Startable – Healy Jones’ & Prasad Thammineni’s Blog

Lots of good content all of a sudden on both mobile and online marketing. Here are some good ones:

• Triggered emails have HUGE open and click throughs: Online Media Daily reports on a study that shows that triggered emails (emails that are sent when a user takes a specific action, such as abandons a shopping cart, have a much higher click through than ordinary marketing emails.”Triggered open rates performed at 75.1% higher”
• I recently posted about email marketing subject line performance. Here are the subject lines email marketers should avoid, and which ones drive good open rates.
• The best email marketing frequency depends on your industry & users, but in general the more you can do the better.
• Yup, people are really opening emails on mobile devices these days; Returnpath “reports that mobile open share has increased 300% since 2010, and shows no sign of slowing, with four out of 10 emails sent being read on a mobile device.” Read more.
• “The iPhone and Android smartphones remain the most popular smartphone platforms for messaging. iOS users account for more than half of those opting into MMS and text-messaging campaigns, compared to 34% coming through Android phones. Those levels are up from 23.6%, and 16%, respectively, in April. BlackBerry accounted for 7% of opt-in messaging.” Read more.

I found this great infographic on Entrepreneur, listing various legal structures available to startups and showing each legal structure’s pros and cons.

update: OK, so this infographic did not paste over very well, so click on that link above to go see it!!

Recently Prasad Thammineni, Healy Jones (me), & one of our investors, David Mars, recent participated on a panel at Wharton reunion talking about how we worked together to grow OfficeDrop. Tyler Wry, Wharton professor, lead the discussion and recently posted an article on the panel for Wharton Magazine.

Tyler’s post, entitled “Teaching Lean Entrepreneurs,” dives into how a business school education can be an asset when running a lean startup. Tyler defines the lean startup, then goes into how OfficeDrop combined some of the theories we learned about at Wharton with the practices of running a lean startup.

Often times business school/MBAs are made fun of by startuppers; this is a somewhat fair stereotype – A lot of times MBAs think that they will join a startup and the the “strategy” person or run a bunch of analysis in Excel. Of course, we all know that startups need doers! But the MBA can be helpful as it provides frameworks that can be used to quickly make sense of a rapidly changing competitive environment that startups face. Also, things like pricing, positioning, etc are all classes taught at business school, and a good school will at least help you be prepared to know what you don’t know so you can launch.

Tyler had an interesting conclusion to his piece, and one that I agree with. He said, “For me, this drove home the point that entrepreneurship isn’t really that different than any other area of business—training matters. Anyone can start a company, and many scientists and entrepreneurs who don’t know the first thing about business become successful entrepreneurs. On average, though, the startups that are most likely to succeed have some serious business chops behind them.”

One of my sysadmins pointed out a great post from yesterday on using a decoy on your pricing page. If done well this can be a great strategy.

I’ve used this decoy pricing tactic on OfficeDrop’s pricing pages for a while. In particular, our digital filing pricing page has an expensive plan that has nicely increased overall conversion on the page.

The main result of this decoy is increased conversion on the page. In otherwords, a higher number & percent of visitors to the page pick a plan and become an OfficeDrop user. It hasn’t really changed the MIX of plans (very few people pick the expensive plan and the same % of people pick the other plans). But I consider the decoy plan a success because it’s getting more people into our funnel.

You can see the pop here when we added a decoy pricing plan to our standard digital filing pricing page. This chart is the % of visitors who visited the page and then signed up for a plan. I.e. the conversion rate of the page. Note that there is a little dip in the beginning that has nothing to do with pricing; it’s a data error. The way to look at this w/o the data error is the two little peaks on the left are close to the pre-decoy conversion rate average; the hump on the rigth is the new average post addition of the decoy pricing plan.

What the Decoy Pricing Plan Looks Like

The decoy pricing is the “ScanPro” “ScanFive” plan on the right. (Thanks for the typo catch Pete!)

Decoy Pricing Plan

It’s designed to be expensive and to make clear that we’ve got the ability to support additional users in the plans… it’s not really clicked that often.

Anyways, check out the post I linked to above. You’ll find it very solid, and it explains why a decoy plan works.

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!

Came across a study by a company called Comparz and found the following quote interesting:

Only 20% or less of SMBs found vendor websites and conversation useful. So what are SMB’s looking for? Over 90% of business users said that user reviews and user ratings and rankings would be the strongest help in making vendor decisions. In addition, 84% indicated that decision guides outlining what to consider when purchasing a solution and would be useful. They also seek a community where they can chat online with similar buyers.

This goes along with my mobile app marketing strategy of getting existing power users to step up and review new versions of apps in app stores.

Interesting research from Flurry again (they were the ones who put out the info that mobile app usage is topping regular web browsing). This time they have data showing that free or “freemium” app titles are generating more revenue than pure paid apps. From a MediaPost summary of the research:

Flurry shows that over the last six months, revenue from free-to-play game apps has overtaken that from paid apps. Among the top 100 grossing games in the App Store as of June, more than two-thirds (65%) of the revenue generated came from freemium games and 35% from paid games.

That’s nearly opposite the situation from six months ago, when paid game apps accounted for 61% of revenue and free titles, 39%. What’s changed since January? Peter Farago, vice president of marketing at Flurry, pointed out that Apple began counting in-app purchases toward app gross revenues at the end of 2010, reflecting the impact of that sales stream in its ranking of top-grossing titles.

Free apps generating more revenue than pure paid apps

So, this research is focused on games, but OfficeDrop is betting the same will be true for our b2b SaaS app. We switched to a freemium model earlier this week, mainly driven by the feedback we were getting in the app stores. App store people just expect to try stuff for free and don’t like free trials. We can’t get them to read the app description that talks about the free trial period; they just look at stars, download and then leave a nasty review without trying the service. Hopefully this freemium experiment will pay off for us. Initial web signups are promising, but it’s too early to tell!

As I mentioned in a previous post, my company recently did a lot of cool testing during our site redesign. Anand Rajaram, OfficeDrop’s co-founder has a series of posts on Performable’s blog that talk about tips, tricks and tools that we used during the process:

Optimizing Conversion Rates Part One – Quantitative Tests

Optimizing Conversion Rates Part Two – Qualitative Tests

Optimizing Conversion Rates Part Three – Lessons Learned

One of the co-founders of my company recently posted his thoughts after attending the Startup Lessons Learned conference, from the perspective of a startup product manager. It’s worth a read!

My occasional co-blogger Prasad Thammineni was recently featured on Amex’s OPEN Forum.com, sharing four intuitive ways that he promotes innovation around the OfficeDrop office. (OPEN Forum is a pretty interesting strategy by American Express to offer their small business card owners a place to share best practices on running their companies.)

Prasad lists a few of the things we try to do at OfficeDrop to be more innovative… As with the OfficeDrop name change process, Prasad makes sure to employ all of the clever minds around the office, not just the over paid ones like mine…