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

The MicroConf Hub Page with links to all the notes for all the talks can be found here.

Speaker: Patrick McKenzie (@patio11)

• “Bingo Card Creator is doing business on hard mode”

Once More, With(out) Feeling

• Listen to Peldi: Start a business that fascinates you (or risk burning out on it)
• “FYI for lifestyle design: your own business is where it is at“
• Becoming an entrepreneur and delivering value to the world is an righteous and awesome way to walk down in life

Quick Wins To Pay For MicroConf 2014

• Fundamental SaaS Equation: [traffic] * [conversion_rate] * [ARPU] / (1 – [churn])
• Traffic is the hardest to optimize for – see Rob Walling’s Blog
• Conversion rate throughout funnel is easier, but takes weeks/months to see results
• ARPU you can manipulate with a few minutes of work
• Churn: run your own Operation Retention

Star #1: Charge. More.

• killed $9 plan
• Added $199 plan due to apparent demand

Star #2: Drip Email Campaign

• 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

Star #3: Annual Billing

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

Raising Your ARPU, Trivially

• Consider Bob with 280 appointments in the small business plan ($79)
• Is Bob happy? How can we make him happier?
• We should do him a solid and offer to upgrade to “Office” plan ($199) at a discount
• Did this at a consulting client:
  • Run my SQL query of everyone who is within 20% of quota on FEATURE_1, FEATURE_2 or FEATURE_3
  • Add new special offers for the higher plans with a slight (~20%) discount
  • Write email offering upgrade to special offer
  • Make +N% revenue per year

Investigating Low Conversion Rates

• Check if users are actually using your service
• Start walking your customers through the product using lifecycle email​
• send emails based on how successful they are in using the product

Lifecycle Emails

• Day Zero: Auto-generated Welcome Email
• Day Three: “Personal” welcome email from “me”
• Day Twenty:
  • Trial successful: sell them hard
  • Trial not successful: rescue the trial
• Day Twenty Seven: “Incoming Charge”

Star #4: Weekly Check-Up (“Get Them Promoted”)

• High perceived value
• Great engagement
• Creates “ongoing earned media” via the option to embed announcements / links / etc.
• Makes ROI discussions academic

Star #5: Digging into Individual Accounts

• Bob’s usage goes up & to the right –> his business is doing well
• If he cancels OR a credit card billing fails, he gets a call (because probably his CC data needs to be updated)
• everyone gets 3 dunning emails
  • 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

• People say consulting doesn’t scale.
• Ways to scale consulting:
  • Move your rate up, dramatically
  • Hire people
  • Improve your utilization at the margin
• So why did I quit?
  • Constant rat race to get new clients
  • Lots of unpaid time doing prospecting / proposal / administrative work
  • You have a boss and you have to go to work every day
• ​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

My Non-software Product

• Most common consulting engagement (2010): “We send no email. Can you, like fix that?”
• I would implement:
  • Drip marketing (see MicroConf 2012 presentation)
  • Lifecycle emails (like two minutes ago)
• It generally required:
  • Lots of sales/convincing
  • A bit of coding
  • Copywriting by me
• Why choose this over consulting (from a customer’s perspective)?
  • Because it is $500 vs. $20,000
  • Because you couldn’t find somebody to do this for you
  • Because you’re not sure you can get to it right now
  • Because it’s a cheap easy way “to test the waters”
• Why Not Get It Free on the Internet?
  • Because real businesses spend money on problems
  • “Free, if you have two week to research it” is not free to someone who cuts paychecks
  • Because paid initiatives signal quality and help to reduce roadblocks to adoption within an organization
• The Key To Marketing It
  • Started 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

Nathan Barry Is An Effing Genius

• Three packages: $249 / $99 / $39
• Sales focuses on what customer gets not on what the price is
• Packaging is a huge win (largest package made ~75% of total revenue)

What Did My Actual Product Look Like?

• Me speaking into webcam and $60 microphone
• Loosely scripted. If I were to do it again, I would add slides
• Took ~2 weeks to record plus video editor @ $3,000
• Hosted video on Wistia and rolled my own delivery platform (you should probably use Gumroad or similar)
• Partnered with folks with related interests: additional value to customers at vanishingly little work to me (e.g. CopyHackers for copy writing)
• Revenue:
  • Launch day: $12,862
  • Next week or two: $16,576
  • “Reminder: Sale ends today”: $15, 579
  • TOTAL: $64,608

Keys To Product Success

• email, email, email. Get people on it, delight them, teach them, sell only occasionally
• Target a pain point that you know there is demand for
• Work on your copy.
• Deliver quality products, because you have only one reputation.

-Christoph