respect of their peers. Don’t underestimate the last one.
If you would like to submit a Lightning Talk, here is what to do before Midnight GMT, May 8th for Europe, July 30th for USA:
A link to a video of you speaking – ideally about what you want to do a Lightning Talk about.
We will review all of the submissions, and pick what we feel will be the most appropriate ones, to talk live at BoS 2015.
Remember to submit by May 8th for Europe, July 30th for USA.
(Please note submissions from third parties including marketing departments, speaking agents etc will be ignored – we don’t have the time – please see below).We only want submissions from people that care enough to do their own stuff. This is a chance to stand up in front of a bunch of people and share an idea you love.
To get your creative juices flowing, here are some previous winners:
Even if you don’t submit an idea, why not think about what you would talk about in 7.5 minutes? Strange as this might sound, lots of our attendees do, even if they have no interest in standing on stage. Thinking about the essence of what you are passionate about can be a very good way of helping you work out what is important to you.
Remember to submit your application to Joe by 8th May, July 30th for USA:
The title and description of the talk you propose
A link to a video of you speaking – ideally about what you want to do a Lightning Talk about.
BoS in your inbox.
BoS is a conference where business leaders and entrepreneurs meet to learn and improve through listening to our world class speakers, but also eachother.
Get the latest updates direct to your inbox, including conference news, discounts, and BoS video content by signing up here.
Using Slack for team communication has dramatically improved the speed and efficiency of our team. Slack has saved us thousands of dollars by enabling our team to communicate without the need for email. It is hard to do it justice in a blog post; Slack is something you need to try and experience to really grasp its potential.
In this post, we’ll share tips on how to integrate Slack with 17 other web apps that will change how you view team communication forever.
What is Slack?
Slack is a team communication tool that allows for synchronous communication on different devices. The app seems simple at first, but there are powerful features that make this the fastest growing app ever.
Slack is not just a simple chat room. It is a communications hub that simplifies the day-to-day work of modern teams. The big pain point that Slack addresses is the need to jump between dozens of app notifications and email in order to keep up to date on your business.
Slack simplifies this by creating a platform that allows one team to communicate on multiple channels and removing the need for most email communication. Better yet, Slack has a massive list of integrations that post updates in your Slack channels. Integrating the apps you are already using means you only need to go to one place to get all the critical information to run your business. Some integrations allow you to interact directly with your apps from Slack using slash commands.
Slack already naturally anticipates daily communication and puts it into context for you. If you paste a link, it will expand it with some information. You can play videos right from the chat room. If an image is posted, you get a thumbnail to work with. You can even share things like Spotify playlists.
Google Hangouts let you communicate with your team or customers with video conferencing, voice calls, or chat.
Integrating Slack with Google Hangouts allows you to start a hangout with members of a specific channel or private group. Sometimes communicating over video is faster and more effective than chat. Having the ability to quickly create and jump into a hangout can accelerate conversations for teams.
Hangouts can be created directly from the channel by using the slash command /hangout. The hangout will have a Slack control panel that will allow you to invite other team members to your hangout.
People have been using these tools for cross team collaboration as well. Groups of journalists from different newsrooms have reported using Slack channels and hangouts to discuss and collaborate on social media, analytics, site design, and other challenges related to the industry. It provides a more intimate setting than a Facebook group, while being more flexible and scalable than a phone call.
This idea can easily be applied to many different industries. Marketers, students, writers, and countless other professions could have Slack teams set up to collaborate and share ideas. This is an excellent combination to support masterminds.
Twitter is a social network and micro blogging service that focuses on users posting short 140-character messages.
Integrating Slack and Twitter posts tweets that are sent to or from specific Twitter accounts to a channel. This is great for keeping on top of your social media marketing or quickly responding to customers who communicate with you on Twitter.
This integration has been very helpful. We send tweets to our WP Curve Daily channel, where our management team and developers are communicating. If any customers reach out to us, we are instantly alerted and can respond quickly.
HuBot is a scriptable chat robot that you can integrate with your Slack account and use for just about anything. You can set it up to poll the team at certain times if they want coffee or what they want for lunch. The guys at Sitepoint have some very creative ways to use HuBot.
We use this chat bot to send special alerts to our team when VIP customers submit a ticket.
MailChimp is an online platform for email marketing.
Integrating MailChimp and Slack will allow you to receive updates when people subscribe and unsubscribe from your list and see the sent status of a campaign. After authenticating your MailChimp account, you’ll be able to pick and choose which lists and notifications to monitor.
The integration with Slack currently supports the following MailChimp events:
Trello is a collaborative project management tool that uses lists and cards to organize tasks within a project. It works great for personal organization or for teams.
Integrating Slack with Trello will send updates to a channel when there’s activity on Trello cards. Trello is the second most popular integration to Slack, so people are finding a great deal of value in this one.
You can customize this for different channels to post activity only relevant to the specific channel.
It can be difficult to keep track of all the changes on individual cards when you are working with a large team with several boards and hundreds of cards shuffling around. This integration in Slack help keep you privy to the activity that’s relevant and current.
We would love to see some commands in Slack that would allow you to create a card from the Slack app. Trello can create cards via email, so we think it would work similar in Slack. Asana and similar tools allow for slash commands to create tasks and we imagine it would look similar to this.
Asana is a project management tool that combines tasks and conversations. It’s an email killer like Slack.
Integrating Slack with Asana will send updates to specific channels when a task is created, completed, or gets a new comment.
A great feature about this integration is that you can use the slash command /asana to list tasks, create new tasks, assign tasks to others, complete a task, and comment. All from the Slack app. This can be very helpful when deep in conversation and you just want to quickly create a task or reminder for a good idea later without breaking your conversation or workflow. Note that to use slash commands, each team member must authenticate their Asana account with Slack.
Having such tight integration on two tools that leverage conversation and communication is great. Asana makes it easy to search conversations and keep a record of them, which is good for firefighting or bug fixes. Slack is great for synchronous communication where responsiveness and speed are more important than organization.
Blossom is a project management tool designed for software development teams. It is great for visualising the flow of project features.
Integrating Blossom with Slack will post notifications on project updates in a channel. This is an easy way to keep all of your updates and information flowing to one place instead of having your team jumping between apps to make sure they have not missed anything.
Google Drive lets you create, store, and collaborate on documents online. Multiple team members can work on documents simultaneously.
Integrating Google Drive with Slack makes file sharing seamless and easy. This is the most popular integration on Slack. Pasting the link to a Google Doc in your chatbox will make it available for anyone in the channel and give additional information on the link instead of just a blind URL. This is a big help when dealing with hundreds of links for blog content.
Having a central communication hub like Slack combined with the collaboration features on Google Docs makes for an excellent experience.
Dropbox allows you to store and share files on the cloud.
Integrating Slack and Dropbox will allow team members to share files with links that anyone in the channel can access. They will be able to download their own copy or add the file to their own Dropbox, so multiple people can collaborate on and share files. Slack will look at the file attached on the link and create a preview, so you don’t just have a blind link with a bunch of numbers in the chat box.
This integration will import Dropbox files when a Dropbox URL is pasted in Slack.
Help Scout is helpdesk for small businesses that is scalable and customizable.
Integrating Slack with Help Scout allows you to see notifications when:
A conversation is created
A conversation is updated
A team member or customer has replied
Conversations are closed or deleted
There are also links to the conversation and @ mentions of the person assigned, so your team members can get updates only when it is relevant to them.
This is great for support teams because it brings the customer support conversations straight to the main communication hub. This makes for much faster response times and more transparent management of the support tickets. You can also set it so links to the ticket or conversation appear in the channel, which makes for faster responses.
Intercom is an app that helps businesses track how users are interacting with their software. It can also engage users with targeted emails and in-app messages or request feedback when a user behaves in a certain way.
Integrating Slack and Intercom posts updates in a designated channel for the following notifications:
New messages from users
A teammate or user replies to a message
Notes are added to a conversation
Conversations are assigned
New users or companies are created
This integration is brilliant because it makes it easier to bring a human element back into your drip campaigns. With notifications coming right to your communications hub, you can pick up conversations on your drip campaigns quickly.
Desk is a an all-in-one customer support system that is designed to scale with the support team and allow for fast responses to customers.
Integrating Slack with Desk allows you to customize notifications for updates on customer support cases in relevant channels. There are many conditions that you can customize. One I really like is that you can customize notification according to the priority of the ticket. So managers can be updated on only high priority cases.
There are countless other apps that you can integrate with Slack and they’re adding more every day. These integrations can streamline your team communication in ways that were almost impossible even a few years ago.
Slack posts all of their new integration announcements on Twitter. Click the link below to follow their Twitter channel and stay up to date.