Patrick McKenzie: “Building Things To Help Sell The Things You Build” – MicroConf 2013

The MicroConf Europe 2013 Hub Page with all the information can be found here

Speaker: Patrick McKenzie (@patio11)

Notes from Patrick’s talk at MicroConf 2013

We were all Newbies once

• In the early years (2005 – 2008) just a nice little bit of money on the side
• Later made enough to quit 9-5 and go entrepreneur
• Then started AppointmentReminder.org – lesson learned: “Only do products that really interest you”

What should I make? (And how will I know that people buy it?)

• B2B or B2C ? —> B2B! B2B! B2B!
  • Easier to get to monthly recurring revenue (MRR)
  • more technical knowledge
  • more money to get out of it
• Find people who don’t love you and ask them whether they would pay for the product!
• Do customer development before you build anything!
• Ask the right questions (“Do you have a missed appointment problem?”)
• Getting email address is next best validation to getting credit card details

Quick Wins To Pay For MicroConf 2014

Fundamental SaaS equation: traffic * conversion_rate * ARPU / churn

• Traffic is hardest to optimize for
• Conversion rate throughout funnel is easier to optimize, but takes weeks/months to see results
• ARPU you can manipulate with a few minutes of work
• Churn: run your own Operation Retention

Charge. More.

• Low prices bring you bad customers
• Killed the $9 plan, added $199 plan for AppointmentReminder.org

Lifecycle-emails for SaaS

• Drip email marketing is often/typically pre-signup, lifecycle emails are post-signup
• Lifecycle emails require more app-specific logic
• Very helpful: good understanding of funnel
• Not required:
  • Lots of volume
  • Great copywriting

Get People to Upgrade To Annual Billing

• Offer discount (1 month free) if they switch
• Offer it to “loyal customers” over email
• One click + confirmation to switch
• Conversion rate from 10% to 25%+
• Immediate revenue of $200 per email sent

Raise your ARPU by upgrading customer to higher tier

• If customer is close to edge of the quota (80%), they might grow anxious
• Suggest them to upgrade to next higher tier (at a discount)

Investigating Low Conversion Rate

• build a dashboard that shows you which customers are failing in using the software (e.g. not setting up any appointment reminders during trial)
• Walk people through the Trial
• set up trial email sequence
  • Day 0: auto-generated welcome
  • Day 3: Personal welcome from me
  • Day 20: if successful sell them hard – if NOT successful extend trial
  • Day 27: “incoming charge”

Weekly Checkup (“Get Them Promoted”)

• High perceived value (everyone likes to hear how much money they made this week)
• Great engagement
• Creates “ongoing earned media” via the option to embed announcemenets/links/etc
• Makes ROI discussions academic

Digging Into Individual Accounts

• If he cancels or has a CC billing failure –> he gets a phone call
• Everybody gets a dunning email, sent three times (i.e. email send when somebody owes you money)
  • Get to the point ASAP
  • Prominent link to capture updated CC data
  • Extend a 3 day grace period, try daily within grace
  • Don’t forget a “You didn’t update so we took the liberty of pausing your account” email

How To Quit Consulting

• Ways to scale consulting:
  • Move your rate up – dramatically
  • improving your utilization
  • Hire people
• Why I really quit?
  • Constant rat race to get new clients
  • Lots of unpaid time
  • You have a boss & you have to go to work every day
• Why not replace with a SaaS ? 
  • Long slow SaaS ramp of death
• So what do we do then? 
  • Productized consulting
    • your most common / most valuable consulting engagement, delivered without the full dance
    • an e-book / video course / etc
    • a training event / seminar / etc
  • Sell it through email
  • Offer it at a variety of price points
  • Make several gigs worth of money in a repeatable, scalable, tweakable fashion
  • most common consulting: “We don’t do email – can you fix it?”
  • Goals for productized consulting: 
    • Teach them how to implement drip marketing & lifecycle emails
    • Market at scale
    • Teach them to do their own copywriting
  • Why would you buy that over consulting?
    • Because it is $500 versus $20,000
    • Because you couldn’t find somebody to do this for you
    • Because you’re not sure you can get it right now
    • Because it’s a cheap, easy way to “test the waters”
  • Why not get it free on the internet?
    • If you pay employees to read information “for free” on the internet, it is no longer free
    • real businesses spend money on problems
    • it reduces roadblocks to adoption within an organization
  • The Key To Marketing it
    • Start building an email list a few months in advance
    • Focused 75% on teaching people stuff (pricing, selling to enterprises, A/B testing, etc) and 25% on telling them about upcoming product
    • Sent two, count’em, two sales emails
    • Sent folks to a long copy page (example)
  • Charge. More.
  • Multiple ways to buy –> multiple ways for best customers to discover ways to pay you more money
  • Partnered with folks with related interests: additional value to customers at vanishingly little work to me
  • Revenue: $64,608

Keys to Product Success

• Email, email, email
• Target a pain which you *KNOW* there is demand for
• Work on your copy!
• Deliver quality products, because you only have one reputation

-Christoph