Startable – Healy Jones’ & Prasad Thammineni’s Blog

Does branding still matter?

I’d like to think so. This video of a 5 year old giving her impressions of different companies’ logos is very cute, and reinforces the idea that having an identifiable brand does (probably) still make a big difference for most companies.

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.

Techcrunch has an article on how Microsoft’s online division has lost money for the past 22 quarters. That’s a long time.

The article takes a pretty negative tone toward Microsoft. The comments seem to indicate that people think Techcrunch is continuing it’s Google and Apple lovefest and is attacking Microsoft because of this bias.

Regardless of TC’s bias towards or against Microsoft, I think the piece could be written about Google – if you replaced “MSFT” with “Google” and replaced the highly profitable “Windows and Office Divisions” with “Adwords” and replaced the loss making “online division” with “everything else at Google.” Basically, Google is still struggling to make money in other divisions that are not search and ad driven.

The battle between Google and Microsoft isn’t a battle for sissies. They aren’t fighting for second place – they are trying to destroy each other. Google doesn’t mind losing money in Chrome (OS or browser), Android, or Docs if it hurts Microsoft where their chief source of cash flow is (i.e. Office and Windows). Microsoft is willing to lose lots of money to try to make Google’s primary source of income, online search/advertising, hurt. They each also understand the importance of the other’s core divisions, and they both want a real piece. Disrupting either is going to be hard and expensive.

That’s the reason each is willing to have their profitable divisions subsidize their losses in the other divisions.

So, is this an opportunity or threat for startups trying to compete in or around these spaces?

Well, it’s a little of each, IMHO. It’s an opportunity, since if you manage to get traction in either area you have two fight-to-the-death potential acquiring companies. But it’s a HUGE threat too, because if you choose to enter one of these areas you are competing with two huge titans who are willing to make economically insane losses to get marketshare. For example – let’s say you are trying to do an email startup (this is just an example). You are competing against two companies that likely have a very different business model than you can afford. They just want users/marketshare of their email services, and the revenue and margins are not particularly relevant. So if your business model requires making money… well, you could be in a really tough spot.

To compete against either you need either an enormously better understanding of the customer, translated into a massively better product… or amazingly deep pockets.

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!

Wow, Google is ready to move people to updated browsers! This is great for the online world, and will hopefully get people off of ancient browsers like IE6 and whatnot.

According to multiple Google blogs:

For web applications to spring even farther ahead of traditional software, our teams need to make use of new capabilities available in modern browsers… Older browsers just don’t have the chops to provide you with the same high-quality experience.
For this reason, soon Google Apps will only support modern browsers. Beginning August 1st, we’ll support the current and prior major release of Chrome, Firefox, Internet Explorer and Safari on a rolling basis. Each time a new version is released, we’ll begin supporting the update and stop supporting the third-oldest version.
As of August 1st, we will discontinue support for the following browsers and their predecessors: Firefox 3.5, Internet Explorer 7, and Safari 3. In these older browsers you may have trouble using certain features in Gmail, Google Calendar, Google Talk, Google Docs and Google Sites, and eventually these apps may stop working entirely.

This is pretty kick butt. It’s time to get people off of older browsers. Supporting old school browsers is a tremendous pain for online services like OfficeDrop. Hopefully the 80 billion users of Google products will upgrade. I wonder what percent of Google users are early adopters who are already using the most updated versions vs the general internet population using outdated browsers. Only 2% of OfficeDrops cloud content management visitors are on IE6, for example. I wonder what it is for the GOOG.

Ok I’ve got to brag a little here. OfficeDrop recently launched our newest mobile app, the OfficeDrop Android Paper-to-Go app, and we’ve had great success with new users and downloads. I’m working on a post about how SEO may be dying, at least for SaaS services, since the huge majority of our new users are coming from app marketplaces these days. I really think we are undergoing a significant shift in the way people find and buy software and web services… and I’m personally having a ton of fun trying to figure it out!

Anyways, here is some of the recent press OfficeDrop has gotten on our new Android app:

May 18, 2011

OfficeDrop: Scan Docs, Turn Them into PDF & Make Searchable (Android)

Using Paper-to-Go you can scan physical documents using your smartphone’s camera and store these documents … other file formats can be uploaded and processed as well. Read OfficeDrop’s Paper-to-Go Review on makeuseof…

Yup, we updated our home page again! OfficeDrop’s new home page is an attempt to get our potential users into a more specific sales funnel more quickly. As we’ve grown and expanded our product line it has become confusing for our new site visitors to find the particular service that they are looking for.

I’ll update when we figure out if the change actually helps improve conversion. Wish us luck!

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.