I just read a great post by David Skok on Managing Customer Success to Reduce Churn. One of the key points I love in his post is that measuring customer engagement does not give you the entire picture of your customer(s)’ happiness with your product, and does not correlate perfectly with expected churn rate. While it’s harder to do, measuring customer outcomes can provide a much better view into how likely a customer is to churn, and how much value/happiness they are getting out of your product.
I noticed this pattern at Boundless quite a bit – a number of our happiest users were minimally engaged with the product. That’s because the product met their needs efficiently in two key areas – price and efficacy. They not only paid less that they thought they would for their learning materials, but they also were able to read and retain their information quickly, without the need to heavily engage with the product. It took a while to figure this out, as we were carefully using analytics to track product usage. And once we saw that happiness and engagement were not highly correlated, but instead outcomes (good grades, efficient studying and the great price point) generated the customer happiness… well, then we were able to double down on the right product features and highlight the best selling points to new potential users.
It’s a great post – check it out!
I’m quoted in a PC World piece about how apps will change the nature of desktop software. I had a long conversation with the author, Jared Newman, about how OfficeDrop’s apps, both our smartphone scanner apps and our mac desktop scanner app, ScanDrop, are dramatically changing how we distribute our SaaS product.
The article’s thesis is spot on:
Not surprisingly, many developers are enthusiastic about the easy distribution and streamlined billing that app stores provide, yet these stores also introduce challenges–some that are unique to desktops, and others that have plagued smartphones since the dawn of the iPhone App Store.
I spoke with Jared for a while about how we were wrong about how customers wanted to use our service. They actually want to download and install apps, not use the web. We were off by 100%.
The soon to be famous Healy Jones quote is:
Healy Jones, vice president of marketing for OfficeDrop, noticed this shift away from the Web immediately after his company released mobile and desktop apps for its document-scanning service.
OfficeDrop, which provides searchable cloud storage, says that it sees seven times more user engagement through its apps than it does through the Web browser, Jones notes. Since releasing its first apps in 2011, OfficeDrop’s user base has grown from 7000 users to 140,000 users.
“We had a thesis that people did not want to install software; that the cloud meant that people could use a browser to interact with software and would never have to install anything. We were completely wrong,” Jones says. “People love installing software.”
Obviously I’m really bullish on apps. That’s also why I’m very bullish on tablets (and part of the reason OfficeDrop recently released an Android tablet version of our app.) Apps are how people want to interact with software. I’m happy people like HTML 5, but if it isn’t installed it’s not gonna grow as well as an app.
Lincoln Murphy, the well known SaaS Marketing guy, got pretty upset at a recent TechCrunch piece on the freemium pricing strategy that posted this weekend. Lincoln says (I’m on his email newsletter list; it’s pretty good): “In a nutshell the Complete Guide to Freemium on TechCrunch is a post by someone who got lucky enough to get their post accepted so he can get a backlink to his site from TechCrunch and where he takes the results of studies and some words from high-profile VCs and weaves it together into a post for the TMZ of the tech industry.”
Ouch. That’s a little harsh. The article isn’t bad at all. The conclusion is 100% great, actually.
What is Freemium?
However, I don’t think it’s the Ultimate Guide to what is a actually a pretty complicated pricing strategy. I happen to disagree with the author’s ideas that a time based free trial = freemium. I can’t tell if my disagreement is a big deal or not – his company, FutureSimple, has a free trial offer, so it’s hard to know how much of the piece is using that as the basis for the post vs. a couple of professors he references. I disagree with the idea that a free trial is freemium so much because OfficeDrop recently made the switch from a free trial to having a free forever plan and we called it “going freemium.”
My definition of freemium is that a user will have the opportunity to use the service/software/whatever forever without having to pay for it. It may be a limited plan or limited features, it may be ad supported; whatever. It just means you can use it for as long as you’d like without paying. FreshBooks has a freemium model, but you run out of “free” pretty quickly. You can jump through hoops to keep it free, but most likely you’ll upgrade. A free trial that expires after a set number of days doesn’t meet my definition of freemium.
OfficeDrop’s free plan is driven by our mobile distribution strategy. I write a little bit about why we think apps are taking over here. But you should listen to my conversation with Lincoln – I call it “Healy Jones on Freemium.” Our free plan is a free forever plan, with some upgrade triggers baked in – search limits, storage limits, OCR limits. But it’s a pretty good product for free; we are the only company offering free high quality OCR for scanned images coupled with storage. People seem to like the plan… and they also seem to like to upgrade to paid plans. We like that part for sure!
Lincoln is putting on a webinar on kicking butt with your company’s free trials model. I think he’s got some good stuff, so I’d suggest you register!
I was recently quoted in a couple of places on how OfficeDrop treats customers, and also about how we made some mistakes when we first started the OfficeDrop Document Management Blog. It’s fun to speak with other bloggers and let them know some of the things I’m learning at OfficeDrop as we grow the business here! I can’t believe how much more effective I am today than I was just one year ago.
Ways to Keep Your Long-Term Customers Happy by Zendesk – For SaaS businesses, existing paying customer retention id critical, and OfficeDrop tries hard to keep our existing customers happy with our service. The Zendesk blog post talks about how we ask “best customers for advice and involves them in big decisions.” And also “OfficeDrop also involves existing customers in new product development, in the form of beta testing. “They are excited to see the new stuff that we are cooking up, and it is fun and exciting for them to be the very first people to try new things.””
Top 5 Mistakes to Avoid on Your Company’s Blog on Mashable – This is a great post on Mashable about simple mistakes company’s make when they start blogging. We are quoted about how we originally did not effectively link back to the OfficeDrop main site when we first started blogging, but there are some other great tips on here about how to be a better blogger.
Last night’s Web Innovator’s meeting was great, maybe the best one so far this year. I really enjoyed the “self funded success stories” talk. Three successful startup founders who bootstrapped their businesses spoke about the trial s, tribulations and lessons-learned of self funding. It was really inspiring to see local companies that were doing well without the need for any outside funding!
Laura Fitton of OneForty moderated the panel, which had:
- Steve Conine, Co-Founder of CSN Stores
- David Hauser, Co-Founder of Grasshopper
- Todd Garland, Founder of BuySellAds
Bootstrapped Startups Lessons
Some of the key takeaways on how to bootstrap your startup, as I understood them from these founders:
- Even if you were not trained as a developer it is very helpful to be able to take part in your products development. Bootstrapping is a lot easier if you don’t have to pay anyone to develop your service/site/product.
- Start pushing right away for a product that you can sell ASAP. When you have funding you have the luxury of taking time to get to market; when you are self funded you need to get selling fast.
- Be sales and support in the early days. If you do not have lots of capital in the bank you need to be very careful that your service is resonating with customers. The only way to do this on a budget is to do it yourself. Listen carefully to your customers and change your product as fast as you can to meet their needs.
- You don’t need a 50 page business plan. Two of the three founders used a spreadsheet to define their company’s early stage goals and track their progress; one had a two page business plan and a spreadsheet. You don’t have time to do a beautiful 50 page bplan – just figure out what you think your metrics and costs will be and start executing (and monitoring your progress against your plans.)
Prasad has a new piece on Small Business Trends on Turning email newsletters into customer insights. I’m a little partial to this newsletter since I helped OfficeDrop create these testing tactics (I’m not claiming that these tactics are unique, just that I was the person to bring them to our marketing efforts.)
I really like the point about allowing replies to the marketing emails. I send a lot of emails our to our new subscribers, and let customers reply to me directly. This helps cut off customer service issues early in the process, and also can get a good dialog going with individual customers.
One point that that did not make Prasad’s piece is that we also let customers know about upcoming new releases/products via the newsletter. It is a great way to get early-bird signups to new products.