FemtoConf 2017: Thoughts on running our conference

On 10-12 February 2017 my friend Benedikt and I hosted our first conference – named FemtoConf – in Darmstadt, Germany.

These are my thoughts on the whole experience of co-running a conference.

Why we decided to host our own conference

Purely because we get this question quite a bit: “Femto” is a unit prefix in the metric system denoting a factor of 10 to the power of -15.

Benedikt and I are huge fans and avid attendees of MicroConf Europe, a conference for self-funded software startup founders.
I’ve been the semi-official scribe at microconfeuroperecap.com since inception.
We both <3 MicroConf, Rob, and Mike.
We even got them a celebratory cake for their 10th MicroConf (https://twitter.com/itengelhardt/status/759480902279979009).

That’s why – when it was time to name our conference – we decided to pay tribute to the legend. FemtoConf is designed to be the smaller cousin to MicroConf – just as the name implies.

We had done a meetup for our podcast listeners back in 2014 and had planed to do it again in 2016. For various reasons (work, family, and stuff), that didn’t happen.

Getting the ball rolling

So one day in late 2016 we said “Screw it, we’re doing this in 2017!”. Within 10 minutes we had decided on a date (10-12 February). We wanted to do it on a weekend, mostly because I work a day job and didn’t want to take a vacation.

We told a few of our listeners and friends about the meetup we were hosting. One of them was Jane Portman of Tiny Reminder, who on a whim told us “I’m coming and giving a talk” – color us surprised.

Turning things up a notch

One thing led to another and before long we had a full blown conference on our hands. We decided to kick things up a gear:
We had already decided to host the conference in Darmstadt. Darmstadt is perfect because it’s where Benedikt lives and easy to get to – it’s close to the middle of Germany and Frankfurt Airport is 30 minutes away.
We looked at conference rooms and found a suitable one at the Welcome Hotel Darmstadt costing 52€ per person per day. By chance my wife had stayed at the hotel before and gave it a raving review.

So we decided on a price: 99€ – enough to cover the costs for the conference room and a bit of buffer in case of unforeseen expenditures (this was a good idea poorly executed).

Benedikt signed us up for Tito so we could sell tickets. We thought that we could – at most – sell 8 tickets.
The plan was to have 8 attendees + speakers + Benedikt & I.

Starting up the marketing engine

When we started selling tickets, we did some serious grade A marketing! I kid, here’s what we really did:

  • we mentioned it to all our friends on all the Slack chats we hang out in
  • we sent an email to our mailing list
  • each of us tweeted about the tickets going on sale

Within 24 hours we were sold out. WHAT?! Looks like we hit a nerve there.
We decided to sell five more tickets and get a bigger conference room.

Finding speakers

Those five tickets sold out as well. So we were now up to 13 attendees + 2 hosts + 1 speaker. We wanted to have maybe four talks, so we needed three speakers.

Luckily, Jane brought along Mojca Mars, who was going to talk about Social Media Marketing.

Benedikt and I decided to approach two additional speakers: Thomas Smale of FE International and Craig Hewitt of PodcastMotor.
Both agreed to speak at FemtoConf and Thomas even was generous enough to be our liquor fairy – another MicroConf tradition; i.e. he sponsored drinks the first night.

The conference itself

There was a lot of preparation – mostly done by Benedikt – that I will only briefly list here:

  • coming up with a schedule
  • sending email updates to attendees (schedule, things to do in Darmstadt, pre-conference survey)
  • taking a look at the room
  • preparing gifts for our speakers (Apfelwein) and attendees (Christstollen)
  • collecting presentation slides from the speakers
  • making plans on how to record audio & video

Kick-off dinner

Fast forward to February 10: I’m heading out from home shortly before 07.00 and take the train to Darmstadt. It’s a four and a half hour journey. I arrive at 11.30 and head straight to the AirBNB I’m going to share with my friends Andrew Culver, Daniel Bader, Daniel Alm and Victor Purolnik.

The next fixed event is the kick-off dinner at Braustüb’l. Benedikt and I spent the meantime talking to the first couple of attendees over lunch and coffee and buying a presenter, because obviously I forgot mine at home. We also set up the audio recording hardware.

Dinner is fantastic, filled with lots of great conversations, and everyone seems to have a blast. The conference is already off to a good start.

The proper conference day

The next morning I wake up around 07.00 and walk over to the hotel to set up the camera and prepare my blog for some notetaking.
When I get there I realize that I brought my camera and my tripod – but that the connector is still on my DSLR, back home in Munich. I text Benedikt, who’s already on the way and he heads back home to fetch his tripod. Disaster averted!

I also realize that there is no cabling in place to supply attendees with power. I get a hold of an hotel employee and she fixes this in 15 minutes – they were on top of their game!

Shortly after 09.30 Benedikt & I kick off the conference with some general information and then we start a round of introductions. After introductions Jane Portman takes the stage and gives a fantastic talk on product strategy.

After that we have a long 50 minute coffee break, before Thomas talks about building a sellable business.

During the 2-hour lunch break we have lunch (surprise!) and we also go for a nice walk the close by Herrngarten. It was a nice change of speed, definitely not something we had planned for.

After lunch we had some more Q&A with Thomas. Than it is up to Mojca to teach us all about Facebook Ads and finally Craig tells us about his adventures in productized services.

Dinner that night was at Sitte – another great restaurant. I leave around 12.30 at night with the few remaining attendees and my head is buzzing with thoughts and ideas.

Sunday morning we have breakfast in the AirBNB and then check out. We all meet in front of the hotel and go for a short tour of the city, thanks to our guide Benedikt. Afterwards to storm into a coffee shop and sit together for a few more hours. Benedikt & I also take the time to record two episodes for our podcast.

My personal thoughts on FemtoConf

First of all, FemtoConf gave me exactly what I hoped for: a weekend with friends and a ton of motivation!

Every time after MicroConf I would feel energized and ready to deep-dive into building a business. The problem is that MicroConf Europe is only once a year.
FemtoConf was – as Andrew called it – a much needed shot in the arm.

I think that Benedikt and I did a lot of things right with FemtoConf:

  • the small size of ~20 founders allowed everyone to talk to everyone
  • lots of time between talks plus two walks throughout the city gave amble time to have deep and meaningful conversations
  • having four talks was just the right amount to get everyone excited about a few(!) ideas they could try in their business AND stuff to talk about with other founders
  • Darmstadt was the right city, especially considering how close it is to Frankfurt Airport (we had attendees fly in from Los Angeles and Crimea – among other places)

Benedikt and I were deliberate in keeping FemtoConf small and focusing on the hallway track. In my opinion those were great decisions. Our attendees share that opinion:

Things that didn’t go well

Aside from me forgetting both the presenter AND the tripod connector the biggest letdown for our attendees was that we wanted to play laser tag on Sunday morning and we couldn’t.
Based on our pre-conf survey I had reserved 7 spots for players, but when I asked around again on Saturday there were 14 willing players. That didn’t work out with the laser tag facility and we had to scrub it.
We all went on a sightseeing tour of Darmstadt instead, which was still great.

Lesson learned: Plan laser tag for all attendees + better halves

From the feedback we got it’s clear that we should give Sunday a bit more structure – maybe with one or two talks plus fun activities. That sounds great, but having additional talks would double our expenses, so we’ll have to see.

Not breaking even

Benedikt and I did improvise (and imitate) a lot for FemtoConf. We followed a solid “Ready, Fire, Aim!” approach when it came to pricing. ¯_(ツ)_/¯

This meant that we were a few hundred dollars short in the end.

That’s not a big deal: We host the pre-conf dinner for MicroConf Europe each year and that has sometimes cost us more than $1,200 bucks (which we are cool with).

Nevertheless, we’d like to break even next year. The biggest contributor to our net loss was that we paid the conference room for 20 people, but only charged 13 people for attending.

Additionally, there were a few extra costs like beverages during lunch, attendee & speaker gifts, and we swallowed a few of the drinks on friday (We had agreed to cap Thomas’ expenses at a certain amount).

I don’t want to charge speakers for attending as other conferences do, so there is only one option: Charge. More. (Hi there, Patrick!)

We’ll probably increase prices quite a bit, but we’ll also add to the FemtoConf experience. People already told us they’d be willing to pay way more, so we’ll see.

Conclusion

Overall, this was a fantastic conference experience. It was great to meet old friends and make new ones. The motivation and energy I feel after FemtoConf is just what I needed to get working on improving my book (SaaS Email Marketing Handbook).

Looking forward to next year!

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Year in Review 2015

I’m Christoph Engelhardt, the maker of LinksSpy.com and the guy who writes the notes at MicroConf Europe. I run LinksSpy as a side project and work a day job in the defense industry. I usually get in about 4-6 hours per week.

To help me think about what happened in the past year, I write year in review posts (2013, 2014). In those posts I review what worked, what didn’t, and where to go from here.

Acknowledgements

I’ve had the help of many amazing and inspiring people who pushed me to where I am today. My thanks go out to:

  • My wife Katharina who puts up with me and my gnarliness when things don’t work out, and yet still believes. Thank you for yet another great year full of beautiful moments worth remembering
  • Benedikt Deicke with whom I produce a (German language) podcast (Nebenberuf Startup). Thank you for the countless times you’ve helped me bring LinksSpy back up and correct my worst fuck-ups. Thanks for being my advisor on hard decision and for pushing me forward with the occasional kick in the butt (If you love Year in Review posts, here is Benedikt’s)
  • Michael Buckbee for dozens of inspirations on how to work smarter. You’re an amazing entrepreneur and human being
  • Dave Collins for the numerous times you’ve guided the product decisions for LinksSpy. A special thanks for taking the time to have lunch with Katharina & me
  • Charlie Irish for many funny conversations and for great hours we spent together in London. It’s always great to hang out with you.
  • Rob Walling & Mike Taber for hosting my favourite podcast and the best conference for bootstrappers like me. Thanks for sharing actionable tips and tactics, and for inspiring me to follow in your footsteps
  • Jane Portman for great conversations, pushing me forward, and for being the first one to take me up on my standing invitation (come to Munich and dinner is on me).
  • all the people that hang out in the BBiz Slack chat: You are an inspiring group of people. Thanks for the help offered along the way and for taking the time to listen when I was troubled with the situation

The Business

I have two products and also do consulting — quite a mix. This comes with pros and cons.

On the one hand, I might be able to push a single product harder if I devoted all my attention to it.

On the other hand, I enjoy the consulting work and working with other founders. It’s nice to have something different to work on when you get frustrated with one product. 🙂

My first web application/SaaS business is TerminRetter, an appointmentreminder.org clone I developed five years ago. Apart from the one time I tried to integrate credit card billing using Stripe and Koudoku, TerminRettter was completely on auto-pilot. It’s profitable, but it needs a complete overhaul if I want to push it further.

Secondly, I work with clients to improve their marketing (SEO, email marketing, conversion optimization). It’s fun to work with other founders and help them grow their business.

It’s both a great feeling, and demoralizing, to know that I make more money in one day consulting than I do all week in the day job. I have to stay in the day job for another six years day job(don’t ask, please). Anyway, everything is cool and fun on this front. 🙂

Lastly, I run LinksSpy. In Michael Buckbee’s words LinksSpy is a “CRM for getting inbound links”. In my own words, LinksSpy is “the sweet love-child of Ahrefs and BuzzStream“.

The Executive Summary

Looking back at 2014, the year I launched LinksSpy, my product saw fantastic growth: going from $190 monthly recurring revenue (MRR) at launch in April to $1,296 MRR in December. Not a bad growth rate — but, alas, it wasn’t meant to stay that way.

It was a struggle in 2015 to keep LinksSpy’s MRR constant or growing.

LinksSpy started 2015 with very high MRR levels, caused by LinksSpy being featured on ProductHunt. When those customers churned, I had to struggle to keep MRR above $1,000. I failed at it for a few months when MRR went down to $814. Through a combination of product improvements (automated follow-ups for email outreach and integration of Ahrefs data) and marketing, I pushed MRR back above the magical $1,000 line.

Although I had to neglect LinksSpy almost entirely for the last three months of 2015 it has stayed above $1,000 MRR (currently at $1,050).

The hardest lesson I learned this year is that churn is a real bitch for a SaaS business. On the bright side, I’ve learned many lessons about onboarding churn.

The Slightly Longer Story

LinksSpy started off extremely strong in 2015. It had just been featured on ProductHunt. The promotion on ProductHunt sky-rocketed the number of paying customers and the MRR.

Being featured on ProductHunt was amazing, wonderful, exhilarating!

Seriously, I was thrilled. I thought I’d 3x my revenue in 2015, because obviously I had things figured out – right? I knew what I was doing – right?

Wrong. I certainly have a good product and I have learned incredibly many lessons on my way here, but what I was seeing at the start of 2015 was just a spike. That spike was caused by an influx of customers that were not an ideal fit for the product – and they never will be.

The ideal customer for LinksSpy is someone who does SEO/link building/outreach marketing all day, every day.

But because of the broad appeal (“More organic search traffic”) and the composition of ProductHunt’s audience, I was attracting a lot of founders/website owners. Paying $29/mo for a product that essentially shows you MORE work you could be doing isn’t highly desirable to those guys (but if you’re reading this, then maybe our “Done-For-You” plan, where we do all the hard work for you, is just right for you).

Lesson #1: Do NOT add more items to your customer’s To-Do-List.

never add to your customer's to-do-list

Even with this huge spike of fresh MRR coming through my door: what goes up, must come down.

I saw that happen immediately.

Customers churned left and right and my marketing just didn’t get enough new customers in.

Much of the churn can be attributed to reaching the wrong market. Also, lack of features, bugs in the software, sub-par marketing copy, and too little traffic are big contributors to the problem of sinking MRR figures.

It was devastating personally to see the revenue graph go down and to the right. The monthly revenue churn rate was 15-20%, and something had to be done about it.

entrepreneurship-relative-joy

(Image by @scottbelsky)

After I had found the motivation to work on LinksSpy again, I focused on relaunching the product with new features. LinksSpy was missing a feature that makes the application “stick” with customers. They would run the reports, check the data, and leave the app unused for months – or cancel outright.

After speaking to customers and recently cancelled customers, I identified two promising features:

  • better data by including data from other providers (I was only using Moz up to this point)
  • enhanced outreach capabilities, i.e. once you write an outreach email to another website through LinksSpy, we will automatically send follow-up emails until they open the email

I relaunched the application in early September and things have improved since then. With the relaunch I also restructured the pricing from $29/$49/$99 for the three tiers by dropping the $29/mo plan and adding a productized consulting offering (“Done-For-You” plan) for $499/month. At the same time I increased the trial period from 7 to 14 days.

In September 2015, I was transferred to another position in my day job. While I enjoy the work I’m doing now, it is also a huge time sink. I’m doing a bunch of overtime and it leaves me mentally drained to the point that I haven’t done any work on LinksSpy in the past three months.

What went well

First and foremost, having a product that makes $1,000/mo in revenue is great. Being able to not worry about it for a few months and still make money is fucking fantastic!

Second, the relaunch and new features are a great step in the right direction. I want to build LinksSpy into a tool that streamlines the outreach marketing process. To that end I have a few more features that I want to add and that will make LinksSpy unique in the SEO niche.

Next, changing the pricing structure was a great idea. While I still need to create a dedicated landing page for the $499/month productized consulting plan, overall this change was a good one.

Additionally, there were no super bad bugs in LinksSpy. I can live happily without the stress and drama. 🙂

Lastly, all the things I did besides LinksSpy were great:

  • attending MicroConf Europe was a blast – as always. I’m so psyched for 2016 already!
  • giving a talk at a local event made me wish I gave more talks (and I’ve lined up more for 2016)
  • hosting a podcast with my good friend Benedikt Deicke allows me to give back to the micropreneur community.
  • building great relationships with inspiring people (I’m looking at you, Charlie, Jane, Jaana, Michael, Dave, Andy, Rob, Mike, Justin, Brennan, Oliver, Anton) is one of my favorite activities. It’s so nice to sit around a table with a bunch of smart folks – try it!

What didn’t go well

I’ve talked enough about how bad the high churn felt and the stress it induced and how I lost motivation for a few months as a result of it, so I’ll spare you a reiteration.

I hired a developer to work on LinksSpy in early 2015. I found an insanely good Rails developer and we agreed on him working 5 hours per week for me. We were right in the middle of getting him on board – he was working on a bunch of open source projects that LinksSpy uses – when he told me that 5 hours per week wasn’t enough for him. I wasn’t ready to spend more than I made with LinksSpy, so increasing was out of the question for me. Sadly, we had to end the contract.

Another thing that didn’t work out at all was my attempt at adding credit card billing to TerminRetter. TerminRetter was my first ever Rails app and the code shows it. I tried to add it for four days with the help of Benedikt Deicke before I gave in. That app is up for a full rewrite if I want to grow it in the future.

Moreover, my content marketing efforts for LinksSpy didn’t work out as planned. I hired a good writer for $300 per post to publish content on the LinksSpy blog. My thinking was that his existing network would be enough promotion to have an ROI-positive content strategy. I wanted to just pay for it to work, which just didn’t work.

Furthermore, I stopped doing monthly income reports. It was too much work as I would spend 3-4 hours writing each one up. When you work less than 10 hours/week, that is simply too much for something that yields no return. The reports were fun to write and I got great feedback from publishing them, but it didn’t grow my numbers. I will still do posts like this one, but other than that I will focus on writing actionable posts.

Lastly, my accounting was really bad at the beginning of the year. I spent two weekend building a script to pull all the important data from Stripe, just so I could do my taxes. I didn’t properly collect receipts in 2014, which made taxes an even bigger headache. I have improved that process dramatically in 2015. Doing taxes should be straight forward this year.

The Numbers

Traffic

Marketing Website:
  • 12,054 sessions
  • 68% new users
  • traffic breakdown:
  • 29.7% referral (top: ProductHunt.com, IT-Engelhardt.de, BloggingCage.com)
  • 37.0% direct
  • 16.5% social
  • 15.2% organic search
LinksSpy blog:
  • 5,891 sessions
  • 76% new users
  • traffic breakdown:
  • 12.5% referral (top: Inbound.org, LinksSpy.com, discuss.bootstrapped.fm)
  • 35.3% direct
  • 26.0% social
  • 22.2% organic search

Revenue

At the current exchange rate of $1.09 USD per 1 EUR and according to Stripe’s dashboard LinksSpy generated $13,922.57 revenue in 2015. This amount is missing the last week of 2015 and is skewed by fluctuations in the exchange rate (dropped from $1.20 USD/EUR to $1.09 during the year).

Expenses

I can’t give you anything exact before I’ve done my taxes, but here’s a very rough idea:

  • $700 for Heroku
  • $500 for Ahrefs
  • $800 in Stripe fees
  • $600 for GetDrip.com
  • $2,300 for freelancers on Upwork/oDesk
  • $1,800 for content on the LinksSpy blog
  • $2,500 for MicroConf Europe (includes tickets, flights, hotel, hosting a dinner, and random spendings)
  • $200 for domains
  • $600 on LeadFuze

I blew all the rest on smaller stuff like Sendgrid, Google, Castingwords, KingSumo, Dropbox, Calendly, PerfectAudience, Github, etc.

I aimed to spend all the money back on LinksSpy and I think that’s one goal I achieved! 🙂

Goals For 2016

Increase the MRR of LinksSpy

Last year I aimed for 3x MRR and ended up at 0.75x MRR. So this year I’m going to set a more modest goal. I want to bring the MRR up to $1,500.

Write More Exceptional Content

The only traffic generation strategy that is working for me is writing great content and promoting it. In the coming year, I’m going to double down on that and aim to write one great piece every three months. My estimate is that it takes about 60 hours to write an piece and line up promotion for it.

To that end I have hired someone to write roughly 200 shorter articles which will all be part of a big content piece. I’m paying $6 per article and he’s half way through the 200 articles. After he is done, I’ll need an editor to go through again and improve the quality. I need to pay someone to add pictures. After all that is done, I need to promote the shit out of it after publication.

Rewrite TerminRetter

I’ve pointed to it above: the TerminRetter app needs an overhaul. So I’ll probably take a few weekends here and there and rewrite the thing from scratch.

Help The Micropreneur Community

Whether through more talks (which I’d prefer), organizing dinners and meetups, or through my podcast: I want to help the micropreneur community thrive. Not very specific, but I’ll figure the details out as I go.

Attend MicroConf Europe

Same as last year: If day job permitting, I’ll be at MicroConf Europe, taking notes, hanging out with friends, and having dozens of fascinating conversation with brilliant people.

Conclusion

This year didn’t go as planned, but it could have been worse for sure. Not going to give in and we’ll see whether I achieve my goals for next year.

Last of all, I wish you, my dear reader, a Happy New Year 2016 and hope you crush it in your business endeavours!

PS: If there is anything I can help you with, please drop me an email… christoph@$YOU_HAVE_3_GUESSES 🙂

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How to Combat Onboarding Churn in Your SaaS Application

Churn is one of the most important metrics for your SaaS application. Whether your app’s revenue curve roars upwards like a Falcon 9 or whether it pancakes into the Valley of Despair like a Sumo-ringer splash diving – it all comes down to your churn rate.

There are a dozen ways to calculate churn, a dozen reasons for churn and hundreds of ways to fight churn; entirely too much for today, so I am going to focus on a type that gets next to no attention and which I call “onboarding churn”.

The quick and dirty basics

Churn is defined as “how many users out of 100 who start as customers at the beginning of a month cancel out and are no longer your customer at the end of the month”.

For example, if you have 200 customers at the beginning of August and 30 of those cancel any time between August 1st and August 31st, then you have a churn rate of 15%.

You can calculate churn either by looking at your users or by looking at the revenue they represent. You usually want to look at the revenue-based churn rate as it is more significant for your business. After all, losing two users on the $99/mo is a harder hit than losing ten users at $5/mo.

15% churn is not uncommon for early stage startups. You don’t have product/market-fit yet, you’re likely missing some essential features, your onboarding is far from perfect and so on. This all contributes to high churn rates.

Looking at churn in more detail

Having that number – commonly called “aggregate churn” – is better than nothing, but it doesn’t exactly give you details. Sure, 15% churn is high, but it doesn’t tell you how to solve it.

Often the users on your lower-tier plans are more likely to churn, and people on the expensive plans are less likely to churn. Talk about counter-intuitive.

For my product, I see the same thing: users on the lowest plan churn out very quickly, whereas the people on the highest plan are with LinksSpy the longest. You don’t get that information from looking at your aggregate churn.

Now, a completely different question is: When do users cancel? Surely, their reasons for cancelling are quite different when they cancel after one month vs. when they cancel after five years. But you don’t glean that information from aggregate churn either.

Again, I have the same problem with LinksSpy. The longer someone is with me, the less likely they are to churn. The churn rate in the first 3 months is 44,1% and after that drops to about 7%.

There are a lot of different ways you can slice up those 15%, but let’s focus on only one type: onboarding churn.

The Strange Case of Onboarding Churn

Onboarding churn is a term I newly coined, so I sure hope it sticks. In the meantime my definition of onboarding churn is churn that happens in the first 2-3 months of a user’s lifetime, because users either don’t get value from your app OR they don’t see the value they get.

I already mentioned that LinksSpy sees quite a bit of onboarding churn, but there are a lot of other companies that face the same value. For example, Moz has onboarding churn of – low and behold – 40%.

In fact, Sarah Bird of Moz was the first to introduce me to the concept of onboarding churn. When she mentioned once that they calculate churn only after a user has been paying for three months, I literally thought “What a cheap trick”. Only after I launched my own product and facing the same problem did I realize that there is some merit to that approach. Kudos, Sarah, for teaching me that lesson before I was ready and my sincerest apologies for thinking you were somehow “wrong”.

As it is there are good reasons to think of onboarding churn as yet another step in your customer acquisition channel. After all users are not really on board as long as they do not use your product.

Free Trials do NOT Prevent Onboarding Churn

The thing that is – euphemistically put – interesting about onboarding churn is that most SaaS/subscription applications have a free trial. So why don’t people figure out whether they like the software during the free trial and cancel before they are charged? After all, that’s what trials are for!

I don’t have an exact answer to that, but I guess that people see initial value in the app and promise themselves to “look into it in a week when there is less on my plate”. Fast-forward a week and they still don’t have time – but next week they will; and so on and so forth. Yeah, that’s the best explanation I can come up with.

Free trials don’t prevent onboarding churn – at least not all of it. Look at Moz! Their trial is 30 days and they still have onboarding churn rates of 40 percent.

In-App Onboarding Does NOT Prevent Onboarding Churn

Surely, having those fancy in-app tutorials that guide you through using the app with those nice bubbles help? Yes… somewhat, they can help if you get them just right.

I’ve revamped the in-app tutorials for LinksSpy at least three times by now, constantly improving on customer feedback. The latest version will go live with the relaunch and will focus on a completely new set of features.

How To Nip Onboarding Churn in the Bud

First of all, you can’t entirely get rid of onboarding churn. Some percentage of users will always sign up for your app, start paying you, never use it and then cancel. Expect the lower bound to be around 20-30%. You can probably drive that number down by going to extreme measures (My friend suggested flying out to them, taking their kids to soccer practice and cooking dinner). But most of those things are not justified for a <$1,000 LTV product.
So you (and I) have to live with a certain amount of onboarding churn.

However, what you can do is to dramatically reduce your onboarding churn.
Two years ago, I freelanced for an 8-figure SaaS company. They are selling access to semi-raw data. We came up with an A/B-test to test the following hypothesis: Delivering actionable advice – based on the data – each month will decrease 30/60-day churn.

We did a minimal test; sending just one email in the first month. The test group completely crushed the control group. Sending just one email decreased their 30 day churn rate by 40%.

It meant that they made an ROI of some 400% on what I charged. From running the split test. For one month. With only half the cohort receiving treatment. Ignoring prolonged customer lifetime.

That’s the power of reducing churn for a company at scale.

Use Emails to Reduce Onboarding Churn

So, emails can work fantastically well. Here are a few ideas what to send:

  • reminders to use sticky features
  • demonstrations of received value (e.g. “You saved $192 this month using our software”) a.k.a. “Get our users promoted” emails
  • reminders to use the app after inactivity

Better First Run Experience

Secondly, having a better onboarding/first-run experience can decrease onboarding churn.

  • Never let your users hit an empty page. If you don’t have data yet, show fake data
  • Lead users down the Minimum Path to Awesome in your product. Eliminate distractions.

I can give you an example of the first point. This is what LinksSpy customers see when they enter the application:

01_linksspy-empty-campaign

 

See all that beautiful white space that designers drool about? Customers don’t like it. Your churn rate hates it.

Now here’s what they will see after the relaunch in 1.5 weeks:

02_linksspy-fake-data-campaign

 

Look at that! Fake data and an in-app tour! Beauty.

 

Get to Product/Market Fit

Furthermore, reaching product/market fit will lower your churn rate across the board. This is not an easy task. Even after you have found a problem and your product presents a viable solution to the problem, you still need to figure out how to reach your target market.

Rob Walling had this problem in parts with Drip: Drip was initially a tool to collect email addresses and send autoresponders.

He got quite a few customers with this tool, but the churn rate was rather high. Only after he pivoted into Lightweight Marketing Automation did the churn rate go down.

Subsequently, the product and MRR blew way up. The huge problem here is that you need to make a decision to either build new features to satisfy your current audience OR pivot to another audience with the same product. It’s hard to know which steps to take.

Software With a Service

Lastly, you can improve your retention by offering a Done-For-You (DFY) service on top of your product. Users don’t want to learn how to use your product. They care for the results.

This is exactly the path that LinksSpy is going to take in the upcoming months. We will discontinue the $19/mo plan and instead introduce a $499/mo plan where we manage the whole outreach marketing process for your website. It’s completely hands-off and you will get a report at the end of the month detailing the results we got you.

Summary

To summarize all this: Onboarding churn is a thing. You will lose most of your customers during the first 3 months and churn rates do drop after that. This effect is caused by a number of things, most notably by not getting your users invested in your product.

Ways out of high onboarding churn are product/market fit, better first-run experiences, email (retention) marketing, and offering a Done-For-You option for your product.

Let me know your thoughts on the topic. Is there anything you struggled with? How did you overcome that challenge?

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Leveling up – Patrick McKenzie – MicroConf Europe 2015 Talk Recap

The MicroConf Europe 2015 Talk Recaps can be found on the central “hub” page.

Website: starfighters.io
Twitter: @patio11
Slides:

 

Talk Recap

  • Everything we do: It’s all about the family
    • optimize for it, NOT for business results
  • Flying Geese
    • From dirt poor country to really rich country
    • developing economy: dirt poor, not able to do anything
    • start industry anyone can do: textiles
    • take educated workforce, infrastructure improvements from textiles industry and build refining steel industry
    • repeat and level up to automobile industry
    • take what you learn from automobile and re-invest into software/robots/aircraft/etc industry
  • Flying Geeks
    • Bingo Card Creator –> Kalzumeus –> Appointment Reminder –> Starfighter

Don’t Make Our Mistakes – Make Much Better Mistakes!

  • Tutorial mission: Your first business
    • Ship it. Ship it. Ship it. Ship it. Ship it. Ship it. Ship it.
    • Optimize for learning over perfection
    • start accumulating unfair advantages for later businesses
    • Cover “minimum viable financial goal”
  • How you know it’s an advantage?
    • People tell you you’re anomalously good
    • Watch other people around you in community. Note where you’re doing good on something useful.
    • Use your growing understanding of your business to project what X would do in another, larger business, or a business with advantages you lack
    • When you find your superpower: Exploit the heck out of it!
  • The case against SaaS for Biz #1
    • huge barriers to shipping and keeping it in the market
    • Hard to sell and market without any pre-existing foothold in industry
    • Long slow SaaS ramp of death
      • took 6 months to get to $400 MRR
  • The Glide Path To SaaS
    • Plant a flag on the market with an e-book, WordPRess plugin, etc
    • Start collecting email addresses
    • Launch a productized consulting business
    • Gradually titrate up the amount of software offered
  • Typical Bootstrapped SaaS Pricing
    • $29 – $49 – Tier 1, some foozles
    • $99 – Tier 2, even more foozles, maybe a feature
    • $249 – Tier 3, much more foozles, all them features
  • Productized Consulting Base Offering
    • $99/mo: SaaS application to do pricing pages
    • $500/mo: Savvy pricing pages as a service
    • $2.5k to $10k++/mo: Chief Revenue Officer
    • This is aspirational pricing!

“The Peldi Test”: Love What You Do

  • Founder/product/market fit is one of the best advantages you can possibly have
  • do something you love
  • Overlap all products in your portfolio!

Level Up In

  • Scale of problem you’re attacking
  • Engineering acumen brought to bear on target
  • Sales/marketing techniques
  • Sophistication of business operation

Ending A Chapter

  • Deciding when it’s time to move on
    • Business not helping you achieve goals (Live/love/Learn)
    • You’ve stopped accumulating marginal advantages
    • It’s “clearly time to go.”
  • Options for pruning portfolio projects
    • shut it down
    • Put it into maintenance mode
    • Sell it
  • Anatomy of a sellable business
    • Goldilocks zone for revenue/price
    • Low ongoing time involvement from founder
    • Low-risk that present revenue evaporates
    • Growth in market
    • Technical risk mitigated
  • Starfighter
    • Online games (CTFs) engineers play, for fun, by programming
    • We passively identify skilled engineers
    • We contact them and ask about background/goals
    • If appropriate, introduce them to hiring managers
    • If they take a job, we earn a commission
    • Where is this “leveling up?”
      • Trusted relationship with co-founders
      • Scale of technical ambition
        • BCC = “Hello World with random number generator”
        • Starfighter = Stock market with C compiler
      • BCC Investment: $60. Starfighter: …
      • Does Starfighter pass The Peldi Test? HECK, YES!
  • Starfighter Lows
    • Morderous Crunch To Ship
      • Ignored family to make deadline
    • Technical Scope
      • 10x technical complexity in a new business: good. We did 100x…
    • Promised a Ship Date
      • never promise a ship date, because you are going to break it
    • Founder Communication Issues

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How I Tripled My Windows Software Revenue In 3 Days – Anders Thue Pedersen – MicroConf Europe 2015 Talk Recap

The MicroConf Europe 2015 Talk Recaps can be found on the central “hub” page.

Website: timeblock.com
Twitter: @andersthue
Slides:

 

Talk Recap

  • I was really bad running a business for the first 11 years – got better in the last 6 years
    • The most destructive force in the universe – besides the Death Star – is shame
    • MicroConf changed it for me!
      • Expanding the comfort zone
      • Sense of belonging
  • shame resilience
    • Dave Collins talking about TSR Watermark Image before teardown: “Finally a really crappy website”
    • Cleaned up the website
    • Removed the free version
    • Improved the copy
    • Went from $300/week to $900/week
    • Changes done in one evening AT MicroConf
  • Why did I not do that before?
    • Requires knowledge
    • Requires courage and shame resilience
    • Requires you to reach out and say help
  • Last day of MicroConf / Takeaways
    • Split ego and product/business
    • Started failing, stopped being a failure
    • Kept raising my hand asking for help
  • Today:
    • 150 sales/month
    • $4500 revenue/mo
    • 5 minutes support /day
    • 2 hours of coding /month

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Mistakes That Will Kill Your Business Value – Thomas Smale – MicroConf Europe 2015 Talk Recap

The MicroConf Europe 2015 Talk Recaps can be found on the central “hub” page.

Website: feinternational.com
Twitter: @thomassmale
Slides:

 

Talk Recap

  • build your business for an eventual sale – even if you don’t plan to ever do that
  • mistakes that will kill your business value
    • “Just one more feature”
    • Not tracking metrics, income & costs
      • get an accountant/bookkeeper
      • important information for buyer
      • missing data –> lower price
    • Single points of failure – owner, platform, third parties
      • common problem for solo-founders
      • SOPs help/reduce pain
    • Overselling annual plans (>20%)
      • annual plans are actually valued LESS than monthly plans
    • Not knowing when to let go
      • growing OR flat growth is the best point to sell

 

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Small Data Science – Marc Hoffmann – MicroConf Europe Talk Recap

The MicroConf Europe 2015 Talk Recaps can be found on the central “hub” page.

Website:
Twitter:
Slides:

Talk Recap

  • The hypothesis is a testable assumption
    • Shopify shops need adwords help (difficult to test)
    • Shopify shops use adwords help (easier to test, look at shopify marketplace)
  • Use all background knowledge you can get
  • Reason Backwards / Pattern Matching
  • Use the “right” statistics (mean vs median)
  • Use heuristics
    • Find most important reason and ignore the rest

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The 1-hour UI Audit – Jane Portman – MicroConf Europe 2015 Talk Recap

The MicroConf Europe 2015 Talk Recaps can be found on the central “hub” page.

Website: uibreakfast.com
Twitter: @uibreakfast
Slides: The 1 hour UI audit slides

 

Talk Recap

  • Your app/website design is damocles sword hanging over your head: Always threatening, but you never have time
  • Top 4 Design Hazards
    • User doesn’t want your product
    • user fails to sign up
    • user fails to get started
    • user fails to reach his goals
  • 3 modules, 20 minutes each
    • functionality
    • layout
    • style
  • Functionality
    • List the goals
      • Who are your ideal customers?
      • What is their big goal when they sign up?
      • What are their long-term goals, business or personal?
    • List the tasks
      • Primary: What tasks do the users perform daily? What is their daily routine for achieving that big goal?
      • Secondary: What unique tasks are performed from time to time?
    • Extract the objects
      • Work through your tasks from previous step, and list all nouns.
      • Chances are your main menu will list the same objects
    • Define the language
      • Work through list of tasks and objects
    • Classify Existing Screens
      • Primary: items in main menu & first-level descendants
    • Audit each Screen
      • List tasks & objects for each screen
      • Ideal Screen Checklist
        • one big title
        • just one list of objects
        • one prominent task (other tasks subtle)
        • clean corners
        • obvious navigation
    • Now work with the results
      • polish the language
      • split complex screens
      • Group elements in horizontal blocks
      • Polish experience for primary tasks
  • Keep your product crispy
    • simple apps are easier to use, build & sell.

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No exit plan – Rachel Andrew – MicroConf Europe 2015 Talk Recap

The MicroConf Europe 2015 Talk Recaps can be found on the central “hub” page.

Website: grabaperch.com
Twitter: @rachelandrew
Slides:

 

Talk Recap

  • Have no plan of ever selling to Facebook or anything
  • What happens after you quit the day job?
    • You hit the goal
    • You don’t have a boss anymore
    • But what is next?
  • Created EdgeOfMySeat.com
    • Things were easier back than
    • Swapping hours for money
  • Launched Perch as a result of consulting work (scratching own itch)
  • April 2013 we went full time on Perch
    • “The most dangerous poison is the feeling of achievement. The antidote is to every evening think what can be done better tomorrow.” – Ingvar Kamprad
  • Goal: “Going full time”
    • specific
    • measurable
    • attainable
    • realistic
    • time-bound

What happened after we went full time on Perch?

  • we’ve launched a second product that people love (a smaller version of Perch)
  • still just the two of us
    • still working very hard – 7 days a week
    • but we love the work
  • There is no transformation moment
    • even after going full-time, you’re still you
    • you still have your weaknesses & strengths
    • you may lose a team that covered your weaker spots
  • We forgot to ask ourselves:
    • What did we want our life to look like?
    • What was the next goal for us?
  • “We have a strategic plan, it’s called ‘doing things'” – Herb Kelleher
  • What are your options? 
    • stay small
      • outsource to small team of freelancers
      • not all products suit small (customers need rapid support; mission critical)
    • hire a team
    • replace yourself
      • “get the solution right then remove yourself from delivery” – Brian Casel
    • sell up and move on
  • We’ve tried staying small
    • Perch as a business has a lot of moving parts:
      • Development
      • Ops
      • Community stuff
      • Marketing
      • Support
      • Documentation
    • We can’t do the job of 5 people
    • We could have delayed that jump
      • continue with consulting
      • would have allowed to hire sooner
      • could have self-funded first hire
  • sometimes it is OK to upset a few customers
  • Why not hire/outsource support?
    • as a self-hosted product support is often our first run experience
    • it is truly technical support
    • not the sort of support a VA can easily handle
    • support that every person with technical chops in the company is going to need to help with
  • hiring a developer: what will this give us?
    • more development capacity
    • someone to work alongside
    • focus
    • new ideas and input to the product
    • What’s stopping us?
      • Money – we’re not quite there yet
    • How are we going to get there?
      • Increase profit to hire developer
      • Working strategically on things that increase sales of Perch
      • Focus on most profitable customers?
    • Who are our most profitable customers?
      • Perch is one-off license sale
      • Recurring because people buy a license per site they develop
      • Support costs are front-loaded
    • How do we identify profitable customers?
      • Look at data
      • segmented our customers into groups: casual, committed, super-users
      • current list of top 100 customers on our dashboard
        • I never talked to some of those customers!
    • We want customers who:
      • run a busy consultancy agency
      • Are building lots of websites
      • are more interested in being profitable than playing with the newest shiny thing
    • Your sales data is a goldmine of information
      • you don’t need a SaaS for this
    • Prioritise features wanted by ideal customers
      • Add weight to feature requests based on customer profile
  • Where do our customers come from?
    • our audience
      • seen me on stage somewhere
    • Colleagues’ audiences
    • NOT our ideal customers
  • Where do our IDEAL customers come from? 
    • they have often never heard of Drew or I
      • e.g. in support they don’t know we are the founders
    • cold audiences from Google, or referrals based on word-of-mouth
    • “Our customers don’t come through the one marketing channel that I am good at!”
  • content marketing targeted at ideal customers
  • search engines
    • we do well in organic search traffic
    • which has meant we’ve typically been a bit lazy
  • Placing ads
    • choosing sites that attract our ideal cusotmer
    • using ad copy that targets these customers
    • creating landing pages that speak to these customers
    • TEST!
  • Plugging our leaky funnel
    • we love Drip!
    • Pushing our customer segments into Drip so we can target them as groups.
    • Identifying lapsed customers – those who haven’t bought a license for 6 months – and emailing them
    • Book recommendation: Watertight Marketing
  • We have everything we need to do this
    • Nothing we’ve discovered has been a shock
    • Underlined things we really already knew
    • We’re looking at data through a different lens
  • If you are stuck
    • define your vision for your company and life
    • what does it look like? What is your role? What else are you able to do?
    • “Arrival is not static” – Sherry Walling

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How to build a self-funded SaaS as a non-technical solo founder – John Ndege – MicroConf Europe 2015 Talk Recap

The MicroConf Europe 2015 Talk Recaps can be found on the central “hub” page.

Website: pocketrisk.com
Twitter:  @johnndge
Slides:

Talk Recap

  • Pocket Risk is an online investment risk questionnaire for financial advisors
    • launched in April 2013
    • $99/mo
    • made it to 6-figures as a non-technical founder

Idea Phase

  • Goal: Establish whether you have something valuable
    • Establish what you want to achieve – $10k MRR, quit your job, billionaire
    • Margin of safety – have money in the bank or a job
    • Find a problem – your own experience or speak to market
    • Assess market size – can I achieve my goals in the market?
      • total reachable market given your resources (i.e. you know SEO, PPC –> that’s your market)
    • Validate problem – speak to 20 prospects and see if problem exists
    • Define the solution – create a mockup. Have a vision for customers, product and industry
    • Customer validation – sell the solution using mockup. Get 10 companies to pre-pay

Build Phase

  • Goal: Hire developer & build something valuable
    • Minimum $15,000 development budget. $100/hour max. You get what you pay for
    • Finding a developer: HN monthly hiring, Ruby groups, referrals
    • Assess Developer – programming test, level of commitment, past work, references, gut
  • Continue marketing and building your list

Launch Phase

  • Goal: Get to breakeven
    • Generate traffic – read Traction by Gabriel Weinberg
    • Find out why people buy, don’t buy, use, don’t use and churn – speak to them on phone
    • Know your metrics and unit economics – traffic, conversion rates, MRR, CAC, LTV, churn, feature usage
      • feature usage tells you “sticky features” that make people happy
    • Develop Relationships – industry journalists, thought leaders, other CEOs serving same customers

Growth Phase

  • Goal: Achieve your overall goal
    • Manage churn – don’t die by a thousand cuts
      • reducing churn doubled my LTV
      • every 30 days check which users didn’t use product for last 6 weeks and email them
    • Keep generating traffic – marketing is a tax you pay for being unremarkable. CAC < LTV
    • Systems – start building systems so the company can grow without you. Use software & hire
    • Vision – steer company towards your vision for customers, product and industry

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