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STARTUP READING LIST – JUNE 2012
Marketing, customer acquisition and sales
Early stage marketing, marketing strategy, driving user engagement, consumer psychology, viral growth, pricing, sales, PR, blogging, content
marketing, copywriting, search engine optimisation and marketing, email marketing,
optimisation and landing pages
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Contents
Early stage marketing ............................................................................................................................................ 5
Focus and market segmentation – David Skok .................................................................................................. 5
Understanding market – Chris Dixon ................................................................................................................. 6
What customers to serve – Mark Suster ............................................................................................................ 6
Getting started with marketing – Brant Cooper ............................................................................................... 11
Getting started with marketing – Dharmesh Shah .......................................................................................... 13
Marketing for early stage tech startups – Mark Suster ................................................................................... 16
An online marketing recipe -‐ KISSmetrics ......................................................................................................... 20
Naming your startup– Chris Dixon ................................................................................................................... 31
Underhyping your startup – Chris Dixon .......................................................................................................... 32
Both sides of the marketing equation – Chris Dixon ........................................................................................ 32
Platform distribution risks – Chris Dixon .......................................................................................................... 33
MVP to landing page – Ash Maurya ................................................................................................................ 34
Avoid the launch – Eric Ries .............................................................................................................................. 40
Fred Wilson on marketing – Fred Wilson ......................................................................................................... 43
The role of marketing – Rand Fishkin ............................................................................................................... 46
The 5 Minute Guide To Cheap Startup Advertising – Rob Walling ................................................................... 51
Marketing strategy .............................................................................................................................................. 57
Pick Your Early Beta Customers Very Carefully– Ben Yoskovitz ........................................................................ 57
How to get your first 1,000 users – Vinicius Vacanti ........................................................................................ 58
1000 true fans – Kevin Kelly ............................................................................................................................. 60
10 obvious strategies to ruthlessly acquire users -‐ Andrew Chen .................................................................... 65
10X Your Business – Elad Gil ............................................................................................................................. 67
How to bring a product to market – Nivi / Sean Ellis ....................................................................................... 69
Marketing science Q&A with Sean Ellis – Nivi / Sean Ellis ................................................................................ 95
Pace of marketing change – Sean Ellis ............................................................................................................. 97
Startup marketing (Sean Ellis) – Nivi ................................................................................................................ 98
The 10x product launch – Ash Maurya ........................................................................................................... 101
Marketing is hard – Rand Fishkin ................................................................................................................... 106
Inbound marketing – David Skok ................................................................................................................... 107
Marketing to match the channel – Steve Blank ............................................................................................. 110
AARRR by business model – Brant Cooper ..................................................................................................... 114
Content targeting is no match for persuasion architecture -‐ Mariel Bacci .................................................... 116
Persuasion architecture in action – Mariel Bacci ........................................................................................... 118
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Founders Make the Best Startup Marketing Leaders – Sean Ellis .................................................................. 120
Growth hacking – Sean Ellis ........................................................................................................................... 122
Customer feedback -‐ Andrew Chen ................................................................................................................ 123
Lessons from the casino industry -‐ Andrew Chen ........................................................................................... 126
Driving user engagement ................................................................................................................................... 128
Product distribution (Gaining user traction) – Peter Thiel (Blake Masters) .................................................... 137
Getting traction – Gabriel Weinberg .............................................................................................................. 184
Optimising the conversion funnel – David Skok ............................................................................................. 154
Big picture customer development – Sean Ellis .............................................................................................. 120
Engaging new users – Chris Dixon .................................................................................................................. 187
Demand harvesting – Sean Ellis ..................................................................................................................... 187
How cost of customer acquisition kills startups – David Skok ........................................................................ 137
Value of a user -‐ Andrew Chen ....................................................................................................................... 137
Social network marketing – Andrew Chen ..................................................................................................... 132
Facebook click to action – Brian Solis ............................................................................................................. 128
Cost of customer acquisition – David Skok ..................................................................................................... 137
Measuring user engagement -‐ Andrew Chen ................................................................................................. 188
Paying to acquire users – Sean Ellis ................................................................................................................ 173
Cost per acquisition -‐ Andrew Chen ................................................................................................................ 154
Building networks – Chris Dixon ..................................................................................................................... 188
The cardinal sin of community management – Eric Ries ................................................................................ 193
Consumer psychology ......................................................................................................................................... 197
The psychology of fear (and conflict) – Peter Thiel (Blake Masters) .............................................................. 197
People always stay the same -‐ Andrew Chen ................................................................................................. 211
25 reasons users STOP using your product – Andrew Chen ........................................................................... 216
10 things about people – Cindy Alvarez ......................................................................................................... 219
Why fear is a marketers best friend – KISSmetrics ......................................................................................... 219
What jobs are users hiring your product to perform – Chris Dixon ................................................................ 222
Viral growth ....................................................................................................................................................... 224
Viral branding versus viral action -‐ Andrew Chen .......................................................................................... 224
Viral loops -‐ Andrew Chen .............................................................................................................................. 226
Engagement loops – beyond viral – Eric Ries ................................................................................................. 229
Viral marketing is not a marketing strategy -‐ Andrew Chen .......................................................................... 233
Ways to achieve viral growth – Vinicius Vacanti ............................................................................................ 235
Viral marketing – David Skok ......................................................................................................................... 238
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Making content go viral – Mark Suster .......................................................................................................... 243
Facebook viral marketing -‐ Andrew Chen ...................................................................................................... 246
Pricing ................................................................................................................................................................ 252
Pricing for startups – Rob Fitzpatrick ............................................................................................................. 252
Determining optimal price – Sean Ellis ........................................................................................................... 253
Great Guidance on Pricing – Sean Ellis ........................................................................................................... 255
Is Your Pricing a Dot or a Triangle? – Cindy Alvarez ....................................................................................... 256
Should You Charge More For Your Product? – Brad Feld ............................................................................... 259
It’s easy to underprice your product – Nivi ..................................................................................................... 260
Price: Why Lower Isn't Always Better – Fred Wilson ...................................................................................... 263
PR ....................................................................................................................................................................... 265
Pitching a tech blogger – Mark Hendrickson .................................................................................................. 290
Building relations with journalists – Mark Suster ........................................................................................... 292
Noone cares about your startup – Matt Brezina ............................................................................................ 295
PR and crisis management – Mark Suster ...................................................................................................... 298
Hiring PR agencies – Brant Cooper ................................................................................................................. 302
PR for startups -‐ Erica Swallow ...................................................................................................................... 305
Spin and PR – Mark Suster ............................................................................................................................. 311
How to pitch tech journalists – Ciara Byrne ................................................................................................... 313
How to pitch to the press – Nick Saint ............................................................................................................ 315
Creating a good blogger pitch – STEPHANIE SCHWAB ................................................................................... 317
Blogging ............................................................................................................................................................. 320
Starting a blog -‐ Andrew Chen ....................................................................................................................... 320
No time to blog? – Charlie O’Donnell ............................................................................................................. 324
How to start blogging – Mark Suster ............................................................................................................. 325
Becoming a better blogger – Neil Patel .......................................................................................................... 329
Blogging for business – Rob Fitzpatrick .......................................................................................................... 342
Becoming a conversion machine – Glen Allsopp ............................................................................................ 344
Just start blogging – Jason Cohen .................................................................................................................. 356
The Ultimate Guide to Guest Blogging – Kristi Hines ..................................................................................... 360
Content marketing ............................................................................................................................................. 367
Content marketing – Toby Murdock ............................................................................................................... 367
Content for both sides – Douglas Melchior .................................................................................................... 377
Content creation – John Pring ........................................................................................................................ 379
Copywriting ........................................................................................................................................................ 394
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Long copy vs short copy – Jeff Sexton ............................................................................................................ 394
For conversions or thought leadership – Steph Hay ....................................................................................... 396
How to be interesting – Jonathan Morrow .................................................................................................... 398
Persuasive writing techniques – Brian Clark .................................................................................................. 401
Sales ................................................................................................................................................................... 265
Sales and scope creep – Michael Woloszynowicz ........................................................................................... 265
Enterprise customers don’t change – Ben Horowitz ....................................................................................... 267
Scaling sales (ABC) – Mark Suster .................................................................................................................. 270
Scaling sales (objection handling) – Mark Suster ........................................................................................... 273
Understanding salespeople – Mark Suster ..................................................................................................... 275
Building a sales team – Dharmesh Shah ........................................................................................................ 278
Hiring sales – Furqan Nazeeri ......................................................................................................................... 280
Hiring sales people – Mark Suster .................................................................................................................. 281
Selling to enterprise – Chris Dixon .................................................................................................................. 284
Create a burning platform – Mark Suster ...................................................................................................... 285
The one day sales cycle – David Skok ............................................................................................................. 287
Search engine optimisation and marketing ....................................................................................................... 404
Adwords is not enough for success on the consumer web -‐ Andrew Chen .................................................... 404
Some thoughts on SEO – Chris Dixon ............................................................................................................. 406
SEO is no longer a viable marketing alternative – Chris Dixon ....................................................................... 407
Strategic SEO for Startups – Patrick McKenzie ............................................................................................... 409
Email marketing ................................................................................................................................................. 419
It’s the CEO’s job to email the first 1000 signups – Rob Fitzpatrick ............................................................... 419
Email marketing – KISSmetrics ....................................................................................................................... 420
Optimisation and landing pages ........................................................................................................................ 428
Why your site will fail – Andrew Chen ............................................................................................................ 428
AB test big changes (not just small) – Josh Porter .......................................................................................... 429
AB vs qualitative testing – Laura Klein ........................................................................................................... 432
Website optimisation – Conversion Rate Experts ........................................................................................... 437
The Anatomy of a Perfect Landing Page – FormStack ................................................................................... 455
Landing pages that convert – Chance Barnett ............................................................................................... 457
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Early stage marketing
Early stage marketing
Focus and market segmentation – David Skok
http://www.forentrepreneurs.com/sales-‐marketing-‐machine/focus-‐market-‐segmentation/
Focus & Market Segmentation
Focus: Segment your Market, and pick the Low Hanging Fruit
At the start of your marketing process, you will be dealing with the issue of who to target – people that you suspect represent potential buyers. A big mistake that I see with startups is that they don’t take the trouble to segment their target market, and identify the low hanging fruit. Much has been written about the importance of Focus, and I am yet another strong believer in this. Particularly in the early days of a startup, when you have very few resources, and when everything you do has to pay off.
If you are not convinced of this, I strongly recommend reading Crossing the Chasm, by Geoffrey Moore, which remains to this day one of the most important books for startups. Inevitably there will be some sub-segment of your market that is most likely to buy from you. It may be a particular vertical, or it could be picking a particular size of customer, or some other characteristic such as experience with IP networking. Look for buyers that are feeling extreme pain (where their hair is on fire), and who also have money, a sense of urgency, and a good fit with the features of your current version of your product.
This will also allow you to develop very specific focused marketing messages that will likely appeal far more strongly than broad general messaging. It will also make it easier to decide what product features to build next, as you will be driven to complete those needed to fully satisfy that one segment. A common mistake is a product that meets 80% of many different segments, because management didn’t have the discipline to focus. 80% is enough to get them interested, but not enough to get them over the bar to purchase.
The reason that management teams don’t focus is because focus is hard. Focus means saying no to highly attractive opportunities that may be knocking on your door. As an example, when I first started working with one of my portfolio companies, they had been approached by one of the top global banks that loved their software and wanted to put it into 2,500 branches. The customer was consuming tons of the company resources, with sales and product people flying everywhere. The problem was the bank needed on-site global support, and there was no way that a tiny startup was in a position to provide that. However because the opportunity was so big, no one was willing to say no to it. It took some outside help to make them realize they couldn’t win the deal, and that they were far better off focusing on the SMB market where their products and ability to service them were ideally suited.
Don’t fall into that trap: you will win by having a product that is over the bar for one sub-segment, and well targeted focused messaging that resonates clearly with that segment.
This market segmentation will drive the first part of your funnel: figuring out who to target.
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Understanding your market – Chris Dixon
http://cdixon.org/2009/10/11/understanding-‐your-‐market/
October 11, 2009
Understanding your market
Some startups become huge sensations without requiring any active marketing – YouTube, Skype, and Twitter come to mind. However, the vast majority of successful startups gained adoption through marketing: PR, SEO, partnerships, paid marketing, and so on. My strong suggestion would be to hope for the former but plan for the latter.
Marketing is a huge topic. Here I just want to make the point that, for starters, you need to figure out two things: 1) how information and influence flows in your market, and 2) when and where people use and/or purchase your product.
I’ll use my last startup, SiteAdvisor, as an example. SiteAdvisor (now called McAfee SiteAdvisor) is a consumer security product. Most consumers don’t learn about security products on their own. Instead, they rely on their “family/friend sysadmin” (smartest computer person they know). These family sysadmins read technical websites and magazines. In order to reach this audience, we performed studies on data we had collected, which led to lots of coverage, which raised our profile and bolstered our credibility.
Now to when and where people buy security products. Most people only think about security when 1) they buy a new computer, 2) they first get internet access, or 3) they get a virus or other security problem. The last case is actually pretty rare, so most companies focus on 1 and 2. How do you reach people at those moments? Through “channels” – in particular PC makers (“OEMs”) and internet providers (“ISPs”). (For public market people: focusing on these two channels was McAfee’s big insight in the 2000′s and how they made a comeback versus Symantec who dominates retail).
Most people don’t talk to their friends about security products so it’s very hard to do mass word-of-mouth marketing. (Exceptions would be the beginning of the spyware epidemic around 2001-2 when AdAware got super popular via word of mouth). So you have to understand and pitch to these channels.
These observations are specific to consumer security, but every startup should have a similar theory of how to market their product.
What customers to serve – Mark Suster
http://www.bothsidesofthetable.com/2009/09/16/most-‐startups-‐should-‐be-‐deer-‐hunters/
Most Startups Should be Deer Hunters
by MARK SUSTER on SEPTEMBER 16, 2009
This post is part of my series “Startup Lessons“
Elephants, Deer and Rabbits – Some thoughts on start-up segmentation
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Nearly all of the mistakes I made at my first company I fixed by the time of my second company. This is the only mistake I repeated twice and it is a mistake that I see many, many companies make.
I know that this advice won’t apply to every possible startup – but I think it applies to many.
When you start your company the very first question you need to ask yourself is which kind of customers do you want to serve. Many start-ups (and even growth firms) lack this discipline and they therefore serve customers off all sizes. This leads to suboptimal results for all.
Make sure you know what the size of customer you want to serve is, what the people in a company of that size do, the problems they have, the features that will resonate and the channels you’ll need to sell into and service that customer. Because it will vary dramatically by different segments I believe you need to pick an animal size and go for it.
I’ve stated my animal bias in the title – but each can work for different business types. The segment breakdowns are below:
Elephants:
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It is very tempting for many start-ups to hunt elephants. These are really massive customers. It’s landing AT&T or Microsoft as a customer when you’re a start-up. You’ve got 8 people and are serving a business unit that has 5,000.
It’s tempting on many levels to be an elephant hunter. If you manage to kill an elephant they have so much meat they’ll feed you for a long time. But elephants are hard to catch and take whole teams of people to bring down. They take special tools. If you’re not successful you may starve. If you do catch them, it could be even worse. Avoid elephants in your early stages. Learn from my mistakes.
Here is the real world story. I worked for Andersen Consulting for more than 8 years. Initially as a systems designer and programmer and post MBA as a strategy consultant. We knew how to land huge corporate customers. We knew how to “call high” into board rooms and get meetings. So when I started my first company I naturally went for elephants.
The problem is that they were initially very easy for me to find. I could easily go into the board rooms of major European companies (I was based in London) and land $500k – $1 million contracts so my order book grew rapidly. The problem is that to win each of these deals I had to promise high service levels. We typically committed to building “missing” features and therefore steered off of our MVP (minimum viable product).
We had to promise really steep service SLAs and help desk hours. We had to do intense training sessions. And when things didn’t go perfectly these organizations had huge leverage over us. In short, servicing the elephants consumed us. It soaked up all of our development resources and didn’t allow us to focus on what we felt our company strategy was.
We started out with such big dreams about changing the world. On some level we felt we did because being a SaaS company in 1999 was trailblazing. But in the end we ended up building esoteric features that we knew our clients would never use because they paid us lots of money. See definition of a whore.
And this is not just a problem at start-ups. I remember working for Salesforce.com and we were bagging elephants relative to our size. We were obsessed with landing Merrill Lynch, Dell and Cisco. I watched the first two of these customers consume significant portions of our internal programming resources. I personally felt that we would have been better served putting more resource into building out cloud services, for example, to make Salesforce more scalable in terms of our user base. (note: my internal friends at Salesforce tell me that they’ve really fixed this now and internal dev teams are much more focused on bigger, more strategic development).
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Elephant hunting does work for some companies. Some companies / products are designed for large organizations from day 1. But I believe that if you go down this road you will struggle to simultaneously serve the SMB market. The needs are too different as are the sales channels and marketing messages. If you want to hunt elephants optimize your tools for just that. And know that VC will be hard to come by.
Rabbits:
Equally deceiving are rabbits. There are so many of them – they seem like they’re everywhere. So you chase them. But as you get closer to them you realize that they’re quick little buggers. They scatter and get away. You wonder whether they were really worth the effort after all.
Rabbits for me are the equivalent of having a low-end version of your product that you feel you’ll make up for in volume. I see it all the time. Companies post the $5 / month product designed for self-service clients. Or they have products that cost $40 / month but that require a direct sales person to close them.
This is especially problematic in the Web 2.0 / Freemium world where too many company build their business models around trying to build massive scale of free customers and then convert a small share to low monthly payments. I guess it has worked for some companies? (Basecamp? Who else?)
My second company, Koral, tried to go down the freemium route. We found that at the low end there wasn’t enough revenue to make it worth our while. Then Salesforce.com asked us to implement our solution to all 3,000 employees (before they decided to buy us). So we were trying to optimize for freemium while building in all of the special requests Salesforce asked for in order to win the deal. We went after it because it was worth some serious elephant meat.
Sometimes it is acceptable for companies to focus on low-level entry customers – Rabbits. Obviously if you’re going to build a massively scaled business like Twitter, Facebook or Zynga you’re going for huge volumes and the small transaction value model can work. I’m told this model has worked well for Zoho in the small business sector. But unless you’re a very large volume business and focused on transactions rabbits are deceptive.
I came across a company today at TechCrunch50 called Outright that is perfectly suited to rabbits. I believe it can actually build a big Rabbit Business and it’s strategy seems perfectly suited to reaching this customer base through partners.
But few companies are good at trapping rabbits.
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Want to be the SharePoint killer? Avoid rabbits. Have a better version of BaseCamp? Ditto. Want to build a product that relies on converting local mom-and-pop businesses into online advertisers – see if a regional approach might work better. Have a product for online backups? Avoid the low end of the market – too elusive and hard to shake enough money out of them.
In short, when you hunt rabbits they’re not as easy to catch as you might think. When you catch them they don’t have much meat. So you need a lot of them to feed the village.
Deer:
The analogy is now obvious. Deer are easy to kill. When you do bag deer they have plenty of meat on them to have made it worth you while. Deer are right-sized for a start-up.
Deer are not so big that they can make huge demands on you for your development resources or customer support. They can barely get you to agree to make changes to your standard terms & conditions. If you catch lots of them you’re not beholden to one big one that if they cancel their order you’d be devastated.
When you’re a start-up it is far easier to cut your teeth on companies that are easy to serve, not as demanding yet can afford to pay you fair prices for your product. If their demands are too high you can easily move on to the next customer. They allow you to stay focused on your defined company strategy without having to compromise.
That’s why I believe most early stage companies should be deer hunters.
Final question I’m often asked – how big financially are Elephants, Deer & Rabbits? That’s for you to determine for your own business because it depends on your customer base and the value you’re providing them. Many of my friends who were initially focused on low-entry price point consumers have moved up market to focus on slightly smaller markets with customers willing to pay. For me, classic definition of deer segmentation.
Apologies to all vegetarians.
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Entrepreneurs: Know Thy Marketing! – Brant Cooper
http://market-‐by-‐numbers.com/2009/11/marketing_help/
Entrepreneurs: Know Thy Marketing!
By brantcooper, November 18, 2009 7:04 pm
I don’t know who is more exasperated, entrepreneurs flummoxed by marketers or me, upset that another entrepreneur has been flummoxed by marketers!
People, language is for communication and marketing terms, abused as they are, fall somewhere within the scope of language. To communicate you need to learn the terms. To practice marketing or to hire a marketer you need to grasp some basics. Please.
Marketing Help Rule 1.
(<> means “not equal to”)
Blogging <> PR <> Brand <> SEO <> Logo <> Advertising <> Tagline <> Messaging <> FaceBook <> Positioning <> Twitter <>Lead Gen <> [Enter mktg term here]
Marketing Help Rule 2.
Trust me, you don’t need all the marketing tactics listed in Rule 1.
Marketing Help Rule 3.
The right marketing tactics for you, right now depend on WHO your prospective customers are and WHAT stage your company is in.
Marketing Help Rule 4.
All Marketers have a core competency (or two). Regardless, (almost) all Marketers will sell (almost) all marketing services.
Marketing Help Rule 5.
You need marketing to grow your business. And more likely than not, you need or will soon need help marketing. Admit it.
For a moment, forget everything you know or think you know or have heard about marketing. Start with a clean slate.
Now imagine you are a new customer of a particular product or service. You just finished buying. You are a bit giddy:
You’re eager to get started.
You’re excited at the prospect of reaping serious value.
You’re determined to at least get your money’s worth.
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You have a small fear in the back of your mind that you spent too much or made the wrong choice.
You both want to show it off and hide it from view until you’ve proved it’s worth.
Now like a bad movie flashback, go back to this morning right before your alarm clock sounded. Better yet, go back to the moment BEFORE you realized you had a NEED that you MIGHT eventually purchase SOMETHING from SOMEONE to RESOLVE the need. Your experience from this moment –pre-realization –to the moment of sale is marketing.
Your maybe want to tell me it’s sales. But no, the seller sells. The buyer experiences marketing. Whether you agree or not, analyze all the marketing advice you’ve received
in this context. Think about all the people telling you that you must use social media
marketing. Think about magazines, news, commercials, blogs. Think about your logo and your clever slogan. Think about “your brand must be consistent!” Think about your color palette. Did any of these things affect your path from pre-realization to purchase (as far as you know)? No, yes, maybe?
Ruminate on this concept:
Ms. pre-realization will eventually buy from me because:
I’m a good person
I try hard
My technology is the best
I don’t oversell
I’m ethical
General Haig interviewed me on some TV show on a plane somewhere, sometime. I think.
I tweet
Marketing feels daunting because you are being shown a dozen yellow brick roads that weave off gloriously into the colorful horizon. That and the promise that the chosen path is flowering with ROI poppies. Walk forward in your customer’s shoes from before purchase; from pre-realization. How do you get to you?
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Startup Marketing: Tactical Tips From The Trenches – Dharmesh Shah
http://onstartups.com/tabid/3339/bid/9008/Startup-‐Marketing-‐Tactical-‐Tips-‐From-‐The-‐Trenches.aspx
Startup Marketing: Tactical Tips From The Trenches
I’m speaking at the Inbound Marketing Summit later this month in San Francisco. There are some really great speakers lined up (David Meerman Scott, Chris Brogan, Charlene Li, Paul Gillin and others). If you’re looking to learn more about inbound marketing and how to get found in Google, social media and blogs, this should be a great event. If you decide to attend, use the code HUB200 for a special $200 discount. Drop me a note if you’re going to be there, would love to meet-up.
My session’s going to be called “Startup Marketing: Tips From The Trenches”. As I get my thoughts together for this, I started making a list of all of the things I’d advise a new startup to do to get things kicked off with a limited budget. As it turns out, there are a lot of tactical steps that individually don’t do much, but in aggregate start laying the foundation for much bigger things. So, I thought I’d share some of these things with you. This list is not intended to be a comprehensive “here are all the things you should do”, but more of a “if I were starting a company today, here’s what I would do in the first 10 days…” It’s written in a short, punchy style. I’ll likely revise it in the future as I add more things, but I wanted to get “Version 1.0” out there for you and see what you think.
Tactical Tips for Startup Marketing
1. Pick a name that works. Needs to be simple, memorable and unambiguous. The “.com” domain should be available without playing tricks with the name (like dropping vowels or adding dashes). Also, just because there’s no website on a domain doesn’t mean it’s “available”. Available means something you can register immediately, or that has a price that you’re willing to pay attached to it. Don’t wander down the rabbit hole of finding the perfect name if you have no indication that it’s for sale. This will waste a bunch of your time.
2. Put a simple website up. Doesn’t have to be fancy. The goal is to put enough content on the site to start the Google sandbox clock. Don’t worry about the site not saying much (nobody’s going to be looking at it anyways). Make sure to use a decent content management system (CMS) and not Dreamweaver or (shudder) FrontPage. Just because you can hand-craft HTML doesn’t mean you should for your startup website. The structure and features of a CMS are going to be important someday. Trust me.
3. Get some links into the new startup website. If you have a personal website, link to it from there. If you have friends/associates/family with websites, cash in some favor chips and get them to link to it. The goal is to get the Google crawler to start indexing your site. You only need one decent link to get things going. To check whether your
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site is being indexed by Google, do a search like site:yoursite.com (not perfect, but good enough).
4. Setup a twitter account. Name of the account should match your company/domain name. Link to your twitter account from your main site and to your main site from your twitter account. (Note: If you have a natural skepticism of the value of twitter, you are welcome to this skepticism. But, go ahead and grab your twitter account anyways. You can resume your skepticism after you do that).
5. Add e-mail subscription. Let people sign-up to get an email when you’re ready to show them the product. A simple email signup form is sufficient.
6. Get a nice logo. Run a quick contest on CrowdSpring or 99Designs and you’ll wind up with something decent enough. Make sure you get the vector file (Illustrator or EPS file) as part of the final deliverable. If you've got design skills yourself, or know somebody really good that can do it, even better.
7. Setup a Facebook business page (known as a “fan” page) for your startup. You’re not going to get many fans in the early days. That’s OK. Just get something out there. Add a simple description of your startup, link back to your main website. The usual stuff.
8. Create a clean Facebook URL. Facebook doesn’t allow simple/vanity URLs (unless you're big and established). So, to make things easier on yourself (and your users), setup a sub-domain and redirect it to your Facebook page. For example, here’s what I did: facebook.hubspot.com (notice that when you visit this link, it takes you automatically to the ugly Facebook URL). Setting up this sub-domain is free and usually pretty easy (it’s done through whoever your registrar is for your domain).
9. Kick off a blog. You can use one of the free hosting tools (like WordPress.com), but don’t use their domain name. Put your blog on blog.yourcompany.com — or if you’re proficient and can install WP locally, make it yourcompany.com/blog. Do NOT make it yourcompany.wordpress.com. The reason is that you want to control all the SEO authority for your blog and channel it towards your main website. And, chances are, WordPress.com doesn’t need your help on the SEO front.
10. Write a blog article that describes how you got to this point. What problem you’re hoping to solve. Why you picked this problem. It should feel a little uncomfortable revealing what you’re revealing. If you have tendencies towards being in “Stealth Mode”, read “Stealth Mode, Schmealth Mode”. With inbound marketing, you’re going to need to get used to revealing things that might be uncomfortable. Get over it.
11. Setup Google Alerts for at least the following: Your company name, link:yourdomain.com and “industry term”. Try to find a good balance for your industry term so you don’t get flooded with alerts that you simply will start ignoring. This may take some iteration and refining. (Oh, and use the “As It Happens” option in Google Alerts so you’re not waiting around for new alerts to show up).
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12. Find three closest competitors. Pretend like someone is paying you $10,000 for locating each competitor. Really try hard. Barely managed to find three? Take a lot of effort? Great. Now find 3 more. Of these 6, pick the two that you think are the most marketing savvy. They should have aWebsite Grade > 90, a blog with some readers, a website that you can envision people using, a twitter account that they actually post to, etc. These are the competitors that you’re going to start “tracking”. Add their names and websites to your Google Alerts.
13. Update your LinkedIn profile (you do have a LinkedIn profile, right)? Mention your new startup, and add a link to your startup website to one of the three slots for this purpose. Make sure you specify the anchor text. Don’t go with the default of “My Website”. The anchor text should be your startup name and maybe a couple of words of what it does. You can look at my profile to get a sense:http://www.linkedin.com/in/dharmesh (note: I don't accept LinkedIn invites from people I don't know. If you're looking to get to know me, follow me on twitter @dharmesh).
14. Get business cards printed. Don’t go overboard, but don’t use a “free” option (because it’s not really free, it’s just subsidized). I don’t believe much in business cards, but you need them to simply avoid the 30 seconds of discussion as to why you don’t have a card when people ask you for one at conferences and meetings and such. They’re worth the price to avoid that uncomfortableness.
15. Use the Twitter Grader search feature to find high-impact twitter users in your industry. Start following them. You want to start forging relationships. Start building your twitter network. Resist the temptation to mass-follow a bunch of random people or play other games just to get your follower count up. That’s not going to matter. Get some high quality relationships going. If you’re really serious, start using an app like TweetDeck so you can more easily monitor the needed conversations.
16. Create a StumbleUpon account. Specify your areas of interest (part of registration). Spend 10 minutes a day (no more!) stumbling and voting things up/down. Start befriending those that are submitting sites that are relevant and interesting for your startup. Don’t submit your own stuff — just start contributing.
17. Subscribe to the LinkedIn Answers category that best fits your area of interest. Answer one question a day that you feel like you’ve got some expertise in. Don’t self-promote. You’re seeking to build credibility and trust — not sell anything.
18. Find the bloggers that are writing about your topic area. Subscribe to their feed, and read their stuff regularly. Leave valuable comments and participate in the conversation. (Do not spam them or write “fluff” comments. If you don’t have something useful to add to the conversation, don’t comment).
19. Start building some contacts on Facebook. Organize your users into groups (one for your business and another for friends/family). This will come in handy later. Don’t spam people and ask them to visit your website. At this point, your website is still probably not worth visiting.
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20. Grade your website on Website Grader. Fix the basic things. You should be able to get a 50+ just by doing the simple things it suggests. [Disclaimer: I wrote Website Grader].
21. Get Some Analytics: Install some web analytics software and start watching your traffic. Where is it coming from? How is it growing? What keywords are people using to find you? What content are they looking at? It's ok to get a bit maniacal and obssessed about it at first. Many of us do that (and some of us never get over it).
If you liked this article, you'll probably love the Inbound Marketing book that I co-authored. It includes similar practical advice for getting found in Google, social media and blogs.
If you’re interested in startups, you can follow me on twitter @dharmesh.
What have I missed? What ideas do you have on tactical things for startup marketing? What do youdo?
Update: Oh, and by the way, if you liked this article, you will love my recently released book,Inbound Marketing: Getting Found Using Google, Social Media and Blogs. The book is a practical guide to marketing on the web and has been an Amazon Top 100 book since the day of it's release.
Love startups? Join the OnStartups community on Facebook.
Marketing for early stage tech startups – Mark Suster
http://www.bothsidesofthetable.com/2011/06/27/10-‐lessons-‐for-‐managing-‐marketing-‐at-‐an-‐early-‐stage-‐startup/
10 Marketing Lessons for Early-Stage Tech Startups
by MARK SUSTER on JUNE 27, 2011
I made every textbook mistake at my first startup, which is why I believe I was much more effective at my second one. I have adopted the motto “good judgment comes from experience, but experience comes from bad judgment.“ We need to learn from doing, by trial-and-error.
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If I can help you avoid some of my first-time mistakes it would be a victory. The following are some lessons I learned about early-stage startup marketing. Because market is such a broad topic, I’m restricting these lessons to PR marketing (as opposed SEO, SEM, product marketing, etc.).
1. Where Stealth is Good – There’s a lot of discussions on the web about whether startups should be stealthy before they launch or not. The truth is – there isn’t a “right” answer so for your company. You need some guidelines to make decisions. My general rule is that it’s good to be stealth in the early days while you’re building your product and testing your market. Stealth does not mean constipated, paranoid and totally untrusting of others. It does mean not telling more people your future plans than is necessary. It means avoiding drinking too much at cocktail parties with other tech people and bragging about your plans. It means not over-sharing your deal with VCs or other investors.
The truth is that we work in a very small, tight-knit industry and news & plans spread fast. In the early days you don’t really want 3 extra teams hearing your ideas and gearing up to compete before you feel you’ve got a solid head start. Most people totally advise against stealth. They think that only by being open and testing your ideas in an open marketplace can you be successful. Be careful about this advice.
Also be careful about VCs. Most ones that I know have very high ethical standards so I’m not concerned about that. But once a VC has heard your idea he can’t “un-think” it. And these ideas have ways of seeping into board discussions with portfolio companies as in, “have you ever thought about trying A, B or C?” It’s mostly unintentional but tacit knowledge about ideas spreads quickly amongst the chattering elite.
I actually like finding entrepreneurs who are more circumspect, less braggadocios and generally more planned about their actions.
2. Where Stealth is Bad – I do meet entrepreneurs who clearly fall on the other side of spectrum and are totally closed. I worked with an entrepreneur who was to appear at a startup networking event where he was to talk about his company’s plans. He considered pulling out of the event
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because he wanted to stay in “stealth mode” and felt an event like this compromised him. I counseled him to do the event (it was high profile) and talk in broad themes about the areas in which his business would compete. There are very few truly novel ideas so talking in broad themes certainly wouldn’t give away any grand strategy. In stead he went to the event and told everybody “we’re in stealth mode and can’t yet reveal what we do.” It went down like a lead balloon.
I think he really learned from this experience: Experience comes from bad judgment. Nobody likes to hear you say, “we can’t tell you anything we’re in stealth mode” so develop some generic talking points that don’t give anything away when you’re asked what you do.
The biggest problem with over-stealthing yourself is that you cut off some of your most valuable resources in terms of testing your ideas, getting feedback from smart entrepreneurs & investors and helping you figure out the potential flaws in your approach.
In my experience, entrepreneurs who are overly paranoid or are information hoarders rarely do well. They certainly struggle to find mentors as there is nothing more frustrating than trying to help a company who is afraid to tell you anything.
3. Market Today’s Puck, Not Where It’s Going – I often tell startups to “skate where the puck is going” as a metaphor for not just copying what every other company is doing today but to think about where the future lies and planning for that now.
But it is a big mistake to tell too many people where you’re heading. I call this “marketing futures.” Marketing futures can be really good for enterprise software companies where the information is passed between sales rep and potential customer in terms of near-term roadmap. The buying cycles are often 3-6 months so you want to put your best future foot forward. But don’t let this information get out into the general press and don’t market more than a few months out.
For early-stage consumer companies I would be careful not to market futures at all.
We all know that much of early-stage technology startup success comes from execution and often what you’re working on today will be rolled out more seriously over the next several months. So I recommend that companies talk in detail about the puck at their feet but avoid talking about where the puck is going. While all your competitors are trying to copy your model, you’re already on to the next thing on your engineering team.
Nobody seems more disciplined at this tight-lipped future marketing than Apple and you can see how it has served them.
4. Don’t Market a Bad Product – Perhaps the most important lesson for first-time entrepreneurs is that you can’t have great marketing for a bad product. The corollary is that it is very hard to recover from a crappy marketing campaign that over-hyped. I think I first heard this from Guy Kawasaki but it’s kind of obvious. In a world in which you’re encouraged to launch early and get feedback from customers you can often confuse “product launch” with “marketing.”
I think a great example right now is turntable.fm. It’s a buggy product but pretty damn cool. I haven’t heard them pounding their chest and running big marketing campaigns. And the product itself is invite-only so they can control volume and everybody has expectations managed. By the time they go GA (generally available product) I’ll be the kinks are all worked out. And the anticipation of wanting to see the product will build.
The strategy they’re employing is called “velvet rope” as in what nightclubs do to build scarcity and interest in getting on the inside. It also helps to keep down issues with crowds getting too big, too early.
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5. Don’t Blow Your Wad Early – There is a temptation of startups to announce that they’re “first” at something so they rush to market with announcements. I know because I did this in early 2000. We rushed to market to be first and got great coverage in the Financial Times (we were in London). But our product wasn’t ready for prime time and we struggled to live up to the hype we had created.
As you can imagine that once you’re compared to Ishtar (the movie) you’ve got a higher bar of success to get people interested the second time. Not everyone has a spare 40 mill for a re-do.
6. Market to Your Target Audience – I’ve seen a lot of startups who like to write blog posts on life as an entrepreneur. That’s fine if entrepreneurs are your target market. But be clear on whom your target market is and what the messages you want to communicate to them are. I talked about that in detail on this post about how to blog as a startup.
But whom you’re marketing to is not always an easy topic. At one company I work with it’s clear that our target user today is youth-oriented and middle America as opposed to 20-something and Silicon Valley or New York. We’ve been very successful at the former. But we also need to be mindful that often the influencers are on the coasts (LA/NY/SF) and that we can’t ignore them. So we’ve launched some campaigns to be sure we’re picking up these crowds with different messages.
7. Don’t Believe the Hype – Perhaps one of the biggest mistakes in marketing is to get caught up in your competitors marketing noise. When you’re inside the bubble and paying attention to every announcement of your nearest 3-4 competitors it’s easy to get despondent when they get their killer press articles or announce new features.
Those of us that have been around the block tend to not get too worked up on any big competitor announcements. They come and go. They’re mostly fleeting. Life goes on. iMessage is announced. The NY Times puts Group Messaging companies on their list of companies crushed by Apple’s WWDC. But life doesn’t end. It’s a narrow product. Most app-to-app products are inter-operable, Apple isn’t. You have tons of differentiation. Life goes on.
8. Your Competitors Look the Same as You When They’re Naked in the Mirror – One thing that startup CEOs often overlook is the impact of marketing on team morale. Every day your team members are reading about all of the great things happening at your competitors company. You’re reading their press releases or blog posts. Insider your company everything feels like it’s going to hell in a hand basket.
That’s because that’s how it ALWAYS feels at a startup. You always have too much technical debt, too many problems, staff members quitting, not enough capital, customer complaints, etc. That is EXACTLY how your competitors feel, too. And they’re reading your press articles and thinking, “shit, they have everything figured out.” You don’t. Make sure your team knows this and stays confident. Iwrote about it in detail in this article.
9. Build Relationships – Many startups make the mistake of thinking that they simply approach a journalist any time they have a story and get coverage. IIt doesn’t work that way. Journalist are constantly harangued by over-eager entrepreneurs. Go slowly. Get to know journalists when you don’t need stories. If you care about this topic a more detailed article is here.
Follow them on Twitter. Respect their profession. Read their articles. Comment. Ask if you can help be a source for other stories. Say hello to them at conferences. Understand how their job works. Understand that for every article they write they need “an angle” and if you can’t help shape that you’re not likely to get inches. The more helpful you are over time the more likely you are to get inches when you need them.
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10. It’s a Marathon, Not a Sprint – Some startup teams I speak with try to lump a bunch of announcements all into one release to try and have more effect. And example is lumping your VC funding announcement into a story about major customers wins, product features or key milestones. Don’t do this.
A funding announcement is a stand-alone event. It’s an angle. There are journals who dedicate a lot of time & energy into covering funding. Focus solely on that event. When it’s time later to talk about some major customer wins or big biz dev partnerships you’ll do so. If you announce killer product features worthy of coverage then talk about that.
One strategy I encourage is to break up mini-releases into exclusives that you give to different journalists to spread the love around and give everybody something unique to write about. Nobody likes writing re-hashed stories.
The Ultimate Online Marketing Recipe -‐ KISSmetrics
http://blog.kissmetrics.com/ultimate-‐online-‐marketing-‐recipe/
The Ultimate Online Marketing Recipe
The basis for any good online marketing plan is an awesome landing page. But regardless of how incredible your landing page is, you still need to get people there. That’s often the part that breaks down when a company actually starts marketing a new product or service online. They’ve got the landing page that’s been expertly designed and follows all the best practices, but they’re not getting conversions because they’re not getting traffic.
There’s tons of information out there for crafting an online marketing program that won’t cost you much more than time. One little problem: there’s so much information available that it’s often overwhelming. Even things like infographics that try to break it down can be too much.
So we’ve crafted the ultimate online marketing recipe. One that’s easy to follow and breaks everything down into steps. We’ve linked more information about most steps throughout the article so you can easily access more in-depth information if you need it.
Stage One: Gather Your Ingredients
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Image by Like_the_Grand_Canyon
The first stage of your marketing recipe consists of gathering up your ingredients. You’re laying the groundwork here for the rest of your marketing efforts, so make sure you don’t skip anything. Think about what happens when you leave out an ingredient in a recipe for a cake. Leave out the flour, and you get a soupy mess. Leave out the sugar and the taste is horrible. Leave out your eggs and the whole thing crumbles. The same thing happens if you leave out a key ingredient of your online marketing plan.
So let’s start by claiming your brand on the major social networks: Google+ (as soon as brand pages are available), Facebook, and Twitter. Depending on your industry, there might be niche social networks where you also want accounts (for example, an author might want to set up an account on Goodreads and LibraryThing as well). Make sure you customize your Twitter background. This can serve as your social landing page until your website and other landing pages are ready.
At this point you also want to set up your corporate blog and start posting right away. Make sure you submit your content to social sharing services (like StumbleUpon) and bookmark it on sites like Delicious. Research popular keywords related to your content and make sure you tag your posts with those words, and include them naturally within the content itself.
On the technical end of things, you’ll want to set up a Google Analytics account, a Google Webmaster Tools account, and a Feedburner account for managing and monitoring your RSS feeds. Analytics will help you monitor exactly what’s happening on your website, where your traffic is coming from, etc. Make sure you set up some goals and conversion funnels there, and annotate any important events (like a mention on a big blog) so you can remember six months from now why you saw a spike or a dip in traffic at a particular time.
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At the same time, you should be gathering up leads for your product or service launch. Make sure you use a hosted email provider like Gmail, not a program like Outlook. Create your email template at this time, too.
Step-by-Step Breakdown
Set Up Your Website Correctly.
Build a website. Chances are your company already has one. But if they don’t you can’t go any farther. Your website is the central hub of your entire online marketing strategy.
Install Google Analytics. Make sure the analytics code is on every page of your website.
Set up a Google Webmaster Tools account. Create a sitemap XML file and submit it to Google Webmaster Tools. Be sure to have your web designers or developers fix any errors that Google Webmaster Tools may alert you to. We have a pretty comprehensive guide to Google Webmaster Tools here.
Claim Your Social Networking Profiles.
Sign up for a Twitter account. Think about your Twitter name because people will naturally “mention you” on Twitter by typing @yourcompanyname. Therefore you’ll most likely pick a Twitter name and URL like: http://twitter.com/yourcompanyname. Be sure to link back to your website in your profile.
Have a professional designer create your Twitter background. Your Twitter background should be consistent with your website branding and offer some basic contact information. Consider communicating your value proposition on the background or in your profile description.
Create a Facebook page (not a profile). Like Twitter, create a Facebook page and claim your Facebook URL to be something like: http://facebook.com/yourcompanyname.
Set up Your Company Blog.
Keep your blog on your company domain name. The whole point of blogging is to attract relevant traffic back to your website. Blogging on another domain other than your company domain, defeats this purpose. This is the fundamental reason why blogging is good for SEO. For example, your blog should be located somewhere like: http://www.yourcompanyname.com/blog or http://blog.yourcompanyname.com.
Keep your blog design consistent with your website design. They don’t have to look identical, but for the same reason you keep your Twitter profile in alignment with your company branding and design style, you should do the same for your company blog.
Get your Email Marketing Ready.
Choose an email distribution service. Sending mass emails from your personal computer email client or web based email account is a sure fire way to shoot your email marketing campaign in the foot. Choose an email distribution service like Mailchimp, Constant Contact or Aweber to send out your company newsletter. Each of these services are great for making sure your emails get through to your email base while minimizing the dreaded spam folder. On top of that, they make adding new emails to your marketing list a snap.
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Create an Email Template. Again keep your email template consistent with your website branding and design style.
Stage Two: Initial Prep Work
Image by Wapster
By this point you’ve got all the basics gathered. You’ve got your social media accounts, you’ve set up your blog, and you’re tracking your efforts. Now it’s time to start building up more content and reinforcing your first efforts.
You should be working to build a Twitter following on a daily basis. There are a number of ways to do this, including following other users who might be interested in what you’re offering, and posting useful tweets. You should also be starting your drip marketing campaign with the leads you’ve gathered, to build up awareness and educate your potential customers.
Continue to refine your SEO based on the keyword research you’ve done. The goal is to maximize your placement for both primary keywords and longtail search results (which is where you’ll probably gain the most traction initially). Make sure you’ve set up custom reports in Analytics for both search optimization and other important metrics.
Finally, it’s a good idea to set up an editorial calendar for your blog and stick to it. If you know what you’re going to post ahead of time, it helps ensure that you’re updating regularly. Forming the habit of regular blog posts can be a difficult thing to do for new bloggers, but is essential if you want to be successful. And while we’re on the topic of blogs, make sure you’ve set up social sharing buttons on your blog posts to make it easy for others to share your content.
Step-by-Step Breakdown
Build a Twitter Following
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Start tweeting gently. Get your feet wet and get comfortable with the “Twittersphere”. Tweet a few times a day at first, retweet other people’s posts you find valuable. Follow people you know really well to start instant and meaningful Twitter relationships.
Follow people who might be interested in what you offer. You can search twitter to find people who are talking about what you have to offer. See what kind of interactions you get from this. However, sometimes it’s best just to follow people related to your industry (like experts and gurus) than to bother potential customers. Figure out what’s right for you.
Be personable. Don’t just spam your twitter account with your own blog content. Interact with your followers and share other people’s content when it makes sense.
Download our Twitter Marketing Guide. Read this guide a little bit every day and you’ll be a Twitter expert in no time.
SEO
Conduct keyword research. Use keyword research tools to figure out what key phrases attract the most relevant traffic to your website. It’s very important at this step to determine what languageattracts the right kind of customers to your website. Don’t just aim for the keywords with the highest search volume.
Create keyword rich title tags and H1 headings. The most basic and powerful SEO you can do is simply place the top key phrases you have selected from your keyword analysis and place them in the title tags and H1 heading tags of your webpages. DO NOT REPEAT KEYWORDS ON MULTIPLE WEBPAGES. This will cause keyword cannibalization and ruin your SEO efforts. Also, be sure you have only one H1 heading per webpage which can be easily detected by viewing the webpage source code and searching for “h1″.
Don’t forget about videos and image content. Images are really important for SEO. Be sure every webpage has a couple unique images with the appropriate alt tag information filled out (alt tags contain keywords related to the image). If you have videos, be sure to upload them to a branded Youtube channel and think about the title of your videos. They are important keywords for search as well.
Create an Editorial Calendar
Prepare a list of topics you want to publish. This is an excellent process to make sure you have enough content to publish for months to come. It’s also a great time to think about what content will attract the audience you’re are trying to market to. Spend a lot of time on this part!
Schedule your posts. After you have determined what content you want to create, it’s important you have a plan to ensure you can execute the content delivery. Determine who will write what content, what the due date is for each post, and allow time for content review.
Stage Three: Mix Your Ingredients
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Image by Jamie
It’s time to really start pushing your online marketing campaign. You’ve got all the basics down, you’ve settled into a bit of a routine in terms of blog updates and other efforts, and now you want results. All too often, people falter at this stage, thinking they’re not going to see results, when in fact this is just the point where they should really be stepping up their efforts.
Up to this point, you’ve probably just been tweeting whenever it was convenient. That’s great, except that there are optimal times for sending out tweets, depending on what you want your followers to do. Rather than sending out tweets randomly, use an app that lets you schedule your tweets (like HootSuite or Seesmic).
Up until now, you haven’t done too much with your social media accounts other than Twitter. It’s time toset up a Facebook page. You want to create a page that focuses on gaining more “likes” (followers), so that your updates are being broadcast to those interested in what you’re offering. Make sure yourFacebook page is connected to your blog so that news items are posted whenever you publish a new post.
You should also, at this point, consider segmenting your email lists so you can better target your email newsletter. If your mailing list isn’t growing as fast as you’d like, there are a couple of ways you can add new leads. The first is to answer questions on sites like LinkedIn or Quora (make sure your profile is filled out completely on both sites) to establish yourself as an expert. The other way is to offer some kind of giveaway in exchange for signing up for your mailing list. Make sure it’s something of value, so that your visitors will be happy to turn over their email address or other information in exchange.
Directly tied into the second part of that is creating an ebook or whitepaper that solves a need your prospective customers will likely have. Giving that away only to newsletter or feed subscribers is a great way to get more people to sign up.
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This is also a good time to start advertising with Google AdWords. There are plenty of coupons out there that give you a credit (sometimes upwards of $100) to try AdWords. Find these and use one to set up a test campaign using landing pages. Figure out which ad and landing page combinations work best (using your Quality Score), and then start spending your own money on further AdWords advertising.
Make sure that the landing pages you use are designed with a single purpose in mind and with a single call to action on each page. Cluttering up your pages with too many options or too much information only serves to lower your conversion rates. To make sure your landing pages are the best they can be, make sure you use the Unbounce.com scorecard. Generate a to-do list for improvements from your score there.
Use your Analytics reports to look for areas on your website that are underperforming and find ways to fix them. This step becomes even more important if the underperforming pages are vital parts of your conversion funnel.
Another great way to drive more traffic to your site is to write guest posts for other blogs with similar visitor demographics. Look for sites in related niches and get in touch with the blog owners about guest posting. For example, if you’re selling a financial product to small business owners, look for blogs that address marketing for small business, or something similar. Same demographic, but not a direct competitor.
Step-by-Step Breakdown
Schedule Your Tweets.
Pick a Tweet scheduling tool. Use a service like Bufferapp to schedule your tweets throughout the day. Write compelling tweets that should entice click throughs and seed some of your previously written blog content for future delivery.
Don’t leave your Twitter account on auto-pilot. Remember to interact and be personable throughout the day. If your company Twitter account is only spitting out content from the company blog and there isn’t any real human interaction visible on the profile, the more “spammy” your company profile will look.
Set up Your Facebook Page.
Fill out your information. Include your company contact information, year founded, links to your website and blog.
Upload images. Upload images such as advertisements, pictures of your team and company events. Show the world that your company is a living, breathing, and exciting entity.
Connect your blog to your company Facebook page. Use a tool like Hootsuite to use your blog RSS feed as a way to update your Facebook page automatically.
Download our Facebook Marketing Guide. This comprehensive guide will help you get the most out of your Facebook marketing efforts.
Segment Your Email List
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Design your email segments. Since every person on your email list isn’t meant to receive every email you’re going to send out, design the appropriate segments (i.e. product updates, press releases, gender, region etc.).
Let your customers choose which emails they would like to receive. Wherever you have an email sign up form, be sure to ask your subscribers what kind of emails they want to receive. This will put your subscribers in the appropriate buckets and should improve your email marketing metrics.
Start Advertising Online
Google Adwords. If you want instant website traffic and new business, Google Adwords is the place to be. But watch out, it can be very expensive and highly competitive.
Yahoo / Bing. Google might be the largest pay-per-click advertising network, but Yahoo and Bing tend to have a better return on investment.
Facebook. Facebook Advertising allows you to target potential customers by interest, age and gender demographics which gives it a completely unique advantage over Google and Yahoo/Bing.
Consider hiring a professional. Online advertising is an extremely competitive, expensive and time consuming task. Unless you have someone in-house that can be dedicated to this activity full time, it’s wise to hire a reputable firm or PPC marketer to manage your internet advertising campaigns. Done right, this can be one of the most lucrative ways to generate new business.
Doing it yourself. If your don’t have the budget to hire a professional and insist on doing internet advertising in-house or yourself, be sure to read this guide.
Stage Four: Bake
Image by Kevin Spencer
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We’re getting to the stage where everything is about refining and reinforcing what you’re already doing. There aren’t a lot of new steps at this point, but if you really want to get the most out of your efforts, you need to continuously refine and test what you’re doing.
On that note, try some A/B testing with your landing page ideas to see whether there are better ways to do what you’ve been doing. You might even try some “live” tests with real visitors to see what they’re drawn to on your pages, and if they respond to your call to action.
You should also be A/B testing your emails to make sure that you’re getting the best response possible. Don’t just monitor open rates, though, make sure you’re measuring overall conversions. Who cares if people open your email if it ends up in their trash two seconds later? What you want are emails that are converting in high numbers, regardless of their open rates. Of course, the ultimate goal is to find an email with a high open rate and a high conversion rate.
Link building at this point becomes much more organic. You’re getting some traffic at this point, and the best way to capitalize on that is to create great content that people want to link to. Monitor these incoming links to see where your traffic is coming from, and to see if your content is reaching the right demographics. One great way to get more incoming links is to write about influential people your visitors would be interested in reading about. In the best case scenario, this can get you attention from the actual influencer.
You should be using LinkedIn more at this point to extend your reach. This is particularly important for anyone selling a B2B service or product, but even B2C companies can benefit from using LinkedIn. Just look for people or groups who are likely interested in what you’re selling. Don’t overlook the power of recommendations, either. Make sure you’re not neglecting any one social media platform; balance your time so you can manage them all.
Step-by-Step Breakdown
A/B Test
A/B test Pay-Per-Click landing pages. You’re most likely going to be sending traffic from your Pay-Per-Click marketing, social media marketing and sometimes even email marketing to special landing pages (instead of your website home page). Therefore you should A/B test these landing pages to see which variations perform better. This is the surest way to see instant marketing improvements.
A/B test your website webpages. A lot of people forget that their website pages are landing pages. These should also be A/B tested (whether it for lead generation, sign ups or sales).
A/B test your email campaigns. Finally, you can A/B test your email campaigns to see which headlines, layouts, and copy performs best.
Engage in Link Building
Write great blog content. The key to ranking well on the search engines is to provide your customers and audience with great content. Think of creative articles you can publish on your blog that will attract other bloggers and industry people to link to your posts.
Ask for links. Sometimes it’s as simple as asking the right people to link to you. Perhaps someone has written a blog post about your site and forgot to link to you. In other cases you can ask vendors to and business partners to link to your website. Be sure to have them include the key phrases you picked during your keyword analysis in the link text that points back to your website.
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Create infographics. Infographics are a great way to communicate ideas in a very creative way. They generally get linked to a lot. However this activity should most likely be outsourced to a professional design firm. Here are some examples of infographics created for KISSmetrics.
Use Linked-In
Connect with people or groups who are likely interested in what you’re selling. Similar to Twitter, nurturing these relationships correctly will help spread the good word of your brand.
Give recommendations. This is somewhat like social networking karma. Recommend people who have helped your business or company and see what happens in return!
Stage Five: Serve and Enjoy
Image by Kimberly Vardeman
At this point, it’s all about maintenance. You need to make sure you don’t lose any of the ground you’ve gained, while continuing to build your platform and reputation.
Try being more interactive on social media. Leaving Twitter open throughout the day so that you can interact “live” with your followers or those talking about your brand is a great way to improve your reputation. Make sure that Twitter is being monitored throughout the day and interact whenever possible. You might make a schedule so that different employees can manage Twitter at different times throughout the day, so that a single person doesn’t get overwhelmed.
You should try creating a viral landing page for a contest to get more attention. Make sharing the page (either by liking or sharing it on Facebook, or retweeting on Twitter) a requirement for contest entry for the best results.
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Start using surveys and feedback widgets to get real-time data from those visitors coming to your website to make sure you’re not losing any leads due to technical or usability problems. This is vital at this stage if you want to continue growing. You should also make sure that your incoming marketing traffic is being segmented so that you can better monitor the effects of your efforts (Analytics has great tools for this).
You’ve already done a whitepaper or ebook to get more visitors, so now why not try an infographic related to your industry? Infographics are a great way to share data. Make sure your logo and website address are highly visible on the graphic for the best results.
And finally at this stage, you may want to consider using expert services (like KISSmetrics) to get even more out of your efforts.
Step-by-Step Breakdown
Monitor Your Social Network.
Assign or hire someone to actively monitor. Great opportunities can be gained by actively monitoring your social networks. However this task can be 100% time consuming, so it wise to hire a support person to perform this task or assign “on guard times” for certain employees. If cost is an issue when it comes to hiring someone for this task, consider using Odesk.com
Determine how to handle complaints and reputation issues. Having a game plan on how to handle people complaining about your brand can be very crucial to your online success. Devise a process and protocol to handle complaints and cries for help.
Surveys, Tracking and Feedback
Sign up for website monitoring. You should sign up for a website monitoring service that will alert you if your website goes down for any reason.
Sign up for KISSinsights. One of the bests way to provide content, products or services that your customers want is to ask them by using a survey tool like KISSinsights.
Track everything with UTM tracking. Get in the habit of tracking all your online marketing activities by using UTM tracking on all links. This is the reason why internet marketing is so awesome, nearly everything is trackable and measurable! Using analytics like Google Analytics or KISSmetrics, you can see the effects of all your internet marketing activities.
Use KISSmetrics!
Sign up for a KISSmetrics account. If you really want to take your internet marketing to the next level, KISSmetrics allows you to A/B test every marketing activity, calculate ROI of each online marketing activity, provides segmentation analytics, event tracking and more.
Talk to us anytime and ask us for help.. Trying to do every possible online marketing activity is really hard to accomplish. This is why KISSmetrics is such a useful tool. With KISSmetrics you can determine which online marketing activities are helping you achieve your goals, therefore allowing you to focus on the marketing tasks that are actually making a difference to your bottom line. Click here to try KISSmetrics and you’ll be surprised at how much more you can get out of your online marketing efforts with our tool. We’re more than happy to discuss the ways in which we can improve your business. Feel free to talk to us!
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About the Authors:
Cameron Chapman is a freelance designer, blogger, and the author of Internet Famous: A Practical Guide to Becoming an Online Celebrity.
Sean Work is the Marketing Director at KISSmetrics. You can follow him on Twitter right here :)
Naming your startup– Chris Dixon
http://cdixon.org/2009/04/18/naming-‐your-‐startup/
Naming your startup
The Name Inspector has a good post today regarding 6 naming myths to ignore. I think it’s generally right on. Naming is so important and so incredibly hard, especially for consumer internet companies that not only have to find a good name but also get the URL. I am convinced that a big part of Twitter’s success, for example, is it has such a great name. Simple word, easy to spell, great imagery, and also evocative of what the product does without being overly literal.
I have been involved in naming a number of startups, including my two most recent companies: Hunch and SiteAdvisor. Each time it was a long and painful process. Here are some things I’ve learned along the way.
1) Probably the most important thing is that the name be easy to spell after someone hears it pronounced. I was involved in one startup before where every time you said the name the person says “what?” and then you have to spell it. Trust me, it becomes really tedious and also adds friction to word-of-mouth buzz.
2) You should have different naming goals for different products. For example, SiteAdvisor was a security product. You really can’t make security “cool” so we didn’t even try to bother to do that with the name. Instead we went for a name that helped explain in a very literal way what the product did. Before we came up with the name SiteAdvisor, I probably had 100 meetings where people said “I don’t understand what you are building – is it an anti-phishing toolbar, a spyware blocker or what?”. This included meetings with VC’s who focus on security and other experts. I knew the name SiteAdvisor was a winner when my father in law wrote the name on a high school blackboard and asked the kids what they thought the company did and one kid said “They advise you about websites” (and then he said ” … or construction sites” ). Also we liked the name because we imagined in the future doing more than just security – for example warning about adult content. (Alas, we never got that far).
3) I tend to disagree with The Name Inspector about name length. Shorter is definitely better. In particular the number of syllables is important. SiteAdvisor, while good at describing the product, is really clunky to pronounce. I also tend to really dislike Latin-y portmanteau names like “Integra” “Omnitrust” etc. Sounds like a pharmaceutical product.
4) A few things I’ve learned about methodology. I think it’s very rare to have an epiphany where you come up with a great name. First of all, even if you do, the domain is probably taken and too expensive. For systematically brainstorming, I really like the Related Words function on RhymeZone. I try to make lists of words that are sort of related to the product and then look at all the related words, look at all those words’ related words, etc, making lists of words and word fragments
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that sounds good. Then I have a systematic process for checking domains to see if they are buyable. If you are super lucky (and picked a multiword domain name) you might get it retail, but at this point almost all .com names (yes, I think you still need to own the .com) are owned by someone and the question becomes whether they will sell it at a reasonable price. The best case is usually that it’s owned by a professional domainer and it’s not very monetizable via Adsense (domainers make a lot of money from Adsense on sites like candy.com so you’d need to offer them a tons of money to sell it).
Naming is tough!
Underhyping your startup – Chris Dixon
http://cdixon.org/2010/04/06/underhyping-‐your-‐startup/
April 6, 2010
Underhyping your startup
I recently tweeted:
New early-stage start up trend: get big quietly, so you don’t tip off potential competitors.
Chris Sacca agreed:
@cdixon Agreed. As of this morning, I have four companies who don’t want investors mentioning that they’ve been funded.
Business Insider took these tweets to mean “Stealth mode is back.” But that’s actually not what I meant. The companies I’m referring to (and I think Chris is referring to) are publicly launched, acquiring users and generating revenue. They are modeling themselves after Groupon, where the first time the VC community / tech press gets excited about them, they are already so successful that it’s hard for competitors to jump in.
This trend strikes me as a response to the fact that 1) raising money from certain investors can be such a strong signal that it triggers massive investor/tech press excitement, 2) things are “frothy” now – meaning lots of smart people are starting companies and easily raising lots of money, 3) word seems to travel faster than ever about interesting startups, and 4) there are big companies like Facebook and Google who are good at fast following.
I don’t know what to call this but it’s not stealth mode. Maybe “underhype” mode?
Both sides of the marketing equation – Chris Dixon
http://cdixon.org/2010/10/16/the-‐ladies-‐night-‐strategy/
October 16, 2010
The “ladies’ night” strategy
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Many singles bars have “ladies’ night” where women are offered price discounts. Singles bars do this for women but not for men because (heterosexually-focused) bars are what economists call two-sided markets – platforms that have two distinct user groups and that get more valuable to each group the more the other group joins the platform - and women are apparently harder to attract to singles bars than men.
Businesses that target two-sided markets are extremely hard to build but also extremely hard to compete against once they reach scale. Tech businesses that have created successful two-sided markets include Ebay (sellers and buyers), Google (advertisers and publishers), Paypal (buyers and merchants), and Microsoft (Windows users and developers). In some cases individuals/institutions are consistently on one side (buyers and merchants) while in other cases they fluctuate between sides (Ebay sellers are also often buyers).
In almost every two-sided market, one side is harder to acquire than the other. The most common way to attract the hard side is the ladies’ night strategy: reduce prices for the hard side, even to zero (e.g. Adobe Flash & PDF for end-users), or below zero (e.g. party promotors paying celebrities to attend). Rarer ways to attract the hard side is 1) getting them to invest the platform itself (e.g. Visa & Mastercard), and 2) interoperating with existing hard sides (e.g. Playstation 3 running Playstation 2 games).
If you are starting a company that targets a two-sided market you need to figure out which side is the hard side and then focus your efforts on marketing to that side. Generally, the more asymmetric your market the better, as it allows you to market to each side more in serial than in parallel.
Platform distribution risks – Chris Dixon
http://cdixon.org/2012/02/14/platform-‐distribution-‐risks/
Platform distribution risks
When your product extends a platform’s functionality, one of the main risks you face is that the platform could embed your product’s key features within the platform – what is sometimes called subsumption risk. This happened to a lot of startups in the 90s that built products for the Windows platform.
When you depend on a platform for distribution (acquiring and retaining users), you take on
different risks. Specifically:
1) Oversaturation . The risk that supply of products on the platform significantly outpaces demand.
This seems to have happened recently to the iOS App Store: there are over 500,000 apps and counting, and popularity tends to be highly concentrated, making it very difficult for new apps to get noticed. Oversaturation also happened to Google (organic) results in most query categories in the last 2000′s.
2) Barriers to discovery . The risk that the discovery methods on the platform aren’t meritocratic.
iOS apps depend upon appearing in iTunes’ Top 25 lists, leading to a “rich get richer” bias, along with aggressive attempts to game the system. Apple has other app discovery mechanisms like its Featured Apps and Genius features, but those seem to drive far fewer downloads than the top lists. Google search has increasingly been favoring Google’s own products and also seems to heavily favor
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older, well-entrenched websites, making it very hard for new sites to gain significant SEO traction. Currently, social networks like Twitter and Facebook seem to have the most meritocratic discovery mechanisms, which is one reason so many startups target them for distribution.
3) Throttling . The risk that the platform will throttle distribution or monetization (for apps that rely on
paid advertising, throttled monetization also means throttled distribution). Facebook started out letting apps send unfiltered notifications to users’ timelines but then introduced algorithms that heavily filtered them (thereby entrenching the position of leading app makers like Zynga). Facebook also started out letting apps charge users directly, but laterchanged that policy and imposed a rev-share.
If you are launching a new website or app, you should have a distribution strategy beyond just “people will love it and tell their friends about it”. Your strategy should probably involve at least one major platform. And you should think through the distribution characteristics of the platform and decide if they are a good fit for your product and how best to mitigate the risks.
Finally, it is worth noting that some of the most successful startups grew by making bets on emerging platforms that were not yet saturated and where barriers to discovery were low. Today, the most interesting new platforms are probably Android tablets and emerging social networks like Foursquare and Tumblr. Betting on new platforms means you’ll likely fail if the platform fails, but also dramatically lowers the distribution risks described above
MVP to landing page – Ash Maurya
http://www.ashmaurya.com/2009/11/from-‐minimum-‐viable-‐product-‐to-‐landing-‐pages/
From Minimum Viable Product to Landing Pages
A lot (okay a ton) has been written already on landing page design. A great starting point is Chance Barnett’s Landing Pages That Convert. One of the most important elements of a landing page is the unique value proposition (UVP). It’s a headline, image, or tagline that needs to engage the visitor in the first 5 seconds. The “experts” agree that a great UVP can more than compensate for getting everything else wrong on the page. Since CloudFire is primarily distributed through our website, getting the UVP right sounded like the next MVP (maximum learning for minimum effort) to tackle. My strategy was to
Start with a simple layout for the landing page
While keeping all other elements the same, just vary the UVP
Measure engagement
Rinse and repeat
Version 1: A Starting Point
While testing my MVP, I started building a basic landing (and pricing) page in parallel that I would show potential customers at the end of the interview. CloudFire’s UVP was predicated on the problem that “Sharing lots of photos and videos is a hassle” so my initial reaction was to come up with a quantifiable statement that could be verified. I started with:
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The initial reaction from customers was that they didn’t view the value proposition of CloudFire as “performance based” but “convenience based”. The 5 minute promise was also a little vague.
This version did also not explicitly call out “who” the product was for, which was part sub-conscious and part by design. We all want to build mainstream products but trying to act mainstream from the start is a mistake. You can’t afford to be all things to all people.
Version 2: The Emotional Hook
I then turned to Chance Barnett’s rule on leading with “finished story” benefits and tried connecting at a more emotional level:
This version did actually get nods of approval from interviewees. It hit the “sharing is a hassle” point and called “parents” out explicitly.
Of course, testing this way was very skewed as I had the benefit of first pitching and demoing the customer in person. I decided it was time to drive (buy) a little traffic and test. A concern I had was that everyone we interviewed had found their existing photo sharing solution through a friend referral and not through Google. I decided to test StumbleUpon, Facebook, and Adwords anyway.
No lean testing approach would be complete without some A/B split testing, so I came up with 3 variants which I set up using Google Website Optimizer. I thought competition would be fierce in an existing market such as Photo Sharing, so at this stage, I decided to measure engagement simply as the visitor reaching the pricing page. This also sped up testing iterations which is key to learning. I did track signups but wasn’t ready to optimize the signup process just yet.
Variation 1: Simple Way
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Variation 2: Dead-simple
Variation 3: Fastest Way
Testing Approach 1 – StumbleUpon: A New Alternative
I had read a post on the lean startup circle group about StumbleUpon advertising being a much cheaper alternative ($0.05 per visit) to Adwords and decided to start there. For those that don’t know their model, StumbleUpon suggests pages to users that have expressed interest in a particular topic. Users rate stumbled pages and can recommend them to others. You can select some demographics (sex, age) but the categories are pretty broad. I tested both Male/Female and Female only, ages 25-45, under Family and Photography categories. I signed up for $5/day which drove 100 visits per day. While StumbleUpon had no problems driving visits, the bounce rate was 100%.
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I liken StumbleUpon to a TV remote. People are clicking for pages with some entertainment value and like TV, engagement for other pages is pretty low. It didn’t take long to realize it was time to move to another test channel.
Testing Approach 2 – Facebook: Where Customers Hangout
Facebook was appealing because a lot of our customers already had their social networks on Facebook and used it quite regularly. However, with Facebook, I had the reverse issue from StumbleUpon. I didn’t get enough visitors per day. The suggested CPCs were high and our CTR really low. I had heard of similar low performing reports from others and rather than tweaking the ad copy on Facebook, I decided to test against the elephant in the room – Adwords.
Testing Approach 3 – Adwords: The Elephant in the Room
A ton (maybe too much) has also been written about creating and testing PPC campaigns. I used some of these techniques to group and test keywords and ad copy variations. The more general keywords were highly competitive and seemed to get even more expensive from one day to the next. It was good to learn I wasn’t alone. With highly niched keywords (parent targeted), the competition was moderate, but the search volume was too low. It wasn’t even a question of advertising budget – Simply not enough people were searching for “Sharing baby photos” to drive any meaningful search traffic. Interestingly enough most of the click-throughs were coming from Google’s content placement channels like YouTube which were expensive ($2-5) and with low engagement (85% bounce rate).
This validated my earlier finding that SEM might not actually be a viable distribution channel for CloudFire.
Social proof seems to be king when it comes to reaching and connecting with parents. Influence based channels like blogs, social media, and viral loops are probably the distribution channels that will work here.
The biggest frustration, however, was dealing with the lack of learning. There wasn’t enough traffic to even make the A/B split tests statistically meaningful. These weren’t cheap click throughs and I had no visibility into why people were bouncing. The message just wasn’t getting through but why…
Testing Approach 4 – UserTesting.com: A Breakthrough
It was time to turn to some usability testing minus the pitch. I had some experience with face to face usability testing with BoxCloud. They can be done fairly cheaply but require time to find testers, script the test, and then conduct the test. Cindy Alvarez has a great presentation on User Testing Tactics. While gearing up for this, I ran acrossUserTesting.com which is a way to run usability testing over the web for $29 per 15 minute test. The test session is recorded with a screencast (audio + video). The only thing you really miss out on is body language. But the advantage of not having to conduct the test session made it a no-brainer to try.
While $29 per test might sound like a lot, it costs more to run face to face usability testing – gift certificates, coffee, your time. More importantly though “yet more experts” have shownthat all you need are 5 testers to uncover 85% of the problems. I was spending as much on Adwords a week, with not enough learning, so it was worth A/B testing both approaches.
With UserTesting.com, you can be highly selective on the target demographic of the tester. No checkboxes, just plain text. Mine read:
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***YOU MUST BE A PARENT THAT CURRENTLY SHARES FAMILY PHOTOS AND/OR VIDEO ONLINE TO ACCEPT THIS TASK***
Then you give the tester a script to follow. I asked the tester to view the page for 5 seconds and recount what they remembered. Then asked them to explain the service and highlight what was different about it and if the difference mattered to them. In other words: Can people understand the UVP from the landing page and is it really a Unique Value Proposition?
After the first 3 tests it was pretty obvious that people did not get the UVP. They viewed CloudFire as yet another photo/video sharing service that promised no hassle and ease of use – which were just empty words to them. CloudFire’s most unique feature was “no uploading required” but I had purposely kept the headline benefits based leaving the product details to the video. Surely people would want to watch the 2 minute tour. Only 1 person clicked on that link and she only watched it half way before concluding she had seen enough. Not one person could see how CloudFire was different from their existing service.
Version 3: The Video Alternative
Since people weren’t clicking the video, I decided to supplement the headline with more descriptive text and replace the image area on the right with a slideshow that cycled through highlights of the video on a set interval.
This version started getting better UVP comprehension but people found the slideshow too busy so I reverted back to the screenshot and came up with some alternate headlines.
Version 4: Alternate Headlines
The big change here was stating the UVP as a unique feature since the benefit was not resonating. The usability tests had shown that the term “uploading” was very much part of our customers everyday vocabulary. So much so that they automatically assumed every photo sharing service required it. I decided to lead by challenging that assumption.
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I found the word “instant” didn’t really register with people. I think it’s because “instant” is one of those abused marketing terms that isn’t always equated to mean “immediately” or “in zero seconds”. I remember seeing a Google ad one time that read: “Instant Website – Up and running in 30 minutes”.
That said, this version did a lot better than the last in getting the “no uploading required” point across. Some testers saw this difference immediately, others realized it at some point during the test window. There were a few that just didn’t see it no matter how much time they spent on the page.
Version 5: Busy Parents
So I made one other change where I put a “No uploading required” starburst on the image itself and that seemed to do the trick. Almost every tester was now immediately reporting “No uploading required” and were curious as to what that meant.
Curiosity is the first step towards Engagement
Awesome!
This version is fast-forwarded a few iterations. By then, I had also split-tested a new headline: “Photo and Video Sharing for Busy Parents” which answered the “what” and “who” of the product as well as used the words “busy parents” to connect at a more emotional level than just “parents”. It
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also showed a different call to action button from “Download Now” to “Try us for Free”. The point was not to hide the fact that CloudFire is downloaded software but to test if that affected engagement. I’ll go into more on optimizing the signup process later.
Takeaway
The most important takeaway for me was realizing that marketing optimization was not like code optimization. It’s much harder to correlate causality from raw data and there is no substitute to talking to real people. So as Steve Blank loves to say: “Get out of the building”.
Avoid the launch – Eric Ries
http://www.startuplessonslearned.com/2009/03/dont-‐launch.html
Don't launch
Here's a common question I get from startups, especially in the early stages: when should we launch? My answer is almost always the same: don't. First off, what does it mean to launch? Generally, we conflate two unrelated concepts into the term, which is important to clarify right up front.
Announce a new product, start its PR campaign, and engage in buzz marketing activities. (Marketing launch)
Make a new product available to customers in the general public. (Product launch)
In today's world, there is no reason you have to do these two things at the same time. In fact, in most situations it's a bad idea for startups to synchronize these events. Launching is a tactic, not a strategy. In the right situation, it's a very useful tactic, too. In particular, a marketing launch can help you do three things (courtesy, as is most of my marketing advice, of The Four Steps to the Epiphany):
Drive customers into your sales pipeline. This is the usual reason given for a marketing launch, but for most early stage startups, it's a failure. That's because a marketing launch is a one-time event, and rarely translates into renewable audiences. Worse, if you are not geared up to make the best use of those customers when the launch sends them your way, it's a pretty big waste. And, as we'll talk about in a moment, you don't get a second chance. Because this reason is so often used as an excuse, I recommend giving it extra scrutiny. Are you really choosing to engage in marketing in places where your potential customers pay attention? Do your customers really read TechCrunch? If not, do not launch there. Even if you must launch to your customers, avoid the urge to also launch in extra places, just because your PR firm can do it at the same time.
Establish credibility with potential partners. In some businesses, especially in certain industries like traditional enterprise software, you simply cannot bring a new product to market on your own. You need to combine your product with others, and this requires partners like OEM's or system
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integrators. A marketing launch can help you get in the door with those partners, if you're having trouble getting their attention. Again, it's critical to focus your marketing launch on those publications, venues, and channels that your potential partners are paying attention to. If you don't know who the partners are, what they pay attention to, or what kind of message they are open to receiving - it's too early to launch. Do some Customer Development instead.
Help you raise money. If you are having trouble raising money, sometimes a little PR can help. But don't be too sure. When VC's and other investors see PR activity, they are going to expect to see significant traction as a result. If you launch and see only mediocre results, it may actually make it harder to raise money. Sometimes, it can be easier to raise money pre-launch, if the launch is not imminent and there is some fear on the part of investors that they might lose the deal when the launch drives awareness of your company to all their peers.
Those are the potential goals of a marketing launch, but those are not its only effects. It also has causes other tectonic shifts that many startups don't consider:
A marketing launch establishes your positioning. If you don't know what the right positioning is for your company, do not launch. Figuring this out takes time, and few entrepreneurs have the patience to wait it out, because the business plan does such a good job of explaining what customers are going to think. The problem is that customers don't read your business plan. When you launch with the wrong positioning, you have to spend extra effort and money later cleaning it up. For example, we did some early press (in Wired, no less) for IMVU that called us the next generation of IM and compared us positively to AOL. At the time, we thought that was great. Now, I look back and cringe. Being compared to AOL isn't so great these days, and IM is considered a pretty weak form of socializing. When we finally launched for real, we had to compensate for that early blunder. Of course, we didn't realize it was a blunder at all. We were actually really proud of the positive coverage. In fact, at that time we were auditing Steve Blank's class at Haas, since he was an early investor. Since we hadn't shown him much in the way of progress recently, we actually brought in the article to show off. I won't recount what happened next (although your can hear us recount it in audio). Suffice to say I can trace my understanding of what it means to launch to that day. We're lucky we had a mentor on board who could call us on the bad strategy before it was too late. Most startups aren't so fortunate.
You have to know your business model. Most startups launch before they've figured out what business they're in. Pay attention to your fundamental driver of growth. If the product needs to be tweaked just a little bit in order to convert users into customers, you want to figure that out before the launch. If the viral coefficient is 0.9, keep iterating until it's 1.1 before you launch. And if your product doesn't retain customers, what's the point of driving a bunch of them to use it? Spend your time with renewable sources of customers and iterate.
You never get a second chance to launch. Unlike a lot of other startup activities, PR is not one where you can try it, iterate, learn, and try again. It's a one-way event, so you'd better get it right. Remember the story about IMVU's early encounter with Wired? When we finally did launch the company, even though our product had grown and changed significantly, Wired didn't cover it.
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I wrote a little bit about the epic launch we had at a previous startup in my post Achieving a failure. We really did it well, with a great PR firm and great coverage. New York Times, Wall Street Journal, CNN, the works. But it turned into a crushing defeat, because we couldn't capitalize on all that attention. The product didn't convert well enough, the mainstream customers we were driving weren't ready for the concept, and the event fed expectations about how successful the product was going to be that turned out to be hyper-inflated. Worse, we tricked ourselves into thinking that what the press said about our success was actually true. And even worse, we'd cranked up the burn rate in order to be ready to handle all those millions of mainstream customers we anticipated. When they failed to materialize, the company was in big trouble. Why do startups synchronize marketing launch and product launch? I think it has mostly to do with psychology.
Investors push for it. Many investors have a desire to see their companies lauded publicly. This actually makes a lot of sense, if you see the world from their point of view. Third-party validation is one of the few forms of feedback they have available to them. Most investors in startups have a 3, 5 or even 10 year horizon for liquidity. That means they don't really know if they made a good investment for a very long time. Seeing the press talk about what a great investor they are is a great form of feedback. As a bonus, it gives them something to show their partners and LP's. This trend is so strong, this is actually a question I recommend to screen potential investors: "How do you know it's time to launch the company?" See if their answer is about tactics or strategy.
Founders push for it. Who doesn't want to see their name in print? Investors aren't the only ones with ego invested in the company. In some ways, founders are even worse. How do they know they are making progress? They spend so much of their time trying to convince everyone around them that their idea is great and the company is doing well: employees, investors, partners, friends, family, significant others - it's a long list. But when they go to sleep at night, who's there to convincethem that they are making progress? My experience is that many founders actually have a deep anxiety that maybe they are not succeeding. Sure, they are keeping everyone busy, but are they really working on the right things? A marketing launch is a temporary salve for these kinds of worries. Plus, it gives you something you can send home to mom (hi, mom!). Unfortunately, it's not a long-term solution, so it can become a bit of an addiction and, therefore, a huge distraction.
There is also fear of the accidental launch. Companies that are thinking strategically sometimes reason like this: "if we do a product launch, members of the public will see our early product. They'll form their own opinions, maybe see our wrong positioning, and maybe talk to members of the press. By the time we're ready for a marketing launch, it will be too late. Better to launch now and get ahead of the story, or stay in closed beta until we're ready." In most situations, this fear is misplaced. Here was our experience at IMVU, which I have seen replicated at many other consumer internet startups. We did alienate and mis-position to our early customers. Luckily, if your product isn't good enough to have traction, you simply cannot alienate very many customers - because you can't get them engaged with the product. When you finally do get traction, the millions who see the right positioning will dwarf the few who saw the wrong one. And you can get an astronomical amount of traction before anyone will write about your company of their own accord. IMVU was a top-1000 website in the world, with millions of customers and making
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millions of dollars without getting any significant press coverage. In fact, we often felt frustrated when new startups with a fraction of our success got terrific write-ups in Silicon Valley-centric venues. We had to resist the urge to launch just to make that frustration stop. And, more often than not, we'd watch those companies flame out and die while we continued to grow steadily every month. If we'd wasted energy chasing their PR coverage, we'd probably have died too.
So don't combine your product launch with a marketing launch. Instead, do your product launch first. Don't chicken out and do a closed beta; get real customers in through real renewable channels. Start with a five-‐dollar-‐a-‐day SEM campaign. Iterate as fast and for as long as you can. Don't scale. Don't marketing launch. How do you know you're ready for marketing launch?
When you have a strategy for the launch, which means knowing why you're doing it. Make sure it's solving a problem you actually have, and not one that you think you might have some day.
Know what the success metrics are for the launch. If you know what the strategy is, you'll know how to tell it was a success. Write it down ahead of time, and hold yourself accountable for hitting those objectives.
Know what your fundamental driver of growth is. Make sure the math for your model makes sense. That way, you'll be able to predict the future. When customers come in from your marketing launch, you'll know exactly what they are going to do and how that benefits your business.
Know where, when, and how to launch. If you know what your strategy is, and you know your target well (customers, partners, investors) you will also know where they are paying attention, and what messages they are able to absorb. Hold yourself and your PR agency accountable for developing a high level of understanding of these questions ahead of time.
One last suggestions. Think about the psychological motivations that are driving you to want to launch earlier than makes sense for your company. See if there's anything you can do to address those underlying needs that does make sense. For example, if your employees are feeling frustrated that they don't get much third-party validation for their work, use a board of advisers to fill that role. Bring in people that they (and you) respect to evaluate your progress and make suggestions. In my experience, this has provided an effective boost to morale and also helpful guidance. When you're ready, enjoy the launch. Until then, resist the urge.
Fred Wilson on marketing – Fred Wilson
http://www.avc.com/a_vc/2011/02/marketing.html
Marketing
You asked for it Arnold and 84 others (so far). So I'm gonna talk about marketing.
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I believe that marketing is what you do when your product or service sucks or when you make so much profit on every marginal customer that it would be crazy to not spend a bit of that profit acquiring more of them (coke, zynga, bud, viagra).
A very experienced and successful entrepreneur came into our office a week ago to pitch his latest company. At the end of his pitch he showed us some numbers. Normally for a raw startup we see almost all product and engineering expenses (headcount). But his plan had a monthly budget for customer acquisition. After he left, we talked about his plan and my partners focused on the customer acquisition number. It bugged us. It felt wrong.
So a few days later, I called him. We talked about what we liked about his plan and pitch and what we didn't like. I brought up the customer acquisition line item at one point in that call. He said "every company needs a marketing budget." It seemed like a strong reply but in truth not one of our top performing companies had a marketing budget in their initial business plan.
Zynga has spent millions on customer acquisition and continues to do so. But in the beginning, when Zynga was three or four people and they launched Texas Hold'em on the brand new Facebook Platform, they didn't spend any marketing dollars. That was the beauty of that time and that plan. The Facebook Platform was free distribution. Zynga rode that free distribution to millions of users, profits, and additional games. Only then did they start marketing.
In my talk at Harvard Business School, I said "Early in a startup, product decisions should be hunch driven. Later on, product decisions should be data driven". I've seen that line tweeted a thousand times since then. Clearly people like that rule. Here's another.
Early in a startup you need to acquire your customers for free. Later on, you can spend on
customer acquisition.
So if you need to acquire customers for free early in a startup, how do you do that? There is no one right answer, it depends a lot on who your customer is and how hard the sell will be (consumer/enterprise and free/paid). I'm not an expert on enteprise focused SAAS businesses. I am not going to address that part of the market here.
For the consumer/free part of the web, there are some obvious things you will want to do:
1) Twitter - so many entrepreneurs have asked me "how did you start a company before Twitter?" Twitter is that free distribution that Zynga got on the Facebook Platform. You can and should get the word out about your product/service on Twitter and Facebook. You should encourage your friends to post about it, retweet about it, and encourage people to try it out. The digerati hangs out on Twitter and will see the tweets and RTs and many of them will try it out.
2) Social hoooks - Your product/service must be social. It must encourage your users to invite others to try it out. Hooks into Facebook and Twitter are obvious. Email invites are another obvious feature. The product should allow people to express themselves in it. Profiles, personalization, etc will allow the users to feel ownership of the product and tell others about it. Foursquare's adoption of a game dynamic when it launched is a particularly clever implementation of a social hook. Games are the most social of all things on the web.
3) Find entry points - MySpace launched in the holywood crowd that were friends of Tom and Chris. Twitter launched in the SF tech community that were friends of Ev and Biz and Jack. Tumblr launched
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in the "roll your own blog" avant garde community that David was part of. Quora launched in the Facebook alumni community. Facebook launched on Ivy League campuses. You get the idea. Find an obvious group of like minded people who know each other and launch into that community. If they like it, it will spread throughout that community and eventually beyond.
4) Events - Find live events to launch at. SXSW is famous for breakouts. Twitter and Foursquare are the two most talked about examples. I worry that SXSW has become so big and so many companies are planning to breakout there now, that it can't happen anymore. We will see. But there are many live events that you can attend and galvanize users at. GroupMe did a version of that at the Austin City Limits music festival. I've heard of companies breaking out at Burning Man, The Democratic National Convention (Airbnb), and the Sundance Film Festival.
5) PR - Do not hire a PR firm to do your free marketing for you. This is a core capability you must own. You can and may want to hire a PR firm to supplement your efforts, but that's a different story. The best companies know how to become the story and work it. Being in NYC helps a lot. Foursquare is a great example of this. You can laugh at Dennis and Naveen doing fashion shoots but think about how many new users they got for doing that. It was a stunt like any other stunt they've done. And they have done hundreds of them. The media eats it up as they always need something to write about. Twitter is another example of a company that owned its PR. Biz is a master. At the same time Biz and Jack were iterating on the product, Biz was thinking about the brand, the story, the bird, the logo, the meaning of Twitter in the world. And he got out there and started telling the story. He is an evangelist and he did it so well. Twitter would not be Twitter without that effort. If you don't have a Biz or Dennis on the founding team, find someone who can do this for you. But I will say that the best PR centric startups have the "media DNA" in the founding team.
6) Search - It is not first on the list for a reason. I don't think search driven businesses are interesting. Live by SEO, die by SEO. Don't be a google bitch. But you will notice that many of the top consumer web brands are higly SEO'd. Try searching on a person's name who is active on Twitter. I bet their Twitter feed will be one of the first five results. It is for my name (if you take out dups). Flickr did this very well. So does LinkedIn and Crunchbase. SEO is something that takes time to pay dividends. But you should build your product day one to be search friendly and keep at it. You can break your SEO with product changes and be careful not to do that.
7) Developers - I've said many times that developers are the new power users. Twitter is the iconic example. By launching with an almost totally open plaform and a dead simple API, Twitter got thousands of developers to build products that had "Twitter inside." Those developers and their products pulled Twitter into the market. Soundcloud is another great example. There are a ton of apps that people use to create music and other audio experiences that have "soundcoud inside." Each and every one of those apps is a distribution channel for soundcloud. They are pulling Soundcloud into the market. So build your product as platform from day one. And once you get traction on your product, do things that will cause it to become a platform, Foursquare is doing this well. They first got millions of users and now they are developing a vibrant ecosystem of third party developers. They did a hackday this past weekend that was very successful.
8) Build a great product - I'll end with a return to where I started. Marketing is for companies who have sucky products. If you build something that is amazing (think Flipboard or Instagram or Instapaper) people will adopt it because it is amazing. And you won't have to do much marketing, at least at the start.
So that's what I got on marketing Arnold. What do you think?
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The role of marketing – Rand Fishkin
http://www.seomoz.org/blog/i-‐disagree-‐with-‐fred-‐marketing-‐is-‐for-‐companies-‐that-‐have-‐great-‐products
I Disagree with Fred; Marketing is for Companies that Have Great Products
February 26th, 2011 - Posted by randfish to Entrepreneurship
One of the people I admire and respect most in the technology, startup world is Union Square Ventures' Fred Wilson. A little more than a year ago, I had the opportunity to sit down and chat with Fred in his New York offices, just as SEOmoz was ending a failed fund raising attempt. The writer I'd come to know and love through his blog and tweets shone through - he's affable, humble, smart and considerate. And his firm employed (at that time anyway) an analyst with professional SEO experience, who also sat in on the meeting.
Today, Fred wrote a post on his blog titled "Marketing."
I strongly disagree with the statement "marketing is what you do when your product or service sucks," and I mostly disagree that it only pays to use marketing when profit margins are insanely high. As I read it, part of me wondered , "Isn't the goal of venture capital to help a company scale faster than it could without funding?"
To be fair to Fred, what he calls "marketing" is what I believe many of us in the startup/tech space would call "advertising" or "paid customer acquisition channels." Later in the post, he says:
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I disagree less with this point. For some startups, "free" customer acquisition in early stages certainly makes sense as the primary channel, though I'd question whether the right amount to spend is always $0.00. That strikes me as both extreme and rarely correct. At the very least, startups should be experimenting with paid acquisition channels that look compelling - ignoring them simply because they aren't free could really hurt your growth potential.
My Perspective on Startup Marketing
I've helped a lot of startups in various stages with marketing - through SEOmoz's old consulting business, through lots of personal relationships, through our Q+A and through events and conferences. Last year, YCombinator's Paul Graham invited me down to their Silicon Valley offices for a pizza party where I talked about SEO for startups. I gave a similar talk at Seattle's Techstars a few months ago and a brand new one that I presented at Twiistup in Los Angeles just a couple weeks ago. I've embedded that presentation below:
Inbound Marketing for Startups in 2011
View more presentations from randfish
I'm a huge believer in inbound marketing, which includes social media, content marketing (blogging, whitepapers, research, infographics, etc.), SEO, video, Q+A and comment marketing and loads of other free (or mostly free) channels. Inbound marketing is a powerful way to make consumers aware of your business and your products, and in my opinion, it's one in which people don't invest nearly enough. I'm worried that Fred's post will re-inforce a harmful stereotype that I see a lot in the tech startup world.
Product is All That Matters?
For the first few years that I was in the "web world," 1997-2001, there was a dangerous and obvious bias in startups toward sales and marketing - and branding in particular. But, in the past few years, that pendulum has swung to the equally dangerous paradigm that product is everything.
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Don't get me wrong - I think a product-bias in a startup is an extremely healthy thing to have. SEOmoz's focus is ~65% product, 35% everything else, and that ratio is likely to be more product-biased in the future. But I see so many great startups who need, more than anything, to GET THE WORD OUT.
Let's look in Union Square's Ventures portfolio:
Zemanta - one of USV's companies that everyone who reads this blog should probably know about, yet I'd guess that <10% do. Certainly, Zemanta has cool product opportunities that it can and should execute, but they also seriously need to better reach the search marketing community. I've seen them doing so somewhat actively - sponsoring and speaking at events, some content marketing and outreach, case studies and networking (and that's just what I've personally observed).
Clickable - another USV-backed venture that's in the marketing space; Clickable helps advertisers manage all their account on Google, Bing, Facebook and more in one place (which is awesome). Again, I think a 70/30 product/marketing balance makes sense, but there's no way they shouldn't be using the power of inbound marketing to build awareness and bring their market to their site. No offense intended, but the Clickable blog, with its anonymous icons and erroneous Facebook integration (note that the same number of people "like" every post) could use some marketing TLC.
Etsy - back in 2009, when SEOmoz had a small consulting arm, we helped Etsy on some SEOand community outreach features. From what I've heard and seen, that effort paid off. Here's some Google Trends data (which,
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granted, is far from perfect):
Some of USV's companies - Twitter, Foursquare, Meetup and, to a slightly lesser extent, Stackoverflow - may indeed have product built around natural marketing. The very act of using the services creates an incentive to share, to participate and to discover. But, quite honestly, this is not the reality for most startups, especially those who are B2B focused.
In fact, there are a ton of great startups that need at least as much marketing as they do product growth. For example:
Trunk.ly - already a phenomenally useful and addictive product. My understanding is they're seeking investment to help grow/scale and, more than anything, they need a few dozen to hundred more evangelists and articles extolling their virtues. I think even Fred would agree that marketing is a "must."
Namesake - a very cool conversation and opportunity platform, Namesake is another example of a startup that could benefit from significantly more brand-awareness and participation. Whatever dirt Quora has on TechCrunch's editors - yeah, they should get some of that.
The Resumator - following several years of successful operation and growth, Resumator has a lot of customer feedback and a fairly mature product that's truly useful and powerful. Awareness among HR professionals and SMBs who struggle with the inefficiencies of hiring, however, is low. It's possible some unique product features would skyrocket Resumator to the moon, but I'd guess that marketing (both inbound and through paid channels) is one of the best investments they can make.
Markup.io - this seriously slick and useful app could certainly benefit from additional features and product maturity, but it's already solving a big pain for web workers of all stripes. More people who have this pain need to know about Markup - marketing is the answer (at least, to that problem).
I'm not a believer that a market will simply flock to a great product. Many great products have died due to obscurity; only a few great products have succeeded in spite of rejecting marketing. Fred uses the examples of Twitter and FourSquare; Google could be another reasonable example. Those are outliers, and while they might be the types of companies Fred is seeking to invest in, they're the exception, not the rule, and thus I worry that the advice and perspective will have the wrong impact.
An Update from Fred
As I was writing this post, Fred published an update he called "The Bug Report." Unfortunately, in my opinion, there's still a lot of bad advice.
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Ack! Fred is, whether intentionally or not, one of the startup world's most influential marketers and that carries over to the companies he invests in as well. When Zemanta's team reached out to talk to me, they had only to mention Fred's backing to get my attention. When Fred first started writing about Disqus, using their plug-in on his site and evangelizing their value, he became one of their biggest marketing channels.
Fred Wilson is, undeniably, a powerhouse of an inbound marketer. When I saw that he was writing about marketing, I hoped to hear his perspective on the incredible channels he's built through content and social media. I wanted to know how he helped to bring legitimacy and media attention to New York as an emerging startup epicenter. I was curious about how he built a following on his blog, how he picked topics to write about, how he coached his companies to build their own inbound marketing. I was hoping for the same transparency on his clearly strategic and well-planned marketing campaigns (e.g. the startup visa) that he offers with his MBA Monday series.
And reading his posts, I felt let down. Perhaps I've just been so impressed with the rest of his written work that my standards are too high.
The final point of contention between us is Fred's view on marketing professionals:
Being not only a marketing professional, but someone who's done work to help Fred's portfolio companies with marketing, it's hard not to take personal offense. I don't know if he'd loop in the consulting efforts we provided to Etsy or the small amounts of pro bono assistance I've given to Zemanta in that group, but I know that any attack on marketing professionals of this magnitude is going to cause ripple effects.
So, instead of engaging directly, let me just point out some examples of amazing marketing professionals who've had dramatic, positive impacts on our businesses and others:
Probably no one is more famous for startup marketing than Sean Ellis, who's helped companies like Dropbox, Xobni, LogMeIn, Eventbrite and many more with early stage, inbound marketing. I've spoken to founders from several of those companies and they've raved about him.
The team at Unbounce has built a great product in a somewhat crowded space, and while their engineering differentiation is quite remarkable, it's been the efforts of Oli Gardner, Director of Inbound Marketing, who's gotten them onto the radar of the web marketing community (at least, from my perspective).
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UK-based Conversion Rate Experts has showcased a lot of their incredible work, which needs little introduction here. They helped SEOmoz scale from a business that focused almost entirely on product to one that finally took some pride in its conversion funnel and ability to sell. I rave about them every chance I get.
SEOmoz's own marketing team, under the direction of Jamie Steven, has accelerated the business in a way that can't be underestimated. Yes - we've got a fantastic engineering team, we built some uniquely useful products in Linkscape, Open Site Explorer, the Web App and the mozBar, but without our marketing efforts, we'd probably be a much smaller, more niche company and the amazing efforts of our product and engineering teams could impact only a fraction of the customers we serve today.
There's many, many more examples I can and should showcase, but reflecting on it, I don't need to. I think this is a great opportunity to use the comments to showcase what you - as inbound marketers - have been able to accomplish. Let's take Fred's assertion that "marketing professionals do a lot of damage" and prove it wrong, example by example.
I can't wait to read what you've got to share, and as an added incentive, the moz team will send a nice care package to the comment (or comments) exemplifying the power of inbound marketing with the most thumbs up.
The 5 Minute Guide To Cheap Startup Advertising – Rob Walling
http://onstartups.com/tabid/3339/bid/43774/The-‐5-‐Minute-‐Guide-‐To-‐Cheap-‐Startup-‐Advertising.aspx
The 5 Minute Guide To Cheap Startup Advertising
The following is a guest post by Rob Walling. Rob Walling has been an
entrepreneur for most of his life and is author of the book Start Small, Stay
Small: A Developer's Guide to Launching a Startup. He also authors the top
20 startup blog Software By Rob, that's read by tens of thousands of startup
entrepreneurs every month and he owns the leading ASP.NET invoicing
software on the market in addition to a handful of profitable web properties.
Imagine that you've just completed version 1 of your product and you're preparing for launch. You’ve greased the wheels with a few bloggers, targeted some keywords with SEO, created a bit of linkbait, and scheduled the press release to launch in the morning. At this point your co-founder turns to you and says: “What are we going to do with the $300 we have stashed away for advertising?” Consider this your lucky day. The goal of this article is to provide you with the core of what you need to know about cheap startup advertising as quickly as possible, so you can start spending that ad budget wisely. Let's get started.
Two Key Advertising Strategies
The half-life of advertising traffic is zero. This means that the moment you stop shelling out cash, the traffic stops. The problem is that with typical conversion rates of 1-2% you're paying for 98 or 99 out of every 100 people to walk away and never come back to your site. To combat this inherent wastefulness of advertising, I have two key strategies I recommend no matter which method of advertising you use.
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Strategy #1: Try to Get Permission
Seriously consider offering something in exchange for a visitor's email
address . It can be a free trial, a free report, or maybe even a free book. But gaining
the means and permission to contact that customer again will increase your conversion rate over time in most cases. There is great power in an email list.
Strategy #2: Use Advertising to Test
Use advertising as a testing tool rather than a long-term stream of customers .
Very few startups can withstand the cash outlay required to turn advertising into a marketing activity with positive ROI. Even if you figure it out, advertising is a volatile marketing medium. Prices increase rapidly in online advertising as new competition crops up or prospects grow bored of your ad and your click through rate drops. When this happens, all of the time you invested in optimizing your ad campaign is *poof*...gone. So instead of relying on ad traffic as an ongoing stream, use it for what it's best at: the ability to generate a slew of visitors very quickly, and to be turned off just as quickly. This kind of traffic source makes it great for split testing and user behavior testing using tools like Clicktale and Crazyegg. It also gives you insight into how certain traffic converts for you. With properly tracked conversions and an ad on Facebook, you can determine that men from 35-45 convert at a rate 15% lower than women of the same age. This is valuable information, especially early in your marketing effort when you're still trying to figure out the ideal market for your application. Often this is not the largest market; it's the one to whom you can market for the lowest cost. As another example, with AdWords you can learn in a hurry which keywords convert for you, and which don't. This is insanely valuable as you invest the time and money on the
long-haul of search engine optimization. Knowing the keywords that really convert for
your business, as opposed to the ones that you think will convert, can save you piles
of cash and many months of SEO effort.
The "First Five" Advertising Options
With the above strategies in mind, let's look at the first five advertising options you should consider.
Option #1: Niche Advertising
As a startup, there are hundreds of general advertising options available, and thousands more niche opportunities. Depending on the niche you're catering to you should be able to find a forum, blog, magazine or website in which to spend some ad dollars. The tighter the niche the better. Remember that niche sites tend to be cheaper to advertise on and drive more targeted traffic, which makes a huge difference in your conversion rate. (And if you're not targeting a niche because you want your audience to be the "whole world," you're going to need a lot more than $300 in your ad budget). In general, if you are marketing to a niche you will know the sites to target. If you don't it's time to pound the pavement and find out what they are. By "pound the pavement" I mean search on Google and contact people in the niche to find out where they hang out online. Two reputable niche ad networks I've worked with in the past are:
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InfluAds - With an increasing number of advertising "communities" covering design & UX, startups and entrepreneurs, work & productivity and web development, InfluAds can work with budgets as small as the $300-400 range. They sell a minimum set of granted impressions, and if more traffic is available during a month then existing advertisers receive it for free. Image ads only.
BuySellAds - Though they've traditionally focused on the design & UX space, BuySellAds is in the process of branching into many other niches. This image-only ad network was the primary source of traffic for a design-oriented website I owned, and made the difference between a few hundred dollars a month in sales, and a few thousand. Advertising is purchased by impression or on a monthly basis from individual advertisers, meaning each offers different pricing. But the minimum buy is very cheap - in the $10-$20/month range.
Option #2: Google AdWords
Ad Format: Text or image
Ad Components (for text ads): 25-character deadline, 2 lines of body copy @ 35 characters each, 35-character display URL
Approval Process: Automated, with manual review if you trip a filter
A few years ago, Google AdWords was great for startups. Many niches were untouched, and 5 and 10 cent clicks were commonplace. But these days, the vast majority of niches worth pursuing have ever-escalating click prices as more advertising dollars move online, including dollars from large corporations that don't blink an eye about spending $5 to produce a single visitor to their website. With a 1% conversion rate you need a $500 lifetime customer value to break even. This is more than a stretch for most startups who are scraping by on 0.5% conversion rates and sub-$100 lifetime customer values (at least to start with). But with Google carpet-bombing $75 AdWords coupons to every business in the civilized world, the number of advertisers, and thus the competition, is increasing. For the most part, the days of cheap clicks are over. The $1-2 per click I used to pay to advertise my invoicing software has become a negative ROI for me at $4-5 per click. But all is not lost. There is still a place in the backwoods of AdWords where the wild-west mentality (and cheap clicks) reign. That place is the content network. People traditionally think of Google AdWords as the ads that appear to the right of the search results. But the lesser known cousin of search ads are the ads that appear in every AdSense block you see around the web. These are ads placed through the Google AdWords content network. The content network is less targeted, higher volume, and typically much cheaper to advertise on, than the search results. While we don't have time here to delve into specifics of how to place ads on the content network, the most consistent approach I've seen that works over the long-term is to use their cost-per-action tool called the Conversion Optimizer. There's a great write-up of how it works from Patrick McKenzie of Bingo Card Creator fame, here. There are also some helpful
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tips on advertising on the content network here. And if you're willing to drop a few bucks, by far the best AdWords book available is the Ultimate Guide to Google AdWords, which includes a section on using the content network.
Option #3: Facebook
Ad Format: Text with required image
Ad Components: 110x80 image, 25 character headline, 135 characters of body copy
Approval Process: Manual (sometimes slow)
Facebook is still viable for startups with its ability to deliver 10-15 cent clicks under the
right circumstances . But it's a bit like the Wild West: if you approach Facebook
advertising incorrectly you will pay a premium, around 75-90 cents per click. The value of Facebook is its ability to show your ads to exactly who you want to see it based on information in a user's profile. You can easily segment on gender, age, location, relationship status and a number of other fixed parameters, along with thousands of interests and occupations you can target using keywords. The key to low cost Facebook clicks is having a high click through rate (CTR). The key to a high CTR is a combination of a powerful image, an engaging headline, and laser-focused targeting. Due to space constraints we're not going to cover the basics of choosing a powerful image or writing an engaging headline. Not when there are perfectly good articles already written on the subject for those who would like to know more: choosing an image / writing a headline. But once your ad is written, there is a trick to achieving those 10 cent clicks. Based on a tip from my friend JD, I now use the following method with Facebook ads:
Target your demographic information so tightly that you can write a headline that addresses them specifically. Example: if you are selling shoes online to the U.S. market, create 10 different versions of the ad, one for each of the major metro areas in the U.S. Also include the qualifying "interests" keyword: shoes. Now make each ad headline address its group specifically, using a formula like "Need Shoes in [city name]?"
Start the ads with a modest budget of, say, $5-10 per ad per day.
After 12-24 hours review the ads. Some will have high CTRs and costs per click around 10-15 cents. Others will have low CTRs and clicks in the 80-90 cent range.
Pause the higher cost ads and increase the budget for the low cost ads to whatever you can afford; $100 per day or more per ad.
For a few days you will receive extremely low-cost, targeted traffic. But since you've chosen a small group of people, they will start to tune out the ad rather quickly. At this
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point your CTR will drop and your cost will climb. Pause the ad, and start over with new cities, new images or new headlines.
This approach requires ongoing maintenance but if you can generate targeted, 10-cent clicks it's worth the effort.
Option #4: StumbleUpon
Ad Format: not applicable
Ad Components: just your URL
Approval Process: Manual
I recently advertised my developer's guide to launching a startup on StumbleUpon. The plus side of StumbleUpon is that all clicks are 5 cents. The downside is the bounce rate is high since people are basically channel surfing. I achieved a 96.88% bounce rate in my experiment, with an average stay of 2 seconds. I wonder if it was something I said? In my test, only 25 visitors stayed longer than 5 seconds. I paid $50 for 1000 clicks, but since only 25 of them stayed long enough to read anything, I effectively paid $2 per click. Your mileage may vary, but through this and other experiments I've gathered the following tips for advertising on StumbleUpon:
Your #1 goal is to get stumblers to stay longer than 5 seconds. Your #2 goal is to get them to up-vote your page. Paying $50 for 1000 clicks is one thing. Having it go viral and receiving 10,000 clicks for the same price is another.
Don't send StumbleUpon traffic to a landing page that asks for an email address. StumbleUpon users are notoriously fickle about providing their email.
People stumble to be entertained, so if your page doesn't have the potential to go viral or turn into linkbait, you will not likely fare well.
Blog-like content and videos seem to work best. Anything that resembles a traditional landing page will bomb.
Option #5: Reddit
Ad Format: Text with optional image
Ad Components: 70x70 image, title, URL
Approval Process: Manual (two-day lead time)
Reddit uses an interesting approach for their ad pricing: advertisers bid a certain amount per day, all of the money goes into one big pot, and each advertiser receives their share of the impressions based on the percetage of funds they contributed. It's a simple system, but it means there's a bit of uncertainty about what you're going to get for your
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money. However, Reddit has the potential to provide some very cheap clicks - I've seen as low as 3 cents - if you play your card right. Similar to StumbleUpon, Reddit provides your ad with the potential to go viral. Gabriel Weinberg has agreat write-up of the 20,700 clicks he scored for 3.14 cents each for his new search engine Duck Duck Go. His eye-catching image and tech-focused startup served him well with the audience. As he says:
First, a search engine ad is a good fit for reddit ads in general. It has broad market appeal and redditters in general like trying out new technology. Second, I think the ad is particularly well structured. The circular duck icon draws your attention, is contrasting to site colors, and sticks out because it is a circle (as most images are square). I believe the title also has appeal.
Gyutae Park also has a nice write-up of the 434 clicks he purchased for 9 cents each here. One of my recent experiments was a bit more pricey: 187 clicks at 40 cents each. My lackluster performance was a combination of landing on a competitive advertising day, and using a poor-quality header image. In retrospect, I have no idea what I was thinking using this unreadable
image: Reddit ads are so simple (just two visible components) that the only tip I have is self-evident: your image has to rock, and so does your title. It's all about choosing an image and headline that makes people click.
Conclusion
To conclude, I want to reiterate what I said early in this article: unless you have deep pockets think of advertising not as a long-term traffic strategy, but as a testing tool to improve your website and find out more about your ideal visitor. Few bootstrapped startups can withstand the cash outlay required to turn advertising into a marketing activity with a positive ROI, but that shouldn't keep you from testing the waters to find out for yourself. I look forward to hearing about your advertising experience and recommendations in the comments.
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Marketing strategy
Marketing strategy
Pick Your Early Beta Customers Very Carefully– Ben Yoskovitz
http://www.instigatorblog.com/be-‐selective-‐in-‐early-‐beta-‐programs/2011/11/16/
Pick Your Early Beta Customers Very Carefully
The goal of a startup is to find a sustainable, repeatable and scalable business model. And so much of a startup’s success is dependent on the early “beta period” where you provide access (to your product) to a limited group of prospects. If the beta period is a complete flop (no one uses the product, feedback is poor, etc.) it doesn’t mean the startup is a failure, but the company has to be in a position to learn from those setbacks, adjust and try again. If the beta period is a roaring success, then fantastic, you’re most likely ready for the next step (which typically involves opening up access, starting to charge money, etc.)
I’d bet that most beta periods end up somewhere in the middle. And many go off the rails through the process because of a startup’s eagerness to scale (before proving sustainability and repeatability) and a lack of focus.
Getting people to sign up for your beta is getting easier and easier. GoInstant has ~2,000 people on its waiting list. I’ve seen startups with 100x that number. But finding the perfect people or customers in that list is another story. This is where it’s so important to have a hypothesis and assumptions around the ideal customer. This is true whether you’re B2B or B2C (but more relevant for B2B companies.) Without a strong definition of your supposed ideal customer, it becomes too tempting and too easy to hand out beta accounts like candy. Being able to say you have thousands of “customers” at the beginning sounds great and may feel like momentum, but it’s the worst vanity metrics possible. For starters, they’re not customers (unless they’re paying), and secondly, it’s so early in the process you really have no clue if any of them will use your product successfully.
For each beta account that you hand out you want to be actively soliciting feedback and working with them. Adding too many people into an early beta increases your workload, while decreasing your focus. And if the customers range quite extensively, their use cases are different, and their requirements, product demands, etc. are all over the map. Now you’re left confused and uncertain as to what you should be doing, and you’re suddenly building a product with too many masters.
With a strong hypothesis around your ideal customer and ideal use cases, you can be extremely selective around who comes into the beta. Screen your beta customers. Make it clear that its a selective process, and your goal isn’t big numbers of mediocre users, but a small number of insanely passionate and successful users.
Think of it as an initial cohort that you’re going to actively work with. If the results are less than stellar, you can evaluate the reason(s) for that. Maybe the product really isn’t ready, but hopefully the feedback from this small and similar group of beta customers is consistent and can drive the appropriate learning and change. Or maybe they’re the wrong type of customer. You can then find another group/category of beta customers and try again.
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You can also let in a few outliers into your beta program — chase a few of the (potentially) interesting but diverse leads — and see what happens. One of these may turn out to be your ideal customer and lead to a lot of significant learning and change for your startup. But only do this in an extremely controlled way. And make it clear internally, that you’re taking on added risk by doing so.
Your initial beta customers have an incredible amount of influence over the direction of your startup, whether intentionally or not. If the group is too big and de-focused you run the risk of losing yourself in the noise. The experiment (which is exactly what a beta program should be) will have too many variables to tease out the most important lessons, and leave you with some great big vanity metrics (like # of users) but incredibly poor actionable metrics that really matter.
How to get your first 1,000 users – Vinicius Vacanti
http://viniciusvacanti.com/2011/02/08/how-‐to-‐get-‐your-‐first-‐1000-‐users/
How To Get Your First 1,000 Users
FEBRUARY 8, 2011 COMMENTS
The good news is that it’s easier than you think to get 1,000 people to try your site.
The bad news is that it’s really hard to get those people to turn into users, users that create an account, users that come back repeatedly and users that tell their friends about your site.
This post is about how to get 1,000 people to try your site so you can find out what isn’t working, iterate and keep trying to build a site that people, other than your mom, actually come back to. I’ll write a future post on how to retain those users.
Get Yourself a Domain Name and a Splash Page
You should set up your splash page today. Not tomorrow, today. In terms of the domain name, it’s okay if you don’t love your domain name; you can change it later though it’s always easier to pick a good one from the start.
Once you get your domain name, you should use a service like unbounce to create a simple splash page. You don’t need a programming background to create this page.
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The goal of the splash page is to collect email addresses from visitors. How do you do that? The splash page tells a user very clearly what problem your site will solve for them. If the user submit their email address, you’ll give them early access to the site when it’s ready. For Yipit, the splash page said: “Get All the Best Daily Deals in Your City”. For Tumblr, it’s “The Easiest Way To Blog”.
Those email addresses become your early test users. When your prototype is ready to be tested, you’ll email a portion of these users and get them to test-drive your prototype. You’ll iterate and invite more users from your list till the product works.
Now, how do you get people to visit your splash page?
How To Drive People to Your Splash Page
There is no shortage of ways to get people to your splash page. The following are things we at Yipit did and things we’ve seen our friends do:
Add Link to Your Email Signature. Seems obvious, but most people don’t do this. You should have your value proposition at the bottom of your email with a link to your splash page. For us, it was: “Get All the Best Daily Deals in Your City: http://yipit.com”
Add Link to All Your Web Profiles. Add a link to your splash page on your Facebook, Linkedin, Twitter and every other account you have. Now you might see why it helps to be a high profile social media user.
Create a Demo Video. Even if your prototype isn’t ready, create a demo video of what your prototype will be doing. Dropbox did this and their video appeared at the top of Digg giving them 100,000 email addresses wanting access to their site. You can also add this video to your splash page to help increase conversion of people submitting their email addresses
Be Full Entrepreneur. When I went to tech events, friend’s drinks, family gatherings, I would pitch everyone on Yipit. Painful, yes. But, it got me good at pitching Yipit and those people would go home and sign-up to check it out.
TechCrunch and other tech blogs. It will be hard to get press for your site if you can’t give the blogger a prototype to use. But, if you do have a working prototype, this the easiest way to get people to your splash page. For all three of our projects, 140it.com, UnHub.com and Yipit.com, we were able to get TechCrunch to write about us just by submitting it to through their news submission form. If you can give the bloggers some beta codes for their readers, that makes it more likely they’ll write about your site. Just make sure you’re ready for it. If you have a very good demo video, they might be willing to write about you without the prototype.
HackerNews. HackerNews is a great community of entrepreneurs who are willing to give you good advice on your startup. You need to have a working prototype and let them look at the site directly, though. Here’s some great advice on how to submit to HackerNews.
Facebook Ads and Google Adwords. This is actually really hard and often pretty expensive. We were never able to really pull this off despite several attempts.
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Start a company blog. The blog should be focused on providing helpful advice on the problem you are helping consumers solve. Kissmetrics, a startup focused on helping websites with analytics, runs an excellent blog on helping startups think through user acquisition. This strategy involves a lot of work so only do it if you have a really good idea for the content you want to create and think that users will appreciate it.
Some final tips and notes:
Your list will get stale. The longer you wait to invite people to your prototype, the smaller the percentage that will respond to your invite email. You can try to keep the list active by sending them occasional updates on the product.
I recommend you give the users a survey after they submit their email addresswhere you collect information from them regarding what they are hoping your site will accomplish for them. I have heard good things about surveymonkey
Encourage users to tweet, share on facebook, or email your site to their friends. One way people have done this successfully is to promise the user earlier access to the prototype if they invite 3 friends.
Now that you know how to get people to your site, I’ll write a future post on what you need to do to make sure those 1,000 people actually stay on your site.
If you have employed any other techniques that have worked well, comment below and I’ll add them to the list.
1000 true fans – Kevin Kelly
http://kk.org/thetechnium/archives/2008/03/1000_true_fans.php
1,000 True Fans
The long tail is famously good news for two classes of people; a few lucky aggregators, such as Amazon and Netflix, and 6 billion consumers. Of those two, I think consumers earn the greater reward from the wealth hidden in infinite niches.
But the long tail is a decidedly mixed blessing for creators. Individual artists, producers, inventors and makers are overlooked in the equation. The long tail does not raise the sales of creators much, but it does add massive competition and endless downward pressure on prices. Unless artists become a large aggregator of other artist's works, the long tail offers no path out of the quiet doldrums of minuscule sales.
Other than aim for a blockbuster hit, what can an artist do to escape the long tail?
One solution is to find 1,000 True Fans. While some artists have discovered this path without calling it that, I think it is worth trying to formalize. The gist of 1,000 True Fans can be stated simply:
A creator, such as an artist, musician, photographer, craftsperson, performer, animator, designer, videomaker, or author - in other words, anyone producing works of art - needs to acquire only 1,000 True Fans to make a living.
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A True Fan is defined as someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the t-shirt, and the mug, and the hat. They can't wait till you issue your next work. They are true fans.
To raise your sales out of the flatline of the long tail you need to connect with your True Fans directly. Another way to state this is, you need to convert a thousand Lesser Fans into a thousand True Fans.
Assume conservatively that your True Fans will each spend one day's wages per year in support of what you do. That "one-day-wage" is an average, because of course your
truest fans will spend a lot more than that. Let's peg that per diem each True Fan
spends at $100 per year. If you have 1,000 fans that sums up to $100,000 per year, which minus some modest expenses, is a living for most folks.
One thousand is a feasible number. You could count to 1,000. If you added one fan a day, it would take only three years. True Fanship is doable. Pleasing a True Fan is pleasurable, and invigorating. It rewards the artist to remain true, to focus on the unique aspects of their work, the qualities that True Fans appreciate.
The key challenge is that you have to maintain direct contact with your 1,000 True Fans. They are giving you their support directly. Maybe they come to your house concerts, or they are buying your DVDs from your website, or they order your prints from Pictopia. As much as possible you retain the full amount of their support. You also benefit from the direct feedback and love.
The technologies of connection and small-time manufacturing make this circle possible. Blogs and RSS feeds trickle out news, and upcoming appearances or new works. Web sites host galleries of your past work, archives of biographical information, and catalogs of paraphernalia. Diskmakers, Blurb, rapid prototyping shops, Myspace, Facebook, and the entire digital domain all conspire to make duplication and dissemination in small
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quantities fast, cheap and easy. You don't need a million fans to justify producing something new. A mere one thousand is sufficient.
This small circle of diehard fans, which can provide you with a living, is surrounded by concentric circles of Lesser Fans. These folks will not purchase everything you do, and may not seek out direct contact, but they will buy much of what you produce. The processes you develop to feed your True Fans will also nurture Lesser Fans. As you acquire new True Fans, you can also add many more Lesser Fans. If you keep going, you may indeed end up with millions of fans and reach a hit. I don't know of any creator who is not interested in having a million fans.
But the point of this strategy is to say that you don't need a hit to survive. You don't need to aim for the short head of best-sellerdom to escape the long tail. There is a place in the middle, that is not very far away from the tail, where you can at least make a living. That mid-way haven is called 1,000 True Fans. It is an alternate destination for an artist to aim for.
Young artists starting out in this digitally mediated world have another path other than stardom, a path made possible by the very technology that creates the long tail. Instead of trying to reach the narrow and unlikely peaks of platinum hits, bestseller blockbusters, and celebrity status, they can aim for direct connection with 1,000 True Fans. It's a much saner destination to hope for. You make a living instead of a fortune. You are surrounded not by fad and fashionable infatuation, but by True Fans. And you are much more likely to actually arrive there.
A few caveats. This formula - one thousand direct True Fans -- is crafted for one person, the solo artist. What happens in a duet, or quartet, or movie crew? Obviously, you'll need more fans. But the additional fans you'll need are in direct geometric proportion to the increase of your creative group. In other words, if you increase your group size by 33%, you need add only 33% more fans. This linear growth is in contrast to the exponential growth by which many things in the digital domain inflate. I would not be surprised to find that the value of your True Fans network follows the standard network effects rule, and increases as the square of the number of Fans. As your True Fans connect with each other, they will more readily increase their average spending on your works. So while increasing the numbers of artists involved in creation increases the number of True Fans needed, the increase does not explode, but rises gently and in proportion.
A more important caution: Not every artist is cut out, or willing, to be a nurturer of fans. Many musicians just want to play music, or photographers just want to shoot, or painters paint, and they temperamentally don't want to deal with fans, especially True Fans. For these creatives, they need a mediator, a manager, a handler, an agent, a galleryist -- someone to manage their fans. Nonetheless, they can still aim for the same middle destination of 1,000 True Fans. They are just working in a duet.
Third distinction. Direct fans are best. The number of True Fans needed to make a livingindirectly inflates fast, but not infinitely. Take blogging as an example. Because fan support for a blogger routes through advertising clicks (except in the occasional tip-jar), more fans are needed for a blogger to make a living. But while this moves the
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destination towards the left on the long tail curve, it is still far short of blockbuster territory. Same is true in book publishing. When you have corporations involved in taking the majority of the revenue for your work, then it takes many times more True Fans to support you. To the degree an author cultivates direct contact with his/her fans, the smaller the number needed.
Lastly, the actual number may vary depending on the media. Maybe it is 500 True Fans for a painter and 5,000 True Fans for a videomaker. The numbers must surely vary around the world. But in fact the actual number is not critical, because it cannot be determined except by attempting it. Once you are in that mode, the actual number will become evident. That will be the True Fan number that works for you. My formula may be off by an order of magnitude, but even so, its far less than a million.
I've been scouring the literature for any references to the True Fan number. Suck.com co-founder Carl Steadman had theory about microcelebrities. By his count, a microcelebrity was someone famous to 1,500 people. So those fifteen hundred would rave about you. As quoted by Danny O'Brien, "One person in every town in Britain likes your dumb online comic. That's enough to keep you in beers (or T-shirt sales) all year."
Others call this microcelebrity support micro-patronage, or distributed patronage.
In 1999 John Kelsey and Bruce Schneier published a model for this in First Monday, an online journal. They called it the Street Performer Protocol.
Using the logic of a street performer, the author goes directly to the readers before the book is published; perhaps even before the book is written. The author bypasses the publisher and makes a public statement on the order of: "When I get $100,000 in donations, I will release the next novel in this series." Readers can go to the author's Web site, see how much money has already been donated, and donate money to the cause of getting his novel out. Note that the author doesn't care who pays to get the next chapter out; nor does he care how many people read the book that didn't pay for it. He just cares that his $100,000 pot gets filled. When it does, he publishes the next book. In this case "publish" simply means "make available," not "bind and distribute through bookstores." The book is made available, free of charge, to everyone: those who paid for it and those who did not.
In 2004 author Lawrence Watt-Evans used this model to publish his newest novel. He asked his True Fans to collectively pay $100 per month. When he got $100 he posted the next chapter of the novel. The entire book was published online for his True Fans, and then later in paper for all his fans. He is now writing a second novel this way. He gets by on an estimated 200 True Fans because he also publishes in the traditional manner -- with advances from a publisher supported by thousands of Lesser Fans. Other authors who use fans to directly support their work are Diane Duane, Sharon Lee and Steve Miller, and Don Sakers. Game designer Greg Stolze employed a similar True Fan model to launch two pre-financed games. Fifty of his True Fans contributed seed money for his development costs.
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The genius of the True Fan model is that the fans are able to move an artist away from the edges of the long tail to a degree larger than their numbers indicate. They can do this in three ways: by purchasing more per person, by spending directly so the creator keeps more per sale, and by enabling new models of support.
New models of support include micro-patronage. Another model is pre-financing the startup costs. Digital technology enables this fan support to take many shapes. Fundable is a web-based enterprise which allows anyone to raise a fixed amount of money for a project, while reassuring the backers the project will happen. Fundable withholds the money until the full amount is collected. They return the money if the minimum is not reached.
Here's an example from Fundable's site;
Amelia, a twenty-year-old classical soprano singer, pre-sold her first CD before entering a recording studio. "If I get $400 in pre-orders, I will be able to afford the rest [of the studio costs]," she told potential contributors. Fundable's all-or-nothing model ensured that none of her customers would lose money if she fell short of her goal. Amelia sold over $940 in albums.
A thousand dollars won't keep even a starving artist alive long, but with serious attention, a dedicated artist can do better with their True Fans. Jill Sobule, a musician who has nurtured a sizable following over many years of touring and recording, is doing well relying on her True Fans. Recently she decided to go to her fans to finance the $75,000 professional recording fees she needed for her next album. She has raised close to $50,000 so far. By directly supporting her via their patronage, the fans gain intimacy with their artist. According to the Associated Press:
Contributors can choose a level of pledges ranging from the $10 "unpolished rock," which earns them a free digital download of her disc when it's made, to the $10,000 "weapons-grade plutonium level," where she promises "you get to come and sing on my CD. Don't worry if you can't sing - we can fix that on our end." For a $5,000 contribution, Sobule said she'll perform a concert in the donor's house. The lower levels are more popular, where donors can earn things like an advanced copy of the CD, a mention in the liner notes and a T-shirt identifying them as a "junior executive producer" of the CD.
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The usual alternative to making a living based on True Fans is poverty. A study as recently as 1995 showed that the accepted price of being an artist was large. Sociologist Ruth Towsesurveyed artists in Britian and determined that on average they earned below poverty subsistence levels.
I am suggesting there is a home for creatives in between poverty and stardom. Somewhere lower than stratospheric bestsellerdom, but higher than the obscurity of the long tail. I don't know the actual true number, but I think a dedicated artist could cultivate 1,000 True Fans, and by their direct support using new technology, make an honest living. I'd love to hear from anyone who might have settled on such a path.
Updates:
One artist who partially relies on True Fans responds with a disclosure of his finances: The Reality of Depending on True Fans
I report the results of my survey of artists supported by True Fans: The Case Against 1000 True Fans
10 obvious strategies to ruthlessly acquire users -‐ Andrew Chen
http://andrewchenblog.com/2007/04/13/10-‐obvious-‐strategies-‐to-‐ruthlessly-‐acquire-‐users/
10 obvious strategies to ruthlessly acquire users
Every consumer internet company needs to think about user acquisition, even if the site is built to be viral. You need to bootstrap user base, content, and all the other neat effects that kick in when you hit 50k+ users. This is obviously true in the case of social media sites that depend on UGC content.
I’ve been looking for a list for how people go about acquiring users, and I haven’t found a great one. So here’s a group of obvious, standard strategies to acquire users, and details about a couple of them.
10 (obvious) strategies to acquire users
Email/IM features for invites and content
Blog/MySpace widgets
Auto-invite for email, social networks, etc
Auto-embed for blog widgets
A/B tested signup pages
Smart adwords buying
Viral referrals
SEO/landing page generation
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Push through RSS/Email, etc.
Reduce user “drag” through the entire funnel
Let’s drill into more details.
#1 – Email/IM features for invites and content It’s obvious that you need to make it very easy to share content, invites, and other things for your site. So anything that might be an e-mailable article or detail page, put an “Email this to a friend” link there. Same for invites. And don’t have it just be e-mail, remember that lots of people use IM and you can use “aim:goIM” as a prefix to make it easy to send it to a AIM buddy.
#2 – Blog/MySpace widgets Another super obvious feature is to widgetize the most core content on the site, and allow people to embed it into their blogs. They might do that because your site is solving something they want for their site (music-sharing/chat/slideshows), but it might also be something to help them make the site more sticky or content-rich (popular links, interesting news, etc.)
#3 – Auto-invite for email, social networks, etc This is not new, but requires a bit more work. In the case of Flixster, after you sign in, it recognizes that you’re a hotmail.com or gmail.com or whatever user, and asks you for a username/password for that e-mail service. If you agree, it’ll go through and invite users from your address book and folks you’ve corresponded with. Annoying, but a great way to blast several hundred people all at once.
#4 – Auto-embed for blog widgets Same for blog widgets – why trust users to copy and paste when you can get their MySpace credentials, save them, and make it a 1-click experience to add your widget to their spaces?
#5 – A/B tested signup pages Using one headline versus another can create a 5x difference in signup percentages. If you want to make sure you’re not using a bad one, make sure you A/B test your signup pages. Try different value propositions – focus on Free versus Sharing versus MySpace versus whatever Web 2.0 proposition you have. Try them out, and keep a hidden field in the signup on the source. Then track them over time to see what works.
In fact, before you even launch your product, you can build a landing page through something like Survey Monkey. Then, drive traffic to it, and see how people respond to differences in layout, headlines, copy, and others.
Offermatica is the king of this kind of stuff. If someone would like to build a long-tail version of this used by bloggers and such, that’d be a great business.
#6 – Smart adwords buying Once you start getting content, you can get a lot more creative on search keywords buying as well. A lot of people don’t know what keywords to buy, but you should realize that you want to buy literally 10s of thousands of keywords. If you’re a music site, obviously you want to buy things related to “music” but you also want musical genres, artist names, CD names, etc., etc. In fact, once you get some content from your users, you’ll want to take that data and process it for keywords. If you were a fashion site, you want to be buying fashion brands, celebrities, genres, item names, etc.
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The folks at comparison shopping engines are complete masters at this, since it’s not easy to score what keyword combinations are the best, and which ones drive the best ROIs.
A good place to understand where you should start is to look at Google referrals and what keywords people are already coming through as.
#7 – Viral referrals Why should people invite people to your site, other than the fact they love your content? Well, people create these incentives in a couple ways – if your site is invite-only, then people give each other value through the invites, regardless of whether or not the sites are good. If your site is like LinkedIn, and it provides a way to manage contacts, that’s another great inherent way to generate e-mails. One interesting vector on MySpace, from people I’ve interviewed, is oftentimes their experienced friends set up their accounts so that they have a way to keep in touch more easily. A lot of thinking can be put into the viral nature of sites.
#8 – SEO/landing page generation When it comes down to it, every site is really divided into two groups – first, you have the sticky audience that is there because they are part of your core userbase. Then, secondly, you have newbies that are coming into your site because of Google. Often the latter is much bigger than the former.
A great question to ask, then, is the following: How do you create more landing pages and opportunities for people to stumble onto your site?
For that, you need to make sure that the titles of your pages reflect the item you’re viewing detail on. You also want your URL to do the same. You want to add links to other sites when appropriate, and syndicate interesting content. Another SEO tactic is to actually generate landing pages that may not even be user-accessible, but rather, just for bringing in folks from Google. This is yet another deep area where you can spend a lot of money.
#9 – Push through RSS/Email, etc. Obviously, another great way to create stickiness is to offer RSS feeds and e-mail subscriptions for everything. This makes it so that people can disengage from the site, and weeks later come back. Emails also offer the great artifact that people will forward them on to friends, if you offer enough content.
#10 – Reduce user “drag” through the entire funnel A bunch of the above points have to do with how you squeeze more people into the top of the funnel, but a final point is that it’s important to optimize (and A/B test) across many different points in the funnel. For example, if someone’s password is too short, you want to alert them immediately, not once they hit submit. If your login forms are multi-step, it’s better to hide the optional stuff and ping them slowly later on. Once they’ve signed on, give them something to do so that they are immediately having fun, rather than leaving the site since there’s nothing to do.
Conclusion The above is a pretty basic list! Feel free to add additional strategies in the comments.
10X Your Business – Elad Gil
http://blog.eladgil.com/2010/10/10x-‐your-‐business.html
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10X Your Business
Often when I meet with a startup I will ask them to put aside their existing product/distribution roadmap for a minute and brainstorm around a simple question - Question 1: "What circumstances would lead to a 10X increase in the value of your product or business?" Most product and distribution roadmaps are incremental. Do x, then y, then z, each of which has a linear increase in the value of the product or company. I think it is good to periodically get out of that way of thinking and ask what sorts of deals, adoptions, or customers would completely change the game for the company. These things should be at least borderline realistic - i.e. if you devoted a small set of resources, the stars aligned perfectly, and luck went the right way, it might, just might, work out. But you will never know if you can make something amazing happen if you don't think audaciously and actually devote some small subset of resources to just go for it. As an entrepreneur or business manager, you should periodically ask yourself, what can create a big step function in company or user value? And then you need to figure out, how can I execute that 10X step? Question 2: "What can you realistically *do* to accomplish the circumstances that will 10X your company?"
Can you dedicate a person to fly out and camp out for the next 6 months until you close that company-making deal?
Can you spend all your funding on acquiring users and manufacture a network effect?
Can you lobby for a partnership in a company's home headquarter's newspaper or turn their users into a lobby for you on Twitter and Facebook in order to make an impossible deal possible?
Examples of things that 10X'd Companies:
AOL/Apple deal in the 1980s. In the 1980s, Steve Case was on the marketing team at Quantum Computer Services (later renamed AOL). The QCS management sent Case to stake out Apple offices and asked him to not come back until they had an Apple deal. It took many months of living out of a hotel room, but Case eventually sealed the deal.
PayPal paying $10 a user. PayPal raised tens of millions of dollars of funding but its users base was not growing as quickly as they would have liked. Rather then sitting on the money and waiting for something organic to happen, PayPal's leadership decided to make a bold bet - spend a large portion of the funds they raised ($10s of millions) buying users in order to bootstrap a network effect. The company went on to go public before being acquired by eBay.
Microsoft/IBM deal. Microsoft famously told IBM they had an operating system when they didn't in order to win IBM's business. They then scrambled to find an OS they could quickly license from another software developer. A number of lessor entrepreneurs would have said "sorry, we can't help you". Of course, within a few years the OS franchise became the foundation of Microsoft's meteoric rise.
Google/Yahoo! deal. Yahoo! outsourced search to Google and allowed Google branding on the Yahoo! homepage. This lead to two outcomes: (a) Google had a massive spike in both traffic and data that is could use for analytics and to refine its search engine (b) The Google branding on the
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Yahoo! site caused non-early adopters to become aware of Google as a brand and drove significant traffic directly to the Google site. Since Yahoo! paid Google for the service, it also partially funded Google as a business.
Zynga raising a crapload of cash for media buying and "overpaying" for social gaming startups. When Zynga got started there were dozens of other social gaming startups. Zynga changed the game for itself by realizing scale is what would cause it to win. Zynga raised large amounts of money to buy scale - both via media buying (ads) as well as via buying lots of small startups for more then its competitors would pay (by projecting the future value of the assets, vs current value). One of these acquisitions turned into Farmville, their core franchise. All the other startups that could as easily have been Zynga? 99% of them are acquired for small change or are dead.
What are other examples of companies making unexpected 10X moves? Let me know in the comments.
How to bring a product to market – Nivi / Sean Ellis
http://venturehacks.com/articles/sean-‐ellis-‐interview
How to bring a product to market / A very rare interview with Sean Ellis
by Nivi on December 14th, 2009
Sean Ellis recently sat down with us and explained how to bring products to
market. You should listen to this interview for ideas on how to get to product/market
fit, how to measure fit, and how to survey your users so you can improve fit.
If you don’t know Sean from his blog or tweets, he lead marketing from launch to IPO filing at LogMeIn and Uproar. His firm, 12in6, then worked with Xobni (Khosla), Dropbox (Sequoia), Eventbrite (Sequoia), Grockit (Benchmark)… the list goes on. 12in6 “helps startups unlock their full growth potential by focusing on the core value perceived by their most passionate users.”
This is the first time Sean has done an interview on the record. I’m really psyched he’s making his insights public — this interview is a must-listen. We’ve broken the interview into two parts: 1) before fit and 2) after fit. This post contains Part 1 (and here’s Part 2.)
SlideShare: How to bring a product to market Audio: Interview with chapters (for iPod, iPhone, iTunes) Audio: Interview without chapters (MP3, works anywhere) Transcript with highlights: Below
This inteview is free — thanks to KISSmetrics
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We’re bringing this interview to you free, thanks to the kind support of KISSmetrics. Sean is an advisor at KISSmetrics and we interview their CEO, Hiten Shah, in How to measure product/market fit.
KISSmetrics built survey.io with Sean — now they’re collaborating on KISSMetrics, a new tool for funnel optimization.
Prerequisites
You’ll get more out of this interview if you also read:
An example of the survey.io survey Sean uses before fit. (Several phrases we use in the interview mean the same thing: Product/market fit = Fit = 40% of surveyed users consider the product a “must-have” = 40% of surveyed users would be “very disappointed” if they could no longer use the product.)
The startup pyramid.
Some of our favorite posts by Sean.
Outline
Here’s an outline and transcript of Part 1.
Half the marketing battle is the product
Must-have products make marketing much easier
How PayPal built a must-have product
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Understand the must-have users
How to get to product/market fit
How not to get to fit
Should I launch?
You can’t set a deadline on fit
How to communicate with the board during fit
How to use positioning to improve fit
It’s frustrating to try to grow without fit
How many users do you need to determine fit?
Who do you survey?
What is promise?
Don’t over-position your product during fit
Pivot the business around the love
Focus the product on the love
Create a great experience around the love
Create a business model around the love
First find the love
Are recommendations a good indicator of fit?
The must-have metric is a good indicator of fit
Preview of Part 2: What comes after fit?
Transcript
Nivi: Hi, this is Nivi from Venture Hacks, and I’m here with Sean Ellis. We’re going to talk about how to bring a startup’s product to market.
This interview is broken up into two parts: before product/market fit and after product/market fit. Or to put it another way, what are the set of activities you have to do to get the product/market fit, and then once you’re there, what are the set of activities you have to do to prepare for sustainable growth.
I’m super psyched about this interview. This is Sean’s first-ever interview on the record. We’re going to jump right into it.
Half the marketing battle is the product
Sean Ellis: The whole idea that’s gotten me to where I am right now, where I’m doing multiple companies, is basically that I’m just trying to get lots of cycles, up front, in that really critical zone —
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I call it the fail zone — that if you don’t get that done right, the company will fail. And if you figure that part out, then it’s really a question of how much success is the business going to have?
Particularly, one of the things that I’ve learned that’s been a little humbling through the experience is that if nobody wants the product, it doesn’t matter how effective the marketer is, you’re going to have a really hard time being successful. And if people want the product, you don’t have to be that great a marketer — the product is just so much easier to market. So half the battle, I’ve realized over time, is just finding the right company with a product that people actually need, and that there’s a big enough market that can support growth for that business.
Must-have products make marketing much easier
Nivi: Yeah, and what might be interesting for some people to hear is what’s in that grey zone between nobody wants the product, to a lot of people consider the product to be a must-have. For example, sites that have great marketing and distribution through viral marketing, but they don’t necessarily have any real must-have-it-ness with their customers or with their users.
Sean: All right, so the question really being: the grey-zone products that fall between those must-have products, and products that maybe aren’t as strong of a must-have, but can you be successful with those?
I am just figuring this out as I go along. I know that there is no right answer on any of these things. What I do know is that if you have a must-have product, your chances of success are very high.
And the way that I figure out if a product is a must-have or not is: what percentage of people are telling me that they’d be very disappointed if they could no longer use it? But it seems like you find a lot of categories where you might say that it’s a nice-to-have, rather than a must-have.
And I think that the difference is that for a nice-to-have product — so, something where not a lot of people say they’d be very disappointed without it — that you probably can be successful, but it’s going to take a lot of effort on the marketing side to make up for those product deficiencies.
I think if you really step back and say, as a business, that ultimately our goal is to create a successful, fast growing business, that people really need our product, and that over time we have a defensible business where it’s really hard for somebody to come in and provide an alternative product where we start losing customers, that in an early stage startup you have an opportunity to put a product out there, get that initial user feedback, and then you have two choices.
If that feedback is really strong and the users say that they’d be very disappointed without it, in a large percentage, then you can try to grow the business.
Alternatively, if they come back and say that they wouldn’t be that disappointed without the product, then you have the choices where you can either try to grow it or you can decide that you’re not going to try and grow the business. And to me, my recommendation has always been to decide not to grow the business if it doesn’t have a lot of people that are real passionate about the solutions.
Actually, you can operate a startup at a pretty low cost if you basically have a small engineering team and you’re putting product out there and you’re not spending a lot to get people on there, but you’re really engaging the people that do come in. You can engage them much better if there aren’t that many people, so you’re in a position where it may take you a year or two years, but you can really, over time, start to evolve a product into being something that someone wants.
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Maybe you find early on that absolutely nobody wants the product, and in that case you might want to do a complete restart on the business.
And when I’m presenting to groups, the example that I always point to, mostly so that people know that there’s hope if they don’t have great product/market fit initially….
How PayPal built a must-have product
Sean: That product/market fit is how I describe having a large percentage of people that would be very disappointed without the product. If you’re above 40% of the people saying they’d be very disappointed, I tend to say you’ve found product/market fit, and if you’re less than that, you haven’t.
So a lot of times I meet with companies that are maybe in the 15% to 20% range on that, and it’s very discouraging. You’ve worked very hard to put out a product, so the example that I give them is PayPal, where the initial product that they came out with was a cryptography product where you would use a PDA to store access codes for servers, and it was better than carrying a bunch of individual devices to access those servers. And the problem they were solving was that there was a lot of clutter in carrying those devices, and they were going to consolidate them all onto a single hand-held.
In “Founders at Work” there is a great case study on this. What Max Levchin says in “Founders at Work” is that they put the product out there and “nobody really needed it.” That was a direct quote — “nobody really needed it.” So what they decided…. Most companies would try to interpret the data and keep blasting away and say that somebody needs it. They just don’t get it yet.
Nivi: We need more distribution….
Sean: Yeah, they blame marketing, they blame sales, but ultimately, it took a lot of guts, and just honesty, to say: You know what? We created something that nobody really needs.
So what they did at that point was they stepped back. They asked what are we good at? We’re good at developing for a handheld PDA. We’re good at security. What else can we do with these skill assets that we have? And they decided that they were going to get into the mobile PDA payment space, where basically, people could beam payments back and forth.
And on the initial vision they were able to raise a couple hundred thousand dollars. On this new vision, they were able to get a prototype out on that initial money that they had raised, and they were able to raise… I think it was four million dollars. I don’t remember the exact number on it. And they actually beamed the VC money over so they had a good enough prototype to be able to accept the payment via this PDA payment. And then they were off to the races, and they started executing the business.
I think, in that case, my guess is that if they had surveyed those users who were using PDAs to make payments; it was more of a party trick. It was something that there wasn’t a real big need for, but they got users on there. They got lots of users on there, and they were able to get those users coming back. But, I’d put it in that probably-nice-to-have category.
Nice-to-have is kind of a scary thing, because you get enough success that you want to keep at it. But they were very fortunate in that they sort of stumbled into what ultimately became their market, which was, of course, the web-payment platform that PayPal is today. And that was really a function of people just starting to use it that way. And so, that’s why I focus a lot with companies on helping them figure out the use cases behind their product. If the people who have one use case
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consider it much more of a must-have than people who have a different use case, then that’s probably the business you’re going to be able to build a successful business on.
Understand the must-have users
Nivi: So, do you ask the must-have users what they use the product for?
Sean: I ask everybody what they use the product for, and I’m trying to see, really, who has the most passion around the product. And usually it breaks down by use cases, sometimes by user types. It’s really just looking through the initial data to really understand who really needs this product, and it can be on demographics, it can be on use cases, it can be on a lot of different things. But once you really understand a group that really needs the product, then you start to have that true North for the business — the part that you can actually start to build a business that will grow and thrive around if they represent a big enough market.
Nivi: Right. In that product/market fit stage that you’re talking about, which is basically the bottom layer of your pyramid, what don’t you do? For example: PR, trying to get a lot of distribution, increasing your burn.
Sean: Well, it depends a little bit on the type of business that you have.
So just one quick thing on wrapping up the PayPal example was, by the time they pulled the plug on their mobile-payment business they actually had, I think it was 1,000 times more people using the web payments. They had obvious traction, so they didn’t need to necessarily get that from a survey. They could just see that they had the traction there at that point. They could say: You know what? That’s where our real business is. Even though they fought it, initially, because they had different preconceptions about where their business would be.
How to get to product/market fit
Sean: I purposely try to avoid working with companies that are pre-product/market fit, because they’re in such a risk zone that, one, it’s going to hurt my reputation if I string too many of those together, and two, to ask people, who have a product that people don’t need, to pay me to help them with marketing would just not be the right thing to do. It would be a mistake for them to pay me, and it’s just not smart, from my perspective, to stake my reputation on their success.
But I found myself working with one fairly recently, on a very short, almost advisory project, of just helping them out. And my advice to them was to really be laser focused on that number and to really monitor that very-disappointed number.
So, one of the things that I’ve seen work well for companies that are in the 20% range, or even lower, of the user saying they’d be very disappointed without it, is to focus on, one, why those people would be very disappointed without it, and to really start to say, OK, this is our best signal of value that we’re creating.
And then, to look at the feedback from the people who would only be somewhat disappointed without it. Ignore the people who say they would not be disappointed without it, because they’re so far from being satisfied.
But then look at those somewhat disappointed people, and look at feedback from those people — particularly on what changes they’d like to see in the product. And look for things that relate to the very-disappointed feedback. If you take all feedback equally, you’re going to have a very broad product experience that is very disjointed.
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And I think one of the mistakes when people are too responsive to user feedback is that it’s a product that does everything, because if you try to please everybody, you’re essentially going to have a very unfocused product. But if you use the feedback from your very-disappointed people to give you that focus, and now you’re looking for feedback from everyone else that relates to what the very-disappointed people have told you…
Nivi: Like with PayPal, for example.
Sean: I think, using PayPal as an example, if they had surveyed all of their users, I’m assuming that a lot of the people who were doing the hand-held payments would basically have been saying that they’re only somewhat disappointed without it. And then the people who were doing the web payments would be saying that they’d be very disappointed without it. But some of the people on the web payments would be saying somewhat-disappointed, and they would say: if only I felt more comfortable about security; or, if only I could do it faster; or, if only you could give me better records of payments that have been made.
So you could take the feedback from the somewhat-disappointed who were using hand-held payments, and act on that to try to get there, but then you’re not really honing in on where the passion is.
Or, you could take it from the other side, saying, OK, these people may be a little pickier about what defines something that’s a must-have, but the feedback that they’re giving would improve the experience for the people who already say it’s a must-have. So, it’s really trying to just hone a consistent, core-product vision that is already starting to crystallize based on the feedback from the really passionate users.
Nivi: Yeah, that’s great. So in this case, it’s related in the sense that somewhat-disappointed people are using the same segment of features in PayPal.
Sean: Yeah. It’s that use case.
Nivi: Use case.
Sean: Yeah. They’re suggesting improvements to the use case that’s consistent with the most gratified users there are.
How not to get to fit
Nivi: Great! Yeah. So that’s a great idea in terms of getting what you need to do to get product/market fit, and I’d like to talk more about that, but it would also be great to hear what you don’t do.
Sean: I think the thing that you don’t do — and I’ll make one caveat in a second, on this — is that you don’t aggressively try to grow the business. Particularly, you’re not trying to do business development relationships. Maybe you can spend enough to create some flow so you actually get people giving you the feedback on the product, but one thing I wouldn’t do is obsess over ROI on that flow.
Your goal is not to figure out that repeatable, scalable customer acquisition engine at that point. Your goal is to get enough people in there to where you can react to their feedback and hone the product experience on their feedback.
Should I launch?
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Nivi: How about a launch?
Sean: This is very debatable. A lot of people would say that a launch is a really important event. For me, I’ve never been big into launches. Launch is a one-off. With launch, you’re going to get a group of people in one time, and you’re going to get some feedback on them. And yes, they may be cheaper because you got some good press around it, but you haven’t learned anything about how to grow the business with a launch. So for me, I’m much more….
I wrote a blog post way back when. I think it was called “Launch with a Trickle,” and that’s much more of my focus on things. Just get enough people on there as early as you can, so that you can react to their feedback. And you may find that they absolutely love the product. Then hone in on why they love the product. And then get the messaging right and the experience right, so that you’re delivering that better. Once you’ve kind of tightened up and you’ve got that validation that a lot of people love your product — hopefully more than 40% say they’d be very disappointed without it — then you can step on the accelerator and a big launch might make sense at that point.
You can’t set a deadline on fit
Sean: But what I see too many companies do is set a date. They say, we’re going to have our launch on January 14th, and they’re two months away from that and they’re working towards… I mean, it’s either time or it’s not time.
Nivi: Yeah, and you can’t set a deadline on product/market fit. Right? That is the point in time, in the growth of a company, where you basically are unable to predict anything.
Sean: Right. And all you’re going to do then is make the mistake of being too aggressive too early, or piss off your investors by missing that date for the launch.
So it’s much better to say, our clear objective — the next milestone that we need to get to before we do all of these things — is to actually make sure that enough people love this product. As soon as we get there, then we have to figure out why, and make sure that we’re really honing every piece of the business to reflect why people love the product.
How to communicate with the board during fit
Nivi: Right. So, on that topic, how do you communicate with the board and set expectations when you’re trying to get to the product/market fit stage?
Sean: What I’ve found is that people either get it or they don’t.
Nivi: What are the responses of the people that don’t get it, like from a board perspective? What have you heard board members say directly, or secondhand?
Sean: They’re just: You’ve got to go for it! You’ve got to go for it! It’s good enough. It’s good enough. And they just want to accelerate the business.
I have a great example of a company that was about 15% or 20% on product/market fit and I loosely advised them at no cost, because I was going to spend some time in Scotland and they’re based in Scotland. And I wanted to get to know these guys better because I was going to be spending a week over there. So we just worked together over a period of time.
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And when we first started working together they were at the 15% or 20% very-disappointed number, and they explained to me that their board of directors was just pushing them on: We’ve got to get to this growth number! We’ve got to get to this growth number!
And they took the time to really explain: This is our goal right now. We don’t think our product is good enough to accelerate this business. Our goal is to take the feedback from the users that we have and keep getting our product better.
In the process of doing that, they had the very painful process of actually having to lower projections on growth, and doing it week after week, and frustrating their board of directors through that process. But they did exactly the right thing, because today their very-disappointed number is over 50%.
And when I met with them when I was in Scotland about a month-and-a-half ago, they were at a really exciting point where they said they keep going back to their board of directors and saying: Hey! We’re going to revise those numbers up. They kept going and saying the numbers are too low. It’s going to be better than that, because now that they have the product right they could really focus on that, and they weren’t going to have the….
You can grow when your product/market fit is lower than that, but you’re going to grow a lot slower than you otherwise would, and you’re not going to address the real problem. And you’re going to have a very frustrating experience trying to grow that business over the next several years, versus saying: Let’s keep our costs really low, let’s get the product right, and when we’re focused on growth, no excuses. Now we’re absolutely accelerating that business and it’s going to be much easier to grow the business at that point.
And ultimately, you take it a year out or two years out, you’re going to have a much bigger userbase doing it that way than if you’re trying to grow through the whole period of time.
How to use positioning to improve fit
Nivi: Now, what changes should they make to get to that number, without getting into the specifics of the business?
Sean: I don’t know. I didn’t work with them, so all I know is that they did the things that I’ve mentioned, where they really took the feedback of the very-disappointed people, really tried to look for the signal of who loves this product. Somebody loves it. Who loves it? Why do they love it? How can we really put a stake in the ground around that and try to make that piece better, and try to play down the other pieces?
Nivi: Then maybe reposition?
Sean: Yes. Some of it’s definitely through repositioning.
I have another company that I worked with that was before I had [done] that. This was really the company that helped me come up with the idea that I was going to survey people ahead of time, because I got into two companies at the exact same time who were both at about [where] 7% of their users said they’d be very disappointed, and found myself in the “oh, crap!” moment of figuring out that now I’m going to have to help these guys transition to growth and grow, but they’re not ready for it yet. And why did I wait until I had a six-month contract with them to run the survey? From now on I’m going to survey it ahead of time.
But at one of those two companies, we were able to see a really strong signal in the 7% that said they’d be very disappointed without it, reposition on that signal… [interrupted]
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Nivi: So how do you reposition on the signal. In this case, did you get a little bit more data…?
Sean: We just found out — I mean, I can’t give any specifics on it — they had a product that had lots of different features, and each one of those products could be a product in itself. They built a really big suite of tools, within a product, and everyone who said they’d be very disappointed was focused on just one of those. So we basically only talked about the one they were focused on, and we didn’t talk about any of the other things.
Nivi: To the user, say, on a landing page or on the home page.
Sean: Exactly — on the home page we only highlighted that and said we’ll introduce the other stuff after we get them in. One of the benefits with that was that we were really able to simplify messaging. Having a really complex product set that you have to present people is way harder than simplifying that and only highlighting one. So, we basically highlighted the most important must-have product from the group, and hid some of the other products, and as a result we could be much clearer in what the benefit was for the people coming through and what we were actually offering.
So, one week later, on the next cohort of people coming through, we were over 40% because they had a very different expectation of what this product was, just by changing the messaging and focusing their first user experience on just this one piece of the business.
Nivi: Right. So, with no real change in the product, but a change in the messaging and a little bit of first-user experience change, you got a huge uptick in the must-haves.
Sean: Yup, exactly. And the interesting thing is that business, probably out of every business that I’ve worked with, is the one that I think has the opportunity to be a multi-billion dollar business, and one that I’m most excited about. And when I first saw that 7% number, it was the one that I thought: how do I get out of this? So now I’m really happy that I stuck with it, and I’m happy that we were able to figure those things out. And I’m really good friends with the founders.
It’s frustrating to try to grow without fit
Sean: When everything’s going well, the chemistry gets much stronger and it’s just a much more enjoyable place to be. That’s just one of the things that I’ve learned, is that in a company with a low product/market fit, it’s not a fun place to be. It’s frustrating trying to grow that business.
And for a company that can really embrace the fact that: You know what? We missed. The product that we created just isn’t something that people really seem to want or need.
Nivi: And we don’t really measure ourselves through growth right now, either.
Sean: Yeah. So for us, we’ve got a lot of money in the bank. Somehow we got lucky enough to raise the venture capital. If we try to grow we’re going to waste a lot of that money trying to grow. Let’s just keep our costs way down, get just enough users in there and either do a complete reset on the business — like PayPal did, which I think most companies don’t need to do — or just find the love.
In my last blog post I talk about “just find the love.” Somebody loves it. Somebody really needs that, and once you find that, that’s the stake in the ground that you can figure out how to create a successful business.
How many users do you need to determine fit?
Nivi: And what is just enough users?
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Sean: That’s a good question. I think it kind of depends on the business, but ideally, if you have a product that ultimately is going to cost thousands of dollars, then it’s just not going to be realistic that you can bring in a hundred every day on that product. But if you have a product that’s going to have a 10% upgrade rate or a 10% purchase rate, and it’s going to be $100, then that’s a product that you probably want to try to have a pretty constant flow of around 100 new people a day.
And whatever it costs to get to that 100 new people a day is a really good flow to iterate on. If you can only be at 30 or 40, that’s probably OK.
Nivi: And how about on the output side of that — the people that you’re going to survey, the people that have gotten to the finish line? How many people do you need to be talking to, to get a good signal there?
Sean: I look for around 30 responses as a minimum. It really depends. If you have a very low percentage of users that say they’d be very disappointed… Say you’ve got 30 responses and you’ve only got 5% that say they’d be very disappointed without it, that’s not a whole lot to work with on finding a signal.
But I ran a survey this morning with a business that has 70% of their users that say they’d be very disappointed. We got a very strong signal on 42 responses.
Nivi: OK. Right.
Sean: Really, it kind of depends, first, on how strong that number is. And then what you’re trying to do is get enough responses in there to find some sort of signal that either says: We completely missed, or that [there are] very few people we’ve hit with, so we want to make sure that we survey enough people that we’ve got maybe 10 or 20 people who say they’d be very disappointed, that we can start to hone in on the feedback that they’re giving.
Who do you survey?
Nivi: And do you ever have trouble defining what that finish line should be? For example: active monthly users, people who just signed up for the product, or is it… [interrupted]
Sean: Do you mean on who to survey?
Nivi: Yeah.
Sean: What I tend to do is say, people who have been back at least once.
And I think for a consumer product you shouldn’t be charging at this point; it should be free at this point, because the money side already starts to put a big filter out there. Even if you had a trial, people would make up their mind pretty quickly. If they decide they’re not going to buy it, then they’re not going to say they’d be very disappointed without it, and not buy it. So, just pulling money off until you can get that signal is pretty important.
For me, I define what is actually the experience that we think is the experience that gives them a full taste for the product, then I want to make sure that people have at least done that when they come back to us.
Nivi: So in the case of PayPal what would that be?
Sean: That they’ve at least made a payment with PayPal or accepted a payment.
Nivi: One payment?
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Sean: Yeah. And then, that they’ve been on the site within the last two weeks.
Nivi: OK.
What is promise?
Sean: So those would be kind of the two pieces. You just asked about intent and the value proposition in some of those things, so I think the important starting point is that the promise or the differentiated value proposition is really based on whatever signal that you find. Where you find the love on the product, that’s what you’re trying to do there.
Nivi: And you call that promise.
Sean: Promise is one of the names I use for it, but it’s all synonymous with just the value proposition, the differentiated value proposition of just what is this product going to do for you. What is the unique piece about it?
Nivi: Right. So in the PayPal case: send money to friends online.
Sean: Yeah.
Nivi: OK.
Sean: Yeah. I think that would be… And at the time, that was fairly differentiated. Now you can use credit cards and other things, so something that remembers your log-in information might be trying to differentiate from just Visa or Master Card or American Express.
Don’t over-position your product during fit
Sean: But what I was going to say with that is that there are two periods where that becomes important. One, before you have product/market fit you’re trying to find that signal, so you can do some sort of early positioning to try to highlight that. But the problem is, too much positioning is going to steer your users in a certain direction. So, early on, a lot of times it’s good to actually be very feature-function oriented.
Nivi: OK.
Sean: Because unless you have a real strong signal…. You can experiment with it, like, OK, let’s bring people in and we’ll give them this message and we’ll see what their very-disappointed number does, just on this group of people. We’ll survey them separately.
But in general, if you don’t have a real strong signal, then it can be kind of dangerous to shape their experience by highlighting some unique attributes that turn out not to be the important unique attributes.
Nivi: Because it might be inconsistent with…?
Sean: Because you’re going to shape their experience so much that they may miss the other thing that would have been the thing that would really thrill them.
Nivi: Right. So give me an example of how I would do that.
Sean: X Corp. is a prime example on that. In the early days at X Corp., it was just one of those things that I realized that if I really focused on homepage messaging it was going to take me a really long time to get some level of consensus, and that’s just the way that the business….
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The way most startups operate, early on, is that everyone has opinion around what the homepage looks like and what it says. And so, what I realized is that getting a lot of those early users, we were going to be getting them through search anyway, so I basically said I’d let everyone else figure out what’s going to be on the homepage, I’m just going to take people in through landing pages.
With landing pages you know what the person’s intent is when they’re coming in through a specific search word, so you can really hone things in a more segmented way.
But our homepage ended up being very feature-function oriented, and the group we initially built the product for ended up being a relatively small percentage — especially on a revenue side — of where the business ultimately ended up generating a lot of revenue. So I think if I had taken a traditional marketing approach to that I would have been very benefit-oriented right from the beginning. And I probably would have positioned it away from what ended up being the really interesting market for us, because I would have given so many details about how they should use the product that this other group may not even have considered using the product.
And so, as a result of having, essentially a group of engineers be able to initially determine the wording for the homepage, they just focused on the features that they created, with not a lot of why someone would need it. And that turned out to be the best thing that could happen because, ultimately for us, by the time I really started looking for that signal, the signal was very different than what we would have initially had if I had positioned out of the gate for that.
Pivot the business around the love
Sean: A big theme that I keep coming back to is, where is the love? It’s basically just finding out which users are passionate about the product. What is the use case on the product that those people have? Why do they actually love the product? And that gives you a good core of information to guide every part of your business. So messaging, you want to reflect that, but also, now that you know that, you want to make sure that you can really get a lot more people to that particular type of use case and that particular type of gratifying experience. So understanding user gratification is really critical in all of it.
First of all, you want to know that you have enough that you can try to grow the business — that you actually have something that will be growable. And then in growing the business, having that gratification should give you guidance on everything. So product roadmap should be a function of how people are gratified with the product and who’s gratified, so it should give you a lot more focus on that product roadmap as opposed to a lot of feature feedback and ideas and different things that, over time…
You know, initially you have to kind of scatter-shoot it. You have to cast a fairly wide net of things that might please people, but once you really know where that gratification is, that’s where you really want to double down, and that’s your business. Before, everything’s an experiment. But your business is really on where that gratification or where that love is.
Nivi: Does that go to what is the primary benefit of the product in your Survey.io?
Sean: Yes. That’s where I start to see it. I start to see it in each of those questions. I can start to see, in the very-disappointed question there’s a: why did they pick that? You can start to see it in there, as well.
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Ultimately, that’s the first thing that I’m trying to look at. One, do enough people love
this product? And two, why do they love this product? And then everything that I’m
doing is basically helping the business to — I wouldn’t say reposition, because
reposition is associated with messaging — realign itself around that really strong user
gratification . And once you have that alignment around that, it gives you a lot more direction.
Early on, everything is an assumption, everything is vision, but once you have users on there you can finally start to find that nugget of value.
Focus the product on the love
Sean: And one of the things, if you really step back and ask a lot of entrepreneurs why
startups fail, a lot of people rightly focus on lack of focus as being what causes a lot of
startups to fail. But then the question is, OK, if it’s lack of focus, what should you be
focused on? Obviously, lots of focus on the wrong thing is still going to cause you to
fail, so then it’s a big question of what you should be focused on . And for me, ultimately it’s
that strong signal that this is something that users really love about the product. So understanding who loves that product — who really has that need — that starts to give you guidance on who you’re going to target going forward.
What other things can we do that can enhance that use case — that can make that particular use case? How can we prioritize those feature enhancements, the parts of the product roadmap that relate to that, and maybe drop some of the things that are the wild cards that we’ve had in there for a while?
The thing that amazes me is a lot of startups have got a little side-product project of a completely unrelated product or something else, which I think, early on when you don’t have product/market fit, is probably not a bad idea. You’re throwing a lot of stuff out there to start to see what sticks.
But once you’ve found that signal, you’re ahead of 90% of the startups out there. So once you find that strong signal, your ability to be really successful is focusing on that strong user gratification and passion and figuring out how to get more users to it, more of the right types of users to it. How can we make it even better — but, that part better, not all parts better, that part better?
Create a great experience around the love
Sean: How can we completely refine that brand experience?
Now is the time to go and get a better designer to come in and really get the graphics perfect on that part. Now is the time to bring in someone who is the absolute wordsmith to get the descriptions perfect on the website, but making sure that they’re being very responsive to that user feedback and they’re not just being a wordsmith by what they think is what’s important to people.
Create a business model around the love
Nivi: Business model?
Sean: Business model is absolutely a function of that. You want to make sure that you are not trying to monetize something that’s not important to users. If users tell you they’d be very
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disappointed without it, the other thing that they’re telling you is that you could keep cranking that price up for a long time before they change to being somewhat disappointed without it.
And if you’re really focusing on that to determine your price and how you charge for the product, you’re going to have a lot more signals.
First find the love
Sean: So I think that’s a big theme that startups should look at, is focus, and focus on what and when.
The “when” — early on your focus is on just trying to find some love within your product. Find somebody who loves something about your product. And you can get that day one, before your product is even developed, just by talking to people and saying: Hey, this is the problem that we think people have out there and this is how we’re going to try and solve that. Does that seem like something that would be useful for you?
Nivi: The customer development approach.
Sean: Yeah, the customer development approach. Steve Blank has a really good book that’s documenting everything on that and has written a lot more about that.
I purposely, again, have stayed out of that area because it’s so high risk, and you can’t be good at everything so that’s the part that I’ve said I’m not going to try to be good at.
But essentially from day one, it’s all about that search for something that somebody really needs.
Are recommendations a good indicator of fit?
Nivi: Going back to the must-have — that metric — you don’t see user recommendation in that metric there, as well?
Sean: It’s interesting; I see a lot of correlation on success in businesses with the must-have.
I had somebody contact me recently who had a 70% must-have number and they are adding 20,000 new users a day with great monetization, and they just started recently. It was just one of those things that wasn’t surprising to me to see all that success because they have that strong must-have number without really even having a marketer in the company.
So the must-have, I think, is really big, but there are a lot of people that have good recommendation numbers that struggle, and part of that is that… I think YouTube videos is a prime example that sometimes you just see some really funny things that you want to share with other people, but ultimately would you be very disappointed if you couldn’t? Probably not.
Nivi: Right. So it could be a false-positive. But let’s say for the folks that do have the 40% must-have, do you see a correlation of recommendations then?
Sean: Not necessarily. Sometimes I see it really high. A company that I surveyed today, with surveys rolling in right now, was 90% recommend rate, but sometimes I see it being pretty low on a company that’s doing really well. Sometimes I see, as I said before, companies that are pretty low on the must-have, but high on the recommendation rate. So I actually don’t think that’s a good proxy for success, but I haven’t studied it enough to know for sure.
The must-have metric is a good indicator of fit
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The only thing that I do know is, on the must-have number, I’ve probably looked at 150 companies now on that number and I could maybe point to one or two that were less than 40% that had any kind of traction and success. And over 40%, everybody had some success. And maybe it’s 35%, maybe it’s 45%, but somewhere around there you get enough people.
The only thing I tend to find a challenge with is that some companies have a must-have number that’s around 40%, but then the feedback is all over the board on why they consider it a must-have and that becomes really hard for being able to find any kind of signal to base the business on. So that’s a different problem, and I haven’t figured out how to deal with that.
Nivi: There are too many segments in the customer base.
Sean: Yeah. Everybody loves it, but for different reasons. Then maybe you have to figure out which one of those reasons represents the biggest target user group and hone in on that.
What comes after fit?
Nivi: Right. One thing you talk about is, once you have the product/market fit, trying to get through the next few steps as quickly as possible. So it would be great if you could talk about that, and also, for people that don’t know what the pyramid looks like, what are the next few steps?
Sean: Sure. As I said, if you don’t have product/market fit, you want to be obsessively focused on getting there, however you’re defining product/market fit. I think the easiest kind of definition to work toward is trying to get 40% of your users to say they’d be very disappointed without it.
And during that period you’re trying to stay very low burn and very conservative on all of your expenses within the business. And once you find 40% of your users that say they’d be very disappointed without the product, then you’re in a position that you have a business that can grow
now. So then the question is: do you try to grow the business right then or are there
some things that you can still do that are going to make it even easier to grow when
you’re focused on that? And what I’ve found in working with so many companies at this
stage is that you’re definitely better off waiting a little time until you try to grow the
business .
Nivi: And what does it mean to grow the business? You’re talking about spending money to acquire users, essentially.
Sean: Acquiring users, for a lot of businesses, means starting to spend money, but it might also mean really trying to crank up the virality of the business, or it might be SEO that doesn’t require a lot of spending.
Nivi: But it’s time and money that you require for people… [interrupted]
Sean: Yeah, and focus. The time piece, you could say, has time or focus. But it’s essentially saying…
How to bring a product to market, Part 2 — after product/market fit
by Nivi on January 12th, 2010
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“Where the #@!*% is Part 2?”
That’s what I’ve been hearing since we published Part 1 of our rare interview with Sean Ellis.
Here’s part 2 .
In Part 1, Sean discussed what you do before product/market fit: how to get there, how to
measure it, and how to survey your users so you can improve fit.
In Part 2, he explains what you do after fit: optimizing your positioning, implementing a business
model, and optimizing your funnel — all so you’re prepared to acquire users quickly and profitably.
If you don’t know Sean from his blog or tweets, he lead marketing from launch to IPO filing at LogMeIn and Uproar. His firm, 12in6, then worked with Xobni (Khosla), Dropbox (Sequoia), Eventbrite (Sequoia), Grockit (Benchmark)… the list goes on. 12in6 “helps startups unlock their full growth potential by focusing on the core value perceived by their most passionate users.”
This is the first time Sean has done an interview on the record. I’m really psyched he’s making his insights public — this interview is a must-listen.
SlideShare: How to bring a product to market, Part 2 Audio: Interview with chapters (for iPod, iPhone, iTunes) Audio: Interview without chapters (MP3, works anywhere) Transcript with highlights: Below
This inteview is free — thanks to KISSmetrics
We’re bringing this interview to you free, thanks to our sponsor KISSmetrics.
Sean is an advisor at KISSmetrics and we interviewed their CEO, Hiten Shah, in How to measure product/market fit with survey.io. KISSmetrics built survey.io with Sean — now they’re collaborating on KISSMetrics, a new tool for funnel optimization that we’ll discuss in an upcoming interview with Hiten Shah.
Prerequisites
You’ll get more out of this interview if you also read:
Part 1 of our interview with Sean.
The startup pyramid.
We use several phrases interchangeably in the interview: Growth = scaling = acquiring customers with a known ROI. Preparing for growth = after product/market fit = optimizing promise + implementing economics + optimizing the funnel.
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Outline
Here’s an outline and transcript of Part 2.
What comes after fit?
Prepare for growth
a) Put the metrics in place
b) Optimize the funnel
c) Optimize the messaging
Prepare for growth as quickly as possible
Remove bottlenecks to preparing for growth
Preparing for growth is not a low-burn period
Preparing for growth doesn’t require growth
Use a business model to grow quickly
Grow and create new channels
Nail the first user experience while preparing for growth
Leave no room for the competition
Marketplaces are an exception to this model
Why Sean decided to focus on startup marketing
Just scratching the surface
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Transcript
Music: The Equator by Tortoise
What comes after fit?
Nivi: Right. One thing you talk about is, once you have the product/market fit, trying to get through the next few steps as quickly as possible. So it would be great if you could talk about that, and also, for people that don’t know what the pyramid looks like, what are the next few steps?
Sean: Sure. As I said, if you don’t have product/market fit, you want to be obsessively focused on getting there, however you’re defining product/market fit. I think the easiest kind of definition to work toward is trying to get 40% of your users to say they’d be very disappointed without it.
And during that period you’re trying to stay very low burn and very conservative on all of your expenses within the business. And once you find 40% of your users that say they’d be very disappointed without the product, then you’re in a position that you have a business that can grow now. So then the question is: do you try to grow the business right then or are there some things that you can still do that are going to make it even easier to grow when you’re focused on that? And what I’ve found in working with so many companies at this [post-fit] stage is that you’re definitely better off waiting a little time until you try to grow the business.
Nivi: And what does it mean to grow the business? You’re talking about spending money to acquire users, essentially.
Sean: Acquiring users, for a lot of businesses, means starting to spend money, but it might also mean really trying to crank up the virality of the business, or it might be SEO that doesn’t require a lot of spending.
Nivi: But it’s time and money that you require for people… [interrupted]
Sean: Yeah, and focus. The time piece, you could say, has time or focus. But it’s essentially saying…
Prepare for growth
Sean: Is now the time to orient — especially the CEO and the marketing group and maybe a sales group — is now the time to build up that group and just say, let’s step on the accelerator and do everything that we can to get very aggressive about growing this business? And I would say, not quite.
The reason being, one, up until this point you shouldn’t have really focused on really trying to get the metrics into your business, so one of the ways that you can effectively grow a business today is, you can experiment in lots of different areas and figure out, in which areas do I invest a dollar and get that dollar paid back the most quickly or make a really strong return on the investment? But you can’t do that if you don’t have the measurement systems in place. So one of the first steps that you want to do is specify what metrics you really need to be tracking in order to be able to grow this business. And you want to then work to implement those.
So, to some degree, Google Analytics can help you, but the problem with Google Analytics is that you don’t really have tracking on a very user-specific level. So maybe you can track with Google Analytics or with Website Optimizer, even with Google AdWords with action tags, you can track a first transaction through dollars spent, but what you can’t track is lifetime value. And ultimately, expected lifetime value is what you should be basing your customer acquisition investments on.
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Nivi: With the per-user tracking, is that what KISSmetrics is for?
Sean: That’s what KISSmetrics is working on. For other companies that I’ve worked with, it’s basically been database driven reports where we’re cookie-ing users when they’re coming in to track them back to the source, and we’re recording that information in the user’s permanent record in the database, and that way any revenue that’s generated from that user, we’re able to tie back to the money that was spent on that referring origin, coming in.
The reason why I started working closely with KISSmetrics is that all of my projects were six months, and that type of a system that I just described tends to be fairly complicated, especially as you start to track where you’re losing users along the way, and some of the other pieces. It was taking a big chunk of the time that we had together to implement that, and there were a lot of bottlenecks around it, so I was trying to find someone who could build that type of a solution as an off-the-shelf type solution and KISSmetrics was on their way to doing something like that. So I’ve been advising them for a couple of years to try to get the full vision out there of something that can really give the metrics that any business needs to be able to drive and manage growth.
Optimize the funnel
Sean: So metrics is just one part of it. Obviously, as I started to touch on right there a second ago, most companies initially have a very inefficient customer-acquisition process. So it’s not just how effectively can you spend money externally, but how can you convert people once they get to your website to having a gratifying first experience, and then ultimately buying your product? And metrics are a good way of determining experiments that you run along the way — how can I get more and more people to actually convert?
That can be through landing-page testing. You can be really effective on that front, or all the way down to just testing purchase prompts. There are all different areas, so you want to have a pretty sophisticated measurement system in place to do that.
I’ve worked with businesses where, at the start of that process to the end of that process, in a matter of just a couple of months, we’ve seen five times as many people purchasing just by more efficiently on-ramping them into the product and converting them into being paying customers, which means that when we then focused on trying to grow the business and buy growth, we could spend five times as much money to get someone to the website at the same return on investment, after that process.
And when you can spend five times as much money to get someone to the website, there are a lot more viable marketing channels that are open to you — a lot of times channels that would not have been effective at all before. If you’re putting a dollar in and you’re only getting 50 cents back, after you’ve gone through this process and you try that channel again and now you’re putting a dollar in and you’re getting $2.50 back, you’re going to put as many dollars as possible into that channel, and you would have cut it previously.
Nivi: And the expected LTV of the user is equal to your allowable acquisition cost per user. Is that right?
Sean: That would be your allowable acquisition cost for a break even. It kind of depends on what your objectives are. If you’re trying to do market share you might even be buying users at a loss initially. If you’re trying to generate a profit, you probably want to build in some profit on that.
Optimize the messaging
Nivi: Right. So, we put the testing in place. What other steps are we going to do before we grow?
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Sean: So messaging. You want to make sure that you’ve got good messaging. So part of that was to get the product/market fit. You might be doing some positioning and messaging. But this is where you want to do a lot of landing page optimization and fine tuning just to see, what’s the best way to convert users coming in?
Nivi: In terms of positioning.
Sean: Ultimately in terms of converting them, positioning is part of that. To me, positioning is sort of the qualitative side and then testing and optimization is the quantitative way of getting to the best result. Hopefully, where you end up is somewhat consistent with what your positioning usage led you.
Prepare for growth as quickly as possible
Nivi: And what are your thoughts on just going through this whole process as quickly as possible?
Sean: That’s a good question. The mistake that I’ve seen a lot of companies make, particularly those that struggled to get to product/market fit, is that the whole mentality while you’re trying to get to product/market fit is to be super conservative and not spend very much money, so a lot of companies kind of [say]: OK, we got there. Now let’s prepare to grow.
And they, again, are really conservative and they’re taking six months to…. A prime example would be: I need to spend $100 a day or $200 a day to know that this is the best-performing landing page, or home page even, or I need to send 1,000 people or 10,000 people through there, and most people will space it out over two weeks. They’ll say they don’t want to spend more than $100 a day while we figure that out, so we’ll space it out over two weeks.
In reality, if you have some place where you can spend the money — let’s say you’re doing that through a Google campaign and you’re not getting the cap on that, but you’re saying, I just don’t want to spend more than $100 a day, you’re essentially going to spend exactly the same amount of money to get to the answer if that’s a good page or not. One way it’s going to take you two weeks; one way is going to take you one day. If you consider that time is money as well, then you’re closer to being able to accelerate the business after one day than you would have been otherwise and it costs you the same. But it’s just really hard I think, a lot of times, for people to go through that mentality.
Remove bottlenecks to preparing for growth
Sean: Another example would be if you are tight on graphic design resources internally, if you test 50 landing pages or 100 landing pages or 1,000 landing pages, you’re going to be so much more efficient at being able to drive growth in your business that it just doesn’t make sense, if your big bottleneck is on graphic design, then you want to bring in two or three people. Pay them a little bit more. It’s a temporary spike in costs to get much faster to the point where you’ve got a lot more landing pages in there.
So you combine those two things. We’re going to spend more to get people through, and we’re going to be able to test five landing pages at a time rather than just two. So being able to do all of those things… The goal should really be….
Preparing for growth is not a low-burn period
Sean: You have two low-burn periods in the business. The first is pre-product/market fit. You’re trying to spend the least amount possible.
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And then the second low-burn period is once you accelerate the business you’re working within the parameters of your allowable acquisition costs, so you can actually go to being cash-flow positive pretty quickly at that point.
One of the companies that I worked with, once we got through this period of — it took us about four months to transition to being able to really accelerate the business and we got it to the point where we could scale marketing to close to a million dollars a month with a fast payback on those marketing dollars.
And at that point we had to raise some more money to be able to fund those campaigns. We raised the money on some very proven metrics and went cash-flow positive the month after we raised the money. So it shows that if we had taken 16 months to go through and really optimize that experience, it probably would have taken a lot longer to get the cash flow positive, but we were very focused and aggressive on it through that period of time and could really accelerate that business in a very cash-efficient way once we got through that period.
Preparing for growth doesn’t require growth
Sean: The mistake that most people make is they’re trying to manage growth and optimization at the same time. For this period of time, growth isn’t important. That’s the other thing that’s really hard for people to consider. That is not the objective — efficiency is the objective.
So for the first part of the pyramid, the base of the pyramid, you’re just trying to create a product that’s good enough, that people want, so growth is definitely not important.
A lot of companies still pat themselves on the back if they grow faster than expected through that period. You shouldn’t, because what happens, especially if you go to your VCs and you pat yourself on the back publicly to them, then you’re essentially saying growth is important to us, and you’re setting expectations that they should want more of it. So basically, say: Hey, we grew. That’s not what we were trying to do yet, but it’s positive on the hope for the business, but before we really focus on growth we want to get our product/market fit number to this.
Now, in this case, basically we want to be able to grow as efficiently as possible when we’re focused on it. And so what we want to do is build in efficiency in the business and the customer acquisition monetization.
Use a business model to grow quickly
Sean: So this is the time when you put in the business model as well, because you can’t spend real aggressively if you aren’t confident that you’re going to get that return on the investment.
A lot of companies make the mistake of… at least I believe it’s a mistake. This is probably one of the most debatable things that I say; a lot of companies believe they can grow faster without a business model. To me, having seen companies that can arbitrage dollars to grow and do it really effectively, you can just accelerate the business so much with that, why would you not spend money to grow? But you can’t do that if you don’t have a business model in place. So that’s why I tend to want to put a business model in place at that point.
The mistake of trying to put a business model in earlier, before you have product/market fit, is that you don’t know if you’re charging for the right things in the right way. You may be charging for things that are totally irrelevant for people and giving away stuff that is really important to people.
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So that’s one of the big reasons I like to delay the business model until, one, I have product/market fit, and two, I know why I have product/market fit — I know why people love the product.
Grow and create new channels
Sean: Now I’m in a position to put the business model in place, work on all the efficiency on the customer acquisition side, and do everything so that when it comes time to focus on growth, the marketing group or the CEO or whoever is going to be managing that process can be completely focused on driving growth — they’re experimenting with lots of channels and finding those that work and killing those that don’t, and basically just as quickly as they can, adding as many new customer acquisition sources to the mix.
And you shouldn’t focus on that until you know how to efficiently convert people and until you have a product that people really need. So that’s why this pyramid just gives you the idea that until you have really achieved that level, and if you’re trying to do multiple things at the same time, you’re not going to give things the necessary focus to actually accomplish them.
And your goal is ultimately to be growing a product that has very efficient conversion, that you’ve got all of the metrics in place to really manage that growth, you’ve got a product that people love, and at that point you’re starting to become a regular company. You’re organized into product teams and marketing and sales and finance and all of those things that are needed to create an efficient, high-growth company that can manage that growth and not implode under that growth.
That’s really why in that center period of time, it’s exciting. What should be driving you, day in and day out, is that we’re close. We’re right to the point where we’re almost going to accelerate the business.
Nail the first user experience while preparing for growth
Sean: So, one other piece that I think fits into this is that a lot of times it requires a lot of experimenting with how you introduce people to your product. What do you show them first? What is that whole first user experience?
The mistake a lot of companies make is that they try to get that first user experience right before they have product/market fit, so those companies are essentially pulling limited resources off of their core product and saying: we’re going to focus those resources on getting that first user experience right. Then that means that they’re not really dealing with the problem. They can maybe get twice as many people in to experience the product, but it still sucks. So they’re not really dealing with the issue.
But now everybody who comes in, or a big chunk of people who come in, are saying that they’d be very disappointed without this product — there’s a lot of love for that product. At that point, basically hitting the pause button on core-product development for two months isn’t even going to hurt the business because people already love it, and taking all of those resources that would have been focused on honing that core-product development, and refocusing those on: How do you introduce people to that? What does that first user experience look like?
The mistake that a lot of companies make is that they’ll take one person off to do that, and it’s going to take them a lot longer to do the development to get that right. But now you’ve got that core-product experience right, taking the majority of your development resources to get through it in a few weeks is going to get you there faster and that is going to put huge dividends on your business.
Nivi: You’ll become master of your own destiny much more quickly. Right?
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Sean: Yeah. The way that I’ve been able to get development teams excited about that is, one, I give them the context of the whole big picture, and then I essentially say this is not something that we’re going to ask you to keep coming back and refining the first user experience. Once we’ve really got it right, backed up by numbers, backed up by saying twice as many or three times as many or ten times as many people are getting in and experiencing that core-product experience, then you can go back into just working on that awesome core-product experience that you’ve created, and evolving that and just continuing to create a great product experience.
But otherwise, we’re going to have to keep asking you for help for the next six months, until we get that first user experience right. It’s just much better for everybody, for you guys, to put the pause button on that, help us get this right, and then we’re going to be able to grow the business and it’s going to be a lot more exciting.
Leave no room for the competition
Nivi: And once you’re growing the business, what do you think about growing quickly to eliminate slack in the marketplace and basically leave no room for the competition?
Sean: Once you have product/market fit, and once others see you having traction, you’re going to attract a lot of copycats into the business. And they should be trying to come in because, like I said, the product/market fit is kind of the hardest thing to get to, so once somebody sees that you have a lot of passionate users who really love it, it’s the easiest way to create a moderately successful business — to knock that off.
So you have a short-term advantage, which is you’re able to respond to all the real product feedback that you’re getting from users who are coming in and experiencing that, so you can start to evolve your product better.
So partly what you want to do is just buy every related keyword, maxed out, and be very efficient on those keywords so that you can spend a lot more money on them acquiring users. So, the next guy can’t even consider spending keywords, so you’ve killed that channel for them. You just want to basically make it so that by the time someone can respond, it’s going to take them several months to be able to come out with something that’s close to your product. By the time they come in there, there’s just no market left for them to play in — you’re really redlining that market.
It’s interesting. In companies that I’ve been with through the growth period, the products that come easiest are the ones that often get the least focus because, oh, we’re hitting the targets on those numbers. We have to work harder on these other numbers. But it’s always the products where the growth comes easiest where the competition comes in because we didn’t take the slack out of the market in those products, and then suddenly competition that we didn’t expect, and then it’s not so easy to grow any more.
Marketplaces are an exception to this model
Sean: I think all of the things that I’ve talked through are a snapshot of what I think is best right now. There are so many exceptions in the different types of businesses that are out there. For example, marketplaces do need to focus on growth a lot earlier. Their business is a function of the people that are on there and how they’re using the product, and the experience changes for everybody else with more people on the product. eBay would be a good example of that.
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I think each of these things are some of the guidance that I wish I had in the startups that I was in, but don’t just take it exactly as-is and think you can just plug it right on your business and that it will work. You need to sort of interpret what this means for your business.
Nivi: Do you have any experience applying any of this theory to marketplaces at all?
Sean: Yeah, Y Corp. is a company that I’ve worked with that is a marketplace that I’ve definitely learned a lot and learned that it’s different than a lot of the companies, like Dropbox or Xobni, where it’s a more specific product that, with a million users or fifty users, there would be experience where the product doesn’t change that much, where for Y Corp. the experience changed a lot.
Nivi: So how do you still take a thoughtful approach when you’re building a marketplace?
Sean: It’s just a lot more complicated. I think, for me, one of the things that’s kind of come out, in my head, on marketplaces is that you probably need deeper pockets for it. You don’t have the luxury of focusing quite as laser focused on each of the steps in the pyramid that I talked about — that you actually do need to think about growth earlier on, and that even when you’re then focused on growth you need to make sure that you’re constantly finding out if the love is moving, if it’s on something else. It’s just a lot more dynamic to try. It’s fun. It’s interesting, but it’s definitely harder.
And I’ve had enough conversations with other people from dating sites to anything that’s got the experience based on the mix of people that are there, that it’s really something that affects any businesses like those. So that’s one piece that, don’t just feel like you can plug this in directly. There are probably exceptions for a lot of these things.
Why Sean decided to focus on startup marketing
Nivi: Why did you decide to focus on startup marketing, and why is it important to you and how did you come to that conclusion?
Sean: It actually happened when I was coming off of LogMeIn and figuring out what I was going to do after LogMeIn. I knew that the company had gotten big enough that it was not really the size that I wanted to be working in anymore, and that I wanted to go back to early stage.
So it was more just thinking, OK, I can jump into another startup and hopefully I can be fortunate enough to get into a startup where it has the success. But just looking at realistic startup success rates, LogMeIn was the second in a row of two startups that I had run marketing from launch through a NASDAQ IPO filing, and I just knew, realistically, that there was not a good chance that I was going to be able to do that with a third one.
And so partly what I was looking at was just in general…. I kind of went through the thought process of: did I just get completely lucky, which certainly had something to do with it, or were there some things that we did that actually led to that success? And when I really started thinking through both of the companies, I came to the conclusion that the hardest part and the part that really mattered in building a successful company, was what we did in the first year, and really just figuring out everything about the business: Who really needs this product? Why do they need it? How are we going to charge for it? How are we going to acquire new users?
All of these things that needed to be figured out, once we had them figured out then it was much more about, OK, now how do we get more users? But a lot of the moving parts had stabilized at that point and we could really focus on just getting more new users. And so I thought, if that’s really the most important part, I thought that it was also the most challenging part, and so future success that I have is really going to be based on how well I can do that first part.
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And then I realized that in 10 years, across these two startups, I’d only spent one or two years in that really challenging stage, so if I really wanted to get good at that I was going to need to figure out how to work in that stage a lot.
And the problem with startups is that every person working in a startup full-time, basically has an option vesting period that’s usually about four years on those initial options. So you work really hard in the beginning and you get some level of success and then it takes another four years to be compensated for that success, so there’s no way you’re going to create all this success and then leave the company right away.
So for me it was more about: how can I work really hard in that stage and actually be compensated for it? The only thing that I really figured would be the best way to structure it would be as an interim VP marketing role, and I was introduced, from one of the investors in LogMeIn, to a company that was in his portfolio called Xobni. They were still in private beta, and he said just talk to the guys. So we had a conversation that ended up extending for a couple of hours and we really bonded over some things.
And I got excited about the product and they got excited about potentially working with me and tried to bring me in long-term, full-time, and that was not something I wanted to jump right into. I was really passionate about figuring out this early stage and doing cycles there. So we decided that it made sense to pursue an interim VP marketing role. So I basically went there and thought, I’ll do interim VP marketing role after interim VP marketing role, for the next several years — essentially negotiate my exit before I came in so that I’d be able to keep a reasonable amount of options. That was the initial plan, and the whole idea was just to get the experience, up front, and practice, up front, to get good at that and to really document what’s important and what’s not important.
I think the challenge that I figured out was that, really, on the marketing side, there’s a lot of bottlenecks to get a lot of the things done, like optimization and trying to get resources to do a lot of those things. Everybody’s scrambling to get the overall product out.
So I knew a lot of what needed to be done, but there’s just a lot of waiting around until you have the tools that you need to do that. So where I’m looking at everyone around me working 14 hours a day, and wanting to put that time in myself, there just wasn’t that much to do. So I almost felt guilty that I wasn’t putting in the same amount of effort that everybody else was, so I still spent the time in the office, but I just found myself doing a lot of things that maybe weren’t that important.
That was why, after Xobni, I decided that I was going to do a more leveraged model where I could work with a couple of companies where they actually had somebody inside to manage the execution of things, but that I would actually be more on the outside, being able to not spend more time in the company than I needed to spend. So that’s why I did Dropbox and Eventbrite in that sort of way, where I was balancing two companies at once, and that worked pretty well.
Just scratching the surface
Sean: I feel like I’m still just scratching the surface on what can be learned in early-stage startups. There are not a lot of people that have deep enough experience and frequent enough experience in that really critical up-front stage to get good at it. It’s been fun to try and figure it out, but there’s a big variety of companies. There are certain things that I think are applicable to all businesses.
One of the most important discoveries in the last couple of years, since I’ve been focused on this stage, is figuring out this very-disappointed number and just understanding that trying to grow a business that doesn’t have users that would be disappointed without it, or don’t consider the product
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a must-have, is going to be a difficult and frustrating experience for anybody, including me. It’s humbling. I can’t do it.
I can’t do it very well, and when I see companies doing it I have a lot of admiration for them to be able to grow a business that is weak on that [fit] number. Those are the hard-core marketers that are kind of too good for their own good, because they’ve basically allowed the business not to focus on what the core issue is that’s holding them back. But those people would really benefit from taking a step back and tightening up some of these things.
I’m doing an experiment with Webs.com, for example, that is a later-stage company. They’ve been around for a long time. They’re a top-100 website and have a ton of user passion and a lot of the things that I’ve done to help prepare companies to grow are things that Webs hadn’t done, so we’re working together to see if we can retroactively put some of these things in place to accelerate their business.
And for me it’s all about learning and just experimenting in companies to find out what’s unique to startups and what’s unique to later-stage companies and what applies to everything.
Nivi: Great! That’s great. I just want to say thanks very much, Sean, for talking to us.
Marketing science Q&A with Sean Ellis – Nivi / Sean Ellis
http://venturehacks.com/articles/qa-‐sean-‐ellis
Marketing science Q&A with Sean Ellis
by Nivi on December 23rd, 2009
The comments to our interview with Sean Ellis turned into an awesome Q&A — this post is a roundup.
(Feel free to keep asking questions here or there and I’ll try to get answers from Sean.)
Is my product a nice-to-have or a must-have?
Jae Chung wonders whether his product is a nice-to-have despite the positive press:
“I spent the past 24 hours poring over each of the points [in the interview]. We also formed about 8 months ago and the site is currently undergoing beta testing and has received positive feedback from many of our users and the press. However, my gut tells me we are in the “nice to have” category, and could never quite put our finger on what it was that users found appealing. We’ll definitely be implementing your survey to find out where the “love” is!”
The survey he’s talking about is survey.io.
Should I charge users before fit?
Sean Ellis:
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“I think that it is easier to evolve toward product/market fit without a business model in place (users are free to try everything without worrying about price). As soon as you have enough users saying they would be very disappointed without your product, then it is critical to quickly implement a business model. And it will be much easier to map the business model to user perceived value.”
Michael Harry Scepaniak:
“…freeing yourself (pun intended) of paying customers early on would seem to allow you to make more radical moves (pivots), since you don’t have to worry about angering anyone that has given you money and expects you to deliver on their expectations in return.”
Instead of charging users for a part of the product they don’t even want, first find the part they love, and then figure out how to get users to pay for it. Entrepreneurs who advise you to charge from day one probably had fit early on in their startups.
How do I tell users that I’m going to charge someday?
Eric Santos:
“Do you communicate to the users that the product will have a price someday?”
Sean Ellis:
“I would communicate that “it is free during Beta” or if “beta” is too techie, then free during the introductory period. If you plan to have a free version, you can also let people know that.”
Should I pay users to send feedback?
Gregory:
“What about offering a gift or paying users to send feedback? Is this a useful technique, why or why not?”
Sean Ellis:
“I haven’t needed to offer a gift for feedback yet. However, on SMB targeted products I tend to create a formal beta program that includes feedback requirements. Those people that participate in the beta program lock in a discount on the product (generally I don’t announce price at this point, just that they will receive a 50% discount). In addition to providing great feedback, these people tend to convert at a very high rate (since they worked for a discount).”
What if my customers aren’t filling in surveys?
Vincent Chan:
“From my experience, many SMB users don’t like to fill in a survey for an unknown startup. Should I take that as a bad sign? In other words, is the survey response rate an equally important metric as the “must-have metric”?”
Sean Ellis:
“Yes, I’ve found survey response rate directly correlated to the percentage of users that consider the product a “must have.” For “must have” SMB products I often see the response rate over 10%.”
How do I find the love in a hardware company?
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Samuel Bouchard:
“Sean, how can this “find the love approach” apply to hardware companies? What needs to be adapted to the method when you sell a product that is worth several $k’s?”
Sean:
“Samuel, I haven’t worked on a hardware product, so I’d just be guessing… Given the cost of getting a hardware product to market, I’d spend a lot more time up front on “where’s the need?” Steve Blank’s book Four Steps to the Epiphany gives great guidance on this.”
If you can build a product in a day, show customers the product. If the product is going to take weeks, show customers a PowerPoint instead.
Pace of marketing change – Sean Ellis
http://startup-‐marketing.com/my-‐favorite-‐online-‐marketing-‐tactic-‐doesn%E2%80%99t-‐work/
My Favorite Online Marketing Tactic – Doesn’t Work
That’s a pretty safe prediction for two years from now. I’ve seen many hot online marketing tactics lose their effectiveness over the last decade.
The key cause: Online tracking makes it easier for marketers to quickly figure out what actually works. As a result we start piling into the most effective tactics. Eventually they get saturated. An equilibrium is reached where most of the big profit potential is lost. SEM (Google Adwords) is the best example of this. A few years ago I was able to spend 7 figures per month on SEM with a tracked payback of three months. Today very few keyword categories offer that fast payback at any kind of meaningful scale.
The other reason that popular tactics fade so quickly is that popular tactics generate a lot of noise. Potential customers start tuning out the whole channel as it gets cluttered with advertisers. In the 90s, I used to get 20X higher click through rates on banners than what’s typical today. There were several months in the late 90s at Uproar where we ran the most viewed banner on the entire web (according to Nielson NetRatings). Today banners rarely appear in the marketing mix for my startup clients.
And now it appears Facebook apps are quickly fading as a viable marketing channel.
So what can startups, marketers and VCs do to combat the short shelf life of online marketing tactics?
Advice to Startup CEOs: Don’t pay a premium for a marketing veteran’s many years of tactical online marketing experience – only the last couple years really matter. And most of the critical go to market projects are very different from traditional marketing functions.
In fact I generally encourage startups to hire a complete rookie. The marketing leader is one of the most challenging roles for a startup to hire. The best marketing vets are looking for startups that have a bit of “wind at their back.” It’s the rookie that can create this momentum. Their lack of experience often means it’s easier for them to adopt new effective tactics as well as concentrating their efforts on the pre-tactical projects. In exchange for coming in early, give them a legitimate shot at the long-term marketing leadership role. After a year they will be intimately familiar with your customers. And they
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will likely be every bit as effective as a veteran marketer but available for a fraction of the equity and cash.
Finally encourage your VCs to hold regular marketing summits so your marketer can trade effective customer acquisition tactics with other marketers (share “Advice to VCs” below with your VC).
Advice to Marketers: Don’t specialize in a single tactic. This is counter to the advice of most people, but hopefully by now you understand the flaw in focusing on a single tactic. They fade too fast and then you have to start building a new specialty.
Instead, focus on developing marketing skills that will always remain relevant. These include things like marketing psychology, diffusion of innovation, company building, customer research methods, persuasive website architecture, actionable marketing metrics… Stay on top of the latest tactics, but always balance this with developing expertise that will remain important in the long term. And when you discover effective new tactics, really analyze them to understand why they work. Those principles will remain important and will help you create/spot the next effective tactic.
And encourage your CEO/VCs to arrange marketing summits with other startup marketers where you can learn from each other (and please invite me).
Advice to VCs: Encourage your portfolio companies to exchange their most effective tactics. Most VCs get their CEOs together, but rarely do I hear about VCs bringing together their marketing leaders (mine never did in any formal way). Marketers probably have much more relevant insights to offer each other than CEOs. Effective online marketing tactics are surprisingly effective across different business categories. The collective insight across your portfolio of what works is enormous.
I recently attended one of the rare marketing summits at a VC and found it to be extremely valuable. Expertise in the group ranged from viral marketing to creative ways of generating press. I was happy to share my insights at no cost – well actually in exchange for their insights. I also shared some of my tools/projects that can be leveraged to get better results out of every tactic. I’m sure the other marketers would agree that it was an extremely valuable use of a few hours of our time.
Startup marketing (Sean Ellis) – Nivi
http://venturehacks.com/articles/sean-‐ellis
The sultans of startup marketing
by Nivi on November 19th, 2009
I recently re-connected with an up-and-coming venture capital Associate who thanked me for introducing her to the masterworks of Steve Blank and Eric Ries. I told her to check out Sean Ellis’ blog, and mentioned that I’ve learned just as much from Sean.
Later that night, she sent me a note: “Sean Ellis is awesome. Thanks so much.” Let me tell you why Sean is awesome.
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First, Sean lead marketing from launch to IPO filing at LogMeIn and Uproar. He later worked with Xobni (Khosla Ventures, First Round Capital), Dropbox (Sequoia Capital), Eventbrite (Sequoia Capital), Grockit (Benchmark Capital), Flexilis (Khosla Ventures), eduFire (Battery Ventures)… the list goes on. So all of his theory is backed by a wealth of experience across a broad range of startups.
Second, his startup pyramid changed my life and increased my bench press by 75 lbs. This is the best model I’ve seen on how to build a startup. Read it.
Finally, he shares a lot of his knowledge for free on his blog. Here are extracts from a few of his posts. Make sure you click through and read all of them in full. I read his blog from front-to-back when I first discovered it (start with the newer stuff).
When Should a Startup Start Charging?
“I’ve recently changed my long held belief that all startups should charge immediately upon the release of a new product. I now believe that non-enterprise targeted startups should only charge once you have achieved product/market fit. As explained in this earlier post, I define product/market fit as at least 40% of your active users saying they would be “very disappointed” if they could no longer use your product…
“For startups targeting enterprises, it actually does make sense to charge before reaching product/market fit. This is the best way to help the enterprise figure out how to get value from your product (somebody on the inside will be motivated to work with you to unlock value since they’ve already spent the budget). If you haven’t charged anything, your attempts to engage the customer and find value are likely to be perceived as an aggressive sales annoyance rather than genuinely helpful…
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“Startups often delay implementing a business model claiming “we’re focused on growth right now.”
But once you’ve achieved product/market fit, most startups will grow faster with a business model
(I wrote a post on this earlier). A business model gives you rational constraints within which you can execute very aggressively – otherwise you are held back by fear that you may be wasting money on paid marketing programs.”
The Startup Pyramid:
“Product/market fit has always been a fairly abstract concept making it difficult to know when you have actually achieved it…
“I’ve tried to make the concept less abstract by offering a specific metric for determining product/market fit. I ask existing users of a product how they would feel if they could no longer use the product. In my experience, achieving product/market fit requires at least 40% of users saying they would be “very disappointed” without your product. Admittedly this threshold is a bit arbitrary, but I defined it after comparing results across nearly 50 startups. Those that struggle for traction are always under 40%, while most that gain strong traction exceed 40%. Of course progressing beyond “early traction” requires that these users represent a large enough target market to build an interesting business…
“If you haven’t reached product/market fit yet it is critical to keep your burn low and focus all resources on improving the percentage of users that say they would be very disappointed without your product. Avoid bringing in VPs of Marketing and Sales to try to solve the problem. They will only add to your burn and likely won’t be any better than you at solving the problem. Instead, you (the founders) should engage existing and target users to learn how to make your product a “must have.” Sometimes it is as simple as highlighting a more compelling attribute of your product – but often it requires significant product revisions or possibly even hitting the restart button on your vision.”
To Pay Or Not To Pay To Acquire Users?
“I recently heard a VC say that startups “should spend the least amount of money possible on marketing.” This is a healthier attitude than the opposite prescription of undisciplined land grab, but a better approach is pure ROI marketing. Marketing opportunities that offer a fast payback with additional profit margin are a key component for reaching your startup’s full market potential…
“If your growth is accelerating, you will attract competition. And this competition will likely be savvy enough to replicate the customer acquisition and monetization approaches that you worked hard to invent. So it is important to make it as difficult as possible for them to get traction. I know some of you are saying “but yourrecent post told us to ignore the competition.” My point was not to ignore the competition forever, simply to ignore them while you are figuring out a repeatable, positive ROI way to acquire customers. Competition (especially those that are spending irrationally) will distract you from this critical task.
“But once you have optimized the first user experience and introduced a business model that generates sufficient revenue to fund user acquisition, it’s time to focus your marketing efforts to aggressively build new customer acquisition channels and scaling existing channels – both free and paid.”
I am a fan. And so can you.
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The 10x product launch – Ash Maurya
http://www.ashmaurya.com/2011/10/the-‐10x-‐product-‐launch/
The 10x Product Launch
You’ve painstakingly defined and built an MVP through 100+ customer interviews. You’ve collected thousands of emails from potential prospects through a teaser page. You’re ready to launch. But…
The engineer in you is worried about some real technical risks. You’re pushing the envelope using a new type of database – is the database partitioned correctly, will it scale, should you wait and run more tests first?
The marketer in you is worried about your pricing and positioning – can you justify charging for your MVP, are you delivering enough value, have you picked the right price, maybe you should wait to add a few more features, or defer charging to later?
A popular solution is launching as a “private beta” – allowing you to incrementally rollout your product, keep early customer expectations at bay, and defer the pricing question under the guise of gaining more learning first. While this approach certainly appeases our inner fears, it is often the cop-out approach.
The purpose of the MVP is getting your product in front of customers to start the process of learning but not all learning is equal. You need to prioritize learning around the riskiest parts of your product first.
For most products, technical risk ain’t what’s riskiest.
Launching a new product can be daunting because you have to simultaneously juggle multiple product, customer, and market risks. I’ve been fielding some of these tradeoffs lately with the upcoming launch of a new SaaS product – USERcycle, and devised the following 10x launch plan.
The 10x Product Launch Plan
Here’s the general idea:
Like the “private-beta”, the 10x launch uses a staged rollout. But unlike the private beta, it completely avoids any connotations around “being in beta”. You have to both demonstrate strong product conviction and be ready to rigorously test those convictions from day one.
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Additionally, the staged rollouts use a logarithmic step function (10x) that affords the right prioritization of risk at each stage.
What is the right prioritization of risk?
The Lean Canvas below charts the path I use for systematically tackling the 3 types of risks:
Product Risk – Getting the product right
1. First make sure you have a problem worth solving. 2. Then define the smallest possible solution (MVP). 3. Build and validate your MVP at small scale (demonstrate UVP). 4. Then verify it at large scale.
Customer Risk – Building a path to customers
1. First identify who has the pain. 2. Then narrow down to early adopters who really want your product now. 3. It’s okay to start with outbound channels. 4. But gradually build/develop scalable inbound channels – the earlier the better.
Market Risk – Building a viable business
1. Identify competition through existing alternatives and pick a price for your solution. 2. Test pricing first by measuring what customers say (verbal commitments).
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3. Then by what they do. 4. Optimize your cost structure to make the business model work.
Putting 10x in Action
Stage 1: Use interviews to recruit 10 early adopter customers
Use problem interviews to find a problem worth solving and identify your prototypical early adopter.
Put up a “problem focussed” teaser page and start collecting email addresses.
Use solution interviews to define your MVP and recruit your first 10 “early adopter” customers (not users) – they pay you from day one. If you nail the right problem, this shouldn’t be difficult. Make a bold promise, keep pricing simple, and back it up with a high-touch concierge MVP model and/or money-back guarantee.
Build your MVP and validate that is delivers on your Unique Value Proposition.
What’s happening here?
The first objective is finding motivated early adopters not on-the-fence users.
Early adopters are as visionary as you but from the problem perspective.
Customer interviews are a great way for qualifying early adopters.
Plan on talking to 100 prospects to find the right 10 early adopters.
Starting with just 10 customers defers technical risk for testing market risk.
First key metrics: activation, retention (and revenue).
Stage 2: Use email list to find next 100 customers
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Use your 10 early adopters to help find the next batch of customers (they pay you too).
Supplement the rest by setting up more solution interviews using your email list.
Collect customer testimonials / case-studies.
Start building a marketing website.
What’s happening here?
Exercise full AARRR user lifecycle (adding referral) to validate compelling UVP.
Test early channels for user acquisition.
Use refined positioning and social proof to build a compelling marketing website.
Plan on 1,000 person email list to yield 100 customers.
Stage 3: Use marketing website to acquire next 1,000 customers
Use your marketing website to sign-up users.
Use your learning to define multiple pricing plans including a freemium option if one makes sense.
Manage the full user lifecycle from visitor to sign-up to paid.
What’s happening here?
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Strong early adopter testimonials should help drive latter stage customers.
Usage patterns of existing customers help define optimal pricing plans.
Move towards a more automated self-serve model.
Start tackling scaling risks.
Stage 4: Build your engine of growth for next 10,000 customers
Start testing other customer acquisition channels.
Optimize cost structure.
Optimize AARRR funnel.
What’s happening here?
Product/Market Fit
Shift from finding a plan that works to accelerating that plan
Why 10x works?
Maximize learning (about what’s riskiest) per unit time.
You don’t need a lot of users to learn. Just a few good customers.
If you can’t convert a prospect in a 20 minute face-to-face meeting, it’s much harder to convert an unaware visitor in 8 seconds on your landing page.
Pricing is not only part of the product but defines your customers.
Start building a path to customers from day one – start direct to maximize learning before automating.
Disclaimer
This 10x Product Launch strategy is only partially implemented at this stage with theUSERcycle launch. USERcycle is a B2B SaaS product but I believe this launch strategy should
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work as well for a B2C product as long as you stay on the left-hand side for a while i.e. acquire users in steps of 100, 1,000, 10,000, 100,000, 1,000,000, etc.
Whatever comes out of this experiment, I will share my learning along the way. In the meantime, please share your comments below…
Marketing is hard – Rand Fishkin
http://www.seomoz.org/blog/why-‐its-‐so-‐easy-‐to-‐get-‐marketing-‐all-‐wrong
Why It's So Easy to Get Marketing All Wrong
April 25th, 2012 - Posted by randfish to Management / Culture
I got a couple emails last week I wanted to share in anonymized format. Here's the first one:
It's me again <redacted>, just wondering I have been learning allot more about how to link build without software like senuke x and other automatic software and becoming a better manual link builder with google alerts etc.
And here's the second:
I look after around 6 clients at the moment, but my daily jobs just seem to be very repetitive e.g. finding related blogs, commenting on them, submiting sites to decent directories and guest posting, an now and again creating infographics and sharing them with blog owners and across sites such as reddit/quora etc...mostly I'm just blog commenting though.
I get A TON of emails like this. When folks are relatively new to the field of online marketing, or are moving from classic marketing into SEO, they often reach out seeking advice and help. Unfortunately, the volume's become a bit overwhelming of late, and I'm only able to respond to 50%, sometimes less (side note: I tried an experiment w/ email scalability a couple months back that failed). Thus, I wanted to write a post to express some empathy.
Yes. Marketing is really, really damned hard.
I understand the temptations to phone it in, to spam instead of creating authentic value, to outsource responsibility, to proclaim for all to hear that you HATE marketing, to give up. You're not alone. In fact, I've been just inches from all of those perspectives time and again over the last decade.
But that's also what makes great marketing so powerful. When:
Very few people are qualified or capable to do something
Many people believe that thing to be impossible
Only a handful make exceptional investments to achieve it
That, in my opinion, is when remarkable things are in your grasp.
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The marketing channels we invest in - SEO, social media, content marketing, community building, virality - fit these parameters well. It's easy to do the basics, tough to get the intermediate items right and mind-blowingly challenging to get that last few percent that takes us from mediocrity to extraordinary.
So many times, marketing professionals are called in to execute on Step 3 after being handed half-assed 1s and 2s. My friend Philip Vaughn told me at a lunch some months ago that "startups aren't really an engineering, product or organizational problem. They're mostly a marketing problem." But if we're handed crap to market, we can't help but do crap marketing.
Get Found using Inbound Marketing – David Skok
http://www.forentrepreneurs.com/sales-‐marketing-‐machine/inbound-‐marketing/
Get Found using Inbound Marketing
The web has forever changed people’s buying habits. Instead of needing to rely on sales people to send them information, buyers now have Google and other search engines to research products, find competitors, and see how other people rate those products in blogs and reviews. Furthermore they are greatly influenced by individuals that have emerged as experts in particular subject areas who use social media to get their messages across.
This sea change in buying behavior requires vendors to re-think how they go to market, and optimize to make sure that they will get found by buyers using search engines, blogs, reviews, and social media. The termInbound Marketing was invented by the crew at HubSpot, to describe the techniques that are needed to get found by buyers, and to make sure that the reviews and blogs around your industry segment cover what you are doing. (HubSpot is a SaaS company that provides great software tools, plus education to help you automate Inbound Marketing. The founders, Dharmesh Shah and Brian Halligan have also written a great book about the topic: “Inbound Marketing: Get Found Using Google, Social Media, and Blogs (The New Rules of Social Media)”. Full Disclosure: I am an investor and board member at HubSpot.)
HubSpot produced this great humorous video that highlights the hopelessness of the old techniques in this new world:
As further evidence of this change in buying behavior, I was recently talking to the CIO of a large pharmaceutical company, and he told me how he hates spam emails from vendors, and how he had
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developed a canned email response to them. I asked him to forward me a copy of that email, and have excerpted a couple of paragraphs from it that quite clearly describe the change:
“Please understand that I get dozens of these types of messages a week. I simply do not have time to read them, dig into them, follow-up on them, or reply to them. The most effective solution to this problem is for me to ignore the messages, which is what I usually do. …
… Finally, a small comment. As a customer, I find this type of approach to sales to be largely annoying to me and unproductive for you. We learn far more about what we want to purchase by searching the web, looking for customer references in blogs and forums, word of mouth, and by finding white papers on your site that concretely describe solutions to problems we are having.”
Remarkable Content is King
A key part of getting found is making sure you show up on the first page of a Google search. The lazy marketer’s approach to doing this is to purchase Google Adwords, and pay by the click (referred to as SEM, Search Engine Marketing). However 85% of people ignore the paid ads, so to be really effective, you will need to perfect your SEO (Search Engine Optimization) skills.
SEO requires you to develop great content that your buyers will find sufficiently interesting, different or insightful, that they will want to remark on it. (The authors of Inbound Marketing refer to that as remarkable content.) When your readers remark on your content on-line, using tools like Twitter, Facebook etc., they spread the word virally to other readers and broaden your reach. These comments lead to links back to your site, which lead to ever increasing page ranking in the search engines.
To be successful at this, you will need to keep the content fresh. Traditional web sites don’t work in this regard, as they don’t change frequently enough. What is needed is a blog that you update regularly.
Your blog cannot simply be a sales pitch for your product, but needs to be about topics that your buyers care to read about. The tone could be educational; or humorous; or controversial. But above all it needs to be highly engaging and relevant to them – i.e. remarkable.
When you post a new blog entry, you will see your site traffic surge for a few days, then die back to a level slightly higher than before.The more you post, the faster your traffic will build. But in the end, it is the really great articles that you post that will have the most impact.
Once you have interesting content, you can use social media like Twitter, Facebook, LinkedIn, Digg, StumbleUpon, etc. to get the word out. Your goal is to get other bloggers to link to you, and to have people tweet about your content.
An interesting thing about a marketing department that focuses on Inbound Marketing: it will place a high value on people that know how to write and develop content that draws in an audience. A silver lining to the damage that the internet has inflicted on the publishing industry, is that there are plenty of very talented journalists seeking employment, and they possess the perfect skills for this job!
SEO versus SEM
Like most of things that are good for us in life, SEO requires work and patience before it will payback. So it can be tempting to take shortcuts, and just use SEM (paid search ads). However if it is done
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right, the results will continue to build, and you will start to build your own audience, and own your own traffic.
We have also seen that the cost of paid search increases as the need to scale the lead volume grows.
The Power of Free
Another extremely powerful way to create inbound traffic and qualified leads is to use a free product or service. A great example of this is the WebSiteGrader service from HubSpot. (If you haven’t tried this, I recommend giving it a try now. It will only take a few minutes.) WebSite Grader has a couple of interesting attributes that are worth studying:
It is free of charge
It takes very little work by the customer to get some very valuable results
It provides its results in the form of a score out of 100. Human beings are very competitive, and when they don’t get a good score, they want to find out how to improve their score. That leads them to wanting to find out more about HubSpot which can help them improve their score.
It allows them to compare themselves to their competitors. All businesses care about how they are doing relative to their competition. If they are doing worse, this is a powerful motivator to drive them to change.
Think hard about your audience and whether there is an opportunity to build a similar free web service that would draw them in, and provide great value.
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If you are interested in learning more about how Free products and services can help your marketing, please refer to this section: The Power of Free.
Building your reach
Once you have great content and possibly a free product/service, you will want to find ways to drive the maximum traffic to that content. In the last couple of years we have seen some powerful new tools emerge to help with this process in the social media space. Get yourself accounts on Twitter, Facebook and LinkedIn, and join in the conversation. (For Twitter, I also recommend downloading the Tweetdeck application.) Start by listening. Watch what people are talking about in your topic areas, and take note of their interests. Once you have an idea of how the conversation works join in. Be careful not to take a sales stance to promote your products, as that will rapidly lose you your audience. However you can draw your audience in with short url’s (see http://bit.ly/) that link to your blog posts and other non-sales oriented content.
This short paragraph is not going to be enough to fully educate you on the ins and outs of using social media to build your audience, so if the topic interests you, I recommend going here to learn more:
Internet Marketing Webinars (see the section on Social Media Marketing).
Influencer Campaigns
In every product area, there are usually already influencers that write the most about that area, and have the largest audience that follows them. To conduct a successful social media campaign, you will want to identify those influencers, and reach out to them to get them to write about your product/service.
To get them to pay attention to you, you will first need to understand what they care about. Read their blog posts and tweets, and try to get inside their minds. Try to determine what appeals to them, and what has clearly turned them off. Then prepare your pitch, and use social media to engage with them.
You will then want to monitor the results by tracking their blog posts, links to the articles, tweets, etc.
For more information…
Inbound marketing is a rich topic area that would take more than a single article like this to describe. For more information, try these links:
Marketing to match the channel – Steve Blank
http://steveblank.com/2011/08/05/bonfire-‐of-‐the-‐vanities/
Bonfire of the Vanities
Posted on August 5, 2011 by steveblank
When I was in my 20’s, I was taught the relationship between marketing and sales over a bonfire.
—
Over thirty years ago, before the arrival of the personal computer, there were desktop computers called office workstations. Designed around the first generation of microprocessors, these computers
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ran business applications like word processing, spreadsheets, and accounting. They were an improvement over the dumb terminals hanging off of mainframes and minicomputers, but ran proprietary operating systems and software. My third startup, Convergent Technologies (extra credit for identifying the photo on page 2) was in the business of making these workstations.
The OEM Business Convergent’s computers were bought and then resold by other computer manufacturers – all of them long gone: Burroughs, Prime, Monroe Data Systems, ADP, Mohawk, Gould, NCR, 4-Phase, AT&T. Convergent had assembled a stellar team with founders from Digital Equipment Corporation and Intel and engineers from Xerox PARC. And once we went public, we hired a veteran VP of Sales from Honeywell.
As the company’s revenues skyrocketed, Convergent started a new division to make a multi-processor Unix-based mini-computer. I had joined the company as the product marketing manager and now found myself as the VP of marketing for this new division. We were a startup inside a $200 million company. A marketer for 5 years, I thought I knew everything and proceeded to write the data sheets for our new computer.
Since this new computer was very complicated – it was a pioneer in multi-processing– I concluded it needed an equally detailed data sheet. In fact, when I was done, the datasheet describing our new computer, proudly called the MegaFrame, was 16 pages long. I fact-checked the datasheet with my boss (who would be my co-founder at Epiphany) and the rest of the engineering team. We all agreed it was perfect. We’d left no stone unturned in answering every possible question anyone could ever have about our system. As we typically did, I printed up several thousand to send out to the sales force.
The day the datasheets came back from the printers, I sent the boxes to the sales department in Convergent’s corporate headquarters, a separate building across the highway, and sent a copy to our CEO and the new VP of Sales. (I was thinking it was such a masterpiece I might get an “attaboy” or at least a “wow, thanks for doing all the hard work for our sales organization.”)
So when I got a call from the VP of Sales who said, “Steve, just read your new datasheet. Why don’t you come over to corporate. We have a surprise for you,” I smugly thought, “They probably thought it was so good, I’m going to get a thank you or an award or maybe even a bonus.”
Fahrenheit 451 I got in my car to make the five minute drive over the freeway. Turning into the parking lot, I noticed smoke coming from the far end of the lawn. As I parked and walked closer I noticed a crowd of people around what seemed to be an impromptu campfire. “What the heck??” As an ex Sales and Marketing VP, our CEO had a Silicon Valley reputation for outrageous stunts so I wondered what it was this time - a spur-of-the-moment BBQ? A marshmallow roast?
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Heading to a meeting with the VP of Sales, I almost walked past the crowd into the building until I heard the VP of Sales call me over to the fire. He was there with our CEO feeding things into the fire. In fact as I got closer, it looked like the campfire was being entirely fed by paper. “Here, toss these in,” they said as they handed me a stack of…
Oh, my g-d they’re burning my datasheets!!!
The Bonfire of the Vanities I stood there stunned as I realized that my 16-page carefully constructed, brilliantly written, technically accurate datasheets were being destroyed en masse. I guess I was speechless for so long that the VP of Sales took pity on me and asked, “Steve, do you know we have a sales force?” I managed to stammer out, “Yes, of course.” He asked, “Do you know how much we pay them?” Again, I managed to answer, “A lot.” Then he got serious and started to explain what was going on. (In the meantime our CEO watched my reaction with a big grin on his face.) He said, “Steve, I’ve never seen such a perfect datasheet. It answers every possible question a prospective customer could have about our product. The problem is that our computer sells for $150,000. No one is going to buy it from the datasheet. In fact, reading these, the only thing your datasheet will do is give a prospective
customer a reason for saying “no” before our salespeople ever get to talk to them .
“Do you mean you want a datasheet with less information?!” I asked, not at all sure that I was
hearing him correctly. “Yes, exactly. Your job in marketing is to get customers interested enough to engage our sales force, to ask for more information or better, to set up a meeting. No one is going to buy our computer from a datasheet, but they will from a salesman.”
Marketing to Match the Channel It took me a few weeks to get over the lesson, but it stuck. When selling a physical product through direct sales, Marketing’s job is to drive end user demand into the sales channel. Marketing creates
a series of marketing activities at each stage of the sales funnel to generate awareness, then interest,
then consideration and finally purchase.
Ironically, over the last decade, I’ve seen web startups have the opposite problem. For web sites with an ecommerce component, the site itself is supposed to both create demand and close the sale. Web designers have to do the work of both the marketing and the sales departments.
Lessons Learned
Marketing materials need to match the channel
Marketings job in direct sales channels with consultative sales need to drive demand to the salesforce
Indirect channels require marketing material with more information than a direct channel
Web sites that sell products combine sales and marketing
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Confusing these can get you your own bonfire
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AARRR by business model – Brant Cooper
http://market-‐by-‐numbers.com/2011/02/aarrr-‐is-‐from-‐the-‐pirates-‐point-‐of-‐view/
The Order of AARRR
By brantcooper, February 14, 2011 1:59 pm
Back in December 2009 when Patrick Vlaskovits and I first contemplated our Customer Development book, I was noodling around with a graphic to illustrate the integrate Dave McClure’s Pirate Metrics with Customer Development activities. I posted the graphic in a blog post which garnered lots of attention, including an important comment from Dave himself:
btw, note that AARRR isn’t exactly sequential… in fact, i’d emphasize Activation & Retention *first*, then go after Acquisition & Referral, then optimize for Revenue
Recently, I have caught a couple of my Customer Development clients optimizing the metrics in the “wrong” order, so Dave’s comment bears repeating and perhaps some expounding upon.
The Pirate Says “AARRR”
The anagram is ordered by user experience:
A – Acquisition – User is directed to your site;
A – Activation – User signs up or is otherwise engaged;
R – Retention – User keeps coming back, i.e., is engaged over time;
R – Referral – User invites others;
R – Revenue – User pays or is otherwise monetized;
This is not, however, the order in which you should optimize your product while
building your business. The order (and truly, the metrics themselves) are dependent upon your business model.
For B2C Free, Say RRAAR
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Retention – Nail engagement so that users want to or must come back;
Referral – Your business model requires massive user growth, so your product must require referrals to work or must be so cool it just happens;
Activation – Once your users are here to stay and inviting others, optimize their conversion funnel.
Acquisition – Now you’re ready to blow up acquisition. (Good time to get investment funding.)
Revenue – Millions of users? Time to monetize.
For B2C or B2B Freemium, Cheer RRRAA!
Retention – Nail engagement so that users want to or must come back;
Revenue – If your business model requires users or businesses to pay, you need to figure out what they’ll pay for before you blow-up anything;
Referral – Since you’re likely not a true network-effects business, you optimize referral after revenue. Optimizing referral is actually part retention, part funnel optimization. Users are so happy they will refer others to your site or provide you testimonials or speak to the press, etc. Not much sense in blowing up your acquisition, however, until you have that level of passion.
Activation – This refers to Blank’s “Sales and Marketing roadmap.” Here you understand and optimize your sales funnel.
Acquisition – OK, now you can hire that PR firm.
For Enterprise B2B, Cheer an alternative RRRAA!
R – Revenue – If you’re selling to businesses the number one thing you need to prove is that someone cares enough about what you’re providing to give you money for it.
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R – Referral – As above, referral in this context means that your customers are willing to sing your praises publicly.
A – Activation – In this context, activation is understanding your sales and marketing roadmap.
A – Acquisition – After you nail your sales and marketing roadmap, you’re ready to feed the top of the funnel.
R – Retention – In enterprise B2B, you often don’t have a subscription model, but may be charging annually for maintenance and support.
Note that you will always need to do some level of “acquisition” in order to figure out and optimize the other stuff. But the point is that you’re
not concentrating on or optimizing acquisition at the start. Exact order of AARRR is
debatable from one business to another, so use above as guidelines only.
Content targeting is no match for persuasion architecture -‐ Mariel Bacci
http://www.grokdotcom.com/2012/04/04/content-‐targeting-‐is-‐still-‐no-‐match-‐for-‐persuasion-‐architecture/
Content Targeting Is Still No Match for Persuasion Architecture
By Mariel Bacci
April 4th, 2012
This is the first of a two part series that will help you to understand and implement a proven and cost effective alternative to content targeting. The first post in this series will outline the pros and cons of content targeting, a useful alternative to setting up a content targeting program and how to start identifying the different persona’s that land on your site. The second pot of the series will cover how to use those persona’s to help guide prospects into conversions with persuasion architecture.
What is Content Targeting and is it right for you?
There is a lot of buzz about how to tailor your site to specific types of visitors. Content targeting is surfacing in Beta within the internet marketing arena. Many people are serving different landing pages to repeat customers who are looking for specific information. For instance, if you are a mortgage lender and someone searches for a $400,000 mortgage rates on your site, if they return, you can serve them a landing page that promotes a special offer on a $400,00o mortgage. Or maybe you gather your visitor has poor credit, next time they come to your site, you can serve a landing page
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that assures them they can get a mortgage even if their credit is sub par. This type on content targeting seems great when you’re looking at it from a surface level perspective. A few questions you should ask yourself before you consider investing in content targeting:
1. How many of your visitors are actually repeat customers or are conducting a follow up action that makes this worthwhile?
2. How will you collect and organize data so you know what content to serve next time your repeat visitor arrives or proceeds through a follow up action that you’ve identified? What kind of assumptions will you be making about your visitors?
3. How much money will it cost to set up an effective content targeting campaign? Costs to consider: Strategy, Designing, Coding, Testing, and Opportunity Cost.
4. Is there a more effective way to spend your money at this point in your optimization process? Not everyone is going to benefit from content targeting and not every site is at the point that it’s ready for this type of optimization. In other words, most have got bigger fish to fry first.
How To Identify Persona’s
Here at Future Now, we advocate Persuasion architecture and using Persona’s over content targeting. We appreciate content targeting because it focuses on the customer’s buying process and speaks to the visitor based on a behavior they are demonstrating. The problem is that, it’s impossible to know the buying modes and idiosyncracies of all the different visitors to your site based on a single data point that demonstrates a behavior. There are very few things you can assume by a visitors initial experience with you, and the problem becomes even greater when you are a company whose visitors usually only stop by once. With persuasion architecture, you can lead them all happily to a sale or lead by planning out the experience in advance. Persuasion Architecture helps you to combine the data that can tell you some important things about your visitor’s buying behavior, with other aspects of their buying behavior and personality types because it involves conducting research in advance to understand your segments of visitors at a much deeper level.
You can have two visitors coming from the same keyword, from the same zip code, both experiencing your site for the first time and those two people can have very different needs and intent when on your site. With Persuasion Architecture, you can pre- plan the buying styles of your visitors and create rewarding experiences for them before they even land on your site. With content targeting, you’re limited by the data; so you can only know so much about your visitors and how to prepare for them.
We can intuitively understand that everyone is an individual and has a different personality. The following is an example of how this plays out online:
Let’s say you’re creating a web site promoting Cancun vacation resorts to professional women, 25-54, with household incomes of $100,000 and up, and families with an average of 2 children. The objective of their vacation is some relaxation time and the assurance that their family will stay comfortable and occupied.
With a demographic like the one we described, it should be easy to create a site for this specific set of women, right?
Wrong. They approach the buying process in very different ways. One type of visitor may be an extroverted go-getter. She loves challenges and makes decisions quickly. The other type is an introverted woman who doesn’t like to be rushed. She likes to do a lot of research and take her time
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when making a buying decision. Even though these women look exactly the same on paper, they will all be looking for something different on your website. Plus, different women have very different visions of what “relaxation” looks like.
So, lets take a look at 4 types of women who may end up landing on your Cancun resort website
1. Gillian – Gillian will plan her vacation 6 months in advance. She will research every resort available in the Caribbean on the whole of the internet. She will pay attention to every detail. She will research the resorts and their amenities but will pay special attention to price while shopping. She wants to take this vacation opportunity to relax, and she will book well in advance.
2. Miriam – Miriam wants to go on a cruise with nice people. She’s looking for a vacation where they offer the opportunity to swim with dolphins because she knows that will excite her children. She will ask her friends for recommendations on Cancun Resorts. Miriam will be slow to make a decision. She will browse the site and look for a resort that makes her excited to get to Cancun.
3. Agnes – Agnes wants the most luxurious room she can afford. She wants to stay in a resort with a reputation for outstanding service. She wants to be able to do what the locals do in Cancun so she can think of her trip as an exotic adventure and learn something from the experience. She would also like a resort that includes a fitness center so she can come home looking good and feeling refreshed.
4. Patty – Patty will decide where she wants to go at the last minute.She’ll check out the amenities each resort offers, the more the better. Patty is looking for fun. She likes the personal touch, like chocolates on her pillow or a family picture taken outside the resort framed as a gift left in her room. Price is not a factor for her.
These women all look the same on paper, but they approach the buying process in very different ways and are looking for very different things.To accommodate them, you need to combine demographics, psychographics, and topographical information. You need to understand how your customers approach their buying decision. Most importantly, you need to speak to ALL of them on your website. It is a lot easier and more cost effective to welcome all of these women into their buying process than to try and predict which of them is landing on your site to give them a specific experience.
To see how these 4 women can be convinced to convert on your website, stay tuned for the second post in this series, Persuasion Architecture in Action. You will be able to use some of the ideas to implement conversion strategies on your own website.
Do you have any experience with content marketing? What about persona’s? We would love to learn what has worked well for you in the past and what you would never try again. We have experience increasing conversions using both content targeting and persuasion architecture, so if you need help implementing eiterh on your site, you can reach out to us!
Persuasion architecture in action – Mariel Bacci
http://www.grokdotcom.com/2012/04/09/persuasion-‐architecture-‐in-‐action/
Persuasion Architecture In Action
By Mariel Bacci
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April 9th, 2012
This post is a follow up from last weeks post, ‘Content Targeting is Still No Match for Persuasion Architecture’that describes how to create personas for your website so you can use persuasion architecture to convert your visitors. It also briefly covers content targeting and whether or not using it as a strategy is a good solution for your website. In this post, we will give some suggestions on how to convert each of the four personas we recognized in the last post.
Persuasion Architecture In Action
We have 4 different women from the same demographic to consider. You can read more about them in part 1 of this post.
Gillian – Gillian will plan her vacation 6 months in advance.
Miriam – Miriam wants to go on a cruise with nice people.
Agnes – Agnes wants ro pack in the most adventure possible.
Patty – Patty will decide where she wants to go at the last minute
Here are some methods to speak to each of the four women who land on your page in a way that will help lead them to converting on your site.
Gillian- We know Gillian is looking for a lot of information and a great deal. You want to send her to a page that lists all of your different resorts and their amenities. Grab the part of her that likes to book in advance and save money by featuring a link on the resort/amenities page that lists special low prices for those who book in advance. By providing a link with a call to action like ‘Book in advance and take advantage of early bird specials,’ you propel Gillian forward in the buying process.
Miriam- Miriam wants a resort that will make her feel good about herself and that will keep her family happy. Send her to a page that lists resorts designed to help her entertain her children and make the most of her vacation. Feature local attractions and images of families enjoying themselves. From there,include a link for Miriam to a testimonial page that lets her see how other women just like her have enjoyed the resort in the past and plan to return.
Agnes- Agnes is looking for new experiences and challenges. When you list your resorts make sure to offer Agnes a link to a page that lists local artisans and adventures she can go on. Use that page to show her how a trip to one of your resorts will change her life for the better.
Patty- Patty will be attracted by a page that lists last minute bookings; resorts that still have availability that she can book within 2 weeks. Feature a link on your homepage for Patty that will take her to a list of last minute booking deals. On the resort pages themselves, make sure you show off how
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your resorts provide a personal touch. A good way to do this would be via testimonials or reviews from people like Patty who were surprised at their extraordinary experience with your resorts.
You can personalize each woman’s online shopping experience by understanding their individual needs and offering an intentional path of navigation through your site that satisfies those different needs. All 4 women may travel from the Home Page to the Book Now page, yet each will get there by her own path, driven by her own interests and buying needs. You can present them all the same landing pages, and let them navigate based on their own buying process.
Do you have any experience with content marketing? What about persona’s? We would love to learn what has worked well for you in the past and what you would never try again. We have experience increasing conversions using both content targeting and persuasion architecture, so if you need help implementing eiterh on your site, you can reach out to us!
Big picture customer development – Sean Ellis
http://startup-‐marketing.com/big-‐picture-‐customer-‐development-‐revisited/
Big Picture Customer Development Revisited
Working with four startups at the same time has steepened my customer development learning curve (and also explains why it has been a month since my last update). To help balance the load, I’ve brought on a conversion designer and a researcher; we’re finally firing on all cylinders.
Our customer development goal with every startup essentially boils down to a race to be able to focus on growing the business. But in order to avoid wasting effort and money on tactical growth drivers, the following steps need to be completed first:
Validate the product/service is gratifying a reasonable percentage of users.
Create a value proposition that will attract the right type of users and pull them through the conversion funnel to gratification (and ultimately a transaction).
Eliminate friction from the conversion funnel.
Fine tune a business model that supports scalable customer acquisition channels.
If these steps have been executed well it is relatively easy to grow a sustainable business. But many startups skip these steps and jump right into trying to grow the business – making their job much harder or even impossible. Some will get lucky, but most will fail.
Given the importance of getting customer development right, I’m certain that eventually most startups will contract a specialist to help them navigate the challenges of this pre-scale phase. I’m often asked how I plan to expand 12in6 to help more startups. Most people are surprised when I tell them I don’t have a desire to expand the business. I really enjoy being able to work hands on with two new startups per quarter. If I built a large team to fill the current void of specialists, I’d be too busy managing the team. This would mean less time learning how to improve my customer development approach.
As I explained in my last post, I’m now validating that a startup’s product is gratifying users before I commit to working with them. While I love to hear from as many funded startups as possible, I can barely scratch the surface of the number of startups that need help. If I don’t have the capacity to
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help you, here are a few others that specialize in customer development: (I haven’t dug into their approach enough to be able to endorse them, but I encourage you to check them out)
Brant Cooper (San Diego)
Rajiv Kapoor (New York)
Sean Murphy (SF Bay Area)
If you are specializing in customer development or know someone else that you can recommend, please add names/recommendations in the comments. The main things to consider when evaluating a specialist is their track record building successful companies. And be sure to check references (especially around chemistry with the team).
I have been sharing discoveries on Twitter (follow me @ http://twitter.com/seanellis) and hopefully I’ll resume regular blog posts next week (after I get back from a short vacation in Hawaii).
Founders Make the Best Startup Marketing Leaders – Sean Ellis
http://startup-‐marketing.com/founders-‐make-‐the-‐best-‐startup-‐marketing-‐leaders/
Founders Make the Best Startup Marketing Leaders
CEOs often ask for my advice on the ideal candidate profile to lead their ongoing customer growth efforts once we’ve completed the key steps to unlocking growth. You would think that after running marketing at two startups through IPO filings that I could easily answer that question. But I’ve struggled to define the ideal profile of a successful startup marketing leader. After many course corrections, I finally believe I have it figured out. But to really understand the ideal profile, it is important to comprehend why the role is so challenging.
Based on anecdotal evidence, I’d guess that 90% of startup marketing leaders don’t work out. This corresponds to the overwhelming majority of startups falling short of expectations of founders and early investors. When a startup falls short of expectations, the startup marketing leader is the first to go. Even those fortunate enough to gain early user traction still face the uphill battle of finding cost effective ways to acquire users at scale. And if they do succeed, then startups are often tempted to hire a “next level marketer” to replace them.
A successful startup marketing leader must be undaunted by these risks and believe they uniquely have what it takes to succeed. That sounds a lot like the profile of most startup founders. So it’s not surprising that the best startup marketers are entrepreneurs at the core. Entrepreneurs are willing to take the risk and are generally tenacious enough to uncover the channels necessary to drive long-term growth.
I came to this conclusion after finding the common thread between myself and the two most effective people I’ve met at uncovering growth channels. One is still CEO of his company but has done more to drive customer adoption with a fraction of his time than most startup marketers do with undivided attention. The other highly effective startup marketer is a founder that transitioned to leading marketing. They share a persistent desire to connect their innovative solutions with the people that really need them. After implementing critical tracking systems and an efficient customer acquisition process, they are now relentless about experimenting with channels until they find things that work.
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Contrast this to a typical marketer, who is generally more focused on marketing activities than marketing results. Most of these activities do nothing to move the needle on the business, but make the marketer feel good because they are working hard.
It may be tempting for a startup CEO to read this and think that aggressive targets can steer the marketer in the right direction. I don’t think that will work. Effective marketing leaders will challenge themselves by pushing the boundaries of the startup’s growth potential. The CEO should be a partner in this process rather than setting arbitrary unrealistic goals. If you don’t have confidence in your marketing leader, the founding CEO should micromanage the process by being an active participant
in channel brainstorming sessions and challenging the marketer to ensure tests have been implmented to perfection. Once you have created a product that people really want, most of the remaining company risk and upside lies in your ability to aggressively drive customer adoption. This is not something a CEO should abdicate to the marketer until they’ve demonstrated a relentless drive to uncover profitable customer acquisition channels.
The CEO can also facilitate channel discovery by ensuring that the marketing leader gets the tracking systems they need to execute marketing efficiently. Of course the marketer should be able to make a case for why these resources are important.
What about successful startups that had an initial marketing leader with a more traditional background? First, there is nothing wrong with a traditional marketing background if at the core the marketer is entrepreneurial. Second, the marketer does not always deserve credit for strong user growth. Sometimes great products really do market themselves. My experience with Dropbox certainly supports this assertion. Also, I recently spoke to the former VP Marketing at a company that sold for billions and he agreed that his most important growth contribution was not getting in the way of the viral growth engine.
Of course the risk in hiring an entrepreneur to lead your marketing is that they’ll eventually leave to start their own company. Agree that this is an acceptable outcome if they are willing to give you at least a couple years.
Finally, only the marketing leader needs to be entrepreneurial. In my experience, it is not an essential characteristic for the rest of the marketing team.
Growth hacking – Sean Ellis
http://startup-‐marketing.com/where-‐are-‐all-‐the-‐growth-‐hackers/
Jul 26th 10
Find a Growth Hacker for Your Startup
Once startups are ready to scale, their biggest challenge is often hiring someone capable of leading the growth charge. A marketer with the right talents and approach can kick some serious ass once product-market fit and an efficient conversion/monetization process have been proven.
But the problem is that most startups try to hire for skills and experience that are irrelevant, while failing to focus on the essential few skills. Typical job descriptions are often laden with generic but seemingly necessary requirements like an ability to establish a strategic marketing plan to achieve corporate objectives, build and manage the marketing team, manage outside vendors, etc.
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Generally speaking, the job requirements/skills mentioned above are not paramount for startups in orbefore the early growth phase.
After product-market fit and an efficient conversion process, the next critical step is finding scalable, repeatable and sustainable ways to grow the business. If you can’t do this, nothing else really matters. So rather than hiring a VP Marketing with all of the previously mentioned prerequisites, I recommend hiring or appointing a growth hacker.
What is a Growth Hacker?
A growth hacker is a person whose true north is growth. Everything they do is scrutinized by its potential impact on scalable growth. Is positioning important? Only if a case can be made that it is important for driving sustainable growth (FWIW, a case can generally be made).
The good news is that when you strip away everything that doesn’t have a direct impact on growth, a growth hacker should be easier to hire than a VP Marketing (or maybe an insider already has the needed skills). I’ve met great growth hackers with engineering backgrounds and others with sales backgrounds.
The common characteristic seems to be an ability to take responsibility for growth and an entrepreneurial drive (it’s risky taking that responsibility). The right growth hacker will have a burning desire to connect your target market with your must have solution. They must have the creativity to figure out unique ways of driving growth in addition to testing/evolving the techniques proven by other companies.
An effective growth hacker also needs to be disciplined to follow a process of prioritizing ideas (their own and others in the company), testing the ideas, and being analytical enough to know which tested growth drivers to keep and which ones to cut. The faster this process can be repeated, the more likely they’ll find scalable, repeatable ways to grow the business.
When VP Marketing?
Not all growth hackers can or should evolve into VPs of marketing. A VP marketing needs to be able to help shape the overall company strategy, build and manage a marketing team and coordinate outside vendors among many other responsibilities. Some growth hackers will be great at this, while others will be bored out of their minds. The important thing to note is that without some proven scalable, sustainable ways of growing the business, these things will not matter.
Are You A Growth Hacker?
Some of my favorite conversations are those I have with fellow growth hackers. Last week in San Francisco, I had breakfast with three fantastic growth hackers and we traded insights that benefited each of us (don’t bother asking me for names to try to recruit them, two are CEOs and the other is VP User Growth at a very hot company).
I’m a big proponent of establishing and building a broader community of growth hackers. The problem is that not all people are cut out to be growth hackers. If you think you are a growth hacker, please post a link to your LinkedIn profile below so other growth hackers in your area can connect.
Customer feedback -‐ Andrew Chen
http://andrewchenblog.com/2009/05/04/talk-‐to-‐your-‐target-‐customer-‐in-‐4-‐easy-‐steps/
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Talk to your target customer in 4 easy steps
Answer this question honestly… When’s the last time you spoke to your target customer? Like really talked to them?
If it’s been more than a month, then shame on you!
Consumer internet companies are often overly dependent on quantitative data like Google Analytics, but without understanding the qualitative parts – the consumer psychology that actually goes into making purchase decisions. It’s a good idea to balance out the data aspects, particularly if you are not your target customer.
If you haven’t finished developing your product yet, that’s no excuse! After all, there are many methods of doing qualitative user research without writing a single line of code. In fact, in many ways talking to your customer and understanding them great detail is often much more powerful before you even go through the product development process.
How to recruit target customers to talk to, in 5 easy steps It’s very very easy to talk to people on the internet. You really don’t have to do much work. Here’s what I will often do, in order to get some opinions about a particular set of products, or to deeply understand user behavior (like gifting! or decorating), or to get a better picture of what people do day to day.
Step 1: Write a recruiting survey First off, go to Wufoo.com or a similar site (Surveymonkey.com works well too).
The most important part is to title the survey “Get a $20 Amazon gift certificate for 1 hour on the phone” or something similar.
Make a survey that includes the following questions:
First name (text)
Phone number (phone number)
Email so we can send you a gift certificate (text)
Best time to call, morning, afternoon, evening, weekend (multiple choice)
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Tell me about yourself! (textarea)
That is usually a good base, and you should make all the entries required. Then you also want to provide a couple questions that can help you screen or otherwise prioritize your questions. For example, for a Facebook app you might ask:
What types of games do you like (multiple choice)
What kind of phone do you have? (multiple choice)
Why do you like game X? (textarea)
Have you ever spent money on a game? (multiple choice)
etc.
Anyway, you get the point. I usually try to keep these pretty short.
Step 2: Recruit your participants Now that you have a survey set up, then you can take the URL and start getting people to fill it out. There are a couple obvious areas to recruit people, and I typically do the following:
Link the survey from your product (if it’s out there)
Buy ads on Facebook and send traffic to your link
Post your survey on Craigslist
Buy ads on Google Adwords and send clicks to your survey
For the ad-based solutions, I will usually limit the buy to $50 per day, and spend $0.50 or so per click. I usually find that it costs about $1-2 per survey completion. After I recruit a couple dozen, then you can start moving forward with the call.
Step 3: Do your phone interviews and learn something! This where you’ll learn the most – you can just pick up the phone and start talking. I usually structure the interviews into a couple distinct sections, depending on what I’m trying to learn.
The first section I usually try to learn about basic internet usage:
Tell me about yourself
What’s your typical day like?
Tell me about your computer setup – what do you have? When do you use it?
What are your favorite internet sites? What sites do you use every day?
Then depending on the topic, I’ll usually drill into 3 or 4 different areas with a couple questions each. The entire point is to ask open-ended questions without leading them too much. I will do as many of these calls as makes sense until I am hearing the same information over and over. Then I’ll start tweaking things and changing the interview to adjust.
Also, I will usually not show them a product unless the entire discussion is focused on that – the point of these conversations for me is usually qualitative understanding, not usability. Having them
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thoroughly test competitive products can be interesting also. You want to use this information to drive product strategy, and not be reactive.
I guarantee you’ll learn something!
Step 4: Buy your interviewees a gift card When you’re done, don’t forget to send your interviewees a gift certificate – $20 card from Amazon is a good idea – to thank them for their time.
One of the best things is that once you get some relationships going with the best interviewees, you can go back to them for updates or to identify some of the most extreme cases.
Conclusion The point is, it’s easy to talk to people, and it’s this type of detective work that separates customer-focused companies from technology-driven ones. There’s even a fun tool to suggest a bunch of other methodologies like this also – the IDEO method card deck.
If you have other additions to this, please suggest in the comments!
Lessons from the casino industry -‐ Andrew Chen
http://andrewchenblog.com/2008/05/12/lessons-‐from-‐the-‐casino-‐industry-‐on-‐engagement-‐metrics-‐and-‐lifetime-‐value/
Lessons from the casino industry on engagement metrics and lifetime value
Great book covering the modern casino industry I recently stumbled on "Winner Takes All," which is a great overview of the modern casino industry starting with Steve Wynn, Kerk Kerkorian, and Gary Loveman. It starts out mainly talking about the amazing vision of Steve Wynn, and how he was able to create some of the world’s more expensive and opulent casinos, including the Mirage and the Bellagio. In it, they also talk about a bunch of techniques that the casinos use to maximize on revenue, including vertical integration, in which they build "cities within cities" at a casino, so that you can eat, sleep, shop, entertain, and gamble all without leaving a single complex.
(scroll below for more)
Harrah’s, the casino run by quants The big story for me was the formation and operations of Harrah’s, which mostly constituted lower-tier casino boats for much of their history. They were decidedly unglamorous, and seemed uncompetitive to the entire high-touch Vegas scene. Think of them as Wal-Mart of casinos, versus Wynn’s Prada of casinos. Whereas the Vegas casino scene was very focused on "art" and the creating massive experiences, Harrah’s was run by the numbers and very methodical about how they grew their business.
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Harrah’s eventually became the largest casino company in the world, and is led by Gary Loveman, who got his PhD in Economics from MIT. And they grew their business like a business run by a quant. Here were the major steps they took, as outlined from the book:
First, they created a loyalty card to centralize identities and create consistent experiences
They created a granular calculation of LTV for their customers
Then, Harrah’s segmented their key clients based on usage, and then based on "lifecycle"
All in all, a very interesting approach – I jotted down a couple notes as I was reading the book, and wanted to share some of these thoughts below:
Building a single identiy – the loyalty card Unlike on the Web, it’s not easy for businesses to keep track of their customers – this becomes a big problem in an industry like gambling, where a small % of your customers make up a big % of the profits (aka, these guys are the "whales"). So if a gambler went to their regular Harrah’s casino, people would recognize them and they’d get differentiated service – but if they went to a different Harrah’s, for example on vacation, their history didn’t follow them. That way they couldn’t differentiate between the $100k spender versus the casual looky-loo, which was bad for business.
So Harrah’s introduced a series of loyalty cards called Total Rewards, which were used for "comps" and other free stuff. For the games folks out there, notice that you can "level up" as a member from Gold, Platinum, Diamond, Seven Stars, and for one member – Harrah’s "best" customer – there’s a Chairman’s Club card. They go so far as to fly you around, give you free hotel and accomodations, and other great perks.
This loyalty card gave them the underlying data which they could now use to drive the other parts of their data strategy.
LTV on a per-user basis The next step once they had all this data was to create models against the lifetime value (LTV) of their customers. This was done in two ways – first, you can imagine a visit to a casino, where a customer comes in, plays cards/slots/whatever, and then leaves. Based on their actions, a "theoretical win $" is calculated, which is an expression of what the casino should expect to get from that person. Combining this number and other services consumed and comps, you end up with a net profit calculation. You can imagine that this number is a rolled up view of:
How much money that person brought with them
What games they played, in what mix
How long did they play for
What other services did they consume
etc.
Once you can value an individual session, then you can also chain together multiple visits to calculate an aggregate value. This means that you can now tell the approximate difference between a rich customer that visits every July 4th, once a year, versus someone who plays frequently but also spends less money.
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Targeting based on customer lifecycle Josh Kopelman from FirstRound Capital recent wrote a great blogpost called Lifecycle Messaging that I’d encourage you guys to read. It basically talks about the lifecycle of a customer, and how you want to send them differentiated messaging based on what stage they’re in.
Harrah’s did exactly this – once they had the ability to model out a customer’s LTV, then when new customers arrive, you can start to put them into buckets of profiles that are already "like" them, in order to predict future LTV. Then based on LTV and their stage in the lifecycle, you can start to do some very interesting things: For new high-value customers, they can try to engage them quickly and get them highly personalized service right away, so that they’ll stick. For low-value customers who don’t fit the Harrah customer profile, it may be better to ignore than group than spend too much cash chasing it.
One of Harrah’s most profitable customer segments turned out to be older, retired gamblers who came by very often, and mostly played slots. They called these guys Avid Experienced Players (AEPs) and targeted this group for both new customer acquisition as well as retention. This group was not the "whales" of the Vegas casinos, but had a similar financial heft to the company.
Conclusion There’s a ton to learn from external industries, and I’d like to add casinos as an interesting place to extract lessons for Web entrepreneurs. It has an interesting blend of quantitative data, in gambling transactions, as well as the qualitative, which drive the emotions behind why people prefer the Bellagio to other hotels. It’s one of the industries that is at a fascinating intersection of both, and like the social web, you need both perspectives in order to thrive.
Facebook click to action – Brian Solis
http://www.briansolis.com/2012/05/facebook-‐to-‐marketers-‐its-‐time-‐for-‐a-‐click-‐to-‐action/
Facebook to Marketers, It’s Time for a Click to Action
You Like me…you really Like me. Wait. Maybe you don’t really Like me after all. According to
our Facebook engagement metrics, only 1% of you actually react when we post. So, to keep
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the numbers up, our team posts more often, asks questions, runs polls, curates content,
introduces more and more contests, and asks for your help to submit your pics and videos as
part of our “user-generated” content campaigns. We measure success by the Likes,
comments, shares, the number of conversations, and reach. While the Likes are rising, we’re
starting to recognize the pattern…I guess we never really defined why you should “Like” us
beyond the initial click. We just took for granted that a Like equated to an opt-in.
This general scenario is more common than you may think. That’s all about to change however. Marketers must now rethink their Facebook strategy to define click paths and results. As Josh Constine recentlyreported, Facebook is now giving advertisers access to its API to improve post-click actions. In his post, Constine walks through a series of various scenarios for brands, developers and also local businesses to take advantage of the new Ads API. Here, we’ll talk more about how to start with strategy.
With the updated Ads API, advertisers must now think beyond the “Like.” Facebook’s Ads API will allow advertisers to present ads most likely to take specific post-click action such as content sharing, in-app purchases, Facebook Offers, among a list of other actions (see below). In the great pursuit of ROI, Facebook is also taking a lot of the guesswork out of ad campaign development and deployment to enhance desired performance. The new improvements give Facebook advertisers an unprecedented opportunity to connect with specific market segments based on intelligence to introduce more informed campaigns that trigger relevant clicks, conversions, and return.
Source: Techcrunch
What does “more informed” actually mean? Facebook is studying the behavior of its consumer population and as it does, it will provide deeper insights to brands seeking specific actions, such as those who are more likely to be a virtual good buyer, someone who actively shares content, who attends events, individuals who appreciate deals and offers. Over time, ads can be optimized for audiences based on this behavior as well. As such, brands must not only compete for attention and clicks, but also context and relevance based on behavior and preferences.
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For brands and agencies, advertising based on keywords is no longer good enough. Now that you have a better shot at reaching the right people based on behavior, advertisers must now also become architects of experiences and outcomes.
Now advertisers can specifically optimize for…
1. People talking about this page 2. Page likes 3. Page post likes 4. Page post comments 5. Page post shares 6. @ mentions 7. Check-ins 8. Photo tags 9. Offers shared 10. Offers claimed 11. App installs 12. App used 13. Credit spend events (number of times someone uses credits in the app) 14. Credit spend amount (value of credits that were spent in the app) 15. Number of RSVPs
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This is a click to action…
Designing campaigns now require brands and advertisers to think about the “click to action” they want to encourage. I refer to this as the A.R.T. of Engagement, where brands intentionally design campaigns to provoke relevant actions, reactions, and transactions. To take advantage of Facebook’s API, brands must now employ sophisticated advertising approaches that combine segment and contextual research, segment-specific strategies, app and channel development for each approach, UX, creative design, and real-time conversion metrics, review and optimization.
It’s more than Likes or forcing people through Like-gated apps or campaigns. Now it’s about performance and conversion science where…
1) Contextually relevant content appears in front of qualified and desirable audiences that…
2) Triggers a defined, useful action that…
3) Leads to optimized click paths that result in material content or activity, which then…
4) Motivates conversions to preferred outcomes and…
5) Delivers a more integrated, consistent, and efficient experience.
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To engage more effectively through Facebook’s social advertising platform requires that all strategies and campaigns commence with a stated purpose. I believe that the best way to outline these scenarios is to begin with the end in mind and work backwards from there. By starting with the end in mind, the ability to research desired behavior and who to reach as a result becomes incredibly clear…and also inspiring.
The dimensions of engagement you’ll need to define are 1) what are you trying to accomplish, 2) what the experience looks/feels like, 3) what benefits you’ll offer and what they mean to the people you’re trying to reach, 4) the desirable outcomes you wish to measure, 5) How people feel as a result of the A.R.T. experiences you evoke, and 6) What the experience will look like in the most prominent channels of your connected customers.
This is why you’re now an architect of experiences and outcomes. It takes vision. It takes design. It takes measurement and optimization. The A.R.T. of Engagement is realized through a Social Experience Framework that starts with intentions and ends with resulting sentiment…not just the outcome.
There’s an old saying, “it’s not the gift that counts, it’s the thought behind it.” The same is true for social advertising, marketing and well, business overall. Intentions count for everything. Therefore your intentions must be realized as experiences where technology serves as the enabler to creatively and contextually engage to create experiences that meet or exceed expectations and ultimately inspire desirable outcomes.
Social network marketing – Andrew Chen
http://andrewchenblog.com/2008/05/14/social-‐network-‐marketing-‐getting-‐from-‐zero-‐to-‐critical-‐mass/ Social network marketing: Getting from zero to critical mass
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(above is a picture of fun San Francisco tradition called Critical Mass in which cyclists take
over the street! Thank god I don’t drive much around the city)
What does it mean to hit critical mass? I’ve heard several pitches in which an entrepreneur outlines a marketing plan for their business which is lots of hard work, but eventually they reach a "critical mass" point where all of a sudden magic kicks in, and smooth sailing is ahead. What these discussions often leave out is, what exactly is a critical mass point anyway? How do you know where it is, and how do you know if you’ve hit one?
To answer this question, let’s return to the original definition of "critical mass" from the Physics world:
The smallest mass of a fissionable material that will sustain a nuclear chain reaction at a constant level.
What does fissionable material means? What is the chain reaction that happens for a web property? Let’s look at it from two separate contexts – user acquisition and retention.
User acquisition One way to interpret this is that initially, your site has difficulties with user acquisition, until you hit some scale points in terms of total userbase. Then all of a sudden, your site goes "viral" and you start getting lots of users coming in. To formalize this idea, you could imagine the following happening:
Initially, you are getting users through ads or PR, and your viral factor is <1
As your site grows, word of mouth effects (bloggers, friends, etc) give you some name recognition
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This brand recognition increases your conversion rates across the board, thus boosting the percentages that make up your viral factor, increasing it to >1
That’s one way of viewing it, although I don’t believe that’s what most people mean. They usually mean that their site is not that useful until there’s a certain # of people on it, and when you cross the critical mass point, then the site becomes engaging. So let’s talk about this idea in an engagement context:
Engagement As discussed above, there’s an idea that for a user-generated content site, you have an early bootstrapping problem. If you’re YouTube, but have no content, then no users will stick around. Yet if you have no users, then you have no one to upload content. So you need to break out of this local minimum until you cross some threshold – this is the critical mass point. To formalize this idea, here’s the retention focused view:
Early on, you are getting users through PR or ads, but all your users bounce off the site
However, each user you acquire have some chance of creating content (profile/pictures/video/etc)
Eventually, new users have enough content to consume that they stick around on the site, perhaps messaging older users, who now return
Once you have a "critical mass" of users, then there’s enough activity to keep everyone coming back
In this perspective, you can imagine that there are actually multiple phases that your user passes through – initially, they have a passive experience where they are pulled back onto the site because of notifications like friend adds, messages, etc. And it’s possible for your site to never get past this phase. However, if you acquire enough people, new users pull back old ones, who then start coming back, until they start using the site on a regular basis.
What "scale" of network does your website depend on? However, the discussion above also neglects that users want to consume different kinds of content depending on how they view the site. For example, the following scenarios are probably FAIL states, even if on the surface they look good:
1,000,000 users composed of 100 strangers in 10,000 different locations
1,000,000 users who created 1,000,000 different forums with no cross-visiting
The reason is that the above scenarios represent ultra-fragmentation, with no ability to reach critical mass points. This illustrates that there are different scales of network, which reflect different product designs. These include:
Networks of "real friends"
Networks of online friends united around an activity or interest (WoW, anime, etc)
Networks of people in the same local region
etc.
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It takes careful thought to figure out what network your product is really built on. It’s very common to see companies that are primarily targeting purely online friends build features that are really meant for people that know each other offline.
Similarly, even within a type of network, it’s important to consider the level of adoption within that network. You could argue that there’s a concept for a "minimum social group" which represents the smallest number of friends within the appropriate network, before a social tool is useful. This minimum social group concept is kind of interesting because some applications only need a small number of friends to get off the ground, and others need more:
Skype: 2 minimum
Mailing list: 4-5 minimum
Forum: 10 minimum
Social network: 10? 15? 20?
… etc.
So I’d encourage anyone building a social site to really consider what type of network they are building for, and how many people they need at the local level. Once you can figure that out, then the next goal is to aggregate these smaller groups into a larger one. This is essentially what Facebook did – by understanding how to dominate a smaller space like a college, they could roll up lots of small spaces into a larger population.
Aligning your user acquisition to your network goals As many have observed, startups working on the Local space have had a very very tough time, with the exception of Yelp. In Seattle, where I’m from, Judy’s Book raised a ton of money and then promptly closed shop because it was hard to get traction.
The reason of course, is that a regional network is a pretty specific one – there are tons of them – plus the minimum social group is actually pretty high. You need a lot of diverse people on the site, reviewing everything in site, before you hit a reasonable coverage % for reviews.
Similarly, if you are doing blind addressbook importing as the way to grow your userbase, but you aren’t targeted about what traffic you’re pointing into the viral loop, then you might end up with a bunch of users from Turkey or some other random part of the world. Probably also not what you wanted.
So to review:
Critical mass is defined by what type of network your social product operates on, and how many users you need on that network before the product becomes useful
Thus, critical mass is a product-by-product discussion – there’s no one-size-fits all
Similarly, people that use your product go through a collection of "phases" – from ranging from passive usage where there isn’t enough content to consume, to the point where they are very active and creating content themselves. The threshold point between the phases is a local observation of critical mass
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Sites that are useful for "online friends" and don’t require too many people are the easiest to get off the ground (but have other issues, like they might be too niche)
Site that are useful only for large numbers of "real life friends" (local review sites are a good example) are the hardest to get off the ground, yet are hugely useful if you can get people on board
As always, comments appreciated.
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Driving user engagement
Driving user engagement
Value of a user -‐ Andrew Chen
http://andrewchenblog.com/2008/05/20/whats-‐the-‐value-‐of-‐a-‐user-‐on-‐your-‐site-‐why-‐its-‐hard-‐to-‐calculate-‐lifetime-‐value-‐for-‐social-‐network-‐audiences/ What’s the value of a user on your site? Why it’s hard to calculate lifetime value for social network audiences
Who is this, and where can I find more pics?? For those of you who aren’t familiar, the photo above is of Christine Dolce, aka Forbidden, who is a famous MySpace celebrity (and will surely get her chance to star in a VH1 reality TV show). I can hear a rush of clicks googling her for pictures, so I’ll just provide you the link to herMySpace profile here. Let’s get back to Forbidden in a second, since she fits into a larger discussion.
LTV and the goal of infinite segmentation The core of many marketing programs is segmentation – you take your core audience, identify differences between their motivations, spending patterns, and behaviors, and tailor your messaging to hit that audience. The better defined your segments are, and the more granular they are, the more opportunities you have to personalize your message when you reach out to them.
One way to do this segmentation is to look at "Lifetime Value" (LTV). Calculating lifetime value (LTV) of your customers is a great way to understand how they fit into the core of your business. Typically, your best customers will represent a significant amount of revenue, and you want to make sure they’re happy. Having a granular LTV calculation where you plug in a user’s historical data allows you to come up with infinite segmentation in terms of how you want to differentiate the experience high-value customers get versus low-value ones.
LTV for retail sites versus social sites For retail sites, the calculation of LTV is pretty clear. In plain English, you might define it as:
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The stream of all previous and future profits that a user generates from their purchases
So for a given user, you’d add up all their previous transactions and then add that to whatever model you’ve created about their likely future transactions. Part of what makes this work is that:
Transactions in a retail setting are unambiguous
Each individual makes an isolated impact on the system, in the form of a transaction
Retail buying has a long established history of data, both online and offline
Now let’s look at social properties, particularly ones that have the characteristics that they are ad-supported, are heavily based on UGC content, and incorporate viral marketing. If you were *just* to consider the advertising portion, then it might be easy – the LTV of a user would be defined as:
The stream of all previous and future ad impressions that a user generates from their usage
So that seems pretty clear – if you’re a user who generates 100 ad impressions a day, you are worth more than someone who generates 10.
The problem is when you try to incorporate the value of the UGC that a user generates, or the users they help acquire (or retain!) as part of the LTV calculation. And for this discussion, let’s go back to talking about Forbidden.
Forbidden as an LTV outlier The problem with a user like Forbidden, and possibly even more so Tila Tequila, is that only a small amount of value that they create comes from their actual usage of the site. Instead, they provide additional value through user acquisition, retention, and content creation that is poorly measured by the definition above.
Another way to think of this is that if you were to remove these users from MySpace, you would not simply be subtracting their LTV from your overall site’s value. In fact, it would be an outsized decrease in value, since users like Forbidden and Tila Tequila bring many millions users onto MySpace, and entertain millions of people, keeping them on the site.
A couple commenters of my LTV in casinos blog post said as much:
QDub writes: "Great post! I’d add that for online businesses, LTV is further complicated by a user’s role as a net-promoter and a content creator. Otherwise, LTV should be easier than ever for online businesses vs offline–you have direct access to customer demographic and value data, and creating differentiated outreach is easy as pie.
Problem is, given the state of the web today, we’re still struggling with finding value, period. Segmenting by non-existent LTV may be a moot point for many startups."
Douglas Galbi writes: "LTV value calculations are a good tool, but they tend to place in the background the "social value"
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that’s central to a lot of new internet businesses. So perhaps you and others who know a lot about social software have some knowledge that you in turn can share with casino business folks.
Perhaps gambling in casinos is highly individualistic. But I’d guess that participants prefer the room to be crowded but not too crowded, and to have some beautiful people who are part of the crowd (not just marked performers). Playing games with others who one finds interesting and fun, word-of-mouth marketing, the negative social value of particular personality characteristics (dour, whiny, griefer) might also be factors with business significance to casinos but that might be overlooked in an individual LTV calculation. Someone in the business should be able to get some data and do some analysis for insight into the quantitative significance of these social factors."
These are great points, and I agree with these issues as difficulties in applying LTV. The overall gist is that when you have interactions between users, all of a sudden the dependencies that are caused become difficult to measure.
Let’s talk about how to think about assigning credit based on those dependencies.
Assigning credit in LTV calculations is the hard part Even in the most simple case for assigning credit in the LTV calculation, there are problems. Here’s the smallest example, in which one might ask:
If a User A views a piece of content uploaded by User B, who get credit for that pageview?
Well, the answer to this question is actually quite complicated. First off, it depends on whether or not User A is likely to have that pageview anyway. That this, even if this content uploaded by User B didn’t exist, perhaps User A would be bored anyway and would have consumed that piece of content. In the opposite scenario, if User A came to the site for the express purpose of viewing User B’s content, then User B ought to get a lot of the credit.
Similarly, a case like this exists on the user acquisition side. The question in that case is:
If User A invites her friends B, C, and D onto the site, should she receive any credit for their pageviews?
You think they would, at least a bit, but it ultimately depends on whether or not B, C, and D were going to end up on the site anyway. If your acquisition is great, and you would likely have gotten them through some other acquisition scenario, then it doesn’t seem like A should get much credit. But if they are incremental users, then it’s great, and A should be rewarded.
The point is, a lot of this exercise becomes about figuring out the incremental value. You’re trying to extricate the value that would have already been there versus the new value that gets created by a user.
If Forbidden didn’t exist on MySpace, would users simple go to a different trashy blond girl to look at their pictures?
That’s a very philosophical question, I know
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Conclusion To summarize the blog post above:
Lifetime value calculations can and should be used to value your audience
It’s pretty clean to calculate in retail, and much harder to calculate on social networks
The value of content creators and social linchpins gets mixed up in the calculations
And finally, what we all knew already: MySpace girls are much hotter/trashier than Facebook girls
How cost of customer acquisition kills startups – David Skok
http://www.forentrepreneurs.com/startup-‐killer/
Startup Killer: the Cost of Customer Acquisition
December 22, 2009 • David Skok
In the many thousands of articles advising entrepreneurs on what they have to focus on to build successful startups, much has been written about three key factors: team, product and market, with particular focus on the importance of product/market fit. Failure to get product/market fit right is very likely the number 1 cause of startup failure. However in all these articles, I have not seen any discussion about what I believe is the second biggest cause of startup failure: the cost of acquiring customers turns out to be higher than expected, and exceeds the ability to monetize those customers.
In case you are not familiar with the importance of Product/Market fit, Marc Andreessen has a great blog post on this topic: The Pmarca Guide to Startups, part 4: The only thing that matters.
In this blog, Marc argues that out of the three core elements of a startup, team, product, and market, the only thing that matters is product/market fit. I agree with Marc’s view that product/market fit is extremely important. However after closely watching several hundred startups that have failed, I observed that a very large number of these had solved the product/market fit problem, but still failed because they had not found a way to acquire customers at a low enough cost.
Business Model
I would like to propose that in addition to team, product, and market, there is actually a fourth, equally important, core element of startups, which is the need for a viable business model. Business model viability, in the majority of startups, will come down to balancing two variables:
Cost to Acquire Customers (CAC)
The ability to monetize those customers, or LTV (which stands for Lifetime Value of a Customer)
Successful web businesses have long understood these metrics as they have such an easy way to measure them. However there is a lot of value in looking at these same metrics for all other businesses.
To compute the cost to acquire a customer, CAC, you would take your entire cost of sales and marketing over a given period, including salaries and other headcount related expenses, and divide it by the number of customers that you acquired in that period. (In pure web businesses where the
141
headcount doesn’t need to grow as customer acquisition scales, it is also very useful to look customer acquisition costs without the headcount costs.)
To compute the Lifetime Value of a Customer, LTV, you would look at the Gross Margin that you would expect to make from that customer over the lifetime of your relationship. Gross Margin should take into consideration any support, installation, and servicing costs.
It doesn’t take a genius to understand that business model failure comes when CAC (the cost to acquire customers) exceeds LTV (the ability to monetize those customers.
A well balanced business model requires that CAC is significantly less than LTV:
Since the above two diagrams are so obvious, you may wonder why I have included them. The goal is give the reader a sense of the balancing act required to create a profitable business. Hopefully the
142
value will become more obvious with the third version of the diagram that shows the different factors that affect the balance.
Another reason for stressing the point using diagrams is that many entrepreneurs have realized that since the web provides some amazing new ways to acquire customers at low cost, several new businesses have become possible. The only thing that you have to consider is can you monetize your customers at a higher level than the cost to acquire them.
The Entrepreneur’s Achilles Heel: Optimism
To be an entrepreneur requires great optimism, and a very strong belief in how much customers will love your product. Unfortunately this same attribute can also lead entrepreneurs to believe that customers will beat a path to their door to purchase the product. This frequently causes them to grossly underestimate the cost it will take to acquire customers.
A common scenario is an entrepreneur that has dreamt up a cool new service that they can offer via the web. As a VC, I have sat through many presentations like this, and in most cases the service is actually interesting and compelling. However in the majority of these presentations there is little or no focus on how much it will cost to acquire customers. As I ask questions to understand the thinking, what usually comes out is something vague along the lines of web marketing, and/or viral growth with no numbers attached.
A quick look around all the B2C startups shows that, although viral growth is often hoped for, in reality it is extremely rare. When it does happen, the associated businesses are usually extremely attractive, provided they have a way to monetize their customers. (For more on the topic of Viral Growth, refer to my blog post on that topichere.)
Far more common is a need to acquire customers through a series of steps like SEO, SEM, PR, Social Marketing, direct sales, channel sales, etc. that will cost the company significant amounts of money. What shocks and surprises many first time entrepreneurs is just how high the numbers are for CAC using these kinds of techniques.
Some examples of CAC calculations
For example, if you are using Google Ad Words to drive traffic to your site, take a look at the following interactive spreadsheet. This example shows a cost per click of 50 cents, and the resulting website visitors converting to a trial at the rate of 5%. Those trials are then shown converting to paid customers at the rate of 10%. What the sheet shows is that each customer is costing you $100 in just lead generation expense. For many consumer facing web sites, it can be hard to get the consumer to pay more than $100 for the service. And this cost does not factor in the marketing staff, web site costs, etc.
(In case the model does not show above, please click here to view the spreadsheet.)
One of the more interesting things that this model shows is how rapidly cost of customer acquisition climbs If your leads require human touch to convert them, (compare cell B23 with cell B22.) This human touch can be as light as email follow ups, or as much as inside sales people doing multiple sales calls and demos. I have seen this cost vary from around $400 to $5,000 per customer acquired, depending on the level of touch needed.
Another shocking computation is to look at the cost of a direct field sales force:
143
(In case the model does not show above, please click hereto view the spreadsheet.)
This shows is that it is not unusual for the cost of acquiring a customer to be as high as $100,000. This number is heavily dependant on the productivity of your sales teams. In the model above, this was set to 10 deals per year per team. Given the need to cover R&D and G&A costs, the average gross margin on a deal needs to be at least $150k.
Lessons Learned – Business Planning Stage
My advice to entrepreneurs working on a new business plan is to build a model similar to those above to estimate the cost of customer acquisition. This is going to show you the dependency on several critical variables:
Cost per lead
Conversion rates at each stage of your sales process
Level of touch required
Then compare this to your expected monetization. As a very rough rule of thumb here are two guidelines that you might find helpful:
LTV > CAC. (It appears that LTV should be about 3 x CAC for a viable SaaS or other form of recurring revenue model. Most of the public companies like Salesforce.com, ConstantContact, etc., have multiples that are more like 5 x CAC.)
Aim to recover your CAC in < 12 months, otherwise your business will require too much capital to grow. (Banks and wireless phone companies ignore this rule, but they have access to tons of capital.)
In the early days of the business, you will not be able to accurately predict your conversion rates, and the viability of your entire business may depend on this. So I recommend building an execution plan that focuses on finding out what these numbers will be as soon as possible in the lifecycle of the business. Good numbers will enable you to raise funding easily, and bad numbers may indicate that this is not a viable business.
The good news is that if you can monetize your customers at a higher rate than the cost to acquire them, you probably have a great business on your hands.
Next Generation Business Models
Because a number of smart entrepreneurs realized the importance of lowering CAC, they created new business models such as Open Source, SaaS, Freemium, etc. that directly tackled the problem of acquiring customers. Some of the early B2B pioneers in this space were companies like JBoss (story here), SolarWinds, ConstantContact, HubSpot, etc. Once others started to see the success these companies were having, they started copying the techniques.
These new business models focused heavily on how buying behavior has changed because of the power of the web. Think about your own behavior: if you are like me, you hate having to deal with sales people, and greatly prefer to do your own research starting with search engines, and leveraging free trials, on-line videos, blogs, reviews, and your social network. To adapt to this, the new business models make use of a variety of techniques described below:
144
Extensive use of the web to drive lead flow. In particular, the best practices include using Inbound Marketingto build traffic, instead of paying for traffic with search ads. (Read Get Found using Inbound Marketing to find out more.)
Use of a free product or service to attract web visitors, and aim for a viral spread as they tell their friends. Examples of free products include Open Source software, services like HubSpot’s Website Grader, free versions of a SaaS service that have limited, but still valuable, feature sets, etc. For more info on this topic refer to The power of Free.
Use of a free trial, where the customer can easily download, or use a SaaS version of the full product to see if it works for them.
Leveraging the power of your customers’social networks to get viral growth where possible.
Use of the touchless conversion to convert trials to paying customers.
Using low cost inside sales when the touchless conversion is not possible.
Extensive use of software to automate all processes such as SEO, SEM, social networking, lead scoring, lead nurturing, CRM, etc.
Metrics on all aspects of the customer acquisition process to find out what can be improved.
These techniques are frequently referred to as the Low Cost Sales model, or as Sales 2.0.
Balancing Monetization with CAC
The way in which these techniques can work together with other techniques to drive up monetization (e.g. recurring revenue) are illustrated in the diagram below:
145
Lessons Learned – Ways to reduce customer acquisition costs
Conversion rates play an extremely important role in your customer acquisition cost. Anything you can do to improve conversion rates is obviously a good thing. For more on this topic, please refer to the Building a Sales and Marketing Machine part of this web site.
Consider using A/B testing to improve conversion rates. Web traffic can be easily split so that parts are fed to different landing pages with different offers, and the resulting conversion rates measured.
Look at the level of touch required to complete a sale. Some products are easily understood, while others may require a careful walk-through by a sales person. Sometimes, the customer will want a trial with their own data. With certain complex products, this will need an on-site installation by a sales engineer, which sends costs through the roof. Consider every possible way to minimize this. For example:
Create demo videos that answer every likely sales question.
List the common sales objections that come up in the sales cycle, and provide answers to these on the web site.
Try using customer references to avoid the need for a trial
146
If your customers are going to compare you to the competition as part of their process, consider doing this for them, with a section of your site that has a comparison matrix with appropriate check marks.
If you have a light touch sales model, consider setting yourself the goal of a “Touchless Conversion”, i.e. getting rid of, or minimizing the touch required to close the sale. As shown in the model, this has a huge impact on cost of customer acquisition.
Options for products requiring high touch
The toughest business models are those that employ expensive field sales organizations. The high salaries and commissions for sales people, sales engineers, travel costs, and office costs add up to an extraordinarily high figure. And this is before you factor in the failure rate (the percentage of sales people hired that don’t become productive). It is not too surprising that VCs are not aggressively pursuing these kinds of businesses. There are some ways you can look to address the problem:
If you are currently using a field sales organization that sells direct, look at whether it is possible to sign up OEM deals with strategic partners to leverage their customer base and distribution power. What generally works best here is allowing the OEM to sell only a base layer of your product with co-branding. Then you can go back into their customers and upsell them. Owning the customer base is an important way to control your own destiny, and will also earn your company a higher valuation. In addition to distribution power, these kinds of relationships solve the “safe choice” concern of many buyers, and can transform your business.
Consider converting to a channel sales model at some stage in the lifecycle of the business. Many times this requires that you “prime-the-pump”, as most resellers won’t sell a product until they see clear customer demand. Channel sales models usually only work when the company commits to them fully, and passes all orders through the channel, so be prepared for the loss of margin this will represent to your current order flow.
Another option is to evaluate whether you can move from field sales to inside sales people. Insides sales people are not only less expensive in direct salary costs, but also in travel costs. Other advantages of inside sales people is that they are far more efficient due to remaining in one location, and can contact more people in a typical workday. At a minimum, look at combining inside sales with field sales to improve the efficiency of field sales people.
Conclusions
If you are entrepreneur planning your next business, you can’t afford to ignore the cost of customer acquisition. The earlier you work on this the better, as many of the best techniques require you to build your product differently.
It is also important to ask yourself the question: can my business realistically expect to acquire customers for considerably less than the amount that I can monetize them?
Once you have completed the product, you will want to familiarize yourself with all the latest techniques involved in the low cost sales model, or Sales 2.0.
From a funding standpoint, it is useful to know that your ability to raise capital will dramatically improve as soon as you have proven that you have a viable business model. Think of that as two equations:
CAC < LTV (3x appears to be a rough minimum for SaaS businesses)
147
CAC should be recovered in < 12 months (for subscription businesses)
Once you have proven out the business model, hit the accelerator pedal, and invest as much as you can afford. You’ll want to grow the business as fast as possible before a competitor realizes what you have done, and tries to steal your market!
Acknowledgments
I would like to thank my partner Nick Beim and the management teams at JBoss and HubSpot, Gail Goodman of Constant Contact, Sheila Marcelo of Care.com, for contributing greatly to the ideas in this post.
Cost of customer acquisition – David Skok
http://www.forentrepreneurs.com/startup-‐killer/
Startup Killer: the Cost of Customer Acquisition
December 22, 2009 • David Skok
In the many thousands of articles advising entrepreneurs on what they have to focus on to build successful startups, much has been written about three key factors: team, product and market, with particular focus on the importance of product/market fit. Failure to get product/market fit right is very likely the number 1 cause of startup failure. However in all these articles, I have not seen any discussion about what I believe is the second biggest cause of startup failure: the cost of acquiring customers turns out to be higher than expected, and exceeds the ability to monetize those customers.
In case you are not familiar with the importance of Product/Market fit, Marc Andreessen has a great blog post on this topic: The Pmarca Guide to Startups, part 4: The only thing that matters.
In this blog, Marc argues that out of the three core elements of a startup, team, product, and market, the only thing that matters is product/market fit. I agree with Marc’s view that product/market fit is extremely important. However after closely watching several hundred startups that have failed, I observed that a very large number of these had solved the product/market fit problem, but still failed because they had not found a way to acquire customers at a low enough cost.
Business Model
I would like to propose that in addition to team, product, and market, there is actually a fourth, equally important, core element of startups, which is the need for a viable business model. Business model viability, in the majority of startups, will come down to balancing two variables:
Cost to Acquire Customers (CAC)
The ability to monetize those customers, or LTV (which stands for Lifetime Value of a Customer)
Successful web businesses have long understood these metrics as they have such an easy way to measure them. However there is a lot of value in looking at these same metrics for all other businesses.
148
To compute the cost to acquire a customer, CAC, you would take your entire cost of sales and marketing over a given period, including salaries and other headcount related expenses, and divide it by the number of customers that you acquired in that period. (In pure web businesses where the headcount doesn’t need to grow as customer acquisition scales, it is also very useful to look customer acquisition costs without the headcount costs.)
To compute the Lifetime Value of a Customer, LTV, you would look at the Gross Margin that you would expect to make from that customer over the lifetime of your relationship. Gross Margin should take into consideration any support, installation, and servicing costs.
It doesn’t take a genius to understand that business model failure comes when CAC (the cost to acquire customers) exceeds LTV (the ability to monetize those customers.
A well balanced business model requires that CAC is significantly less than LTV:
149
Since the above two diagrams are so obvious, you may wonder why I have included them. The goal is give the reader a sense of the balancing act required to create a profitable business. Hopefully the value will become more obvious with the third version of the diagram that shows the different factors that affect the balance.
Another reason for stressing the point using diagrams is that many entrepreneurs have realized that since the web provides some amazing new ways to acquire customers at low cost, several new businesses have become possible. The only thing that you have to consider is can you monetize your customers at a higher level than the cost to acquire them.
The Entrepreneur’s Achilles Heel: Optimism
To be an entrepreneur requires great optimism, and a very strong belief in how much customers will love your product. Unfortunately this same attribute can also lead entrepreneurs to believe that customers will beat a path to their door to purchase the product. This frequently causes them to grossly underestimate the cost it will take to acquire customers.
A common scenario is an entrepreneur that has dreamt up a cool new service that they can offer via the web. As a VC, I have sat through many presentations like this, and in most cases the service is actually interesting and compelling. However in the majority of these presentations there is little or no focus on how much it will cost to acquire customers. As I ask questions to understand the thinking, what usually comes out is something vague along the lines of web marketing, and/or viral growth with no numbers attached.
A quick look around all the B2C startups shows that, although viral growth is often hoped for, in reality it is extremely rare. When it does happen, the associated businesses are usually extremely attractive, provided they have a way to monetize their customers. (For more on the topic of Viral Growth, refer to my blog post on that topichere.)
Far more common is a need to acquire customers through a series of steps like SEO, SEM, PR, Social Marketing, direct sales, channel sales, etc. that will cost the company significant amounts of
150
money. What shocks and surprises many first time entrepreneurs is just how high the numbers are for CAC using these kinds of techniques.
Some examples of CAC calculations
For example, if you are using Google Ad Words to drive traffic to your site, take a look at the following interactive spreadsheet. This example shows a cost per click of 50 cents, and the resulting website visitors converting to a trial at the rate of 5%. Those trials are then shown converting to paid customers at the rate of 10%. What the sheet shows is that each customer is costing you $100 in just lead generation expense. For many consumer facing web sites, it can be hard to get the consumer to pay more than $100 for the service. And this cost does not factor in the marketing staff, web site costs, etc.
(In case the model does not show above, please click here to view the spreadsheet.)
One of the more interesting things that this model shows is how rapidly cost of customer acquisition climbs If your leads require human touch to convert them, (compare cell B23 with cell B22.) This human touch can be as light as email follow ups, or as much as inside sales people doing multiple sales calls and demos. I have seen this cost vary from around $400 to $5,000 per customer acquired, depending on the level of touch needed.
Another shocking computation is to look at the cost of a direct field sales force:
(In case the model does not show above, please click hereto view the spreadsheet.)
This shows is that it is not unusual for the cost of acquiring a customer to be as high as $100,000. This number is heavily dependant on the productivity of your sales teams. In the model above, this was set to 10 deals per year per team. Given the need to cover R&D and G&A costs, the average gross margin on a deal needs to be at least $150k.
Lessons Learned – Business Planning Stage
My advice to entrepreneurs working on a new business plan is to build a model similar to those above to estimate the cost of customer acquisition. This is going to show you the dependency on several critical variables:
Cost per lead
Conversion rates at each stage of your sales process
Level of touch required
Then compare this to your expected monetization. As a very rough rule of thumb here are two guidelines that you might find helpful:
LTV > CAC. (It appears that LTV should be about 3 x CAC for a viable SaaS or other form of recurring revenue model. Most of the public companies like Salesforce.com, ConstantContact, etc., have multiples that are more like 5 x CAC.)
Aim to recover your CAC in < 12 months, otherwise your business will require too much capital to grow. (Banks and wireless phone companies ignore this rule, but they have access to tons of capital.)
151
In the early days of the business, you will not be able to accurately predict your conversion rates, and the viability of your entire business may depend on this. So I recommend building an execution plan that focuses on finding out what these numbers will be as soon as possible in the lifecycle of the business. Good numbers will enable you to raise funding easily, and bad numbers may indicate that this is not a viable business.
The good news is that if you can monetize your customers at a higher rate than the cost to acquire them, you probably have a great business on your hands.
Next Generation Business Models
Because a number of smart entrepreneurs realized the importance of lowering CAC, they created new business models such as Open Source, SaaS, Freemium, etc. that directly tackled the problem of acquiring customers. Some of the early B2B pioneers in this space were companies like JBoss (story here), SolarWinds, ConstantContact, HubSpot, etc. Once others started to see the success these companies were having, they started copying the techniques.
These new business models focused heavily on how buying behavior has changed because of the power of the web. Think about your own behavior: if you are like me, you hate having to deal with sales people, and greatly prefer to do your own research starting with search engines, and leveraging free trials, on-line videos, blogs, reviews, and your social network. To adapt to this, the new business models make use of a variety of techniques described below:
Extensive use of the web to drive lead flow. In particular, the best practices include using Inbound Marketingto build traffic, instead of paying for traffic with search ads. (Read Get Found using Inbound Marketing to find out more.)
Use of a free product or service to attract web visitors, and aim for a viral spread as they tell their friends. Examples of free products include Open Source software, services like HubSpot’s Website Grader, free versions of a SaaS service that have limited, but still valuable, feature sets, etc. For more info on this topic refer to The power of Free.
Use of a free trial, where the customer can easily download, or use a SaaS version of the full product to see if it works for them.
Leveraging the power of your customers’social networks to get viral growth where possible.
Use of the touchless conversion to convert trials to paying customers.
Using low cost inside sales when the touchless conversion is not possible.
Extensive use of software to automate all processes such as SEO, SEM, social networking, lead scoring, lead nurturing, CRM, etc.
Metrics on all aspects of the customer acquisition process to find out what can be improved.
These techniques are frequently referred to as the Low Cost Sales model, or as Sales 2.0.
Balancing Monetization with CAC
The way in which these techniques can work together with other techniques to drive up monetization (e.g. recurring revenue) are illustrated in the diagram below:
152
Lessons Learned – Ways to reduce customer acquisition costs
Conversion rates play an extremely important role in your customer acquisition cost. Anything you can do to improve conversion rates is obviously a good thing. For more on this topic, please refer to the Building a Sales and Marketing Machine part of this web site.
Consider using A/B testing to improve conversion rates. Web traffic can be easily split so that parts are fed to different landing pages with different offers, and the resulting conversion rates measured.
Look at the level of touch required to complete a sale. Some products are easily understood, while others may require a careful walk-through by a sales person. Sometimes, the customer will want a trial with their own data. With certain complex products, this will need an on-site installation by a sales engineer, which sends costs through the roof. Consider every possible way to minimize this. For example:
Create demo videos that answer every likely sales question.
List the common sales objections that come up in the sales cycle, and provide answers to these on the web site.
Try using customer references to avoid the need for a trial
153
If your customers are going to compare you to the competition as part of their process, consider doing this for them, with a section of your site that has a comparison matrix with appropriate check marks.
If you have a light touch sales model, consider setting yourself the goal of a “Touchless Conversion”, i.e. getting rid of, or minimizing the touch required to close the sale. As shown in the model, this has a huge impact on cost of customer acquisition.
Options for products requiring high touch
The toughest business models are those that employ expensive field sales organizations. The high salaries and commissions for sales people, sales engineers, travel costs, and office costs add up to an extraordinarily high figure. And this is before you factor in the failure rate (the percentage of sales people hired that don’t become productive). It is not too surprising that VCs are not aggressively pursuing these kinds of businesses. There are some ways you can look to address the problem:
If you are currently using a field sales organization that sells direct, look at whether it is possible to sign up OEM deals with strategic partners to leverage their customer base and distribution power. What generally works best here is allowing the OEM to sell only a base layer of your product with co-branding. Then you can go back into their customers and upsell them. Owning the customer base is an important way to control your own destiny, and will also earn your company a higher valuation. In addition to distribution power, these kinds of relationships solve the “safe choice” concern of many buyers, and can transform your business.
Consider converting to a channel sales model at some stage in the lifecycle of the business. Many times this requires that you “prime-the-pump”, as most resellers won’t sell a product until they see clear customer demand. Channel sales models usually only work when the company commits to them fully, and passes all orders through the channel, so be prepared for the loss of margin this will represent to your current order flow.
Another option is to evaluate whether you can move from field sales to inside sales people. Insides sales people are not only less expensive in direct salary costs, but also in travel costs. Other advantages of inside sales people is that they are far more efficient due to remaining in one location, and can contact more people in a typical workday. At a minimum, look at combining inside sales with field sales to improve the efficiency of field sales people.
Conclusions
If you are entrepreneur planning your next business, you can’t afford to ignore the cost of customer acquisition. The earlier you work on this the better, as many of the best techniques require you to build your product differently.
It is also important to ask yourself the question: can my business realistically expect to acquire customers for considerably less than the amount that I can monetize them?
Once you have completed the product, you will want to familiarize yourself with all the latest techniques involved in the low cost sales model, or Sales 2.0.
From a funding standpoint, it is useful to know that your ability to raise capital will dramatically improve as soon as you have proven that you have a viable business model. Think of that as two equations:
CAC < LTV (3x appears to be a rough minimum for SaaS businesses)
154
CAC should be recovered in < 12 months (for subscription businesses)
Once you have proven out the business model, hit the accelerator pedal, and invest as much as you can afford. You’ll want to grow the business as fast as possible before a competitor realizes what you have done, and tries to steal your market!
Acknowledgments
I would like to thank my partner Nick Beim and the management teams at JBoss and HubSpot, Gail Goodman of Constant Contact, Sheila Marcelo of Care.com, for contributing greatly to the ideas in this post.
- David Skok
Optimising the conversion funnel – David Skok
http://www.forentrepreneurs.com/sales-‐funnel/
Optimizing your Customer Acquisition Funnel
July 15, 2010 • David Skok
This blog post focuses on how B2B companies can optimize their customer acquisition funnels using a customer-centric methodology to analyze and remove blockage points.
Acquiring customers in the B2B world involves using a variety of marketing and sales steps with the goal of converting prospective customers into paying customers. The process is often thought of as a funnel (see diagram above) where you pour in suspects at the top, and various steps in the process, some percentage of prospects successfully convert to the next stage, making the funnel narrower as the process evolves.
No matter how large or successful your business is, you will have at least one place that is a blockage point in your customer acquisition funnel. This is the point where the conversion rates from one stage to the next are not satisfactory, or the point where you have a scaling problem, (i.e. you cannot profitably increase the number of people coming out of that part of the funnel because you have maxed out the capability of one marketing or sales technique). If you solve that blockage point, usually it will cause another to appear somewhere else in the funnel.
155
As an example, you may have too few visitors coming to your web site, which you see as the top of your funnel. Or you might have plenty of visitors to your website, but too few of them signing up for your trial.
In this blog post, I will talk about a method that I have found to be highly effective at removing blockage points. There is enormous power in this exercise, as removing blockage points will increase conversion rates in your funnel. Readers of my prior blog posts on the importance of lowering the cost of customer acquisition (CAC), will know that increased conversion rates have a huge impact on increasing sales and lowering the cost of customer acquisition.
Identifying Blockage Points
The easiest way to identify your blockage point is to ask the question: “What is stopping us from increasing sales by 5x?”. Common answers to this might include:
We don’t have enough leads coming in the top of the funnel.
We have plenty of visitors to our web site, but not enough are converting to registered users.
We have plenty of users signing up for our freemium product (or free trial), but not enough are converting to paid users.
We can’t get meetings with the key decision makers.
We’re doing OK getting people to sign up as customers, but there is not enough growth in the account after the first sale.
The Most Common Causes of Blockage Points
Product/Market Fit
If you are a new startup just going to market, one of the greatest causes of problems in your customer acquisition funnel is that you have not yet found product/market fit. It is important to diagnose if that is the case, as the wrong diagnosis will likely lead to management wasting a lot of money on sales and marketing for a product that is not right. The correct course of action if this is the case, is to focus all your energy and attention on solving product/market fit. While you are doing this, you should limit your
156
spending on sales and marketing to just the minimum level required to have adequate amounts of customer interaction to determine where your customers have the highest levels of pain and urgency, in an area that you can provide a solution. You will need to conserve your cash to continue to pay for product development to evolve a product that does fit the market need.
Solving for product/market fit is a topic that has been widely discussed elsewhere on the web, with great contributions coming from Steve Blank, and Eric Ries with the Lean Startup concept. This primary topic of this post is aimed at companies that are confident about their product/market fit, and who are now working on the next problem that should be addressed: optimizing their customer acquisition funnels.
Beyond Product/Market Fit
After many years of helping to diagnose problems in different companies’ customer acquisition funnels, I have observed that there is a common cause of blockage points:
For example, you may be hoping your prospects will come to your web site in droves. However you may not have solved the problem of how to make them aware of your site, and secondly of providing a motivation or reason for them to want to visit it. (A quick look at your web site might reveal that it is entirely sales oriented, and contains no content of interest to them.) Alternatively, you may be hoping that your prospects complete your on-line registration form and give you their email address, but they will find that step annoying, and be concerned that you will spam them in the future.
This happens because most companies design their customer acquisition process around their own view of the world, instead of first taking the time to understand the customer’s buying process, and their concerns at each stage.
Readers of my other article, Building a Sales and Marketing Machine, will know that I recommend designing sales processes from the outside in. i.e from the customer’s point of view. This involves mapping out the customer’s buying cycle first, and then designing a process to fit that. However since most companies have already got a sales process in place, that advice is less helpful to them. For
157
those startups, the technique I will describe below will be more helpful as it will focus on fixing what is most broken in their current funnel.
Solving Blockage Points
Once you have identified your blockage points, the best way to start to solve them is to get inside your customers head and study their concerns at this particular stage of the sales process:
These concerns represent the friction in your sales process. Mapping these out clearly in a written form will give you the basis for the next step, which involves studying the possible things that you could use to motivate them to take the step or action that you want them to take:
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Think of the concerns as being the friction in the process, and the motivations as being the forward pulling forces that you can use to overcome the friction.
The art is finding the right motivation that is great enough to overcome their concerns, and have them move forward in the sales process. This is where you need to muster your brightest and most creative thinkers to brainstorm the issue. Since customers have such an aversion to being sold to, and now have real control over the buying process, the old ways of moving them through a conversion funnel will usually have mediocre results. Getting superb results requires thinking outside the box and creativity.
Below I will walk you through a few examples to help illustrate how this works.
Problem: Driving Traffic to your Web Site
One of the most common blockage points for startups is right at the very top of the funnel: i.e. how to get found on the web. If you can’t even start a dialog with a prospective customer, then you have no opportunity to sell them.
A very common misperception amongst first time entrepreneurs is “If you build it, they will come”. Given the huge pressures of today’s always-on lifestyle with iPhones, BlackBerries, instant messaging, SMS, Twitter, social networks, etc., the average buyer is suffering from severe information overload. Their most scarce and valuable commodity is rapidly becoming their time and attention. Getting their attention by simply creating a web site and hoping for viral spread will not work in this environment.
Lets start by writing down their concerns and motivations:
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Concerns
Don’t want to waste time on anything that is not immediately valuable and directly relevant to me
Hate being sold to
If it doesn’t come up in the first page of Google search results, I can’t be bothered to look further
Concern about whether they have found the best product/service for this category. (i.e. is there a better product out there that I haven’t yet found?)
Concern about whether this is the best deal (price) they can find for this product category
etc. (please add more in the comments section)
Motivations
I do have a problem to solve, and would love to find a solution to it.
If my friends recommend this product then I’ll want to check it out, and will be favorably disposed towards it
If I can get something for free, and it will help me with my life/work, then that is valuable to me
I am really interested in learning about XYZ (where XYZ may be totally unrelated to your product area)
I trust this review site/individual/consulting firm/etc. as an expert in this area, and would like to know what they have to say about the topic, and which products they rate as the best
I like to hang out on Web sites that entertain and educate me on areas that I am passionate about
etc. (please add your own thoughts in the comments section)
To get them to pay attention to you, you will want to think about giving them something valuable to earn their attention.
Example 1: Use a Free Product (HubSpot’s WebSite Grader)
A good example of using a free product/service as a motivator to drive traffic to your web site is HubSpot’s WebSite Grader tool. HubSpot is a company that sells a SaaS product aimed at helping small and medium size businesses implement Inbound Marketing. The components of their product include blogging, SEO, social media, etc. (In full disclosure, I am an investor in HubSpot.)
HubSpot’s two most powerful tools for driving traffic to their web site are a) their blog, which is full of valuable educational material on Inbound Marketing, and b) the free products, WebSiteGrader, AlertsGrader,TwitterGrader, etc. The first of these, WebSiteGrader, gives customers a way to find out how well their web site will perform in Google searches (SEO), and what
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can be improved to make it perform better. This leverages the third motivation in our list above: “If I can get something for free, and it will help me with my life/work, then that is valuable to me”:
There are several powerful lessons to take from WebSiteGrader in how it works to drive customer motivations to pull them through their sales funnel:
It is a free tool that offers customers a lot of value. Because of that, bloggers will recommend the product and users will tweet about it, spreading the word. (High value, low cost.)
It requires a very small amount of non-private information to get going (just a web site URL), and gives back a lot of value from that small amount of input. (Low customer effort.)
It offers a rating (score out of 100) which takes advantage of the competitive nature of humans. They want to get the best score, so if their score is low, they will likely want to improve it, and if that’s the case, HubSpot has the answer. (Leverages customer’s competitive instincts.)
It positions HubSpot as an expert in the SEO space, and it shows their ability to use technology to perform a task that is normally done by highly paid SEO-experts. (Leverages the respect accorded to experts.)
It builds trust between the customer and HubSpot, by creating a value for the customer (Trust is key to making sales.)
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It has minimum sales pitch, and yet has a clear call to action at the end (see below). The two calls to action are carefully pitched in such a way as to offer more value for free to the customer. (The connection to the next step is obvious an natural.)
Contrast HubSpot’s approach to driving traffic and and providing value for free with the worst types of website that require you to give them an email address before they will allow you watch a marketing video that will tell you about their product. If you’re like me, this will drive you mad, and make you immediately dislike the vendor.
The key to success is to provide value first, which builds trust. Then at an appropriate time the customer will be more willing to offer their email address.
Using Engineering for Marketing
HubSpot’s WebSiteGrader tool is a great example of another idea that is really powerful: using engineering resources for marketing. The power of your engineers is that they can build things that can be used by your customers and provide value to them. These are powerful motivators to overcome friction.
These tools can also be hugely scalable. Compared to the traditional spend that you might put into marketing programs, this can frequently be a far better investment, and be more effective at building the right kind of relationship with your prospective customers.
The power of Education as a selling tool
If you are wondering what to offer to your customers to provide value, I have a suggestion to make: think Education. HubSpot’s highly trafficked blog is a great example of this in action.
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Get inside your customers head, and understand what area they are most interested in learning about, and offer educational material in that area. It helps if this is in the same area as your product/service, but it is not essential. There is an interesting thing that happens when someone learns from material that is well put together and intelligent: They develop respect and trust for the person that is educating them, and will listen to suggestions that come from that person, including for products and service. Think of the following situation: you attend a course on social media marketing, and really like the material and the teacher. At the end of the course, they tell you that the product they use to manage their Tweets and other social interactions is XYZ. You are highly likely to go out an buy XYZ for that job.
You may have heard of consultative selling. In that role, the consultant places themselves at the same level as the customer. In the educational model, the teacher who does great work is automatically placed into a superior role to the person that is doing the learning. This is an important insight, and can be used as powerful tool.
Important note: most companies that I talk to think that they are doing this well, but a quick review of their materials reveals that what they think are educational materials are just thinly disguised sales collateral. This will not work, and will actually turn customers off. To do this well, you may need to hire a dedicated writer who is measured on the quality of material, traffic, and positive comments they generate.
Example 2: Using Data to drive customers to your website
Many companies collect interesting data as part of their business. Frequently it is possible to use insights gained from that data to create interesting articles or services that can be used to drive traffic to your website.
One good example of this is a company called Sysomos (recently acquired by Marketwire). Sysomos provides a SaaS service to help enterprises monitor the conversations going on in blogs and social media that might affect their company. The backbone of the service is a series of crawlers feeding data in to a huge and constantly expanding database. Sysomos uses the data that they have to search for interesting insights on any current topic, and then publish blog posts. Topics they have covered include insights on Twitter usage, social media and the Iranian election, the oil spill, Facebook, etc. Since the topics they look at are of high interest, these blog posts often get picked up by national media, such as The New York Times, and many other bloggers. These published articles and blog posts have led to major traffic increases for Sysomos’s main web site, which they convert to free trials, and then closed customers.
If you don’t have your own data, then collect it from customers
After reading the above, you might be wondering how you could do something similar, but realizing you are held back by not having a data source. Don’t let this hold you back. There are several examples of companies that decided to issue surveys to get collect that data, promising people that participated that the would have access to the results. Amongst businesses there is a strong desire to learn how they stack up relative to the peers and the best in the industry.
One example of a firm doing this is PriceWaterhouseCoopers, who collect data on venture funding, and publish a report called the MoneyTree. This helps them get the attention of VCs and venture backed companies who are their prospective customers.
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Another example of this is a Dutch SaaS business intelligence company called Mirror42. Mirror42 has created an on-line KPI repository that tracks the Key Performance Indicators (KPIs) that are used in various different vertical industries. They have over 200,000 users signed up to use and contribute to the database. Customers can also compare their performance in this KPIs to industry benchmarks, which is highly valuable. Mirror42 then uses these customer relationships to market their SaaS offering.
Top of the Funnel: Harvesting Demand versus Creating Demand
A important note for those readers considering the concerns and motivations of people that they are wanting to attract to the top of their funnel: there are two actually two different classes of customers that you will be dealing with:
Type A: Those that are aware that they want a solution where your product fits the bill
Type B: Those that are not aware of your product category, and aren’t aware that it could benefit them
For Type A customers, you need to Harvest Demand. For Type B customers you will need to Create Demand.
For Type A customers, the most likely starting point for an interaction will be a Google Search, since they are likely looking for a product to solve a particular need. For Type B customers, the problem is much harder, and will likely cost you more effort and money. You will have to reach them in some other way, and get them to hear about your product. The very best method is having them hear about you from a trusted source such as a friend, respected blogger, main stream press, etc.
These two audiences require different marketing programs, and have different motivations.
2nd Problem: Getting Customers to Register
Another frequent problem are in conversion funnels is the point where you want your visitors to register and provide you with their email address or other contact information.
Let’s look at their likely concerns and motivations:
Concerns
Don’t like to give their email addresses, as they hate getting spam emails from vendors
Distrust vendors with my email. Not sure how they may abuse this in the future. You need to earn my trust that you won’t abuse this.
That information is personal, and the time it takes for me to deal with your future emails has considerable value. You need to earn the right to ask for that.
You are asking me to put my valuable time and effort in to trying out your product. I have concerns about whether it will be easy to use, fast to evaluate, and effective at meeting my needs.
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etc. (please add your own thoughts in the comments section)
Motivations
I have a problem, and would like to find a solution. I have seen enough about this product/service in your intro video/content, that I believe it will work and take away my pain.
This site seems to have enough positive feedback in comments from users, and reviews from the press that I feel it is likely a good product, and worth my time to try
I care a lot about being amongst the best in my industry. These guys have data that will allow me to benchmark myself against my peers. That is valuable. (If I find out I am below the industry top performer group, or not following best practices, I will want to improve.)
I’d like to impress my boss/co-workers with my ability to come up with clever ideas and solutions to problems that we have
I am passionate about XYZ and like to learn more about things in that area
I have heard about this from my friends, which means I believe that it is very likely to be good, and worth my time
etc. (please add more in the comments section)
Example 3: Move gratification upfront
Many of the good marketers that I have worked with talk about the time to Wow!. That is how long it takes before your customer gets to the point of Wow! (i.e. experiencing some gratification from use of the product). The conventional approach to registration is to make the customer register before they can get to experience the Wow! moment and get some gratification.
If you are doing this, you may want to try a different approach, and place the Wow! moment before you ask them to register.
Examples of companies that have done this well are:
uberVU (www.ubervu.com), a social media monitoring service which allows you to enter your website’s URL and see a partial version of their reporting before signing up for a free trial (which requires registration).
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Posterous (www.Posterous.com), a blogging site which doesn’t require you to sign up to start using it. You simply email them your first post, and it get’s your registration information from your email address (pretty clever!).
Example 4: JBoss
JBoss, the Open Source Java middleware company, leveraged two powerful customer insights to create a very high growth business. The first was that giving the product away completely free would create immediate interest and viral growth. This worked extremely well: the free product was downloaded over 5 million times.
However that first insight created the next bottleneck in the funnel to solve: the millions of users that had downloaded the product for free had not registered, as JBoss felt that putting a registration in front of the download would greatly reduce download volume. In order to market paid services to that user base, JBoss needed to get the contact information for these users. At the time that we did the brainstorming session to apply this methodology, they were charging money for the documentation, which was bringing in a very nice steady revenue stream of $27,000 every month. The solution to the blockage point was to offer the documentation for free, and use that as an incentive to get them to give us their email address. Because of the significant revenue hit this entailed, it took a while to get everyone’s buy-in, but once implemented, the process generated 10,000 leads per month, which grew over time to 16,000. (The full story behind JBoss’s success can be found here.)
Example 5: Getting a meeting with a Decision Maker
The second company that I started in 1986 was called International Software, which later became the European branch of Corporate Software. 1986 was the time when PCs were just starting to be adopted by enterprises. Before International Software, the typical way you purchased a PC and associated software was through a store like ComputerLand, or BusinessLand. However the problem with these stores is that they primarily focused on the hardware, and didn’t stock more than 5-6 software titles, and certainly didn’t know how to demo them or support them. We spotted an opportunity, create a new channel that only sold software, and focused on the needs of enterprise buyers. We would stock a huge range of products, and provide excellent consulting advice on which products to use, as well as great support.
When I first started the business, I purchased a copy of the Times 1,000 top companies in the UK, and started at the top, dialing the biggest companies, trying to reach their PC buyers. Not too surprisingly, I would get to voicemail, leave a message, and not get a call back. This was a frustrating blockage point, and there was clearly lots of buyer friction at this stage in the sales funnel.
I started brainstorming for a solution: One of the key parts of our service was content. We published The International Software Guide, a 600 page book that reviewed almost all the software products available for the PC at that time. The book was given to our customers as part of our service if they purchased their software from us. It was highly impressive (see below).
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My insight was that if I sent them a free copy of the book first, and then asked them for a meeting, I might provide them with proof that we were different, and capable of providing more value to them than all the other vendors calling on them. The results were spectacular: I went from a 2-3% success rate in getting meetings to around 90%!
(Once in the meeting, our value proposition was so compelling that we converted approx. 50% to customers within a month of the first meeting. The company grew to $100m in sales in four years, and was incredibly capital efficient.)
In today’s world we have the web, and print media like that book are a thing of the past. Using compelling high value content on the web is the modern equivalent of the above story, and is exactly how companies usingInbound Marketing are driving web traffic.
Example 6: Getting to Executive Decision Makers
One of my portfolio companies, Enservio, sells high value products and services to Insurance companies. As part of their sales process, they need to get to senior executives in the insurance industry that are capable of making decisions. Not surprisingly, the average sales person will struggle if they simply try to cold call those executives.
While sitting in the audience of a TechCrunch 50 presentation, the CEO, Jon McNeil, had the brilliant idea to hold a similar conference for executives in the insurance industry, bringing together the very best startup companies that were innovating in the insurance industry. They put together an annual Claims Innovation Summit, and pulled in prestigious speakers from highly respected analyst and consulting firms, and invited speakers from within the industry to add valuable content around the startup presentations.
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The net result was a great success, attracting executives that their sales people could never get to. Not only did they get hard-to-reach executives to the event, but due to the incredibly professional way in which they managed the event, they built trust with those executives, which is a key requirement before a sale can be completed. (A key part of that professionalism was to avoid the temptation to use the event as a selling platform, and to stick to valuable educational content.)
The other benefit of getting executives to an event like this is the amount of time that was available for relationship building. This worked far better than a typical short meeting in an office setting.
Example 6: Applying the technique to Web Site Design
Most web sites represent a mini-funnel in a marketing process where you’d like to move your customer from through a series of steps/pages to the point where they will sign up to purchase your product, download your trial, etc.
The great thing about web sites is that we can get precise analytics that tell us where the bottlenecks are occurring. To improve the conversion rates at these bottlenecks, I have found it highly valuable to apply this same technique: i.e. document the customer concerns and brainstorm the possible motivations that could be used to help get them to move through the bottlenecks.
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One of the other powerful techniques I highly recommend for this purpose is A/B testing. When coming up with new ideas for content on pages, split the traffic so that one half goes through the new page and the other half goes through the old page. Or try two variations of the new page with different wording to optimize the conversion rate. Once you have found the winner, repeat until it’s clear which messaging is having the best effect.
Take a look at the Posterous screen shot below. It has some great examples of how to address customer concerns:
You have to like how they put a redline through Step 1: Create and account, highlighting the fact that you don’t need to register to set up a Posterous blog.
Use a quote from a well known name, in this case Leo Laporte, to reinforce the fact that it really is easy to get going.
Make them feel comfortable that thousands of other customers are using the site, so they can feel comfortable that others like the site, so they probably will, and the risks of anything going wrong with their personal information are likely to be low.
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The “Who is it for?” provides a nice way to allow each user type to get comfortable that this site has features that make it well suited to their needs. Without this, there is a risk that a power user could see the site as too simple for them, given all the focus on simplicity in the messaging.
One thing missing from the above screen that might add value to lesser known sites is some quotes from reviews that say positive things about the product. (I also personally like to see a video demonstrating any new product right on the front page, as it is the easiest way for me to see how a web service works.)
Brainstorming
It is important point to realize that all sales and marketing funnels have blockage points. As soon as you remove one blockage point, another one will appear elsewhere in the funnel. This means that there is always room to improve. I recommend using quarterly brainstorming sessions where the key execs including the CEO, heads of sales, marketing, and product, get together to work on coming up with creative ways to address the latest blockage point using the technique described in this post: Analyze the customer’s concerns and seeing if it is possible to come up with a motivation that will overcome those concerns.
When running these sessions it is highly valuable to have a flow chart diagram of your sales and marketing funnel process as one of the starting places for discussion. Without this diagram, you are unlikely to find that all the players have the same picture of what is going on.
I also recommend that the customer concerns, and possible off-setting motivations, are written down on a white board or similar during the meeting.
Assigning a person to become the customer
In my own startups, I found that I naturally gravitated into the role of being the person who tried to think like the customer, and represented their point of view to the rest of the group. In other companies, it is not always going to be clear which executive has the best natural tendencies to play that role. I recommend that you choose one person from the executive team to play that role, and encourage them to become intimately familiar with how your customers think. This will only happen as a result of them spending time with a lot of customers listening and and asking questions. Then in the quarterly brainstorming meetings their job will be to ensure that the voice of the customer is heard loud and clear.
The importance of Metrics
Elsewhere in this blog, I have talked a lot about the importance of metrics (here and here). If you don’t measure your funnel’s performance, you have very little chance of understanding how to improve it. also when designing any of these creative solutions, you will likely want to understand how effective your solution is, and whether is providing a good return in the investment you made. They key metrics you need are shown in the diagram below:
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You will want to measure the number of prospects going into each stage, and the conversion rate to the next stage. You will also care about the overall conversion rate of prospects from the top of funnel to closed deal, and the average deal size.
The shape of your funnel will likely vary for each different lead source. e.g. a leads from Facebook ads may not convert well into trials, but those that do convert to trials may have a higher conversion rate to closed deals than normal web traffic, and the deal sizes may be larger. That means you will need to track the funnel metrics separately by lead source.
These metrics will show you your funnel blockage points, and help you understand whether your actions to improve funnel flow are working.
Summary
All sales and marketing funnels have blockage points, and as soon as you remove one, the blockage will move to another place.
Blockages are frequently caused because you are hoping your customer will take a step in your process where they are not adequately motivated to do that step.
By analyzing their concerns, and brainstorming with creative thinking executives, it is often possible to figure out customer motivations that can be used to offset their concerns, and get them to willingly take that step.
The best solutions often require out-of-the-box thinking.
Free products, educational content, and insights based on data that you may possess or collect are examples of tools that can be used as motivations for your prospective customers.
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Removing blockage points increases conversion rates in your funnel, which is one the most important things you can do to increase revenues and profitability. (A small improvement in conversion rates can dramatically lower your cost of customer acquisition.)
I recommend setting up quarterly brainstorming sessions to focus on removing blockage points, which could also be referred to as increasing conversion rates.
I also recommend choosing one executive to become the voice of the customer, and setting them the task of getting inside your customers’ heads to understand how they think and react to all stages of your sales and marketing process.
Cost per acquisition -‐ Andrew Chen
http://andrewchenblog.com/2008/11/17/how-‐to-‐calculate-‐cost-‐per-‐acquisition-‐for-‐startups-‐relying-‐on-‐freemium-‐subscription-‐or-‐virtual-‐items-‐biz-‐models/ How to calculate cost-per-acquisition for startups relying on freemium, subscription, or virtual items biz models
Buying ads make sense for direct monetizing products When it comes to products that directly monetize their audience using subscription, ecommerce, virtual items, etc., it can make a lot of sense to rely on advertising as a distribution channel. The reason for although there are 100s of millions of internet users, only a small fraction (usually <1%) will be in-market for your services at any given time. As a result, you are looking to acquire these users, and only these users, and everyone else is considered wasted energy.
Note that the freemium model is a variation on this concept – where you acquire a large base of “casual users” that stick around, and you slowly convert some % of them to subscribers. You can think of it as vertically integrating your distribution, and instead of spending money to buy ads, instead you are spending money to support this large base of free users.
Run an ad-supported consumer internet app? You better understand ad-buying too These days, it’s simple to think that advertising is about placing javascript code on a page, and seeing what numbers AdSense gives back to you. Instead of thinking about it that way, publishers would do their customers (their advertisers) a great service by understanding what it means for ad inventory to perform or not perform. They should really understand how advertisers analyze their cost-per-acquisition so that the publisher can better service them – that’s at the heart of indirect monetization. If you’re not selling directly yourself, you’re helping someone else sell.
CPA, the common currency of user acquisition The first step is to understand your user acquisition funnel, from start to end. Although there are many ways to price things, be it CPM, CPC, or CPA, the key is that it all rolls back to how much it costs you to have a registered user. You need this cost-per-acquisition number to be lower than the lifetime value number, and what you have left is profit (before cost of infrastructure, etc).
So you want to build something that looks like this:
Source Ads bought
CTR Clicks Signup %
Upload pic
Users Cost CPA
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Google 1M 0.50% 5,000 20% 50% 500 $5,000.00 $10.00
Ad.com 20M 0.10% 20,000 10% 50% 1000 $20,000.00 $20.00
The above is an example of two traffic sources, Google and Advertising.com (the latter being an ad network), as well as clickthrough rates, signup %s, and the cost per acquisition.
A couple important notes on the above:
the SOURCE of your traffic is the most important segmentation – make sure you track acquisition and LTV numbers, since you often get vastly different numbers depending on where you are buying ads
you want to break down your funnel into as small of steps that make sense, from the clicks into the signup page into any intermediate profile forms and then the final registered numbers. Your funnel may be larger or smaller
Google might charge you CPC and Ad.com might charge you CPM, but you have to normalize that back into how much it costs you to acquire a registered account. In a CPC model, you don’t care about the CTR much since you don’t pay for impressions that don’t result in clicks, whereas you do care about CPMs
the only difference between a good CPA and a bad CPA is whether it’s above or below your customer LTV
In addition to tracking source of traffic, you may also want to track important factors like what campaign it was in, what creative it corresponded to, the banner ad size, and other things that might affect CPA. The last thing you want is a variation that is very unprofitable, but is obscured by being grouped together
You may also want to group all your marketing channels into the above, including email, partnerships, blog traffic, viral invites, etc. Obviously for stuff that’s free traffic, the CPA is infinity, but it’s good to know what kinds of funnel %s the other traffic throws off, for comparison’s sake
Got all that? Good
What factors influence ad performance? The second thing worth considering is what factors actually influence GOOD numbers for CPAs versus what numbers are generally bad.
I made a quick, anecdotal table below to enumerate some of the factors:
Type Options Importance
Source of traffic Ad networks, publishers ++
Cost model CPM, CPC, CPA +
User requirements Install, browser plug-‐in, Flash +++++
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Audience and theme Horizontal vs vertical ++
Funnel design Landing page, length, fields +++
Viral marketing Facebook, Opensocial, email +++++
A/B testing process None, homegrown, Google +++++
A couple additional notes:
As mentioned previously, the source of traffic is very important – you should dedicate a significant amount of time buying lots of different kinds of traffic to see what works
Cost model is something you should be able to normalize into CPA and mostly ignore, except for cashflow and risk reasons
User requirements can be a huge issue – if you are forcing users to download, that will kill your CPA. Similarly, asking a demographic that doesn’t have credit cards for their credit number can kill you. Make sure that you understand your audience and that your funnel is optimized for them
Audience Theme revolves around the concept that strongly themed products are often quite vertical in nature, which causes a large % of users to reject the product. For example, a site for teens obsessed with vampires is much narrower than a web email site. The narrower the theme is, the harder it is to find appropriate ad inventory to buy
Funnel design and A/B testing is key – definitely worth investing in
Similarly, for those who can find a viral angle in their product, that can be a huge benefit as well. It has the capability to create order-of-magnitude decreases in the CPA, which can be the difference between profitability and bankruptcy! But this also has issues if your product is not widely appealing enough, since virality depends on a horizontal offering to work
If you have questions or comments, feel free to leave a message!
Paying to acquire users – Sean Ellis
http://startup-‐marketing.com/to-‐pay-‐or-‐not-‐to-‐pay-‐to-‐acquire-‐users/
Apr 20th 09
To Pay Or Not To Pay To Acquire Users?
I recently heard a VC say that startups “should spend the least amount of money possible on marketing.” This is a healthier attitude than the opposite prescription of undisciplined land grab, but a better approach is pure ROI marketing. Marketing opportunities that offer a fast payback with additional profit margin are a key component for reaching your startup’s full market potential.
Work from Free to Paid Drivers
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Ultimately my goal with any startup is to acquire the highest number of qualified users possible – at a
positive return on investment . But it often takes several months after “launching” to transition to
aggressive scaling.
I like to start with free customer acquisition channels since they obviously offer the best opportunity to generate a positive ROI. Free drivers may include viral marketing, self-implemented SEO and listing with any directories that are appropriate for your product. Leveraging this early user flow we optimize the first user experience for the right target users and introduce a business model that generates sufficient revenue to fund future paid user acquisition. When we start developing paid channels, we work our way through the lowest hanging fruit first, beginning with demand harvesting channels, later adding demand creation channels.
Kill the Opportunity for the Competition
If your growth is accelerating, you will attract competition. And this competition will likely be savvy enough to replicate the customer acquisition and monetization approaches that you worked hard to invent. So it is important to make it as difficult as possible for them to get traction. I know some of you are saying “but your recent post told us to ignore the competition.” My point was not to ignore the competition forever, simply to ignore them while you are figuring out a repeatable, positive ROI way to acquire customers. Competition (especially those that are spending irrationally) will distract you from this critical task.
But once you have optimized the first user experience and introduced a business model that generates sufficient revenue to fund user acquisition, it’s time to focus your marketing efforts to aggressively build new customer acquisition channels and scaling existing channels – both free and paid.
Product distribution (Gaining user traction) – Peter Thiel (Blake Masters)
http://blakemasters.tumblr.com/post/22405055017/peter-‐thiels-‐cs183-‐startup-‐class-‐9-‐notes-‐essay
Peter Thiel’s CS183: Startup - Class 9 Notes Essay
Here is an essay version of my class notes from Class 9 of CS183: Startup. Errors and omissions are my own. Credit for good stuff is Peter’s entirely.
Class 9 Notes Essay—If You Build It, Will They Come?
I. Definitions
Distribution is something of a catchall term. It essentially refers to how you get a product out to consumers. More generally, it can refer to how you spread the message about your company. Compared to other components that people generally recognize are important, distribution gets the short shift. People understand that team, structure, and culture are important. Much energy is spent thinking about how to improve these pieces. Even things that are less widely understood—such as the idea that avoiding competition is usually better than competing—are discoverable and are often implemented in practice.
But for whatever reason, people do not get distribution. They tend to overlook it. It is the single topic whose importance people understand least. Even if you have an incredibly fantastic product, you still have to get it out to people. The engineering bias blinds people to this simple fact. The conventional
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thinking is that great products sell themselves; if you have great product, it will inevitably reach consumers. But nothing is further from the truth.
There are two closely related questions that are worth drilling down on. First is the simple question: how does one actually distribute a product? Second is the meta-level question: why is distribution so poorly understood? When you unpack these, you’ll find that the first question is underestimated or overlooked for the same reason that people fail to understand distribution itself.
The first thing to do is to dispel the belief that the best product always wins. There is a rich history of instances where the best product did not, in fact, win. Nikola Tesla invented the alternating current electrical supply system. It was, for a variety of reasons, technologically better than the direct current system that Thomas Edison developed. Tesla was the better scientist. But Edison was the better businessman, and he went on to start GE. Interestingly, Tesla later developed the idea of radio transmission. But Marconi took it from him and then won the Nobel Prize. Inspiration isn’t all that counts. The best product may not win.
II. The Mathematics of Distribution
Before getting more abstract, it’s important to get a quantitative handle on distribution. The straightforward math uses the following metrics:
Customer lifetime value, or CLV
Average revenue per user (per month), or ARPU
Retention rate (monthly, decay function), or r
Average customer lifetime, which is 1 / (1-r)
Cost per customer acquisition, or CPA
CLV equals the product of ARPU, gross margin, and average customer lifetime.
The basic question is: is CLV greater or less than CPA? In a frictionless world, you build a great business if CLV > 0. In a world with some friction and uncertainty, you build a great business if CLV > CPA.
Imagine that your company sells second-tier cell phone plans. Each customer is worth $40/month. Your average customer lifetime is 24 months. A customer’s lifetime revenue is thus $960. If you have a 40% gross margin, the customer’s lifetime value is $384. You’re in good shape if it costs less than $384 to acquire that customer.
One helpful way to think about distribution is to realize that different kinds of customers have very different acquisition costs. You build and scale your operation based on what kinds of things you’re selling.
On one extreme, you have very thin, inexpensive products, such as cheap steak knives. You target individual consumers. Your sales are a couple of dollars each. Your approach to distribution is some combination of advertising and viral marketing—hoping that the knives “catch on.”
Things are fundamentally different if you’re selling a larger package of goods or services that costs, say, $10,000. You’re probably targeting small businesses. You try to market your product accordingly.
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At the other extreme, you’re selling to big businesses or governments. Maybe your sales are $1m or $50m each. As the unit value of each sale goes up, there is necessarily a shift towards more people-intensive processes. Your approach to these kinds of sales must be to utilize salespeople and business development people, who are basically just fancy salespeople who do three martini lunches and work on complex deals.
III. The Strangeness of Distribution
A. Fact versus Sales Pitch
People say it all the time: this product is so good that it sells itself. This is almost never true. These people are lying, either to themselves, to others, or both. But why do they lie? The straightforward answer is that they are trying to convince other people that their product is, in fact, good. They do not want to say “our product is so bad that it takes the best salespeople in the world to convince people to buy it.” So one should always evaluate such claims carefully. Is it an empirical fact that product x sells itself? Or is that a sales pitch?
The truth is that selling things—whether we’re talking about advertising, mass marketing, cookie-cutter sales, or complex sales—is not a purely rational enterprise. It is not just about perfect information sharing, where you simply provide prospective customers with all the relevant information that they then use to make dispassionate, rational decisions. There is much stranger stuff at work here.
Consider advertising for a moment. About 610,000 people work in the U.S. ad industry. It’s a $95bn market. Advertising matters because it works. There are competing products on the market. You have preferences about many of them. Those preferences are probably shaped by advertising. If you deny this it’s because you already know the “right” answer: your preferences are authentic, and ads don’t work on you. Advertising only works on other people. But exactly how that’s true for everybody in the world is a strange question indeed. And there’s a self-referential problem too, since the ad industry has had to—and did—convince the people who buy ads that advertising actually works.
If you buy Levis jeans, your apartment blows up. Or is it the other way around?
Comparisons to price or how fast computers work? No. Something strange is going on.
The U.S. sales industry is even bigger than advertising. Some 3.2 million people are in sales. It’s a $450bn industry. And people can get paid pretty well. A software engineer at Oracle with 4-6 years experiences gets a $105k salary and an $8k bonus. But a sales manager with 4-6 years experiences gets $112k and a $103k bonus. The situation is very much the same at Google, which claims to be extremely engineering driven; at a $96k base, $86k in commissions, and a $40k bonus, Google salespeople earn quite a bit more than their engineering counterparts. This doesn’t mean everyone should go into sales. But people who are good at it do quite well.
Self-referential version of sales question.
B. Salesman as Actor
The big question about sales is whether all salesmen are really just actors of one sort or another. We are culturally biased to think of salespeople as classically untrustworthy, and unreliable. The used car dealer is the archetypical example. Marc Andreessen has noted that most engineers underestimate the sales side of things because they are very truth-oriented people. In engineering, something either
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works or it doesn’t. The surface appearance is irrelevant. So engineers tend to view attempts to change surface appearance of things—that is, sales—as fundamentally dishonest.
What is tricky about sales is that, while we know that it exists all around us, it’s not always obvious who the real salesperson is. Tom Sawyer convinced all the kids on the block to whitewash the fence for him. None of those neighborhood kids recognized the sale. The game hasn’t changed. And that’s why that story rings true today.
Look at the images above. Which of these people is a salesman? President Eisenhower? He doesn’t look like a salesman. The car dealer in the middle doeslook like a salesman. So what about the guy on the right?
The guy on the right is Bill Gross, who founded IdeaLab, which was more or less the Y-Combinator of the late 1990s. IdeaLabs’ venture arm invested in PayPal. In late 2001, it hosted a fancy investor lunch in southern California. During the lunch, Gross turned to Peter Thiel and said something like:
“I must congratulate you on doing a fantastic job building PayPal. My 14-year-old son is a very apathetic high school student and very much dislikes writing homework assignments. But he just wrote a beautiful e-mail to his friends about how PayPal was growing quickly, why they should sign up for it, and how they could take advantage of the referral structure that you put in place.”
On some level, this was a literary masterpiece. If nothing else, it was impressive for the many nested levels of conversation that were woven in. Other people were talking to other people about PayPal, possibly at infinite levels on down. The son was talking to other people about those people. Bill Gross was talking to his son. Then Gross was talking to Peter Thiel. And at the most opaque and important level, Gross was talking to the other investors at the table, tacitly playing up how smart he was for having invested in PayPal. The message is that sales is hidden. Advertising is hidden. It works best that way.
There’s always the question of how far one should push this. People push it pretty far. Pretty much anyone involved in any distribution role, be it sales, marketing, or advertising, should have job titles that have nothing to do with those things. The weak version of this is that sales people are account executives. A somewhat stronger version is that people trying to raise money are not I-bankers, but rather are in corporate development. Having a job title that’s different from what you actually do is an important move in the game. It goes to the question of how we don’t want to admit that we’re being sold to. There’s something about the process that’s not strictly rational.
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To think through how to come to an organizing principle for a company’s distribution, consider a 2 x 2 matrix. One axis is product: it either sells itself, or it needs selling. The other axis is team: you either have no sales effort, or a strong one.
Consider the quadrants:
Product sells itself, no sales effort. Does not exist.
Product needs selling, no sales effort. You have no revenue.
Product needs selling, strong sales piece. This is a sales-driven company.
Product sells itself, strong sales piece. This is ideal.
C. Engineering versus Sales
Engineering is transparent. It’s hard. You could say it’s transparent in its hardness. It is fairly easy evaluate how good someone is. Are they a good coder? An ubercoder? Things are different with sales. Sales isn’t very transparent at all. We are tempted to lump all salespeople in with vacuum cleaner salesmen, but really there is a whole set of gradations. There are amateurs, mediocrities, experts, masters, and even grandmasters. There is a wide range that exists, but can be hard to pin down.
A good analogy to the engineer vs. sales dynamic is experts vs. politicians. If you work at a big company, you have two choices. You can become expert in something, like, say, international tax accounting. It’s specialized and really hard. It’s also transparent in that it’s clear whether you’re actually an expert or not.
The other choice is to be a politician. These people get ahead by being nice to others and getting everyone to like them. Both expert and politician can be successful trajectories. But what tends to happen is that people choose to become politicians rather than experts because it seems easier. Politicians seem like average people, so average people simply assume that they can do the same thing.
So too in engineering vs. sales. Top salespeople get paid extremely well. But average salespeople don’t, really. And there are lots of below average salesmen. The failed salesman has even become something of a literary motif in American fiction. One can’t help but wonder about the prehistory to all these books. It may not have been all that different from what we see today. People probably thought sales was easy and undifferentiated. So they tried it and learned their error the hard way. The really good politicians are much better than you think. Great salespeople are much better than you think. But it’s always deeply hidden. In a sense, probably every President of the United States was first and foremost a salesman in disguise.
IV. Methods of distribution
To succeed, every business has to have a powerful, effective way to distribute its product. Great distribution can give you a terminal monopoly, even if your product is undifferentiated. The converse is that product differentiation itself doesn’t get you anywhere. Nikola Tesla went nowhere because he didn’t nail distribution. But understanding the critical importance of distribution is only half the battle; a company’s ideal distribution effort depends on many specific things that are unique to its business. Just like every great tech company has a good, unique product, they’ve all found unique and extremely effective distribution angles too.
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A. Complex Sales
One example is SpaceX, which is the rocket company started by Elon Musk from PayPal. The SpaceX team has been working on their rocketry systems in Southern California for about 8 years now. Their basic vision is to be the first to send a manned mission to Mars. They went about doing this in a phenomenal way. Time constrains make it impossible to relate all of Elon’s many great sales victories. But if you don’t believe that sales grandmasters exist, you haven’t met Elon. He managed to get $500m in government grants for building rockets, which is SpaceX, and also for building electric cars, which is done by his other company, Tesla.
That was an even bigger deal than it may initially seem. SpaceX has been busy knocking out dramatically inferior rocket technologies for the past 10 years, but it’s been a very tricky, complicated process. The company has about 2,000 people. But the U.S. Space Industry has close to 500,000 people, all distributed about evenly over the 50 states. It’s hard to overstate the extent of the massive congressional lobbying that goes to keeping the other space companies—almost the entire industry—alive. Things are designed to be expensive, and SpaceX’s mission is to cut launch costs by 90%. To get where it is now—and to get to Mars later—SpaceX basically took on the entire U.S. House of Representatives and Senate. And so far, it seems to be winning. It’s going to launch a rocket next week. If all doesn’t go well, you’ll certainly here about it. But when things go well, you can predict the general response: move along, nothing to see here, these aren’t the rockets we’re looking for.
Palantir also has a unique distribution setup. They do government sales and sales to large financial institutions. Deals tend to range from $1m to $100m. But they don’t have any salespeople—that is, they don’t employ “salespeople.” Instead they have “forward deployed engineers” and a globetrotting CEO who spends 25 or 26 days each month traveling to build relationships and sell the product firsthand. Some argue that the traveling CEO-salesman model isn’t scalable. It’s a fair point, but the counterpoint is that, at that level, people really only want to talk to the CEO. You certainly can’t just hire army of salespeople, because that sounds bad. So you have forward deployed engineers double up in a sales capacity. Just don’t call them salespeople.
Knewton is a Founders Fund portfolio company that develops adaptive learning technology. Its distribution challenge was to figure out a way to sell to big educational institutions. There seemed to be no direct way to knock out existing players in the industry. You would have to take the disruptive sales route where you just try to come in and outsell the existing companies. But much easier is to find a non-disruptive model. So Newton teamed up with Pearson, the big textbook company. Without that partnership, Knewton figured it would just be fighting the competition in the same way at every school it approached, and ultimately it’d just lose.
B. Somewhat Smaller Sales
As we move from big, complex sales to sales, the basic difference is that the sales process involves a ticket cost of $10k-100k per deal. Things are more cookie cutter. You have to figure out how to build a scalable process and build out a sales team to get a large number of people to buy the product. David Sacks was a product guy at PayPal and went on to found Yammer. At PayPal, he was vehemently anti-sales and anti-BD. His classic lines were: “Networking is not working!” and “People doing networking are not working!” But at Yammer, Sacks found that he had to embrace sales and build out a scalable distribution system. Things are different, he says, because now the sales people report to him. Because of its focus on distribution, Yammer was able to hire away one of the top people from SalesForce to run its sales team.
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ZocDoc is a doctor referral service. It’s kind of a classic internet business; they are trying to get doctors’ offices to sign up for the service at a cost of $250/month. Growth is intensively sales-driven, and ZocDoc does market-by-market launches. There is even a whole internal team of recruiters who do nothing else but try to recruit new salespeople. Toward the lower end of things—and $250 per month per customer is getting there—things get more transactional and marginal.
C. The Missing Middle
There is a fairly serious structural market problem that’s worth addressing. On the right side of the distribution spectrum you have larger ticket items where you can have an actual person driving the sale. This is Palantir and SpaceX. On the extreme left-hand side of the spectrum you have mass marketing, advertising, and the like. There is quite possibly a large zone in the middle in which there’s actually no good distribution channel to reach customers. This is true for most small businesses. You can’t really advertise. It wouldn’t make sense for ZocDoc to take out a TV commercial; since there’s no channel that only doctors watch, they’d be overpaying. On the other hand, they can’t exactly hire a sales team that can go knock on every doctor’s door. And most doctors aren’t that technologically advanced, so internet marketing isn’t a perfect solution. If you can’t solve the distribution problem, your product doesn’t get sold—even if it’s a really great product.
The opposite side of this is that if you do figure out distribution—if you can get small businesses to buy your product—you may have a terminal monopoly business. Where distribution is a hard nut to crack, getting it right may be most of what you need. The classic example is Intuit. Small businesses needed accounting and tax software. Intuit managed to get it to them. Because it nailed distribution, it’s probably impossible for anyone to displace Intuit today. Microsoft understood the great value of Intuit’s distribution success when it tried to acquire Intuit. The Department of Justice struck down the deal, but the point is that the distribution piece largely explains Intuit’s durability and value.
D. Marketing
Further to the left on the distribution spectrum is marketing. The key question here is how can one advertise in a differentiated way. Marketing and advertising are very creative industries. But they’re also quite competitive. In order to really succeed, you have to be doing something that others haven’t done? To gain a significant advantage, your marketing strategy must be very hard to replicate.
Advertising used to be a much more iconic and valued industry. In the 1950s and ‘60s it was iconic and cutting edge. Think Mad Men. Or think Cary Grant, who, in the classic movie North by Northwest, played the classic advertising executive who is cool enough to be mistaken for a spy. Advertising and espionage were debonair enterprises, roughly equal in glamorousness.
But it didn’t last. As the advertising industry developed in 70s and 80s, more people figured out ways to do it. Things became much more competitive. The market grew, but the entrants grew faster. Advertising no longer made as much money as they had been before. And ever since there has been a relentless, competitive push to figure out what works and then dial up the levers.
Advertising is tricky in the same way that sales is. The main problem is that, historically at least, you never quite know if your ads are working. John Wanamaker, who is billed as the father of advertising, had a line about this: “Half the money I spend on advertising is wasted: the trouble is I don’t know which half.” You may think your ad campaign is good. But is it? Or are the people who made your ad campaign just telling you that it’s good? Distinguishing between fact and sales pitch is hard.
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In most ways, Priceline.com represents certain depressing decline of our society. It points to a very general failure. But one specific thing Priceline does well is its powerfully differentiated marketing, which makes it very hard to replicate or compete against. PayPal once staged a PR event where James Doohan—Scotty from Star Trek—would beam money using a palm pilot. It turned out to be a total flop. It turns out that Captain Kirk—that is, William Shatner—is in a league of his own.
Advertising’s historical opaqueness is probably the core of why Google is so valuable; Google was the first company that enabled people to figure out whether advertising actually worked. You can look at all sort of metrics—CPM, CTR, CPC, RPC—and do straightforward calculations to determine your ROI. This knowledge is important because people are willing to pay a lot for advertising if it actually works. But in the pre-internet magazine age before Google, ad people never really had a clue about how they were doing.
Zynga has excelled at building on top of Google’s ad work. Everyone knows that Zynga experienced great viral growth as its games caught on. Less known is that they spent a lot of money on targeted advertising. That allowed them to monetize users much more aggressively than people thought possible. And then Zynga used that revenue to buy more targeted ads. Other gaming companies tried to do just viral growth—build games that had some social element at their core. But Zynga went beyond that distribution strategy and got a leg up by driving rapid growth with aggressive marketing.
The standard bias on the internet is that advertising does not work. But that’s an interesting double standard. There are an awful lot of websites whose businesses model is ad sales. And then they turn around and say that they don’t actually believe ads are good way of getting customers. The Zynga experience shows that creatively rethinking the standard narrative can be quite lucrative. There is a lot of room for creativity in distribution strategy.
E. Viral Marketing
Viral marketing is, of course, the classic distribution channel that people tend to think of as characteristic of Internet businesses. There are certainly ways to get it to work. But it’s easy to underestimate how hard it is to do that. William Shatner and James Doohan seemed similar. In fact they were a world apart. Salesmen may seem similar. But some get Cadillac’s, while others get steak knives. Still others get fired and end up as characters in novels.
[Section on viral marketing math excluded. You can learn about this stuff elsewhere, e.g. here. The gist is twofold: first, viral cycle time is important. Shorter is better. Second, there is a metric called viral coefficient, and you need it to be > 1 to have viral growth.]
PayPal’s initial user base was 24 people. Each of those people worked at PayPal. They all knew that getting to viral growth was critical. Building in cash incentives for people to join and refer others did the trick. They hit viral growth of 7% daily—the user base essentially doubled every 10 days. If you can achieve that kind of growth and keep it up for 4-5 months, you have a user base of hundreds of thousands of people.
Certain segments grow fasters than others. The goal is to identify the most important segment first, so that anybody who enters the market after you has a hard time catching up. Consider Hotmail, for instance. It achieved viral growth by putting sign-up advertising at the bottom of each e-mail in their system. . Once they did that successfully, it was really hard to copy with the same success. Even if other providers did it and had similar growth curves, they were a whole segment behind. If you’re the first mover who is able to get a product to grow virally, no one else can catch up. Depending on how the exponential math shakes out in a particular case, the mover can often be the last mover as well.
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PayPal is a classic example. The first high-growth segment was power buyers and power sellers on eBay. These people bought and sold a ton of stuff. The high velocity of money going through the system was linked to the virality of customer growth. By the time people understood how and why PayPal took off on eBay, it was too late for them to catch up. The eBay segment was locked in. And the virality in every other market segment—e.g. sending money to family overseas—was much lower. Money simply didn’t move as fast in those segments. Capturing segment one and making your would-be competitors scramble to think about second and third-best segments is key.
Dropbox is another good example of a very successful company that depended on viral growth. Pinterest may be as well. It’s sort of hard to tell at this point. Is Pinterest actually good? Or is it a fad? Will it become a ghost town that no one uses? It’s not entirely clear. But it has certainly enjoyed exponential growth.
Marketing people can’t do viral marketing. You don’t just build a product and then choose viral marketing. There is no viral marketing add-on. Anyone who advocates viral marketing in this way is wrong and lazy. People romanticize it because, if you do it right, you don’t have to spend money on ads or salespeople.But viral marketing requires that the product’s core use case must be inherently viral. Dropbox, for example, let’s people share files. Implicit is that there’s someone—a potential new user—to share with. Spotify does this with its social music angle. As people use the product, they encourage other people to use it as well. But it’s not just a “tell your friends” button that you can add-on post-product.
F. The Power Law Strikes Again
We have seen how startup outcomes and VC performance follow a power law. Some turn out to be a lot better than others. People tend to underestimate how extreme the differences are because our generally egalitarian society is always telling us that people are essentially the same.
We’ve also heard Roelof Botha explain that LinkedIn was the exception that proves the rule that companies do not have multiple revenue streams of equal magnitude. The same is true for distribution, and exceptions are rare. Just as it’s a mistake to think that you’ll have multiple equal revenue streams, you probably won’t have a bunch of equally good distribution strategies. Engineers frequently fall victim to this because they do not understand distribution. Since they don’t know what works, and haven’t thought about it, they try some sales, BD, advertising, and viral marketing—everything but the kitchen sink.
That is a really bad idea. It is very likely that one channel is optimal. Most businesses actually get zero distribution channels to work. Poor distribution—not product—is the number one cause of failure. If you can get even a single distribution channel to work, you have great business. If you try for several but don’t nail one, you’re finished. So it’s worth thinking really hard about finding the single best distribution channel. If you are an enterprise software company with a sales team, your key strategic question is: who are the people who are most likely to buy the product? That will help you close in on a good channel. What you want to avoid is not thinking hard about which customers are going to buy it and just sending your sales team out to talk to everybody.
Distribution isn’t just about getting your product to users. It’s also about selling your company to employees and investors. The familiar anti-distribution theory is: the product is so good it sells itself. That, again, is simply wrong. But it’s also important to avoid the employee version: this company is so good, people will be clamoring to join it. The investor version—this investment is so great, they’ll be banging down our door to invest—is equally dangerous. When these things seem to happen, it’s
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worth remembering that they almost never happen in a vacuum. There is something else going on that may not be apparent on the surface.
G. PR and Media
PR and Media add yet another layer to the distribution problem. How the message of your company gets distributed is worth thinking hard about. PR and media are very linked to this. It is a sketchy and very problematic world. But it’s also very important because we live in a society where people don’t usually have a rational idea of what they want.
Consider an example from the VC world. It’s almost never the case that a company finds just one interested investor. There are always zero or several. But if the world were economically rational, this wouldn’t be true at all. In a perfectly rational world, you’d see single investor deals all the time. Shares would be priced at the marginal price where you get a single highest bidder—your most bullish prospective investor. If you get more than one person interested in investing, you’ve done it wrong and have underpriced yourself. But investors obviously aren’t rational and can’t all think for themselves. So you get either zero investors or many.
It’s easy and intuitive for smart people to be suspicious of the media. For many years, Palantir had a very anti-media bias. But even if media exposure wasn’t critical for customers or business partners, it turned out to be very important for investors and employees. Prospective employees Google the companies they’re looking at. What they find or don’t matters, even if it’s just at the level of people’s parents saying “Palantir? Never heard of it. You should go work at Microsoft.” And you can’t just plug yourself on your own website; PR is the art of getting trusted, objective third parties to give you press.
H. On Uncertainty
It’s fairly difficult to overestimate how uncertain people are and how much they don’t know what they actually want. Of course, people usually insist that they arecertain. People trick themselves into believing that they do know what they want. At the obvious level, “Everyone wants what everyone wants” is just a meaningless tautology. But on another level, it describes the dynamic process in which people who have poorly formed demand functions just copy what they believe everyone else wants. That’s how the fashion world works, for instance.
V. Distribution is Inescapable
Engineers underestimate the problem of distribution. Since they wish it didn’t exist, sometimes they ignore it entirely. There’s a plot line from The Hitchhiker’s Guide to the Galaxy in which some imminent catastrophe required everybody to evacuate the planet. Three ships were to be sent into space. All the brilliant thinkers and leaders would take the A ship. All the salespeople, consultants, and executives would take the B ship. All the workers would take the C ship. The B ship gets launched first, and all the B passengers think that’s great because they’re self-important. What they don’t realize, of course, is that the imminent destruction story was just a trick. The A and C people just thought the B people were useless and shipped them off. And, as the story goes, the B ship landed on Earth.
So maybe distribution shouldn’t matter in an idealized, fictional world. But it matters in this one. It can’t be ignored. The questions you must ask are: how big is the distribution problem? And can this business solve it?
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We live in a society that’s big on authenticity. People insist that they make up their own minds. Ads don’t work on them. Everything they want, they want authentically. But when you drill down on all these people who claim to be authentic, you get a very weird sense that it’s all undifferentiated. Fashionable people all wear the same clothes.
Understanding this is key. You must appreciate that people can only show tip of the iceberg. Distribution works best when it’s hidden. Question is how big the iceberg is, and how you can leverage it. Every tech company has salespeople. If it doesn’t, there is no company. This is true even if it’s just you and a computer. Look around you. If you don’t see any salespeople, you are the salesperson.
Corporate development is important for the same reasons that distribution is important. Startups tend to focus—quite reasonably—on the initial scramble of getting their first angel or seed round. But once it scales beyond that—once a company is worth, say, $30m or more—you should have a full-time person whose job it is to do nothing but travel around the world and find prospective investors for your business. Engineers, by default, won’t do this. It’s probably true that if your company is good, investors will continue show up and you’ll have decent up rounds. But how much money are you leaving on the table?
Say your company could reasonably be valued at $300m. Valuation is as much art as it is science. At that range it can fluctuate by a ratio of 2:1. If you raise $50m at $300m, you give away 16% of the company. But if you raise that $50m at $500m, you give away 10%. A 6% delta is huge. So why not hire the best person you can and give them 1% of the company to make sure you capture that value?
A similar thing exists with employee hiring. It’s trickier to know what to do there. But traditional recruiters do not take the distribution problem seriously enough. They assume that people are always rational, and that by giving them information, people will make good decisions. That’s not true at all. And since the best people tend to make the best companies, the founders or one or two key senior people at any multimillion-dollar company should probably spend between 25% and 33% of their time identifying and attracting talent.
Getting traction – Gabriel Weinberg
http://www.gabrielweinberg.com/blog/2010/04/in-‐the-‐pursuit-‐of-‐traction-‐have-‐you-‐considered-‐all-‐verticals.html
Traction Verticals
By
Gabriel Weinberg
April 27, 2010 7:43 AM
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The second major thing I've learned from interviewing people on getting tractionis that initial traction can happen in a lot of different ways, often unpredictably. (The first thing was that entrepreneurs usually have movement ideas even though they often think they have powder keg or empire ideas.)
Given that the first inflection point is unpredictable, it makes sense to consider all traction "verticals" in the pursuit of product/market fit. Here's a list I hope to make exhaustive over time (by updating this post).
Note: this list is no particular order.
Traditional PR. Justin.tv gained an early loyal following from getting written up in national newspapers. Justin Kan tells the story in my interview with him.
Non-traditional PR, e.g. Publicity Stunts. Josh Kopelman had a town renamed half.com, which got him on a lot of national TV shows. He tells the story here.
Search Engine Marketing (SEM). At NextTag, Mark Cramer bought mortgage ads off of Google and found a way to monetize them (for more than he paid). He explains the tactic in my second interview with him.
Non-SEM Online Ads. DuckDuckGo has gotten some success out of reddit ads. There's also lots of other platforms, e.g. Facebook, StumbleUpon, MySpace. Then there are thousands of smaller sites that will take your ads directly.
Search Engine Optimization (SEO). At Bingo Card Creator, Patrick McKenzie operates a collection of sites that get hundreds of thousands of people each year interested in his offerings coming in for free from organic search (mainly through Google). He walks through in detail how it all works in my interview with him.
Business Development (BizDev). Kayak secured an early partnership deal with AOL. Paul English tells the story in my interview with him.
Target Market Blogs. Reddit gained early users after Paul Graham mentioned them in one of his essays. Alexis Ohanian talks about it my interview with him.
Your Blog. SEOMoz eventually took off after years of tireless blogging. Rand Fishkin tells us about it in my interview with him.
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Community Building. At Wikipedia, Jimmy Wales spent a lot of initial effort courting early editors and building a community around them. He recalls the history in my interview with him.
Viral. Posterous took off through posting and sharing. Garry Tan recounts the series of events inmy interview with him.
Trade Shows. Steve Welch gained momentum for Mitos through innovative marketing at industry conferences. He tells us how it happened in my interview with him.
Speaking Engagements, e.g. Conferences. Eric Ries told me (after our interview) that his blog really got traction after he started doing speaking engagements.
Open Source. Zimbra took hold by making their product open source. Statish Dharmaraj opines on the strategy in my interview with him. You could consider this a special case of the next vertical.
Existing Platforms. SurfCanyon has gotten 1.5M downloads of their Firefox add-on. Mark Cramer explains how in my interview with him. And of course don't forget iPhone/iPad, Twitter, Facebook, LinkedIn, Ning, etc.
Sales. Steve Barsh kick-started his company through endless cold-calling and networking, which he talks about in my interview with him. In my interview with Todd Vollmer, Todd lays out a pretty comprehensive approach to startup selling.
Creating a Popular Event. I think the recent Startup Lessons Learned conference by Eric Ries andCharles Hudson is a good example of this strategy.
Here are other verticals I know about though don't have great examples for yet:
Off-l ine Ads. I've heard infomercials can work wonders for the right products. And of course there is TV, radio, billboards, magazines, newspapers, etc.
Buying Smaller Sites. I've heard axod bought a site to jump-start Mibbit. Can I interview you about it?
I'm sure there are more, and I'd appreciate you sharing your examples and stories. I hope to do at least one interview on each vertical for the book I'm doing on getting traction.
As you can see from the above, basically everyone I've interviewed has gotten traction from a different vertical. Yes, partially that was by my design (in the picking of interviewees). However, it is clear that usually they didn't start out thinking they would get traction from that particular vertical. So I think it makes sense to systematically examine each of them and brainstorm how they might work for your startup.
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Engaging new users – Chris Dixon
http://cdixon.org/2010/12/26/the-‐thin-‐edge-‐of-‐the-‐wedge-‐strategy/
December 26, 2010
The “thin edge of the wedge” strategy
Establishing relationships with new users is the hardest part of growing a startup. For consumer products establishing relationships can mean many things: installs, registrations, purchases, or even just getting users to think of your website as a place to go for certain purposes. For B2B products, establishing relationships means getting internal users or testers and eventually contracts and payments. For business development partners – for example API/widget partners – establishing relationships usually means getting functionality embedded in partners’ products (e.g. a widget on their website).
One common strategy for establishing this initial relationship is what is sometimes known as the “thin edge of the wedge” strategy (aka the “tip of the spear” strategy). This strategy is analogous to the bowling pin strategy: both are about attacking a smaller problem first and then expanding out. The difference is that the wedge strategy is about product tactics while the bowling pin strategy is about marketing tactics.
Sometimes the wedge can be a simple feature that existing companies overlooked or saw as inconsequential. The ability to share photos on social networks was (strangely) missing from the default iPhone camera app (and sharing was missing from many third-party camera apps like Hipstimatic that have popular features like lo-fi camera filters), so Instagram and Picplz filled the void. Presumably, these startups are going to try to use mobile photo sharing as the wedge into larger products (perhaps full-fledged social networks?).
Sometimes the wedge is a “single player mode” – a famous example is early adopters who used Delicious to store browser bookmarks in the cloud and then only later – once the user base hit critical mass – used its social bookmarking features. Other times the wedge lies on one side of a two-sided market, in which case the wedge strategy could be thought of as a variant of the “ladies night” strategy. I’m told that OpenTable initially used the wedge strategy by providing restaurants with terminals that acted like simple, single-player CRM systems. Once they acquired a critical mass of restaurants in key cities (judiciously chosen using the bowling pin strategy), opentable.com had sufficient inventory to become useful as a one-stop shop for consumers.
Critics sometimes confuse wedge features with final products. For example, some argue that mobile photo sharing is “just a feature,” or that game mechanics on geo apps like Foursquare are just faddish “toys.” Some go so far as to argue that the tech startup world as a whole is going through a phase of just building “dinky” features and companies. Perhaps some startups have no plan and really are just building features, likely with the hope of flipping themselves to larger companies. Good startups, however, think about the whole wedge from the start. They build an initial user base with simple features and then quickly iterate to create products that are enduringly useful, thereby creating companies that have stand-alone, defensible value.
Demand harvesting – Sean Ellis
http://startup-‐marketing.com/demand-‐harvesting-‐the-‐easiest-‐driver-‐for-‐startups/
Feb 25th 08
Demand Harvesting – The Easiest Driver for Startups
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I always begin a new startup marketing assignment by looking for any untapped existing demand. Demand harvesting is much easier than demand creation – and it has a faster sales cycle. You don’t have to convince someone they need your category of product, you just need to be easier to find/buy and have a better value proposition than the other guys.
The first question to ask is “where would someone seek my product category?” Twenty years ago the most obvious answer would have been the yellow pages, but today it is Google. A lot of information has been published on getting the most out of SEO or SEM and there are also many experts you can tap in this area. Beyond Google, I’ve found it is helpful to survey existing users for other places they would potentially look. It’s great news when discover healthy demand for your product category.
The next step is to analyze the solutions competing for that demand. The best situation is to discover heavy unmet demand and no competition. That is about as likely as winning the lottery, so don’t count on it. More realistically, there will be a few companies with varying offers competing for that demand. In this case, you should hope for weak execution from these existing competitors. If you can be significantly more effective at extracting money from each prospect, you can afford a more prominent promotion at the initial point of connection and begin capturing market share.
If you discover that the existing competitors are executing well, you’ll have to differentiate your offer with a better value proposition for at least a segment of the existing prospects. This was the situation in my last company. We faced a well entrenched competitor who was harvesting the majority of existing demand and spending millions every month creating new demand. Rather than simply trying to out-execute them (they were extremely efficient), we decided to counter with a free-to-premium offer.
This gave us a high response rate among existing main category searchers but also played into a new trend that had been developing over the last few years. In discovering a new expensive software solution, many prospective customers now check for free alternatives. For this new segment of demand, we quickly became the dominant market player. Once we had these users engaged on the free product, we could patiently upsell various complementary premium services.
Whether competing for existing demand or creating a brand new product category, you’ll eventually have to begin creating demand. This is a much more difficult and unpredictable art that I’ll cover in a future post.
Measuring user engagement -‐ Andrew Chen
http://andrewchenblog.com/2008/09/08/how-‐to-‐measure-‐if-‐users-‐love-‐your-‐product-‐using-‐cohorts-‐and-‐revisit-‐rates/
How to measure if users love your product using cohorts and revisit rates
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Do users really love your product?
If they did, how would you be able to tell?
I would argue that the single most telling metric for a great product is how many of them become dedicated, repeat users. This angle of thinking naturally leads to a number of metrics around user retention, which we’ll examine in this blog post.
User retention is especially important for social web products. Failure to consider the backend retention of a userbase can lead to catastrophic results – in particular, without the proper mechanics in place, it’s easy to hit the “shark fin” user curve, as well as the death spiral caused by reverse Metcalfe’s Law. In both cases, once the core audience of a site starts to erode, then the erosion can cause a negative feedback loop that causes the entire audience to fall away.
This raises a series of questions:
What are the right metrics to track for user retention?
(And as a corollary, what are the wrong ones?)
What is a “good” retention number? What are bad retention numbers?
How do you optimize and improve retention rates?
Let’s tackle these below.
Retention versus Engagement First off, there’s an important distinction between engagement versus retention, which some folks often track in one bucket. I generally define retention is simply the act of getting users BACK to revisit, regardless of their actual activity on the site. Contrast this with engagement, which measures how much time they spend with the product, how many features they interact with, etc.
An implication of this is that the right metric to follow is visits rather than something like pageviews or time-on-site.
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Here are a couple examples of the separation of engagement versus retention:
Google is a high retention, low engagement site
MySpace is a high retention, high engagement site
News sites are often medium/high retention, low engagement sites (like checking a headline)
etc.
Note the important point that engagement doesn’t necessarily correlate with monetization. Because many retail sites and reference properties are transactional in nature, oftentimes this implies that the closer you are to the money, the lower the engagement is.
Keep this in mind for people who espouse “addictiveness” and “engagement” as virtues for social media sites.
Retention versus Acquisition Secondly, there’s the important issue of how to disambiguate newly acquired users from retained users. The problem with a traffic graph that’s going up-and-to-the-right is that it’s not clear what’s really happening – is the site bringing in lots of new users? Or is there a bunch of dedicated users that are extended their engagement? You need to figure out which of 4 scenarios are actually happening, which I’ve blogged previously about:
Pageviews are coming ONLY from new users
Pageviews are coming ONLY from one generation of users (like early adopters)
Pageviews are coming ONLY from retained users
Pageviews are coming from new users and retained users
The proper way to disambiguate retention from acquisition is to precisely track the following stats:
How many new users are joining the site?
Of these new users, what are the different funnels they are joining from? (be it SEO, direct navigation, etc.)
Then you separate out these users completely from the aggregate numbers, and the remaining folks you have left are ones who are coming back to the site. You can then further segment this group by cohort, which we’ll discuss below.
Building your first retention table: User cohorts vs Revisit rates Using the points from above, you can now build a retention table that compares how many users are coming back. This table starts with three columns:
Time period the user joined
Number of users that joined that period
Revisit percentage rate
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The reason why you separate it out into cohorts is that it gives the ability to compare performance of the site over time. As new product features are added, ideally the revisit rates would also continue to rise.
Let’s put this together in a table, imagining that we’re at Week 5:
Time period User count Revisit rate
Week 1 (4 wks ago)
1000 28%
Week 2 (3 wks ago)
1100 26%
Week 3 (2 wks ago)
1210 23%
Week 4 (1 wk ago)
1331 15%
Week 5 (now)
1464 0%
A couple points on the above table:
Looking back as Week 5, you can see that Week 1 is now the “oldest” cohort, and those users have had many weeks to revisit the site
The overall userbase is growing 10% per week, starting with an initial userbase of 1000
The revisit rate is naturally <100% since whatever initial cohort you start out with, it can only decrease but not increase
Note that the retention rate of the site seems to be around 30%, although you’d want to let the Week 1 cohort run for a while and see if it eventually stabilizes
Week 5 is currently at 0% since in this example the week just started and no users have revisited yet
The actual number of visits on any given day is weird to calculate using this table, since the view is not based on aggregate numbers
The key metric is really the number that the revisit rate converges to. You can use this number in your traffic models to understand whether you should be focused on acquiring new users, or if you can simply focus on extending the engagement levels of your site.
What’s your revisit rate? (Using Google Analytics to approximate it) Google Analytics gives you an overall number for free, with some caveats. You can access this feature on the lefthand nav through “Visitors”, then “New vs. Returning.” Basically this is an OK approximation of the revisit rate, as long as you:
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Maximize the window in which you are doing the analysis (ideally starting the analytics window when the site was first made public), otherwise the numbers will skew high since you’ll be counting too many dedicated users
Ideally, the site would isn’t adding exponentially more users every day, since it would skew lower because newer users are less likely to have returned
Essentially there’s some skew that comes into play since Google Analytics doesn’t let you segment your users based on when they first joined the site.
Willing to share? For readers who are willing to share the numbers on their site, please comment below and if I get enough responses I’ll do a followup blog post on the subject.
Building networks – Chris Dixon
http://cdixon.org/2010/08/21/the-‐bowling-‐pin-‐strategy/
August 21, 2010
The bowling pin strategy
A huge challenge for user-generated websites is overcoming the chicken-and-egg problem: attracting users and contributors when you are starting with zero content. One way to approach this challenge is to use what Geoffrey Moore calls the bowling pinstrategy: find a niche where the chicken-and-egg problem is more easily overcome and then find ways to hop from that niche to other niches and eventually to the broader market.
Facebook executed the bowling pin strategy brilliantly by starting at Harvard and then spreading out to other colleges and eventually the general public. If Facebook started out with, say, 1000 users spread randomly across the world, it wouldn’t have been very useful to anyone. But having the first 1000 users at Harvard made it extremely useful to Harvard students. Those students in turn had friends at other colleges, allowing Facebook to hop from one school to another.
Yelp also used a bowling pin strategy by focusing first on getting critical mass in one location – San Francisco – and then expanding out from there. They also focused on activities that (at the time) social networking users favored: dining out, clubbing and shopping. Contrast this to their direct competitors that were started around the same time, were equally well funded, yet have been far less successful.
How do you identify a good initial niche? First, it has to be a true community – people who have shared interests and frequently interact with one another. They should also have a particularly strong need for your product to be willing to put up with an initial lack of content. Stack Overflow chose programmers as their first niche, presumably because that’s a community where the Stack Overflow founders were influential and where the competing websites weren’t satisfying demand. Quora chose technology investors and entrepreneurs, presumably also because that’s where the founders were influential and well connected. Both of these niches tend to be very active online and are likely to have have many other interests, hence the spillover potential into other niches is high. (Stack Overflow’s cooking site is growing nicely – many of the initial users are programmers who crossed over).
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Location based services like Foursquare started out focused primarily on dense cities like New York City where users are more likely to serendipitously bump into friends or use tips to discover new things. Facebook has such massive scale that it is able to roll out its LBS product (Places) to 500M users at once and not bother with a niche strategy. Presumably certain groups are more likely to use Facebook check-ins than others, but with Facebook’s scale they can let the users figure this out instead of having to plan it deliberately. That said, history suggests that big companies who rely on this “carpet bombing strategy” are often upended by focused startups who take over one niche at a time.
The cardinal sin of community management – Eric Ries
http://www.startuplessonslearned.com/2009/09/cardinal-‐sin-‐of-‐community-‐management.html
Friday, September 11, 2009
The cardinal sin of community management
Once you have a product launched, you will the face the joys – and the despair – of a community that grows up around it. I won’t sugar-‐coat this: it is one of the most difficult and frustrating aspects of building a company online.
There are many articles by many experts (myself included) extolling the virtues of listening to customers. In fact, there are so many of these propaganda pieces that this question might naturally cross your mind: if listening to customers is so great, why do we need so much propaganda? I’ll tell you the honest truth: listening to customers is gruesome, uncomfortable, and painful work. Sure it has its moments, but then so does getting stranded on a desert island.
Yet few products these days can succeed without their online community, and the insight you can gain from interacting with that community is unparalleled, despite the pain. But to take advantage of that learning, you have to avoid the absolutely one and only cardinal sin of community management: not listening.
This probably sounds illogical. Communities care about lots of things, like how good your product is, how much information you give them, how you defend them from trolls, right? And when you’re being pilloried by community members over the latest mistake your company made, it can doubly confusing. After all, people rarely say they are mad because they are not being heard. But just because they don’t say it doesn’t mean that it’s not true.
Let me give an especially painful example. At a certain point in IMVU’s development, we faced a difficult choice. Some of our most passionate early adopters were using IMVU’s user-‐generated content capabilities to create illicit content. As you can imagine, this was a lucrative customer segment. But it became clear that if IMVU was ever going to become a mainstream business, we had to effectively fire these early customers. The reasons were many and complex, so I won’t rehash them all here. Suffice to say that our partners, vendors, and most importantly regular mainstream customers all found the idea disturbing. So we had to start enforcing new content policies that restricted what kinds of virtual goods could be bought and sold on IMVU.
We did not take this step lightly. We did a lot of analysis to make sure that we were minimizing the number of customers affected. For example, we spent some time researching the usage of virtual goods that would be disallowed under the new policy and were relieved to discover that they accounted for less than 0.1% of all usage. So we felt confident that removing them wouldn’t have too big an impact. We couldn’t have been more wrong.
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This single decision wound up costing the company significant revenue and over the course of several months sent its customer growth into decline. We were totally unprepared for the magnitude of what happened. In the end, we managed to repair the damage, but only after losing a lot of time and at significant opportunity cost. This was one of those catastrophes that shouldn’t have happened. We carefully rolled out the change in stages. We did our best to actively communicate why we were making the change, and we tried to put in place policies that treated affected customers fairly.
Yet none of that mattered, because we violated the cardinal rule. We didn’t listen. More accurately, we made our customers feel like we weren’t listening. And until we could make that right, we kept on hemorrhaging business.
The problem was that although very few customers were affected by the changes in policy, many more were anxious about those changes. We tried to be low-‐key about the roll-‐out of these changes, so as not to call attention to it, but our silence on the subject simply served to make room for conspiracy theories about what was really going on. And, because the people complaining were yelling and screaming, we thought the right response was to ignore them and wait for them to leave. After all, someone who is writing ten-‐page posts about how they are going to abandon your product is presumably going to go away, right? That’s why one of the most important maxims in online communities is “don’t feed the trolls.” People who thrive on creating controversy through volume, repetition and hyperbole don’t really want to be heard. They just want attention, and giving it to them just encourages more reckless behavior.
But silence was the worst possible strategy. For months, we made constant product and policy changes, trying to end the controversy without simply undoing our original decision and abandoning the mainstream market. Nothing worked, until we finally had one of our community managers start talking to real customers on the phone. Then the reality of our problem hit us.
Most normal customers – even among early adopters -‐ do not pay attention to the trolls. They don’t participate heavily in the forums, and they don’t send email when they are dissatisfied. They are largely invisible in the normal channels where customer service and community management pays attention. But that doesn’t mean they are not aware of what’s going on, or that they don’t care deeply about it. It turned out that our customers had gotten a clear message, one that we had never intended to send: that IMVU was becoming a teen-‐only site. We were totally shocked. Adults, even those that aren’t at all interested in racy content, were our best customers. We had built numerous features specifically for them, and often had to contend with charges from teenagers that we were too adult-‐friendly (these two segments don’t really like hanging out with each other as a rule).
When we actually started listening, things changed fast. First of all, we discovered what wasreally upsetting our customers. They had come to rely on the fact that IMVU was one of the very few online communications platforms where verified adults could meet one another. This was an unintended side-‐effect of our earlier content policies, that required age verification before you could buy unrated content from our catalog. It turns out many of our best customers were becoming age verified and then not buying any “adult” content. They enjoyed being treated like adults and having a way to chat online with other adults. Again, this was not about prurient content. Avatars make it possible to meet other people as they would like to be perceived. Mostly, that’s a good thing – many people believe their avatar is a more authentic representation of their true self than their physical appearance. But it also has some drawbacks. In the middle of a serious conversation on the joys of motherhood or the stress of a career you might realize that the person you’re talking to is only 15. That can be a jarring juxtaposition of physical reality that breaks the suspension of disbelief.
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It took me a long time to understand that benefit of our product. Most customers couldn’t articulate it; they just knew they were angry that we had ruined it. Except that, from a literal point of view, we hadn’t ruined it. All of the features that enabled that experience were still there. What we had done to ruin it was make our customers feel like they were not welcome anymore. We kept denying that we had done anything wrong, that the features still worked as advertised, and justifying our decisions instead of apologizing. When we finally understood the problem, fixing it was relatively easy. We made a series of very public declarations that IMVU would always support adults, that we appreciated their unique contribution, and that we would always protect the key features that meant the most to them. The fact that pornography was not one of these key features was besides the point. We had summarily turned off one of their features without consulting them and without remorse. Who knew what feature might be next?
So real listening can head off a crisis in progress. But it also has other powers. For example, consider a common case of a minimum viable product. Since this product is necessarily missing a lot of features, those of us who ship them often want to duck the feedback. After all, it’s likely to be something we already know. In fact, I used to have the urge to argue with customers who gave feedback like “hey, idiot, you’re missing feature X.” I used to respond with something like, “I know, but it’s on our road map and we’re already working on it and we don’t really want feedback about that right now and so please get off my back.” You can imagine the field day the trolls had with that.
Eventually, we learned a better way. Feedback that tells you something you already know is still quite valuable. It gives you a hint that you are on the right track, but it also tells you quite a lot about the person giving you the feedback – that they believe in the path that you are on. For an early adopter, having this insight acknowledged and validated is a powerful experience. So we learned to take the time to say “thank you for your suggestion. Thanks to you, we’re going to prioritize feature X.” Then, when feature X finally did come out, every early adopter who suggested it feels an earned sense of ownership over it. Here’s the best part. They will also defend you against future attackers and trolls.
Collectively, an online community has an unlimited amount of time to spend. Even if you and your community managers are a hundred times smarter and more productive than the members of your community, there is absolutely no way that you can keep up with its sheer volume of energy. So you can’t fight an online community and hope to win the argument. The only way to have your point of view prevail is to have members of the community invest their unlimited time and energy in evangelizing it. And that’s what really, truly, actively listening does. It sends a signal to passionate customers that you care, that you want them on your side, and that they are part owners of your vision. In fact, I am convinced that if you could find some of IMVU’s earliest adopters, they would say something like this: “sure, those guys at IMVU HQ were helpful in writing code and stuff, but in the end they were just the hired help. It was really the community who built that product.” Imagine what happens when a troll shows up and starts bad-‐mouthing you. Those earlyvangelists (to borrow Steve Blank’s phrase) will defend you.
I have seen this dynamic time and again. As a creator of products (and now an author, too), it’s one of the things that keeps me going. When your customers become your allies, there’s almost nothing you can’t accomplish together.
There’s only one catch. You can’t stop listening. If you do, as IMVU found out to our peril, you break the implicit bargain that made you allies in the first place. And when your defenders join forces with your trolls, there’s no way to have your message heard.
That’s why not listening is the cardinal sin of community management. Any other mistake can be overcome: shipping bad product, removing key features, erroneously banning community members, even kicking out a
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whole segment of customers. And when those allies feel unheard, you simply can’t do anything right. Every little thing becomes a crisis. Choose wisely.
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Consumer psychology
Consumer psychology
The psychology of fear (and conflict) – Peter Thiel (Blake Masters)
http://blakemasters.tumblr.com/post/23250566538/peter-‐thiels-‐cs183-‐startup-‐class-‐12-‐notes-‐essay Peter
Thiel’s CS183: Startup - Class 12 Notes Essay
Here is an essay version of my class notes from Class 10 of CS183: Startup. Errors and omissions are mine.
Reid Hoffman, co-founder of LinkedIn and Partner at Greylock Partners, joined this class as a guest speaker. Credit for good stuff goes to him and Peter. I have tried to be accurate. But note that this is not a transcript of the conversation.
Class 12 Notes Essay—War and Peace
I. War Without
For better or for worse, we are all very well acquainted with war. The U.S. has been fighting the War on Terror for over a decade. We’ve had less literal wars on cancer, poverty and drugs.
But most of us don’t spend much time thinking about why war happens. When is it justified? When is it not? It’s important to get a handle on these questions in various contexts because the answers often map over to the startup context as well. The underlying question is a constant: how can we tilt away from destructive activity and towards things that are beneficial and productive?
A. Theater
It often starts as theater. People threaten each other. Governments point missiles at each other. Nations become obsessed with copying one another. We end up with things like the space race. There was underlying geopolitical tension when Fischer faced off with Spassky in the Match of the Century in 1972. Then there was the Miracle on Ice where the U.S. hockey team defeated the Soviets in 1980. These were thrilling and intense events. But they were theater. Theater never seems all that dangerous at first. It seems cool. In a sense, the entire Cold War was essentially theater—instead of fighting and battles, there was just an incredible state of tension, rivalry, and competition.
There are ways in which competition and war are powerfully motivational. The space race was incredibly intense. People worked extremely hard because they were competing against Russians on other side. Things get so intense that it becomes quite awkward when the rivalry ends. The space race ended in 1975 with the Apollo-Soyuz Test Project, where the U.S. and Soviet Union ran a joint space flight. No one was quite sure how it would play out. Was everyone just going to become friends all of a sudden?
So war can be a very powerful, motivational force. It pushes people to try and improve themselves. It’s like wimpy kid who orders a Charles Atlas strength-training book, bulks up, and pummels the bully that’s been tormenting him.
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B. Psychology
But the Charles Atlas example illustrates more than just the motivational aspect of war. When people are myopically focused on fighting, they lose sight of everything else. They begin to look very much like their enemy. The skinny kid bulks up. He becomes the bully, which of course is exactly what he had always hated. A working theory is thus that you must choose your enemies well, since you’ll soon become just like them.
This is the psychological counterpoint to the economic discussion we had in classes three and four. In world of perfect competition, no one makes any profit. Economic profits are competed away. But the economic version is just a snapshot. It illustrates the problem, but doesn’t explain why people still want to compete. The Kissinger line on this was that “the battles are so fierce because the stakes are so small.” People in fierce battles are fighting over scraps. But why? To understand the static snapshot, you have to look to the underlying psychology and development. It unfolds like this: conflict breaks out. People become obsessed with the people they’re fighting. As things escalate, the fighters become more and more alike. In many cases it moves beyond motivational theater and leads to all out destruction. The losers lose everything. And even the winners can lose big. It happens all the time. So we have to ask: how often is all this justified? Does it ever make sense? Can you avoid it altogether?
C. Philosophies of Conflict
There are two competing paradigms one might use to think about conflict. The first is the Karl Marx version. Conflict exists because people disagree about things. The greater the differences, the greater the conflict. The bourgeoisie fights the proletariat because they have completely different ideas and goals. This is the internal perspective on fighting; there is an absolute, categorical difference between
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you and your enemy. This internal narrative is always a useful propaganda tool. Good vs. evil is powerfully motivational.
The other version is Shakespeare. This could be called the external perspective on fighting; from the outside, all combatants sort of look alike. It’s clear why they’re fighting each other. Consider the opening line from Romeo and Juliet:
Two households, both alike in dignity,
Two houses. Alike. Yet they seem to hate each other. In a very dynamic process, they grow ever more similar as they fight. They lose sight of why they’re fighting to begin with. Consider Hamlet:
Exposing what is mortal and unsure
To all that fortune, death, and danger dare,
Even for an eggshell. Rightly to be great
Is not to stir without great argument,
But greatly to find quarrel in a straw
When honor’s at the stake.
To be truly great, you have to be willing to fight for reasons as thin as an eggshell. Anyone can fight for things that matter. True heroes fight for what doesn’t matter. Hamlet doesn’t quite achieve greatness; he’s too focused on the external narrative of how meaningless everything is. He never can bring himself to fight.
II. War Within
A. What’s Past is Prologue
So which perspective is right in the tech world? How much is Marx? How much is Shakespeare?
In the great majority of cases, it’s straight Shakespeare. People become obsessed with their competitors. Companies converge on similarity. They grind each other down through increased competition. And everyone loses sight of the bigger picture.
Look at the computer industry in the 1970s. It was dominated by IBM. But there were a bunch of other players, like NCR, Control Data, and Honeywell. Note that those are longer common names in computer technology. At the time, all these companies were trying to build mini computers that were competitive with IBM’s. Each offering was slightly different. But conceptually they were quite similar. As a result of their myopia, these companies completely missed the microcomputer. IBM managed to develop the microprocessor and eclipsed all its competitors in value.
The crazy ‘90s version of this was the fierce battle for the online pet store market. It was Pets.com vs. PetStore.com vs. Petopia.com vs. about 100 others. The internal narrative focused on an absolute fight to dominate online pet supplies. How could the enemy be defeated? Who could afford the best Super Bowl ads? And so on. The players totally lost sight of the external question of whether the online pet supply market was really the right space to be in. The same was true of Kozmo, Webvan, and Urban Fetch. All that mattered was winning. External questions that actually mattered—Is this war even worth fighting?—were ignored.
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You can find this pattern everywhere. A particularly comic example is Oracle vs. Siebel. Oracle was a big database software company. Siebel was started by a top salesman form Oracle—so there was a dangerously imitative and competitive dynamic from the outset. Siebel tried to copy Oracle almost exactly, right down to similar office design. It sort of started as theater. But, as is often the case, it escalated. Things that start with theater quite often end pretty badly.
At one point, Oracle hatched an interesting plan of attack. Siebel had no billboard space in front of its office. So Oracle rented a huge truck and parked it in front of Siebel HQ. They put up all sorts of ads on it that made fun of Siebel in attempt lure Siebel employees away. But then Oracle acquired Siebel in 2005. Presumably they got rid of the truck at that point.
The ad wars aren’t just throwaway anecdotes. They tell us a lot about how companies were thinking about themselves and the future. In the ‘90s, a company called Informix started a Billboard war with Oracle. It put up a sign near Oracle HQ off the 101 that said: “You just passed Redwood Shores. So did we.” Another billboard featured a “Dinosaur Crossing” sign superimposed in front of the Oracle
Towers.
Oracle shot back. It created a prominent ad campaign that used snails to show the TPC benchmark results of Informix’s products. Of course, ads weren’t anything new. But what was strange was that they weren’t really aimed at customers; they were aimed at each other, and each other’s employees. It was all intended to be motivational theater. Ellison’s theory was that one must always have an enemy. That enemy, of course, should not be big enough to have a chance at beating you. But it should be big enough to motivate the people who fail to realize that. The formula was theater + motivation = productivity. The flaw was that creating fake enemies for motivation often leads to real enemies that bring destruction. Informix self-destructed in 1997.
B. The End of This Day’s Business Ere It Come
The Shakespearean model holds true today. Consider the Square card reader. Square was the first company to do mobile handset credit card processing right. It did the software piece and the hardware piece, and built a brand with the iconic white square device.
Then there was a proliferation of copycat readers. PayPal launched one. They shaped it like a triangle. They basically copied the idea of a simple geometric-shaped reader. But they tried to one-up Square; 3 sides, after all, was simpler than 4.
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Before PayPal’s PR people could celebrate their victory, Intuit came out with a competing card reader. It was shaped like a cylinder. Then Kudos came out with its version, which it shaped like a semicircle. Maybe someone will release a trapezoid version soon. Maybe then they’ll run out of shapes.
How will this all end? Do you really want to get involved in making a new card reader at this point? One gets a distinct sense that the companies focused on copycat readers are in a great deal of trouble. Much better to be the original card reader and stay focused on original problems, or an original company in another space entirely.
C. Even the Big Guys Do It
It’s not just startups that engage in imitative competition. The Microsoft-Google rivalry, while not completely destructive, has a lot of this Shakespearean dynamic behind it. In a way, they were destined to war with each other from day one because they are so alike. Both companies were started by nerds. The top people are obsessed with being the smartest. Bill Gates had an obsession with IQ testing. Larry and Sergey sort of took that to the next level. But Microsoft and Google also started off very differently. Originally they did very different things and had very different products. Microsoft had Office, Explorer, and the Windows operating system. Google had its search engine. What was there to fight about?
Fast-forward 12 years. It’s Microsoft’s Bing vs. Google, and Google’s Chrome vs. Internet Explorer. Microsoft Office now has Google Docs to contend with. Microsoft and Google are now direct competitors across a number of very key products. We can surmise why: each company focused on the internal narrative in which they simply had to take on the other because they couldn’t afford to cede any ground. Microsoft absolutely had to do search. Google simply had to do Docs and Chrome.
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But is that right? Or did they just fall prey to the imitative dynamic and become obsessed with each
other?
The irony is that Apple just came along and overtook them all. Today Apple has a market cap of $531 billion. Google and Microsoft combined are worth $456 billion. But just 3 years ago, Microsoft and Google were each individually bigger than Apple. It was an incredible shift. In 2007, it was Microsoft vs. Google. But fighting is costly. And those who avoid it can often swoop in and capitalize on the peace.
D. If You Can’t Beat Them, Merge
PayPal had similar experience. Confinity released the PayPal product in late 1999. Its early competitor was Elon Musk’s X.com. The parallelism between Confinity/PayPal and X.com in late ’99 was uncanny. They were headquartered 4 blocks apart on University Avenue in Palo Alto. X.com launched a feature-for-feature matching product, right down to the identical cash bonus and referral structure. December 1999 and January 2000 were incredibly competitive, motivational months. People at PayPal were putting in 90-100 hours per week. Granted, it wasn’t clear that what they were working on actually made sense. But the focus wasn’t on objective productivity or usefulness; the focus was on beating X.com. During one of the daily updates on how to win the war, one of the engineers presented a schematic of an actual bomb that he had designed. That plan was quickly axed and the proposal attributed to extreme sleep deprivation.
Each company’s top brass was scared. In February 2000 we met on neutral ground at a restaurant on University Avenue located equidistant from their respective offices. We agreed to a 50-50 merger in
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early March. We combined, raised a bunch of money before the crash, and had years to build the business.
E. If You Can, Run Away. If Not, Fight and Win.
If you do have to fight a war, you must use overwhelming force and end it quickly. If you take seriously the idea that you must choose your enemies well since fighting them will make you like them, you want wars to be short. Let that process go on too long and you’ll lose yourself in it. So your strategy must be shock and awe—real shock and awe, not the fake kind that gets you a 10-year war. You have to win very quickly. But since very often it’s not possible to ensure a quick victory, your primary job is to figure out ways not to have war happen at all.
Let’s return to the 2 x 2 matrix from class five. On one axis you have athletes and nerds. Athletes are zero sum competitors, and nerds are non zero sum collaborators. On the other axis you have war/competition and peace/monopoly capitalism. We said that a company should optimize for peace and have some combination of both nerds and athletes—nerds to build the business, and athletes to fight (and win) if and when you’re unfortunate enough to have to compete.
The nerds-athletes hybrid model allows you to handle external competition. But it also creates an internal problem; if you have to have at least a few very competitive people on your team, how do you avoid conflicts within the company? Very often these conflicts are the most disastrous. Most companies are killed by internal infighting, even though it may not seem like it. It’s like an autoimmune disease. The proximate cause may be something external. But the ultimate cause of destruction is internal.
When we overlay the noting of intracompany fighting on the Marx vs. Shakespeare framework, we get two theories as to why colleagues fight. Marx would say people fight internally because they wildly disagree about what the company should do, or what direction it should take. The Shakespeare version is precisely the opposite; people fight because they both want to do the same thing.
The Shakespearean dynamic is almost invariably correct. The standard version is that two or more people each want the same role in a company. People who want very different things don’t fight in well-functioning companies; they just go and own those different things. It’s people who want to do the same things who actually have something to fight about.
At PayPal, the center of conflicts tended to be the product team. David Sacks wanted the product to be a single seamless whole. That was a good approach, but a less good byproduct was that it was a recipe for product people overlapping with everyone else in the company. Product couldn’t do anything without infringing on someone else’s turf. A big part of the CEO job is stopping these kind conflicts from happening in first place. You must keep prospective combatants apart. The best way to do this is by making clear definitions and precise roles. Startups, of course, are necessarily flexible and dynamic. Roles change. You can’t just avoid internal war by siloing people away like you can in big companies. In that sense, startups are more dangerous.
PayPal solved this problem by completely redrawing the org chart every three months. By repositioning people as appropriate, conflicts could be avoided before they ever really started. The craziest specific policy that was enacted was that people were evaluated on just one single criterion. Each person had just one thing that he or she was supposed to do. And every person’s thing was different from everyone else’s. This wasn’t very popular, at least initially. People were more ambitious. They wanted to do three or four things. But instead they got to do one thing only. It proved to be a
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very good way to focus people on getting stuff done instead of focusing on one another. Focusing on your enemy is almost always the wrong thing to do.
III. Conversation with Reid Hoffman
Peter Thiel: How can people fall into the trap of fighting wars? Is there a strategy to avoid fighting altogether?
Reid Hoffman: To not get mired down is key. You must think very deliberately about your strategy and competition to do that. One element that I’d add to your comments is the very basic idea that part of reason we have competition is that people want resources. People need things, and very often they’re willing to fight to get them. Competition for resources can be natural, and not just a psychological construction.
Peter Thiel: The counter to that is that something like prestige, for example, isn’t any kind of scarce natural resource.
Reid Hoffman: But people value it a lot—so much so that they fight over it. As CEO, people routinely come and pitch you for new titles, with no substantive change in their responsibilities.
Peter Thiel: That’s true—there was a relentless escalating title phenomenon at PayPal. We had lots of VPs. Then lots of Senior VPs. In hindsight it probably wasn’t that stable. But we were acquired before anything really blew up.
Reid Hoffman: Back to your question—it’s so important for early stage companies to avoid competition because you can’t isolate it to one front. Competition affects you on the customer front, hiring front, and financing and BD fronts—on all of them. When you’re 1 of n, your job becomes much harder, and it’s hard enough already. A great founding strategy is thus contrarian and right. That ensures that, at least for an important initial time, no one is coming after you. Eventually peoplewill come after you, if you’re onto something good. That might explain the Microsoft-Google competition you highlighted as sort of bizarre. Each has its great revenue model—its gold mine. At the start they were quite distinct. These respective gold mines allowed them to finance attacks on the other guy’s gold mine. If you can disrupt the other’s mine, you can take it over in the long run.
Peter Thiel: The criticism of that justification for competition is that the long run never really arrives as planned. Microsoft is losing a billion dollars per year on Bing.
Reid Hoffman: It’s possible that this playbook doesn’t work as well for tech companies as it used to. Search is an ongoing battle. But there are other successes. Look at Xbox. Microsoft’s decision to compete worked there. When Sony stumbled a bit, Xbox became a really viable franchise. Microsoft’s strategy is to own all of the valuable software on desks and other rooms, not just isolated products. So, with the Xbox, it’s made some headway in the living room. It’s complicated. But what drives the competition is the sense that there’s a lot of gold over there. So if you’re a startup and you find some gold, you can count on competition from all directions, including previously unlikely places.
Some competition is easier and that gives you more leeway. Banks, for instance, are very bad innovators, which turned out great for PayPal. In more difficult competitive scenarios, you really have to have an edge to win. Difficult competition with no edge makes for a war of attrition. People may get sucked in to ruthlessly competitive situations by the allure of the pot of gold to be had. It’s like rushing the Cornucopia in the Hunger Games instead of running away into the forest. Sometimes people justify this by rationalizing that “if we don’t fight it here, we’d just have to fight somewhere else.”
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Sometimes that’s a good argument, sometimes it’s not. But usually there’s a pot of gold that’s being chased.
Peter Thiel: But people are very bad at assessing probability. It’s irrational spend all your gold trying to get the other guys’ gold if you probably won’t succeed. I maintain that there is a crazy psychological aspect to it. It isn’t just rational calculation because tremendous effort is spent on things that, probabilistically, aren’t lucrative at all.
Reid Hoffman: It’s true that mimesis is a lot easier than invention. Most people are pretty bad at inventing new things. iPhones with a blue cover. Triangular card readers instead of square ones. That’s not invention. If you can actually invent good things, that’s the viable strategy. But most people can’t. So we see a lot of competition.
A side note on invention and innovation: when you have an idea for a startup„ consult your network. Ask people what they think. Don’t look for flattery. If most people get it right away and call you a genius, you’re probably screwed; it likely means your idea is obvious and won’t work. What you’re looking for is a genuinely thoughtful response. Fully two thirds of people in my network thought LinkedIn was stupid idea. These are very smart people. They understood that there is zero value in a social network until you have a million users on it. But they didn’t know the secret plans that led us to believe we could pull it off. And getting to the first million users took us about 460 days. Now we grow at over 2 users per second.
Peter Thiel: The very strategic focus on something no one was thinking of—business social networking—is one of the most impressive things about the LinkedIn. 460 days is moderately fast but not insanely fast. PayPal got to a million users in 4 to 5 months… [pause, laughter]. But while you always want to grow fast, you want to be able to grow more slowly. If you focus and target a non-competitive space, 460 days is plenty of time. You get more time to establish a great lead and then execute and maintain it.
Reid Hoffman: It’s obviously important to target an area that no one’s playing in. The interesting question is what do you do once you’re on everyone’s radar. You have to have some sort of competitive edge. Is it speed? Momentum? Network effects? It could be a lot of things. But you must think through it, because people will come after you as soon as you uncover value. You’ve found your gold mine; now you must defend it. It’s always easier for people to come take your gold than to find gold anew. You have to have a plan to dominate your market in the long run.
Social was big well before LinkedIn. It was something of a dogpile of competition for Linkedin in the early days. But the other companies who were focused on business social wanted to sell to enterprises. Enterprises, they thought, would build the networks. LinkedIn, of course, wanted to focus on individuals and stayed true to the vision. It’s scarily easy to lose sight of the big vision. People are always tracking down the CEO and telling doomsday stories about how we’re all dead if we don’t change something to address competitor x. If you start to focus on doing everything, you’re just going to war without any clear vision, and you’ll fail.
There’s also a version of this that applies to individuals. People look for individual gold—things like good career moves, prestige, status. Having multiple people competing for those things, is, as you said, a recipe for internal challenges.
At LinkedIn we addressed this by structuring precise roles, much like PayPal did. But unlike PayPal, we did this for teams, not individuals. Teams get mandates. A team is responsible for growth, mobile, or certain parts of platform. Sometimes the mandates overlap. Occasional conflict seems inevitable.
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But it’s kept manageable. The benefit is each team functions like a startup itself. There are clear goals and metrics. Every so often, you have to fix things and refactor things. That’s ok. Groups drift and different prioritizations can conflict. It’s worth it. In fact it’s probably a very bad sign if you don’t have to frequently refactor how stuff works to make it effective.
What’s key, as PayPal discovered, is that you give your people a path to success. Maybe they won’t fully agree with it. They don’t have to. There just has to be some reasonable buy-in. That is the best way to avoid internal conflict. The other route—just going full throttle on the us-vs-them dynamic—is very motivational too. But it has all the costs of war that theater that may not stay theater forever. It may defocus your long-term efforts, and, as Peter described, you get engineers designing bombs.
Peter Thiel: External war is a very effective way to forge internal peace. In early March of 2000, PayPal had $15M in bank. It was on track to run of money in 6 weeks. CFO Roelef Botha thought that this was quite alarming. He—quite sanely—shared his deep concern with everybody. But the engineering team wasn’t interested. The only thing that mattered was beating X.com. It didn’t matter if you went broke in the process.
Reid Hoffman: So you can’t just go into full war mode. You have to strategize as to how to avoid competition and external competition. That will take you far. But competition is inevitable. Even if you build good thing with network effects, people aren’t always smart. They’ll try to compete with you anyways, even if that’s a bad idea. So you have to strategize about how to deal with the forces of competition, too, both internally within the company and externally with other companies.
In the tech space, the landscape changes based on what technologies become available. Oracle and Siebel dominated enterprise software because they dominated the sales relationships. And then along comes the cloud. Now you have entirely new kind of products available for the same kind of functions. We’ve seen really massive companies being built in the last decade. SalesForce is the archetypical one that’s succeeded and gone public.
Peter Thiel: And SalesForce was funded by Larry Ellison to compete with Siebel on CRM. Then it succeeded and grew and now, of course, Oracle hates SalesForce.
Reid Hoffman: This plays into how the inevitability of competition. In tech, if you’re not continually thinking about catching the next curve, one of the next curves will get you. Yahoo owned the front end of the Internet in 2000. It had the perfect strategy. But it did not adapt; it failed at social and other trends; that didn’t go so perfectly. Just over a decade later, having missed some very key tech curves, it’s in a very different position.
Peter Thiel: Last class we talked about secrets. You want to have a secret plan. Probably not enough companies have a plan, let alone a secret plan. This gets complicated, because people’s secrets are secretive and so we might not know about them. But, with that caveat, what companies do you think have the best secret plans?
Reid Hoffman: Mozilla seems to have good plans. They understand the move from desktop to mobile. Different from classic companies, they’re not trying to build a closed franchise, but rather trying to keep open ecosystem for innovation. Quora has interesting plans about connecting people to knowledge. Dropbox is interesting, and probably has big plans that take it far beyond just being a hard drive in the cloud. The bottom line is if you don’t have a very distinctive, big idea—a prospective gold mine—you have nothing. Not all ideas work. But you have to have one.
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Peter Thiel: A good intermediate lesson in chess is that even a bad plan is better than no plan at all. Having no plan is chaotic. And yet people default to no plan. When I taught at the law school last year, I’d ask law students what they wanted to do with their life. Most had no idea. Few wanted to become law firm partners. Even fewer thought that they would actually become partner if they tried. Most were going to go work at law firms for a few years and “figure it out.”
That’s basically chaos. You should either like what you’re doing, believe it’s a direct plan to something else, or believe it’s an indirect plan to something else. Just adding a resume lines every two years thinking it will buy you options is bad. If you’re climbing a hill, you should take a step back and look at the hill every once in awhile. If you just keep marching and never evaluating, you may get old and finally realize that it was a really low hill.
One reason people may default to not thinking about the future is that they’re uncomfortable being different. It is unfashionable to plan things out and to believe that you have an edge you can use to make things happen.
Reid Hoffman: People also underestimate how much of an edge you need. It really should be a compounding competitive edge. If your technology is a little better or you execute a little better, you’re screwed. Marginal improvements are rarely decisive. You should plan to be 10x better.
Peter Thiel: I recall being pitched on some anti-spam technology. It was billed as being better than all other anti-spam tech out there, which is good since there are probably 100 companies in that space. The problem was that it took a half hour to explain why it was allegedly better. It wasn’t as concise as: “We are 10x better/cheaper/faster/more effective.” Any improvement was probably quite marginal. Customers won’t give you a half hour to convince them your spam software is better. A half hour pitch on anti-spam is just more spam.
Shifting gears a bit: is there way to stay head of curve before it eats you?
Reid Hoffman: We ask prospective hires at Greylock how they would invest $100k between iOS and android, if they had to make bets about the future. The only wrong answer is 50-50. That is the only answer that’s basically equivalent to “I don’t know.” Think through it and take a position. You’ll develop insight. That insight—or more specifically the ability to acquire it—is what will keep you ahead of the curve.
Another huge thing to emphasize is the importance of your network. Get to know smart people. Talk to them. Stay current on what’s happening. People see things that other people don’t. If you try to analyze it all yourself, you miss things. Talk with people about what’s going on. Theoretically, startups should be distributed evenly throughout all countries and all states. They’re not. Silicon Valley is the heart of it all. Why? The network. People are talking to teach other.
Peter Thiel: It’s a trade-off. You can’t just go and tell everybody your secret plan. You have to guard your information, and other people guard theirs. At the same time, you need to talk and be somewhat open to get all the benefits you mentioned from the network. It can be a very fine line.
Question: Do people overestimate competition? What about the argument that you shouldn’t do x because Google could just do it?
Reid Hoffman: When I evaluate startups, that “Google can do it” isn’t really a valid criticism unless the startup is a search engine.
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Google has tons of smart people. They can, in all likelihood, do exactly what you’re doing. But so what? That doesn’t mean you can’t do it. Google probably isn’t interested. They are focused on just a few things, really. Ask yourself: what’s more likely: nuclear war, or this company focused on competing with me as one if its top 3 objectives? If the answer is nuclear war, then that particular potential competitor is irrelevant.
Peter Thiel: Everyone develops an internal story about how their product is different. From outside perspective they often look pretty similar. So how can you tell whether what you’re doing is the same or whether it’s importantly different?
Reid Hoffman: You can’t systematize this. It’s a problem that requires human intelligence and judgment. You consider the important factors. You make a bet. Sometimes you’re right, sometimes you’re wrong. If you think your strategy will always be right, you’ve got it wrong.
Question from audience: Can you give some examples on how one can successfully get away from competition?
Peter Thiel: PayPal had a feature for feature competition with X.com that lasted intense 8 weeks. The best way to stop or avoid the war was to merge. The hard part was deescalating things post-merger. It was hard to immediately shift to being great friends afterwards. There is always a way in which things get remembered much more positively when everything works out in long run. Conversely, rivalries tend to get exaggerated ex-post when things don’t go so well.
Reid Hoffman: There was some pretty intense infighting at PayPal. One of the things that Peter has said is key: either don’t fight, or fight and win. But you should be skeptical that you will definitely win if you end up fighting.
PayPal’s biggest traction was with eBay. But eBay had an internal product called BillPoint. PayPal, as the sort of 3rd party disrupter, was at a serious disadvantage there. eBay was the only gold mine that existed. We had to win. It was time to leverage the athletes’ competitive talent. One decisive move in the war was focusing on e-mail. The real platform for auctions wasn’t the eBay website, as most people assumed. It was e-mail. People would receive emails when they won auctions. eBay knew this but didn’t understand its importance. PayPal, on the other hand, got it and optimized accordingly. Very often PayPal would notify people that they won the auction before eBay did! People would then use PayPal to pay, which of course was the goal.
It was much harder to compete against the Buy It Now feature. There, eBay had greater success roping people into paying with BillPoint. It was harder to get in front of people if they were just buying and paying for something right away on the website.
The takeaway advice is to always keep questioning the battle. Never get complacent. When you’re in battle, only the paranoid survive.
Question from audience: What do you think about the competition between Silicon Valley and New York? Reid, Mayor Bloomberg has argued that New York will become the dominant tech scene because the best people want to live there. He quoted you as saying “I don’t like all that culture stuff” and suggested that that view is “narrow.”
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Reid Hoffman: I’m friends with Mayor Bloomberg, but I’ll return fire.
So Bloomberg is trying to make a tech-friendly New York that will compete and beat Silicon Valley. That’s great. We wish him the best of luck. More great technology innovation hubs within the US are great for us.
But, to compete, they’ll certainly need the luck. Silicon Valley has an enormous network effect. Tech is what we do. This is the game we play. If there’s anywhere in the world to go for tech, it’s here. People move here just to be a part of the tech scene.
The New York tech world has to compete for its technical people. Many of the best tech people go to hedge funds or move to Silicon Valley.
One of ways to understand effect of competition is companies that emerge here are competitive globally because crucible is so high. The best people go into tech here. And they have a single-minded focus about their work.
All the culture of NYC doesn’t matter positively or negatively, relative to succeeding at the technology innovation game. So it’s a wonderful place to live. Fine. Mayor Bloomberg, you’re very welcome to the people who want to live in New York for its culture and theater and operas. Personally, I love to visit. The people that we want are the ones who want to win this game first and foremost, and who don’t care terribly much about missing Broadway shows.
Question from audience: Isn’t culture important in a sense, though? Silicon Valley engineers aren’t social. So how can they make social games?
Reid Hoffman: It’s not that all great companies come from Silicon Valley. I was simply saying that it is extremely difficult to unseat Silicon Valley as the best place for tech companies. But certainly not every great tech company needs to be a product of the Valley. Indeed, that’s impossible. Groupon, for instance, couldn’t be created here. They need 3,000 salespeople. That is not the game that Silicon Valley specializes in. It worked very well in Chicago. So Silicon Valley learns from Groupon here; as did I. There are certainly other playbooks.
But the Silicon Valley playbook is a great, and perhaps the best. If you have to make a portfolio bet on technology or a portfolio bet on sales processes, you should take the tech portfolio every time. New York is the 2nd most interesting place for consumer internet. It’s just very unlikely to displace Silicon Valley as #1.
Peter Thiel: My take is that New York is a pretty distant second. There are some very cool companies coming out of New York. But one anti-New York perspective is that the media industry plays much bigger role there than it does here. That induces a lot of competition because people focus on each other, and not on creating things. New York is structurally more competitive in all sorts of ways. People literally live on top of each other. They’re trained to fight and enjoy fighting. Some of this is motivational. Maybe some of it is good for ideation. But it directs people into fighting the wrong battles. We will continue to see the more original, great companies coming out of Silicon Valley.
Reid, final question. What advice would you give young entrepreneurs?
Reid Hoffman: You can learn a lot from companies that succeed. Companies have benefited greatly from Facebook’s Open Graph. Ignoring that instead of learning it, for instance, could be catastrophic
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for you, depending on what you’re trying to do. But of course learning everything before you do anything is bad too.
The network is key. This is a large part of how you learn new things. Connect with smart people. Talk. What have you seen in last couple of months? What do you know? It’s not a go-and-read-everything strategy. You’d die before you could pull that off. Just exchange ideas with the smart people in your network. Not constantly, of course—you need to do work too—but in a focused way. Take what you learn and update your strategy if it’s warranted. And then keep executing on it.
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People always stay the same -‐ Andrew Chen
http://andrewchenblog.com/2007/10/31/technology-‐always-‐changes-‐but-‐people-‐always-‐stay-‐the-‐same/
Technology always changes, but people always stay the same
A couple friends were in town recently, and I went with them to the Mechanical Museum at Fisherman’s Wharf, where they have lots of different old mechanical arcade machines. The oldest one was from the 1920s, and the average period looked to be 1950s or so.
It reminded me that while technology advances, human nature stays the same.
Love calculators First up, we have a bunch of machines that are sort of like the "How good of a lover are you?" quizzes in trashy women’s magazines. In general, you stick in a quarter, put your hand on the pad (or some other interactive action), and then it gives you a score.
Here are pictures of the machines I took on my iPhone – click to see a bigger version:
The main emotions that are being elicited in these cases are some combination of:
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narcissism
curiosity
competition
Extra points to the first (left-most) machine for the tagline:
"What do your friends call you behind your back?"
Is this really so different than the various quiz, comparison, and other applications on Facebook? And take a look at a site like this: Best Love Calculator. It even evokes the look and feel of these machines.
Telling the future Also, we have machines like the ones below, which are focused on telling the future. The first machine is the most fun – you put your hand into the machines mouth! The second and third ones are both palm reading.
Here are the pictures:
Of course, horoscopes are still big these days, and people still inexplicably talk about their "signs" – I would ask "who knows why" but the answer to that is simply "because people are people." I’d boil the emotions down to:
narcissism
curiosity
insecurity?
In the modern world, the entire clairvoyance thing is still around, via numerous websites that you find when you google for "psychic". Here’s a good example of what you get when you click on one of those ads. And don’t even get me started about John Edward’s Crossing Over and psychic shows like that.
Jackass and YouTube, oldschool style These next machines are probably the most dated (and hilarious) – basically when you put in a quarter, you’re then able to watch some "kinky" (defined by the 50s). The first machine was the "French Execution," which played some music and you got to watch a guillotine chop off a miniature doll’s head. The second machine had you grabbing a hand-crank to operate a flip book with pretty boring material in it.
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Here are the images:
This is obviously Jackass and the YouTube of the 1950s.
Emotionally, this is catering towards:
novelty
scarcity
curiosity
Of course, the problem with these machines (unlike the other ones) is that after you’ve seen it, it doesn’t seem so special anymore, and you’re unlikely to watch it again. And of course, in a modern society where this type of stuff is available at a much more, ahem, liberal standard, it’s really boring. These were fun mainly because they show how dated the place is.
Simulation games While Will Wright is often heralded for creating the Sim games for the PC, you can look further back than that to see simulation games. In these machines, we see one which is a helicopter machine and then a crane, both of which are operated using a set of simplistic controls.
Here are the images:
Interestingly enough, both simulation games were "directed" rather than undirected. They weren’t pure sandbox games (like SecondLife) but rather had a goal structure for the user. This is something that Erik Bethke (of GoPets) and I have talked about in the past.
Rather than just letting the user fly the helicopter, instead there were lights around the area where you were supposed to hover the chopper. The longer you hover, the more points you score. The lights rotate around the area, and you have to move the chopper there accordingly. The construction crane does the same thing, where you are supposed to grab as much dirt as you can in as little time as possible.
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The emotions here are quite different than the other ones:
aspiration
fantasy
competition
And of course, it’s obvious that the modern versions of this range from things like The Sims toMMOs to any other game that is about role-playing.
Differences with regular websites and Facebook apps Interestingly enough, the machines above are actually quite different than what you would want to build for a modern consumer product.
The reason is that these machines are incented to:
Have a great hook to draw a user in
Make them give you a quarter
Provide some value, but focused less on retention and more on pumping in more quarters
This is misaligned from websites, which share the attribute of drawing users in, but are focused around retention and constant usage, because that’s what drives advertising revenue.
Similarly, Facebook apps have a different incentive structure:
Have a great hook to draw a user in
ALSO, have a great hook to get the user to pass it along to their friends
Provide some value, but mostly focused around virality
Make the structure around frequent usage with continuing value
That’s why things like Magic 8 Balls and Fortune cookies and such are gimmicky products that might drive acquisition, but have problems with overall retention and active usage.
Conclusion I often find that studying older historical products like this to be really fascinating. I think you can learn a lot about human psychology by looking at things like:
card games
physical architecture
con artists
old advertisements
public speaking
magic and psychics
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etc.
While many things are not directly applicable to the world, many of these have underlying themes and emotions that might be useful for modern entrepreneurs.
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25 reasons users STOP using your product – Andrew Chen
http://andrewchenblog.com/2008/06/29/25-‐reasons-‐users-‐stop-‐using-‐your-‐product-‐an-‐analysis-‐of-‐customer-‐lifecycle/
25 reasons users STOP using your product: An analysis of customer lifecycle
Churn from a customer lifecycle perspective As much as I blog about viral marketing, it can’t be avoided that having healthy product retention is an equally (and incredibly) important part about having a successful product. Thus, in addition to talking about the issues around user acquisition, a similar discussion must be had around user churn.
In the customer lifecycle perspective, you look at the product from the perspective of a user that has a series of experiences starting from newbie and going into an advanced role. In addition to looking at the success cases, looking at the failure cases is informative too – you want to analyze your product for potential exit points and relate them to both quantitative and qualitative measures. More on the customer lifecycle concept here, by Josh Kopelman at First Round Capital.
Anyway, here’s a good example of this from the games industry: At the Austin Game Developers conference last year, there was a great presentation on why players leave their MMOGs from Damion Schubert (who also writes a mean blog here). There’s a very convenient writeup of his talk at Massively, which includes the following list:
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I’d encourage reading it in full. Obviously, the challenges that face more web-like products are very different, yet the same approach can be used.
Customer lifecycle within a social product I imagine that many in the readership are working on social products – for any product in this space, you often have a number of fuzzy stages that a user can move through during their lifecycle. This may include stages like:
First experience
Soloing and single user value
Encountering some friends(?)
Hitting critical mass for social
Becoming a site elder
Obviously every product is different, but the rough idea should hold for every social product out there. Early on, the initial experience is all about whether or not the user sees value in the product, and whether or not it “looks okay.” Then, oftentimes the users won’t have enough friends to make the site useful, in which case they fall back on a solo experience. Once they start hitting some other folks on the site, and making friends, then if done correctly, the site will hit critical mass and things will be sticky. And finally, in some products, some % of these users will turn into mods or admins or otherwise be elders within the product.
25 exit points Now let’s look at all the different reasons why people might leave at any point – and obviously, the retention gets stickier and stickier in each stage, so perhaps reasons like “the site is too addictive!” become less effective
Anyway, there they are:
First experience
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“I don’t get what this site is about”
“This site is not for people like me”
“The colors/design/icons look weird”
“I already use X for that”
“I don’t want to register”
Soloing and single user value
“I don’t have time to get involved in a site like this”
“I’m lonely, not enough happens”
“I forgot my password”
“I don’t know how to talk or meet people”
“I’ll just check on this account every couple months in case something happens”
Encountering some friends(?)
“People on this site are mean”
“People I don’t know keep messaging me, WTF?”
“I want my friends to use this, but none of them are sticking”
“I’m getting too much mail from this site”
“I only have 3 friends, this site is still boring”
Hitting critical mass for social
“This site takes up too much of my time”
“Too many people are friending me that I only sorta know”
“People are stalking me based on my pics and events!”
“This Top Friends thing causes too much drama”
“I’m getting flooded by e-mails for everything that anybody does”
Becoming a site elder
“The guys who run this site aren’t building feature X that we really need!”
“The guys who run this site build feature Y that’s going to destroy this site!”
“I’m doing a lot of work but I’m not getting anything for it”
“I’m bored because there’s nothing left to do”
“Newbies are fun to pick on ” (wait, maybe that’s a benefit!)
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Obviously, this is just a quick brainstorm of a list, but the point is, the reasons why people churn is often very different depending on their lifecycle. And some of the best things you can do for your product, in terms of retention, are things that are very positive for newbies, but might have side-effects elsewhere. You always want to balance each of these things off, depending on your product and business goals.
Am I missing anything else obvious? Comments and suggestions are always welcome!
10 things about people – Cindy Alvarez
http://www.cindyalvarez.com/roundups/10-‐things-‐ive-‐learned
10 Things I’ve Learned
September 8th, 2011
Whatever people say they will pay for it is wrong.
If someone says, “I wouldn’t personally use it, but I bet other people would”, no one will use it.
The answer to any question that starts with “do you want” or “are you concerned about” will always be “yes” .
If someone says “maybe it’s just me, but…” — it’s not. Especially if it pertains to your product being hard to use or your marketing being unclear.
If you want to charge money for your product, don’t talk to people who try to get everything for free. (They might eventually be customers, but not until your product goes more mainstream or becomes a defacto standard.)
What features your customers ask for is never as interesting as why they want them.
Almost anyone will do almost anything for you as long as: the request is short, you are enthusiastic, they don’t have to make any decisions that require more than 1 minute of thought.
The two driving forces of purchase and usage behavior are apathy and the desire to avoid looking/feeling stupid.
You can’t build a good product if you don’t genuinely like the people who’ll be using it. You don’t have to be like them, but you have to like them.
Whenever you start thinking “this is a lot more complicated than I originally thought”, you should immediately stop and find a sounding board. You are probably either wrong or overthinking things, and an external brain will see it much faster than you.
Why fear is a marketers best friend – KISSmetrics
http://blog.kissmetrics.com/fear-‐marketing/
Ambulances, Car Crashes, and Why Fear Will Always Be a Marketer’s Best Weapon
Ever notice how everyone turns to look when an ambulance goes by?
Or how traffic seems to stop whenever there’s a crash on the side of the road?
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Something scary is happening, and people can’t help wanting to see what’s going on. It’s a basic aspect of human nature, and marketers use it to get you to pay attention.
Just look at the news. It seems like every night the TV news features a story about a new product that could kill you, a pending storm, a crime wave, or yet another political demagogue.
Why?
Because fear sells.
If they promise to reveal information about the newest product recalls or health scare, more viewers will tune in. People want to know what this new threat is and will go out of their way to make sure they’re informed.
More fear equals more viewers, and more viewers equals more advertising dollars. The equation is as simple as that.
Lots of people hate the constant fear mongering, sure, but there’s no denying that it works. And smart marketers in all areas of business look for ways to include it in their marketing.
Here’s why:
Fear Influences Every Purchase Decision
It doesn’t matter what product you’re selling. At least part of every purchase decision consumers make is based on fear.
For some products, it’s obvious. People buy smoke detectors because they’re afraid of fire. They buy burglar alarms because they’re afraid of being robbed. They buy cars with air bags and high safety ratings because they’re afraid of being injured in a car accident.
But what about buying something like… oh… children’s toys?
Well, let’s picture the typical scenario.
It’s three weeks before Christmas, and your six-year-old gives you his Christmas list to send to Santa Claus. At the top of the list is a Nintendo Wii. He wants one more than anything else in the world, and he begs Santa to give him one.
At first, you’re resistant to the idea. You’re thinking about buying him a new set of encyclopedias, a NetBook, or karate lessons — you know, something he can use.
But then you imagine Christmas morning. His face filled with joy, he races down the stairs and goes straight to the box that looks like a Nintendo Wii. He tears the wrapping paper off, his eyes glowing with anticipation, and finds… a brand-new set of encyclopedias.
The anticipation turns to horror. His eyes fill with tears. He won’t come out of his bedroom for the rest of the day, and that night, he asks you if Santa Claus is real. You tell him no, and his disappointment turns to anger as he realizes you’re the one who let him down. Putting him to bed, you realize nothing will ever be the same between you again, and you hate yourself for not having bought that Nintendo Wii.
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Or so you imagine, and it terrifies you so deeply that you rush to the mall and stand in line with 500 other people to buy one.
The truth: fear can sell anything. You just have to know how to use it.
A Simple but Powerful Question
To figure out what the fear motivation is for virtually any product, look at what consumers want when they purchase it, and then ask a simple but powerful question:
What’s the worst that could happen?
For example, when a woman buys designer clothes, she wants to look good, she wants quality, and she likely wants to impress people. Probably no big deal if she doesn’t buy it, right? But what’s the worst that could happen?
Well, she could miss out on a promotion at work because her boss doesn’t think she looks like a leader. She could meet the love of her life wearing jeans and a sweatshirt, and he could get sidetracked by the model wearing designer clothes, forgetting about her forever. Or, it could even be something simple like her friends would talk behind her back, wondering why she can’t find the money to find better clothes, and she could overhear them and feel embarrassed.
All very strong, fear-based motivations.
And here’s the question: what’s more likely to get her to take the clothes off the rack: the desire to look nice or the fear of getting passed over at work, forgotten by her true love, and embarrassed by her friends?
Yeah. Not even close.
Consumers Want to Purchase Reassurance
When a consumer buys something, they want reassurance that the thing they’re buying is going to address the fears they have.
They want to know that buying the automatic backup program for their computer means they don’t have to worry about losing their files.
They want to know that buying that new book that "everyone is talking about" will mean they’re not going to be left out of the conversation at the next cocktail party.
They want to know that buying a AAA membership will mean they’ll never be stranded, that there will be a pickup truck and a friendly repair man to ready to help them, whenever and wherever they break down.
It’s all about reassurance. When devising your marketing message, figure out what your consumers are afraid of, and then address how your product can fix that problem.
Reassure them that, with your product, they have nothing to be afraid of.
Can’t You Take It Too Far?
Sure, just look at political campaign ads. Coming to a town near you this fall, opponents will be beating each other into oblivion, all in a cutthroat game to win (or protect) a congressional seat.
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And it’ll work.
Politicians have long known that scaring voters is an almost sure-fire way of getting votes. Usually, whoever paints the nastiest, most horrifying picture of the other guy wins. It doesn’t even matter if it’s true. People pick the lesser of two evils, and the winner gets a cushy job in Washington.
But there’s a problem: we end up hating both of them.
You don’t have to be a political buff to know pretty much everyone is dissatisfied with all politicians. According to a poll by Gallup last year, Senators ranked just under car salesmen in terms of how trustworthy they are. There are a lot of reasons why, but one of them is we’re sick and tired of all the fear mongering.
So how do you avoid crossing over the line?
I know of only one way:
Tell the Truth
If you tell people the truth, and it’s scary, that’s fine. They’ll respect you for it.
Take FedEx advertising campaigns, for instance. With slogans like, "Absolutely, Positively Overnight," "Be Absolutely Sure," and "Relax, it’s FedEx," they’re playing on your fear of your package not arriving on time or at all.
And it works because it’s true: delayed and lost shipments really are a problem. No, not nearly as much as they were 30 years ago, but sometimes you want to "be absolutely sure," and in those cases, it’s worth paying FedEx or one of its competitors.
Other campaigns though are offensive, or worse, laughable. Instead of frightening teenagers from taking drugs, the infamous "This Is Your Brain on Drugs" was just a big joke. Everyone knew it was an exaggeration, and so it lost credibility.
The lesson?
Tell the truth.
Don’t distort or invent facts, simply to frighten your customers. Fear-based marketing is at its most powerful when it is most real. Find a threat your customers are genuinely afraid of, and then use it to motivate them to act.
It’s a thin line, yes, but it’s the game we play.
You don’t want to end up on the wrong side, now do you?
What jobs are users hiring your product to perform – Chris Dixon
http://cdixon.org/2011/12/21/whats-‐the-‐job-‐users-‐hire-‐your-‐product-‐to-‐do/
December 21, 2011
What jobs are users hiring your product to perform?
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One of Clay Christensen’s favorite concepts is that instead of dividing your customers into segments and asking which features each segment would like, you should think about what “job” the customers are “hiring” you product to perform. Here is an example:
A fast-food restaurant chain wanted to improve its milkshake sales. The company started by segmenting its market both by product (milkshakes) and by demographics (a marketer’s profile of a typical milkshake drinker). Next, the marketing department asked people who fit the demographic to list the characteristics of an ideal milkshake (thick, thin, chunky, smooth, fruity, chocolaty, etc.). The would-be customers answered as honestly as they could, and the company responded to the feedback. But alas, milkshake sales did not improve.
The company then enlisted the help of one of Christensen’s fellow researchers, who approached the situation by trying to deduce the “job” that customers were “hiring” a milkshake to do. First, he spent a full day in one of the chain’s restaurants, carefully documenting who was buying milkshakes, when they bought them, and whether they drank them on the premises. He discovered that 40 percent of the milkshakes were purchased first thing in the morning, by commuters who ordered them to go.
The next morning, he returned to the restaurant and interviewed customers who left with milkshake in hand, asking them what job they had hired the milkshake to do. “Most of them, it turned out, bought [the milkshake] to do a similar job,” he writes. “They faced a long, boring commute and needed something to keep that extra hand busy and to make the commute more interesting. They weren’t yet hungry, but knew that they’d be hungry by 10 a.m.; they wanted to consume something now that would stave off hunger until noon. And they faced constraints: They were in a hurry, they were wearing work clothes, and they had (at most) one free hand.”
The milkshake was hired in lieu of a bagel or doughnut because it was relatively tidy and appetite-quenching, and because trying to suck a thick liquid through a thin straw gave customers something to do with their boring commute. Understanding the job to be done, the company could then respond by creating a morning milkshake that was even thicker (to last through a long commute) and more interesting (with chunks of fruit) than its predecessor. The chain could also respond to a separate job that customers needed milkshakes to do: serve as a special treat for young children—without making the parents wait a half hour as the children tried to work the milkshake through a straw. In that case, a different, thinner milkshake was in order.
There are at least three obvious ways to apply this concept: 1) when searching for startup ideas, think about jobs people want done that they can’t currently get done, 2) when thinking about how to fix or improve your product, understand why existing users are hiring your product (or should be hiring your product) and try to improve those experiences, 3) when analyzing markets, segment companies by the jobs they are hired for. Sometimes products that might appear similar (e.g. two photo sharing apps) are actually hired for very different purposes, and are therefore misclassified as competitors.
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Viral growth
Viral growth
Viral branding versus viral action -‐ Andrew Chen
http://andrewchenblog.com/2007/06/07/is-‐your-‐site-‐really-‐viral-‐viral-‐branding-‐versus-‐viral-‐action/ Is your site really viral? Viral Branding versus Viral Action
The PayPal alumi’s viral successes Just came on this article in the YC News front page, called A Gold-Plated VC’s Billion-Dollar Secrets. I’d encourage you to read it, even though the title is completely at odds with the guy who they’re covering. (Think humble, not gold-plated!)
Anyway, there’s a great analysis about viral marketing and the fact there’s actually several variations of it these days. Broadly speaking, you have two categories:
Viral branding
Viral action
Let me explain the two categories below.
Viral branding Most people, when they talk about viral marketing, are in fact talking about viral branding. That’s the philosophy of:
Do something REALLY cool and people will tell all their friends.
In the article, they explain it like this:
"Many people think the word "viral" is interchangeable with "word of mouth"–implying that the product or service is so good that people are compelled to talk it up with their friends."
Here are some examples:
Subservient chicken
Virtual bartender
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Sith Sense
etc.
Another variation of this is the types of things people do on their blogs, where they try to write something genuine or interesting, or attention-whoring or controversial, and people pass it around to all their friends.
This is really great, and has its place. In fact, whole books have been written about it, likePurple Cow. In fact, books like Tipping Point are also really about it. So if you find yourself reading books about "breaking through the noise" and "identifying influencers" and other soft-skill marketing strategies, then you are reading about the viral branding industry. Another good way to benchmark this is how many of the examples are based on off-line word-of-mouth examples versus interactive media.
Viral action There’s another segment of viral marketing that is really about direct response marketing. That is, the entire focus of the PRODUCT (not marketing, but deep down into the product) is getting more people to use it. That means you are ultimately focused on one issue only:
Do something that’s REALLY easy to spread to other people
In this case, you are focused more on the mechanism of viral transmission than you are the content of what you are transmitting. For many products, this means you are making it highly efficient to take over their communications media to spread your message.
This is the quote from the article:
"Word of mouth is when I tell you to shop on Zappos because I think the service is great," explains Botha. "It becomes viral when you have to be ‘in the system’ to use it. For example I can post a video on YouTube but then you would need to go to the site in order to see it."
What are examples of this?
Plaxo taking over your Outlook and making it easy to spam 50 people at once
YouTube giving you the code to easily copy-and-paste videos to other sites
Slide asking for your social network credentials to make it easy to embed slideshows
In these cases, they are not simply depending on making something really cool to have you spread it. They are making it automatic, something built into the product rather than as a marketing afterthought.
Furthemore, you end up focusing more on metrics than in the branding case. You end up measuring and optimizing things like:
Sources of traffic
Landing page views
% of users that register
% of users that send out invites
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# of invites sent out, per user on average
% of invites delivered successfully
% of invites read by users
# of virally added users, per user on average
And of course, you’d want to A/B test the hell out of each step of the way.
The viral equation? Obviously, one cannot live without the other. It makes me think that there’s a very short checklist of things you need to do in order to make your site viral:
Make it EFFICIENT to spread your site
Give people an INCENTIVE to send it to their friends
Have a GREAT product that keeps people around spreading it through time
I think these are the 3 things you need to create an enduring viral site… just don’t get too sucked into the branding / soft-side of it without addressing the stuff around your product.
Viral loops -‐ Andrew Chen
http://andrewchenblog.com/2007/07/11/whats-‐your-‐viral-‐loop-‐understanding-‐the-‐engine-‐of-‐adoption/
What’s your viral loop? Understanding the engine of adoption
What’s a "viral loop?" A term I’ve heard tossed around frequently in real life, but not in the blogosphere is the term "viral loop." In fact, when googling it, I only saw one mention from Jia Shen, a very smart guy:
“The viral loop of people inviting each other to most social networks revolves around a user posting a widget to their page and having friends see their page.
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The viral loops for Facebook (there are multiple) revolve around the news feed, the mini-feed and the invite request. Not around people coming to your page and interacting with it”
Anyone who cares about this topic should read the entire VentureBeat article Q & A with RockYou — three hit apps on Facebook, and counting. And of course Jia is speaking at the upcoming Viral Marketing conference put on by Noah Kagan of CommunityNext.
To define the viral loop, you can think of it as:
The steps a user goes through between entering the site to inviting the next set of new users
Simple enough? Well, because this core loop is repeated so many times over generations and generations of users, getting it right is incredibly important.
What are some examples? Let’s look at some great examples of viral loops done right. Slide.com
First off, the user will likely hit a MySpace page with the widget in place
If they like it, they will click and hit a landing page on Slide.com
The next step is to suck down the pics from their accounts, arrange/decorate them
Now when you hit "Save", it takes you to a page where you can upload your widget simply by putting in a MySpace username and profile (without leaving the site)
Then it immediately shows up, but not before the "Post a bulletin for all my friends" checkbox, which is defaulted to checked, fires off a bulletin to all your friends
In the scheme of things, Slide is great because the total number of pages you spend between clicking onto Slide and telling your friends is 3 pages at most. That’s fantastic. And note the great use of AJAX which reduces the number of context-jarring pageview changes, but instead feels like a natural interaction. Honestly, I’m surprised that the entire set of pages isn’t AJAX to make the experience that much smoother.
Now let’s look at the viral classic, YouTube.
YouTube.com
Again, the first encounter will probably be a video embedded in a page
If they like it, at the end of the video there’s an embed code that can be directly copied
Or, if they don’t want to embed or e-mail that video, other videos are recommended at the end of the process so that people can try those, and potentially embed a different one
… and so on.
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Building your own viral loop Ultimately, viral loops are like induction proofs in that you are jumping to a steady state situation in which your viral widgets/emails/messages are already out there, and you are optimizing some set of steps that users have to jump through. Then, once you get this right, then you are figuring out how to build "on-ramps" into your viral loop so that you bootstrap the entire process. 1. What’s your viral media? The first (and last) choice you have to make is where people are going to receive an entryway into your viral loop. That might be e-mail, Facebook newsfeed, or blogs. The main factors to evaluate here are how difficult it is to integrate your entryway into their surface, and the response rate. The first factor, integration, is obviously important because a difficult integration means that perhaps fewer people will see your messages, or your messages will be filtered out altogether. The second factor, response rate, depends on how in-your-face your messages are (think Facebook invites versus e-mail spam), and how competitive the medium is. Obviously, viral marketing is about a compounding viral growth rate, and if your response rates are low, that will mean a huge difference in outcomes. 2. What’s your funnel design? The next choice to make is the design of your viral "funnel." First off, you want it to be short and as accessible as possible, since each page is a barrier you’re asking your users to leap over. Assume up to 80% to 90% attrition if you are asking them to register for a username/password, for example. So if you can make it very short – 2-3 pages at most – with progressive commitment of personal information, you’ll get further along in your design. And obviously, you’d ideally want to test for drop-off at each point, and optimize each step as if it were a landing page.
As stated above, viral growth rate is a compounding process, so the difference between a 80% dropoff and a 50% dropoff is huge spread over 1000s of viral loops. 3. What’s the viral hook in your product? Another important choice is product, of course. At the end of the day, a bad product can adversely affect your viral experience, because a poor slideshow (or a widget that no one wants) will lead to very few embeds. So picking something that is either a deep personal expression (music, avatars, slideshows, celebrity posters, etc) or a communication mechanism (voice messages, text, etc) are all great for getting people to WANT to put the apps on their homepages. 4. What are the onramps to your viral loops? Once you’re done with a very tight viral loop, then it’s time to create the on ramps. In this case, you are looking at places like your website homepage, paid advertising, traditional marketing campaigns, SEO, etc, to create places where users can discover your viral loop and begin the process
That’s it! Those are the basics of thinking through a viral loop. The best way to understand them is to browse MySpace or get spammed by invites to social networks, and then break down exactly the "funnel" they are trying to put you through.
IMHO, Tagged.com has a fascinating one to analyze, since they won’t even let you use the website without entering in your e-mail addressbook information. Definitely check out that one. They definitely short circuit the entire viral process by turning it from:
Register -> Use Product -> Evaluate Product -> Tell friends
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to:
Register -> Tell friends -> Use Product -> Evaluate Product
In their case, it’s really irrelevant how good the product is – instead, the focus is just on getting that viral loop to be fewer than 2 pages, and increasing your "branching factor" by using addressbooks rather than asking users to recall their friends’ emails. Anyway, check that out and also try out some of the other very successful social networks.
See you at the conference!
Engagement loops – beyond viral – Eric Ries
http://www.startuplessonslearned.com/2008/12/engagement-‐loops-‐beyond-‐viral.html
Tuesday, December 16, 2008
Engagement loops: beyond viral
There's a great and growing corpus of writing about viral loops, the step-by-step optimizations you can use to encourage maximum growth of online products by having customers invite each other to join. Today, I was comparing notes with Ed Baker (one of the gurus of viral growth). We were trying to broaden the conversation beyond just viral customer acquisition. Many viral products have flamed out over the years, able to capture large numbers of users, but proving transient in their value because they failed to engage customers for the long-term. Our goal is to understand the metrics, mechanics, and levers of engagement. Levers of engagement Let's start with the levers of engagement. What can you do to your product and marketing message to increase engagement?
Synthetic notifications. The most blunt instrument is to simply reach out and contact your customers on a regular basis. This is such an obvious tactic that a surprising number of companies overlook it. For example, IMVU runs frequent promotional campaigns that offer discounts, special events, and other goodies to its customers. From a strictly "promotional marketing" point of view, they probably run those campaigns more than is optimal (there's always fatigue that diminishes the ROI on promotions the more you use them). But there is a secondary benefit from these activities: to remind customers that IMVU exists, and encourage them to come back to the site. The true ROI of a synthetic notification has to balance ROI, customer fatigue, and the engagement effects of the campaign itself. When you live with your own product every day, it's easy to lose sight of just how busy your customers are, and just how many things they are juggling in their own lives. A lot of engagement problems are caused by the customer completely forgetting about the provider of the service. Direct notifications can help ameliorate that problem.
Organic notifications. Facebook, LinkedIn, and other successful social networks have elevated this technique to a high art. They do everything in their power to encourage customers to take actions that have a side-effect of causing other customers to re-engage. For example, from an engagement standpoint, it's a pretty good thing to automatically notify a person's friends whenever they upload
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pictures. But it's exponentially more engaging to have each person tag their friends in each picture, because the notification is so much more interesting: "you've been tagged in a photo, click to find out which one!" Similarly, the mechanics of sending users notifications when new friends of theirs join the site is a great organic re-engagement tactic. From the point of view of the existing customer, it goes beyond reminding them that the site exists; it also provides social validation of their choice to become a member in the first place. As with synthetic notifications, organic notifications are subject to fatigue, if they are not used judiciously. On Facebook, "poking" seems to have fairly high fatigue, whereas "photos" has low (close to zero?) fatigue. Ed adds this account: "When I first joined Facebook, I used to poke my friends and get poked back for the first few weeks, but now I rarely, if ever, poke people. Photos, on the other hand, is probably the primary reason I go to Facebook every day. Because they are constantly new and changing, I doubt I will ever get tired of looking at my friends photos, and I will probably always get especially excited to see a new photo that I have been tagged in."
Positioning (the battle for your mind). The ultimate form of engagement is when the company doesn't have to do anything explicit to make it happen. For example, World of Warcraft never needs to send you an email reminding you to log in. And they don't need to prompt you to tell your guild-mates about the new epic loot you just won. The underlying dynamics of the product, your guild, and the fun you anticipate takes care of those impulses. This is true, to a greater or lesser extent, for every product. After you've acquired a customer, why would they bother to come back to your service? What do they get out of it? What is going on in their head when that happens? I wrote about this challenge for iPhone developers, in an essay on retention competition: the battle over what icon the user will click when they go to the home screen. At that point, there's no opportunity for marketing or sales; the battle is already won or lost in the person's mind. It's analogous to walking down the aisle in a supermarket. Just because you're already a Tide customer, doesn't necessarily mean you'll always buy Tide again. However, if you've come to believe that Tide is simply the only detergent in the world that can solve your cleaning problems, you're pretty unlikely to even notice the other competitors sitting on the shelf. Great iPhone apps work the same way. Marketing has a discipline about how to create those effects in the minds of customers; it's called positioning. The best introduction to the topic is Positioning (I highly recommend it, it's a very entertaining classic). But you don't have to be a marketing expert to use this tactic; you just need to think clearly about the key use cases for your product. Who is using it? What were they doing right before? And what causes them to choose one product over another? For example, a common use case for teenagers is: "I just got home from school, I'm bored, and I want to kill some time." If your product and its messaging is all about passing time while having fun, you might be able to get to the point where that is an automatic association, and they stop seriously considering other alternatives. That's exactly what the world's best video games do.
Seeing the engagement loop We're just starting to weave these techniques into a broad-based theory of engagement, that would complement the work that has been done to date on viral marketing and viral loops. Notice that all of these techniques are attempting to affect one of a handful of specific behaviors that have to happen for a product to have high engagement. Do these sound at all familiar?
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A customer decides to return to your product, as a result of either natural interest, or a notification (organic or synthetic).
They decide to take some action, perhaps influenced by the way in which they came back.
This action may have side effects, such as sending out notifications or changing content on a website.
These side effects affect other customers, and some side effects are more effective than others.
Some of those affected customers decide to return to your product...
This is essentially a version of the viral loop. Let's look at a specific example, and start to think through what the metrics might look like if we attempted to measure it:
Customer gets a synthetic message saying: "upload some photos!" Some percentage of customers click through.
Some percentage of those actually upload.
Those customers get prompted to tag their friends in their photos. Some percentage of them do (A), and these result in a certain number of emails sent (B).
Each friend that's tagged gets an email that lets them know they've been tagged. Some percentage of them click through. (C)
Of those, some percentage are themselves convinced to upload and photos. (D)
Calculating the "engagement ratio" If we combine the quantities A-D using the same kinds of formulas we use for viral loop optimization, and the result is greater than one, we should see ever-increasing engagement notifications being sent. This will lead to some reactivation of dormant customers as well as some fatigue, as existing customers get many notification. Our theory is that the key to long-term retention is creating an engagement loop where the reactivation rate exceeds the rate of fatigue. This will yield a true "engagement ratio" that is akin to the viral ratio. This makes intuitive sense, since the key to minimizing fatigue is to keep things new, exciting, and relevant. For example, user-generated content that includes of friends, especially if it includes you ("Joe tagged you in a photo. Click here to find out which one!") is usually going to be newer, more exciting, and more relevant than synthetic notifications ("Did you know you can know upload multiple photos at a time with our new photo uploader?"), or even than more generic organic notifications ("You've been poked by Joe."). High "engagement growth" with low fatigue is how you get the stickiness of a product to near 100%. You can try to churn out, but your friends keep pulling you back in. That's an engagement loop at work. Seeing the whole Engagement loops are a powerful concept all by themselves, and they can help you to make improvements to your product or service in order to optimize the drivers of growth for your business. But I think the value in this framework is that it can help make overall business decisions that require thinking about the whole rather than just one of the parts. For example, let's say you have a viral ratio of 1.4. Your site is growing like wildfire, but your
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engagement isn't too good. You decide to do some research into why customers don't stay involved. When asked to describe your product, customers say something like "Product X is a place to connect with my friends online." Turns out, when optimizing your viral loop, this was the winning overall marketing message. It's stamped on your emails, landing pages, UI elements - everywhere. Removing a single instance of that message would make your viral ratio go down, and you know that for a fact, because you've split-tested every single possible variation. As you talk to customers, you notice the following dilemma. Customers have a lot of options of places to connect with their friends online. And, compared to market leaders like Facebook and Myspace, you discover that your product isn't really that much better. Consequently, you are losing the positioning battle for your customers when they get home from school and ask themselves, "how can I connect with my friends right now?" Worse, your product isn't really about connecting with friends; that's just the messaging that worked best for the viral loop, where customers aren't that familiar your product anyway. To win the positioning battle, you could try and make your product better than the competition, or find a different positioning that allows you to be the best at something else. Let's assume for the sake of argument that your competitors offerings are "good enough" and that you cant' figure out how to beat them at their own game. So you decide to try to reposition around a different value proposition, one that more closely matches what your product is best at. You could try and drive home that positioning with an expensive PR campaign, superbowl ads, and whatnot. But you don't have to - you have a perfectly good viral loop that is slowly but surely exposing the entire world to your positioning messages. Here's what this long example is all about. When you go to change your messaging, imagine that your viral ration drops from 1.4 to 1.2. Disaster, right? Not necessarily. Since your viral ratio is still above one, it's still getting your message out, albeit a little slower. But if your new positioning message improves your engagement loop by more than the cost to your viral loop, you have a net win on your hands. Without measuring your engagement loop, can your business actually make tradeoff decisions like this one? Connecting engagement and viral loops The two loops are intimately connected, in a figure-eight pattern. Customers exit the viral loop and become part of the engagement loop. As your engagement improves, it becomes easier and easier to get customers to reenter the viral loop process and bring even more friends in. And as in all dynamic systems, there's no way to optimize a sub-part without sub-optimizing the whole. If you're focused on viral loops without measuring the effect of your changes on other parts of your business (of which engagement is just one), you're at risk of missing the truly big opportunities. Hopefully, this theory will prompt some interesting responses. We'd love to hear your feedback and hear your stories. Have you struggled with engagement and retention? What's worked (and not worked) for you? Share your stories, and we'll incorporate them as we continue to flesh out this theory. Thanks for being part of the conversation.
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Viral marketing is not a marketing strategy -‐ Andrew Chen
http://andrewchenblog.com/2007/09/01/viral-‐marketing-‐is-‐not-‐a-‐marketing-‐strategy/ Viral marketing is not a marketing strategy
Viral marketing is not a marketing strategy Many times, viral marketing is seen as a "marketing strategy" that is interchangeable with other methods of acquiring users. That is, you go through three steps:
Develop your product
Think through a plan on how to make people use it
Declare viral marketing is one of N approaches (along with SEO, SEM, PR, etc.)
Or perhaps you already have an existing product, and you have gotten interested in using a Facebook widget or something like that to make it "viral." If you are in this boat and think of viral marketing as a compelling marketing strategy, you’re in trouble.
Successful viral products don’t have viral marketing bolted on once the product has been developed. It’s not a marketing strategy. Instead, it’s designed into the product from the very beginning as part of the fundamental architecture of the experience.
Roelof Botha, the venture capitalist that backed YouTube, says:
Forget about adding "viral" to your marketing to-do list after your product is already on the market. You need to bake it into your business model from the very beginning. "Viral isn’t something you can just make happen," says Botha. "It has to be inherent in your product."
Viral marketing is not a product feature Similarly, no single product feature determines the viral success of a business. I’ve seen several
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product pitches where the business is described as "viral" on slide 10 of the presentation, because of a particular feature, like:
"Tell a friend"
Widget embeds
Addressbook importing
… or whatever.
No single feature determines the virality of the product – instead, it’s part of a viral loop that connects a disparate set of functions into a cohesive motivation for the user to tell their friends. If the fundamental product doesn’t drive a viral motivation from its users, then it’s very hard to force it.
Viral marketing is a fundamental product design discipline So what happens when you try to start a new viral product from scratch? Ultimately, you ask the reverse question of what most folks do. Instead of:
We have product X, how do we virally spread it?
… we ask:
We have viral loop X, what’s the right product to put into it?
Once you have that question in mind, it becomes a lot easier to start brainstorming compelling experiences that might be inherently viral.
It might feel really weird to you to have this constraint. Why allow something like this to arbitrarily affect your product experience? Well, it’s true that it’s yet another constraint, but you are dealing with plenty of constraints already, like:
Keeping things free (or making premium subscriptions)
Making it web (versus hardware)
Having it support some browsers (versus better ones people should be using)
Keeping the site fast (rather than slow)
… and more. These are all things that motivate and constrain your product decisions, and adding (or substituting viral marketing) can be a very very smart idea to have a successful business rather than a successful product.
The skillset for effective viral marketing Because of the above issues, "viral marketing" is not really something that ought to be in the domain of soft-skill folks like PR, advertising, and marketing people. Nor is it in the world of hardcore technical folks that can architect systems but not consumer interactions.
Instead, it’s something that needs to bridge both soft and hard skills. You need an interesting combination of skills, including:
Understanding the motivations behind user behaviors
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Understanding and exploiting the technical loopholes to create viral loops
I think that the fundamental compartmentalization of these two skillsets is what ultimately drives huge companies being worse at viral products than startups.
Ways to achieve viral growth – Vinicius Vacanti
http://viniciusvacanti.com/2012/02/27/9-‐ways-‐to-‐make-‐your-‐startup-‐grow-‐virally/
9 Ways To Make Your Startup Grow Virally
FEBRUARY 27, 2012 COMMENTS
If you want your start-up to become the next big thing, it’s not good enough to just build a great product. Unless you can afford to buy users, you’ll have to grow virally.
The difference between getting one of your new users to convince one friend to sign up and that person getting two new friends, is huge. Assuming you start with 1,000 new users, after 9 months, it’s the difference between having 9,000 users and 511,000 users!
Below are 9 ways your start-up can grow virally:
Get Your Users to Spread the Word
Get users to tell others about your app simply by using it. This is probably the best on this list and one of the hardest to achieve. It’s generally true of communication and content-creation apps.
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Tumblr. People create their tumblrs and link to to it on their email signatures and Facebook and Twitter profiles. When those visitors come, at the top of each tumblr page, is a pitch for the visitor to “Join Tumblr”.
About.Me. Users can create beautiful landing pages for themselves. Like Tumblr, they link to their about.me pages on their social media profiles. But, as you’ll see below, there’s a reason why Tumblr has grown much faster than About.Me.
Get users to push content they create on your app to Facebook, Twitter. This is a recent and huge phenomenon. However, users won’t just push any content they create, just content that they are proud of or think their friends will find interesting.
Instagram. Probably the best example of a site taking advantage of this trend by enabling their users to take beautiful pictures which they then share on Facebook, Twitter.
Foursquare. People want to tell their friends where they are, especially at high-profile locations like sporting events and music concerts.
Tumblr. When people create a new post, they share it on Facebook/Twitter.
Get users to generate content that you optimize for search engines. While this isn’t traditionally thought of as a viral growth strategy, it’s very important. Millions of potential new users are searching on Google and, if your users create content that addresses these search needs, you’ll be able to pitch those searches to join your service.
Wikipedia. Probably the best example of this. Wikipedia users create massive amounts of really strong content that Google searchers access every day.
Yelp. Did an amazing job of turning local business reviews into great business listing pages that Google often places at the top of their search results.
Quora and StackOverflow. Users answer questions that are then presented on Google search results for the millions of people asking those same questions.
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Make it in your users’s best interest to invite their friends. If your strategy is to ask users to invite their friends just because, they won’t.
Twitter. By giving every user a follower number, it encouraged people to tell others to “follow them on Twitter” including many users that hadn’t yet signed-up for Twitter. Twitter also became a way to retain fans so that they could push content to them at a later date. The same dynamic applies to Facebook pages.
Kickstarter. When people create their Kickstarter project, they email all of their friends and families to contribute to the project.
Groupon and Gilt. Since both services have a high-enough user value, they can afford to give their users a referral credit for telling their friends.
Dropbox. Gives users extra memory for their dropboxes in exchange for inviting friends.
Get celebrities to use your app. Celebrities have huge followings. Early Facebook didn’t take advantage of this as it was all about just your friends but, with fan pages, they have tapped into this strategy.
Twitter. Twitter has done an amazing job of courting celebrities to use their service with some of the most high profile celebrities having millions of followers.
MySpace. While they have done many things wrong since, they created THE page where bands resided online and, with bands, came their legions of fans.
Get content created on your app to be newsworthy. If the content created on your app becomes interesting for journalists to cover, you can tap into something more valuable than traditional PR.
Twitter. Celebrities are constantly tweeting things they shouldn’t and journalists have a field day every time it happens.
Kickstarter. Successful projects on Kickstarter like the Robocop statue in Detroit transcend the service and are covered by journalists and bloggers.
Groupon/Living Social. Whether it’s Amazon, Whole Foods or GAP, these deals will get covered by journalists.
Increasing Conversion
Adjust your product to become more mainstream. It won’t help much to have all your users constantly telling everyone about your service but most people aren’t interested. If you want to reach millions of users, millions of people have to potentially want your product. For instance, About.Me has very strong viral potential (as described above) but not everyone wants their own about.me page (at least not yet) and so their conversion rate suffers.
Instagram. This could have a been a niche product but by making it so easy that even an absolute beginner could take a beautiful picture, it went from a niche to a mainstream product.
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Tumblr. Blogging platforms have been around for a while but Tumblr makes it so easy to blog that they’ve been able to convert many from non-bloggers to create a Tumblr.
Get your users to use your app everyday. The more your users visit your app, the more likely they are to invite their friends, create content, etc. A great example of this struggle is Plancast which, while being a product that created content, it wasn’t content that was created everyday.
Groupon and Gilt. Because there’s new content every day, they email their users everyday.
Optimize your sign-up and referral funnels. If you are getting one extra user a month and optimize your landing page and referral funnels, you’ll cross over into viral territory. It’s not uncommon to see conversion rates double after a few optimization experiments. (At Yipit, we use Google Website Optimizer).
Conclusion
Building a great product is only half the battle. Take the time to think through how you can build in as many viral growth opportunities. It’s worth the effort to go from linear to exponential growth.
Viral marketing – David Skok
http://www.forentrepreneurs.com/lessons-‐learnt-‐viral-‐marketing/
Lessons Learned – Viral Marketing
December 6, 2009 • David Skok
A short study of this web site reveals that a hugely important factor for success in startup companies is finding ways to acquire customers at a low cost. In the Business Models section, we looked at the perfect business model: Viral customer acquisition with good monetization. However viral growth turns out to be an elusive goal, and only a very small number of companies actually achieve true viral growth.
In 2005, I invested in a company called Tabblo (acquired by HP in 2007), and had the good fortune to work with an outstanding entrepreneur, Antonio Rodriguez. Tabblo did manage to achieve good viral growth, but around the same time YouTube was launched and managed to achieve explosive viral growth. In the process of looking at these two companies, we learnt several important things about virality. This post digs deeper into what it takes to achieve viral growth, and examines the key variables that drive viral growth.
To give you a preview of this post, what you will learn is that there are two key parameters that drive how viral growth happens, the Viral Coefficient, and the Viral Cycle Time. To fully illustrate the arguments, I have included two spreadsheet models (embedded) that you can play with interactively to see how viral growth works. There is a risk with this level of depth, that some readers will find this too technical, and if you find yourself reacting that way, may I recommend that you jump straight to the conclusion, which is under the heading Lessons Learnedtowards the bottom of the article.
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What we want to understand in these two models, is how the population of Customers changes over time. The first model that we will build looks in a very simple way at how viral growth works in the marketing world.
The Viral Coefficient (K)
Imagine you are starting a new company that plans to acquire customers through viral growth. You have several friends that you use to become your first customers, and they in turn start inviting friends to join, and those friends start inviting friends, etc.
The model at this stage has the following inputs:
Variable Name Description Example Value
Custs(0) Initial set of Customers 10
i No of invites sent out be each new customer 10
conv% The percentage of invites that convert into customers 20%
The first thing that we need to calculate is the number of new customers that each existing customer is able to successfully convert. This turns out to be an extremely important variable, and is known as the Viral Coefficient. The formula to calculate the viral coefficient is pretty simple: multiply the number of invitations by the conversion rate.
K Viral Coefficient K = i * conv%
Now lets take a look at how K affects customer growth as we go through the first cycle of viral “infection”. Our initial 10 customers will each send out 10 invitations, and successfully convert 20% of those (i.e. 2 new customers each). So the total customers after the first cycle will be equal to the starting 10, plus the new 20, which equals 30.
(In case the model above does not appear, click here to view the model full screen.)
To fully understand the model, it’s useful to look at the second, and subsequent, cycles of growth. In the model above, only the new customers that were added in the prior cycle send out invitations. This is because it is highly unlikely that the entire population will continue to send out invitations every cycle. Every time I have looked at other blog articles or formula for Viral Growth, they appear to have gotten this part of the calculation wrong.
Understanding the impact of the Viral Coefficient
Now that we have the model built, we can play with the variables to see what effect they have. In the spreadsheet above, go to cell B6, and change the Conversion rate for invites (conv%) to 5%. This will make the Viral Coefficient less than 1. Now look at what that did to your population growth. Instead of continuing to grow, it grows to 20 people, and then stops.
What this tell us is very interesting:
The Viral Coefficient must be greater than 1 to have viral growth.
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Further playing with the spreadsheet will show that increasing the viral coefficient by increasing the number of invites sent out, or the conversion rate, has a nice impact on how the population grows. Try this out by changing cells B5 and B6 in the model above. Later on we will talk about how to design your application to maximize these values.
The Second Important Variable: Viral Cycle Time
Antonio Rodriguez built Tabblo around the same time that YouTube was built. Both sites were viral, but while Tabblo was reasonably successful, YouTube exploded and amassed users at a rate that had not been seen before on the Internet. What was going on here?
To answer this question, we have to look at the Viral Cycle Time,(which we will refer to in formulas as “ct”).
The full viral cycle involves several steps that work in a loop:
The Viral Cycle Time is the time that it takes for this cycle to complete.
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In YouTube’s case the Viral Cycle Time was extremely short: a user would come to the site, see a funny video, and immediately send the link on to their friends. Tabblo, on the other hand, had a much longer cycle time. A customer would post some photos on the site and invite their friends. The friends might see the photos on Tabblo, and like the experience and decide that they would use the site the next time they took photos they wanted to share. However, that is where the problem came in: it could take months before they next took photos, and decided to share them.
Later on this post, we will talk about how to optimize Viral Cycle Time – (see Lessons Learnt).
How Viral Cycle Time affects growth
To model Viral Cycle Time’s effect on growth, I searched the web, high and low, looking for a pre-defined formula. To my great surprise, there was no formula that I could find that correctly calculated customer growth, and showed the impact of Viral Cycle Time. What was also surprising, was that I did find several blogs showing formulae for viral growth, but in every case, they appeared to make the same mistake, which was assuming that the entire customer base would continue sending out invitations for every cycle. So I collaborated with my partner, Stan Reiss, who turns out to be a whole lot smarter than I am, and he helped me develop the fomulae that are used in the more sophisticated model for viral growth below:
(In case the model above does not appear, click here to view the model full screen.)
A quick look at the table that shows the effect of varying the Viral Cycle Time shows that customer growth isdramatically affected by a shorter cycle time. For example, after 20 days with a cycle time of two days, you will have 20,470 users, but if you halved that cycle time to one day, you would have over 20 million users! It is logical that it would be better to have more cycles occur, but it is less obvious just how much better. A quick look at the formula tells the whole story. The Viral Coefficient K is raised to the power of t/ct, so reducing ct has a far more powerful effect than increasing K.
This explains why YouTube exploded at a faster rate than ever seen before.
Lessons Learned
There are a large number of interesting lessons to learn from the above models:
Unless you have a Viral Coefficient that is greater than 1, you will not have true viral growth.
The most important factor to increasing growth is not the Viral Coefficient, but the Viral Cycle Time (ct) which should be made as short as possible. This will have a dramatic effect on growth.
The second most important area to focus is the Viral Coefficient (K). Anything that you can do to increase the number of invitations sent out, and the conversion rate, will have a significant effect on growth.
In addition to the above lessons that come from the model, there are some other important observations:
Virality is not a marketing strategy that can be executed by the marketing department. It has to be built into your product right from the beginning. This is a function that needs to be thought through by the product designers and developed by the engineers.
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The most viral products are those that only work if they are shared. For example, Skype only worked in the early days if you got your friends on to Skype, otherwise you had no way to call them. If you have an application today, think about how you can make it social, where it would work better by sharing data with friends/co-workers. That provides a great incentive for customers to invite their friends/colleagues to use the application.
To make the Viral Cycle Time as short as possible, we can apply the same thought process that we use inBuilding a Sales and Marketing Machine, where we look at what are the customers motivations and negative reactions as they flow through the viral cycle. For example, when I reach the stage where I have to enter my friends addresses, I will not bother to do very many if I have to look them up in another program, and copy and paste them one-by-one into the browser. You can solve this problem by providing me with Facebook Connect integration to invite my Facebook friends, and an adapter to import my email contacts. (Check out the “Share This” button at the bottom of this post as an example of how this can be done.) Getting at email contacts is easy with web mail clients like GMail, etc. – but harder with Outlook. However viral products like LinkedIn have created Outlook adapters that you can download. It is also feasible to get at that information via Outlook Web Access (OWA) provided you can deal with the security concerns.You should also be looking for ways to encourage customers to invite people at various junctures in their use of the application. And of course, you should be asking yourself the question: is the value proposition of your product really that compelling that your customers will want to share it with others?Another great way to increase virality is to incent customers with a reward for every customer they successfully convert. Since this can result in an individual feeling guilty that they are making money off their friends, the best way to do this is to also provide the friend that is receiving the invitation with an equal incentive. Now your customer will feel like they are doing their friends a favor.
Consider leveraging viral platforms such as Facebook, which have built in social features to let friends know what apps you are using. The wall, and status updates provide a great way for their friends see your app.
Use A/B testing to figure out which approaches and creative presentations are getting you the highest conversion rates.
If you are successful in creating a viral model with very short cycle times, watch out for what can happen. Several companies that have been lucky enough to achieve this have been shocked by the enormous need to scale server capacity. Fortunately with cloud computing offerings such as Amazon EC2 and S3, it is easier than in the past to scale on demand.
Hybrid Viral Models
Many entrepreneurs reading this post will realize that they may not have the means to achieve true viral growth (where they have a Viral Coefficient of greater than 1). Rather than giving up, it is worth considering a hybrid viral model. In the hybrid viral model, you make up for the shortfall in customers by acquiring those through some other means such as paid search, or SEO.
Model Limitations
The model above is pretty simplistic and does not take into consideration several real world phenomena:
What happens when you grow so fast that you start to saturate the population. This has happened to several Facebook app developers. They experience very rapid growth, and then suddenly the growth
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dies. Andrew Chen has written a great blog post about this: Facebook viral marketing: When and why do apps “jump the shark?”. (Side note: I don’t believe that the equation that Andrew puts forward for simple viral growth is correct, as it assumes that the entire population will continue sending out invitations at each viral cycle. However his work on saturation of the population is very relevant for highly successful viral apps.) In case you are interested in where the term “jump the shark” came from check this out: Wikipedia: Jumping the shark.
What happens if you have attrition in your customer base over time. An easy way to extend the model to take this into consideration would be to add a variable to model Attrition Rate as a percentage of the entire installed base at each cycle, and simply subract this from the total population at each cycle. This topic is nicely covered in this blog post by Andrew Chen: Is your website a leaky bucket? 4 scenarios for user retention.
The customers that you have may send out more than one set of invitations beyond the initial set.
etc.
Further Resources
Since publishing this post, I created a SlideShare presentation that has a several additional ideas on viral marketing: The Science behind Viral Marketing. Also check out Andrew Chen’s blog, as he has written extensively on the subject of Viral Growth. For example, here is one great example: What’s your viral loop? Understanding the engine of adoption.
Uzi Shmilovici has a nice list here of the Eight Ways To Go Viral.
Kevin Lawler very kindly created a post explaining how to derive the formula for viral growth used in this post:Virality Formula.
Acknowledgements and Thanks
My thanks to Antonio Rodriguez, the founder of Tabblo, who got me started on thinking about this topic several years ago. Also to Andrew Chen, whose writings on this topic are excellent. And to my partner Stan Reiss, who took my simple logic and turned it into an elegant mathematical formula.
Making content go viral – Mark Suster
http://www.bothsidesofthetable.com/2011/04/11/here-‐are-‐10-‐tips-‐from-‐buzzfeed-‐to-‐make-‐your-‐content-‐go-‐viral/
Here are 10 Tips from BuzzFeed to Make Your Content Go Viral
by MARK SUSTER on APRIL 11, 2011
I recently had the pleasure of spending an hour with Jon Steinberg, president of Buzzfeed, a company who focuses on helping media companies make their content go viral.
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His words, “we find things on Sunday morning that will be on the Today show on Tuesday morning.” That’s why people turn up to Buzzfeed.
We talked about a lot of great stuff in the video including how to do sales calls and a how a new “culture of writing” is emerging as a critical skill set in business today. We also talked about why Jon decided to leave Google to become an EIR at a VC firm (Polaris) – minute 33.
But of course we also focused on making content go viral. In working with brands, Jon says:
“ Vary creative, try lots of things, the costs are so low, why would we put up one piece of
branded content? It is absolutely MVP of advertising. Can we do 10 variants? Can we
take this video and put it in 10 different contests? One in a list, one with a quiz, one
with a cut-out tool – let’s see what takes off. There’s no cost!”
There’s tons of more great advice from real-world experience from Jon so please watch when you have time. You can also get the video or audio on iTunes and save it for a commute. Right now we have about 25,000 people who listen to it every week this way. Here’s a link for iTunes.
But if you’re short on time to watch it, I wanted to at least provide you with some of Jon’s insights on what makes content go viral. [we started this convo at minute 47]
1. Keep it Short – “It’s gotta be short. 30 seconds is good, 60 seconds is worse, 90 seconds is worse,
people just do not want to watch long stuff.” Doh. I guess this video won’t go viral, then! Again, Jon, “I’m not just talking about video. If you want something to be shared virally on the web it has to be short.”
2. It needs to have an interpersonal, human angle – Examples he gives, “mothers & daughters, traits in your boss you don’t like or the perfect drinks on your anniversary. Everybody will send this to people and say, ‘isn’t this just like us?’ or ‘this is totally different than us’ – you need to start the conversation” I have to admit I get this all the time. I’ll write a post on how to give feedback to employees and then I’ll get emails from people telling me they forwarded it to their whole team. When it’s personal, it gets shared a lot.
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3. People want rough content that feels genuine to them / authenticity – People don’t want highly produced stuff, they want stuff that feels genuine to them. “How-to” guides work well. Behind the scenes videos do great.
4. Create something people can engage with – Examples include videos you can put your image into. Or creating quizzes or games with your content. People want to engage with content, not just consume it. The more engaging, the more it gets shared.
5. Offer the ability to react / comment - In the blogging world it’s clear that having a good comment system like Disqus is critical. And you need to work your comments section if you want people to share your content and turn up again. Good comment community = viral blog. It’s called showing good service to your most loyal customers.
6. People like lists / images – Everybody likes lists. Try making your blog posts as lists and have
it in your headline to drive clicks. How very meta of me, hey? If you want a great tool to create lists check out Ranker (I’m not an investor). Also, images are way more viral than video. Many people aren’t able to listen to videos in their office.
7. Give up page views – Many websites give you presentations or lists and make you scroll through 10 pages to see the entire list. Jon says don’t do this. You get a few extra page views but less people will consume the content and certainly less will share it and make it go viral.
8. Make sure you headline is compelling, a call-to-action or a list - We talked a bit about the need to make your title catchy. In an era of RSS, Twitter, Facebook & new consumption tools like FlipBoard – titles matter.
9. Make sure the content of your Tweet / FB Share isn’t something that is something people would feel stupid sending around to their friends & colleagues – we didn’t actually get to this in our interview, but I had seen Jonah Peretti (the founder of BuzzFeed & also of The Huffington Post) talk about this in a previous interview. If the title of your post (or the content itself) is something that is likely to make the sharer feel embarrassed for sharing it then it certainly won’t go viral. Keep in mind that when somebody hits “share” they are putting their reputation on the line by sharing it with friends.
10. Tweet appropriately – OK, I’m adding this one to the list (also not in interview) but it’s a technique I have data on. First, make sure to leave 10-12 spaces in your Tweet rather than using all 140 characters. Sure, people can use new-style Retweets but many people prefer old-school ones. If you don’t leave enough space then it’s harder to share and many people won’t bother.
And I tell people all the time, it’s OK to Tweet more than once (full advice in this link). In particular I do an East Coast morning Tweet (5.40am PST) and a West Coast Tweet (8.40am). Each converts the same (e.g. if I hand’t sent the second tweet I’d get a lot less clicks / shares). I use a tool to set it up in advance so I don’t actually have to be ready to Tweet in real time.
If you keep a blog make sure you have ReTweet buttons prominently placed near your article. This will also drive a lot of shares.
And finally, don’t be afraid to ask for a ReTweet. So if you liked this article, please find that nice little
Tweet button near the top and share the love or share your own viral tips in the comments section below. I’ll see you there.
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Facebook viral marketing -‐ Andrew Chen
http://andrewchenblog.com/2008/03/05/facebook-‐viral-‐marketing-‐when-‐and-‐why-‐do-‐apps-‐jump-‐the-‐shark/ Facebook viral marketing: When and why do apps “jump the shark?”
Excel spreadsheet download For those of you who are interested in the gory details, please download the following spreadsheet here:
Viral and Retention Excel Model (Click to download)
Math warning! This blog post will be a little more technical than usual, so I apologize to those of you who are bored by this. Anyway, let’s get started.
See this image before? Many would describe that as, EPIC FAIL
That’s what happens when you “jump the shark” and your app goes from successful to completely not successful. Why does this happens? This blog post is to dissect that exact issue.
Modeling user acquisition First off, let’s look at some ways to model user acquisition. For those of you with the spreadsheet, this is the second tab. You first start with a couple constants:
Invite conversion rate % = 10%
Average invites per person = 8.00
Initial user base = 10,000
Carrying capacity = 100,000
(note that these are just example numbers)
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To understand how these constants work, you basically want to think about how viral marketing works. What happens is that you start out with an initial userbase (=10k), and every time your userbase grows, each user ends up sending out invites (=8.00), which then have a specific conversion rate (=10%).
That means that in the first time period, you have 10k. In the second time period, you get 10k*8*10% more users, which equals 8k more users, who are the next round of users who send invites. Then in the third time period, it’s 8k*8*10%, and so on. Note that the new batch of users needs to exceed the previous batch, in order to “go viral.” That ratio is often referred to as the viral coefficient. In fact, here’s the equation for this unbounded viral equation:
u(t) = u(0) * (1 + i * conv)^t where u(0) = 10k, i = 8.00, conv = 10%, and t is the # of time periods
However, note that this assumes that your “carrying capacity,” that is, how many users are in the total network, is unlimited. However, on Facebook, that’s not true – once you burn through the 60 million new users, then you don’t have any left. Similarly, it doesn’t reflect the reality that as you saturate the network, your invites may end up going towards people who have already evaluated or installed your app, and they are unlikely to install it again.
A simple model for network saturation Thus, one simplifying assumption is that as you saturate the network, the conversion rate on your invites goes down. In one possible model, you’d argue:
If you have installs on 0% of the network, then your natural conversion rate (10%) holds
If you have installs on 50%, then your natural conversion rate is discounted 50%, which equals 5%
If you have installs on 99%, then your natural conversion rate is discounted 99%, and etc.
Note that you might even argue that this is an optimistic view. You might argue, for example, that the “discount” on your conversion rate should be related to the total % of the userbase that’s been invited, not the total % that’s installed something.
In that version, if someone hates your app and doesn’t want to install it, it’s unlikely that they will ever install it. In the version I’m describing, the only people who won’t install your app are the people who have already done so.
To describe this mathematically, you might say that at each point, there’s an “adjusted conversion rate” which looks like:
adjusted conversion rate = natural conversion rate * saturation % = natural conversion rate * (current installs / total Facebook population)
so if you agree that’s true, then you can combine the this last equation into the initial one:
u(t) can be defined as: = u(0) * (1 + i * adjusted_conv)^t = u(0) * (1 + i * conv * u(t-1) / carrying_capacity)^t
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(This can then be simplified further, but I’ll leave the math to the reader – the spreadsheet reflects this thinking already)
As a result of this, you see that your cumulative install base kinda looks like a logistic curve:
Now that you see that the cumulative users follows an interesting trend, where it starts to grow exponentially, but then starts to hit saturation. Then it eventually takes some time, but it starts to plateau as you reach the carrying capacity of the network.
Quick break for Cohort analysis re-introduction Before reading through this post, you might want to glance over a previous blog I wrote on cohort analysis and its relationship to user retention reports
You may want to read that before going further…
Back to our story… Previously, I discussed how you can mathematically model the viral acquisition process, particularly as you hit the network saturation point. However, while the model shows a growth curve for cumulative users, it doesn’t take into account how retention metrics fit in.
In the spreadsheet linked above, you can flip to the “User retention” tab, which shows a cohort analysis perspective of the hypothetical site. Here’s how to read it:
On the Y-axis are “Time period cohorts” which are defined by the group of users that joined in a particular time period. So #1 means, the users that joined in period #1
On the X-axis are the “Time period” which defines the time period that the specific cohort is in
So for example, in 1×1, there are an initial 3,000 active users on the site.
However, by the next time period, the 3,000 active users have declined to 1,500 users. However, because there are a bunch of virally generated users, there’s a new cohort of 2,328 users who have
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joined as cohort 2. The number of “new” cohorts is defined by the rows in the other spreadsheet tab, “Viral acquisition.”
Then notice that at the bottom of each time period, there’s a count for how many users are active in total, in each specific time period.
Does this make sense? If not, shoot me an email at voodoo[at]gmail with what you’re confused by, and I’ll update this blog with more clarifications!
Introducing the retention coefficient So the key driver for retention is the % of users that stay alive in a specific cohort, between one period to the next. If it’s 50%, then if you start out with 3k users, in the next period you’ll be left with 1.5k users. If it’s 100% retention, then 3k users ends up with 3k users.
So let’s play around with the numbers.
At 99% retention, which means that over 20 periods you are losing very few users, you get a graph of total active users that looks like this:
This chart looks pretty good, of course. You start with exponential growth, then hit a plateau, and you have a very slow burn on your userbase. I suspect that the Facebook site, among other highly popular sites, essentially have >99.999% retention between days. I say that because people seem to use the site for years at a time, and probably the early users of the site are probably mostly still on it.
Now for the EPIC FAIL. OK, here’s the fun part, which is when you drop the retention coefficient down to 50%:
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Ouch. Doesn’t look good. If you’ve read all the way this, far it’s pretty clear why this happens, but let’s summarize:
Key conclusion The key in this calculation, if you look at the stats, is that:
Early on, the growth of the curve is carried by the invitations
However, over time the invitations start to slow down as you hit network saturation
The retention coefficient affects your system by creating a “lagging indicator” on your acquisition – if you have good retention, even as your invites slow down, you won’t feel it as much
If your retention sucks, then look out: The new invites can’t sustain the growth, and you end up with a rather dire “shark fin.”
Things look great at first, but if you can’t retain users long-term, then you don’t have a business.
Improvements to the model I want to make a couple comments on how the simplified model contained within the spreadsheet could be improved dramatically:
Don’t just model invites, model multiple viral channels
Include “usage loops” not just the “invite loops,” which are triggered by users trying out the product
Try both a global carrying capacity, as well as a “niche discount” for the number, if your app is super-niche and focused on a particular demographic or user behavior
Be able to handle realistic numbers – perhaps even retrofit it onto Adonomics data, for example
Factor in re-engagement channels
etc.
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Obviously if anyone would like to think about this more, feel free to and shoot me an email.
Questions and comments? I built this model very quickly while on the plane ride back from Graphing Social Patterns, but if anybody wants to discuss the model, make improvements, etc., please e-mail me:
voodoo[at]gmail
Thanks!
UPDATE: Dave Fry sent in a correction on the fact that only the new delta of users sends out new invites, the old guys have already done so, and are unlikely to in the next period. Thanks Dave!
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Pricing
Pricing
Pricing for startups – Rob Fitzpatrick
http://thestartuptoolkit.com/blog/2011/11/youre-‐a-‐startup-‐its-‐okay-‐to-‐ask-‐about-‐money/
You’re a startup. It’s okay to ask about money.
by robfitz ·∙ November 4, 2011
While I would admittedly be uncomfortable asking a colleague how much cash is sitting in their bank account, directly re-applying personal etiquette to a business discussion is generally a mistake.
You’re a startup. It’s okay.
There exists some critical, make-or-break information that you’ll find impossible to tease out in any other way. As long as you know what you’re looking for and how to ask, you’ll find those revelations surprisingly easy to get at.
And it won’t even be an awkward conversation.
Quantifying “value”
Common wisdom is that you price your product in terms of value [to the customer] rather than cost [to you]. That’s true. And you can’t quantify the value received without prodding their financial worldview.
But just asking if they would pay ￡X for your product fails the Mom test.
Like all good questions-for-learning, you want to ask about what they currently do now, not what they believe they might do in the future.
The 2 most important questions for sales-driven startups are both about money.
Ask about their current solution to find a price anchor
“What are you using now?” gives you a price anchor. If they are paying ￡100/month for a
duct-tape workaround, then you know which ballpark you’re playing in. On the other hand, they
may have spent ￡120,000 this year on agency fees to maintain a site you’re replacing. If that’s the
case, you don’t want to be having the ￡100 conversation.
Sometimes, both of the above will be happening simultaneously and you get to choose how you present yourself.
Are you a replacement for the tool at a yearly value of ￡1.2k or a replacement for the agency at
100x that?
Ask about their budgets to unearth hidden decision makers
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“Where would the money come from?” leads to a conversation about whose budget the purchase will come from and who else within their company holds the power to torpedo the deal.
The real goal here is to figure out whether you’re talking to the right person.
Often, you’ll find yourself talking to a user who is different than the budget owner. Your future pitches will hit unseen snags unless you learn who else matters and what they care about. This knowledge will eventually turn into a repeatable sales roadmap as you grow toward adding non-founders to your sales & customer team.
Sales are a side-effect
As a bonus, these questions also tell you how likely a particular client is to convert into an early sale.
If you hear, while digging in, that he is the budget owner and just happens to have the funds already allocated for a purchase of this ilk, then you might want to violate rule #1 of customer development (“learn, don’t pitch”) and reach for your sales hat.
Determining optimal price – Sean Ellis
http://startup-‐marketing.com/category/pricing-‐your-‐product/
How to Determine the Optimal Price for Your Web Service
For the startups I help take to market, one of our most important projects is determining their optimal price. Unlike companies in established categories with high unit costs, optimal pricing for a software startup mostly relates to maximizing revenue. An optimal price allows the startup to grow at the fastest possible rate by maximizing profitable investments in customer acquisition programs and/or offering a free version to drive broad user adoption. Considering most software startups simply guess a price, determining your optimal price can become an enormous competitive advantage.
The optimal pricing project is part of the overall “optimization phase” I describe in my metrics driven go to market approach presentation.
There are three key factors to consider when determining your optimal pricing:
Price sensitivity– You want to find the price that generates the highest yield per 1000 trials (or visitors, DLs, etc.). You can find this number by determining how many units you would sell at each price. For example, if you have a 10% conversion rate at both $8/unit and $10/unit, then $10 is obviously the better price for you. But let’s say at $20/unit demand drops to 8%. Despite lower demand, yield is higher at $20 so it would be a better price than $10 ($1600 per 1000 users at $20/unit compared to only $1000 per 1000 users at $10/unit). I estimate max yield pricing first through surveys and then through experimentation at several price points. Around launch your volume will be too low for a meaningful sample size, so be sure to launch with “introductory pricing” which should be at the low end of your expectations. Adjust the price when volume allows you to hone in on the optimal pricing.
Marginal cost– For web services it’s important to understand your cost per unit to avoid pricing at a loss. This marginal cost is essentially a floor on your pricing. If you have bandwidth and storage costs that are $5/user/year, then your business would not be sustainable if you priced your service at $4/user/year. For most downloadable software, there is no marginal cost per user (beyond marketing costs).
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Growth strategy– I generally prefer one of the following pricing strategies for innovative products. One is a Market Builder pricing strategy where the majority of your users are coming through your demand generation initiatives. Demand generation is expensive (unless driven through viral tactics) and therefore requires premium pricing to create a high allowable user acquisition cost. An example of a company that took a Market Builder approach to grow the personal remote PC access category is GoToMyPC, which combined premium pricing with aggressive radio demand generation. An alternative strategy is a Market Drafter pricing strategy. Freemium pricing is ideal for a market drafter. Essentially as the Market Builder creates awareness for the category, the Market Drafter swoops in and offers a much better deal (SEM is a good place to focus for a Market Drafter). This strategy only works when a Market Builder is aggressively investing to grow the category. I prefer the Market Drafter position when possible (see this post for more details on why). In the long term, the Market Builder must focus on differentiation to justify its higher prices (or reduce prices)
Once the optimal price has been established, there are many tactics that can used to boost response rates. These include:
Setting the price a bit higher than the optimal level and then frequently discounting it.
Using a decoy super premium version to make the version with the “real price” seem cheaper.
My favorite pricing model for driving demand is Freemium, combined with carefully researched max yield pricing on the premium version of the product – then applying the response boosting tactics listed above. An insightful read on Freemium pricing is Josh Kopelman’s post “The Penny Gap.” It is an exploration of the “power of free” in driving customer adoption and suggests that elasticity of demand is not linear. At the price of zero, demand soars.
Dan Ariely also makes this point in his book Predictably Irrational . He concludes “Zero is not just
another discount. Zero is a different place. The difference between two cents and one cent is small. But the difference between one cent and zero is huge.” He supports this point through the following experiment: He first offered a Lindt Truffle for 15 cents and a Hershey Kiss for one cent. Participants (who could only select one) purchased the Lindt Truffle 73% of the time and the Hershey Kiss 27% of the time. When they were both discounted an additional penny (making the Hershey Kiss free), demand for the Hershey Kiss shot up to 69% and demand for the Lindt Truffle dropped to 31%.
There are several other great pricing psychology nuggets in Predictably Irrational; I highly recommend reading it. It goes well beyond the three basic pricing factors presented above. Some useful points include:
A higher price not only positions your product as superior, people may actually have a better experience using the product. He presents a fascinating experiment that shows people got more relief from a $2.50 pain killer than a 10 cent pain killer, even though they were both just vitamin C. He concludes “the perception of value, in medicine, soft drinks, drugstore cosmetics or cars, can become real value.”
When we encounter a new product, we accept the first price that comes before our eyes as the anchor. This price has a long-term effect on our willingness to pay for the product from then on. He uses the example of black pearls. Initially there was no demand for them, but when they were anchored to the finest gems in the world with premium pricing, demand shot up.
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Differentiation gives more flexibility to increase price. His example here was that Starbucks differentiated the coffee shop experience allowing them to more than double the price of a cup of coffee compared to Dunkin Donuts.
Finally remember that technology prices tend to drop over time. Keep this in mind when determining allowable acquisition cost based on a user’s lifetime value. Lifetime value will probably be lower when considering future pricing pressure. It’s better to be ahead of the curve in driving prices lower, which often requires innovation that allows you to profitably offer the service at a lower cost than competitors (for web based services with marginal costs).
Posted in Freemium (Free-to-Premium), Pricing You
Great Guidance on Pricing – Sean Ellis
http://startup-‐marketing.com/great-‐guidance-‐on-‐pricing-‐from-‐zoosk-‐ceo/
Dec 29th 11
Great Guidance on Pricing from Zoosk CEO
There is a way to think about that. The model that I have in mind is a graph where the X-axis is the price and the Y-axis is the revenue. At a price point of zero, you make zero money. A ridiculous price or a very high price point, again you make zero money because no one buys your product. This curve starts from zero and then goes up and then comes down. There is a peak, the revenue maximizing price point. Theoretically it is there whether you know it or not. It depends on your product and your demographics, etc., but if everything else is fixed, there is a revenue-maximizing price point. If you actually know the revenue-maximizing price point, you can do say, okay, that’s the top of the peak. However, I prefer to make 10 percent less money but have 20 percent more customers. You want to stay a little bit to the left side of the peak. It is around 90 percent of the revenue maximization point. The way I think about it is a little bit different. I don’t look at it as a continuous thing. I would try to pinpoint the revenue-maximizing price point and then find the nearest round number right before. If my revenue maximizing price point is somewhere between $20 and $30, I would shoot for $19.95. I can tell you that there is at least 20 to 30 percent additional profit you can get by optimizing your product packaging and your product pricing. If you can figure it out, you can go from a company
Shah,Tarang; Shah,Sheetal (2011-11-16). Venture Capitalists at Work: How VCs Identify and Build Billion-Dollar Successes (p. 64). Apress. Kindle Edition.
A lot of people have asked me about how to determine optimal pricing for a product or service. This morning I read the following statement from Alex Mehr, the founder/CEO of Zoosk, and thought it was the best explanation I’d ever seen. It’s a great articulation of the theory behind the process I’ve used for years.
Alex Mehr, the founder/CEO of Zoosk on pricing: “There is a way to think about that. The
model that I have in mind is a graph where the X-axis is the price and the Y-axis is the
revenue. At a price point of zero, you make zero money. A ridiculous price or a very high
price point, again you make zero money because no one buys your product. This curve starts
from zero and then goes up and then comes down. There is a peak, the revenue maximizing
price point. Theoretically it is there whether you know it or not. It depends on your product
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and your demographics, etc., but if everything else is fixed, there is a revenue-maximizing
price point. If you actually know the revenue-maximizing price point, you can do say, okay,
that’s the top of the peak.
However, I prefer to make 10 percent less money but have 20 percent more customers. You
want to stay a little bit to the left side of the peak. It is around 90 percent of the revenue
maximization point. The way I think about it is a little bit different. I don’t look at it as a
continuous thing.
I would try to pinpoint the revenue-maximizing price point and then find the nearest round
number right before. If my revenue maximizing price point is somewhere between $20 and
$30, I would shoot for $19.95. I can tell you that there is at least 20 to 30 percent additional
profit you can get by optimizing your product packaging and your product pricing. If you can
figure it out, you can go from a company.”
Shah,Tarang; Shah,Sheetal (2011-11-16). Venture Capitalists at Work: How VCs Identify and Build Billion-Dollar Successes (p. 64). Apress. Kindle Edition.
Is Your Pricing a Dot or a Triangle? – Cindy Alvarez
http://www.cindyalvarez.com/profitability/is-‐your-‐pricing-‐a-‐dot-‐or-‐a-‐triangle
Is Your Pricing a Dot or a Triangle?
October 8th, 2009
Most product managers I know secretly (or not-so-secretly) dread pricing. Price too high, and you risk alienating customers; price too low and you’re undervaluing yourself and making it harder to raise prices later.
We stress so much about that number that we tend to forget that “price” isn’t a single number to our customers. When customers consider “what something costs”, they’re actually measuring three main drivers:
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Money: The obvious one. What am I going to pay in dollars and cents?
Mental energy: How much do I have to think about this?
Time: How long will it take to learn/deploy/configure?
As you can probably guess, these points aren’t independent. The reason “free” is so psychologically powerful is that it entirely removes the “money” axis and strongly reduces the “mental energy” axis.
I don’t have to think about “free” at all. Paying even one cent – that requires some mental energy. I need to enter a credit card number, or remember my PayPal password.
For someone who works in a large-ish company, a $500 purchase may be very low mental energy – they can charge and reimburse it without additional work. A $501 purchase might mean writing up a description, asking for pre-approval, getting a signature, having to write up a purchase order… a huge increase in mental energy over an additional dollar.
Time and money are related when the product requires expensive consulting, or steals an expensive internal resource from whatever they were working on previously. Also, long deployment cycles can mean paying for a service for months before starting to see the benefits.
Which shape should your pricing triangle be?
Market maturity and customer priorities determine how high or skewed your triangle can be.
Commodity Product, Mature Market
For example, a product in a mature market that has seen commoditization can’t be very high on any dimension. If I’m looking at, say, dryer sheets, I’m not going to choose an option with a higher price tag, or a set of warning labels and detailed instructions, or one that increases drying time.
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I just don’t care enough. Some dryer sheet maker would have to come up with a truly disruptive innovation before I’d even consider increasing my “cost” on any axis.
New Technology, Early Adopter
On the other hand, take the first-generation MP3 players. They were expensive. You had to find software to rip your CDs, and then often another piece of software to load the music onto them. It probably took 45 minutes to load up my Diamond Rio for the first time with a whopping 45 minutes’ worth of music.
The early adopter is okay with spending more money, expending mental energy, and spending time futzing with this new product. Everyone else… is not. This has led many a product down a bad path.
Cash-Poor, Time-Rich
If your target customer is a high school or college student, this is what your triangle may look like. Don’t incur costs trying to make the installation faster or the instructions easier – do whatever you can to make it free or cheap.
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Time-Poor, Cash-Rich (or adequate, anyways)
Why does Amazon OneBox exist when BitTorrent is out there?
Because to this audience, it’s not worth the time of searching for a specific episode among a bunch of crap, waiting to download, dealing with corrupted files… when you could just pay a couple bucks and get your missed TV show with One-Click.
For this market, don’t worry about your pricing being too high. (If it is, you won’t permanently scare people off; they’ll come back when you adjust it.) Worry A LOT about how to make the purchase a no-brainer. Write better documentation. Streamline your checkout process. Invest in making deployment incredibly fast and easy.
Should You Charge More For Your Product? – Brad Feld
http://www.feld.com/wp/archives/category/entrepreneurship/page/5
Should You Charge More For Your Product?
My partner Seth Levine has an outstanding post up today about the freemium model. It’s titled Pricing models, the freemium myth and why you may not be charging enough for your product and is worth going and reading right now.
He covers a bunch of stuff, nicely divided into the following topics:
Beware of too many pricing tiers.
Have a clear delineation between product tiers.
How about overlay features that you charge by the drink for?
Be careful what you put a tariff on.
The freemium myth.
Don’t be afraid to charge for your product.
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Beware the long “trial period”.
Seth has become “the pricing model guy” at Foundry Group – we’ve been dragging him into every pricing conversation whenever they come up.
I have one counterintuitive thing to add – it’s often easier to raise prices early on than lower them. While many pricing curves assume a decay curve toward lower prices over time, early in the life of your business you should consider gradually raising prices until you hit a natural price ceiling. Grandfather your early customers into the old pricing for a period of time (three months to a year) – they’ll feel like they’ve gotten a great deal for being an early adopter. Don’t forget to thank your early customers for their support.
Interestingly, this is the opposite of some very popular (and successful) pricing strategies, such as Apple’s for the iPod and the iPhone. High early prices for premium demand followed by steady price reductions over time as new products are introduced. If you are an established premium provider of a high demand product, especially for a physical good (e.g. a phone) vs. a digital good (e.g. software), this approach makes sense, both from a manufacturing supply perspective as well as a volume manufacturing perspective. But, if you are a digital good, you have a lot more variable manufacturing capacity (as long as you know how to quickly scale) and more margin to play with (ahem – usually 99.9%.)
Seth makes an important balancing point that you shouldn’t start out with too low a price point. This is especially true if you aren’t willing to raise prices to their natural ceiling over time. But, if you have no idea where to start, and have the courage to increase price quickly as you find early demand, consider a relatively low price point “guess” and then move it up until you find a ceiling.
It’s easy to underprice your product – Nivi
http://venturehacks.com/articles/pricing
It's very easy to underprice your product
by Nivi on April 1st, 2009
What’s the right price for your product? According to Steve Blank, it’s apparently $0. And it’s also $1 million. What?
Listen to this wonderful story to learn how Steve uses these two prices to create a bounding box around the highest price customers will pay for a product. And see why he thinks “It’s very easy to underprice your product… particularly if you’re an engineer.”
Audio: It’s very easy to underprice your product (mp3)
Steve’s story is about enterprise software, but you can apply these same techniques and thoughtful approach to almost any market — including the consumer Internet.
This is an excerpt from the fourth class of Steve’s customer development course. I’ve already taken the class, but I still subscribe to the Venture Hacks podcast and listen to it on my iPhone while I’m walking home from the gym.
Here’s a transcript of the story. Also see How to Determine the Optimal Price for Your Web
Service .
“And she realized… she left money on the table.”
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Steve Blank: Can I tell you a pricing story? When we starting Epiphany, I had no idea how to price enterprise software. There was one small problem, I had started an enterprise software company and never been in the business.
But, I had heard, and it actually was true, there was a woman named Sandy Kurtzig, who had started ASK Softwark. She was one of the first woman entrepreneurs, woman CEOs of a large corporation. And they were making software for IBM mainframes that was manufacturing software. Something called Manman, which I used in the late ’70s, early ’80s.
Since it was the first non-IBM enterprise software on IBM mainframes, [when] she got her first potential order, she didn’t know how to price it. It must have been back in the mid-’70s. She’s [with] this buyer, has a P.O. on his desk, negotiating pricing with Sandy.
The way she tells the story is, she didn’t know what to ask for it. But, the head of manufacturing told the buyer to go buy this damn thing. [He] didn’t care, [if] it was the world’s best piece of software. So, Sandy said she goes into the buyer who says, “How much is it?”
And Sandy gulped and picked the biggest number she thought anybody would ever rationally pay. And said, “$75,000�. And she said all the buyer did was write down $75,000.
And she realized, shit, she left money on the table. Sandy Kurtzig was awesome. And she said, “Per year.”
And the buyer wrote down, “Per year.”
And she went, oh, crap what else? She said, “There’s maintenance.”
He said, “How much?”
“25 percent per year.”
And he said, “That’s too much.”
She said, “15 percent.”
And he said, “OK.”
[Ed: This is called "flinch pricing."]
So, enterprise software got priced at $75,000 per year, per module. Now, I have to tell you when I started at Epiphany I heard this story and someone said, “Steve, how much is your software?”
I said, “$75,000 per year, per module.”
Now, fast forward to about four years later. I’m leaving Epiphany, we’re about to go public like the next week. I did not want to be a Section 16B officer. I happened to be walking by a conference room. It must have been conference room 702B then. I think we had 800 people.
I happened to be hearing a pricing discussion. So, I kind of stand outside. And they are arguing about the pricing I had just made up as an entrepreneur, because I heard this war story. And somebody was screaming, “You can’t change the pricing. It was calculated by…”
“I was about to let it go for $75,000… By the time we walked out, we got an enterprise software order for about $1.2 million.”
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Steve Blank: But the best Epiphany story, which I actually learned from a world class saleswoman named Gina Rulon-Miller. Her brother Todd was the first sales person at Netscape.
We went into Triple A, CSAA in San Francisco. It was going to be our first multi-million dollar customer. I went in with Gina. They loved our stuff, it really was going to do them a world of good. They said, how much is it?
And I was about to go, “$75,000…” And Gina goes, “Shut up I’m the salesperson.” She said, “A million dollars.”
And I went “…” Gina’s going, “Shut up. I’m the salesperson.”
And the guy looks at Gina and said, “Gina you’re out of your mind. We don’t pay more than $675,000.”
And Gina said, “All right. We’ll let you have it for $675,000.”
So, here was this software. I was about to let it go for $75,000, my first professional software salesperson had just gotten $675,000 and she did the same thing. And she said, instead of per year, she said, “But that’s for the base module. What other ones would you like?”
By the time we walked out, we got an enterprise software order for about $1.2 million. The point about pricing is, particularly if you are an engineer, it’s very easy to under price your product. Because you tend to value it on cost or need or competitive or whatever.
Bounding box pricing
Steve Blank: I, finally, in an almost every business I now work up what I call “bounding box” estimate, which is:
“How much is your product?”
“It’s free.”
“Steve, you can’t mean it. This is our fourth meeting. You know I’m serious.”
“No, no, no. It’s free. Assume it was free, how many would you use?”
“No, Steve. How much?”
“No, assume it’s free. How many would you use?”
Now, for enterprise software does anybody know how you make money in enterprise software?
Yeah. Turns out for enterprise software it’s the number of seats you actually got deployed on. Yeah, you made money on maintenance later, whatever. But, if you just got deployed on ten seats in one department, it’s not really enterprise is it?
It’s like closet software, which I used to get stuck into. You actually want to come out of the closet and be deployed broadly, as broadly as you can. And the test was if it didn’t cost anything, what would it take to deploy it?
When I used to do that they said, “Well I didn’t really tell you, but the IT guy really needs to approve this through the…”
“Well, why didn’t you tell me that before?”
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“Well, the product wasn’t free before. I thought we were just going to put it on ten seats.”
My point is going to zero flushes out a whole set of issues. Other times, I’ll go say to that same question, “How much is the product?”
“It’s a million dollars.”
“Steve, we’ve been talking for three months now. You know I don’t have a budget for a million bucks.”
And you get an answer sometimes like Gina did. “The most we pay for this type of software is $500,000.” Seriously. In a startup, you will find out by asking these questions continually, what the bounding box of your potential revenue is.
Do not be bound by what other people are charging. Anybody know where that science experiment that is being run today on a much lower price? Anybody know?
Anybody have the device in their pocket? iPhone. What’s the price of an iPhone app? Anybody know?
I don’t know. There are a bunch of sites out there with some iPhone revenue charts. It’s interesting. Go take a look at what the right pricing for iPhone apps are. My observation is people are running bounding box experiments real time. Real time.
Are they free and they drive other upgrades later or they charge you $9.99 and get real value now?
Price: Why Lower Isn't Always Better – Fred Wilson
http://mba-‐mondays.pandamian.com/price-‐why-‐lower-‐isnt-‐always-‐better/
Price: Why Lower Isn't Always Better
I want to tackle the issue of forecasting and projections next in the MBA Mondays series but I don't yet have an outline in my head of how I am going to approach this critical subject. So I am taking a breather this week and instead will tell a story I heard from a marketing professor in business school.
This professor did a lot of consulting on the side. He was known as a highly analytic marketing expert. He was asked to take on a french producer of champagne as a client. This champagne producer was trying to enter the US market but was not selling very much of their product in the US.
The professor did an analysis of the "five Ps"; product, price, people, promotion, and place. He determined that the champagne was of very high quality, it was being distributed in the right places, and that the marketing investment behind it was substantial. And yet it wasn't selling very well.
He did an analysis of comparable quality champagnes and determined that this particular producer was pricing his product at the very low end of the range of comparable product.
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So the professor's recommendation was to increase the wholesale price such that the retail price would double. The client was very nervous about the professor's recommendation but in the end did it. And the champagne started selling like crazy. They couldn't keep it in stock.
The morale of this story is that price is often used as a proxy for quality by customers, particularly when the product is a luxury item. By pricing the champagne at the very low end of the range of comparable product, the producer was signaling that its product was of lower quality than the competition. And by raising the price, they signaled it was of higher quality.
So when you are selling something, be it advertising, software, or something else, think carefully about how you are signaling the market with your pricing. Having the lowest price among your competition might be the right strategy but it might also be the wrong one.
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Sales
Sales
Sales and scope creep – Michael Woloszynowicz
http://www.w2lessons.com/2011/03/infinite-‐scope-‐creep-‐sales-‐development.html
Infinite Scope Creep, The Sales-Development Disconnect
Let’s say you're a developer or product lead at a relatively young, bootstrapped startup. You're not yet profitable and the company's cash flows are low as your still refining your product, and have relatively few clients. To increase cash flow your sales team tries to close every deal possible and are loath to turn down any clients, even if the product is not a good fit for them. To further add fuel to the fire, nearly every deal is inked with preconditions of adding missing features that the client “absolutely must have”. Many reasons are given for closing such poor fitting deals - which I'll get into later - but regardless of the reasons, they always lead to toxic results. The Result The resulting effect of this disconnect is manyfold. For starters, developers begin to get frustrated as they are pulled away from the initially laid out stories in their backlog and asked to work on features that deviate from the original plan. More problematic is the fact they they begin getting confused about the direction of the product, the market it serves, and the problem being solved. You enter a state of continual scope creep and the original vision of the product deteriorates into a fragmented collection of features. The initial problem of cash flows is further exacerbated in the long term as you find yourself with a product that poorly solves a number of problems rather than effectively solving one problem. The most detrimental sales actually result in a long-term increase in your costs if the deal does not fit with your cost structure. The best example of this is promising a highly customized solution when you have a mult-tenant application with few customization options. Under a lean startup approach these sales tactics either slow down, or completely destroy the build-measure-learn feedback loop. Developers simply make the leap from one build phase to the next, and never exit the loop, thus no learning takes place. From a customer perspective it’s important to remember that with hosted SaaS style solutions client satisfaction and problem-solution fit are paramount. If the promised value is not delivered then users will simply stop paying. In addition to not paying, the over-promise, under-perform result will lead to negative referrals which will hurt future deals with clients that may actually be a good fit for the product. Prevention This sort of cycle is easier to prevent than it is to stop, therefore it is important to take measures from the outset that will stop sales people from ever venturing down this path. One of the most effective tools is the creation of a user persona and communicating to
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all teams who your client is and what problem you are trying to solve. Make the completion of the minimum viable product your priority and only allow changes only based on validated and significant feedback. Some good rules to follow are:
Any in progress stories should be completed before moving on to a newly proposed feature. If you are using scrum and sprints, the new feature cannot be started until the next sprint.
A feature should only become a candidate if several sales meetings have suggested a need for it. At this point the feature should be tested with the existing client base through discussion or MVP style tactics (e.g. dummy pages, beta signups, etc.). If the feature is proven valuable and important to your current and potential users you can start to prioritize it. The first step in prioritization is determining its ROI, or simply its benefit to developer effort ratio. The benefit is particularly important to drill down on as you’ll need to consider whether it will it result in higher conversions, higher upgrade rates, or wider adoption. If wider adoption is the source of the benefit I recommend holding off until the product serves its current target user base as well as it can. If the ROI proves attractive add it as a story and let it marinate in your backlog for a little while, never jump into the feature right away. If the feature is still relevant in a month then fit it into your development schedule.
Feature additions or changes need to be decided on by a group of employees. This group should contain developers, product managers, sales people, and user experience designers. This way you can flush out all the implications of the proposed change, an effective solution can be found, and cross-functional buy in can be had.
Features should generally only be added if you’ve exhausted the product’s current target market
If you’re in the process of developing features for one target market, features for another target market should only be added in the context of a pivot. Simply put, your sales team has determined that you are pursuing the wrong market and are changing the direction of the product to serve this new target market. If you’re not changing direction then leave the feature somewhere and come back at a later time.
If the cycle has already begun, it’s critical to address the issue with the management and sales teams and implement the above safeguards. Most importantly develop the client persona and articulate the problem this user is having. This persona will serve as a simple test for client leads and will aid in filtering out a great deal of incompatible deals. Some Common Justifications You’ll typically hear several justifications for closing an ill-fitting deal but rarely are they valid.
“We can learn about how this type of customer works” This is never a good reason as you should be learning how the customer works before starting development. Remember that you need to learn how this customers broader market works, not just how they work.
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“This deal is highly strategic and will provide lots of future [insert dubious benefit]” This is one of the toughest calls to make as there is always the thought that a certain partnership will lead to future success. Occasionally they are beneficial, but from my experience these “strategic” partnerships rarely play out as expected and typically underperform. What you are doing here is making an up-front investment in the hope that it will result in long-term revenue generation. In effect this is the same as what you are trying to do with your existing product vision so why not proceed with that? Just remember that strategic partner ships vary greatly in their success, rewards are sometimes one-sided, and that they can only be beneficial if you have a finished product.
“Just this one time” It’s never one time, it’s merely the start of a vicious cycle.
What Your Sales Team Should Be In the early stages of your business the focus should be on validation and learning. The sales team should therefore work towards optimizing these two critical components with an emphasis on long-term value rather than short-term cash flow. Your sales people will need to be part salesman, and part product manager. They need to close the deal when it’s a good deal, and listen when it’s not a good fit. While a client may not be a good fit for the current version of the product, they may present insights on where the product can go in the future, or perhaps that you’re targeting the wrong market and a pivot is needed. To get these results from the sales teams the incentives have to be aligned accordingly. Commissions have to be paid based on long-term user retention and the profitability of closed deals. If a $100/month sale results in $5000 in up-front development and acquisition costs it’s hardly a successful sale. There is a great saying that “strategy is not about what you do, it’s about what you don’t do”. Remember that in business it’s easy to “yes”, it’s saying “no” that’s hard, but it’s the no’s that define the success of a product. Everyone is always hesitant to cut features, refuse features, or turn down clients, but it’s a reality of software development. Potential clients are never gone forever and if they’re not a good fit today, they may be tomorrow. After all, if the client is even talking to you today then they are clearly willing to change their current way of doing things. Always remember that in the early stages of your business you need evangelists, not detractors (think net promoter score). Focus your efforts of providing a best-of-breed solution to your target market and aim to under-promise and over-deliver.
Enterprise customers don’t change – Ben Horowitz
http://bhorowitz.com/2010/11/15/meet-‐the-‐new-‐enterprise-‐customer-‐he%E2%80%99s-‐a-‐lot-‐like-‐the-‐old-‐enterprise-‐customer/
11.15.10 // Meet the New Enterprise Customer, He’s a Lot Like the Old Enterprise Customer
Every day I hear from entrepreneurs, angel investors and venture capitalists about an exciting new movement called “the consumerization of the enterprise.” They tell me how the old expensive Rolex
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wearing sales forces are a thing of the past and, in the future, companies will “consume” enterprise products proactively like consumers pick up Twitter. But when I talk to the most successful new enterprise companies like WorkDay, Apptio, Jive, Zuora, and Cloudera, they all employ serious and large enterprise sales efforts that usually include expensive people some of who indeed wear Rolex watches. In fact, companies like Yammer who originally started with new age models have transitioned to more traditional enterprise sales approaches after experiencing the market without them. So what gives? Are all these smart people out of their minds? Has nothing changed since the early days of IBM? Some things have changed, but others are exactly as they were.
The Order of Adoption Has Changed
20 years ago, the technology adoption curve generally conformed to the following order:
Government—specifically Defense and Intelligence organizations
Businesses—with large businesses going first and smaller businesses adopting later
Consumers
Today things have completely reversed. The latest technology goes to consumers first, followed by small enterprises that behave like consumers, then larger ones, then the military. The stunning reversal is one of many profound side effects of broad scale Internet adoption.
In the old days (before the Internet), no technology products were free, because distribution costs made it impossible to offer anything without some commitment from the end customer. As a result, new technology adoption generally started with the deepest pockets (the military) and worked its way down to the shallowest pockets (the consumer). Since the introduction of the Internet, many technology products can be distributed for free, and therefore have some free or free trial version. Interestingly, the order of adoption now follows decision-making speed rather than deep pockets. That is, consumers who can decide very quickly adopt first and the military—which has a notoriously complex decision making process—adopts last.
This reversal first initially stunned businesses. I remember dozens of CIOs at large companies being shocked that it was easier to find things on the Internet via Google than it was to find things in their own companies. We’ve seen the phenomenon repeat many times with the most recent being that it’s far easier to get background information on complete strangers via LinkedIn than it is to know the skill sets and backgrounds of your co-workers.
Encouraged by the new trend, innovative entrepreneurs imagine a world where consumers find great solutions to help their employers in the same way that they find great products to help themselves. In the imaginary enterprise, these individuals will then take the initiative to convince their collegues to buy the solution. Through this method, if the product is truly great, there will be little or no need to actuallysell it.
The actual enterprise works a bit differently. Meet the new enterprise customer. He’s a lot like the old enterprise customer.
Meet The New Enterprise Customer
At the D8 technology conference, Steve Jobs made a statement about selling to enterprise customers that many missed but was extremely insightful and revealing:
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“We want to make better products than them. What I love about the marketplace is that we do our products, we tell people about them, and if they like them, we get to come to work tomorrow. It’s not like that in enterprise . . . the people who make those decisions are sometimes confused.”
Why are the enterprise people so confused? Why don’t they just quickly adopt the best products without requiring these complex sales processes?
Big Companies Don’t Have Credit Cards
Purchasing anything in a large organization requires a rigorous justification process that generally culminates in a purchase order (PO). They do not allow their employees to use their credit cards to buy technology off of the Internet. In fact, at many companies, doing so and attempting to expense it after the fact is a fire-able offense.
If you work in a startup, you might wonder why large organizations don’t just trust their people to make smart purchasing decisions. If an employee needs a new technology, why wouldn’t the company just let him do the right thing? There are many reasons.
The employee may not know what’s appropriate in the context of the larger organization. The more people in an organization, the more diverse the set of needs. If the organization purchases, for example, social networking software it must attempt to take these needs into account.
The company may already own the technology or a similar technology. If you work with 100,000 people, how do you know what the other 99,999 have already purchased? When EDS was a customer of ours, they had a $1B annual credit with Computer Associates. Computer Associates sells hundreds of products and is constantly developing new products (many of which can only be learned about via special meetings with the company). How would any employee at EDS possibly know about potential conflicts without a formal process?
The employee may be corrupted by side incentives – If an employee of a large organization can make significant purchases without review or proper process, it’s quite possible that he will be corrupted by an agent of a vendor. For example, an enterprise sales rep might buy a network engineer a new Porsche in exchange for a $10 million order.
Public companies must comply with Sarbanes-Oxley compliant expense controls. Generally, when a company designs its expense controls, it must have in place a method for approving significant expenses before they are made. If a company lets an employee make significant purchase or even a small purchase that leads to a significant purchase on his credit card, that will violate the company’s financial controls, because the purchase was not pre-approved.
As a result of these and other factors, large companies employ complex processes to ensure that major purchases make sense. These processes generally span many different organizations and stakeholders. It is not unusual for a purchasing decision to include people from many different IT departments (e.g. development, security, operations) and business functions (e.g. Finance, IT, Legal). The decision often involves technical decision makers, economic decision makers, and risk management decision makers.
Often these processes are so complex that almost nobody inside the company knows how they work. Excellent enterprise sales reps will guide a company through their own purchasing processes. Without an enterprise sales rep, many companies literally do not know how to buy new technology products. A top notch enterprise sales person not only knows her customer’s process better than the
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customer, but will be skilled at characterizing the value of her product to each decision maker independently. This will involve product demonstrations, proof of concepts, complete return on investment analysis and even competitive positioning. The sales rep will work with the various constituents to help characterize the value proposition their management teams.
Large Enterprises Like Their Old Products
One thing that all large businesses have in common is that they have purchased a huge amount of technology over time. In fact, many of these technologies enabled the companies to become big in the first place. Naturally, the technology deployed in an enterprise varies widely in age. Some of the systems are outdated, complex, and downright arcane. Nonetheless, once deployed, enterprises develop great affection for the technology that runs their companies. They may complain about it, but like an old woman speaking of her spouse, the underlying love is far stronger than the criticism. And big companies expect you to love their old products too—by integrating with them.
But how do you figure out which old systems you need to integrate with and which ones you can afford to ignore? Like most things in the enterprise, it’s complicated. Great enterprise sales forces sort through the myriad of existing systems and help guide their companies to find the essential few.
People in Big Companies Work to Live
If you work in the technology industry and particularly in Silicon Valley, you become used to employees who work tirelessly to improve their companies. It is not difficult to imagine one of these employees independently finding a new technology then championing it inside of her company simply because she wants her company to become great. Outside of technology and especially in very large companies, people generally don’t do things like that. Most large company employees like to stay within the scope of their defined job. If they must make a choice between potentially advancing the efficiency of their employer via new technology or getting home to see their 8 year old’s pee wee baseball game, it’s not a difficult decision. As a result, expecting them to adopt your product with no help is probably not a good idea.
Final Thoughts
If you are selling to consumers or companies that behave like consumers, then moving away from the old channel models may make perfect sense. However, if you plan to sell to a large enterprise, keep in mind that the new boss is the same as the old boss.
Scaling sales (ABC) – Mark Suster
http://www.bothsidesofthetable.com/2010/10/31/scaling-‐sales-‐arming-‐aiming-‐as-‐bs-‐cs/
Scaling Sales: Arming & Aiming – A’s, B’s & C’s
by MARK SUSTER on OCTOBER 31, 2010
This article was originally posted in a much more concise version over GigaOm if you prefer the shorter version.
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This is part of my ongoing Sales & Marketing Series. In the first part of this post I talked about how sales in a startup is often evangelical, requires as consultative sale and needs constant adjustments based on customer feedback.
The next few posts are going to talk about scaling your sales operations as you move out of the evangelical phase.
In the early days of selling it can sometimes be an advantage to not have rigid pricing schedules, complex service level agreements (SLAs), hard-and-fast rate limits, etc. In each sales situation your goal as the leadership of the company is listening to feedback, calculating the customer ROI, testing what prices people are willing to pay, learning where budgets will come from, etc.
But what happened to me and what I think happens to others is that this tacit knowledge of how to sell your company’s products is not as institutionalized as you think. The people that are in the same office as the leadership team, many of whom have been there since the “early days” intuitively know how to position the company and how to sell its products. In fact, many of these people can adjust the company presentations on the fly as you roll out new product features or can reposition versus the competition as they get feedback from customer losses.
As your company develops multiple offices, hires a larger number of sales people or increases product complexity over time this kind of tacit knowledge doesn’t scale. The new hires that you pick up will use your same sales decks created by marketing but will have less impact and you often don’t realize it’s happening. Or the sales decks will all be customized by your “feet on the street” and won’t resemble the way you THINK your company is being positioned.
I know all of this, like most everything I learned about startups, from making mistakes at my first company. We had 4 or 5 sales reps that had been around since the early days. We then brought the number up to 8-10 and even hired an SVP of global sales & marketing. Because he was a big company sales exec he was very critical of some of the missing tools at my company. He pushed for a lot more standardization of pricing, marketing collateral, sales process, etc.
He told me, “There’s no standardized way for me to onboard new people. There’s no way for us to easily rollout changes to pricing, positioning relative to competitors or new sales tools. We need more standardized tools if we’re going to “arm” our sales teams with the tools they need to effectively do their jobs and we need to better “aim” them at the right opportunities.
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Ultimately he & I had a bad cultural fit. I was stuck in startup culture and he was stuck in big company culture and their was a chasm between us that couldn’t be rectified. But the truth is that he was right about the need to for us to change as we grew and I think this happens at a lot of startups. Like I did, they get stuck in this middle ground where process & tools become more important.
Be realistic about your skills. I’m not (and never will be) a good process manager because I’m not process driven myself. I had to surround myself with trusted people who were great at process.
I’m going to take a few posts to talk about some of the scaling issues. In this post I’m going to talk about “aiming,” or segmenting your deals into A’s, B’s & C’s.
A’s, B’s & C’s
As a very early-stage startup person you’re used to rigorous prioritization. You have no choice since in the first few years everything you do is about showing results to justify financing to continue your operations.
I would work through my sales deals pipelines by doing pipeline reviews. In order for a deal to be forecast in the current quarter you had to have a champion, identified a budget holder with money to spend, presented the customer with an ROI (return on investment) calculation of the benefit of using our product and the customer had to be in an active review of choosing a supplier of document & collaboration services (the product we offered).
You could often tell when a sales person couldn’t defend having the deal be listed as an A deal (and thus have a high forecast percentage) by having them walk you through each deal. When I got busy and only had time to review spreadsheets or output from Salesforce.com it was impossible to know which deals were “real.” The reason, as I learned, is that many sales people like to take meetings with customers who are willing to meet them and give all the right messages. But many of these people they’re meeting with are NINAs (no influence, no authority) – and thus not qualified.
Inexperienced sales people will spend too much time with people that are nice to them and talk a good game about being interested in your products but who don’t have the budgets. I learned this the hard way. Either we’d have deals that seemed “stuck” (were in the “closing within 3 months” pipeline for 9 months) or we’d have sales reps who constantly kept adding new deals and taking out the old “sure deals” that didn’t close.
The most experienced sales reps were the ones who knew that the three most important things to do with a sales lead were to qualify, qualify, qualify. Lead quality matters because the scarcest resource of a sales rep is actually time. The reality is that no matter how much you want to sell your products, you can’t push them on a customer who isn’t ready to buy. They might have other initiatives, budget constraints or just need more time to evaluate your space. As the best sales leaders will tell you, “you have to align a company’s sales cycle with a prospects buying cycle.”
This is where management has to step in and help with “aiming.” Ultimately as you grow this task can be shared between a VP of Sales, VP Marketing and the CEO. I define “A deals” as those that have a realistic shot of closing in the next 3 months, “B deals” as those that you forecast to close within 3-12 months and “C deals” as those that are currently unlikely to close within the next 12 months.
“A deals” should get much of the sales person’s time (say 66-75% of time), “B deals” should get the balance as each sales rep needs to build their pipeline and bigger deals take time. And the key to scaling is that “C deals” should get no time from sales. They should be owned by marketing.
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The role of marketing in managing pipelines is to do two things 1) fill the top end of the funnel with new “qualified” leads (e.g. converted from “suspects” to “prospects”) and 2) managing “C deals.” Today’s C deals are obviously tomorrow’s A’s & B’s.
So the best run companies have marketing running activities to nurture their C deals. Examples activities:
Newsletters – one of the goals of newsletters is to keep your company & its products on the consciousness of your “suspects” or future buyers. C deals go in the newsletter bucket and should be identified as C newsletter companies. The things you send them should be different than the newsletters you send to existing customers, for example
Customer Events – It is far easier to get potential customers interested in your products when they hear actual customers talking about your products and how they are using them. Suspects & prospects are often in search of success stories from their peers to hear how they’re improving internal operations. So one of the smartest things we did at Salesforce.com was run “city tours” which were basically our existing customers standing up and talking about how they were using our products plus our product management teams talking about future innovation / development. Customer events are a great way to market to your C deals so that you keep them informed and try to raise their interest levels
PR – Some companies are excellent at PR and others don’t put much effort into it at all. I think PR is an incredibly important activity for technology companies and most companies aren’t very good at it. I wrote a bit about how to better manage journalist relations in this post. The reason many companies don’t put enough effort into PR is that PR doesn’t have an immediate translation into sales because it’s most a “C deal” activity.
Analyst Relations – In many technology fields analysts are hugely influential in determining enterprise budgets. I sometimes find it funny since 73.6% of all statistics are made up, but the truth is that many analysts are great and help customers frame the decisions they need to reach. Spending time with analysts getting into their “innovator quadrants” will help you manage your C deals and pull them forward to B’s & A’s. This is obviously a marketing & CEO activity.
In the next Scaling Sales post I’m going to cover “objection handling.”
Scaling sales (objection handling) – Mark Suster
http://www.bothsidesofthetable.com/2010/11/02/scaling-‐sales-‐arming-‐aiming-‐objection-‐handling/
Scaling Sales: Arming & Aiming – Objection Handling
by MARK SUSTER on NOVEMBER 2, 2010
This is part of a series on sales & marketing. The original post of this article on appeared on GigaOm in a more concise version here.
I previously covered how early phase sales teams should be “evangelical” and consultative in nature. As a tech startup grows it needs to develop more process & management if it is to scale. I call this “arming & aiming” your salesforce. The first post on scaling sales dealt with “aiming” your sales teams – making sure they were focused on the right opportunities. This one deals with “arming” your teams – preparing them for battle by giving them the right tools to increase their win rates.
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One of the biggest areas I’ve noticed many sales teams don’t spend time on to train their staff is “objection handling.” When I talk to people about sales I often describe the sales process as a series of hurdles (objections) that are put up to avoid making a purchase and your responsibility is to work through these common objections with your customer.
[update: as per Phil Sugar's excellent comments below - you need to first be sure that the customer has a need that you can solve and is ready to buy. The first rule is sales is qualify, qualify, qualify so you don't spend time overcoming hurdles only to find out there is no buyer.]
In the evangelical phase you’re working through these with customers on the fly. Some objections are real and they end up becoming changes to your product, your service plan or your pricing / bundling. Some objections are just excuses not to buy that can be overcome with enough time, effort and evidence.
As a founder, when you’ve been dealing with these kinds of objections for a couple of years it becomes natural and you easily handle objections on price, product & competition without much
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thought. It is tacit knowledge. But to effectively scale a sales team you need to codify it, train your sales teams, monitor results, refine your messages and then refine the training / rollout to your teams.
Some examples of common objections across many companies:
1. Prices are too high – Inexperienced sales reps will try to convince you they need to lower price to win deals. More experienced sales leaders seldom compete on price. They’ll discount – sure. But they want to establish a baseline in the customer’s mind of the value they will get by using your product. And the only way to do that is to help them calculate the ROI (return on investment) of using your product. As a company you need to invest in ROI calculators (spreadsheets) that are easy for sales reps to plug in basic customer metrics and pop out with an expected benefit. It is even better when the spreadsheets were established with your early customers and therefore the baseline for the calculations are real. Even better if that customer is referenceable! Referenceable customers are the holy grail of sales.
2. You’re more expensive than competitors – “Of course we are. We’re a premium product. Let me walk you through the comparison set of our offering versus our competitors…” You need to talk them through your advantages. For example, if you’ve raised 3x the funding of your nearest competitor then you talk about the investment dollars you’re putting into your product versus the competition. ”It’s not about buying the product only where it’s at today – even though we’re advanced there – it’s about where the product is going. We’ve investing in R&D at a faster rate than the competition which is why we raised $10 million to fund extra development.”
3. We’d rather buy the “all-in-one” solution - Let me show you our API’s and how we integrate. You can have best of both worlds. All-in-one solutions may initially seem appealing but you end up getting inferior innovation. Our big, integrated competitor is investing across 12 different product sets. We only do 2 and therefore those two are much deeper / better functionality / more focused. Let me show you how you can use both of our products seamlessly.
Whatever.
These are made-up examples but they are typical of the kind of knowledge you gain over time for how to win an increased percentage of competitive deals. You need to codify all of your knowledge, put it into writing that can be disseminated to distributed sales reps and run training exercises where you drill people on the most raised objections.
And importantly you also need to get feedback from your sales reps who are on the front line every day what is working and what isn’t. Don’t think that you have all the answers in the ivory tower.
If you don’t arm sales people with the knowledge of how to overcome these obvious hurdles then each one will be competing without the collective wisdom of your company’s years of experience.
The next post will talk about more of the munitions your sales reps need.
Understanding salespeople – Mark Suster
http://www.bothsidesofthetable.com/2010/04/08/journeymen-‐mavericks-‐superstars-‐understanding-‐salespeople-‐at-‐startups/
Journeymen, Mavericks & Superstars: Understanding Salespeople at Startups
by MARK SUSTER on APRIL 8, 2010
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Most technology startups seem to be founded by three types of people: product managers, engineers or biz dev types (MBAs and the like). Very few of them are started, in my experience, by sales people and very few early stage companies really understand sales. That’s why I started the Sales & Marketing Series and at one point I will do a bunch of posts on the sales methodology we developed at my first company called PUCCKA.
Today I want to talk about sales executives and a model for thinking about them. If you ever have to interview, hire, judge the performance of, decide whether to promote, assign clients/regions to them or have to decide whether to fire sales people, I think having a framework for thinking about them is helpful.
Here’s mine:
Let me start with a few biases. First, I think that most great sales people have an innate skill that can’t be taught. That view from me isn’t surprising since on the topic of Nature vs. Nurture in entrepreneursI’ve clearly come down on the side of nature more than nurture (again, that doesn’t mean nurture has NO influence, just less than nature). Second, I think that running great sales programs is mostly about running great sales processes. So as you grow your business and if you’re looking to hire sales people, one of the most important things to look for is somebody who understands the sales process and somebody that you perceive as “process oriented.” More on that later.
1. Journeymen - Journeymen (Journeywomen!) are, as the name implies, the people who have “learned a trade and work for another person usually by the day.” They are hugely process driven. These people take directions well from a sales manager on how to approach sales campaigns. When you hear them speak in an interview about how they’ve run sales campaigns in the past they describe the methods with precision. They are masters at using Salesforce.com because they love the structure that it provides. They’re organized and methodical. They’ll have taken 10 sales courses and
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they’ll list them all on their resume (why??). They set up “tickler” lists to remind them of calls and they always make the calls they say they are going to make. They’re always on time. They work through ROI calculations with customers. They’re great at orchestrating your company to deliver product demos. They know how to walk a deal from business owner, through IT, through procurement and through legal to get a closed order. They are the LIFEBLOOD of sales organizations because they’re plentiful and deliver great value relative to their costs. They’re also usually very loyal to your organization. Almost by definition. They’re journeymen.
But doesn’t Journeyman almost imply something pejorative? Yeah, kind of. Even though they’re great at process you can tell when you spend time with them that they miss some sort of “spark” that you’re expecting in a sales person. Some sort of magic where you just finished the meeting and can’t remember what they were selling but you know you needed three of them. It’s the “je ne sais quoi,” the “X factor.” And in my experience Journeyman are not good in two scenarios. a) they don’t tend to make great heads of sales departments and b) they aren’t the people you want early in your company. The reason for “b” is that most early stage companies survive on “evangelical sales” as in when you’re having to educate the customer on something new and different and get them to take a leap of faith. Journeymen don’t do “leap of faith.” They sell more commoditized or well understood products that can be sold via a well-defined process. That’s my view, anyhow. And my experience has taught me that.
2. Mavericks – Mavericks are the opposite of Journeymen. Mavericks are by definition bad at following rules and bad at process. I should know because I’m a maverick. (John McCain used to be a Maverick but as Jon Stewart points out is no longer one – super funny 5 minute video – must watch if you have time and if, like me, you used to love McCain before his lobotomy. If you still love McCain, um … not so funny then). Mavericks are the people who innately know how to navigate a sales campaign. They can get access to senior executives and champion a sales campaign from the top. They still hit all of the highlights of the sales methodology (getting a champion, understanding the pain, mapping your solution, proving the ROI, finding out the competitors and differentiating and getting every department to “yes”) but they can’t follow the exact same process every time. They’re unmanageable. I’m unmanageable. We’re chaotic by nature. But in the end they know how to put the big wins on the board. They can smell the person who holds the purse strings in a company and how to gain access to them. They inspire trust in the buyers and they build long-term relationships. They’re not afraid to break a few eggs along the way – nothing ventured, nothing gained. The buyer is more loyal to the maverick than to your company. That’s OK.
Every organization needs maverick sales people. They hit your home runs. But … they DO NOT make good sales leaders. In fact, if they work in sales they shouldn’t have anybody reporting to them. They should go for the big wins and get all the support they need. I think I made a pretty good CEO but I know I would be lousy sales manager. Maybe like somebody who could run a restaurant but wouldn’t make a great chef? To be a great sales manager you need to get a team of people to be able to follow your sales process methodically. You need to do weekly sales team calls, regular customer calls with your team, review their pipelines with them, find out when they’re BS’ing you, produce weekly forecasts, etc. Don’t confuse your mavericks who have the innate ability to sell with a potential VP of Sales that will need to run your team. The difference is PROCESS ORIENTATION.
Mavericks do work well in early-stage companies and are probably your best bet for you first hire or two. You need somebody who can lead evangelic sales and get referenceable clients that can be marketed later when you have your journeymen.
3. Superstars - These, as the name implies, are the rare breed of individuals who have the innate ability to sell and are very structured and process oriented. You get all the benefits of a maverick but with more reliability and predictability. You also get somebody who can work well with leverage.
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They’re able to manage and therefore harness the power of many journeymen to consistently deliver your sales numbers. I generally think that superstars are not the first people to hire in a startup. The best of them will require too much money and will be working for somebody else managing a team AND carrying a bag. Superstars are best to hire once you’ve got your product/market fit, proven your product will sell, hired a maverick and a few journeymen and now need to bring in leadership and structure to enable you to scale more quickly and predictably. If you found the right person who is a superstar and is ready to join your early-stage business I wouldn’t kick them to the curb. But … I question if they’re really a superstar if they’re willing to work for you at a super early stage. Have to ask yourself why. Or whether you have the wrong read on them.
4. Trouble – If you interview somebody who doesn’t seem like they’re religiously process-driven / can take good direction and if you don’t have the feeling that they could sell ice to the Eskimos then don’t hire them. They will not succeed at sales. Enough said.
In life I’ve found it useful to have little frameworks to try and interpret the world through. They don’t always apply 100% of the time but they’re a useful way to shorthand. The Journeymen, Mavericks and Superstars matrix has always suited me well and has stood the test of time.
Thank you to the lovely Jacqui for helping me with the Balsamiq mockup graphic. LOVING Balsamiq!
Building a sales team – Dharmesh Shah
http://onstartups.com/tabid/3339/bid/10155/Building-‐Startup-‐Sales-‐Teams-‐Tips-‐For-‐Founders.aspx
Building Startup Sales Teams: Tips For Founders
First off, just to be clear, I’ve never been a sales person. I’ve never even played a sales person on TV. All the points below have been pulled from startup sales teams that I think work pretty well (including the team at my marketing software startup).
Building Startup Sales Teams
1. Don’t hire sales people too early. In the early days, the founders should be able to sell (and should be selling).
2. You don’t need sales people, you need sales. Don’t think VP of Sales — think “Revenue Engineer”. (Not the greatest analogy, but just like you won’t hire a development “manager” as one of the first 5 people in a startup, you shouldn’t hire a sales “manager” either). Don’t get caught up in fancy titles — focus on dollars in the door.
3. Don’t hire several sales people at once. Your goal is to figure out the “pattern” of what kinds of people are best based on what you’re selling and who you’re selling it
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to. You need some feedback from the system so you can continue to iterate on your hires.
4. If you’ve never hired or been around sales people before, be prepared for a bit of a shock to the system. They’re not bad people, they’re just different. If you're an introverted geek like me, it's helpful to remember that your startup needs to sell stuff.
5. Resist the temptation to create complicated compensation plans. If it requires a spreadsheet to figure out the commission, it’s too hard. You’ll have plenty of time to confuse sales people later — start simple.
6. Agile methodologies can work in sales as well. Iterate! Refine your demo script, your slides, and any other collateral information. Capture the lessons learned by the best-performing people and spread it to the rest.
7. Sales people will generall act in mostly rational (but often surprising) ways based on incentives. The rules of the game defines the behavior of the players. You were warned.
8. ALWAYS connect incentives somehow to ultimate customer happiness. If you reward just “deals getting done”, you’ll get deals — but at too high a price. You might get push-back that sales people don’t control/influence customer happiness, but they do. They “pick” customers, they set expectations, they control the degree of “convincing” applied.
9. Make sure you understand the economics of your business. Figure out your total COCA (Cost of Customer Acquisition). This includes sales people, marketing people and marketing campaigns. Quick example: Lets say you paid a sales person $10k, a marketing person $10k and you spent $5k on Google AdWords (for a total of $25k) last month. If you sold 10 customers last month, your COCA is about $2,500. Different businesses have different needs in terms of sales vs. marketing spend. Make sure neither is too far out of whack.
10. Your life-time-value (how much revenue you expect to generate per customer) should be higher than your COCA. No, I did not need a degree from MIT to figure that out. Once your LTV is a multiple of your COCA, you’re ready to start turning the knob and scaling the business a bit (hiring more sales people). But, if your LTV is way lower than your COCA, proceed with caution. If there is no hope for LTV getting higher than COCA, you’ve got a problem. Don’t try to hire additional sales people until the economics sort of make sense. If the car is pointed towards a brick wall, hitting the accelerator is not a good idea.
11. Track data maniacally (even if it’s just in a spreadsheet). Information you will want includes: What was sold, who sold it, when, for how much, etc. This data will be invaluable later as you start to scale. For example, you should be able to answer the question: We had 14 customers cancel last month — who sold those customers? Is there a pattern? In the early days, you likely won’t have the volume (or the time) to analyze the data — but you should at least capture it for future use.
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12. Your pricing should be in line with your sales structure. For example, you can’t expect to have an outside salesforce (that meets with customers in person) if your average deal size is only $10,000. The math won’t work.
13. Once you get beyond three or so people, running your sales in a spreadsheet will become painful. Start looking at CRM systems (like Salesforce.com).
14. Start watching the shape of your “funnel” as early as possible. How many leads are you getting a month? How many turn into opportunities? How many of those convert into paying customers? Once you understand your funnel, you can slowly start tweaking your system to fix the “leaks”.
That’s all I’ve got for now. For those of you that have built early-stage sales teams, what are your ideas and insights?
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Hiring sales – Furqan Nazeeri
http://altgate.typepad.com/blog/2007/09/hiring-‐your-‐fir.html
Hiring Your First Salesperson
I was recently asked about this topic by a talented first-time founder/CEO and decided to post this excerpt from my response.
So you want to hire your first salesperson? As founder of your company, you have raised some initial capital, recruited your initial development team and even gotten your product to a beta level. Now, you're talking to customers and starting to sell in earnest. This is a pretty important milestone and decision for you and the company. Here's a couple of tips based off my own experience.
If your background isn’t in sales, then you should find someone whose background is to help you hire the right person. Salespeople interview well so if you don’t know how to cut through that you’re in for a ride. But the key is to find someone who’s hired 100+ sales people and sales managers in their career and leverage their experience. Put them on your advisory board and interact with them frequently. You might even retain them as a "buyers agent" to help with recruiting. Ask them to do actual interviews and help source candidates as well.
When in doubt, "hire junior." Except in rare cases, it is probably premature to hire a VP of Sales that you’ll keep for 2+ years. You want someone who’ll be out in the field selling and bringing back customer feedback (and sales!) probably more of the former in the first year. Terry Gold wrote a good blog post on this some time back.
Depending upon how far along the product is, you may also want someone who doesn’t fit the classic sales mold. Ideally, the person who you hire will come back and help translate why the “customer said no/not now” (or "yes" for that matter) into new product features/pricing/packaging. Someone who has product experience or maybe even someone who once worked on a help desk for a product selling into similar firms could work.
Read and re-read the “Sales Learning Curve” by Mark Leslie. While it’s not directly relevant to every company, the principals are the best I have seen on how to bring a new product to market and who to recruit to do that.
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In terms of structuring compensation, be careful not to apply a classic sales compensation package. If you hire someone with a comp package of $70K times two with commission on sales, you’ll end up getting pulled in a direction you may not want to go. In my experience, the right compensation package is a base plus discretionary bonus that gets them to an on-target earnings you both are comfortable with. You’ll want to agree with them to review the metrics every 3-6 months. Put them in writing. To pull this off will require establishing some trust between you and your new hire. Take the time to develop it.
I would stay away from hiring through traditional job boards for this position. Assuming you don't know someone already, I’d place an ad on LinkedIN jobs and also spend a bunch of time doing searches on LinkedIN for people who might be a fit or who may know someone who would. You will want to upgrade your LinkedIN account so you can do searches and send intro notes (costs a couple hundred per year for a biz account, I think). Network with sales people you admire. Call some of your customers/beta users and ask them who are the sales people or companies whom they admire. I found this to be a great source of candidates early on.
Hiring sales people – Mark Suster
http://www.bothsidesofthetable.com/2010/10/12/startup-‐sales-‐why-‐hiring-‐seasoned-‐reps-‐may-‐not-‐work/
Startup Sales – Why Hiring Seasoned Sales Reps May Not Work
by MARK SUSTER on OCTOBER 12, 2010
A while back I wrote a bunch of posts on Sales & Marketing and have been meaning to get back to that theme for a while. Even if you don’t have “direct” sales I would tell you that “everything is a sale” including fund raising, hiring, getting press and doing business development. So I hope these posts will be useful to all and not just those who need road warriors.
If you’re interested in recruiting sales people, I wrote on the topic of startup sales people: who to hire & when – understanding the roles of Journeymen, Mavericks & Superstars.
Evangelical sales – Understanding startup sales people and process.
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One of the biggest mistakes I see early-stage startups making is hiring “seasoned” sales professionals or hiring people too senior, too early. Here is my recommended approach.
1. Start by selling, yourself - OK not by “selling yourself” but but selling, yourself. Reminds me ofEats, Shoots & Leaves. OK, I’m still self conscious about whether a comma goes there but you get the point.
I see way too many startup founders who don’t have experience in selling and probably don’t feel that comfortable going to customers and asking for orders. This is probably because many founders are product or technology people. If this is you I think it’s really important to get over this hurdle. Spending time selling to customers is the best way to find out what their problems are and how good your solution currently is at mapping to their needs. This only works if you’re not a crocodile sales person. You learn by asking.
The mistake many startup people make is they hire a “sales person” to go out and talk with customers so they can do what they’re good at which is building product or “running the company.” Sales people are a different breed, you say. The problem is that in an early stage business there probably isn’t a perfect fit between your early product and a customer’s needs. You learn that by showing them your product, watching their reactions, asking them questions about what they’d like to see improved and then racing back to the office to talk with the team about what you’ve learned and how you can incorporate it into your product plans. Repeat this process 50 times and trust me you’ll see patterns.
I was WAY off between my book research about what the engineering & construction market would want (my first company) and what they actually wanted. I only found out through customer meetings.
Also, this goes equally for business development. How can you send some young MBA “biz dev type” out into battle to sign up partners when you’ve never met with your potential business development collaborators and heard what their goals are and how you can meet them? If you send out the biz dev guy I’m sure he/she will ink deals. That’s what they do. But you’re unlikely to yield results unless there is a close alignment of benefits for them and for you.
2. Next you need to hire “evangelical” sales people - Once you’ve started to get alignment between your product offering and what customers want you’ll need to hire a sales person or two. You should already have a good feel for the customer pain, how you solve it, how your product differs from competitors and what the acceptable price points for your product should be. If you don’t have a “base camp” understanding of these issues you’re not ready to hire a sales person. If you can’t figure all of this out then adding a non-founder sales person isn’t going to solve your problems – it’s just going to add to your burn rate.
But assuming that you do have a good starting point for sales, you’ll need to hire somebody to expand your pipeline of leads, help build customer relations and to allow you also to have some time for the hundred other things you’re responsible for like fund raising, recruiting, products, customer support, etc.
The next mistake people make is to hire people who have “done it before” in your field and from a big-name innovator in your field. So if you’re enterprise sales that might mean hiring people from Oracle, Microsoft, Salesforce or whatever who have never been at an “unbranded” startup. The skills to be successful at a sales academy company like those listed are very different than those who would work at a startup. If they left an “academy” and worked for a startup before coming to you then they’re probably fine.
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The specific things you’re looking for are: intelligence, ability to think creatively, ability to work with customers on vaguely defined problems, ability to assemble an ROI business case (with a template already created by marketing) and above all else the ability to listen, summarize and follow-through. Early stage selling is way more “evangelical” than process driven. That means you’re more often than not trying to get customers to realize they actually have a problem versus their already having budget assigned for a system in your category.
It is a consultative sale. Don’t confuse that with hiring “consultants” who make terrible sales people. But a consultative sale means you need somebody comfortable working with a lack of defined structure, process or product. If you hire that person straight from a sales academy they will be hugely frustrated that you don’t have pricing sheets, high quality sales collateral, a well-oiled sales process integrated into Salesforce.com and a clear sense of why customers should buy your product.
Having somebody from an academy institution when you’re ready to scale is awesome. There are no people like this who know how to crank the sales machine once the product / market fit are aligned. But hire them too early at your peril. IMO at least.
3. Don’t bring in the big guns yet – The related mistake I see (and have made) is hiring people who are too senior. I always tell people, “hire somebody who wants to punch above their weight class” (i.e. the person who wants to next level up rather than the person who has already done it). Most sales professionals start by carrying bags. As they become more senior they take on management responsibilities such as planning, forecasting, pipeline reviews, coaching staff, etc. As they get really senior they hire people to help them with sales ops, comp plans and creating marketing collateral.
What you really want are guys like Derek Rey who is doing a tremendous job over at Ad.ly. I had breakfast with the CEO, Arnie Gullov-Singh, yesterday. He was showing me their latest products, positioning and collateral. It was awesome.
I said, “wow, I’m glad to hear that Krista is working out so well as our head of marketing.” Arnie, “yeah, she is, but she didn’t do this deck. Derek did. He talks with customers, comes home, cranks out a new deck and has it in new proposals within the week.” I was blown away by the quality. He’s on the front line and hearing what customers really want. And he rapidly iterates that back into product development to rapidly respond to customer requests and has the messages straight into our sales campaigns.
Eventually you’ll need sales “management” and either your strong early sales leader can grow into that or you eventually need to bring in somebody with professional sales management experience. Each situations is different. Some people can scale into the roll and others can’t. And some of the best sales people also don’t want to move into management in the same way that some great technical architects don’t always like to move into managing GANTT Charts, work progress and people.
4. Do many sales meetings together - Once you have your initial sales people in place you can’t just sit back and review their weekly sales spreadsheets and push them for progress. You still need to be out on the front lines together. They need to hear how you position your company and how your products will help the customers. They need to watch and gauge customer reactions. They need to learn from you and if they’re good (and if you’re open) they also need to give you feedback on what doesn’t work.
And you need to watch them pitch. Avoid the temptation to always jump in and “save” them. Take the opportunity to watch the sales process as an observer. You learn so much from being able to sit
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back and just watch the body language rather than having to “perform.” It’s also a vital part of sales training.
5. Don’t confuse your early sales success with a scalable sales process – Finally, once your evangelical team is firing on all cylinders and orders are starting to flow in the door, it’s easy to confuse this with your ultimate success. I was there. Once I had 4 sales reps cranking so I took it up to 10 and saw cracks in the system. What works early in a company – the evangelic sales – does not scale well.
I often hear early stage founders telling me about their initial sales successes. I’ve even gone on some sales calls with them to see customer reactions to their products. I find myself often saying to these entrepreneurs, “having watched you I can see why customers are interested in buying. You’re very personable, persuasive and you intuitively know their problems. Plus, they know they’re dealing with the company owner. Please don’t confuse that with your ability to scale this business. Once you’re no longer leading the sale it becomes much more difficult without a standardized approach. I learned this the hard way.”
And I’ll save what I learned for my next post: “Arming & Aiming.”
Selling to enterprise – Chris Dixon
http://cdixon.org/2010/02/06/selling-‐to-‐enterprises/
February 6, 2010
Selling to enterprises
For some reason when you are selling information technology, big companies are referred to as “enterprises.” I’m guessing the word was invented by a software vendor who was trying to justify a million-dollar price tag. As a rule of thumb, think of enterprise sales as products/services that cost $100K/year or more.
I am by no means an expert in enterprise sales. Personally, I vastly prefer marketing (one-to-many) versus sales (one-to-one), hence only start companies making consumer or small business products (advertising based or sub-$5000 price tags). But I have been involved in a few enterprise companies over the years. Here’s the main thing I’ve observed. Almost every enterprise startup I’ve seen has a product that would solve a problem their prospective customers have. But that isn’t the key question. The key question is whether it solves a problem that is one of the prospective customer’s top immediate priorities. Getting an enterprise to cough up $100K+ requires the “buy in” of many people, most of whom would prefer to maintain the status quo. Only if your product is a top priority can you get powerful “champions” to cut through the red tape.
My rule of thumb is that every enterprise (or large business unit within an enterprise) will, at best, buy 1-3 new enterprise products per year. You can have the greatest hardware/software in the world, but if you aren’t one of their top three priorities, you won’t be able to profitably sell to them.
One final note: enterprise-focused VC’s sometimes refer to products priced between (roughly) $5k and $100K as falling in the “valley of death.” Above $100K, you might be able to make a profit given the cost of sales. Below $5k you might be able to market your product, hence have a very low cost of sales. In between, you need to do sales but it’s hard to do it profitably. Your best bet is a “channel” strategy; however, for innovative new products that is often a lot like trying to push a string.
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Create a burning platform – Mark Suster
http://www.bothsidesofthetable.com/2009/10/04/3-‐sales-‐tips-‐for-‐startups-‐creating-‐a-‐burning-‐platform/
3 Sales Tips for Startups – Creating a Burning Platform
by MARK SUSTER on OCTOBER 4, 2009
This is part of my ongoing series Startup Advice. Many entrepreneurs who start technology companies are product people, technologists or savvy business people who worked previously for a larger company. Most start-up entrepreneurs have little or no sales experience. I know I didn’t. But through nearly a decade of startups I learned that sales comes down to three essential elements:
1. Why Buy Anything? This is the easiest one for most entrepreneurs. If you sell a product direct to a customer – in person or on the phone – you need to understand what their pain points are and position your product benefits against those pain points. I’ll do a full post on this another day. But most good entrepreneurs do this naturally.
Even businesses that attempt to sign up customers directly on a website need to answer this question for people albeit programmatically and through good website copy. Many, many tech companies I meet start with a set of “awesome features” and present them to me (and I suspect also to customers). They end up building what is called a FNAC (feature, not a company) as most people won’t pay for them. I first heard this term from the guys at First Round Capital.
2. Why Buy Mine? This one is a little harder but still quite straightforward. Not only do I need to understand a customer pain point that my solution solves but I also need to convince them that my product does it better or most cost effectively than others on the market.
Many entrepreneurs think naively that it’s not good to have competitors. To the contrary. Customers seldom like to buy unless they perceive they have options. They like to feel like they compared your solution to something else on the market. If nobody else does what you do then maybe it isn’t really such a big market after all. (Incidentally, VC’s hate when they hear companies pitching who say, “I don’t have real competitors” as I outlined point three in the linked post).
I’ll cover “Why Buy Mine” in a later post, but my quick answer is that referenceability is the most critical tool to solving this problem. By having reputable people from reputable businesses listed in
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case studies, on the website with quotes and/or willing to take phone calls makes all the difference in the purchasing decision.
3. Why Buy Now? The real test of sales and the topic of my post is “why buy now.” It’s what kills most sales cycles including raising venture capital.
Great sales leaders know that you can only sell effectively when your sales cycle matches the customers buying cycle. That is why they qualify customers really hard and ask the sort of questions that would make us non-sales-trained people squeamish. Asking customers directly whether they have budget this quarter for a program like your company offers takes nerve. Great sales people are also direct about asking whether the individual that they’re speaking with controls the budget.
When you qualify a customer, if the customer has shown interest in your product but isn’t ready to buy then they get sent over to marketing. Great sales companies manage this very effectively and have sales prospects put into 3 buckets: those ready to buy this quarter (A), those ready to buy soon (B) and those not likely to buy in the next 12 months but still interested (C).
Most companies are not good at managing integrated sales & marketing departments – particularly startups. My old employer, Salesforce.com (they bought my company Koral), were masters at this. They generated an enormous amount of inbound leads through PR, email blasts and heavy efforts with analysts such as Gartner Group, IDC, Aberdeen Group, etc.
Initially the leads need to be qualified. If you’re not ready to buy then you go into an email database. Their goal is to get you to appear in person at city roadshows that they run or to come to their annual Dreamforce conference. Here they surround you with sales professionals, product people and, of course, lots of referenceable customers! If you appear then they’ve increased the probability that you’re closer to becoming an A or a B buyer.
In products designed to sell directly on the web the process is no different. Your goal as a website is to elicit my email address out of me with as little else required as possible. With this email address you can continue to market to me even if I don’t buy today. That’s why websites offer newsletters.
Websites are also getting much more sophisticated using techniques such as re-marketing to find a way to drive you back to their website. If you spent time at a site you might not be aware but they’ve possibly dropped a cookie on your computer and use pixel tracking to follow you around the web. If you were at a ladies online retail store don’t be surprised if you start seeing advertisements for that same store next time you’re reading the Washington Post or on Yahoo!. Companies such as Undertone Networks or SeeWhy (run by my friend Charles Nicolls who’s a BI expert formerly from Business Objects) offer these products to websites. If I didn’t get you to buy when you came to my site I know you were at least interested. I just need to get your back and find a more compelling reason for you to BUY NOW!
Note that the “why buy now” problem exists with VCs also even though nobody will ever tell you this. If you meet a partner who really seems to like you buy he/she is in the process of closing another deal it may be a good 2-3 months until he’s ready to look seriously at another deal. I like to say that if a partner has recently done a deal he is often in the penalty box for a while. Not always, but it’s your job to politely find out. You need to qualify VCs the same way you qualify sales leads.
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So is there nothing you can do to accelerate sales? Actually within a certain margin you can bring sales forward slightly. In sales we do this by creating a “compelling event” or as some people call it “a burning platform” (in case the reference isn’t obvious, when you’re on a oil platform that’s burning you have no choice but to jump.
It’s the reason that vendors create limited time period sales or exclusive offers only available until they run out.
If you work in enterprise sales you need to be able to not only identify the pain of “why buy anything” but why buying now is going to be a significant economic benefit. As an example, if you’re a network monitoring tool such as Gomez and you can demonstrate that your customers performance is slow and for every second of latency they’re losing 8% of sales to abandonment resulting in $20,000 / day – you’ve got a burning platform.
There are many techniques but all involve proving that the customer will have more benefit by acting now (lose weight before Summer!), will have more pain if they don’t act (your customers are abandoning your shopping cart) or that they’re behind the competitor.
Can you express your proposition to customers in terms of a compelling event? If so, I suspect your sales will grow more quickly.
The one day sales cycle – David Skok
http://www.forentrepreneurs.com/sales-‐marketing-‐machine/one-‐day-‐sales-‐cycle/
Where it all started – The One Day Sales Cycle
The concept of building a sales and marketing machine first came to me in 1983 in my first startup. I found myself faced with a 9 month sales cycle, selling CAD systems to Architects. The whole process of marketing and sales looked like a mysterious black box – it worked sometimes, but not often enough, and it was hard to figure out what was working and what was broken, and most of all: how to grow the business.
I had started this business right out of college, and had no sales, marketing or business training. But I did have an engineering background, and I started to apply that disciplined thought process to the problem. What I found was:
We were spending six months educating the customer on what CAD was, and how it could benefit them.
We had to show them lots of drawings that other customers had produced
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They needed to talk to many customer references
They had to figure out their tax situation and choose between a lease or suspensive sale.
They had to get financing approval from a bank
There was also one sales blocker that had been a problem for a while: we had to show them how they could network their workstations, and share drawings. If you are old enough to remember back to 1983, you will remember that the idea of a LAN did not exist in those days. However our workstation vendor HP, had just come out with something called a Shared Resource Manager – the equivalent of a modern day file and print server.
After mulling this over, I came up with the idea of holding an event where we would try to address all of the sales cycle elements.
We held the event at a major resort location in a very high class hotel that created the impression of a company that was far larger than the 35 people we were at that time. The first problem to solve was figuring out what message would work to attract our audience. At first I was taken with the idea of playing up the entertainment of the location, but fortunately I realized that this would send the wrong tone. Since CAD was still a very new technology, we realized that the best draw card would be to focus on the education. The second big draw card was the opportunity to come and meet with other architects who had made the move to CAD and hear their experiences.
We were successful in attracting 600 architects to attend with their wives. They arrived in time for dinner, and were taken through an entrance that resembled going through a time machine into a dining room where we had carefully placed our best prospects next to our best customers.
Then came the next problem: this event was being held in South Africa, and unlike the US where I live today, the average South African businessman is somewhat shy, and unlikely to actually talk to their neighbor at a dinner table. To overcome this problem, we hired a well known stand –up comedian to break the ice. This was a dangerous move, as the wrong comedian could doom the whole event, but fortunately we had found exactly the right person, and his tone and jokes were right on the mark. The atmosphere of the entire room was transformed. There are few things as powerful as laughter.
Towards the end of dinner the lights dim: on stage left, an actor playing the role of an architect appears in a small pool of light. His phone is ringing. It’s his wife complaining that he is working late again. The wives in the audience all nudge their husbands – this is a familiar scene to them.
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On the other side of the stage Merlin appears, and with the aid of 36 slide projectors, three video projectors, and the first computer contolled laser, takes the audience on a humorous tour through history, showing how the world would have been different if CAD had been around in days past. If you think about the year this took place – 1983 – before Steve Jobs, before Bill Gates, it was the first time this audience had had been exposed to technology like this for a product launch. This had the effect of making our tiny 35 person company look like a global multi-national organization.
The next day we took the architects through a series of educational lectures, including looking at the ROI. Then we had a tax consultant talk them through the tax implications of suspensive sale versus lease. And we had pre-approved each firm with a bank that was on hand to discuss how the financing could be made to work.
The final element that put the finishing touch on the event, was probably the most important. We had taken a very large circular room, and covering every inch of wall space there were CAD drawings from our customers. And finally we had brought in a Shared Resource Manager, HP’s first iteration of a file server and local area networking.
But we made one mistake. By 2pm, the first architect walked up to me and asked to place an order. We had no idea things would work that way, and we were completely unprepared. I asked my assistant to quickly type up an order form and get this photocopied. By the end of the event, we had taken $4m in orders. More than the entire revenue that the company had done in the past 12 months! And bookings stayed at $3m a month thereafter.
I have never been quite so successful with applying the methodology, but it has helped to build some very successful companies since then. I hope it is of help to you. Remember the art of this methodology is to get inside of your customer’s mind, and learn to think they way they do. Then shape your whole sales process around what you learn from that experience.
Posted by David Skok
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PR
PR
Pitching a tech blogger – Mark Hendrickson
http://markmhendrickson.com/how-‐to-‐pitch-‐a-‐tech-‐blogger
How to pitch a tech blogger. —
I've been asked privately quite a few times over the last couple of years how one should pitch their startup to a tech blog likeTechCrunch, GigaOm, VentureBeat or ReadWriteWeb. So I've decided (quite selfishly) to write a post about the subject instead of repeating myself or re-forwarding emails.
This comes from my experience as both a tech writer (for TechCrunch, ~1.5 years) and internet startup entrepreneur (for Plancast, also ~1.5 years), so I've been able to see things from both sides of the table, particularly when it comes to PR for newly founded startups. As such, these are principles that I primarily recommend to unproven entrepreneurs with unknown companies who want to launch publicly for the first time. Once an entrepreneur or their company gains visibility, their approach to PR will evolve and the press may end up coming to them for news instead of the other way around.
The Story Is Key
When you pitch a blogger -- or any writer for that matter, whether they work for The New York Times or your local paper -- it's crucial to recognize their desire to identify and then write a story. And by story, I mean something that starts, continues, completes or encapsulates a narrative. Bloggers have no interest in merely reporting facts detached from meaning. And they certainly don't want to report facts that actually have insufficient significance to their readers. Bloggers dread the idea of someone coming along and justifiably saying "so what?". Good narratives prevent that. Great narratives are thought-provoking and get further developed in readers' minds.
Now, you obviously don't have the power to directly dictate which narrative a blogger will craft as the result of your pitch (no matter how many pay-for-publish conspiracies you've heard). But it's important to think about a narrative for your company or product, because you can and should steer the blogger towards it. Why? Because bloggers are strapped for time and don't possess the same depth of domain expertise as you. Lay out a narrative that jibes well with their preconceptions and they'll likely run with some form of it.
It helps to recognize some of the more common types of narratives. If you read through the headlines on Techmeme, you'll find that most fit into at least one of the following:
Competitive or Political Drama - aka "company X releases product Y to kill company Z"
Gossip - "CEO of company X gets tangled up in Y"
Insight - "trend X will change the world because of A, B, and C"
Evolution & Confluence - "service Y is like X for Z, capitalizing on the recent developments of A and B"
Success - "company X has created super impressive technology Y, is growing fast, or has made lots of money"
Failure - "company X is dying or has messed something up"
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The idea is to figure out which type you want to adopt and then craft the facts of your announcement into a compelling and succinct narrative that conforms to it. You'll likely opt for type #4 or #5, but don't hesitate to spice it up with a bit of #1 or #3 (the story can have sub-narratives, but expect the blogger to lead with only one). This isn't an exercise in stretching the truth or making stuff up; there's a reason why you've built what you've built or done whatever you're announcing. Weave that reason into a bigger story while avoiding as many buzzwords as possible.
When framing your narrative, you'll do well to remember that bloggers are creatures of comparison. They'll immediately try to compare your product or announcement to another they've already seen, and if they find a close match, they'll pass on it. You should get out in front of this reaction by emphasizing the characteristics of your announcement that make it unique. But don't insist that it is incomparable; on the contrary, be forward about drawing comparisons that will highlight the significance of its uniqueness. The writer should come away from your pitch thinking "I've seen cows before, and this is indeed a cow, but it's purple! All of the other ones I've seen are only black and white" not "This guy insists this purple thing is not a cow but it obviously is. It might be worth writing about the fact that it's purple but I'm not sure; it feels as though I'm being pitched another cow".
Relationships Matter
This may sound like psychological manipulation directed towards selfish ends (i.e. sales) but if that's how it feels, you're doing it wrong. The goal here is to help the blogger, not exploit them. When you help them (with well-articulated material for a story), they help you (with a story that will publicize your business). As with all transactions, it relies on a relationship, however temporary. And the success of that relationship will depend on how much trust and rapport you've established.
A lot of times when entrepreneurs are ready to pitch, they go looking for a friend who knows and can refer them to a writer. The idea here is to leverage someone else's relationship to validate themselves transitively. This is all fine and good, and it's certainly better than submitting a story to a writer cold. However, it's much better to begin building a direct relationship with them well before the pitch.
One of the beautiful things about the internet is that you can develop relationships with people without ever meeting them. Get on your favorite bloggers' radars by commenting thoughtfully on their posts, retweeting and replying to them on Twitter, and submitting promising tips to them for stories that have nothing to do with your company. If you blog, take the time to write pieces that link to their pieces; they'll most likely read them and take note of your name. If you happen to live in their area, introduce yourself and chat with them casually at an industry event without giving an elevator pitch unless they ask.
The point is to achieve some level of familiarity and validation before ever pitching them on a story, not to become their best friend. In fact, you don't want to be too overeager or complimentary, otherwise they'll perceive you (rightfully) as a suck-up.
When you're ready to pitch, make sure you're not wasting their time with material that can't be delivered as an interesting story. A litmus test is whether you'd honestly be interested in reading about your announcement if you weren't the one behind it. And when presenting the story, keep it real. Certainly don't embellish or lie about anything. Build trust by throwing in a few facts that, if published, might not make you look so good. If you must, just ask the blogger to please not publish them and they won't, but you'll gain credibility in their eyes.
A Straightforward Procedure
As far as the mechanics of delivering a pitch, it's best to ping a blogger about the announcement you'd like to make about a week beforehand. Describe it in one paragraph (no more, no less), suggest the time you'd like them to write about it, and ask them if they're interested and want to hear more. If they respond in the affirmative, send them a few more paragraphs with details and some visuals (e.g. screenshots or demo video) or
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private access to an alpha product, if relevant. Do not send them a press release; it will only insult their intelligence.
Try to be flexible on the timing if they're busy, and if you must pitch the same announcement to more than one blogger (not advisable for unknown startups who should bolster the value of their story with exclusivity), be completely forthright about it and your reasons for doing so. Resist the urge to propose an embargo; they only cause frustration.
Once a blogger has written about you, don't embarrass them by being the first to comment with "thank you for writing about us!". Do your part in promoting the piece by getting friends and family to retweet, post to Facebook, etc. And space things out before pitching them again so they don't grow tired of you or the subject.
Your Company's Best Representative
If this procedure sounds simple enough, you can craft the most compelling story for your company or product, and you have the time necessary to build these relationships, then you shouldn't hire anyone else to handle PR for you. It'll only be a waste of money, and you'll get less than optimal results. In any case, bloggers much prefer to work directly with executive-level representatives than PR firms, so you'll be doing them a favor.
As you scale your business, or if you find any of this particularly daunting, then perhaps you should seek professional guidance. But otherwise take this as an opportunity to develop a new skill set and relationships that'll serve you well even beyond your current startup.
Good luck!
Building relations with journalists – Mark Suster
http://www.bothsidesofthetable.com/2010/03/22/6-‐tips-‐to-‐building-‐relationships-‐with-‐journalists/
6 Tips for Building Relationships with Journalists
by MARK SUSTER on MARCH 22, 2010
File this under both Startup Adivce and Sales & Marketing Advice.
I was over at Robert Scoble’s blog Sunday night reading about the “Death of the Great Startup Launch.” I’m not 100% sure that I understood his core thesis but I *think* it was that startup events such as Demo force such a zone of secrecy about what you’re working on (with a threat of being kicked out of the event for leaking your story) that they kill the ability for most companies to dazzle people with a great company launch and doesn’t allow journalists to triangulate with others in the
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market before going to press. Oh, and Demo charges the startups $18,000. Robert’s article is worth reading.
It got me thinking, which for me is always the sign of a good blog post. I think Robert’s right. Too many startup execs place too much emphasis on the big stage launch. There are many problems with this:
- Your chances of being selected aren’t great
- When you are selected you share the stage with 49 other companies (in the case of TechCrunch50. It is a great show but would be 10x more valuable if it were TC20)
- Most people pay attention to the first 5 companies. Maybe 10. By company 22 it’s hard to remember what any of them did.
- Journalists don’t know enough about your company before the show, don’t have time for proper research, and you will be competing for their time afterward with 49+ other companies that want them to write about you
- If you’re Yammer, Mint or RedBeacon (all winners) you’re knighted with wonderful coverage. Many other great companies are not.
- So I’ve always advised people that if they do launch at a big show, the most important public relations work they do is after the conference. Use the fact that you were on an anointed list to build credibility when you eventually approach journalists (and VC’s, customers, employees)
But more broadly it got me thinking to one of the biggest mistakes tech executives get into in the first place. They see journalists as a means to and end. They see them as a person who can influence the outcome of their company at a single point in time – when they (the startup) have something important to say. I’ve heard many startup CEO’s (and VCs!) lament the coverage they get from journalists who reported the details unfairly. It’s no wonder many companies don’t get good coverage. Here’s my thoughts on improving your relationships with journalists and as a by-product improving the coverage that they afford you:
1. Have a great product – OK, I know I’m stating the obvious, but being friends with or helping journalists will never get you great coverage (if you’re dealing with a high-quality news organization or blogger) if you have a bad or mediocre product or service. At best you’ll get coverage or avoid getting panned. Don’t put in the time to getting coverage until your product rocks. Guy Kawasaki said it best (paraphrasing), “you can’t do great marketing with a bad product.” Total waste.
2. Know that journalists are human – Again, sounds obvious. But you’d be surprised how much tech folks either hold journalists too much on a pedestal or disdain them. They’re human. Get to know them as human beings. The closest relationships I ever built with journalists were at cocktail parties where we didn’t talk anything about my company. I became quite good friends with a journalist at the Financial Times and eventually helped her as she wrote a book on the venture capital industry. It started socially. The more she got to know more the more she called me for help with stories. The more you connect with them the more you’ll get over the tendency to want to “spin” and the more they’ll trust you when you give them facts. They get BS’d too so much that you shouldn’t take their trust for granted.
3. Understand their needs - You need to understand a journalist’s needs. First, understand their deadlines. Imagine if you had to release your software daily in order to keep your job or to have the traffic numbers you need to earn your paycheck. They are often interested in knowing whether
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there is a story to be had from their discussion with you. I’ve gone on social lunches with journalists where they’ve brought a small pad of paper and pen and left it on the table. Sort of makes me a bit uncomfortable because I’m thinking, “sh*t, I hadn’t planned anything interesting to say. Are they expecting an announcement out of me?” I don’t think they always are. But as journalists they’re always prepared just in case.
When they are interviewing you for a story, don’t be afraid to ask what the “angle” of the story they’re working on is and how you can best help them with the story. Every great article has an “angle.” The angle of this article is that most people don’t build good relationships with journalists and they should. If I needed third party quotes to support that story I’d be calling journalists to get their opinion on my topic and calling CEO’s to get theirs. In my blog I just save that for the comments where people can say what their perspectives are.
By knowing the angle you know how to better serve their needs when you speak. Make sure you know before talking how much time they have – remember they have to publish frequently. To that end, make sure you also know when they plan to publish your story.
Mostly, I believe that journalists want to be able to have “unfiltered” conversations with real business leaders. Given a choice of your marketing person or talking to you (the founder) there’s no competition. Make yourself available. It is an important part of your job. Not talking to the press is a bit like a politician saying they don’t want to talk to the press because they’d rather save that time for drafting legislation. Might be true, but not in your best interests.
4. Help them better do their job – I’ve always been a big believer that relationships with journalists are a long-term investment. You need to deposit in their bank first. Get to know them when you don’t have a story that is running. Offer to help them with stories they’re working on. Be willing to go on the record with quotes / sound bites. If they want access to people in the industry that you know make sure to help broker the intro – both sides will thank you for it. If you’ve got good ideas for a story – shoot it over to them in an email. If they call you for an interview that has a deadline – be responsive. You’ll be depositing all the way and earning trust.
On many occasions I’ve offered to give 30 minute industry overviews on a tech topic to journalists when they’re not working on a deadline and want to better understand a topic like SaaS, Cloud, LBS, etc. The bottom line – if you enjoy discussions with people, if you enjoy educating and sharing – these conversations will not only form closer relationships but will be enjoyable for you as well.
Robert Scoble interviewed me in 2006 about my startup, Koral. This video will be too long for most of you to want to watch (22 minutes) but provides a good example of how I think about this. We had a far ranging discussion. I wasn’t trying to pitch a tightly controlled message about my company. It was Robert’s show. I wanted to just let him take it where he wanted it to go (while ensuring that I at least got in my points about what Koral did and why it was a benefit).
By the way, don’t forget that all those times you’re quoted in the blogs and press articles helping other people’s stories you’re actually accruing benefit as well by having your name and company listed.
5. When it is your turn you’ll get a fair shot – If you’re helpful to journalists they are far more likely to want to cover you when you have news to share. It’s that simple. Do not equate that with them giving you glowing reviews – you have to earn that. But you’ll likely at least get inches. And remember when you do to understand the angle of their story, understand the key points you want to communicate and make sure to balance those to make the article successful for both of you. Often when the journalist is agreeing to consider writing about you they don’t yet know the “angle” so I always recommend trying to define the angle. Don’t be afraid to be transparent. You can say
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something like, “I was thinking that you might cover a story like, ‘why today’s mobile ad networks don’t benefit most application companies’ and then work me into that story line. Does that sound right to you or do you want to come at it from a different angle.
6. If you’re unhappy fight back fairly – There is always going to be the time where you get unfavorable press. If you don’t that’s a sure sign that you never really had any success so you’d rather be the person who occasionally gets side swiped. Deal with it gracefully. Write the author and let them know that you understand why they wrote their story they way that they did and your OK with that. But that you’d like the opportunity to clarify a few points so that they can better understand you for next time. If possible, use it as a way to get an in-person meeting to discuss it. At a minimum maybe you’ll have a chance to strengthen your rapport for next time.
Also, remember that this is the era of the blog. Don’t be afraid to write a blog post with their comments in it and point out why you think the actual case is a bit different than what they wrote. Be respectful. If they wrote some good points obviously point those out, too.
Summary: Journalists are people. It turns out that they’re actually quite interesting people. And they spend time with people far more interesting than you or me. So spending time with them can be enjoyable. You can hear all sorts of wild stories and learn much. So any relationship you build with them will be worth it purely at the friendship level. But one day you’re obviously going to want coverage (after all, I don’t hang out much with journalists who cover the healthcare sector). Make sure you deposit much in their bank in terms of assistance and trust before you ever luck for a withdrawal.
If any journalists read this please feel free to add extra tips or disagree with anything I’ve said.
Noone cares about your startup – Matt Brezina
http://www.mattbrezina.com/blog/2009/12/no-‐one-‐cares-‐about-‐your-‐stupid-‐little-‐startup-‐5-‐tips-‐to-‐make-‐them-‐care/
No one cares about your stupid little startup – 5 tips to make them care
Dec 3rd, 2009
by Matt.
This post is adapted from a talk I gave at Sutherland Gold’s PR Bootcampin October 2009.
The title of this post “No one cares about your stupid little startup” was a message I learned in the earliest days of Xobni during a phone call with SiteAdvisor and Hunch founder Chris Dixon. To this day, I still haven’t met Chris in person (Chris if you come across this post, we’ve got to catch up next time I’m in NYC), but this one phrase has guided every step of my thinking for Xobni’s PR strategy for the past 3 and a half years.
I’ve embeded my presentation below. The presentation will take you through our path to 3 million downloads. The first half of the presentation isn’t PR specific but outlines our stages of user development. I outline how we rolled our product out to the masses through carefully planned stages: stealth, closed beta, nerd scarcity, invite beta, public beta,official launch, and business model driven growth (the current stage).
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The second half of the presentation specifically focuses on five tips and case studies for how to drive awareness for your startup through PR. I’ve broken out the latter half of the presentation below and included much more explanation than I was able to put in powerpoint.
Here is a link to the preso just incase the embed above doesn’t work for you
1. Tie yourself to a bigger trend
This is the best way for a startup to hack the PR system. There are thousands of startups. Why should a journalist write about yours? Yet, they all love to write about Facebook, Information Overload, and Google vs. Microsoft. So, tie yourself to one of these trends.
For Xobni, we tied ourselves to the following trends
The web inside your inbox
Facebook crossing into the business world
Email, the oldest social network
Enterprise software is going grassroots
Email overload
But you can’t just say you are part of a trend, you have to make some noise so people pay attention. So here is what we did.
Remember a couple years ago how Facebook would send you an email that said “you have a message,” but didn’t send you the content of the message? I hated that. Turns out, a lot of people hated this.
So, one night we made a Facebook app that would put a big button on your Facebook page that said “Stop! Email Me Instead” and when a user clicked the button, it opened an email addressed to you. You could also one-click reply to any Facebook message with this button and kindly ask the sender “Please email me instead.”
10 thousand people installed our app in less than a week. Fred Wilson,VentureBeat, and others wrote about it. We hadn’t even announced what Xobni’s real product was and yet we were already working on our PR.
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2. Take every opportunity to meet a journalist in person
I won’t say much, other than two quick corollaries. First, use a product feedback session as a way to build a relationship before you are ever looking for a story. Tech journalists like Arrington, Om, Rafe and others have seen a lot products come and go. They have a good idea of what works. Have them look at your product way before you need that press hit “ah.” (arm slap, arm slap – think trainspotting heroin injection) You’ll get some good product feedback and you’ll build a relationship that is deeper than any press release.
Second, this all become much easier if you are in a tech capital where tech journalists and bloggers are living their lives. The ability to bump into a writer from the WSJ, TechCrunch, or CNet on a street corner is an under appreciated benefit of basing your company in the SFBay.
3. Heavily engage with users – WOM is better than PR
A few things we’ve done that seemed to work well:
Our 5th employee was a customer support guy
We have an elite alpha forum of 500 users that test and provide feedback way ahead of the general public. And they worship Tyler our QA lead and his rare form of tough love.
Tough Love Tyler
We continue to stay focused on individual users. I try to do one phone call per week with a user. It resulted in a good blog series.
We have a special twitter handle for customer support xobni_support
And we send out a lot of t-shirts
Zappos.com is one company that has made their blue ribbon customer support a PR story in and of itself.
4. Journalists are people. People are lazy. Therefore, journalists are lazy.
Most startups are on to this trick. Just like you design your product for the expected laziness of your users, build a press center for lazy journalists. They are people too.
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We have a webpage dedicated to everything a journalist could ever need (screenshots, videos, company history, investors) in one spot. A product video on youtube can do miracles. You can help a blogger understand your product without having to try it and they’ll often put the youtube video in their blog.
5. Be a source of data
The press may not care about your product, but they often will care about the data your company has can provide. Do you remember Janet Jackson’s “wardrobe malfunction” during the Superbowl? It was the most replayed piece of television ever recorded. Tivo had the data.
I know that was the first time I ever thought, “Damn, I wish I had a Tivo.”
PR and crisis management – Mark Suster
http://www.bothsidesofthetable.com/2011/08/14/teachable-‐moments-‐in-‐pr-‐crisis-‐management/
What Startups Can Learn About PR and Crisis Management
by MARK SUSTER on AUGUST 14, 2011
I was recently approached by Fast Company to comment on “crisis management” at startups in the wake of the Airbnb “ranksackgate” story. I agreed to do the interview because the story was about what other companies can learn rather than about airbnb in particular.
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What are the teachable moments? The short article in Fast Company is here if you’d like to read it.
In a nutshell – I think airbnb eventually got to the right place and I was impressed with the letter their founder Brian Chesky wrote and their new commitment to safety and damages. Obviously they wish they would have figured this out a bit more quickly, but as a young team I personally cut them a little bit more slack than I would if it were Oracle, for example.
And as long as people put things right and show contrition, situations like this eventually become a “tempest in a teapot.” Today’s Internet titans are filled with such momentary lapses.
But I thought I’d use the situation to talk more broadly about some PR lessons you might learn for your own business and also incorporate some situations I’ve faced recently with some portfolio companies.
1. If You Don’t Shape Your Story, Somebody Else Will My golden rule of public relations is that “if you don’t shape your story somebody else will.” We see this in politics all the time. Think John Kerry and the “swift boat” scandal. Whatever your political view we can all agree that John Kerry is a terrible communicator. He’s verbose, often off message and wooden.
During the 2004 election he was accused of having made up material facts from his service in the Vietnam War in an election against somebody who didn’t serve in a war. How do you lose that debate?
Simple: he let other people tell the story. He didn’t respond quickly and forcefully. Journalists write stories that have an appeal to readers whether the accusations have merit or not. Just look at the silly Obama birther debate that we wasted so many news cycles on.
You know the saying, nature abhors a vacuum. The story will get written whether you want it to or not.
Don’t be “swiftboated.” Shape your own story.
2. Understand the Gravity of the Situation for Your Customers So how do you know when to publicly come forward with information and when to not do so? Is it
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ever appropriate to just let a news cycle pass assuming the story will move on and die down? The obvious starting points to think to yourself are:
Has something happened that fundamentally affects my customers or partners?
Is there a story that negatively affects how people perceive my brand?
Is there a reason I need to communicate to my constituents?
Is there a need to change my policies, announce a mea culpa or get a topic focused on the right points?
If you’ve done something that is wrong you should put it right immediately. Do not expect it to blow over. The perception of your brand by not responding will not recover. You cannot seem overly defensive. If you believe that journalists or competitors are telling a story that isn’t right you need to put that straight. Do so by winning the hearts and minds on substantive talking points rather than attacking others. Attacking always comes across as petty.
3. Don’t Bury Bad News If you have information about a situation that has gone terribly wrong don’t cover it up. Remember that the cover up always ends up worse that the actual infraction. We learned that from the original “gate.” If you were hacked and customer passwords were stolen, get the story to your customers ASAP. Yes, it will be bad. But imagine how much worse the story will be in 30 days when people find out you knew their information was stolen and they didn’t have a chance to reset passwords, cancel credit cards or whatever other remedies they would have preferred to make.
Consider the flawless response from Brian Norgard at Chill. His product auto-posted a testimonial from Dave Morin into Facebook and Mark Zuckerberg called the tactic “lame.” Pretty tough when you’re called out by Zuck himself. Yet a quick response clearly made this Chill moment into lemonade.
If you want to see flawless in action, read Chill’s post. They shaped the story. They reacted quickly. They didn’t try to bury the news of what they’d done. They turned off the feature (took the high ground) while defending the practice in their post. Moreover, they drove a lot of attention to social TV viewing and Chill through their response. 10/10.
4. Never Blame the Press The most tempting thing for inexperienced entrepreneurs to do is to attack the press. It’s easy to say somebody hates you, got the story wrong, is lying, has biases, etc. In fact, some of these things may even be true in some circumstances. Your job is to change the situation, not shoot the messenger. Build deeper relationships. Have private conversations to change opinions. Find other media outlets to tell your story. Know your positive talking points. But don’t pick a fight with the press. That’s a war you’re not going to win.
We live in a free society. It’s the job of the press to hold us all to account and question our conduct, our performance, our accuracy our businesses. Sometimes the story will be dead-on and will benefit us all by protecting consumers, sometimes I won’t agree with the story and think it will be proven largely wrong. In any event, I’ll take a free press any day. Journalists are doing their jobs. When many do it simultaneously – even when some stories aren’t 100% accurate – we have way more transparency in our system.
The positives far outweigh any possible negatives.
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5. Know Your Key Messages I was recently talking with an entrepreneur who had just gotten a ton of press around his company for an interview he gave to a journalist. The story was controversial enough that it created follow-on articles. He seemed proud, “all press is good press, right?” Wrong. I told him,
“Look, all of the press you got was totally ‘off message.’ You’re being talked about for
the wrong thing. I don’t mind controversy. But if you’re going to say something
controversial make it about the market you serve. Make it about the point-of-view
you’re trying to change.
Make the story be about your market. Journalists aren’t going to write about you all
the time unless you’re Facebook. You just burned a story. You wasted that opportunity
with that journalist and that journal. What a shame.”
Know your talking points at all times. Know what you want the market to talk about. Stick to your script. All press isn’t good press. Off message press is a wasted opportunity.
6. Don’t Take the Bait Another entrepreneur contacted me recently because a competitor had attacked his company in the press. I’ve written about this topic before – you should make your competitors frenemies, even when the do stupid things like attack you. Sure, if it’s a major attack that you believe will hurt your business you need to respond. But my view is that you take the high ground. Attacking back makes you both look petty. Two wrongs don’t make a right. Lead in the press with your positive attributes. Use it as an excuse to get a journalist to write about you.
The story of X company attacks Y, how does Y respond is an angle journalists can sink their teeth into. Of course they want you to attack back hard – that makes a great story for them. It doesn’t help you. Stay focused on your message.
And privately reach out to your competitor. Go meet them in person. Explain that your biggest competitor is inertia as it almost always is for startups. That, or incumbents. But tit-for-tat between small companies NEVER makes sense. Don’t do it.
See here how much perfect bait was tee’d up for MG at TechCrunch in this public fight between Google & Microsoft and again and again. Public fights are the gifts that keep giving for journalists and those fighting never come off looking good – they just convince themselves they do.
7. Develop Trusted Advisors Like in every part of your business you need advisors. Startups often have advisors that help on recruiting, fund raising, biz dev, sales, etc. You need friends who have lots of experience in dealing with the press and hopefully relationships with journalists themselves. Trust me, these advisors will prove invaluable if you don’t have a lot of media experience. It isn’t something that comes naturally to most.
I’m always surprised how friends ask me for media help after they fawked up a story and never in advance when they’re planning. With portfolio companies I’m always involved in the planning phase. I want to know our media roadmap.
8. Get to Know the Press Now Most startups talk to the press when they have a big event they want to talk about. That’s too late. I
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know it’s counter-intuitive because it seems like you shouldn’t talk with the press until you’re ready with something to say.
The reality is you want to have journalist relationships well before you have a story. Help them with other stories. Get to know what areas they’re knowledgeable and passionate about. Become interested in their profession and in them as people. Just like I advise people to get to know VCs early, so too with journalists. Here is a quick action plan for you in how to build journalist relations.
9. Get Media Training I do a lot of public speaking and that includes speaking on television. Very few people are good at TV and many are sh*t scared of it. Yet with some simple media training you can be an effective communicator.
The same goes for press interviews. Knowing how to stay on message, knowing what your talking points are, knowing what the journalist’s angle in the story is, etc. are all parts of effective media training.
And any great PR firm will have a media training department. It’s how I learned the golden rule of TV interviews – ABC. Answer, bridge, communicate. Answer the question your asked briefly, use a bridge sentence to change to what you want to talk about and then communicate your key messages. It works every time. No media training for me = no ABC. It was worth every penny.
10. Have a PR Strategy You probably also want to have PR people with whom you work. Sometimes they will work inside your company, sometimes they will be external. Here’s a 10-point guide on how to work with PR firms.
PR doesn’t happen by accident. It’s a business function and a very important one at that. Good PR will help you punch above your weigh class. Bad PR will bury you and make everything harder: funding, recruiting, biz dev, sales.
Draw yourself a chart as a CEO of all the activities for which you must dedicate time. Make sure at least 5-10% of your time allocation is in this bucket. Year round. PR is a continual process, not an event.
Hiring PR agencies – Brant Cooper
http://market-‐by-‐numbers.com/2010/05/startups-‐dont-‐hire-‐a-‐pr-‐agency/
Startups: Don’t Hire a PR Agency
By brantcooper, May 12, 2010 6:46 pm
I hope my PR friends won’t hate me after this post, but the point needs to be repeated: Startups should not hire PR agencies. It seems not a week goes by without hearing about young companies blowing huge wads of cash on “marketing” they’re not ready for. Some entrepreneurs get in this fix because they fail to distinguish between PR and other marketing tactics. They know intuitively or are told they ‘need marketing,’ but the first thing they think of is PR. As I’ve mentioned before, PR <> Advertising <> Word of Mouth <> Social Media, etc.
Before you hire a PR agency or even consider PR, the first thing you need to understand is what you are trying to accomplish, what is your objective. Second, you should consider whether that objective is right for the stage of your business. If you are an
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early startup, pre Product-Market fit, or even pre “Sales and Marketing Roadmap,” you should not hire a PR firm.
Hiring an agency is wrong, because, generally:
You do not need press releases
You do not need a campaign blitz of articles and press mentions
Your PR firm does not know how to do your customer messaging or positioning for you
Your PR firm should be no where near your social media
Most PR firms will tell you need all of the above, that they are the experts and you aren’t, and will try to charge you a retainer of at least 5K/month
You do not need press releases.
Do your customers read press releases? Does anyone? Press releases were originally intended to notify media of a newsworthy story. In the high-tech world, releases have been so abused by businesses blasting trivial events on the one side and by media outlets writing “stories” that repeat the content without critique or judgment that the credibility of releases has diminished significantly. And it’s getting worse. Online releases are used not to provide notice to interested parties, but rather to generate external links in order to boost PageRank. If your objective is the latter, there are several online PR services that will accomplish your goal for a lot less money.
You do not need a campaign blitz of articles and press mentions.
An agency orchestrated analyst and media tour and blogger outreach program is called “awareness” marketing, is intended to create “buzz” about your product and company, and can indirectly lead to increased visits to your web site by prospective customers. Hiring an agency to lead this effort is still the best way to go, because a good firm not only has a great rolodex of media contacts, but the principals
have relationships with the media that mean increased credibility and better
press. The problem is that startups are not ready for the buzz. You can only launch once and if you blow it, it’s blown. If your selling process isn’t tuned to your customer’s buying process, if your target market segment isn’t finely tuned, if you product doesn’t provide enough value to retain users and you need to pivot, you’ve likely wasted your one chance at not blowing the Techcrunch bump.
Further, as you grow and learn more about the market, you want to cultivate your own relationships with key figures in your industry. Since reporters and analysts participate in social media, access to them through your network without the assistance of a PR agency is pretty easy.
PR firms do not know how to do your customer messaging or positioning
I find this one particularly irksome, because PR firms often tout their ability to develop
messaging and positioning. And they can do a good job when targeting the media
and analysts. PR firms do not know your products, customers, or competitors. You
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do, so it’s your responsibility to learn what messaging and positioning works in your
market. The key verb here is learning. You should be testing your positioning through
Customer Development interviews and A/B testing. There’s a large pool of talented and creative people (including PR professionals) who can help you brainstorm concepts and wordsmith phrases, but outsourcing the effort to an agency is a recipe for bland, undifferentiated marketing-speak. Further, wrong positioning, like placing you in the wrong market, could ultimately lead to your startup’s demise.
PR firms do not belong any where near your social media
Big companies hire PR agencies to manager their social media streams, because they don’t want to screw up their brand. It’s spin, baby, spin. It’s used as a continuation of traditional one-way communication from company to consumer or as a new (mostly) one-way communication from consumer to company black hole. This is likely not your social media strategy. Your strategy likely is to belong to a community through active participation (in ways that don’t directly benefit you), and to provide value unique to you and your business. You might retweet interesting articles that relate to your industry, answer questions unrelated to your business, or even give props to competitors who have done something positive. Such activity requires intimate knowledge of your products, customers and community and you cannot expect a PR agency to have that level of knowledge.
Most PR firms will tell you need all of the above, that they are the experts and you aren’t, and will try to charge you a retainer of at least 5K/month
PR agencies are in a tough place. Online PR resources; reporters, analysts and influential bloggers easily accessible to businesses; decreased use of traditional (e.g., print) media; and a legacy of a high-priced retainer fee structure portents poorly for traditional agencies. Hence the move to make their case as the natural purveyors of social media marketing. For the reasons given above, however, I beg to differ.
Which isn’t to say, you should never do PR.
At Eric Ries’ Startup Lessons Learned conference last month, I participated on the Customer Development panel and we were asked if PR was ever justified. While moderator Sean Ellis and fellow-panelist David Binetti rightly pointed you shouldn’t do PR campaigns, as I discuss above, I mentioned that there are ways to use PR activities in “small” ways to help you achieve discrete objectives. Low-level PR can help build an “expertise reputation” for a Founder without compromising the company. Low-level PR might help you access specific industry contacts who you feel may be early adopters. The distinction here is that you’re not trying to build “buzz,” but rather are taking discrete steps to achieve a defined objective within the context of the stage of your business. For these tasks, you can do them yourself or you might hire a PR consultant and pay them by task or by hour.
Finally, some believe that buzz is required to raise capital. I don’t know, but I have a hard time believing that’s true. I do know that I’m not sure I would want money from someone who could not see through the ruse of manufactured buzz.
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Comments welcome!
PR for startups -‐ Erica Swallow
http://mashable.com/2011/10/10/pr-‐startups/
10 Essential PR Tips for Startups
October 11, 2011 by Erica Swallow33
Erica Swallow is a technology and lifestyle writer. Sign up for her course on “PR for Startups” to learn more about getting media coverage for your fledgling business.
It can be challenging for unknown startups to garner press attention — budgets are tight, relationships with journalists may not be that strong and explaining a new concept is difficult. Not to mention, early-stage startups usually only employ a few people focused on product and development. Therefore, marketing and public relations are often tackled piecemeal by whomever has time.
Good press, though, can be one of the biggest drivers for startups looking to grow their user bases, and as a result, a pretty important component for success.
As a tech journalist, I’ve been pitched by hundreds of companies and have developed a taste for what works and what doesn’t. Read on for my startup tips.
1. Know What’s Newsworthy
Before you begin pitching your startup, stop to think about what is truly newsworthy, especially to the publications you’re targeting.
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Sadly, many startups simply aren’t newsworthy, because they aren’t unique or don’t offer any added value beyond their existing competitors. If your startup is in that boat, it’s really not a matter of figuring out how to pitch your company — instead, you may want to consider improving your product before hitting the pavement.
That being said, if you feel your startup is unique and worthy of coverage, figure out the right angle with which to approach a journalist. A few common ideas include:
The startup’s launch
The launch of a new product, feature or offering
The release of a compelling study or interesting data
The company’s response to a current event
News of a high profile partnership
Once you figure out what qualifies as newsworthy, begin crafting your message by first understanding all of the details about what you’re pitching.
2. Have a Concise, Value-Driven Message
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Before sending out any pitches, take time to craft your company’s message. Be able to explain your startup in one sentence so that anyone — techie or not — can understand its purpose. For example, here is how a few of my favorite startups describe themselves:
“Airbnb is a trusted community marketplace for people to list, discover and book unique spaces around the world online or from an iPhone.”
“Skillshare is a community marketplace to learn anything from anyone.”
“Lot18 is a membership by invitation website for wine and epicurean products from coveted producers at attractive discounts.”
Cut down on industry jargon so that any average Joe can understand your pitch with one read.
After you’ve crafted your company pitch, stick to it for everything you pitch — unless, of course, you find ways to improve it over time.
Besides your company’s description, you’ll also need to create a message for the news event you’re hoping to get covered. Figure out how to explain your story pitch in only a few sentences. Journalists get tons of pitches every day — it’s very likely that the journalist you’re pitching will only read the first few sentences of your email.
When finding your voice for the pitch, try not to force a hook. For example, a lot of press releases and pitches that I receive around key holidays try to make the enclosed news sound more relevant due to the upcoming holiday. If the hook is unrelated, though, it just bogs down the message and makes it difficult to understand.
Once you’ve crafted your message, making sure that it is clear and concise, be certain that it answers these questions for the journalist: “Why is this newsworthy? Why should my audience care?”
3. Understand a Journalist’s Coverage Area & Audience
Determine which demographic — and therefore, which publication — would be interested in your startup. Then research which journalists at that publication cover the vertical in which your startup or its news would fall.
Consider making a list of the top 5-10 journalists in your industry that you’d like to build relationships with and then move forward, focusing on those journalists every time you have a story to convey. Read up on the journalists’ articles and get a clear understanding of what each of them covers. When you pitch them, showcase that you follow their work and feel that your startup fits in with their coverage.
You don’t have to come right out and say that you’ve read all of a journalist’s articles to convey that information, though. For the sake of originality, try to stay away from the cliche first sentence of, “I read your recent post called ‘XYZ,’ and I think you’d be interested in my startup.” If you can’t think of a compelling format, go with something like, “I noticed you’ve covered location-based networks quite a bit at Publication X, and I think you’d be interested in learning about how my startup is changing that space by [fill in blank].” Be sure to differentiate your company from ones that the journalist has already covered, however.
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While pitching individual writers sounds more promising to many PR folk, you should always determine the official pitching method for your preferred publication. For example, stories for Mashable should be pitched to [email protected]. That inbox is monitored at all hours of the day and relevant pitches are forwarded to the correct editors and writers. Contrary to popular belief, news inboxes aren’t always bottomless pits.
4. Customize Your Pitches
People generally don’t like to be part of blast emails, and journalists are no exception. When you want a particular person to cover your story, customize your pitch to be relevant to his coverage area and audience.
Take the extra time to craft custom emails for a small list of journalists that you really want to cover your story. They will most likely notice that you’ve taken the time to write a thoughtful email and be more likely to respond.
5. Avoid Press Releases & Simple Mistakes
I’ve rarely encountered press releases that were helpful. Generally, they are lengthy, full of empty quotes from company reps and tainted with marketing jargon. Just stay away from them. Period. Instead, stick with custom emails.
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Now, I know you’ll be tempted to copy and paste information from one email to another — and you should. After all, your company’s description and the news pitch won’t change much. Be careful, though, of copying incorrect information, such as “I love your work on TechCrunch,” when the writer actually works forVentureBeat.
Another common mistake is to misunderstand a writer’s coverage area. Just because a reporter has written about the top startups in Canada doesn’t mean he wants to know about your Canadian printing company.
6. Have Useful Assets Available
As you get down to pitching time, make sure you have all assets ready that a journalist might request, such as:
A company or product description
Photos relevant to the story
Screenshots of the product
In some cases it may make sense to include a screenshot or photo in the initial pitch, but most of the time just mention that you can send over photos, screenshots and more details if the writer is interested in learning more.
7. Consider Timing with Exclusives and Embargoes
Timing is essential when pitching news. You want to give the writer enough time to report, but you don’t want to pitch the idea too soon that the writer forgets about it by the time your company launches or announces the news officially. I personally prefer to receive news one week in advance of the official announcement. And when possible, I love to have the option of covering the news as an exclusive, when a publication is given the right to be the first publication to report on a given story.
Another key term to know is “embargo.” An embargo is “a request by a source that the information or news provided by that source not be published until a certain date or certain conditions have been met,” as stated on Wikipedia.
An embargo is useful if you anticipate that reporters will need extra time to accurately report the news. This gives them time to interview sources at your company, for example, while still getting the story out right when everyone else does.
8. Offer Up Unique Data
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When pitching, include data and numbers that support your ideas when possible. In fact, an interesting study, infographic or other data sometimes warrants its own pitch. If your company has gathered proprietary information that tells a compelling story, pitch it.
9. Follow Reporters on Twitter
Make it your goal to build relationships with the group of journalists that cover your industry.
Meeting up for lunch or drinks isn’t always the best option when it comes to keeping the conversation alive, though — oftentimes, a journalist may only want to meet up when you have a story to pitch. After all, he or she is probably busy doing other things.
A great way to stay in touch is to follow your key reporters on Twitter. Writers often tweet when they’re looking for sources, and they share articles and other news that they’re interested in. Use these pieces of information to learn more about each journalist and tailor your communications accordingly.
Furthermore, there’s nothing wrong with a little interaction. When you find something you think a journalist may enjoy, tweet it over. And when he or she shares an interesting article or tweets something entertaining, feel free to interact.
If you’re unsure of who to follow, check out Muck Rack, a list of journalists on Twitter.
10. Reverse Pitch Using HARO & NewsBasis
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It’s much easier to pitch a reporter when you already know what he or she is writing. Use tools like HARO andNewsBasis to find and respond to reporter requests for sources.
If your company or someone within your company matches a journalist request, respond by clearly explaining how you could add value to the story. Oftentimes, this type of coverage helps position individuals at your startup as subject matter experts.
Spin and PR – Mark Suster
http://www.bothsidesofthetable.com/2009/11/29/save-‐your-‐spin-‐for-‐someone-‐who-‐cares/
Save Your Spin for Someone Who Cares
by MARK SUSTER on NOVEMBER 29, 2009
Handling PR with VCs
This is part of my series on How to Raise VC but could equally be filed under Startup Advice more generally.
I recently got a phone call from an entrepreneur whom I respect and who runs a company that I hope will do great things one day. He had pitched me in the past and I told him that for a variety of reasons his company was too early stage for me but that I would happily keep track of their progress.
He started the call by telling me he had exciting news. He was about to be featured in a major US news magazine as one of their “hot” picks. I think my response surprised him, “Really? Is that why you called? To update me on your PR? That’s what you’ve got? PR? Save it for someone who cares! What progress have you made in your business?”
I don’t think that’s what he was expecting. Entrepreneurs get so used to friends and family congratulating them on their press coverage that they forget sometimes that this isn’t real. A positive news story means NOTHING about the core performance of your business. A good friend of mine was features on the front cover of the LA Times business section with a glowing article. He had 2 weeks’ cash left in the bank and was facing massive layoffs or potentially bankruptcy.
Press doesn’t mean anything other than free advertising. Don’t get me wrong, I’m very pro PR but please see it for what it is and don’t think that smart or experienced people are going to see it as any more than it is either.
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Our call recovered and we spent the rest of the time talking about the development of their management team and their product. But it got me thinking about how often entrepreneurs overplay their PR so I thought I’d try to offer some advice and how to play PR with VCs (or more broadly with customers or business development partners)
1. Press coverage really matters – The good news – your press coverage really does matter. I know that most people will tell you that they aren’t influenced by what they read on TechCrunch but the reality is that people are way more influenced by what they read in the press than they even admit to themselves. Just notice how many VC emails you get after your TechCrunch article or after you were on stage at TC50. Please don’t take my post as meaning you shouldn’t have PR as an important part of your company’s strategy.
In another post I’ll talk about how PR has changed dramatically in the past 10 years or you can justread Brian Solis’s blog or buy his book on the subject. Most notably you need to understand Earned Media and how blogging, public speaking and social media play an important role in the new PR landscape.
2. In your VC pitch your PR page should take no longer than 30 seconds – Wait. If press coverage matters so much then why shouldn’t I talk it up more in my VC pitch?
Many entrepreneurs have a PR page in the PowerPoint deck. It has logos of the 5-6 most prominent places they’ve been covered with a paragraph from each article. They proceed to read these paragraphs out loud to the VCs in the meeting.
PR is subtle. When I read an article about you I’m influenced. When you sit and walk me through it for 4 minutes on a page I’m reminded of what it is – press coverage. It shows nothing more than you have the ability to get coverage for yourself. Again, I reiterate, it IS important. Press coverage helps you to recruit team members, it helps add legitimacy to your customers who often do Google searches on you before buying and it helps influence biz dev (partners), corp dev (acquirers) and investors.
So what is the right way to pitch your PR page – either in a VC meeting or in a biz dev meeting? Put up your slide with the 5-6 logos of journals that have covered you. Reduce any quotes to a few key words and make them large.
When the page comes up say,
“I guess every entrepreneur needs to put in the obligatory PR page. We feel honored that we’ve gotten such good press coverage. Most notably we loved that ReadWriteWeb referred to us as ‘a next generation TripAdvisor” because that’s exactly how we want to be positioned. PR has helped us to drive our numbers faster than we had planned and has gotten us to our 300,000 registered users. We plan to continue to use PR as an ongoing part of our customer acquisition strategy.”
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End. Next page. And only go back if you’re asked to. Leave them wanting more. You’ve accomplished two things. One – you’ve shown that you understand how PR plays an important role in customer acquisition and more broadly in your company’s success strategy. Two – you’ve been subtle about your PR achievements so the VC is left with a positive impression of your press coverage rather than becoming cynical.
3. In an email you can have curated links - So at the risk of sounding contradictory, I still think press coverage is important to VCs. The best way to handle your press coverage is to send a series of links in an email to the VC you’re getting back in touch with. It can be a simple email on any topic and toward the end say, “I’ve included some links to the most important (or most recent) articles covering us in case it helps with your research.”
I’ll close this story down with the one I started – the entrepreneur who called me to tell me he was about to be profiled in a major news magazine. How could he have turned this into a positive? After the article was written he could have sent me a short email with a one paragraph intro saying, “Just wanted to let you know we got this great coverage in ABC magazine: (link to article). We’ve been making progress in bringing together our management team and our next release is about to ship. I’d love to do a 30 minute call just to update you on our exciting news.”
9 times out of 10 I’ll click on the link and peruse the article. If it’s positive it will probably have some minor impact on my perception of you – whether I acknowledge it to myself or not. Strike one up for subtlety.
How to pitch tech journalists – Ciara Byrne
http://venturebeat.com/2011/01/24/pitch-‐to-‐tech-‐bloggers/
How to pitch to tech journalists
January 24, 2011 9:56 AM Ciara Byrne
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Here at VentureBeat we receive a considerable number of bad pitches, both from PR firms and from entrepreneurs themselves. To make life more tolerable for everyone, we have decided to provide some tips on how to ensure that your pitch is not one of them. Let’s start with some typical examples of the bad pitch.
The boring pitch
In most cases nobody cares that your company has a new CFO or has signed a partnership with another company nobody has heard of. At a minimum, you need to tell us why this news is significant. Better still consider more carefully what you decide to publicize and if it’s really of interest to anyone outside your company. An interesting piece of news may get lost in your deluge of press releases.
The rocket scientist pitch
Tech journalists are rarely experts in all areas of technology (or sometimes in any areas). If you send a pitch full of technical language about ultracapacitors, sodium silicide, or hybrid TDM we may simply have no idea what you are talking about. Assume that we know nothing and first explain the basics of the technology and why it’s important in order to set the context for your news.
The never-ending pitch
Entrepreneurs promoting their own companies are particularly prone to this one. Starting a company is a difficult and all-consuming business so it’s not surprising that you want to tell us, in excruciating detail, how wonderful your product is and how much effort went into building it. The problem is if we if we are not immediately hooked after the first sentence, we will already have hit delete.
The buzzword bingo pitch
PRs are more likely than entrepreneurs to indulge in the buzzword bingo pitch. If your pitch contains the words “game-changing”, “disruptive”, “paradigm-shift” or “innovative” you are guilty as charged. Assume that all pitches contain these words so if you want to stand out try to avoid them.
The world of the tech journalist must seem like a mysterious one to the outsider. How to attract the attention of these fickle creatures? Having catalogued the many ways of doing a bad pitch, here are some pointers on how the tech journalist’s mind works and how to pitch accordingly.
Know your journalist(s)
One of the easiest ways for your pitch to get attention is if you know the journalist personally or have dealt with him before. That’s just human nature. We are always more likely to pay attention to pitches from people we know over those we don’t. Mark Hendrickson’s post on how to pitch to a tech blogger makes the excellent suggestion of building up a relationship with your target journalist well before you pitch to him, e.g. by commenting on or linking to his posts.
Assuming that you are cold pitching, do some research. Don’t pitch a story on games to a journalist who doesn’t cover games. Familiarize yourself with your target journalist’s work. “I enjoyed your article on x.. so thought you might be interested in y” is always a good tactic. People enjoy flattery even when they don’t believe it.
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Be clear about the priorities of your target publication. Some sites prioritize being first to break a story above all else. Others are more interested in deep technical detail or analysis in addition to raw news.
Individual journalists or publications will often have a preferred contact method. For VentureBeat, mail pitches to [email protected].
Tell us what we want to know, quickly
There are a few basic things we need to know. Make your subject line clear and try to cover these points in a paragraph or two.
Urgency: Why should we write about this topic now?
Significance: Why write about this company versus all the others out there? This doesn’t just mean competitors, but the entire universe of companies we could choose to write about instead.
Numbers: What’s the concrete evidence of business traction?
Be honest
If you have already been covered in another publication, tell us, and then explain why we should still cover you in spite of this. If your news is embargoed for a specific time, tell us. There’s no reason why we should have to drag that information out of you. We will probably also want to know if you are pitching to other publications at the same time. Deception may help get you coverage once but you won’t get it a second time. Build a long-term relationship, not a one night stand.
Make it easy for us
We are lazy. Minimize our workload by supplying a press pack with some nice photos or infographics. Write your press release or report so well that we can just cut and paste parts of it (yes, we do this sometimes). Another good tactic is a video such as ZenRobotics hilariously off the wall “movie trailer”.
Make your pitch more than an ad
Some of my favourite pitches tell a story that will interest an audience wider than the potential customers of, or investors in, your company. Good examples are Saplo’s text analysis of happiness or AVG’s study on kids and technology. A pitch which is playful and piquant will always attract attention.
Tech journalists are like restaurant critics. We write about magical technology and fascinating people every day. Our palates may become jaded. Surprise and delight us and you are half way there.
Mail your pitches to [email protected] (received by all VB writers).
How to pitch to the press – Nick Saint
http://www.businessinsider.com/how-‐to-‐pitch-‐your-‐startup-‐to-‐the-‐media-‐2010-‐11
How To Pitch Your Startup To The Press
Nick Saint | Nov. 22, 2010, 6:36 AM | 3,447 | 4
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Here's how most startups that never get written about approach reporters:
Let's say you're working on a new payments system that is obviously better than PayPal in every way, and is therefore a lock to become a multi-billion dollar business within a few years. So, you punch 'PayPal' into Google News, and just like that, you have a list of people who have written stories about PayPal recently.
Then you type up an email that starts with "I read your article about PayPal the other day. Very interesting! Since you're interested in PayPal, I thought you might like to know..." You paste in your standard pitch, then you send this email to everyone on your list.
The appeal of this system is obvious -- it lets you reach a lot of reporters in a limited amount of time. The trouble is that none of those reporters will read through this email. Don't waste your time trying to disguise a mass email as a personal one. Instead, use that time to identify one person you think should be interested, and actually write your pitch for that person.
Choosing a target
Avoid the temptation to pitch the person you'd most like to have write about you. Since the time you
have to spend on this is so limited, you should instead focus on the person who is most likely to
write about you. The way to figure that out is simply to read about your industry -- something you should probably be doing anyway.
Pay attention to who writes interesting things in your industry. If someone is regularly writing about your competitors, that person is presumably interested in what you do. When you are familiar with what someone is writing in general , you're much better equipped to pitch them then when you're
referencing a single article.
Pitch a story, not your company
That your company exists is not, in itself, an interesting story. Your job here is to get your company into the news. But the reporter's job is to write things their audience wants to read. You know what sorts of stories this reporter writes. Think of a what a good story written by that person and involving your company might look like, and pitch that . (For more on that, this article by former TechCrunch
writer Mark Hendrickson is well worth a read.)
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The easiest way to do this is to set yourself up as an expert in your field. If you write interesting things about your industry, or provide interesting data, or are just available to say interesting things about it, reporters will want to talk to you and feature you in other things they write. That isn't as good as having a story written all about you, perhaps, but it gets your name out there, and makes your company and everything it does seem more newsworthy as a result.
For much more on all of this from reporters, widely-covered entrepreneurs, and a PR professional, check out this video of the recent Demystifying PR event:
Creating a good blogger pitch – STEPHANIE SCHWAB
http://www.socialmediaexplorer.com/online-‐public-‐relations/how-‐to-‐create-‐a-‐good-‐blogger-‐pitch/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+SocialMediaExplorer+(Social+Media+Explorer)
HOW TO CREATE A [GOOD] BLOGGER PITCH
by STEPHANIE SCHWAB · January 27, 2011
Because I work with a number of PR firms, and have worked for a PR agency in the past, I’m well aware of the difference in pitching bloggers vs. journalists. The problem is, most PR people aren’t. My blogger friends bitch and moan to me constantly about the bad pitches they get from PR people, and how many mass emails they receive. But c’mon folks, it’s been years since this problem was identified and there have been lots of attempts to help PR people understand the difference. Yet blogger outreach still seems to be a problem for most PR practitioners.
I’m going to give it a shot and tell you my process for blogger outreach. This is not the only way, it’s just how I do it, and it’s been pretty helpful to me for a number of years. Hopefully it will help you too.
img credit: music2work2 (flickr)
IDENTIFY THE BLOGGERS
Create a list of blogs you think might make sense for your brand. Yes, your intern can do this. But it’s got to be more than a “list of mommyblogs.” (More than once I’ve been handed a list with a bunch of URLs. Not so helpful.) Create an Excel spreadsheet and put in all of the information you can’t find in Vocus or Cision. For example, if you’re going after mom or dad bloggers, here are some of the things you might research and put into your list:
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ages of the blogger’s children
parenting topics (kids with special needs, blended families, working parents, etc.)
physical location (you might need them for something local down the road)
whether they write about products or services at all (indeed, some blogs are still personal blogs with no PR/brand involvement – imagine that!)
whether they’ve worked with competitor brands
whether or not they host giveaways or contests
And so on. Tailor this list to your industry or pitch needs.
Note that in order to create this kind of a list you (or that intern) will have to read the blogs. More than one post. Plus the About Me/About Us page. This is not a task which can be finished in ten minutes. Take pity on your poor intern and realize that this is a lot of work. If the pitch is important enough, it’s worth at least a day or two (or more) of their time (or yours).
DEVELOP RELATIONSHIPS
This is the part which is most often ignored. You will have much more success if you have a relationship with the blogger before you pitch them. This means you’ve subscribed to their blog (in your RSS reader or via email), you’ve left a comment or two (relevant, not throwaway) on their blog, and you feel like you “know” them as you know any you do other blog you read regularly (like your favorite sports blog or celebrity gossip blog). You can also develop relationships by meeting bloggers at events, conferences and meetups. Add a column to your spreadsheet which indicates whether you really “follow” the blogger or “know” the blogger in real life, so that you can use those bloggers for your most important pitches.
If you absolutely don’t have the time to do this for your pitch, just be sure that you’ve done the best identification possible and have the greatest amount of information on every blogger before you select who you’re going to pitch.
CHOOSE THE BLOGGER AND CRAFT THE PITCH
Once you’ve got a reasonable list of bloggers to choose from, select a few blogs which seem to be the most relevant to your pitch and/or those with whom you feel you’ve got the best relationship. For each blog that you’re pitching, determine a connection between the blog and your brand, product or pitch. For example, if the blogger has recently gone to CES and written about gadgets, and you’ve got a gadget to pitch, mention that you read their gadget posts (which you have, right?) and that you agree or disagree with one of their reviews. (Or whatever.) Just be authentic, honest, and as specific as you can. Every blogger gets pitches which say “I read your posts and just love them! You’re so funny!” It’s not enough.
Next, determine whether what you want the blogger to do relates to brand-related work they may have done in the past. Such as, “you’ve recently hosted a giveaway for Brand X, so I’m wondering if you’re willing to work with me to create a giveaway for My Brand which would make sense for your readers.” But never fear, even if you don’t see that they’re already doing something similar, you can pitch them on what you want them to do. Just be polite and make your ask as clear as possible.
An even better way to gain traction with a blogger is to take a slightly longer route, and to tell them that you want to work with them to create a realtionship to the brand which makes sense for
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them. Instead of assuming that they will give something away or write a review or write a guest post for you, first ask them if they are interested in the brand, then have a phone call (gasp! an actual conversation) with them to brainstorm about ways in which you can work together authentically for both parties.
MAKE IT A WIN-WIN
Above all, make it clear that you want this to be a win-win for the blogger and for your brand. And I hope I’m not the first person to break it to you, folks, when I say that for most bloggers this means they expect to be compensated in some way (and no, “traffic to your site” is not compensation). After all, you are asking them to be your marketing arm and to help you promote your product or service to their readers. And they are not getting paid by their publication to do this work – they are the publication.
If you take the time to craft a a handful of well-researched, informed, and well-matched pitches, you will likely get a much, much higher return than if you sent out a boilerplate “Dear Blogger” pitch to a list of 100 blogs. In the end, the time you spend upfront could very well justify itself vs. the time you have to take to follow-up incessantly with the hundreds of bloggers who are ignoring your bad pitch.
Do you agree? Disagree? Have other ways to improve blogger pitches? Please give us your thoughts in the comments below.
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Blogging
Blogging
Starting a blog -‐ Andrew Chen
http://andrewchenblog.com/2008/08/11/how-‐to-‐start-‐a-‐professional-‐blog-‐10-‐tips-‐for-‐new-‐bloggers/ How to start a professional blog: 10 tips for new bloggers
Starting from scratch I started my professional blog in late 2006 as I was packing my bags and moving from Seattle to San Francisco. In the first month, I was pleasantly surprised to see a couple ex-coworkers subscribe via e-mail, and didn't think it would ever lead to more readership than that. Two years later, I have a nice community of a couple thousand subscribers, and I occasionally get the question of "how would you start a blog, if you were to do it over again?" I thought I'd share my thoughts on that.
Here's the quick summary, for those who want a quick skim:
Carpet bomb a key area and stake out mindshare
Take time to find your voice
Stay consistent on your blog format and topic
Just show up
Go deep on your topic of expertise
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Meatspace and the blogosphere are tightly connected
Embrace the universal reader acquisition strategies for blogs
Come up with new topics with brainstorms, news headlines, and notes-to-self
Look at your analytics every day
Don't overdo it
Extended discussion below…
Carpet bomb a key area and stake out mindshare Like all products and markets, the blogosphere has its own set of existing products and channels. For example, if someone asks me about a "VC blog" I might refer them to Fred Wilson, Mike Speiser, Venture Hacks, and others. If someone asks me for a "games blog," I typically recommend folks like Raph Koster, Nabeel Hyatt, Daniel Cook at Lost Garden, and others. The point is, just like companies, blogs tend to achieve 30-second elevator pitch status, and it makes sense to figure out a theme for whatever you're going to be writing. IMHO, as long as the space you're writing about is growing, you can never be "too vertical" since you'll easily attract a couple thousand supersmart people who care passionately about your particular sub-vertical.
In general, I find people describing this particular blog as "the viral marketing blog" more than anything else. I write about a bunch of other stuff other than that, but people seem very interested in the topic so I'll take what I can get
Take time to find your voice As I said before, it's good to find a key area. That said, it takes some time to get there, and I spent the first couple months switching between a couple topics – be it personal stories, product design, and advertising. It wasn't until almost a year in that I started writing about viral marketing, which this blog is probably most widely read for.
I found that as I wrote more consistently, and learned from other bloggers, I began to change the tone and voice of my articles. While some of the key elements were always there – essays rather than links, certain topical themes, etc. – I added much better formatting within the blog posts, photos, linking to other blogs, etc.
Stay consistent on your blog format and topic Related to finding your voice, it turns out that blog format really matters. To completely oversimplify, there seem to be two very different kinds of blogs that are successful. Either you're a "curator" of news, or you're a primary content source.
The curator is someone who blogs often and throughout the day with links and snippets, and I would consider someone like Robert Scoble (or iJustine!) to be the Michael Jordan of this approach. The style is often more conversational and casual, and includes lots of little updates on what they are doing or reading or trying out. These guys can really "cover news" and are widely read because they can provide the first opinion on new stuff coming out.
The bad news is that the curator model requires you to stay on top of things For a guy like me, with a full-time job and blogging as a dirty habit, being a pure content creator is much more appealing. I
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will never get the traffic of the news curators, but I can go deep on a specific topic and get a laser-focused audience that just cares about the topics I write about.
It's obviously good to experiment and leave the door open for any and all topics that interest you, but obviously once you begin to settle and find your voice, it's good to focus since then your readers will know what to expect from you. There's nothing worse than that guy that writes one really good essay about the industry and then spends the rest of the time writing about his dog!
Just show up Hands down, the hardest thing about writing a blog is doing it regularly. I often just don't have the energy to write, and have to consider it as a core part of my job in order to get it done. It's especially true once you get past the first couple months and you've hit the top 90% of topics you wanted to get off your chest. Then coming up with new ideas is much harder.
In general, it seems like you have to maintain a tempo of at least 1 essay a week to be relevant. Any less than that, and people stop reading (or at least you'll have all subscriber traffic and no one will just check your site). This blog is averaging about 1.5 posts a week, which I should probably work on, but it seems enough for at least some group of people to follow it. If I weren't so lazy, I'd try to get at least 3-4 posts up per week, and possibly make them a little shorter. (Or one long one, and 2-3 news-related items)
Go deep on your topic of expertise In general, I've found that you can never go "too deep" when covering a vertical. Some of the things I would have thought were the most esoteric – like viral loops and sharkfin graphs – have become the most widely read and widely linked posts. I originally hesitated to even post those since I thought they would be too obscure, but instead I found that people either appreciated it more. My guess is that it has to do with the fact that either they're learning something completely brand new that they think is interesting, or at the very least you're build "street cred" by not being the typical super-high-level analyst.
Meatspace and the blogosphere are tightly connected Surprisingly (or unsurprisingly?) the world of San Francisco conferences, events, hanging-out, etc. are very much correlated with the blogosphere. A lot of readers of my blog either know me personally or know of me through a mutual friend – I get this sense since many of the inbound emails I get start with, "hi I read your blog and am friends with X" or I have lots of friends introducing me to FOAFs who want to talk about a topic from my blog. I think the point of this is just to say that you can grow your readership by being part of the conference circuit – either organizing or speaking or otherwise – and also your blog readership will lead to opportunities to get more visibility in meatspace. It's all useful, so embrace it. And move to SF if you haven't already
Embrace the universal reader acquisition strategies for blogs When it comes to blogs, the user acquisition is pretty boring. You basically have the following sources of traffic, by importance:
SEO, specifically Google
Blog aggregators (like delicious, digg, etc.)
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Social platforms (like twitter, friendfeed, etc.)
Individual blog links
Given that a lot of your blog traffic will come from SEO, it's a good idea to try to own some keywords for a topic if you can. I get a ton of searches on viral loops and other viral marketing terms. It's a good idea to add whatever your main keywords are to your blog title, blog topics, etc. I sometimes use blog titles like: "Facebook marketing: X" to get people to link back to me using those terms.
Similarly, whatever your expertise is, you might find vertical aggregators that drive a lot of traffic. For me, it's Hacker News, Techmeme, and others. Identifying those key aggregators and submitting your articles is key.
Come up with new topics with brainstorms, news headlines, and notes-to-self As mentioned above, it's very very easy to run out of new topics to write about. Writer's block seems to afflict me almost every week This is especially true once you hit the 2-3 month mark, since many of the topics that you might want to write about have already been covered in one angle or another.
My usual remedy to this is to employ a set of tactics that generate a healthy list of blog topics in my inbox, to be written one day or another. The first tactic is that when I'm in a good creative mood, I'll often do a quick brainstorm of many potential topics and ideas. Some can be simple and explanatory, like "how to do X" or specific companies, or recollections of specific conversations that are worth blogging about. Similarly, I'll also peruse sites like Techmeme and look for headlines that catch my attention. In particular, I often look for things that I think are either wrong, need clarification, or otherwise would compel me to rambling if someone told me about it in person. All of these ideas I will write up in very short outlines and e-mail to myself. Having a short outlin or starting a paragraph or two of the post helps me sketch out the idea in enough form to easily execute it at a later date. Otherwise, if you just have a fun headline but no body, going from 0 to 60 can be quite rough.
Look at your analytics every day I look at the small amount of analytics on my blog on a frequent basis to understand what's going on. It's really nothing fancy, and certainly pales to the kind of instrumentation I'd do on an actual web project, but it's good enough. More importantly, it helps you get some interaction with your passive users that aren't leaving comments, and helps you figure out how to serve them better.
In general, I start by looking at my referrers every day, along with daily visitors/pageviews. I have sitemeter bookmarked on my phone so that I can glance at this all the time. I'll look at what searches people are making via Lijit, and what searches are drawing people to this site. Another thing is to look at my Feedburner numbers and subscribers to see who is subscribing and how things are trending. I also get my top referrers and top content e-mailed to me on a weekly basis by Google Analytics, so I have an understanding of what people are looking at.
In general, in looking at this information I'm trying to assess a couple things:
Are there specific topic areas people are coming to the site for, that I should write more about?
Are there certain traffic sources that I should try to "develop" more? (Twitter is one good example of this)
What are the e-mail domains and companies that are visiting this blog, and how would I better serve those readers?
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What are the searches people are making on the site, and are there any that aren't returning any results?
The point of all of this is looking at your blog not as a "diary" as many people do it – instead of being fuly focused on yourself and what you want to write, you can think of your readers as your customer-base, and you're trying to collect whatever knowledge you can to cater to their needs. Obviously, for part-time bloggers like myself, it's important to balance your interests with the interests of your audience, but in general I think the philosophy holds.
Don't overdo it Finally, have fun After all, you can always quit! I often find myself not blogging for a week or two just because I don't feel like it. I think that's OK, since this isn't my full-time job and I'm just doing it for fun. I think if I felt a lot more pressure to do this consistently, regardless of my enjoyment, I'd probably stop since it wouldn't be fun anymore.
No time to blog? – Charlie O’Donnell
http://www.thisisgoingtobebig.com/blog/2011/9/6/entrepreneur-‐social-‐media-‐fail-‐i-‐dont-‐have-‐time-‐to-‐blog-‐beca.html
Entrepreneur Social Media FAIL: I don't have time to blog because I need to hire, get customers, get PR and raise money
TUESDAY, SEPTEMBER 6, 2011 AT 04:41PM BY CHARLIE O'DONNELL
Let's be clear-‐-‐you can absolutely build an incredible company without participating in social media. There is certainly success without blogging, and blogging definitely isn't a guarantee of success by any means. So why bother? You have tons of things to do as a founder. You have hiring to do, money to raise and you've got to get your company's story out there. Blogging takes up time that you don't have. Most entrepreneurs don't recognize the value of personal use of social media as an important-‐-‐maybe the most important-‐-‐channel for accomplishing these milestones. Two things are true for every startup: 1) Founders and CEOs are key to driving success and 2) these companies need awareness for their unique message to accomplish all sorts of goals. Yes, the entire team does the work, for sure, but founders and CEOs set the tone with their first hires. The initial team and the level of work they are challenged and motivated to do is a direct result if the environment created by the people at the top. That's why startups are uniquely personal. The DNA of the founders makes its way into the product, sales strategy, recruiting efforts, etc. If you are going to accompany these efforts with a public message, you're going to want to choose an equally personal channel.
Unfortunately, using other people's channels and audience, which is essentially what PR is, won't be as effective-‐-‐simply because no one can tell your story as well as you can. PR can magnify, distribute, etc., but it's your own story that is the fuel for a well executed PR campaign these days-‐-‐and I think it starts best on your own site in your own voice. Your blogging or participation on Twitter won't suffice alone, but it's a key ingredient to a comprehensive PR strategy these days.
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On top of that, no one really gets paid to tell *your* story-‐-‐but that's what people want to hear. When people consider working for you, they want to hear who you are and where you're taking this company. You can tell them on the interview, but how many people aren't even coming for an interview because they haven't heard about you and your story? That's part of what blogs, Twitter and other forms of social media do-‐-‐they make you discoverable. They also make you more easily followable. I can watch your napkin develop into a company from afar without further cluttering my inbox-‐-‐not that email lists are easily discoverable anyway. These channels also allow you more at-‐bats with your message. You don't want to spend your whole NY Times interview telling the whole story about how your grandfather's shoe store inspired you to be an entrepreneur, but you can tell that story on your blog-‐-‐as well as any other lessons he taught you. That story might surface a VP of Marketing with an interest in startups who has a similar story of family inspiration. That person may have been following you based off of someone else's retweet of that post you wrote on why good marketing talent is so hard to find. A coffee and a handshake later and you just added a key member of your team who was enthusiastic enough to take a huge pay cut in exchange for more equity, without paying a recruiter fee. What was that you were saying about what your time its worth?
Blogs and social media can be as equally serendipitous in surfacing early customers, speaking opportunities or potential investors. Yes, it is absolutely entirely possible to do this on your own, but why not use a cheap channel that works effectively if it is available to you.
Time, that's why-‐-‐but there are ways to solve for that. If I was a busy entrepreneur with a commute, for example, I might record my thoughts over audio and get a ghost writer to summerize them into a set of discrete posts. In fact, getting interviewed for an hour by someone could result in enough content for 3 or 4 blog posts-‐-‐since you can speak faster than you can type. Is this inauthentic? Not if you're conveying your unique perspective, experience and message-‐-‐it's no different than having an editor. How about having everyone in your company contribute suggestions for things they'd like to hear you talk about-‐-‐take requests if you can't think of what to write about. Anything, really, that is you being the face of your vision and your company, telling your story is a potentially valuable asset-‐-‐one that I don't see nearly enough entrepreneurs taking advantage of. Instead, they spend way too much time trying to convince others to tell their story for them.
How to start blogging – Mark Suster
http://www.bothsidesofthetable.com/2010/03/08/should-‐you-‐blog-‐yes-‐and-‐heres-‐how/
Should You Blog? (yes, and here’s how …)
by MARK SUSTER on MARCH 8, 2010
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This is filed under sales & marketing advice.
Summary notes and then I’ll extend:
Should you blog? Yes. As Brian Solis is fond of saying, “PR stands for public relations, not press
release.” That’s right. In the era of two-way communications people expect an authentic voice and not the Wizard of Oz pulling levels behind the curtains. Blogging is an important way to build an audience and also drive SEO traffic. It’s also a great way to build relationships with people interested in your topic area.
What should you blog about? Define your customers, partners and other relevant people to
your organization (e.g. analysts, journalists, potential employees) and blog about what you want to communication with them. Don’t blog about what you think would be “cool.” I don’t think that most startup blogs should be about how to build a startup. That’s blogging to the echo chamber unless they’re your target customers. And if they are I suggest your revenue stream is likely to look a bit skinny. If you’re a financial services firm blog about personal finance.
How to find your “voice”? Be authentic. Don’t try to sound too smart or too funny. Just be
yourself. People will see who you are in your words. If you try to make everything too perfect you’ll never hit publish. If you try to sound too intelligent you’ll likely be boring as shite. Most blogs are. Be open and transparent. Get inside your reader’s minds. Try to think about what they would want to know from you. In fact, ask them! Don’t be offensive – it’s never worth it to offend great masses of people. But that doesn’t mean sitting on the fence. I have a point of view and I’m sure sometimes it rankles. But I try to be respectful about it. Sitting on the fence on all issues is also pretty boring. But unless you’re a political or religious blog stay out of all the stuff that you were taught not to talk about at cocktail parties. And don’t blog drunk. Mostly, have fun. If you can’t do that you won’t last very long.
OK, that’s my summary and I don’t want to violate my terms with the people at Mashable who were very generous with me so I’m now into new territory. But if you like this topic please consider reading the Mashable article. I put much time into it.
The new stuff:
How do I get started? First, you’ll need a platform. I use WordPress and am very happy. In this
genre there is also Typepad although I find less people using it these days. Blogger kinda sucks IMHO. There are the new tools like Tumblr and Posterous. I’ve played with both and they’re pretty cool. They’re more light weight, easier to use and more social. But for my “professional” blog I’m quite happy with WordPress for now. Then you need to decide whether to use the “hosted” version
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or the “installed” version. At least that’s true in WordPress. The advantage of the hosted version is that it’s easier to get started. The disadvantage is that you can’t install a lot of additional tools that use Javascript. Actually, that’s kind of lame. I started with the hosted version and then migrated to an installed version so I could use Google Analytics and some other products.
You then need a URL. It’s true you can be msuster.typepad.com or similar ut that’s kind of lame so I wouldn’t recommend it. Just get a real URL. I think it’s important to think about what image you want to portray when you pick your URL name. It doesn’t need to be short. You’re not trying to build a consumer website like Mint.com. My website is a pretty long URL but people manage to find it. Much of my traffic is through referring websites and/or social media. Some search. But I chose the URL of the brand that I want to portray. Both Sides of the Table. I was an entrepreneur. Now I’m a VC. Not rocket science. What are you trying to convey? What will be your unique positioning? Don’t just write a carbon copy of what somebody else is doing. That’s boring.
So I wrote a post, now what? OK, well, actually the first thing I did is come up with a list of 50
posts that I wanted to write. I planned it out a bit. I didn’t want to run out of things to write about in the first 6 months. So I created a “series” that I could talk about in a theme. My first series was theslides that go into a PowerPoint presentation. Since there are 10-12 slides this gave me my first few weeks. Don’t blow your load on your first post. Slice it up enough to do many posts. I think most blogs are between 600-1000 words / post. I’m long winded – usually 2,000 words. I know. I know. Once you’re written a few posts don’t try to make the flood gates open at once. Slowly build your audience. Make it organic. If you write good content and consistently you’ll build an audience over time. I’m now at about 70k monthly uniques put the growth has been gradual over the past 9 months – not one great spurt.
How do I build an audience? So you have a few posts live and want some readers. The obvious
starting point is to email a few friends and let them know you have a new blog. Don’t be overbearing – just an email saying, wanted to let you know about my new blog. I also recommend you put it under your email signature in a color other than black. You also should have it be what your Twitter page links to.
Every time I write a post I send it out on Twitter. I try to send out the Twitter link when more people are online. I currently do this using CoTweet, which allows me to schedule when the Tweet goes out. I’ll frequently send two Tweets – one in the morning and one in the evening. Not everybody sees the first one. I try to vary the copy sometimes so that it isn’t boring if somebody sees it twice. Make sure your blog has Tweetmeme or similar. This means if somebody likes your post and wants to Retweet it they can by simply clicking a button. To add a post to Facebook button I use a tool called fbShare.me. You can also sign up for Tweetpost to have your Twitter account automatically update Twitter. Also, make sure to sign up with Feedburner. That way people who want to get your blog by RSS and/or email can do so. Make sure your blog also has a Follow Me on Twitter button so people who find you can easily follow you.
The great thing is that the more compelling content you write the more people Retweet you, which drive more traffic to your blog. Twitter is, after all, about link sharing. The more they go to your blog and like it, the more will follow you on Twitter. As you build up that following you have more people to drive to your blog going forward. Virtuous circle. That’s the basics. I’ll write about some more advanced “hacks” at the end of the post.
How much time will it take? If you plan out what you want to write about in advance then it’s
really about writing. I tend to write an outline before I write the actual post so that my writing will have some structure. I write for about 45 minutes to an hour in the first pass. I usually then re-
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read, edit, spell check and add links. This usually takes another 20-30 minutes. I then always add an image. I think this is a nice touch. Just staring at text is a bit boring and I find that the image can add humor and/or drive people in. I used to add 2-3 images but that proved too time consuming.
I get most of my images from iStockPhoto. There are placed to get free images but I don’t like to deal with the creative commons wording and linking and potential that I got it wrong. I’m fine paying $1-2 / picture. I know the free option would work well so if you’re on a budget go down that road. I’ve often thought about trying to crowd-source a copy editor. I think I would improve my posts if somebody could edit them and make them shorter. For now, I hope it’s good enough.
Then there’s comments. You HAVE TO respond to comments. First, it’s the most fun part of blogging. It’s addicting like Twitter. It’s where you exchange ideas with other people. It’s where your community gets to know you. It’s where you build loyalty and relationships. I have met many people in person who were first commenters on my blog. I find it frustrating if I leave comments on somebody’s blog and they never respond. I don’t expect responses to each and every comment but there should be some interaction. Unless, of course, I’m posting comments on a blog like TechCrunch or the Washington Post. But I remember in the early days Michael Arrington used to respond to comments on his blog a lot.
I’m very particular to Disqus as my commenting platform. I like the interactivity and ability to have nested responses. I like being able to have authenticated responders and images. It helps to get to know people better. Native commenting systems mostly suck. Use Disqus.
How frequently should I write? Tough question. I’m going to assume that like me you
have a day job. If you’re a full time blogger and reading this then you need to go get a real book on how to blog. This is directed at part time people who are building a blog to support their real business. I think you should commit to one post per week. I recommend writing 8-10 before you get started so that you have a backlog in case you get busy. Sometimes I write 4 or 5 on a weekend when I get time so that I have them for weeks where I’m busy. One time I set my alarm for 5am and blasted through 12 posts in two mornings and I had fodder for weeks. That was my “Entrepreneurial DNA” series. I wrote it on two mornings during Thanksgiving holiday. Then later I just added images and edited. Right now I’m writing about 3-4 times / week. I can’t commit to every day like some bloggers. And I reserve the right to drop back to 1-2 posts some weeks if I feel busy or burned out. But my personal SLA right now is once / week minimum.
FWIW, It’s 11:41PM right now. I wrote this post at about 6:30PM. I’m editing in bed. Probably shouldn’t be. I’m sure if I bought my WakeMate already they’d be telling me not to!
How can I track my performance? First, most blogging tools have analytics built
in. Wordpress does. Then you can install Google Analytics to your website. This will give you more realistic stats. When you Tweet you should use a URL shortener tied to an analytics platform. The most common isBit.ly. I use awe.sm. Awe.sm allows me to track more granular details about my campaigns than I can currently on Bit.ly and it’s where I got my custom URL’s grp.vc and bothsid.es. You can also track how many people sign up on Feedburner. I try not to obsess too much about the ins-and-outs of daily or weekly performance. I just want to know that I’m building up a slow and steady audience. It’s a marathon and not a sprint.
Appendix: Traffic Hacks:
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Commenting on other blogs – you need to comment on other people’s blogs. First, it is a place where your comment will often link back to your blog (such as on TechCrunch) where it can drive traffic. Occasionally, and not overtly, and only if relevant you can provide a comment with a link back to an article in your blog. Don’t do this often, don’t be blatant and make sure it’s relevant.
Linking to other blogs – For example, many people know that I love VentureHacks because it’s a great resource for entrepreneurs and I finally met Babak Nivi (aka Nivi). Notice I’ve linked to his website. If he tracks his blog (which I’m sure he does) he’ll see this link. If he has a Google Alert on his name (everyone does) then he’ll also get that. Don’t stalk people and link all the time. If you do link make it relevant. Don’t be over the top gushing and creepy. Be subtle. Link to different blogs. Don’t overtly tell everyone you link to, “I linked to you, check out my article!” Assume that over time if you write compelling content they’ll eventually check you out. I do notice when people link to me or write about stuff I’ve written about. I try to check out most of them. Sometimes I get busy. Every few I try to stop by and leave a comment so that they’ll know I’ve been there and I appreciate the coverage. Sometimes I just read the blog and file it away in memory to check out another time.
Covering relevant people in your blog in an authentic way – If your blog covers topics in your industry it’s likely that you’ll be able to write about some people and companies that you want to be aware of your blog. Yesterday I wrote about Plancast. I love their product. I don’t have any reason to drive Mark Hendrickson to my blog but using him as an example, writing a story about Plancast would make it more likely that the founder would find his way to my blog. I chose not to write about companies for a long time on my blog. My strategy was to keep it advice based for the first 6 months so I never really employed this as a strategy to drive traffic. But I know it works.
Tweet support - What I DID do in the early days is enlist Tweet support. I would occasionally ask people that I was close with to retweet my posts. I tried to mix it up in order to not ask the same people often. I would send out emails with the Tweet text already written so that they just had to cut-and-paste. As my blog started getting authentic traffic I stopped asking for this help.
Guest authoring – Once you have a bit of credibility as a writer a great strategy to drive traffic is to write guest posts for relevant bloggers in your sphere of influence. If you run BakeSpace and blog about food why not contact some of the local food blogs and see whether you could submit guest articles. Most people are delighted to have the free content. In return all you ask for are links back to your blog and to your Twitter account. Slowly and surely these will add users, of which some will come back on a regular basis.
Becoming a better blogger – Neil Patel
How to Become a Blogging Superstar
May 1st, 2012 - Posted by neilpatel to Content & Blogging
This post was originally in YouMoz, and was promoted to the main blog because it provides great value and interest to our community. The author’s views are entirely his or her own and may not reflect the views of SEOmoz, Inc.
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Do you have what it takes to become a superstar blogger?
While anybody can set up a blog…not everyone can take that blog and turn it into a world-renowned blog that ends up on Time Magazine’s best blog list or Ad Age’s Power 150.
The bad news is that you need some pretty unique qualities to make it to the top. The good news is that just about everybody can learn those qualities.
Let’s take a look at them…
Superstar bloggers are insane
Most superstar bloggers have one thing in common: they take risks. They take risks with their blogs and they take risks with their content.
Your goal as a writer for your blog is to stop someone dead in their tracks nearly to the point that they can’t believe you just wrote what you just wrote...
And they have to keep reading.
This means you have to write headlines like How to Rank on the First Page of Google through Videos and 8 Simple SEO Tricks That Will Help You Rank Above the Fold and Increase Your CTR.
But on a higher level, you keep on pushing the boundaries of what your blog can do. You wonder about thedesign of your blog…and can you make it work harder?
You wonder about conversion and how you can triple it. You think about crazy ideas…
Sure, not every idea will work.
But that’s what separates a superstar blogger from your average blogger…they never give up. They keep trying and pushing and making everything they touch better.
Superstar bloggers write and write and write
You’ll never get away from this one because you have to write a lot to get better at what you do. What I mean by this is you need to write at least 1,000 words a day…
Seven days a week.
Some of that content won’t be that great. Some of it will be awesome and drive you a ton of traffic. Your quantity can suffer some time as long as your quality doesn’t.
And another lesson about writing so much is that you will cast a wider net when you have more and more blog posts online for the search engines to index.
There are currently about 3 billion searches a day on Google…
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This will ultimately lead to more visitors and subscribers.
Superstar bloggers stick to their master plan
Do you have a master plan?
In Daniel Pink’s book Drive, he talks about the single sentence that defines you. He uses as an example where Carol Boothe Luce once said to John F. Kennedy, "A great man is one sentence. Abraham Lincoln's was 'He preserved the Union and freed the slaves.' What's yours?"
What about you? What one sentence defines you? Here are some examples to get you motivated:
A world traveler who speaks about entrepreneurship to foreign governments.
North America’s greatest digital media strategist.
A well-rounded political writer with a blog read by 25,000 people.
Those may sound like pretty grand ideas…but remember…superstar bloggers are insane.
They go big.
But once that master plan is in place, you need to stick to it. You need to create the plan and then start working the plan. You won’t go anywhere if you don’t work the plan
You have to ship.
And don’t worry about perfection. Sure, you’ll want to make adjustments when you get feedback…but make those changes and keep pushing forward.
Becoming a blogging superstar is a journey…not a finished goal.
Superstar bloggers are creative
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If you want to become a superstar blogger, then you need to come up with a way that you generate idea after crazy idea.
That’s going to be hard because you will have to churn out a lot of content.
What do superstar bloggers do to keep those ideas and creativity constantly coming? Here are six tips forbreaking writer’s block from Darren Rowse:
Change your environment – If you are struggling to be creative in your office, jump up and work from the kitchen. Or move outside. Spend a couple days a week working from a café or restaurant that doesn’t mind you being there for a while. Or work with a friend.
Keep an idea journal – Whether you use a notebook and pencil or a free tool like Evernote, jot down ideas for content when ever inspiration hits you.
Just write – Sometimes to jolt your creative system you need to simply write without an agenda. This is a great way to empty your mind of thoughts and ideas that have been percolating for quite some time.
Read other bloggers – Become a master at reading a ton of other blogs. If you can manage hundreds a day, you will never be short of ideas. And remember to copy ideas down as you get them.
Figure out needs – Use your readers’ needs as the starting point for your blog posts. What problems are they facing? What questions are they asking?
Combine two unrelated ideas – A great exercise for generating ideas is to take two completely unrelated ideas and then combine them. For example, what kind of ideas can you create when you match blogging with Mt. Everest? Or what about digital marketing and The Simpsons? See how that works?
Superstar bloggers are passionate
If you look at bloggers like Seth Godin, Rand Fishkin or Ramit Sethi you’ll see that they love what they do. You can also see that they are also totally immersed in what they do.
Are you totally immersed in what you do?
It’s okay to start a blog and then learn 30 days down the road that you really don’t love the subject you are trying to write on. Maybe it was just a passing phase.
What you need to do, however, is drop it fast and pick up something that you do love…because readers will be able to tell if you are not enthusiastic about your blog. They’ll sniff you out and you will struggle to grow it.
The godfather of passion, however, has to be Gary Vaynerchuk. His passion is obvious whatever he touches or speaks…it could be on his Wine Library TV or on stage or on one of the many videos that he shares through his marketing blog.
He’s on fire and you can’t help watch him and get on fire, too. And this is why he is a superstar blogger.
Superstar bloggers interact with their readers
You can not shy away from those who comment on your site. You need to jump in and thank every single person who comments. You need to engage them with questions and pick their brains for ideas on new topics.
Run surveys on your site using KISSinsights or simply publish a post asking for new content suggestions.
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You should also run contests that reward your readers with gifts… letting them know how much you appreciate their support.
When you create content that your readers really love and can relate to then you are on your way to creating a vibrant community who will support you for a very long time…both as readers and buyers.
Besides, you want this community engaged so they share your content on the social web.
Superstar bloggers are insanely focused
You’ll kick butt in the blogging world if you can stay focused and organized. The very best of bloggers have a razor-sharp focus…
They see the big picture and then use their self-discipline to stick to it.
But they also don’t do it alone. They use productivity tools to help them stay focused and efficient. Here are 8 I recommend every blogger use:
Zaarly – You can hire just about anybody in your area to do just about anything you need done. Want somebody to research for you? What about put a desk together?
Batchbook – As your contact list grows, you’ll want a great system to manage it. Batchbook is a cloud-based contact management tool that can even handle your social media contacts.
MailChimp – I’ll mention this in a later section, but you’ll want to create an email newsletter that looks professional and doesn’t cost a fortune. MailChimp can help you.
DropBox – With this app you can access any document or file anywhere you want. Store a document on your laptop and it’s on your iPhone, too.
Jing – This free tool allows you to capture images from the web, create arrows and boxes on those images and then post to your blog. You can also create videos and narrate on the fly…
Rescue Time – This thing will easily save you 4 to 5 hours every week because it tracks what you do and helps you avoid distractions.
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Evernote – Clip a URL, selection of a page or the entire page into Evernote and then save for later. Great for recording ideas for future blog posts.
FreshBooks – Once you start earning a living off of your blogging, you will definitely keep track of your income and expenses. This tool will help you do that without wasting your time.
Superstar bloggers understand their strengths and weaknesses
Great bloggers know what they are really good at…and they know what they are really bad at. This helps them to see what they need to work on…or delegate to someone else…to help conquer their goals.
This can include things like design, code or proofing.
But you also need to learn how to give away those tasks that you don’t enjoy at all. Those are the tasks that rob you of productivity because you tend to procrastinate. And like I mentioned above, use a tool like Zaarly to delegate.
Superstar bloggers use a variety of media
In today’s world, copy is not enough. Google is learning how to index video and audio and giving you a wider net to cast for possible search terms.
What you have to do is learn when to use each of these tools. For example, you need to ask yourself:
When should you use text? As long as search is dominated by keywords, then this will make up the chunk of content you produce. But as you will see, you will also be combining medias.
When should you use video? I’m a fan of creating short…anywhere from 2 minutes to 11 eleven minute…videos for tutorial type content. SEOmoz does this with their Whiteboard Fridays andKhan Academy has become famous though his use of video. This also works well with video, especially with Google+’s hangout feature. Keep in mind that you should create a transcript to put on YouTube and your website for the skim readers and search engine spiders.
When should you use audio? Audio works great for tutorials, but I’ve found that the best podcasts are those that feature two people talking make it way more interesting. Check out theManager Tools podcast to see what I mean.
Superstar bloggers diversify their income
Superstar bloggers don’t rely on their blog to bring in all their income. In other words, you don’t rely on just one income stream.
This means that you need to use your blog as a stepping stone to other ventures. This could be to books you sell and create like Darren Rowse does…
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or information products to sell like Timothy Sykes does.
Maybe it’s to promote yourself as a speaker or the platform you use to promote your own conference.
In addition, your blog will also become a magnet for joint ventures with other bloggers…something you mustengage in if you want to expand your audience.
Superstar bloggers are thorough and original
While in the early days of blogging…before there was so much competition…being brief was very important.
Not so anymore.
These days people want more than just a quick answer. They want a detailed, highly-researched post that will answer their questions completely.
The worst thing you can do as a blogger is to provide a pat answer to a real problem.
When it comes to creating content for your blog, the superstar method is to study your analytics to see who is coming to your site, when, from what source, where are they going, why they are there…and how to get them converted into subscribers.
There is a huge audience online. This Edison report shows that more than half of Americans who are +12 or older are using social media…
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How do you tap into those people?
You analyze the search terms…you study your Twitter analytics to see what gets shared the most...you look into why some posts get more comments than others…and then you create content that produces those kinds of results.
Superstar bloggers are curious
You’re probably thinking that superstar bloggers reach a certain point and then they stop learning.
That couldn’t be farther from the truth.
The bloggers that I’ve met who I consider superstars…people like Ben Huh and John Chow…are constantly reading, studying and looking for ways to implement and test their ideas.
These are people who will try anything once. Your weirdoes…
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These are your 0.1%. And that’s going to be you.
The thing about these guys and girls is that they are curious, restless and eager to know more.
They are also some of the most humble people I’ve met, too, which is important. They never come off as arrogant or prideful. They want to learn from you no matter who you are…and they want to help you learn, too.
Superstar bloggers are relentless
From reading to writing and testing to tweaking…superstar bloggers never stop. Sure, they may take a short break just to get their bearings again…but they won’t be away from it too long.
And when it comes to writing great content…each and every day they are creating posts that stick to the subject matter they are experts on.
They don’t stray…and when it seems like they do they are always really good about tying the post back into their cornerstone content.
And when it comes to their schedule…superstars are also very consistent here, too. You need to decide when you are going to post…and then stick to it!
One more thing…if you want to become a superstar blogger you have to understand that success takes along time.
Trust me…I’ve been at this for over ten years…and one of the things that has kept me at it even when things get really difficult…is that I’m relentless and I stick to the master plan.
Superstar bloggers are humble
You can’t really be a life-long learner if you think you know it all. That’s why you need to remain humble and understand that you have so much to learn…
It will take time and you will master certain aspects of blogging. You may become one of the best headline writers like Matt Drudge is…but you know you can always get better.
That’s humility.
Superstar bloggers are self-starters
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If you ever plan on working for yourself, then you better know that you will need to be able to manage yourself.
What do I mean exactly?
You’ll need to be able to kick yourself out of bed and get to writing when you would much rather sleep in on the rainy day.
The thing about working for yourself is that you only make as much money as you work. If you’re not writing, then you are losing money.
Being a self-starter is all about having ideas…and then putting them to work. If you can’t do that, then you will not become a superstar blogger.
Superstar bloggers watch for trends
If you really want to catch some traction with your blog…watch what is trending on Twitter and Google and then jump on that traffic.
This is why blog posts that tie into current trends always get a lot of traction. For example, when Steve Jobs pasted away I wrote a post on the 11 Business Lessons Steve Jobs Taught Me. And I didn’t just do it for the traffic, but instead it allowed me to look back at all of the great things he helped me accomplish in life.
That post got a lot of traction.
Here’s another example. This is what is hot on searches as of this writing:
You could write an article titled “How Amanda Bynes Getting Arrested Can Make You Filthy Rich.” You could do that with all of those searches.
Keep in mind that trendy posts must relate to your readers self interest…in other words, you just can’t write a trendy post for the sake of writing a trendy post…
You have to write about something your readers care about.
Superstar bloggers find a common enemy
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This a great copywriter tactic that says you will engage readers if you choose an enemy that both of you hate. For example, very successful financial newsletters will play on fears that the government is out to get the money of the rich…and make the government the enemy.
In SEO, Google or Microsoft is often played as the enemy…the big bad guys who wants to spy on everyone, play to their favorites and never give SEOs a break:
Now I don’t suggest that your cornerstone content is all about you attacking this common enemy. That will get old quick.
Superstar bloggers are not afraid to outdo another blogger
For the most part the blogging community is made up of people who get along pretty well. So I’m not talking about doing something rude to someone else…
I’m simply talking about taking their idea and making it better.
Here’s what I mean. If I write a blog post called 10 SEO Trends You Can’t Ignore…then you can come along and write one called “10 SEO Trends That Will Drive Massive Traffic to Your Site in 45 Minutes”.
When it comes to gaining attention, that strategy really works.
Don’t be afraid to use it.
Superstar bloggers twist social media to their advantage
Back in the day when blogging was the only game in town the way to get people talking about and sharing your content was through commenting on other blogs.
This is what Pete Cashmore did with Mashable. He literally commented on hundreds of blogs a day.
With the rise of social media tools like Twitter, LinkedIn, Google+ and Facebook, commenting is still a successful strategy...but using these social media sites have become a major part of a successful bloggers arsenal.
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It all starts with creating great content that people love to share. And it continues with you sharing other people’s content, building a list of influencers you follow and interacting on a daily basis with your followers.
Social media will help spread your brand across the web.
Superstar bloggers build a list
The real magic of the blog comes in with the list that you build from your growing audience. The more you blog the more traffic you will get…
But that traffic is worthless if you don’t do anything with it.
See, the email inbox is still a very private thing…and it’s a place that almost everyone still communicates.
Friendstar came and went. MySpace has come and gone. And maybe Twitter, Facebook and eventually Google+ will go away when something new and better comes along.
But through all of this email still remains.
So if you want a way to communicate with your audience…then start building an email newsletter list.
This gives those who sign up an exclusive relationship with you. And your conversion rates will be much higher when you market to the email list.
Superstar bloggers target their traffic
One big mistake that a lot of beginning bloggers make is they try for the biggest audience. They may end up getting 1,000 hits a day to their blog…but not get more single subscriber or one single person to buy from them.
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How can that be? If the traffic is so high…they should be able to make at least one sale, right?
Sadly it’s wrong.
The problem with this approach is that quantity never outranks quality. If you have only 50 highly-qualified hits to your site you will more than likely have higher conversion rates than if you had 1,000.
So know who your audience is and what they want…and then give it to them.
Superstar bloggers are very personal
You likely have one or two bloggers who you think are the greatest. And I’ll bet that one of the reasons that you like these bloggers so much is how personal they are.
They blog every day about business and the world of content marketing, but it’s always in there…those life experiences that are very close to them…and how these experiences can turn into lessons to help you the reader.
Chris Brogan is a master of this skill. If you look at his “Best Of” page you’ll see that a lot of that content is written from a personal perspective:
It’s like he was writing just to you because he is writing like he is talking. He is very conversational. It is coming out so easy because he is passionate and informed about what he is talking about…but it’s in such a personal context that you can totally relate.
Superstar bloggers stick to their brand
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While lots of superstar bloggers started off without really knowing their brand…they knew what they were really good at it…but they didn’t have a really good idea of their essence.
But blogging eventually helped flesh that out.
Johnny B Truant has created a brand of blogger misfit. His name alone tells you a lot…but then his avatar that’s branded on Twitter, Facebook and his blog tells you even more. He’s biting into an apple, which reminds you of Adam and Eve and the first sin.
His brand is very distinct.
But this doesn’t mean that you can’t create another blog and create another brand. Lots of superstar bloggers run two or more blogs…but each blog is branded very uniquely.
Conclusion
In a world where so many blogs are being published you need to know what qualities are necessary to rise above the crowd and stand out like a superstar. Fortunately you can look at current blogging superstars and follow what they did.
What other qualities do blogging superstars have?
Blogging for business – Rob Fitzpatrick
http://thestartuptoolkit.com/blog/2011/12/blogging-‐for-‐your-‐business-‐is-‐worth-‐it-‐even-‐if-‐you-‐get-‐no-‐traffic/
Blogging for your business is worth it even if you get no traffic
by robfitz ·∙ December 14, 2011
I used to blog out of guilt. Every now and then, my investors would sternly suggest I blog more. I’d grumpily obey and then point to the flat traffic graph as clear evidence of blogging’s fruitlessness.
It was a self-fulfilling prophecy of fail.
I’ve written previously about my first month of serious blogging in terms of performance & initial thoughts. A couple months on, I now see a clear ROI — even if you have no traffic.
My process
Posting used to take me 4 hours. Now it takes about 20 minutes. You’ll get faster. My process is:
Capture every idea
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Don’t wait for good ideas – shipping regularly creates quality
Don’t obsess — publish posts on the 2nd draft
Watch realtime analytics and heavily polish only the posts which start to take off
Blogging makes money, sort of, eventually
The advertising value of blogging is essentially nil. I put an ad on my site and it just about covers my coffee budget[1].
If you have a product, blogging is an awesome source of leads — but that depends on traffic. Some niches are able to tap into sites like reddit or hacker news to get a nice initial traffic bump, while others just need to slog through it for a couple years, building an audience the slow way.
Leads are going to be the winner in terms of financial ROI eventually, but it can take so long to get to a reasonable quantity that it’s easy to get discouraged.
That’s why I want to draw some attention to the two other big perks which are traffic-independent.
Blogging makes you better at your job
I’m a better writer now than I was three months ago. Turns out, a lot of business is writing.
I’m also a much better marketer. And I don’t mean that in the sleazy sense. Marketing comes in many forms, and if you aren’t doing direct sales, then you’re relying on marketing. It covers everything from crafting & distributing a message to understanding analytics, setting up good funnels, running tests, and doing optimisations.
I’ve learned where the stuff I care about overlaps with the stuff other people care about. Every blog post is a chance to test the appeal of a worldview or a value proposition.
Blogs are a better learning environment than a real business because you aren’t constrained by the product roadmap — you just write something and have a whole new batch of visitors and data to play with.
Blogging closes deals
Blogging is planting a flag. You’re saying you exist, and you care enough to form and share your thoughts, even if nobody is listening. Soon, the right people start noticing and coming to you — no hustle required. Your traffic graph isn’t going to spike or hockey-stick, and that doesn’t matter one bit if you’re talking to the right people.
I get occasional emails from founders, which is fun and has led to some cool collaboration opportunities.
Plus, quality people will often check your email domain before meeting with you. If they see an active blog with good content, they’re going to go into the meeting considerably more eager to work with you.
I had a watershed moment when I was about to begin pitching someone on how great I was only to be cut off with something like, “No no, it’s cool, I read your blog.”
$500 an hour
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I once overheard someone say that blogging is so important, you should value it at $500/hour (as in, if someone paid you $450 to skip your blogpost for the day, you would politely decline and get to writing).
I’m not sure I would quantify it quite like that, but I definitely consider it a crucial part of my day and think it’s worth the time investment for just about every new business.
I can’t think of a quicker way to bootstrap your credibility and make opportunities appear.
[1] The guys who are making a living directly from blogging have 50k+ subscribers and give advice which involves buying lots of things via affiliate links. They also tend to talk about how to make money through blogging, which I realise is a line I’m dangerously
close to walking here
Becoming a conversion machine – Glen Allsopp
http://www.viperchill.com/blogging-‐conversions/
June was the first time in the history of this site where the blog gained over 1,000 subscribers in a month. To be specific, the final increase count was just over 1,300. Even though I’m posting as infrequently as I ever have, traffic levels are at their highest, and the blog is converting visitors into subscribers better than ever before.
I’m not saying this to brag, but to show that the changes I’ve slowly been implementing are having a big effect here, and I want to share them with you all today. If you haven’t been getting the results from blogging that you were hoping for, or you just want to fine-tune things a little, then this post is for you. Very recently I talked about a huge flaw in blogging, which I’ll get to in a minute. Even though I self-referenced this, a few people emailed me to say it’s strange that I am promoting a blogging product and then talk about the downsides of the platform. I wasn’t sure about whether or not I should start this post off with a snippet of the things I love about blogging, so let those emails be a nudge to do exactly that.
Because, let’s be clear, I do love it. I owe so much of where I am and what I have done to this mode of publishing that I don’t even know where to start. I will say that two highlights of my blogging “career” include getting to work in South Africa with huge brands for 18 months and having my Dad phone me in Paris to say that he just heard someone talking about me on the radio when driving to work.
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I could go on, but I’ll just add that blogging has changed my life in a vast number of ways, and I still love writing in public now as much as I did when I clicked ‘Publish’ on my first ever post in 2006. Did WordPress look ugly back then or what?
I will reiterate what I’ve said before which is that I don’t think blogging is the thing to focus on if you want to make money online quickly. Blogs take a long time to build, since they’re very much relationship focused, and just relying on RSS – like most bloggers do – sets you on a horrible path when it comes to converting readers into buyers.
I offered the alternative CloudBlueprint strategy, which has proven popular, and two women making $5K per month proved that you can implement it into a blog as well. I want to take my recommendations for this further than ever before, and focus on both plugging the “flaws” that your blog has as best as you can and making sure it’s converting for you better than ever before.
Though I’m sure you take this as a given for ViperChill content by now, the article below is very long and contains a lot of different recommendations. Since my aim with this post is to help you, the last thing I want to do is overwhelm you with too many ideas and things you have to implement.
If you’re one of these people who are new to this whole blogging thing, then just take my top three recommendations and put them into action, and come back to this post another day for the rest.
Over the last year I’ve experimented with the “Popular posts” section of this website quite a lot. In the old ViperChill design I had a gradient-yellow column showing my top 10 posts. But, it was static and I had to make the headline text really small for it to look good in the design.
When I updated to my new theme, the popular posts were now automated, and I could easily set how many I wanted to show. These headlines were originally accompanied by images, but now you will just see them as the blue links in the right sidebar here. I removed the images recently and found that doing so not only speeded up the site but also improved it aesthetically, in my opinion.
I’ve now put less focus on that element of the sidebar, and put a few hours into a page you’ll find in the navigation bar here under the guise of ‘Viral’. The resulting page reveals a list of the most popular
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ViperChill posts I’ve written in terms of the number of comments that they’ve received. Since it’s highlighting the posts that have already proven popular with readers, it’s likely that at least one of the headlines will entice visitors to click on them, as they have done for so many others before.
I added a visual element to the page for people who are more stimulated by graphics. Not everyone likes to read text on a page, with many opting to look at a cover of something out of habit. I turned my top three posts into small magazine style graphics for this very reason, as you can see above.
I’ve noticed a clear increase on the number of comments this page has generated on older posts, so already know it’s working well in terms of directing visitors around the site. Though I haven’t done this at the time of writing, I’m going to be adding a link to the bottom of all ViperChill posts that takes people to this page.
This will be useful for people who have already opted-in to my ViperChill offerings and just want to read more of my free content. There are 19 posts listed (odd number, I know) so far, but I’ll probably extend the list to the top 30 posts in total.
I’ll continue by looking at what is probably the most prominent change I’ve made to the site recently: The creation of a ‘Start Here’ page. I have Pat Flynn to thank for the inspiration, and his video critique with Derek also gave me the push I needed to finish some other changes I had planned to make for far too long.
Pat found that creating the page meant that people stayed on his site much longer (a 90% increase!), and his overall bounce rate was much lower. This makes sense, since people leaving the site quickly are usually first-time visitors. If they see a page that appeals to them “New Here?” then there’s a good chance you can get them to stick around.
There are some great tips in the video, so definitely check it out. I do want to say however that there are a couple of things that I disagree with. The first being on the way Pat should act on his About page. Derek suggests that Pat should change his wording to focus more on what he can offer the site visitor in terms of benefits, which I think is good advice in most cases.
However, I’ve personally found – especially in the niche that myself and Pat are in – that people are far more interested in hearing about the person behind the site, so they can quickly decide if that person is worth listening to or not. There are so many shady characters in this industry that will more than happily say what they can do for you, so I think his current page is perfect.
I also disagree with constant focus on getting an email address on a lot of pages. Sure it’s highly effective, but if you haven’t converted someone the first few times they see an opt-in box, then you’re missing some other key element. Perhaps what you’re giving away just isn’t enticing enough.
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Pat’s “Getting Started” page was created in addition to his About page, where as I have replaced my About page with more information about me and the site. My reason is that I simply like to get to the point when I’m talking about myself, and the ‘philosophy’ of the site is very focused around me, so it made sense to combine them on one page.
The aim of my New? Start Here page is to really take new visitors to ViperChill by the hand, explain more about me and the site, and then offer more content. I am personal (read: cat pics) on the page as I always want my writing to feel as if I’m talking to you one-on-one. Note that I will be updating that video that’s on the page, but it’s a decent placeholder for now.
It was important for me to try and make the page appeal to a wide variety of audience types. For people who are really interested in ViperChill, they can watch a five minute video, find out about some of my top content, and even watch a 24 minute blogging video on that page if they want to. Other people might be enticed by the email subscription box, while some people mentally answer which “level” they are and click links to Beginner, Intermediate and more Advanced content.
I’m sure there are tweaks I’ll make to the page as time goes on so keep checking back, but even if there are possible improvements to be made, what I have now gives me a far more stable and efficient funnel than I had before.
One of my favourite books on business and marketing, Rework, also happens to come from one of my favourite companies to follow online, 37Signals. They’re the guys behind Basecamp and some other popular online tools. I’m going to use their book cover as an example of how powerful one testimonial from an outside source can be.
Though I’m a big fan of 37Signals originally and would have purchased their book anyway, seeing the one line quote from Seth Godin at the top of Rework has a huge effect on how people, who stumble across the book randomly, perceive it.
Testimonials work because anyone can hype up themselves, so having other people say nice things about you instantly makes you more credible. And, if you can get someone like Seth Godin to hold you in such high regard, then you’re going to get the attention of his fans and more.
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Since testimonials work so well on sales page and squeeze pages, it only makes sense to put them on areas of my blog near where people have the option to subscribe to something. I’m fortunate to have had some well-known publications say some nice things about me, and that’s powerful. If you share too many then you definitely run the risk of showing off or alienating current readers, so sprinkle them in your current design if you have some to share.
A few people on Twitter noticed my sidebar testimonials / quotes have been up for a few weeks now and asked me how they were converting. It’s hard to tell since I’ve added more opt-in boxes to the ViperChill and don’t have split-testing in place for my sidebar yet but I can see a clear difference when I look at my ‘Daily New Subscribers’ chart in Aweber. I went from getting 30 opt-ins per day on average to over 60 on weekdays now and hundreds on post days.
What, those three weren’t enough for you? It’s a good thing I have a lot more to share…
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If you do have a lead magnet in place, which links to something like Aweber, then it’s very easy to see which emails you’re sending out result in people unsubscribing from your updates. If you know you’re sending something that people don’t like, then you can tweak that message in order to keep more subscribers on your list in future.
I have 28 unsubscribed people on my list at the moment. By going to Subscribers then selecting the Unsubscribed drop-down in Aweber, I can see exactly which emails people read before unsubscribing. You can see this data for various emails below…
Email One: 14
Email Two: 3
Email Three: 1
Email Four: 1
Email Five: 1
Email Six: 3
Email Ten: 5
Nobody unsubscribed from emails 7,8 and 9, so obviously people enjoy the content found inside them. Email one gets a lot of unsubscribes as people often just sign-up for a freebie (such as my 10K eBook) and cancel their subscription straight away.
When I looked at email six, I actually think the content is excellent, so that wasn’t a concern. The only difference between email six and my other emails is that it is set to send out 7 days after the previous one, instead of every 3 days like my other emails.
I did this to give people a little break from all of the information they were getting, but instead I think people are confused by the delay, and unsubscribe. I put this back to being the same delay as other emails, and there has only been one unsubscribe from this message since.
Email 10 is actually the last email in my queue, and I haven’t followed up to it for at least two weeks. My thinking is that people still see the email in their inbox, with no follow-ups, and then unsubscribe. Any other theories on this are welcome in the comments below.
Since I’m getting dozen of opt-ins per day on this list, and sometimes over 100, my email unsubcribe rate is pleasantly low. That being said, any little tweaks – like I made to email six – can still have a positive long-term effect for me, and hopefully for you as well.
I’ve recently taken advantage of the ability to have multiple sidebars throughout your WordPress website, and I really think that the result is optimal for my current situation. When people are reading your blog posts, they’re getting value, so you want to take that opportunity to either get them to buy something, opt-in to something or read more of your content.
When people are on my About page, they want to know more about me. This shows me that the visitor is engaged. Because of this, I don’t want to still be in their face with an opt-in form which they’ve already seen on my blog posts. So, the sidebar used for posts and static (contact, about, etc) is now totally different. It also has an interactive element where I ask what level the visitor thinks they are in terms of marketing skill.
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Each link then takes them to a section of links that are most useful for their level. Finally, I also have a separate sidebar for people following CloudBlueprint as I need to be able to show different information to those people. Ideally I want “CloudBlueprinters” to either share the course around, download the videos, or opt-in to get more information from me.
I put a lot of hard work into CloudBlueprint so it’s important to be clear about what I want people to do after they’ve watched it (if they enjoyed it, of course).
For those of you who don’t have multiple sidebars built into your theme, I have sadly failed to find a good updated guide online that shows you how to do this. However, thanks to the ViperChill forums, I recently learned of ‘Widget Context‘, a plugin that lets you specify which sidebar widgets show on which types of pages on your blog. You can specify them by a number of factors, which should help some of you easily replicate the type of thing I’m doing here if you see value in it.
I can’t say that this has had a huge effect on my conversions, since I’m not yet tracking it perfectly (it gets quite complex since I’m working on yet more sidebar pages). Logic and first impressions tell me that it’s going to have a far better impact than having the same sidebar all over my site, but I’ll let the results tell you all in a few weeks.
A big problem I’ve spoken about when it comes to blogging is that when a new visitor lands on your site, you’re often sending them away in order to monetise them. If someone comes to your site for the
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first time and clicks on an affiliate link or goes to your product page, and doesn’t buy anything, then there’s a chance you’ve lost them for good.
This is why I spoke about squeeze pages being such a huge benefit over regular blogs for collecting subscribers in CloudBlueprint. The $5K Case Study I also shared looked at taking this approach and applying it to blogs by adopting a “squeeze header”.
One way to fix this is to put more emphasis on creating a lead magnet. A lead magnet is something you use to entice people to give you their email address. I’ve talked time and time again about how email subscribers (in my experience and for thousands of other marketers) tend to buy more products and stay more engaged than any other type of audience.
I tend to go above and beyond for email subscribers, since I love the closed off yet personal nature of the whole system. The three most common types of lead magnet, which I unconvered in my pro blogging video tend to be:
Podcasts
eBooks
Videos
If you don’t know how to create any of these then definitely go and check out the video above. You can create them all for free and they’re all effective freebies to giveaway online. I’ve recently heard of people having success with more obscure items, such as a “million dollar business card” with an idea on it, and having those work well.
If you have the time, then definitely be creative.
In my own split-testing I’ve found that adding a graphical element to your giveaway can give you a huge boost in conversions. Not only does it work on squeeze pages, but it works on sales pages as well. You can see I’ve already started adding graphics for the first few modules on the CloudBlogging sales page.
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Not only do I have a lead magnet in the sidebar for all blog and post pages, but there’s an eBook graphic in the site footer here which takes you to my 10K subscribers page. My lead magnet is a 30+ page eBook on how I grew VieprChill to over 10,000 subscribers. Since this is a real case-study it’s quite rare to see, and I’ve been told by hundreds of people that they were blown away by how much work I put into it.
As I revealed on this post, I have tested a ton of titles on the page, and found the current header to be the best wording for conversions. Since the page is static (also talked about on that linked to post) I can easily tweak certain design aspects to help conversions even further. You’ll see that page has a very minimalist header and footer, as my main aim is to get people to fill in the opt-in box to receive the eBook.
Even if they just download it and unsubscribe straight away, there’s a chance they will come back to ViperChill in the future if they just open the PDF I sent them as it contains so much value-giving information.
As I stated earlier, not everybody is attracted to text and would be happy to read your content. New visitors are especially likely to skim your page and look for anything that catches their eye. Using a graphic next to an opt-in form or other call to action gives that CTA more chance of being seen.
What I like to do when I think I have my whole lead generation funnel in place is to test my site in full, as if I’m a brand new visitor. I like to turn off any toolbars (even the address bar) in my browser, so you really just get to see your site and nothing else on the screen. The funnel that visitors typically go through is as follows:
Step One: A new visitor lands on your site and notices your opt-in form
Step Two: They enter their email address. As soon as they click the submit button, you should be taking them to a page that at least reminds them to check their email address. I say “at least” because visitors are usually in a very engaged state at this point, so may be happy to do more things. One option is to then offer a free eBook, and use a service like Cloudflood to make them tweet or Facebook share it (which gets you more traffic) in order to get the download link. I’ve used this to good effect.
Step Three: They then visit their inbox and must click on a confirm subscription link. Make sure your text here has been customised in Aweber. Make the confirmation redirect go to a page on your where you give them what they opted in for. By default I had set this to go straight to my About page, but received a few emails from confused readers asking where their eBook was. Finally, remind visitors to once again check their email and to expect another one from you in a few days (if that is the case).
Step Four: You continue to follow up with relevant and valuable content.
If you don’t have pages on your site for steps two and three then set them up right now. Just a few minutes work can ensure that you don’t lose subscribers unnecessarily.
One benefit of blogging over a strategy like email marketing is that you constantly receive a trickle, if not a flood of visitors still looking at your old content. There are dozen of posts on this site which get 50+ views every single day because of links pointed here from other sites, search traffic, and people exploring ViperChill.
It’s important to focus on the fact that people coming from search and referring sites are highly likely to be brand new visitors to your website. This means that your blog post is possibly your only chance to give a good first impression and capture their attention. Below I’ll highlight a few common ways to tweak your old posts to get the most out of them…
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Get Their Email & More with Shortcodes
With the help of my friend Joost, I recently created a simple WordPress plugin so that I could easily show certain style elements in any blog posts of my choice. I can do this by utilising shortcodes – little codes you use to call the contents of a file – so that if I want the same message on a lot of posts, all I have to do is type a short code, such as [SEOeBook] and an SEO eBook opt-in form would display. If I ever want to tweak this opt-in form in the future, then I just edit the plugin, and don’t have to tweak every individual post.
The great thing about shortcodes is that they can be used for tons of things. For example, they have the ability to easily show an RSS box or a category specific opt-in form which can convert readers much better. You could even create a list of links to your top posts in each category that shows on relevant posts.
At the moment all my plugin does by it output a date. It’s currently being used on my Viral pagein order to show how frequently the comment counts on that page are updating. They aren’t automated yet, but I’m working with a programmer on it, so they should be very shortly. Hence the timestamp.
You can download my plugin here, and install it like any other WordPress plugin. At the moment all you have to do is type Friday, 1st of June on any post or page text, and it will always show yesterday’s date on that post. I won’t go into detail about programming or editing pages, but those of you with a little tech skill should be able to see how you can duplicate the plugin and create different shortcodes e.g. [SEOeBook] to show opt-in forms and more.
Change Your Ending Paragraph
When you first launch a post, your aims with it are usually different to its purpose a few months down the line. For example, you may be advertising a product you no longer have for sale, or asking for comments when you’re not actually looking for them anymore. Since people will still be reading your old posts, tweak your ending paragraph and ask them to do something else next.
Your best option is to send them to a page that is as relevant as possible to the topic they’re currently reading about and offers an enticing freebie.
Show Related Articles
Though I don’t do this personally, it’s a popular choice around the blogosphere so that’s why I’m covering it. Various plugins allow you to easily show articles that are related to the one you’ve just written. These plugins are considered good for SEO and they can help you to generate more pageviews.
The reason I don’t do this is because I ultimately want to take visitors through a different funnel. I would rather send them to a page which offers a ton of value (like a video course or free 30+ page eBook) and then entice them to subscribe or just send them to a page which highlights my best content in all categories.
Interlink
If you don’t want to use a related posts plugin, then another way to improve your internal SEO and keep people on your website longer is to interlink your articles. If you’re anything like me then every post you’ve published in the past can probably be tweaked to include more links to your other blog posts on the same topic.
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This task is a little time consuming but if you’re willing to put the effort in then it can definitely be worth it. At least do this for your highest trafficked pages to start with. A few people out there use plugins for this kind of thing but the result isn’t always great. Tweaking things manually would be easier for me since I write less, so do try out the plugins out there and see if any are for you if post by post editing seems too much.
Link to a Product
If you’re not as focused on collecting emails as me and just want to go for the sale, then that’s definitely an option as well. When people take the time to read about a topic online, they’re in an engaged state where they’re happy to read more information on that subject. This is especially true if your blog post didn’t quite cover everything that they wanted to know.
Putting your own products on these posts can result in more sales for you, or you can even promote affiliate products here from the likes of Clickbank as well. If you are going to do this then I recommend that the product offering is highly relevant to the post, and not something you should add to all posts en masse.
You’re going to reach a stage in your marketing career where there is very little for blogs to teach you. The best course of action you can take at this point is simply any form of action. There are a lot more people who know how to make money online (at least in theory) than people who actually do anything with their knowledge. Since you’re a ViperChill reader, and I’m here to help you, then I don’t want you to become one of those people.
Mostly out of personal curiosity, I decided to record myself writing during a Pomodoro. A pomodoro is simply 25-minute time slot where you take productive action. In this case, I wrote an article. I speeded up the typing and you can see how I wrote over 1,000 words very easily in the video below…
My apologies in advance for the cheesy editing. I needed something to make all of that writing a little more watchable ;]. The point I want to make is that you can get a lot done in a short period of time. All that’s needed is for you to just…start (!).
I very rarely (if ever these days) find myself subscribing to new blogs, so I always take note when I stumble across a new site and end up adding it to my feed reader. In most cases I’ll enjoy that sites latest posts, but often also see that thousands of other people are regular readers, which shows me there must be more good stuff to come.
If I removed any evidence of social proof from ViperChill – such as my feed subscriber and comment count – then I would still have the exact same content on the website, but people would be less inclined to subscribe.
I believe that your content is everything, first and foremost, and you all seem to do a pretty good job on that front, but if you have social proof that you can show off, then do so. My own WordPress plugin ViperProof (demo in the bottom right corner of ViperChill) is free and allows you to do this with ease.
It’s not so easy to show social proof when you start your blog, but if you’ve been running it for at least a few months then there should be some things that you can share with the world.
I’ve talked about Heatmap tools on this blog a few times. Right now I have heatmap tools built in to other services I use like Google Analytics and Visual Website Optimizer. Even so, I still opt to pay $9/m for Crazy Egg (no affiliate link) as it’s interface and analytics data is far more advanced than the ‘add ons’ mentioned for two prior services.
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An example of something I changed after using CrazyEgg is the word ‘Glen’ in my site footer. According to my heatmap tracking results, that word would get clicked on more than most other links on my page. Yet, it wasn’t a link. Just some bold text.
So, I changed that word to a link (even though it looks the same) and now people can learn more about me when they do so. Though this was a little change, it can have a big difference when thousands of people are visiting my site, so it’s always worth trying to improve usability.
Something a lot of bloggers could benefit from – but don’t implement – is a feed footer. A feed footer basically allows you to add HTML to the end of your blog posts that people receive via RSS. This may be in the likes of Google Reader, or in their inbox for people who subscribe that way.
I tweak my feed footer fairly often, and even created a plugin for free to help you tweak your own. I prefer to direct people to areas of my site whether they can either get something for free, or get more content from me.
I’ve noticed other bloggers pitching products at the bottom of their feed – which is fine – but it’s not something I have any plans (or need) to do personally.
One thing I know a number of bloggers get caught up in when they first start out is in trying to be everywhere, as often as they can. I’m personally a much bigger fan of narrowing where your spend your time and focusing on creating stronger connections. If you’re someone who really has given everything a try, look at your top referring traffic sources for the last year, to see which actions were the most helpful.
Commit to spending more time on the things that actually worked well for you. It may be that Tweeting is a good use of your time, commenting on a certain blog sends you a lot of visitors, or that you have a few keywords which are bringing in a good amount of search traffic and they could use a search boost.
You will get to a stage where you need to stop looking to others to see what to work on and start using your own real-world results to give you an indication of what is working in your niche. No marketer has operated in every industry out there, so there’s a good chance you’ll discover secrets about your industry we just couldn’t have told you about yet.
I’ve spent quite a bit of time over the last few weeks ensuring that my blog is as fast as it can be. There is still a lot of work to be done but I managed to take the load time on a slow conection from 12.5 seconds to just over 5. The two biggest changes involved me first of all cleaning up my code, removing CSS files I don’t need, and removing any Javascript calls that aren’t being used.
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A good tool to give you an indication of which files are taking the longest to load on your site isthis one, from Pingdom. My theme by default (before I massively tweaked it) had no less than 7 CSS files and about 12 Javscript files, which were massively slowing down my pageloads.
A few months ago I also started using Amazon’s CloudFront service. They basically host a few files for me (such as my CSS and javascript) and I handle the rest of the blog loads with my usual hosting. Amazon’s has CloudFront “clusters” in various locations around the world, so when you’re loading files from this site you’re actually pulling them from servers which are closest to you.
You are charged based on how much bandwidth you use, and my biggest bill so far has been just $2.17 for one month.
I wanted to leave you all with the final recommendation on what I’m going to next, and if you like the idea, then it may be something you want to do as well. I already my homepage optimised for a keyphrase I want search traffic for – viral marketing – so now it’s time to start branching out on the phrases that I want to try and rank for.
I’m going to replace the ‘Topics’ in the sidebar with links to flagship content, rather than category pages. I’ll create a great guide on various subjects, and then do some smart interlinking from relevant post pages. Since I’ll be sending traffic to these pages, they’ll also be optimised to convert new visitors into subscribers.
For people who are already subscribers and want more content, I’ll still be pulling in each category’s RSS feed so the pages are constantly updated with relevant links to my latest posts. This is something I’ve only ever seen done on a couple of websites and definitely has the potential to be another powerful page idea, just like the “Getting Started” page recommendation.
If you have any questions, leave them in the comments below as always. Are you going to be making any changes to your site now? I would love to hear what you have to say…
Just start blogging – Jason Cohen
http://blog.asmartbear.com/start-‐blogging.html
Attacking your sucky excuses for not blogging
APRIL 11, 2011 60 COMMENTS
You already know that nowadays you’re invisible without some sort of social media presence. You already know the (alleged) benefits of having a personal orbusiness blog.
But you still don’t blog, and for good reason, right? Blogging is work, and ten other things are more important. Writing is hard and takes longer than you think it ought.
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And even if the blog works, the experts say you won’t be able to measure its effect, and it will probably take years to come to fruition. Years? Fooey. You need a sale today. You need a job by next Thursday. Who has time for “years?”
…but that’s like saying you’re not going learn to play an instrument because it takes practice.
…but that’s like saying you’re not going to start a company because at first it’s difficult and the payout — if there is one — is too far away to be tangible.
Not much in life that’s worthwhile is easy, especially at the beginning. That’s not an excuse to not do it.
Here’s a bunch of other excuses you’re probably using to avoid becoming a good communicator with influence in the world. Maybe by showing you ways around them you’ll take the plunge.
I don’t know what to write about.
Kathy over at Virtual Impax has a great way to remedy that:
If you’re in business, you’re either helping customers/clients to:
1. achieve a goal, 2. satisfy a desire, and/or 3. solve a problem.
Decide which of those things you do, and write down exactly what that thing is. You’re not identifying what you do but rather the end result that your customers are using you for.
Now write about that.
For example, email newsletter systems like Constant Contact or MailChimp let you collect names and send email. That’s what they do. But their customer’sgoals are to stay in their clients’ minds, to get them to click on links, and probably ultimately to sell them something.
So MailChimp doesn’t need to blog about their software (except maybe to explain a tip or announce a new feature), and certainly doesn’t need to talk about Barak Obama or Miley Cyrus. They should talk about how to write an effective newsletter, how to track key metrics on newsletter campaigns, what kinds of things you should expect to achieve from a newsletter, ideas for content for your
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newsletter, ways to look informative instead of spammy, ways to get two-way promotion with other bloggers via your newsletter, and so on.
These are all things which are equally applicable to their competitors products, but that’s OK! Providing a software tool is just one way in which they’re going to help their customers succeed — this training, knowledge-transfer, best-practices, and tips are also necessary to make their customers truly successful.
As Kathy says in that article:
If you don’t KNOW what goals you’re helping people achieve, if you don’t know what desires are being quenched, if you don’t know what problems need to be solved, then OF COURSE you aren’t going to know what to blog about.
Yeah, and you have a deeper problem then blogging: You don’t know why you’re in business!
I’m not good at writing.
So how are you going to fix that?
And yes, you do have to fix that. However you feel about the way the Internet is going, you have to admit that writing skills are getting more important, not less. Whether it’s blog posts, Twitters, Facebook updates, discussion forums, or that arcane so-last-millenium technology known as “email,” we’re writing more now than ever.
There’s no better way to improve than to write short essays and put them on the Internet for all to see. Why?
Short, so completion is realistic. Public, to elicit your best performance. Essays — not memos, not inconsequential updates — because it forces you to consider a topic, decide what you think, and convey that to others,which is the basis of making an impact on another human being.
Writing is like any other skill — you have to practice to improve. Duh. You certainly won’t get better at it by summarizing meeting notes or Twittering what you ate for lunch.
Don’t worry about other people seeing your crappy writing; at first no one’s looking except friends and family, and they understand what you’re trying to do. Later when you’re better at this, you can delete those posts or, if you’re like me, you’ll leave them because it’s fun to see how far you’ve come.
All the good ideas have already been written about.
No, it’s worse than that. Good ideas have been written about by famous bloggers with flair and panache, and it’s been read by their tens of thousands of readers.
So what?
When you see a great article that really resonates with you, that you wish you had written yourself, here’s the post you write next:
[OTHER BLOGGER] wrote a great piece yesterday about how [SUMMARY OF ARGUMENT]. What stood out was [MORE DETAIL, WITH PITHY QUOTE].
Then the body of the post can go in all sorts of directions:
Pile on three more arguments for this point.
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Tell a story about an example of this point.
Tell a story about a counter-example which went terribly wrong.
Say essentially the same thing but elaborate where the original poster made assumptions or skipped a step.
Say essentially the same thing but condense the original poster’s lengthy missive (who, me?) into a punchy summary.
Find related articles which agree and create a narrative where you weave their arguments together to drive the point home.
Find counter-point articles and explain why those are wrong.
For the conclusion, challenge the reader to use this in her life. Ask a poingant question or suggest actions they could take today.
You can follow this format forever. As you practice, you’ll discover more and more of your own ideas, your own language, and your own flow will naturally take over.
Finally, you can use this same technique for posts you vehemently disagreewith!
Just make sure you’re riffing off something you feel strongly about; then finding more to say will be easy.
I’m not creative.
People say this all the time; I don’t think they know what they mean.
Do you mean you’re not a music composer or you don’t get post-modern art or you’re not the next Hemingway? No kidding, me neither. That’s not what this is about.
The goal isn’t to generate art or invent new philosophies; the goal is to improve your ability to communicate and increase your sphere of influence. You don’t have to be an artiste to do that!
The preceeding sections should make it clear that invention is unnecessary and uniqueness is irrelevant. Clarifying your impressions about something you just read is enough; converting your feelings into words is enough; presenting your existing, unoriginal opinion as a three-part argument with a link or two is enough.
Those things aren’t easy, I’ll give you that! But they don’t require creativity.
There’s lots of everyday things you already talk about; now it’s just time to organize and present your thoughts.
I’m not good with software / I don’t know about “the world of” blogging software.
Fair enough, let me help:
Sign up for a free account at WordPress.com or join me at my companyWPEngine. Either way you’re up in minutes.
Start with a few test articles to get the feel of things.
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Look through the site design templates they have and pick something you like. This is supposed to be enjoyable!
Don’t worry (right now) about widgets and RSS and fancy formatting and clever pictures. You can do that later.
Write!
There’s more things you should do eventually, like putting your blog behind your own domain name so you can switch blogging platforms later and usingFeedburner to track how many people have subscribed to your blog. But if you create too much work for yourself ahead of time you’ll never begin.
Once you get 10-20 posts under your belt, check out the ways this blog got popular.
But that’s later. You can fix everything later. Right now no one’s looking anyway.
Remember, this is for you.
Just start.
Continuing…
Do you have more advice, or do you argue that blogging isn’t useful enough to justify the effort? Let’s continue the discussion in the comments.
The Ultimate Guide to Guest Blogging – Kristi Hines
http://blog.kissmetrics.com/guide-‐to-‐guest-‐blogging/
The Ultimate Guide to Guest Blogging
Here at KISSmetrics, we’ve discussed how you can build authority in your industry through blogging. If you’re a fan of Social Media Examiner, you might have read about major brands that have benefited from guest blogging. So today, we are going to look at exactly how you can get guest blogging opportunities and make the most out of them.
Determine Your Guest Blogging Goals
Before we begin, your first task is to decide what your goal for guest blogging is. Knowing this goal ahead of time is key in determining the right kind of blogs to submit guest posts to. Typically there are three main goals for guest blogging.
Positioning yourself as an authority and well-known name in the industry.
Getting exposure (traffic) back to your website.
Building backlinks to your website.
With the right kind of content on the top blogs, you can do all three of these things. If you are trying to accomplish either #1 or #2, then you will want to find blogs that have a good sized and engaged audience. If you are just trying to accomplish #3, then you need to pinpoint blogs with strong root
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domain authority. You can check this for free using the SEOmoz toolbar. Knowing your goals in advance will help you in determining which blogs will be the best for you to submit guest posts to.
How to Find Guest Blogging Opportunities
The first thing you will want to do is find guest post opportunities. When looking for places to guest post, your main goal is to find sites relevant to your niche or industry. You are looking for blogs that fit the following criteria:
The content is focused on your niche / industry.
The audience of the blog will be interested in your industry.
The blog has engaged readership (posts have been shared socially and commented upon).
The blog owner is active on social media (so you know that they will be promoting your work on their site).
So if you are selling seeds, you will want to find gardening blogs with an engaged audience of gardeners. The following should help you find the right kind of guest post opportunities.
Google Searches
Google is a great place to start in the search for guest posting opportunities. You can use any of the following keyword searches to find blogs that accept guest posts. Just replace keyword with keywords from your industry.
keyword “submit a guest post”
keyword “guest post”
keyword “guest post by”
keyword “accepting guest posts”
keyword “guest post guidelines”
These searches should lead you to a blog’s guest post guidelines page, guest post submission page, or actual guest posts by other writers.
Prolific Guest Bloggers
Know of any prolific guest bloggers in your industry? If you read enough blogs in your industry (which you should), these will be the names you see over and over writing content for others. For online marketers, that list includes Gregory Ciotti, Danny Iny, Leo Widrich, Neil Patel, Marcus Sheridan, and many others. Using Google search, search for the name of prolific guest bloggers in your industry plus the phrase “guest post by”. This will reveal all of the sites that these guest bloggers have posted upon. They should be good places for you to guest post upon as well. A bonus would be if you actually know a guest blogger in your industry that can make an introduction for you to the owners of blogs they have guest posted upon.
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Competitor Backlinks
If you (or your online marketing agency) has ever pulled up a backlink analysis of a competitor while working on your SEO campaign, chances are one or more of your competitors have backlinks from guest posts they have done. If you have access to tools like Open Site Explorer, you can look at the backlinks of your competitors and spot any blogs they have written for. If you don’t, you can do a Google search for link:domain.com -domain.com “guest post” (replacing domain.com with your competitor’s domain) which should reveal sites that a competitor has written for.
Social Searches
A lot of bloggers and guest posters will share their latest guest posts on social networks. Since the easiest one to search is Twitter, you should try running a Twitter search for keyword “guest post” to
get the latest tweets about guest posts in your industry. Just follow the links to see which blogs are accepting the guest posts.
600+ Guest Blogging Opportunities
Need more keyword search ideas or a just a list with lots of different guest posting opportunities? Check out this post on Buzz Blogger with 500 places to syndicate content and this one by Brian Keith May with100 sites to submit guest posts.
MyBlogGuest
Last, but definitely not least, is My Blog Guest, a community of guest bloggers. Sign up for free and search for blogs which are accepting guest posts. Better yet, post your own information to say that you are looking to write guest posts on a particular topic so blog owners can find you!
Preparing to Pitch a Guest Post
Notice that we don’t just jump from finding guest blogging opportunities to contacting the blogs. That’s because there are a few things you need to do before you propose a guest post for a site you’ve just found.
Get to Know the Blog’s Content
Getting to know your target blog’s content is key. Sure you know they have content about the keyword you searched for while looking for guest post opportunities. But you need to know even more about that content such as…
What level of audience are they writing for (beginners, intermediate, advanced)?
What type of audience are they writing for? If your business is B2B, then you will want the blog audience for your guest post to be businesses, not general consumers.
What type of content do they write? Is it mostly general concepts or specific, detailed tutorials? Do they like lists?
See How Other Guest Posts Do
While a blog may have guest posts, the question is do the guest bloggers do well? Do guest blog posts on the site get as much comments and social sharing as blog posts by the owner? Some sites
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might accept guest posts, but if the audience is only tuning in for the blog owner, then you won’t do so well if your goal is to build authority or get traffic back to your website.
See Who the Guest Bloggers Are
Some blog owners are more likely to accept guest posts by certain types of people over others. Peruse a few guest blogger bios on the blog to see if they are fellow bloggers, freelancers, consultants, business owners, and so forth. This will be important when you introduce yourself to the blog owner for your pitch. You can read more about the success rates of guest posting outreach in this study on SEOmoz.
Find Out What Posts Do the Best
To ensure that your guest post gets accepted, you will want to pitch the blog owner with topics that will do well with their audience. To get some good ideas of topics that will work with the blog’s audience, use the following sites to see what posts have been popular on social media. Just replace domain.com with the blog’s domain.
http://topsy.com/s?q=domain.com – This will show you the number of times blog posts have been tweeted. Click on the number if you want to see who has tweeted the post and learn more about the blog’s audience.
http://plus.topsy.com/s/domain.com – This will show you the number of times blog posts have been shared on Google+. Chances are, blog posts that have been shared on Google+ a lot will also have a lot of +1′s which might mean better search visibility.
http://delicious.com/search?p=domain.com&jtf=E&partial_type=B – This will show you the number of times blog posts have been saved on Delicious.
http://digg.com/search?q=site:domain.com – This will show you the posts on a blog that have received the most amount of Digg votes.
Become a Familiar Face in the Blog Community
To increase your chances of getting accepted as a guest blogger, you will want to get some recognition from the blog owner first. The best way to do this is to take a week or two and comment on their latest posts. You’ll get bonus points for sharing those posts on Twitter too – just be sure to include the blog owner’s @username on Twitter. This way, when you pitch your guest post, you won’t be a complete stranger.
The Best Times to Pitch a Guest Post
You won’t always have a golden opportunity to pitch a guest post, but there are certain things to take advantage of when they arise. These include the following.
When blog mentions you in one of their posts or on social media (Twitter, Facebook, Google+, etc.).
When the blog lists you, your business, or your product in one of their posts.
When the blog specifically advertises they are looking for guest posts.
When the blog publishes another guest post.
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Basic Pitch Best Practices
The following are absolute musts when pitching a guest blog post to another blog owner.
Read the Guidelines
The last thing you need to do before contacting the blog owner is read the guest posting guidelines, if applicable, and follow them closely. Does the blog owner want you to pitch an idea or actually submit a full post? What format do they want it in? Do they want you to create an account and enter it into WordPress? These are all things to know ahead of time before you contact the blog owner.
Personalize Your Email
As a blogger who receives daily guest post pitches, nothing turns me off of an email more than ones starting with Dear Sir or Madam , Dear Webmaster , To the owner of Kikolani.com , or
simply Hi . Somewhere on the blog you are about to contact will be the name of the blog owner. You
might have to ferret around for it on the about page or on one of the blog’s social media accounts, but it is more than likely out there. Find it, and use it to start the email.
Who Are You
Remember the part about seeing who guest bloggers are on your target blog? Some blog owners are particular about only allowing other bloggers to submit guest posts on their sites. If you noticed that most guest bloggers are bloggers themselves, then you might want to introduce yourself as a blogger at ( insert your personal or business blog here ). You can always be a business owner on the side – just focus on your blogging skills first.
Why You Should Be a Guest Blogger
Be sure to include why you should be a guest blogger. Add a few links to posts you have published elsewhere, including your own blog. Preferably go with posts that have a good bit of social engagement so the blog owner will see your potential value with their audience.
How to Pitch a Guest Post Idea
If the guest post guidelines ask you to submit a topic idea, then (based on your research of previously popular posts), pitch a few different ideas so the blog owner has some to choose from.
How to Submit a Great Guest Post
One of the common questions about guest blogging is whether you should be using your best content for your own blog or for your guest posting. It really depends on the quality of the blog you are submitting your content to. If the blog has nothing but 900+ word posts with lots of screenshots, then your post should be similar. If the blog has nothing but posts with 500 words or less with only one image, then your posts (again) should be similar. The following are other good tips for making your guest post as awesome as possible.
It’s Not About You
The first thing to remember about a great guest post is that it is not about your business, your products, or your services. Guest posts should be valuable sources of information – not advertisements! Any information about your business and related items should be reserved for the
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author bio. Occasional mentions, stories, or examples are OK to illustrate a point, but the majority of the post should be focused on something other than your business.
Format Posts Like the Ones on the Site
Take a look at posts on your target blog. Do they use lots of headers, bolded text, images, quotes, or other special formatting? Make sure that your post has similar elements to match other posts on the site.
Include Internal and Source Links
Show the blog owner that you know their content by including a few internal links back to some of their posts. The easiest way to do this is to do a Google search for site:domain.com
intitle:keyword . This will get you their top posts on a particular keyword so you can link that post to
the keyword in your post. Also, if you mention any specific products, books, etc., be sure to link to those too (assuming it’s not self-promotional).
Include a Call to Action for Comments
At the end of your amazing guest post, be sure to include a call to action for comments. The more discussion your post generates, the better!
How to Craft a Great Guest Bio
The most important part of guest blogging (for you) will likely be your guest post bio. This is usually the only place you should include self-promotion links back to your website, blog, product, service, book, etc. What you write in this section will depend on your guest blogging goals.
If your goal is to get good backlinks, just make sure your bio includes a link back to your website with your target anchor text and you are all set.
If your goal is to get traffic back to your website, then you might want to consider where you want that traffic to go. Depending on the subject of your guest post and the audience of the blog you place it upon, you might want to send traffic to a custom landing page or page about a specific product / service.
If your goal is to increase followers to your social accounts, do this by adding a line to the end of your bio that says “Follow me on (insert your top social network and link here).”
How to Be the Best Guest Blogger
If you’re aiming to become a regular contributor to a blog, or simply want the blog owner to brag about what a great guest blogger you are, then be sure to do your best to promote your post to popularity through your own audience. The blog owner will love it if you send new readers their way. Also, be sure to reply to your comments. That will go a long way if you are working to build authority in your industry.
Tracking Your Results
When the goal is traffic, the results of your guest blogging should definitely be measured. The best way to do this is to create an Advanced Segment in Google Analytics. You can learn how to set up an Advanced Segment in this post on how to find out which online marketing strategy drives the best
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traffic. All you need is one segment using the source dimension with multiple statements for each domain that you have guest blogged for – you can have up to 20 or statements per Advanced Segment. Mine looks like this…
Using this, you can view all of your Google Analytics data based on referrals from your guest posts. This can help you determine the success of your overall guest blogging strategy in terms of getting traffic and making conversions. If you’re not sure how to track conversions, see this post on getting actionable datato learn how to set up goals.
How to Get Guest Bloggers for Your Blog
Finally, don’t forget that guest blogging can be a two way street. It’s tough to maintain your own blog content while guest posting on a lot of other blogs. So be sure to open an invitation for guest bloggers to write on your own blog. This way, you can keep fresh content on your own blog, add a new perspective for your audience, and hopefully get new readers from your guest blogger’s community. It’s a win-win situation!
Do you use guest blogging as part of your online marketing strategy? What other things
would you suggest for a business looking to increase their guest blogging success?
About the Author: Kristi Hines is a freelance writer, professional blogger, and social media enthusiast. Her blog Kikolani focuses on blog marketing for personal, professional, and business bloggers. You can follow her on Google+, Twitter, and Facebook.
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Content marketing
Content marketing
Content marketing – Toby Murdock
http://www.seomoz.org/blog/how-‐to-‐build-‐and-‐operate-‐a-‐content-‐marketing-‐machine
How to Build and Operate a Content Marketing Machine
May 23rd, 2012 - Posted by Toby Murdock to Content & Blogging
This post was originally in YouMoz, and was promoted to the main blog because it provides great value and interest to our community. The author’s views are entirely his or her own and may not reflect the views of SEOmoz, Inc.
Content Marketing is hot. White hot. SEO and digital marketing thought leaders are declaring that Content Marketing is the next big thing. Even Rand is touting its importance.
The strategy of Content Marketing makes sense: instead of pushing messages about your product at prospects, pull prospects towards you by publishing content about your prospects’ interests. Search rank, traffic, leads and all sort of goodness flow from this approach. So the conversation is no longer about if or why an organization should practice Content Marketing. But the still unanswered question is “How?” How does a brand actually become a publisher, produce great content, and attract traffic and generate conversions? So if you’re wondering “How?”, fear not. This post will provide a guide on how to build and operate a Content Marketing Machine. But, to be clear, I’m not talking about dipping a toe in the water: doing some blog posts, busting out an infographic. I’m talking about a sustained effort to generate content excellence in your category. I’m talking about a machine that generates more traffic and leads at lower cost than all of your other channels combined.
The Machine
First, let’s take a look at the machine, all of its pistons, cogs, smokestacks and miscellaneous parts. This will give you an overview of what you’re building and what you’re going to operate:
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Now we’ll go over the machine, part by part.
Goals & Plan
What is the goal, the end output for your Content Marketing Machine? Content marketing is utilized for lots of objectives, including customer retention, upsell, support and brand awareness. But by far the major objective for most Content Marketers is Lead Generation / Customer Acquisition, which can take the form of adding an item to a shopping cart, filling out a lead-gen form, or signing up for a trial. Your plan then becomes to create a content-powered path that takes your prospect from where they are today to the end goal. This plan is best plotted on a matrix, called The Content Grid, where one axis lists your customer personas and the other axis lists your various stages in the buying cycle. We can do a close-up on this part of the machine here:
Then for each cell in this grid, you have to ascertain what content can attract the persona to that stage and help move them on to the next stage. Specifically each cell should answer the following questions:
What questions does the Persona want to answer at this stage in the process?
What are the topics and categories that would provide this content and answer these questions?
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What are some sample headlines for content in each cell?
What formats (blog posts, videos, eBooks, etc.) would this content be delivered through?
Remember, at the top of your buying cycle, the prospect does not care at all about you and your brand. Your content here should be at some intersection between your prospect’s interests and the expertise within your organization. The content here at the top should never promote your own products and services. But as you move down the Content Grid and the prospect has indicated interest in your products and services, your content should provide more information about them.
Team
So you’ve got a plan. Now you have to figure out who is going to execute it. Begin by looking at your grid. Who can produce these pieces of content? Is it going to be internal contributors? External paid freelancers? Guest posters? Naturally this depends a good amount on your budget. But for most organizations it is a mix of internal and external contributors: you want to utilize your unique internal expertise, but you also use external talents to share the burden, particularly on rich media content like video and infographics. While there is a variance in the mix for the set of contributors, there is one consistent, crucial role: the Managing Editor. Many stakeholders will submit ideas and content into the Content Marketing Machine, will turn its Audience Development crank, and will pull leads and reports out of the Machine. But you need at least one person whose primary responsibility is to man the controls of the machine: to plan the editorial calendar, to supervise content production and distribution, to generate traffic and conversions, to monitor metrics and to be accountable for results. Without such a person, you aren’t operating a Machine, but rather a small appliance (perhaps a Content Marketing toaster).
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Ideally the Managing Editor should have content experience from a journalism, copy writing or PR background. But the Managing Editor should also know the web and the ways of search, social, analytics and link-building. Lastly the Managing Editor should be familiar with marketing and the end objectives of driving traffic and conversions.
Ideas
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The Ideas section of the Content Marketing Machine is where marketers most often struggle. In the Content Marketing Institute’s 2012 Content Marketing Research Report, over half cited consistently outputting content as their greatest challenge, which a particular struggle over figuring out what to produce. To truly become a publisher requires consistently producing content 3, 4, 5 times a week. What in the world, marketers lament, am I going to write about every day? Remember: the bulk of the content that you are going to produce is about your customers’ interests, not about your products. Thus the best way to generate content ideas is to understand what your customers are interested in. There are two best practices for idea generation. First is online social listening. Dive into the categories you are covering on Twitter, Facebook, LinkedIn, etc. See what topics the communities are interested in. Q&A sites like Quora and Yahoo Answers can identify the specific questions your prospects want answered. The other best practice is to leverage the ears in your organization. Your colleagues in sales, services, support, etc. are talking with customers every day. Encourage them to listen for nuggets of customer concern and then submit those into the Content Marketing team. To give your colleagues incentive to participate, make sure that their submissions don’t end up in a black box. Instead, if you reject them, let them know. If you accept them and convert the idea into content, keep them informed of the content and how it performs. The best organizations at this even keep a leaderboard to showcase which employees are making the best contribution to the Content Marketing ideas effort.
Production
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As you get your idea generation going, you’ll then need to operate the heart of the Content Marketing Machine, the content production. The centerpiece of production is an Editorial Calendar. The calendar should specify who is going to create what piece of content, when they will have it submitted, when you plan on publishing it, and to where you plan on publishing it (your site, YouTube, Slideshare, all of the above, etc.). The Editorial Calendar should look something like this:
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In your Editorial Calendar you should also note the Customer Persona and Buying Stage that the content is intended for. As you look over your Calendar, you should be able to visually see whether or not you producing the right content mix to cover the various cells in your Content Grid. Many organizations can get buried in the logistics of the Production stage. Many stakeholders can be involved, including: the idea generator, the content creator, graphic designers, the Managing Editor, the SEO expert, the social media team, Legal & PR (for approvals), etc. Often too much of the effort goes into coordinating these players instead of creating great content. If you’re in a moderately sized organization with decent complexity, make sure your map out the process involved to get content out the door. Who will submit the content? Who needs to approve it and at what stage of the process? Who is going to be posting messages to Twitter, Facebook and LinkedIn once the content has been published? Identify the required workflows and have a plan to manage them so that your efforts don’t get consumed by administrative tasks.
Audience Development
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So you’re publishing content now! Your machine is up and running! Congratulations! However, creating the content is just half of your task. The other half needs to be around getting visitors to that content, which is the Audience Development component of the Content Marketing Machine. Audience Development breaks down into 4 major buckets:
Influencers
Search
Paid
Syndication
Influencers. Influencers are the most important component of Audience Development. Begin by identifying the influencers in your space: the individuals and organizations in your topic that have lots of visitors to their sites, followers to their Twitter accounts, etc. In other words, these are the places on the web where the prospects who you want to read your content hang out. Your objective is to win links from these Influencers to your content. Get started by building relationships with these Influencers. Retweet their tweets. Comment on their blogs. Get into a dialog. Once you’ve gotten on the influencer’s radar, craft content with the end objective--the Influencer link--in mind. Ask yourself: What content would be of enough interest to this Influencer that they would want to share it with their audience? Or try to bring the Influencer into the process from the start: tell them that you are working on a piece of content and would appreciate their feedback or a quote. Search. Winning these Influencer links is the key to getting referral traffic to your content. It is also the biggest way that you can improve category two in Audience Development: search traffic. Win links from authoritative influencers, and the Search Engines will improve your rank, driving more traffic. Of course you need to be deliberate about this process: identify the search keywords that your personas will search for; target and optimize your content for keyword; and track how your content efforts, keyword by keyword, are effecting your search ranking. Paid. Despite all of the inbound, organic goodness that Content Marketing centers on, Paid traffic does have a place in the mix. Whether it is SEM, or Facebook ads, or sponsored Tweets, or paid Email newsletter distribution, using paid tactics to drive content part of Content Marketing Machine mechanism. What’s interesting to note, however, is how Content Marketers are using paid to drive traffic to their content pages (i.e. about the prospect’s interests) instead of their product pages (about the marketer’s products). The process of developing a relationship with a prospect built on informative content is so powerful that marketers are taking the more patient but more effective approach of buying traffic to their content.
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Syndication. Finally, the content you produce need not be limited to your own properties, whether your site, YouTube account, Slideshare account, etc. The most straightforward way to earn a link from a site where your prospects frequent is to give that site quality content. Syndicating your content earns at least one link to your site through your author bio, but also begins to develop a relationship between you and your prospects before they have ever visited your site. Particularly at the beginning, others sites have a lot more traffic than yours does, so syndicating content there is a great way to get your traffic off the ground.
Measurement & Conversion
OK, now the Machine is running full tilt! You have content being produced, and visitors coming for that content. As the Machine runs, you need to keep an eye on a set of gauges for each part of the machine so that you can learn how it’s running and continue to tune it and optimize performance.
Ideas & Production. Keep an eye on the mix of content you are pushing out the door. Do you have the right distribution across the personas from your Content Grid? Are you hitting the relevant categories?
Audience Development. What Influencers are sending you the most traffic? You should be sure to express your gratitude to these Influencers and link back to them. What types of content are succeeding in generating the most valuable links? You need to double down on that content. What keywords have high search volumes but fail to drive you much traffic? You need to improve your production of content around these keywords to improve your rank. Which paid channels are proving the most cost effective traffic? Traffic & Conversion. This is the major objective as it gets to our end goal of the conversion. All of your content needs to be assessed for how it is performing in bringing first time visitors to your site, bringing back returning visitors, and moving them down the buying cycle, particularly to the conversion event (e.g. form submission; add to cart; start a trial) that you are looking to track. Score all of your content on these objectives, and look for the trends: which authors are pulling in the most new visitors? which content types (e.g. blog post, eBook, video) are keeping each of my personas coming back? which categories of content are leading to the most conversion events. Every initial content strategy is a best guess. Only by operating your Machine and monitoring your metrics can you understand what’s working and what’s not working and improve your performance over time.
Building Your Own Machine (versus Renting Someone Else’s)
And indeed, you have to recognize that the results of Content Marketing accrue over time. Traditional marketing tactics, i.e. advertising, involve the Marketer renting the attention of someone else’s audience: the
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marketer pays the media to be able to put the marketer’s message in front of the media’s audience. Despite the problems of advertising, this renting has immediate effects, because the media already has an audience. Content Marketing takes longer, particularly because, when you start, you have no audience! But don’t be deterred! Just like the difference between buying and renting a house, with Content Marketing, you are building equity as your build your audience. Over time, your audience becomes an incredible asset: a perpetual source of leads / trials / new customers at extremely low cost relative to traditional marketing (i.e. advertising). There are now many brands who have successfully built and now operate such a Content Marketing Machine (here are 50 examples). This highest state of Content Marketing nirvana is for your Content Marketing Machine to become self-perpetuating. Typically the machine works with content as the input and audience / leads as the output. But once you’ve become such the authority on your topic, your output, the audience, will begin to supply the inputs, the content (see prior section on Syndication). SEOmoz has, very deservedly, reached this highest state of Content Marketing nirvana. I, in fact, am an audience member providing the inputs! I hope that these inputs, this content, have been helpful to you as you look to build and operate your own Content Marketing Machine. I’m eager to answer any questions. Please fire away in the comments!
Content for both sides – Douglas Melchior
http://launchingtechventures.blogspot.com.au/2011/05/five-‐tips-‐to-‐boost-‐user-‐conversion.html
Five Tips to Boost User Conversion Through Valuable Content
by Douglas Melchior
What kind of content will drive clicks and convert visitors into users or customers? I posed this question to marketing directors at five different consumer Internet companies, including Brett Below at Rent the Runway, Andrew Sinkov of Evernote,Liz Wald of Etsy, and Shawna Strayhorn of Refinery29. I overlaid these practical findings with research from Brian Halligan at Hubspot.
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Content can be anywhere on the website, and is viewed by search engines and humans alike. Content on the homepage gets the most views, but it has to be useful to people and peak interest immediately. Here are 5 strategic tips to maximize the value of content on your site and outbound communication:
1) Write Content for All Sides of the Platform. At Etsy, the marketplace for handmade goods, the marketing team creates content for both buyers and sellers. Use these two types of content to engage a small but active buyer community, and to attract sellers with the benefits and best practices of your platform. Writing for sellers will help frame your business as an opportunity to the seller rather than a margin muncher or competitive threat.
2) Integrate User-‐Generated Content into Your Site. The most effective Web 2.0 sites engage users in a framed environment. Get users to write about their success stories or uses of your product and include that content on your site. For Rent the Runway, that content might include wedding coverage detailing the bridesmaids’ dresses or crowdsourcing a look for this year’s prom.
3) A Picture is Worth a Thousand Words. Graphics-‐heavy emails, websites, and conversion pages are substantially more likely to get user conversions. If you’re website is about handmade crafts, for example, include plenty of pictures of those crafts to get higher conversion. In the world of instant gratification and massive media consumption, pictures peak interest a lot more than craftily assembled words.
4) Tell, Don’t Sell. Endless selling of the website’s merchandise won’t drive traffic. For email communication, focus on industry tips and picks rather than on individual merchandise. Click-‐through rates can double when the messaging is about advice rather than specific items. For email communication, focus on items that everyonebuys often. This will keep interest high and allow for future upselling.
5) Find a Partner and Exchange Mailing Lists. Partnerships with well-‐known bloggers and industry experts are an excellent way to boost your credibility and mailing list. Find an industry blogger, and pay him/her to write an article on your behalf and send to both of your mailing lists. Ask for a reciprocal link, and chances are you will get a boost to your subscriber base, while mutually benefiting both parties’ brand images.
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Content creation – John Pring
http://www.seomoz.org/blog/indepth-‐guide-‐to-‐content-‐creation-‐with-‐infographic
In-depth Guide To Content Creation [With Infographic]
May 17th, 2012 - Posted by Designbysoap Ltd to Content & Blogging
This post was originally in YouMoz, and was promoted to the main blog because it provides great value and interest to our community. The author’s views are entirely his or her own and may not reflect the views of SEOmoz, Inc.
It doesn’t matter whether you’re an on-site SEO consultant, a link-building specialist or an all-round ‘internet marketer’, content creation should be particularly high on your list of priorities. We’ve been hearing the phrase ‘content is king’ for years now, but given Google’s recent de-indexation of low-quality blog networks, the Panda updates and the new algorithm burning across the horizon, it seems it’s never been more true than in 2012.
It’s not difficult to understand the importance of high quality, unique and relevant content in the modern SEO industry; content of this type published on your own site can do wonders when it comes to link magnetism and social media metrics and similarly, can help you obtain extremely powerful links from high authority domains that might otherwise be out of your reach. But creating this content is easier said than done, particularly if you’re trying to compete in a crowded industry. Sure, if you’re working on behalf of a client in a fairly dull field it can be relatively easy to produce content that will attract attention, but competing in content-heavy industries like SEO, gaming and entertainment (for example) can be very, very difficult.
So how can you make creating high quality, shareable content easier? What processes can you follow to minimise the time you spend researching and thinking and maximise the time you spend creating and sharing your content?
To try and answer these questions I’ve put together the following article and infographic (a large chunk of my time working for Designbysoap is spent designing infographics) that aims to give you a structure for content creation, as well as some useful tips and tools. I hope you enjoy it and, more importantly, I hope it helps when it comes to creating high quality content for your own campaigns.
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Click for a full size version if you'd like to print it.
Research
Typically, this is often the most time-intensive element of content creation, whilst annoyingly yielding the fewest results. I’ve spent numerous hours reading posts and analysing data that ultimately comes to nothing. Sure, it can be enjoyable and often rewarding in terms of learning about an industry, but it’s not always permissible to spend huge chunks of your time (or a clients’ for that matter) reading and searching only to end up with nothing to show for it.
Having said that, the research portion of your content creation process can often be one of the most important – delivering content based on flawed, incorrect, irrelevant or (perhaps worst of all) boring information will get you nowhere and will essentially nullify all your efforts in the latter stages.
Ultimately, you need to find out what’s popular in the area you’re working in. Your research needs to be around a topic that’s current, relevant to your industry, popular and, most importantly, likely to gain traction (whether that be via social media platforms, inbound links or attention from high profile sites).
To help you identify this kind of content, there are several excellent tools at your disposal;
Google News – helps you highlight areas of interest and current news
Google Trends – helps you hone into specific topics in any given area of interest
Google Insights – helps you discover what people are searching for around an area of interest. Great if you’re writing blog posts
Digg, Twitter, Reddit – helps you find out what’s popular with the readers, what kinds of topics are receiving the highest level of sharing
These are the platforms I turn to first, but there are plenty of others (Cracked, AllThingsNow, Bing News, Fark, etc.), all of which will add to your level of insight around any given topic. Now, these can certainly help you find up to date, reliable and current information and can be invaluable when it comes to highlighting the most popular topics, but they don’t solve the problem of minimising the time you’re spending on research.
This is where a phenomenal tool from SEOGadget comes in, that makes ingenious use of Excel and Google Docs. I hugely recommend you follow the link and save a copy of the document to your own Google Docs (when you’ve finished reading this post of course), as it will save you a massive amount of time and effort during the research stage. The tool allows you to add a search query within the excel document, after which it will pull in invaluable data from Google News, Google Insights, Twitter, Bing News, Digg and numerous other platforms. You can not only quickly and easily find out what’s hot, but you can see the most popular topics on a range of social media platforms and highlight the top and rising searches around any given topic. There’s a fair bit more to it, but I’ll leave you to discover all it has to offer - suffice it to say it’s a perfect tool for the content creation research stage.
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Ideas
Once you’ve got a solid set of data and a firm grip on the type of information likely to be shared, you need to start brainstorming some ideas on how you’re going to present the information.
The first thing you need to decide is the angle from which you’re going to approach the information. It’s no good just re-formatting a post or piece of content that already exists (you see this a huge amount when it comes to content creation, particularly in the SEO industry), you need to add something new or interesting to what you’ve already got. Can you come at the information in a new way? Or add something new to the story? Can you produce something unique to the industry?
Essentially, you’re looking at how you’re going to present the information you’ve gathered (an in-depth blog post, a video, a static infographic, an interactive infographic, etc), how you’re going to approach the subject (informative, analytical, satirical, etc) and how you’re going to add something beneficial or attractive to the target audience (drawing new conclusions, bringing together lots of pieces of information, attempting to shock, informing, entertaining, etc).
An excellent example is SEOmoz's own Google Algorithm Change History; all of this information is available elsewhere on the internet, but by pulling it all together and keeping it up to date, they've provided a piece of content that makes life easier for readers (bringing all the information together in one place), keeps them up to date (by displaying the latest information) and provides new insight (by viewing the complete history of algorithm updates, you can see the progression Google has taken, which offers far more insight and value than a post discussing just the most recent change).
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Sometimes, it’s enough to simply be first – as long as the content you’re producing is high quality. A great example from a different industry is the Angry Birds Space infographic (section included below). This was the first quality infographic to be published on the latest Angry Birds installment; a game that saw a huge amount of buzz across news platforms for reaching 10 million downloads in just three days. The infographic is not only very nicely designed, but gained a decent amount of traction. Only two days after being published, the infographic has seen over 1,000 Facebook likes:
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Infographic section via PlayVille
You can also gain a decent amount of traction by focusing your content around an upcoming event - a great example is the F1 2012 Season infographic (a section of which is included below). The infographic doesn't necessarily offer anything new, but took advantage of the excitement surrounding the start of the new Formula 1 season, resulting in a very high placement for the infographic.
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Ladbrokes via Infographic section on Autoblog
Another excellent idea is to try your best to involve other people in the idea (or even the research) stage; specifically, people you know have an influence in the industry you’re working in.
Let’s say you’re producing an infographic on console gaming – why not email some people from Destructoid, G4TV, Gamespot, IGN, etc. and ask them what they’d like to see in an infographic. Or give them a collection of your ideas and ask them which they think is the best – not only does this involve influencers in the early stages of your content creation, but it can help massively when it comes to placement and promotion.
If these people give you valuable insights or information, then include them in your content (in the sources section of an infographic, or via a credit link in a blog post) – you’d be amazed how much more willing people are to share things when they’re credited with a hand in the research or production.
Placement
Once you’ve gathered your information and you have an idea of the type of content you’re going to produce, you need to try and identify where the content is going to be placed.
Obviously if the content is going on your own website, then this is less of an issue, but if it’s a link-building exercise then having an idea of the kind of site you’ll be aiming for can make a big difference to how you approach the creation stage.
It can be a good idea to start your outreach before you approach the actual creation of your content, as confirming a placement beforehand will make your life much easier in terms of considering the target audience. If you know where the content is going to be placed, then you can tweak the language, style and tone you adopt throughout the piece in order to maximise your chances of appealing to their readers.
Conversely, you don’t necessarily need to have confirmed the placement location before you start work on the production stage. Often you may find it easier to convince sites to place your work once they’ve actually got something to look at, rather than trying to tempt them with just the concept. If you’re planning on completing your outreach once you’ve finished the content creation stage, then you should at least have an idea of the sort of website you’re going to be targeting. Don’t specifically aim content at one website before you contact them, as if they turn it down you may struggle to place it somewhere else.
When it comes to contacting specific websites, your best bet is to write a concise and polite email to the most relevant person at the organisation, then follow this up with a call a day or two later. Don’t be disheartened if you don’t hear back from your preferred placement, it’s still worth giving them a call just to check they’ve received your email and even if they turn it down, you’ve got a contact you can use for future pieces.
Creation
So you’ve done your research, you’ve got your content and you’ve got an idea of where you’re going to place the piece – now it’s time to actually create your content.
Giving you advice on the creation stage is a little tricky, as it will depend on what type of content you’re putting together. To overcome this, I’ll quickly cover the two most popular content types; blog posts and infographics.
Infographics
Having produced around 100 infographics personally over the last 18 months (and overseen scores more), I consider them to be one of my main areas of expertise. One of my major pet hates when it comes to infographics is people telling me that there are ‘rules’ to infographic production – there aren’t. An infographic doesn’t have to tell a story, it doesn’t have to avoid using text at all costs, in fact it doesn’t have to do anything
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other than display information that is either complimented by, or portrayed via graphics. So don’t get too caught up in the non-existent infographic ‘rules’ and just focus on producing something that is engaging to your target audience.
Some topics will require more text than others, particularly if the data is qualitative rather than quantitative. A lot of people will use phrases like ‘don’t make me read’ when they’re looking at infographics, but you should give your audience more credit – people don’t mind reading, as long as the information you’re including is concise and adds something to the visuals. If you can visualise it (i.e. statistical information), then do, if you can’t then don’t worry too much about it, people will forgive you.
Try and create an immediate impact with the visuals and draw readers into your infographic as early as possible, the most obvious place to do this is with the title. It’s amazing how many people are happy to just type the title in a nice big font and then move on to the rest of the content. But if you look at some of the best infographic designers (and the most popular infographics online), you’ll see that the title is a fantastic opportunity to grab the reader with a strong, relevant visual. I’ve included a few examples below to show you what I’m talking about (please note these are just a part of the original graphic -- there is a lot more to see when you click on the link underneath each image!):
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Infographic section via the Designbysoap blog
Infographic section via Volvo
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Infographic section via HotelshopUK
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Infographic section via Geekosystem
When it comes to visualising the data you’ve got, try and keep a consistent theme throughout the infographic, whether that’s through your choice of visualisation methods, the colours used or the style of design. If you can help it, try and avoid using too many infographic ‘cliches’ – a good example of this is using a line of six person icons to visualise a statistic like ‘60% of people use people icons in their infographics’.
Just try and be as creative as you can (which I realise isn’t really all that helpful, as it’s like saying ‘be more musically gifted’), and don’t take the lazy approach just because you’d like to get it finished.
My last point is on orientation – generally speaking, if you’re going to be placing the infographic online then you’re probably better off opting for a portrait infographic, rather than a landscape one. This is because it’s far easier to use online and usually allows you to use a longer file (people will always prefer to scroll up and down as opposed to left and right, if the web page even allows it).
Blog Posts
It seems like an obvious thing to say, but in-depth blog posts are far more likely to encourage sharing than a quick post that just skims over a topic. Long blog posts are great as long as they’re adding value to a topic – you should be informing, educating or entertaining your readers as much as you possibly can.
Include relevant, quality outbound links that are useful to your readers – if you find a good tool during your research phase, link to it. If you find a post that offers an alternative argument to what you’re saying, or adds additional information, link to it. Too many people are hesitant to link out from their blog posts, worried that it will give readers a reason to leave their page. Trust me, if you’re producing high quality content, they will come
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back (for example, when I’m reading blog posts and I come across a link I want to follow, I tend to open it in a new tab and then continue reading).
Again, it seems obvious, but pay attention to grammar and punctuation – it’s hard to come across as authoritative if your content is full of spelling mistakes, misplaced commas and missing capitalisations. It might sound strange, but grammatical errors can also put off people from sharing your content and you want to do everything possible to increase the likelihood of shares and links. If writing isn’t your strong point, then get someone else to proof read your articles before publishing, particularly if you’re sending them out as guest posts.
Another good tip is to try and engage your readers as early as possible in the post – the best places to do this are the title, the sub-title and the opening paragraph. There are many different ways to do this; provocation, humour, questioning, etc. just make sure you grab people as early as you can. Bear in mind it’s the title that will encourage click-through rates when it comes to blog front pages and aggregation networks such as Inbound.org. Having said this, don’t be deliberately misleading with your titles – sure it can increase click-through rates and traffic to have a title that draws attention, but if it’s erroneous then you’re far more likely to piss people off than you are to encourage sharing.
You should also try and help your readers as much as possible; something that often means not assuming knowledge on their part. Unless you’re writing for particularly high level, technical websites, it’s best not to over-use entropic language without clearly explaining yourself. If you’re writing a post full of tips, explain things to your readers – rather than just saying do this, tell them how to do it.
Another valuable tip is to try and break up the copy in particularly long articles – use sub-headings and paragraph breaks to make the article look less dense and more accessible to readers. You should also make sure you’re using images in your posts, not only do they break up long sections of text nicely, but they can often be extremely helpful, particularly in tutorials and ‘how-to’ articles (screenshots can be especially useful). When it comes to sourcing images, you should either be creating them yourself or using an online platform such as Shutterstock or Creative Commons, rather than just stealing them from other websites. Having said this, the latter is permissible in some situations, just be sure to include credit links to avoid upsetting other webmasters, and check the copyright laws in your country. Don’t forget to properly name and alt tag your images either – it’s amazing how often you see people missing this potentially valuable ranking signal.
Publish
So you’ve spent hours putting together a high quality piece of content, now it’s time to get it live. Hopefully you’ll have started your outreach before putting the content together, but if you didn’t, now’s the time to start sending some emails.
I would always advocate aiming as high as you possibly can (as long as the quality of the content is good enough), as it never hurts to try. When we’re advising our link-building engineers on gaining high profile placements, we get them to put a list of five or six potential placements together, in order of domain authority, traffic or level of engagement via social media (depending on the post content and what we’re trying to achieve). From there you can start at the top and work your way down, until someone agrees to place your content.
Once a placement has been confirmed, make sure you’ve got an idea of when it will be published, so you can start sharing as soon as possible. You should also keep up a level of etiquette when you’ve posted on someone else’s website – push the content as much as you can, link to it from other posts and send as much traffic and social media engagement as humanly possible. This not only makes the link more valuable, but will encourage the administrator to publish your posts in the future. You should also keep an eye on the comments and reply to as many as you can; keep up the level of engagement and discussion and beinvolved.
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Promote
It’s amazing how many times we see people produce fantastic content, and then just leave it to either reach a large audience or, more often, fall flat on its face. If you’ve gone through all the effort of researching and producing a high quality piece of content, then you should continue that effort through to the post-publishing stage.
It’s true that if your content is good enough and it’s published on a high profile platform, then it will likely achieve a high level of social media traction and natural inbound links, but that doesn’t mean you shouldn’t do your best to push it as best you can.
You should aim to utilise as many avenues as you can to promote your content, including social media, news aggregators, infographic publication sites and inbound links from other domains (particularly applicable if you or your team writes lots of related guest posts). I could include a massive list of sites you can use, but honestly it depends on the vertical in which you’re working. Instead, check out this awesome link building strategies post, this list of infographic distribution sites, this post on finding the perfect content promotion platform and this handy list of social bookmarking websites.
You should also try to reach out to influencers in the industry you’re working in, whether that be via phone, email or social media platforms. The success of this practise will depend on a variety of factors (including the content itself, the domain it’s published on, the author, the way you choose to make contact and the area of discussion), but it never hurts to try. If you made the effort of reaching out to people during your research and ideas phase as suggested, then you may find you get some great traction via some very influential people.
So that’s about it for my guide to creating good content – did I miss anything? Disagree with anything I said? Let me know in the comments below.
Post by John Pring from Designbysoap Ltd.
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Copywriting
Copywriting
Long copy vs short copy – Jeff Sexton
http://www.grokdotcom.com/2009/04/13/how-‐to-‐think-‐about-‐long-‐vs-‐short-‐copy/
How to Think About Long vs. Short Copy
By Jeff Sexton
April 13th, 2009
Long and short are linear terms (they refer to length ,
right?). So they work fine to categorize or describe copy found in a sales letters or print advertisements.
But (most) websites aren’t linear because hyperlinks break linearity (aka subvert hierarchy).
People don’t read (most) Websites one full page at a time in a numbered order; they read/scan/move from one link that interests them to the next link that interests them, often entering or starting on something other than page #1 (what bad web designers notionally understand as the home page).
This means “Long copy” and “short copy” only apply to Websites metaphorically at best, roughly translating to “content rich & substantiated” and “minimalist / pared down,” respectively.
The upside is that hyperlinks make it possible to get the best of both (offline) worlds. Visitors who want more substantiation and richer content can drill down on the links that interest them, and visitors who only want a quick, bottom-line summary and an express path to converting can get that too – all on the same site.
That said, long copy equivalents still tend to out-convert “short copy” alternatives. Here’s why.
The crucial element: Are you answering their questions & concerns?
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Two recent studies, one involving complex B2B sales/Websites and one one-commerce sites, show that well over 50% of potential leads/customers fail to convert because the Websites studied failed to answer prospects’ questions and provide needed information.
I’ve experienced it myself: if I need to know a wireless card or piece of software will work on my Mac, I’m simply not buying until I get that answered. Similar dynamics exists with concerns rather than absolute requirements, and, yes, this is especially critical for services, complex sales, and lead generation.
Content rich sites typically out-convert minimalist designs because they more completely answer the prospects’ questions.
And as I’ve previously written, question-answering content isn’t just copy. High quality pictures answer questions and concerns. User reviews answer questions and concerns. So do videos, blogs, forums, etc. And, of course, there’s persuasive copy.
Modeling Customer Psychology and Persuasive Online Copywriting
Suppose you’re genuinely interested in buying something, talking to a salesman about it, and in the process of asking how much it costs. How many times can that sales guy dodge or ignore your question before he destroys your trust?
Once? Twice, maybe.
With online copy, visitors ask questions by scanning the page and clicking on links. If your web copy doesn’t facilitate scanning and skimming, and if you don’t provide hyperlinks and content to answer visitors’ questions, your Website will become that used car salesman who won’t give a straight answer to a direct question.
At Future Now, we’re big on Personas simply because we’re big on making sure Websites answer the questions and concerns of their visitors. We find it essential to model and facilitate the flow of visitor-website sales conversations in order to avoid the “used car salesman” syndrome.
So rather than having any old interaction or conversation with visitors, personas allow one to reverse engineer conversations that lead to conversions. To do this, simply:
Take a persona’s emotional state, concerns, and informational needs upon entering a Website
Compare that starting point with what the visitor will have to feel, know, and believe in order to confidently take the action you want them to convert
And then plan out the conversation your site will need to have with that persona in order to make that persuasive journey from starting point to sale.
Going through this process allows Website designers and copywriters to persona-lize the Website. They can plan messaging and links custom tailored for each buying behavior/motivation. The visitor can then self-determine just how many rabbit-holes of information/assurance/question-answering she needs to in order to feel comfortable buying, thereby getting the exact “length” of copy that’s right for her.
Fast decision makers and late stage buyers that just need a quick and easy way to buy, get it. And those visitors needing a lot of information, insight, and assurance can get that too.
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Think of it as an adult and sales-oriented choose-your-own-adventure novel. Or just think of it as a really sincere sales conversation performed by your best salesman who just happens to be available to talk to (and convert) customers 24 hours a day, 7 days a week.
What more could you ask from either long or short copy?
P.S. For a different (but congruent) take on the advantages of Long Copy (and it’s online
equivalents), check out Sonia Simone’s excellent article over at CopyBlogger.
For conversions or thought leadership – Steph Hay
http://500.co/2012/04/23/copywriting-‐conversions-‐or-‐thought-‐leadership/
COPYWRITING: CONVERSIONS OR THOUGHT LEADERSHIP?
Posted on April 23, 2012 by max| Leave a comment
SuperMentor Steph Hay (AKA Poison Ivy) is known at 500 Startups for her content expertise, UX
skills, and giant hair. By day, as co-founder of FastCustomer, Steph works to rid the world from ever having to wait on hold again. By night, she co-organizes the DC Lean Startup Circle and learns Ruby so she can one day finish CakeRock.
A thread in my inbox: “We have a lot of ideas on topics to write about that are relevant to our industry. But how should we go about producing content? Hire a copywriter?”
Two primary follow-up questions I’d ask:
1. Do you want to find the messages that convert users to buyers? 2. Do you want to establish yourself as an authority on certain topics?
To which you’d likely answer “Both.” But how to achieve each relies on different goals, people, tools,
and timelines.
COPYWRITING FOR CONVERSIONS
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To directly convert users to buyers using words alone, I mentioned trying an adwords-based
test as a starting point. That 3-step process yields only one thing: a short-list of words or phrases that make people click.
With that data, you now have a jumping-off point for producing more content like it on a landing page that we can tweak to get conversions up.
But at least you’ll know that content-wise, you’re using the terminology users need to see to arrive on the page in the first place.
This route is all about the sprint: finding the individual words that directly drive users to you, then using analytics-based UX design to close the deal. Whee!
People involved: -AdWords Expert (for placing/managing ads) -Copywriter (for coming up with the language to test in ads, status messages, email; then for optimizing the landing page once the most-clicked messages are nailed down) -Social Media or Email Marketing Expert (for testing messages in the best way possible across social media platforms or email) -Visual Designer (for designing the landing page once you’re got the most-clicked messages nailed down) -UX Designer (for optimizing the landing page to test/iterate for maximum conversions)
Tools involved:
-Facebook, Google, LinkedIn ads (for testing clicks; limited by daily ad budgets) -Twitter or Facebook updates (for testing clicks/shares; limited by network) -Email (for testing subject lines to opens, and opens to clicks; limited by list size) -WordPress (for landing pages if w/o a front-end developer) -MixPanel and/or Google Analytics (to track click-to-conversions) -Other tools you’d recommend? Tell me!
Summary:
It’s all about running fast — content can be up and iterated upon in a matter of days, discovering the messaging that makes people click immediately thereafter, then building and refining landing pages until the magic content-then-UX formula is discovered.
Then blow’d up.
COPYWRITING FOR THOUGHT LEADERSHIP
Startups-as-thought-leaders is a great way to: -Get invited to conferences and speak on panels -Create a repository of SEO-friendly landing pages -Be the go-to expert for press -Close deals with customers who need to see papers to say “yes” -Create newsletter fodder (which make for nice investor updates, too) -Direct inquiries to posts that answer common questions -Keep super fans engaged over the long-haul
But if none of these are pressing goals, then your time and energy (and runway) might be better spent on the first approach of finding conversions fast.
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This route is all about the marathon: STRATEGICALLY finding the topics people care about, then using consistent production of content on these topics to establish credibility over time.
People involved:
-Content Strategist (who likely is also an excellent writer) -Social Media Strategist (to be consistently researching topics) -Product Manager or Business Analyst (to keep posts relevant to business efforts)
Tools involved:
-A CMS or blog platform on your domain that isn’t a complete bitch to use and also includes some way for users to share posts easily via social media and email -Email list (for distribution of said posts, either as published or on a specific timetable) -Whatever text editor is preferred (I’d suggest a Google doc if doing collaborative writing) but IA Writer is badass.
Summary:
Building thought leadership over time takes planning, regular research, a confidence in voice and direction, consistent publishing, and — above all else — an audience of users who give a shit
about what you’re saying.
But if you (like 37signals or Woot.com) can achieve this goal, it’s gold.
How to be interesting – Jonathan Morrow
http://www.copyblogger.com/how-‐to-‐be-‐interesting/
How to Be Interesting
“Be interesting.”
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It’s good advice, but it’s nothing new. You’ve probably known from the beginning that being able to interest readers is a crucial part of growing a popular blog. It’s pretty obvious that no one is going to stick around unless they find your blog interesting.
But how are you supposed to do it exactly? How can you “be interesting?”
Far too much of what we write about attention and interest is abstract. We talk about differentiation, value, and triggers — all useful concepts, but you can’t point to them. You can’t hold out your hand and say, “Give me some differentiation.” As a result, it’s hard to wrap your mind around what those things actually mean.
I’d like to change that. Over the past few weeks, I’ve paid attention to the things that command attention, both of myself and others, and I’ve made a list of 21 techniques that work. It’s far from all of them I’m sure, but it should be enough to get you started.
1. Be wrong: The world is full of people trying to do the right things. It’s become so common that many of us are bored by it. We long for someone that is willing to do the wrong thing, say the wrong thing, be the wrong thing. If you have the courage to be that person, you’ll find lots of people paying attention to you.
2. Be right: You can also gain attention by being right… but only if you’re more right than everyone else. Run a mile faster than anyone else, explain your topic more clearly than anyone else, be funnier than everyone else. Embody perfection, and people will take notice.
3. Communicate what others can’t: As writers, we take ideas from our heads and put them on the page. Sometimes we forget how difficult that is for some people and how valuable that makes us. Lots of people would give anything to be able to say what they mean. But they can’t. So, they turn to songs, books, and art that communicate for them. Be a producer of those things, and you’ll never lose their attention.
4. Do something: Everybody online is trying to say something important, but very few are trying to do something important. If you want attention, dare not to just give advice to others, but to live that advice yourself. Then blog about it.
5. Surprise people: Chip and Dan Heath, authors of Made to Stick, say that one of the best ways to set yourself apart is to break people’s “guessing machines.” Take a surprising position, making outlandish analogy, or otherwise do the opposite of what you normally do. As long as it’s unexpected, people will stop and pay attention.
6. Make people laugh: Bloggers are far too serious. We’re so busy trying to teach that we forget to entertain. As a result, large portions of our readerships fall asleep. And what’s the best way to wake people up? Humor. Public speakers have been using it for ages, and as long as it’s appropriate for your audience, humor can wake your readers up and get them paying attention again.
7. Offer them an aspirin: Some of the best blog posts ever written are simple as an aspirin. Your reader has a headache, you have a cure, so you offer them that cure in the form of a blog post. They pay attention… not because of how pretty or well crafted your blog post is, but because it cures their headache. Conclusion: try acting like a pharmacist, not a blogger, and you’ll never lack for attention.
8. Show a (half) naked woman: Ever noticed that a disproportionate number of advertisements feature a scantily clad woman? That’s because it works. It draws the attention of not only men (as you’d expect), but also women. For whatever reason, nearly everyone finds their attention drawn to it. Here’s proof that it even works with blog posts.
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9. Tell them who they are: “Who am I?” is not just a question; it’s a universal quest that most of us follow for our entire lives, continually defining and redefining ourselves, always insecure about whether who we are being is really us. As a blogger, you can (and should) harness that insecurity. Turn your blog into something that defines your readers, like this one, this one, and this one.
10. Predict the future: Every once in awhile, use your expertise to make a bizarre claim about the future. If you have any authority at all, people will take notice. Imagine if Brian wrote a convincing, well reasoned argument that online courses are the business model of the future. Oh wait… he did, and some of the biggest names in Internet marketing continue to talk about it.
11. Unleash your inner dork: Many blog posts are like miniature textbooks; they’re instructive, well-organized, and put you to sleep with their lack of enthusiasm. If you want to become famous on the web, stop trying to sound like an all-knowing teacher and unleash the “inner dork” inside of you — the part of you that’s so enamored with your topic that everyone else thinks it’s funny… but they pay attention anyway. More on dorkyness here.
12. Be courageous: Most of the videos on YouTube are there to make you laugh, but amongst them, you’ll find this rare gem that has attracted the attention of over 9 million people. The fact is, pretty much everyone has felt the foot of adversity on their neck, but very few of us respond to it with courage and grace. Be one of those people, and you’ll find the world watching.
13. Be startlingly honest: Every once in awhile, tell the truth. Be so honest that you’re scared to click the “Post” button. Be so honest that no one knows what to say in the comments section. Be so honest that your lawyer tells you to stop. You’ll feel better… and people will talk about you.
14. Be irreverent: Want to stir people up? Make fun of their god, their politics, their family — anything they hold dear. Yes, they’ll be offended, but lots of other people will think it’s hilarious. If you can’t stomach being hated by a portion of the world and loved by another, then you don’t deserve to have a blog.
15. Tell a good story: This one has been drilled into us so many times that I almost didn’t include it… except for one thing: people still don’t get it. Yes, stories support your points, make solid openers, and teach people while entertaining them, but a good story can make you a legend. I’m not talking about the little anecdotes that pepper the blogosphere. I’m talking about the story that haunts you on your deathbed. Forget about all the others. Tell me that one.
16. Break an important piece of news: Every time Google does something new, thousands of bloggers write about it. That’s great for Google, but where’s the real benefit for the bloggers? The first one to break the story is the only one that matters. It gets all of the traffic, links, and authority. Everyone else is just an echo.
17. Disprove the proven: For a long time, everyone thought you had to be the best to be successful. Then Chris Anderson came along and turned the world upside down with The Long Tail. He disproved what a lot of people held to be true, and it made him (even more) famous. Granted, it’s hard to engineer a breakthrough, but if you run across one, people will talk about you for years.
18. Pick the perfect picture: Want to make a good post better? Pick a picture that expresses exactly what you mean, and put it at the top of your post. Yes, it takes time, but the extra traffic is more than worth it.
19. Master the metaphor: Metaphors are the paths we create to lead our readers to our ideas. Create one strong enough, and it will become a highway of attention, leading readers to your blog more quickly than any other technique here (except maybe the last one. More on metaphors here.
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20. Create a work of art: Many bloggers crank out posts the way slaughterhouses crank out chickens. They’re ugly things, fit for nothing but consumption. If you want to surprise people, stop and put some actual effort into your blog posts, creating a work of art. You’ll be surprised by how many people remember it long after it’s been swept off your front page.
21. Put your readers first: Yes, you’re the blogger. Yes, you’re the one with talent. Yes, you’re the one working your tail off. But it doesn’t matter. The one and only thing of consequence is your reader. You can rail against this fact for as long as you like, but as long you do, you’ll never be interesting.
Persuasive writing techniques – Brian Clark
http://www.copyblogger.com/persuasive-‐writing/
Ten Timeless Persuasive Writing Techniques
Want to convince your readers to do something or agree with your point of view?
OK, that was a silly question. Of course you do.
Persuasion is generally an exercise in creating a win-win situation. You present a case that others find beneficial to agree with. You make them an offer they can’t refuse, but not in the manipulative Godfather sense.
It’s simply a good deal or a position that makes sense to that particular person.
But there are techniques that can make your job easier and your case more compelling. While this
list is in no way comprehensive, these 10 strategies are used quite a bit because they work.
Repetition
Talk to anyone well versed in learning psychology, and they’ll tell you repetition is crucial. It’s also critical in persuasive writing, since a person can’t agree with you if they don’t truly get what you’re saying.
Of course, there’s good repetition and bad. To stay on the good side, make your point in several different ways, such as directly, using an example, in a story, via a quote from a famous person, and once more in your summary.
Reasons Why
Remember the power of the word because. Psychological studies have shown that people are more
likely to comply with a request if you simply give them a reason why… even if that reason makes no
sense.
The strategy itself does make sense if you think about it. We don’t like to be told things or asked to take action without a reasonable explanation. When you need people to be receptive to your line of thinking, always give reasons why.
Consistency
It’s been called the “hobgoblin of little minds,” but consistency in our thoughts and actions is a valued social trait. We don’t want to appear inconsistent, since, whether fair or not, that characteristic is
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associated with instability and flightiness, while consistency is associated with integrity and rational behavior.
Use this in your writing by getting the reader to agree with something up front that most people would have a hard time disagreeing with. Then rigorously make your case, with plenty of supporting evidence, all while relating your ultimate point back to the opening scenario that’s already been accepted.
Social Proof
Looking for guidance from others as to what to do and what to accept is one of the most powerful psychological forces in our lives. It can determine whether we deliver aid to a person in need, and it can determine whether we muster the courage to kill ourselves.
Obvious examples of social proof can be found in testimonials and outside referrals, and it’s the driving force behind social media. But you can also casually integrate elements of social proof in your writing, ranging from skillful alignment with outside authorities to blatant name dropping.
Comparisons
Metaphors, similes and analogies are the persuasive writer’s best friends. When you can relate your scenario to something that the reader already accepts as true, you’re well on your way to convincing someone to see things your way.
But comparisons work in other ways too. Sometimes you can be more persuasive by comparing apples to oranges (to use a tired but effective metaphor). Don’t compare the price of your home study course to the price of a similar course—compare it to the price of a live seminar or your hourly consulting rate.
Agitate and Solve
This is a persuasion theme that works as an overall approach to making your case. First, you identify the problem and qualify your audience. Then you agitate the reader’s pain before offering your solution as the answer that will make it all better.
The agitation phase is not about being sadistic; it’s about empathy. You want the reader to know unequivocally that you understand his problem because you’ve dealt with it and/or are experienced at eliminating it. The credibility of your solution goes way up if you demonstrate that you truly feel the prospect’s pain.
Prognosticate
Another persuasion theme involves providing your readers with a glimpse into the future. If you can convincingly present an extrapolation of current events into likely future outcomes, you may as well have a license to print money.
This entire strategy is built on credibility. If you have no idea what you’re talking about, you’ll end up looking foolish. But if you can back up your claims with your credentials or your obvious grasp of the subject matter, this is an extremely persuasive technique.
Go Tribal
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Despite our attempts to be sophisticated, evolved beings, we humans are exclusionary by nature. Give someone a chance to be a part of a group that they want to be in—whether that be wealthy, or hip, or green, or even contrarian—and they’ll hop on board whatever train you’re driving.
This is the technique used in the greatest sales letter ever written. Find out what group people want to be in, and offer them an invitation to join while seemingly excluding others.
Address Objections
If you present your case and someone is left thinking “yeah, but…”, well, you’ve lost. This is why direct marketers use long copy—it’s not that they want you to read it all, it’s that they want you to read enough until you buy.
Addressing all the potential objections of at least the majority of your readers can be tough, but if you really know your subject the arguments against you should be fairly obvious. If you think there are no reasonable objections to your position, you’re in for a shock if you have comments enabled.
Storytelling
Storytelling is really a catch-all technique—you can and should use it in combination with any and all of the previous nine strategies. But the reason why storytelling works so well lies at the heart of what persuasion really is.
Stories allow people to persuade themselves, and that’s what it’s really all about. You might say that we never convince anyone of anything—we simply help others independently decide that we’re right. Do everything you can to tell better stories, and you’ll find that you are a terribly persuasive person.
As I mentioned, this is in no way a complete list. What other persuasive writing strategies work for you?
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Search engine optimisation and marketing
Search engine optimisation and marketing
Adwords is not enough for success on the consumer web -‐ Andrew Chen
http://andrewchenblog.com/2007/05/12/adwords-‐is-‐not-‐enough-‐for-‐success-‐on-‐the-‐consumer-‐web/ Adwords is not enough for success on the consumer web
Viral growth is a requirement for consumer web success Every web entrepreneur should be a student of organic, viral growth. Even though I’ve worked in the online advertising industry for the last few years, I’m humbled by the numbers that a well-designed viral site like Tagged can put up. These stats are HUGE, and they are only getting bigger. Google AdWords is not enough It’s convenient to assume that you can outsource all of your marketing out to Google, and buy lots of AdWords. Or let’s say you’re ambitious enough to want to buy from ad networks, or other ad sources. This is a myth.
The largest sites ultimately cannot be bought through online ads. To achieve 50 million users via Google Adwords, let’s work backwards:
50 million users
500 million uniques that land on your page (with 10% registering)
50 billion ads with a 1% clickthrough rate
Let’s pick a range of CPMs, from $0.50 to $2:
At the low end, $0.50 CPM means $25 million in ad spend
At the high end, $2 CPM means $100 million
These are obviously impossible numbers to achieve just using ad spend. The only way to solve this is to make sure that every user you bring in brings their 10 friends. Then, when you spend a targeted $10k at the beginning of your site’s existence, you can get the momentum going quickly.
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Design viral into your product, not into your marketing strategy A lot of people would claim that once you have a product, you can design a "viral" strategy around it. Do you really believe that designing a word-of-mouth strategy for a music CD is the same thing as a product like Plaxo or LinkedIn? The answer’s no. The truth is, you have think about how viral fits into your site at the beginning.
Let’s talk about how most people think of viral…
When users see the product, this is what seems to happen:
User sees the product
User tries the product
If user likes product, make it easy to tell their friends
Word of mouth spreads
New users try the product
… and so on
Let me say that this is a very old-fashioned way of looking at viral product use, because it’s inherently tied to an assumption that people have to go through a full cycle of evaluation before they spread the word. What’s another way?
How to SHORT-CIRCUIT the viral process
Instead of thinking that viral is something that’s tacked onto the end of your user experience, instead think about how it could get integrated into your user process. In fact, the earlier, the better. You want to make it so that in TRYING the product, they spread it to their friends.
Ideally, the funnel looks like:
User sees the product
User tells all their friends to use the product
User tries the product
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[Site propagates regardless of whether or not the user likes it]
Then regardless of whether or not the user tries the product, or if they like the product, or if they get off their lazy asses to tell their friends, the deed of propagating the site is already complete.
How do you do this? Let’s take Tagged as an example – click here to try out the site. Or tryFlixster, another site that’s gotten incredible traction lately. As soon as they sign in, they are trying to import your Gmail/Hotmail/Y! contacts. They make it an integral part of the user experience.
Or take a look at something like Plaxo, whose entire existence is about asserting control over your communications hub, thus making the viral effect even better.
By spreading the site at the earliest possible moment in the experience, you’re not at the whim of the user to act outside of his/her normal processes.
Too annoying? Or too ruthless? Some might say that they hate the fact that these processes exist, and that they might be too ruthless or even immoral. These points are definitely worth debating. I certainly believe that if you’re able to create a engaging user experience, adding these techniques to the front-end isn’t bad.
If you believe that:
Ruby on Rails makes development easier
Product creation is cheaper
Infrastructure is cheap
… then the corollary is that there’s more competition. Breaking out of the noise in any way possible, even if ruthless, will be a key technique for success in the Web 2.0 world.
If you’re interested in a high-level listing of different user acquisition methods, check out an earlier blog I wrote on the subject called 10 obvious ways to ruthlessly acquire users.
Some thoughts on SEO – Chris Dixon
http://cdixon.org/2009/12/02/seo/
December 2, 2009
Some thoughts on SEO
“SEO” (==”Search Engine Optimization”) is a term widely used to mean “getting users to your site via organic search traffic.” I don’t like the term at all. For one thing, it’s been frequently associated with illicit techniques like link trading and search engine spamming. It is also associated with consultants who don’t do much beyond very basic stuff your own developers should be able to do. But the most pernicious aspect to the phrase is that the word “optimization” suggests that SEO is a finishing touch, something you bolt on, instead of central to the design and development of your site. Unfortunately, I think the term is so widespread that we are stuck with it.
SEO is extremely important because normal users – those who don’t live and breath technology – only type a few of their favorite websites directly into the URL bar and for everything else go to search
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engines, most likely Google*. In the 90s, people talked a lot about “home pages” and “site flow.” This matters if you are getting most of your traffic from people typing in your URL directly. For most startups, however, this isn’t the case, at least for the first few years. Instead, the flow you should be thinking about is users going to Google, typing in a keyphrase and landing on one of your internal pages.
The biggest choice you have to make when approaching SEO is whether you want to be a Google optimist or a Google pessimist**. Being an optimist means trusting that the smart people in the core algorithm team in Mountain View are doing their job well – that, in general, good content rises to the top.
The best way to be a Google optimist is to think of search engines as information marketplaces – matchmakers between users “demanding” information and websites “supplying” it. This means thinking hard about what users are looking for today, what they will be looking for in the future, how they express those intentions through keyphrases, where there are gaps in the supply of that information, and how you can create content and an experience to fill those gaps.
All this said, there does remain a technical, “optimization” side to SEO. Internal URL structure, text on your landing pages, and all those other things discussed by SEO consultants do matter. Luckily, most good SEO practices are also good UI/UX practices. Personally I like to do all of these things in house by asking our programmers and designers to include search sites like SEOMoz, Search Engine Land, and Matt Cutts in their daily reading list
* I’m just going to drop the illusion here that most people optimize for anything besides Google. ComScore says Google has ~70% market share but everyone I know gets >90% of their search traffic from Google. At any rate, in my experience, if you optimize for Google, Bing/Yahoo will give you SEO love about a 1-6 months later.
** Even if you choose to be a pessimist, I strongly recommend you stay far away from so-called black hat techniques, especially schemes like link trading and paid text ads that are meant to trick crawlers. Among other things, this can get your site banned for life from Google.
SEO is no longer a viable marketing alternative – Chris Dixon
http://cdixon.org/2011/03/05/seo-‐is-‐no-‐longer-‐a-‐viable-‐marketing-‐strategy-‐for-‐startups/
SEO is no longer a viable marketing strategy for startups
Many of the today’s most successful informational sites such as Yelp, Wikipedia and TripAdvisor relied heavily on SEO for their initial growth. Their marketing strategy (whether deliberate or not) was roughly: 1) build a community of contributors that created high-quality content, 2) become the definitive place to link to for the topics they covered, 3) rank highly in organic search results. This led to a virtuous cycle where SEO drew more users, leading to more contributors and more inbound links, leading to more SEO, and so on. From roughly 2001-2008, SEO was the most effective marketing channel for high-quality informational sites.
I talk to lots of startups and almost none that I know of post-2008 have gained significant traction through SEO (the rare exceptions tend to be focused on content areas that were previously un-monetizable). Google keeps its ranking algorithms secret, but it is widely believed that inbound links are the preeminent ranking factor. This ends up rewarding sites that are 1) older and have built up years of inbound links 2) willing to engage in aggressive link building, or what is known as black-hat
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SEO. (It is also very likely that Google rewards sites for the simple fact that they are older. For educated guesses on which factors matter most for SEO, see SEOMoz’s excellent search engine ranking factors survey).
Consider, for example, the extremely lucrative category of hotel searches. Search Google for “Four Seasons New York” and this ad-riddled TripAdvisor page ranks highly:
(TechCrunch had a very good article on the TripAdvisor’s decline in quality).
In contrast, this cleaner and more informative page from the relatively new website Oysterranks much lower in Google results:
As a result, web users have a worse experience and startups are incentivized to clutter their pages with ads and use aggressive tactics to increase their SEO when they should just be focused on creating great user experiences.
The web economy (ecommerce + advertising) is a multi-hundred billion dollar market. Much of this revenue comes from traffic that comes from SEO. This has led to a multibillion-dollar SEO industry. Some of the SEO industry is “white hat,” which generally means consultants giving benign advice for making websites search-engine friendly. But there is also a huge industry of black-hat SEO consultants who trade and sell links, along with companies like content farms that promote their own low-quality content through aggressive SEO tactics.
Google seems to be doing everything it can to improve its algorithms so that the best content rises to the top (the recent “panda” update seems to be a step forward). But there are many billions of dollars and tens of thousands of people working to game SEO. And for now, at least, high-quality content seems to be losing. Until that changes, startups – who generally have small teams, small budgets, and the scruples to avoid black-hat tactics – should no longer consider SEO a viable marketing strategy.
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Strategic SEO for Startups – Patrick McKenzie
http://www.kalzumeus.com/2010/01/24/startup-‐seo/
Strategic SEO for Startups
Posted on January 24, 2010 by Patrick in SEO
One way I’ve found to cut down on support requests is to make sure I write publicly about any issue that keeps coming up for my customers. Other small companies contact me for advice fairly frequently, and that also tends to retread the same issues, so I’m going to blog it in depth once rather than giving fifteen people 30% of my thoughts on the same issue. One common issue is “How do I improve our SEO?”
Strategy as opposed to tactics: SEO has a lot of opportunities for micro-optimizations in it, from rewriting title tags to dynamically interlinking content pages. They’re all interesting subjects and I’m not going to talk about them. If you don’t feel comfortable in your meat & potatoes SEO yet, head on over to SEOBook or SEOMoz. Both are excellent resources. I’m going to focus on core decisions you make about your business and marketing approaches rather than page-level optimization.
Why Startup SEO Is Different
Essentially every business on the Internet from multi-billion dollar giants like Bank of America down to a one-man software business is dependent on SEO, because Google has become the primary navigation tool for the Internet. (I suppose I could write “search engines” but I feel no particular need to maintain the polite fiction that there is more than one search engine in the United States.)
SEO for a small business is very different than it is for Bank of America.
Limited budgets: Startups cannot devote huge amounts to advertising, branding campaigns, or link acquisition. (Paying for links will theoretically draw the wrath of Google to you. In practice, once you’re above a certain size, you’re immune. If you’re reading this article, you do not have immunity.)
Low domain strength / trust: Google tends to trust older domains, domains with lots of links, and domains with lots of older links. All of these are signals of what one might call trust: the longer you’ve been on the Internet and the more people who asserted your quality by linking to you, the less likely you are to be a useless spammer. However, if you just registered your domain last Tuesday, Google has a priori no reason to trust you over the other billion pages on the Internet.
Cultural aversion to SEO: There is a pernicious myth among startups that SEO is a black art aimed at perverting the purity of the search results. This is partially because search engine spam is indeed a problem and partially because Google is very good at influencing the culture of technically adept people, and it is in Google’s best interest to make people think that their algorithms are the authoritative voice of God. (Google, for all its image as an open company with significant OSS contributions yadda yadda yadda guards their index and algorithms with a ferocity that would do Microsoft credit.)
Algorithms have no moral status. If your engineering team sorts records using an n^2 sorting algorithm, then tells you that they did it because the sorting has always been n^2 and therefore this is
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the Morally Correct Way To Sort, you need to whack your engineering team over the head and tell them to do better. Similarly, your SEO strategy is simply the input you provide Google’s black-box algorithm which sorts search results: just because it is ineffective does not mean it is the Morally Correct Way To Sort.
A related worry is that SEO hurts the user experience. It certainly doesn’t have to — a good deal of SEO is about creating stuff your users want to use, surfacing content in a way that is understandable to them, and not breaking your site’s usability when seen from the primary Internet navigation method (Google). I wouldn’t advocate black hat methods: the black hatters are better than you are at them, and if you use them you’re in a constant arms race with Google (who has billions of dollars, thousands of sharp engineers, and the peaceful conflict resolution skills of Darth Vader) when as a startup you’re already biting off more than you can chew.
Why Startup SEO Is Better
On the plus side, you do have some advantages as a startup:
Strong Technical Skills: I’m a moderator in charge of programming topics at SEOBook and we get an awful lot of nuts and bolts questions like “How do I edit a title tag?” or “How do I do a 301 redirect in Apache?” Thankfully, since you presumably have programmers who know what they’re doing, you’ll never need to ask either of those. In addition, you can program tools and content to improve your marketing, including SEO. We’ll discuss specifics in a moment.
Link Richness: SEO is, at competitive levels, mostly about link acquisition. It is very difficult to get a link without paying for it in many sectors of the information economy. For example, while there is probably a thriving micro-community of online taxidermists, they probably control relatively few links compared to their numbers. However, if you’re a startup, you probably hang out on Hacker News or similar where the blogs-to-person ratio is 6.3, a new useful bit of OSS can make news in four continents on the first day, and online interaction forms a substantial portion of the personal and professional identities of your peers.
There are pluses and minuses to this: a lot of people overadapt to the fickle preferences of TechCrunch et al. That reminds me of dodgeball in fourth grade except there are 100,000 kids and it is mathematically possible for all of them to be picked last. Appealing to your peers can’t be your only marketing strategy. However, it is helpful for when you’re making a cold start, to help get the link to rankings snowball running. One business which did this very well is Balsamiq, which sent letters to blogs big and small to get coverage. Steal Peldi’s approach to writing them: it is aboveboard and works.
Strategic SEO Objectives
Ideally speaking, well prior to launch you should figure out exactly what you hope to get for from SEO. ”Rankings” is not an acceptable answer. Neither is “visitors”. I could get your startup ranked for [fried squirrels with wasabi] by the end of the day, but unless you’re selling a book of very eclectic recipes that probably won’t do you much good.
If you’re selling display advertising, coating every search result under the sun might actually work for you. (Display advertising is, essentially, search advertising’s less talented brother: it is essentially a second bite at the apple for advertisers to get a click when users avoided the AdWords ads on Google. I have deep, deep doubts about the sustainability of display advertising as a business model.)
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If on the other hand you’re trying to get users or sales for your application, you have to balance the needs of your SEO operation with the need to convert users. For example, your homepage will almost invariably be the strongest page on your site. It probably has to be conversion-oriented rather than conversation-oriented. However, outside of the home page, conversion-oriented pages don’t attract links that frequently. Almost nobody blogs “Hey guys, I saw an awesome sales letter today, check it out” and if they do you probably don’t want their attention anyhow.
So your SEO strategy is likely going to involve a mix: non-commercial offerings designed purely to solicit links/attention, semi-commercial scalable content generation which we’ll talk about in a minute, and sales funnels supported by the rest of your website.
Aiming at a moving target: The first cut of your SEO strategy will be wrong, just like v1.0 of your product will be non-responsive to the needs of your users. That is OK: after you start you’ll begin collecting insights and data which let you refine it. You want to get something out the door as soon as possible so that you can begin collecting links, other indicia of trust, and data on what is working for you. Many startups wait until launch to put a significant amount of content on their websites. This is almost always a mistake. If you can’t show the application yet, no problem, talk about the problem domain. Talk about the needs of your customers. The “media launch” where Steve Jobs comes down and presents the iCommandments works very well if you have a built-in base of millions of radical fans and a PR budget which could buy Chile. If you’re reading this, that probably doesn’t apply to you. Google is going to hate your bones when your website first debuts onto the world stage: start that clock ticking as soon as possible.
There is no Google sandbox: If you’re well read about SEO you’ve probably heard about the “Google sandbox”, where sites languish for months or years prior to ranking. There is no Google sandbox per se: a site doesn’t magically jump from zero to hero because it is 180 days old. Google can find sites within minutes of them appearing on the Internet and rank them inside of an hour if Google has sufficient reason to. The sandbox is the perceived reality, though, because from a cold start it takes a while to build up symbols of trust, such as links from trustworthy domains. All the more reason to get started early.
SEO Is A Feedback Loop
Sites tend to built self-reinforcing authority: the site at the top of the rankings for teddy bears (almost certainly Wikipedia, I can tell you without looking) is the first people go for teddy bears and the most likely to collect another citation when someone is writing about teddy bears. That will help that site rank for teddy bears and everything else in the future. In this sense, winners win in SEO.
What does that mean for you? Well, if your startup does designer teddy bears, Wikipedia has a built-in advantage over you for ranking for [teddy bears] and that advantage gets stronger with each passing day. However, all is not lost: by moving further down the long tail of search terms, you too can benefit from self-reinforcing authority. If you’re the best place on the Internet to go for [kimono teddy bears], your site will get stronger each passing day just by virtue of that.
If you’ve done much conversion optimization this should not be a big surprise to you, but things at the top of a page get clicked much more than things lower on the page, all else being equal. This is equally true of search results: when AOL released its data, the top result got over 40% of the clicks, the second result 11.9%, etc. The entire second page, by comparison, got only 10%. SEO is a winners take mostgame: for a given search term, the vast majority of the benefits flow to the handful of sites at the top of the first page.
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What does this mean to you? It means focus on search terms you can win. You will not prevail against the likes of Microsoft, Google, et al for head keywords in most circumstances, unless your product becomes synonymous with the niche. (A head search term is at the popular end of the search frequency distribution, as opposed to on the long tail. This is completely relative: [money] is a head term relative to [bingo cards], and [bingo cards] is a head term in the bingo niche relative to [valentines day bingo].
Incidentally, I can’t recommend The Long Tail enough for anyone interested in SEO. If you’ve been on the Internet the last few years you’re probably sick to death of it and have read the (accurate) criticisms of conclusions about books and music being overstated. However, no single book will improve your thinking on SEO as much as The Long Tail will. (In particular, read up on tails within tails.)
For the amount of effort it would take you to rank #12 for the head term of your choice, which will result in marginal traffic even if the head is huge, you could rank in the top three for a huge basket of tail terms. Additionally, one of the things you’ll notice is that conversion rates for head terms are terrible. People searching for the terms on the head are either just beginning their research into a topic or are less sophisticated. Generally, those are not the searchers you want. Longer, specific queries are more common among people who have done the research and are nearing a purchasing decision.
Here’s an example for you: for the last several years I’ve ranked on the first page for [bingo cards] most of the time. At the moment I’m probably, oh, eightish or so. That was worth about 6,300 visits in 2009. That resulted in three purchases of my software, for a value per visitor of a bit more than a penny. Wheeeee.
By comparison, [free bingo cards] gets less than a fifth as much traffic, according to Google’s keyword tool. However, the 1,200 visitors there also bought 3 copies. (If that you didn’t expect people explicitly looking for free things to convert at five times the rate of undifferentiated searchers, welcome to the Internet. Nothing makes sense except the data you collect. Get something out there so today so you can find which 90% of everything you know is wrong.)
Now if we go waaaay down the tail to [geography bingo], we find that despite it having fairly few searchers (I only got about 300 hits visits year from it), it is quite lucrative ($70 CPM). I could spend my entire life working in bingo and never be #1 for [bingo cards], but for a non-competitive tail term like [geography bingo], I’m #1 by virtue of showing up.
Sadly, a lot of startups of my acquaintance are so focused on the product that they don’t bother showing up for the topics that matter to their customers. I won’t pick on anybody in particular (sidenote: write “Its OK to mention this conversation publicly” on an email to me and you might get a backlink when I need an illustrative example, like here), but it is very common for startups to launch with less than 1,000 words of text on their website and all the content behind the sign in screen. That essentially cedes the long tail to your competitors.
Thus, my generic SEO strategy for a startup is a) be the best on the Internet for b) as many topics as you possibly can be that c) matter to your paying customers.
Making SEO Scale
Everything about a startup has to scale ridiculously disproportionately to the time invested in it, because you have too much to do and not enough people to do it with.
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Some people say this is why you have to work 80 ~ 100 hour weeks. If I worked 100 hour weeks, Scholastic Publishing would still be able to afford to devote a thousand man-hours for every one I can, if they chose to. Your only hope for rising above the din on the Internet is to work smarter than your competitors. Happily, your small size, technical skill, and agility let you run rings around the other guys. One way is through scalable content generation.
Content in SEO is sort of a dirty word. It can mean anything your users can consume: text, video, whatever. Sadly, when people talk about content they are mostly talking about commoditized garbage, because the quality levels of content produced at scale are generally terrible, as you’re about to see.
There are about four approaches for creating content at Internet scale:
User-generated content. Strategies centering around user generated content really devolve into two things: one, you hope people will steal hand-crafted content from elsewhere and put it on your site while you look the other way long enough to build traction (hello, Youtube, Scribd, etc) and two, you generate vast amounts of mostly excruciatingly worthless content which happens to match an equally vast amount of search terms. Then, you sell display advertising against the visits for those searches. This is essentially the business model for WordPress — give a blog to anybody who asks for one, display AdSense ads to folks who arrive on old posts via Google. The ads give them the answers the content could not.
I don’t mean to malign user-generated content too much. Sturgeon’s Law says that 90% of everything is garbage, which implies that 10% is not. However, it is very difficult to use that 10% that is not garbage to advance your business goals, because it is not conversion-oriented and your advertisers don’t pay premium CPM rates just because the page the user landed on is worthwhile. (Actually, in practice it tends to work out the other way around: if the page the user lands on is worthwhile, it will likely satisfy their desire, and economic value from that searcher ends. That means low CTRs to ads and, accordingly, low CPMs. If on the other hand the page is useless, then they might click on an AdSense link to continue the search. This is the perverse incentive by which advertisers pay to make the Internet a mass of garbage.)
Mass Semi-Amateur Content Creation: The Demand Media model is capturing quite a bit of attentionthese days: take an authority domain like eHow, use sophisticated algorithms to generate article ideas for it, pay an army of underemployed freelancers miniscule wages to write uninspired content about the suggested titles, collect hundreds of millions in AdSense revenue.
The quality of Demand Media (et al) content is a cut above Youtube comments, but not by all that much. I don’t really recommend implementing this model for startups. First of all, I think Google is going to have to crush it like a bug in the next 12 months, because currently it is a license to print money and is polluting far too much of the search space. Second, the amount of sophistication it requires is considerable, and while I think that is probably duplicable for a startup (particularly if you used something like TextBroker to automate dealing with the freelancer army) I think you’re better off with your engineering investments in more defensible places.
That being said, study this model and study it well: they’ve got a tight analytics-to-pipeline loop, they’ve got almost everything automated, and their margins are out of this world. There is no reason you can’t do those things while producing great content by taking advantage of focus and engineering ability that Demand Media cannot devote to every microniche they want to expand into. DemandMedia can saturate the world in How To questions but will never be able to outpublish
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me for bingo cards, because they will never detail someone to write a CMS to let their freelance army make those easily.
Talented expert workers: You can have all of your website content created by talented artisans who laboriously polish every bit to perfection. For example, you could write every page by hand yourself, or hire a team of journalists to do it for you. Have you seen the financial results for the New York Times recently? Still want to do this except without the 200 year old megabrand? Good, moving on.
Scalable Content Creation That Works
So how are you going to create large amounts of content that satisfies needs for your users while still advancing your business needs and not being garbage? You leverage the unfair advantages that you have because you’re the smallest guy in the room.
Data You Can’t Get Anywhere Else: If you hang out around geeks who can’t get dates, you’ve seen a series of posts by OKCupid on topics such as how your race affects responses in online dating. This is brilliantly done linkbait: it takes a huge amount of proprietary data (OKCupid response analytics) and exposes it in such a way that it is interesting (“Whoa, the very hottest women really do get hit on less than than you would expect “) , easily consumable (“Whoa, this pretty picture demonstrates that black guys have it hard when dating.”), and easily shareable (“Guys, I found scientific proof of why we need to take our shirts off!”) If you’re J. Random Dating Affiliate, you can’t possibly duplicate that linkbait. OKCupid can do it over and over and over again, though: they’ve written the analytics tools, they’ve figured out how to do the research and visualizations, all they need to do is come up with a new hook andbam they’re at the top of the social news sites collecting links again.
If you don’t have interesting data, you should start collecting interesting data. However, in the meanwhile you can start visualizing or crunching existing data. This is less defensible — anybody can go to the Census and get a few gigs of various poorly conceived slices to fill their hard drive — but you can add a whole lot of value in less time than you think with some SQL, your graph library of choice, and a well-written executive summary.
One of the few bright points for the New York Times is that they’re capable of doing things like this, for example. You could have done that. If you were in the job board industry, you could do something like that every Friday afternoon, by using open source, agile development, and all that jazz. Pretty soon you’ll be cited as an authority on the subject — because, ahem, someone who publishes repeated analyses of raw data is an authority on the subject (or at least appears to be, which is 90% of what matters on the Internet, for better or worse).
Focus on evergreen content: A lot of people like blogs as content generation engines, and indeed, I think every startup should probably have a blog. Then people blog on current events. Bad call! You see, today’s news is worth reading for about a day — less, in some sectors of the economy. You’re a hamster on a wheel if you’re trying to keep up with the news — tomorrow, everything you write today is worth markedly less, and a week from now it will be almost totally forgotten. Instead, pick the concerns of your audience that are roughly static and that will be pretty much the same next week, next month, next decade. Alternatively, create resources that don’t go stale.
For example, for a bit of extra work that NYT visualization above could use live data, and instead of being a wonderful piece of technology becoming quickly irrelevant to a story from years ago, it could be a hub for the enduring issue of Racial Difference In America. The NYT is interested in that issue and still will be in 2012. They don’t have the strategic vision to make that graph with live data,
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though. Luckily, yourbusiness is not a maladapted dinosaur reacting too little and too late to the changing business landscape.
I like to call this “evergreen content.” For example, if you have a website selling a service teaching people Japanese, a page on how to make requests in Japanese will be good for generations. It is evergreen. Or エバーグリーン, I suppose.
Agile — Not Just For The Product: Because you have excellent internal analytics (you do, right?) and you track what is working and what isn’t (you do, right?) and you can quickly bring resources to “market” because you’re using highly productive programming environments (you are, right?), you can try ten things, watch eight fail, and then try ten variations on the best two.
For example, suppose you have a mailing list of customers or fans (you do, right?). Pitch (comparatively) low cost explorations of ideas to them, like blog posts about topics A/B/C/D/E. Observe which one gets the most play with your existing customers. Build (more expensive) resources about that topic, like something which requires custom programming. (Bonus points: credit your customers with the inspiration for building the new thing! You want a 95% certain way to get a link from Bob Smith’s blog to your new article? Cite his contribution to it. Help them help you get the ball rolling with their blogs, Twitter accounts, blah blah.)
Obviously, if one idea works out well for you, going in more depth or breadth on the same theme allows you to possibly re-use code, link sources (“Hey Cindy, this is Patrick from Random Job Startup. A few months ago you had some great comments about our unemployment visualization. We’re putting together something similar and I wanted to ask if you had any more insights…”), marketing tacks that worked, etc. (A great micro-idea I heard the other day: watch what people tweet about your stuff, use that as the title next time. This may be the first time I’ve ever heard of an idea to get actual value out of Twitter.)
Pillar Content vs. Bill ‘er Content
As mentioned, you’re going to have to strike a balance between creating content designed to spread and gather links, attention, etc. and content designed to sell your stuff. They’re not totally disjoint sets, but in practice non-commercial content will form the vast majority of your links.
If you don’t have any great ideas for non-commercial content (“How do we get people talking about our new squeegee brush? It is a boring subject”), here’s a couple:
Open Source Software: You’re a programmer and you probably use vast amounts of OSS. It is highly likely that in the process of creating your startup you will write some plumbing which is not your source of competitive advantage, but would solve problems for other people. Since you already wrote it, why not OSS it? Spend a few hundred on a nice logo (this is rounding error next to the engineering time you have invested and will greatly increase spread, trust me), write up a decent page on your website with examples and documentation, and send it to folks you think could use it.
I did this for my Rails A/B testing software, which at the time was a sorely underserved niche. That is probably my best links-to-unit-effort idea ever, and it got links from authoritative sources like the Ruby on Rails official site who may not have been interested to hear about my new and improved Jane Austen bingo cards. (Some people have no appreciation for the finer things in life — at least according to therabid Jane Austen fans on the Internet.)
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I have one comment on OSS for SEO which may cost me geek cred: does Github pay your salary? I love them. They’re wonderful people. They contribute a lot to OSS. They are also quite good at marketing their business and do not require your help to do it. If you’re going to do OSS to get links, get links to your own site.
Blog Your Email: Do you get pre-sales inquiries or support requests? Take careful note of how your customers ask questions, because they speak a different language than you do. I describe bingo cards as “unique”, my customers frequently describe them in email as “not the same” or “not alike”, as it “How do I make bingo cards that are not the same?” Using the same language that your customers use, answer their questions in public. This can be bill ‘er content, since somebody asking this question likely has a need they’re interested in paying money in to solve (after all, a person just like them has sent you an email about it, knowing that your answer is going to involve “Oh, you do this on our product”). Thus, while you are answering the question, you can probably work in a plug for your product.
Good SEO Can Make Your Startup
Your startup can succeed at SEO via the sweat of your brow and a bit of focused creativity, without having to spend hundreds of thousands to do so. In terms of cost efficiency, organic SEO is probably the most efficient distribution method ever created. Even with very modest amounts of resources, you can have get hundreds of thousands of visits and add thousands of users to your product. (I do, and I’m certainly not a towering giant conquering the Internet from my local rice field. You can do better.)
If you take one thing from this article, please, take this: you cannot afford to not have an SEO strategy. If the idea of being an SEO gets your dander up, get over it drop me a comment and I’ll suggest something you can do that you won’t dislike but will still improve your SEO.
The usual disclaimers: I don’t get compensated for using people as examples. I do try to write most people who ask for advice (odds are better if you ask good focused questions, let me get a blog post out of it, etc) but I know a few have slipped through the cracks as of late. I’m by no means the world expert at this — take everything I say with a grain of salt.
Followup Questions for "Strategic SEO for Startups"
Posted on January 25, 2010 by Patrick in Uncategorized
Peter Christensen had a few questions for me regarding my last blog post about SEO for startups. I thought the questions were interesting enough to require a bit more than a comment on his post, so I’m going to answer them in detail here. The details are very, very specific to my particular business — if you want a high-level strategic overview, I suggest reading that post instead.
In the past you’ve talked about outsourcing your content creation to your “army of freelancers”. What did that consist of on your end? My guess is you looked at terms and topics people were searching for (you mentioned “baby shower bingo” once) and then sent a job to your freelancers to come up with 80 or so baby shower words that you feed into your card generator and sample bingo card landing pages.
Periodically, when I have an idea for a new project, I put out a call for freelancers on my blog similar to this (for blog writing on my “sprawling bingo empire”) or this (for creating bingo cards). (Incidentally, “army” is an overstatement: I think in my business career I’ve used a bit less
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than a dozen, but don’t have my expenses report in front of me. One woman in particular is easily 80%+ of that. Why mess with something that works?)
The work-flow for those two projects is a bit different, but in general I write up the general outline of what I expect (you can see the most important bits in those posts) and then let my freelancers run with them. For bingo cards I typically give them discretion to choose their own topics (although I let them see my stats for what previous cards were popular — for example, sorted by genre or popular this week). For the blog creation project I came up with a list of 14 mini-sites via a one-off SQL query.
The deliverable for bingo cards has changed over the years as I’ve upgraded my CMS. Currently, there is a back-end one page web form on my site which asks for a title for the card, a subtitle, a brief sentence of description, and then a word list. Anything submitted there goes into my database and awaits my review, which given that my freelancer is very good at what she does is typically “Oh, good, here’s 30 lists for this month. Approve All. Goes off to bank site to mail check.” Within a few seconds of me hitting approve, the CMS backing my site turns the word list into a PDF file, grabs a screenshot of it, and does a bit of content page generation.
The deliverable for the mini-sites is just pages made in WordPress, extolling the virtues of Valentine’s Day bingo or what have you.
How do you analyze and rank your SEO strategies? I see your sample card landing pages have an id that they pass to the registration page so you know how the different landing pages are converting. What other methods do you use to determine which SEO methods are most valuable to you?
The flippant answer is that if I make more money than I expect to then I guess everything is working. Seriously speaking, though, I do very little backwards facing analysis (“Did that work?”) and concentrate mostly on forward facing analysis (“What opportunities can I exploit now?”), with the exception of when I’m writing a blog post to comment on how something worked.
One of the reasons I’ve cooled on Google Analytics over the years is it doesn’t really lend itself to providing data which lets you make actionable decisions in a reasonable amount of time. For example, if I look at my stats, I can tell you with arbitrary precision how much more popular baby shower bingo cards are than football bingo cards. Whee. That doesn’t tell me anything I can do to improve my business today. Most of the things which can tell me stuff that will improve my business are the domain-specific analytics functions I’ve created (like the above) or fun little one-off explorations of my database that I do from the Rails console.
For example, I might play around one day and see what the most common 25 words are for customers making bingo cards. (That was what clued me into baby shower bingo.) That usually identifies a weak spot in my pre-made card lineup, which I can either tell a freelancer about or just fill myself.
Incidentally, you mention that you think the ID I pass to the registration page is for tracking conversions. Actually, not so much. I track conversions with Mixpanel. The reason that ID gets passed is to provide continuity of experience for new trial users. I’m actually really proud of this hack: if you show up on my landing page for, I don’t know, tea bingo, and you click “Create Your Own Bingo Cards” and sign up for the free trial, your free trial account gets pre-initialized with my set of tea bingo cards already in it and “personalized” instructions on the dashboard about how you can print bingo cards like the tea bingo cards you were just interested in.
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This greatly increases funnel success in A/B tests. (You are roughly 20% more likely to successfully download a set of customized bingo cards if I give you the “personalized” treatment than you are if I drop you at a blank dashboard and expect you to fight your way through.)
I also do this for my PPC (AdWords) campaigns: if you respond to an ad for Halloween Bingo Cards, then by jove I’m going to everything short of dropping a pumpkin on your desktop.
Best idea here: I don’t think enough software companies unify the marketing and product sides, incidentally. We tend to treat everybody coming in to the top of the funnel as absolutely the same. Then we treat everybody who makes it through funnel step N exactly the same. But we’ve got data that says they are different — why not use the data to enhance their experience and, not incidentally, improve their propensity to buy the product?
For example, if I were in charge of World of Epic Dragonslaying, and I had a PPC
Your Bingo Card landing pages allow you to programatically generate tons of pages from content in your product. What other tips do you have for getting lots of good SEO content for a low investment of time/money?
I suggest reading the parts of the article about scalable content generation. I don’t have another magic secret that I use for my own business. OK, maybe half a secret: data begets data. For example, I’ve got my 800 or whatever the number is bingo card activities that my freelancers and I cooked up. I use that in several places: each bingo activity becomes
a content page
a PPC landing page
an activity in the downloadable version of the software
an activity in the online version of the software
This gives me usage/popularity data about the same subjects. I use that for:
automated interlinking of content pages (see left hand sidebar, “Related Activities”)
automated decisions of promoted content on the front page
my popular activities list
widgets across my “sprawling bingo empire” which list popular activities
semi-automated decisions on which content to promote to mini-sites
Anyhow, if I should come up with a good second idea to generate content for the website, you’ll likely hear about it here roughly contemporaneously with me implementing it. Many of my friends have suggested I might be at the point of diminishing returns for BCC. I think that is likely accurate, and so my very best ideas this year are probably going to be in service of my next software project. However, given that BCC has always been nights and weekends for me, that doesn’t necessarily mean “maintenance mode” for it will be totally bereft of new ideas.
I hope that answers your questions, Peter. Thanks for asking.
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Email marketing
Email marketing
It’s the CEO’s job to email the first 1000 signups – Rob Fitzpatrick
http://thestartuptoolkit.com/blog/2011/10/its-‐the-‐ceos-‐job-‐to-‐email-‐the-‐first-‐1000-‐signups/
It’s the CEO’s job to email the first 1000 signups
by robfitz ·∙ October 25, 2011
Until you’ve passed a thousand signups, the CEO should be personally emailing every new user. I’m going to cover:
Practicalities
How to mess it up
Common objections
Goals, perks & benefits
The signup thank you note
It’s not a big message. Mine look like this:
Hey Jackie,
Thanks for taking the time to check out STK. Give me a shout if you have any questions or if there’s anything else I can help with.
Stay well, Rob Founder | +44 7940435340 | @robfitz
The specifics (like the footer) are just my personal preference[1].
What I hope you’ll extract from the example is the casual tone and brevity.
How to mess this up
There are only two ways to mess this up and they’re both easy to avoid.
The first is to be demanding. I don’t even like to ask any questions at this point. Your users owe you nothing.
You’re just politely putting your hand up and saying:
Hey, here I am. You aren’t alone.
The second way to mess up is by forgetting common courtesy. They took the time to sign up, you can take the time to try to parse a first name out of their email address and send them a personal one line email.
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Also, make sure you do it every day. Set up your website to show you a list of new signups at the beginning or end of each day.
I’ve seen some intros come through with a survey, which I [personally] find to be fairly disrespectful toward your new users’ time (aka my time). If it’s mass-mailed and arriving a week later, then we’re really not starting out on the right foot.
Common objections
This is an easy list to make because I rattled it off to my investors practically every Friday for a year.
The number one objection and/or excuse is that you don’t want to annoy people. But there’s seriously nothing to worry about if you aren’t being demanding, respect their time by keeping it brief, and reach out both promptly and personally.
Also, since you’re sending the emails personally and every day, the maximum number of people you can offend is just a day’s worth of sign ups. It will only take a week or two to find a voice you’re comfortable with.
How this will help you
First, it ferrets out earlyvangelists. They’ll respond to your one line email with a book of suggestions and use cases. Treasure them.
Second, a non-negligible percent of your otherwise silent cancellations will get in touch with dealbreaker feature requests and support crises.
Third, your users with sales-potential will identify themselves by reaching out. If you email all your trial users, the ones who are seriously considering a purchase will jump at the chance to talk directly to the CEO or founder.
More than once, I’ve said hello to a user with an email like “[email protected]” and received a reply from “[email protected]” with a title like “VP of digital entertainment” in the footer.
Fourth, and arguably most importantly, it’s just polite. Someone took the time to read about and try your startup: that’s awesome!
You would never think to host a dinner party and then refuse to say hello to anyone who walked through the door. You’ve invited people into your website. Introduce yourself and make them feel welcome.
[1] Very few people will actually make unannounced calls to phone numbers in a footer, but I happily answer when they do: free customer development meeting. Also, relegating the title of “founder” or “ceo” to the footer saves you from having to waste a sentence in the body on awkward self-aggrandisement.
Email marketing – KISSmetrics
http://blog.kissmetrics.com/beginners-‐guide-‐email-‐marketing/
A Beginner’s Guide to Successful Email Marketing
“You’ve got mail.”
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Do you remember hearing that? It’s one of those legendary pieces of Internet history formed when the road was still being paved and we were foraging our way through the wilderness of what was the original World Wide Web.
Although times have changed and AOL no longer sends CD’s in the mail, we can still thank them for introducing us to email and our addiction to it.
These days, we’ve replaced that message with Tweets, likes, and status updates, but that doesn’t mean that our affinity for email is any less. In fact, because of the noise that is social media, one could argue that the inbox has become our virtual dojo, our place of solitude amongst the chaos.
This is why, as an entrepreneur, I believe that building successful email marketing campaigns has never been more important than it is now. But there’s a problem; most people don’t know how to do it right. So in the interest of furthering best practices and helping you succeed as a business owner, let’s get back to the basics and talk about how a great email campaign is built, from the ground up.
You’re in their house
People are inundated with interruption, pitches, and advertisements everywhere they look, and though you might think yours is special, there’s a high probability that to the reader, it looks the same as the rest. This is why it’s important to remember where you are, and use your good manners as a result.
Getting into someone’s inbox is like being invited to their home for dinner. If they ask you to take your shoes off, you respectfully do so. It’s the same with email marketing, so before we begin I’d simply like to remind you to be on your best behavior at all times and remember…you’re in their house.
Phase I: Getting Permission
Of course, no email campaign was ever built without getting permission to get started, so first we’ll need to focus on building a sizable email list.
There are many ways you can do this of course. Some prefer to give something away for free while others simply offer a newsletter or product updates.
I can’t tell you which is the right or wrong answer in this case, but I can tell you that it’s important to have a clear purpose when asking for an address. This is where a strong call to action comes into play, and copywriting is super important.
What do I get when I give you my email address?
Are you going to spam me?
How often will you email me?
Will I get discounts?
Will I get a first crack at your beta?
Will you send me relevant offers or more junk?
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These are the kinds of things you’ll need to address if you want to be successful in phase 1. Simply posting “enter your email for updates” isn’t going to get anyone excited to do so. Instead, consider sharing specifics:
Note the Clear and Concise Call to Action in the Examples Above
Take a look at the examples above and you’ll see that the first tells me I’m getting a free catalogue and a series of reviews and special offers, while the 2nd tells me exactly when I’ll receive the newsletter updates. This is a far more specific, and effective, way of doing business.
A quick look at my own practices tells me that the offers I subscribe to most often are for:
Email Series’ (i.e. 6 Ways to Change the World)
Free Downloads
Free White Papers or eBooks
Update Lists (New Issue Notifications, Product Updates, New Releases)
Lastly, and Amazon does this really well, your customers make great candidates, so don’t forget to integrate some form of registration or email subscription as part of your purchasing process. Just remember to treat these addresses with special regard, which we’ll talk about in phase 2.
Get Whitelisted
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While almost all reputable email service providers work very hard to make sure that your emails are not blocked by major ISP’s, they can’t control whether or not your emails hit the inbox or the spam box. Although most will help you by providing a quality score to help you determine availability, getting whitelisted is the most effective way to ensure that your emails get delivered properly.
Essentially, getting whitelisted is equivalent to being marked as a friend, and the best way to achieve this is by being added to the recipient’s address book. The best way to do this is by providing instructions to do so at the top of each email, especially on the initial thank you and first follow-up email.
Furthermore, here are instructions from some of the more popular online providers:
AWeber
Mailchimp
Constant Contact
Campaign Monitor
Blue Sky Factory
Emma
Phase II: Playing the Numbers Game
Manage Expectations with Follow-Up Efforts
Email marketing is all about expectations, and it’s up to you to set them. If your call to action is strong, and your follow-up is consistent, then you can count on a positive campaign. However, if you promise to send one email per week and instead send them daily, then you’re setting yourself up for failure. On the contrary, if someone is expecting daily updates or critical product updates and you don’t’ deliver, then they are likely to be just as upset in that case too.
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Because I asked, I expect Hugh MacLeod to email his cartoons daily.
This is why the first follow-up email is so crucial to the success of your email marketing efforts. Almost all email service providers give you the option to create an autoresponder sequence, and it’s imperative that you take advantage of it.
The initial follow-up email should be sent immediately as a way to introduce yourself and detail what you plan on doing with your new subscriber’s email address. It’s better to be long-winded and detailed than it is to be quick and unobtrusive, but if you can pull off quick and concise then more power to you.
From here, it’s simply a matter of living up to their expectations.
When to Pitch
If you’re going to get in the habit of pitching often, try to put yourself in the reader’s shoes. Ask yourself if your messaging is consistent with the expectations you’ve set. As I said before, Amazon does this well because they send relevant offers based on my buying habits. Those that send blind offers are far more likely to lose permission to keep doing so.
Notice how Amazon recommends products based on my prior buying habits.
Another option to consider is the value you’re providing. While Amazon can provide value in an offer, you might have to provide it with a newsletter or in linking to blog posts or other forms of media content.
Again, each business has different needs, and there aren’t any hard and fast rules as to how often you can pitch or provide content, but remember that an email list is a permission asset and it’s better to err on the side of caution than to play it loose and reckless.
What’s in a Newsletter
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The Sprouter Newsletter is a welcome addition to my inbox because they provide value through insights, updates, and new content. Each email is prefaced with an introduction, and includes a list of great posts, local events, and hot startups.
While we’re on the topic of content, let’s talk about the difference between a good newsletter and a bad newsletter.
The first sign that you’ve received a bad newsletter is that you don’t recall ever asking to receive it. Typically, this happens when a business either fails to maintain a regular email routine or uses poor form and manually adds me to their list after receiving a business card or personal email.
I find that the most compelling newsletters are those that do a great job of mixing messaging and updates. For example, while the email might contain a list of product updates and images, it’s balanced by a personal message or friendly update.
As a rule of thumb, try to use your newsletter as a way to further your relationship with the reader/customer rather than to pitch them. Save the pitch for unique updates, offers, and announcements.
Using the Autoresponder
As a marketer myself, one of the issues I run into most often is that I forget to talk to my list until I have something to sell. Obviously, this is not ideal.
This is where an autoresponder can save you, and why I recommend scheduling content to be delivered on a consistent basis over the course of several months.
For example, Copyblogger offers a newsletter titled “Internet Marketing for Smart People,” and it contains a dozen plus great pieces on how to market better as an online entrepreneur. I can’t remember when I signed up, but I do know that I’ve received an occasional email at least once per month over the past 6 months.
The benefit of that is when you do need to announce a new product or sale, you can count on the fact that you’ve already been in touch, having built a relationship over several weeks/months, and are much less likely to annoy your readers. Of course, it’s important to schedule your autoresponder sequence on specific days so that you know when you can afford to send an email. More than one per day and you’re probably mailing too much.
If you find yourself asking “will this email be one too many?” then it’s probably one too many.
Phase III: Segmentation and Analytics
Analytics
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Notice the detailed daily statistics for open rate on a recent AWeber campaign.
We’ve talked before about the importance of analytics in web copy, and email is no different. Every service provider I’ve ever worked with provides complimentary analytics.
Though they’re all important, the 3 most important to me are open rate, click through rate (CTR), and unsubscribes.
Your open rate will tell you how well you’ve built your relationship; if the number is low, it means that people have started to delete upon receipt, which means you need to work harder on providing value and/or managing expectations.
If your CTR is low, it means that your message is either not targeted enough, or simply not getting through. In this case, focus on improving your copy.
If your unsubscription rate is high in relation to your opt-in rate, then you’ve passed the point of building value and writing good copy…you’ve got some serious work to do. If this is you, try to examine when people are leaving and take action based on those leaks.
If they’re leaving after a certain autoresponder email, then re-work it. If they’re leaving after marketing messages, then re-work the way you present offers. If they’re leaving early on in your funnel, then you need to fix your original call to action so that it’s in harmony with what you’re sending.
Email analytics are critical in that if you’re paying attention, they’ll give you very specific clues as to what you’re doing wrong. Of course the key variable here is “paying attention.”
Segmentation
If you’re unfamiliar with the term, segmentation is the practice of splitting up your email list into more targeted groups.
For example, the following are ways to segment a larger, more unified list:
Customer List (in comparison to leads)
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Product Updates (in comparison to a customer list)
Newsletter
Daily Email List (in comparison to weekly, bi-weekly, monthly, etc)
HTML (yes, some people prefer the option for text)
In dividing your list in this manner, you give yourself the ability to send more targeted communication. Some customers want both product and sales updates, while others might only want to hear about new versions. If you don’t give them the chance to choose, you risk losing them all-together. Since customers make the best buyers, it’s fairly obvious why you want to keep them subscribed to your customer email list.
With segmentation, you can send a broadcast only to those that didn’t open your last message (ask them why), or to those that showed interest (a 2nd pitch). You can also split test messaging amongst different groups in order to refine your best practices.
As you can see, segmentation isn’t rocket science, but it is work, which is why most don’t take the time to do it right. If you do, you’ll immediately separate yourself from the pack.
The Value of Your List
In the future, we’ll talk about more advanced techniques, such as measuring the cost of lead acquisition, but for now know this: your email list is one of your most valuable resources, and if you learn how to treat it right, the cost of doing so will pay for itself.
If you can imagine that each person on your list is worth a set value, say $5, then you can understand immediately how losing several hundred could be dangerous to your bottom line.
What do you think? How has email marketing served you best? What practices help you to keep your numbers growing and your readers engaged? Share in the comments.
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Optimisation and landing pages
Optimisation and landing pages
Why your site will fail – Andrew Chen
http://andrewchenblog.com/2007/06/06/your-‐site-‐will-‐succeed-‐or-‐fail-‐in-‐the-‐first-‐10-‐seconds/
Your site will succeed or fail in the first 10 seconds
Go check your analytics right now! When’s the last time you checked your analytics? If you’re serious about getting a site up and going, you should be glancing at it every day, and doing a deep dive every couple days. In fact, if you haven’t do it right now. If you’re a Google user, go to Visitors (on the left side), Visitor Loyalty, and then Length of Visit. You might see something similar to the diagram above – a bimodal distribution split between newbies that mostly leave your site, and people that stay on to use it. Note that the latter is often returning users, but also users that get hooked on the first try.
You have 10 seconds to catch someone’s attention If you are driving a lot of new traffic to your site, you’ll often see a graph like the one above – in my case, the vast majority of the traffic is coming through Google organic and paid clicks. People either opt into your site or out of your site within the first 10 seconds. They’ll show up, glance at a couple headlines and head out, or if they like you, they might continue on and you’ll keep them for upwards of a couple minutes.
In fact, you could imagine that in 10 seconds, the user’s not doing much except for answering two questions:
"What the heck is this?"
"Is this for me?"
So the better you are able to help them answer these two questions, the more likely you will be to catch and keep them as a user.
5 ways to CONFUSE users and get them to LEAVE Here are a couple great ways to do exactly what you don’t want:
Presenting a portal as your front page
Use lots of marketing speak
Write everything in long-form text
Make them register to do anything
Treat every user the same
Okay, don’t do any of those. What do you want to do instead?
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So the opposite of this, of course would be to:
Present a simple initial interface – just convey the idea as quickly as possible
Speak in their language, not your own
Using pictures, video, and flash can be great! Just don’t overdo it
Make it easy for them to get a taste without registering – give them progressive opportunities to trust your brand
Target users differently depending on how they entered the site. If through search, then try to get them to the right content. If through a friend, show a picture of their friend and other friends.
Remember: you have 10 seconds! Vu-ja-de IDEO has a great concept which they call the opposite of Deja-Vu. Deja-Vu is the process of seeing something for the second time (or thinking you are). Vu-ja-de is seeing something again, for the first time.
Check out your site, or your blog, or your Web 2.0 website, and guess what a user would do in the first 10 seconds. Then improve it until you can convey the simple idea quickly.
AB test big changes (not just small) – Josh Porter
http://blog.hubspot.com/blog/tabid/6307/bid/20569/Why-‐A-‐B-‐Testing-‐isn-‐t-‐just-‐about-‐Small-‐Changes.aspx
Why Marketers' A/B Testing Shouldn't Be Limited to Small Changes
Posted by Josh Porter
Most people who do A/B testing do it modestly, testing only one variable at a time. They test headlines, images, button text, and other important page elements that are crucial to conversion. This makes sense. These elements are simple to test, the results you get are clear, and the next step is obvious: you permanently implement the text or image that converts best. By keeping the testing to one isolated variable, you can be more confident in the results.
But there has also been a lot of discussion about the downsides of this incremental approach. The argument is that if you continually test small items over time, you won’t be able to iterate your way to a much better design. Instead, you’ll just improve in very small increments and get stuck in what has come to be called the Local Maximum, meaning that you’ve hit a glass ceiling in your design. Without a big shake-up, you won’t make any big gains.
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The classic case study for this type of testing is Google’s 41 Shades of Blue study, where Google rigorously tested the color of the links on Google Search and Gmail to see which shade of blue converted best. And because Google has a tremendous amount of traffic, they were able to actually see differences between two shades of blue that a normal person would be hard-pressed to distinguish. At huge scale, small differences are discernible, so it makes sense for Google to do that testing.
But for the vast majority of folks working with much smaller traffic, that sort of incremental testing isn’t feasible. Yet most people still seem to test one variable at a time. (As an aside, we’ve been guilty of publishing results like this such as the red/green button test results. The purpose of the test was to show that even something as innocuous as button color can make a real difference…not that this is the best type of test to run).
Don't Limit Yourself to Small Changes
So the answer is simple: test the entire page as a variable. Instead of testing single design elements like headlines, images, or call-to-action buttons, simply design two completely different pages and test them against each other. In this way, the entire page becomes the variable you’re testing. It's still as valid a test as ever, but you’re just working on a higher level.
An Example of a Page-Level Design Test
Here is an example of a test in which a page-level design had a large effect. Luke Stevens tested two completely different versions of a homepage for his upcoming Performance Based Design book. The results weren’t even close. One outperformed the other by 131%.
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Running a Page-Level Design Test
There are some differences between element-level design and page-level design. The big one is that designing another page takes a lot longer than just writing another headline. So creating the variations and setting up the test will take longer. But once you start, the differences between two differently designed pages will show up much faster than the differences between two headlines. You’ll get test results more quickly with a page-level test because the variations will be so different.
Now, let’s imagine one page worked much better than another, and you wanted to know why. Well, you might be concerned that since the entire page was your variable, you cannot confidently pinpoint the exact reason. Was it the different layout, style, or copy? If you don’t know why something is working/not working, you’ll probably want to roll some other UX methods into the mix, such as interviews or user testing. By combining A/B testing with other methods, you’ll get the complete picture you’re after.
We’re seeing lots of folks A/B test large changes recently, and it’s something I’m sure we’ll see more of. I've helped a lot of people get started with page-level testing, and the results are always interesting. In one recent example, the design team for an art site was testing classic paintings of the old European masters vs. modern abstract artworks, and conversion changed drastically based on whether members of the audience were in their twenties vs. in their fifties. It turns out that younger people dig abstract art and older people like the European masters. This seems to make some sense in hindsight, but it was testing that led to the insight in the first place.
In summary, A/B testing shouldn't just be about small changes. You can do page-level testing (and even flow-level testing) and get very interesting results, often faster and more insightful than the incremental, small changes that A/B testing is known for. So change your testing strategy to include big leaps, and you can avoid the local maximum that much longer.
Read more: http://blog.hubspot.com/blog/tabid/6307/bid/20569/Why-Marketers-A-B-Testing-Shouldn-t-Be-Limited-to-Small-Changes.aspx#ixzz1wWLlAl00
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AB vs qualitative testing – Laura Klein
http://www.slicedbreaddesign.com/blog/index.php/2009/05/ab_qual_testing
A/B and Qualitative User Testing
Laura Klein | 05.21.2009
Recently, I worked with a company devoted to A/B testing. For those of you who aren’t familiar with the practice, A/B testing (sometimes called bucket testing or multivariate testing) is the practice of creating multiple versions of a screen or feature and showing each version to a different set of users in production in order to find out which version produces better metrics. These metrics may include things like “which version of a new feature makes the company more money” or “which landing screen positively affects conversion.” Overall, the goal of A/B testing is to allow you to make better product decisions based on the things that are important to your business by using statistically significant data.
Qualitative user testing, on the other hand, involves showing a product or prototype to a small number of people while observing and interviewing them. It produces a different sort of information, but the goal is still to help you make better product decisions based on user feedback.
Now, a big part of my job involves talking to users about products in qualitative tests, so you might imagine that I would hate A/B testing. After all, wouldn’t something like that put somebody like me out of a job? Absolutely not! I love A/B testing. It’s a phenomenal tool for making decisions about products. It is not the only tool, however. In fact, qualitative user research combined with A/B testing creates the most powerful system for informing design that I have ever seen. If you’re not doing it yet, you probably should be.
A/B Testing
What It Does Well
A/B testing on its own is fantastic for certain things. It can help you:
Get statistically significant data on whether a proposed new feature or change significantly increases metrics that matter – numbers like revenue, retention, and customer acquisition
Understand more about what your customers are actually doing on your site
Make decisions about which features to cut and which to improve
Validate design decisions
See which small changes have surprisingly large effects on metrics
Get user feedback without actually interacting with users
For example, imagine that you are creating a new check out flow for your website. There is a request from your marketing department to include an extra screen that asks users
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for some demographic information. However, you feel that every additional step in a check out process represents a chance for users to drop out, which prevents purchases. By creating two flows in production, one with the extra screen and one without, and showing each flow to only half of your users, you can gather real data on how many purchases are completed by members of each group. This allows you to understand the exact impact on sales and helps you decide whether gathering the demographic information is really worth the cost.
Even more appealing, you can get all this user feedback without ever talking to a single user. A/B testing is, by its nature, an engineering solution to a product design problem, which makes it very popular with small, engineering-driven startups. Once the various versions of the feature are released to users, almost anybody can look at the results and understand which option is doing better, so it can all be done without having to recruit or interview test participants.
Of course, A/B testing in production works best on things like web or mobile applications where you can not only show different interfaces to different customers, but where you can also easily switch all of your users to the winning interface without having to ship them a new box full of software or a new physical device. I wouldn’t recommend trying it if you’re designing, for example, a car.
What It Does Poorly
Now imagine that, instead of adding a single screen to an already existing check out flow, you are tasked with designing an entirely new check out flow that should maximize revenue and minimize the number of people who abandon their shopping carts. In creating the new flow, there are hundreds of design decisions you need to make, both small and large. How many screens should it have? How much up-selling and cross-selling should you do? At what point in the flow do you ask users for payment information? What should the screens look like? Should they have the standard header and footer, or should those be removed to minimize potential distractions for users when purchasing? And on and on and on…
These are all just a series of small decisions, so, in an ideal world, you’d be able to A/B test each one separately, right? Of course, in the real world, this could mean creating an A/B test with hundreds of different variations, each of which has to be shown to enough users to achieve statistical significance. Since you want to roll out your new check out process sometime before the next century, this may not be a particularly appealing option.
A Bad Solution
Another option would be to fully implement several very different directions for the check out screens and test them all against one another. For example, let’s say you implemented four different check out processes with the following features to test against one another:
Option 1: Option 2: Option 3: Option 4:
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Yellow Background
Three Screens
Marketing Questions
No Up-selling
No Cross-Selling
Header
No Footer
Help Link
Blue Background
Two Screens
No Marketing Questions
Up-selling
No Cross-Selling
Header
Footer
No Help
Orange Background
Four Screens
Marketing Questions
Up-selling
Cross-Selling
No Header
Footer
Live Chat Help
White Background
One Screen
No Marketing Questions
No Up-selling
Cross-Selling
No Header
No Footer
Live Chat Help
This might work in companies that have lots of bored engineers sitting around waiting to implement and test several different versions of the same code, most of which will eventually be thrown away. Frankly, I haven’t run across a lot of those companies. But even if you did decide to devote the resources to building four different check out flows, the big problem is that, if you get a clear winner, you really don’t have very clear idea of WHY users preferred a particular version of the check out flow over the others. Sure, you can make educated guesses. Perhaps it was the particularly soothing shade of blue. Or maybe it was the fact that there weren’t any marketing questions. Or maybe it was aggressive up-selling. Or maybe that version just had the fewest bugs.
But the fact is, unless you figure out exactly which parts users actually liked and which they didn’t like, it’s impossible to know that you’re really maximizing your revenue. It’s also impossible to use those data to improve other parts of your site. After all, what if people HATE the soothing shade of blue, but they like everything else about the new check out process? Think of all the money you’ll lose by not going with the yellow or orange or white. Think of all the time you’ll waste by making everything else on your site that particular shade of blue, since you think that you’ve statistically proven that people love it!
What Qualitative Testing Does Well
Despite the many wonderful things about A/B testing, there are a few things that qualitative testing just does better.
Find the Best of All Worlds
Qualitative testing allows you to test wildly different versions of a feature against one another and understand what works best about each of them, thereby helping you develop a solution that has the best parts from all the different options. This is especially useful when designing complicated features that require many individual decisions, any one of which might have a significant impact on metrics. By observing users interacting with the different versions, you can begin to understand the pros and cons of each small piece of the design without having to run each one individually in its own A/B test.
Find Out WHY Users Are Leaving
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While a good A/B test (or plain old analytics) can tell you which page a user is on when they abandon a check out flow, it can’t tell you why they left. Did they get confused? Bored? Stuck? Distracted? Information like that helps you make better decisions about what exactly it is on the page that is causing people to leave, and watching people using your feature is the best way to to gather that information.
Save Engineering Time and Iterate Faster
Generally, qualitative tests are run with rich, interactive wireframes rather than fully designed and tested code. This means that, instead of having your engineers code and test four different versions of the flow, you can have a designer create four different HTML prototypes in a fraction of the time. HTML prototypes are significantly faster to produce since:
They don’t have to run in multiple browsers, just the one you’re testing
They don’t have any backend code that needs to be done
They frequently don’t have a polished visual design (unless that’s part of what you’re testing)
And since making changes to a prototype doesn’t require any engineering or QA time, you can iterate on the design much faster, allowing you to refine the design in hours or days rather than weeks or months.
How Do They Work Together?
Qualitative Testing Narrows Down What You Need to A/B Test
Qualitative testing will let you eliminate the obviously confusing stuff, confirm the obviously good stuff, and narrow down the set of features you want to A/B test to a more manageable size. There will still be questions that are best answered by statistics, but there will be a lot fewer of them.
Qualitative Testing Generates New Ideas for Features and Designs
While A/B testing helps you eliminate features or designs that clearly aren’t working, it can’t give you new ideas. Users can. If every user you interview gets stuck in the same place, you’ve identified a new problem to solve. If users are unenthusiastic about a particular feature, you can explore what’s missing with them and let them suggest ways to make the product more engaging.
Talking to your users allows you to create a hypothesis that you can then validate with an A/B test. For example, maybe all of the users you interviewed about your check out flow got stuck selecting a shipment method. To address this, you might come up with ideas for a couple of new shipment flows that you can test in production once you’ve confirmed that they’re less confusing with another quick qualitative test.
A/B Testing Creates a Feedback Loop for Researchers
A/B tests can also improve your qualitative testing process by providing statistical feedback to your researchers. I, as a researcher, am going to observe participants
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during tests in order to see what they like and dislike. I’m then going to make some educated guesses about how to improve the product based on my observations. When I get feedback about which recommendations are the most successful, it helps me learn more about what’s important to users so I make better recommendations in the future.
Any Final Words?
Separately, both A/B testing and qualitative testing are great ways to learn more about your users and how they interact with your product. Combined, they are more than the sum of their parts. They form an incredibly powerful tool that can help you make good, user-centered product decisions more quickly and with more confidence than you have ever imagined.
For more information on our approach to getting customer feedback, check out:
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Section 2: Web metrics
Website optimisation – Conversion Rate Experts
http://www.conversion-‐rate-‐experts.com/cro-‐tips/?awt_l=AEDfU&awt_m=1jOmw3NnZznbKj
Google Website Optimizer 101—A quick-‐start guide to conversion rate optimization
Includes a list of 108 ways to increase your website’s profits
Here’s how to get lots more customers—free—using Google Website Optimizer.
Using split testing software like Google Website Optimizer is a powerful way to increase your website’s conversion rate (that is, its ability to turn visitors into customers). Many of the web’s most powerful companies, including Amazon and Google, use this technique. Here’s our essential guide to increasing your conversion rate using split testing software. It contains 108 simple techniques for growing your business.
First, what does Google Website Optimizer do?
If you had two possible headlines for your webpage but couldn’t decide which one to use, you could run an A/B split test in which
Half of your visitors would see Headline A, and
The other half would see Headline B.
You could then tally the orders for each headline and determine which headline brought you the most.
Google Website Optimizer lets you carry out tests like this, although such tests often take several weeks to finish.
The real power of Google Website Optimizer comes from its ability to carry out many such tests concurrently!
For example, while you are testing which headline to use, you can also test many other page elements (such as text, images, prices, offers, and buttons)—all at once. Each of your visitors will see a different combination of these elements, and then Google Website Optimizer will work out, on average, which of the elements performed the best. This information will help you put together a high-‐converting “super-‐page.”
For example, if we use Google Website Optimizer on this page (the one you’re currently looking at), we can test the following:
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And we will be testing these variables all at the same time! Not only that, but Google Website Optimizer will tell us which version of each page element, on average, brought in the most customers!
Powerful, isn’t it?
This type of testing is what’s called“multivariate testing” (which just means that you’re testing many variables at once). Google Website Optimizer uses a type of multivariate testing called “full factorial.” Another variation you might encounter is the “Taguchi method.” Both types have pros and cons. A little later, you’ll find a link that allows you to compare them, and others.
Don’t let these details put you off getting started, though. Any testing is better than none.
If you read this entire article…
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…you’ll know more about conversion rate optimization (CRO) than 99% of web marketers!
And you’ll see several pictures of squirrels … for reasons that will never really become apparent!
Here’s a squirrel now.
When we say “conversion rate,” we mean the percentage of your visitors who end up reaching a given goal. Maybe this badly drawn picture will help:
Typical goals include making a purchase, submitting an inquiry form, and signing up for a free newsletter. (Speaking of newsletters, make sure tosign up for our newsletter. It’s as useful as this article.)
Why you need to increase your conversion rate
You need to make conversion rates your number-‐one priority for the forthcoming year for these three reasons:
1. There’s lots of room for improvement. Most websites are losing buckets of money every day because they do an atrocious job of selling products or services to their visitors.
2. Paid search will keep getting more competitive. And increasing your bids is not the answer.
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3. Split testing software is now highly affordable. Split testing software allows you to test changes to your website—and tells you which changes brought in the most customers. (To help you decide which software is best for you, see this comparison of multivariate testing software platforms.) It used to cost several thousand dollars per month. Now it’s almost free (and, in the case of Google Website Optimizer, it actually is free).
Unfortunately, though, Google Website Optimizer doesn’t tell you what to test. That’s where our expertise comes into play. And this whole website gives you a taste of what we can do.
Some exciting benefits of increasing your conversion rate
If you double your website’s conversion rate, you will halve your “cost-‐per-‐acquisition” (CPA). This tool shows you how much extra you’ll earn. (By the way, CPA means how much it costs to get each new customer.)
When your conversion rate does increase, however, we recommend you don’t just sit back and enjoy the profits (tempting as it might be to do so). Instead, we recommend you take advantage of the fact you can now afford to pay twice as much per visitor. This means
1. You can pay about twice as much per click on AdWords, which can bring you a disproportionate number of additional visitors.
2. You can start advertising in media that had previously been too expensive for you, such as
Full-‐page magazine ads
Newspaper ads
Direct mail
Radio ads
TV infomercials
3. Your affiliates can earn twice as much as before, and this will cause the large affiliates to leave your competitors and join you.
4. As the number of orders skyrockets, your company gets greater bargaining power with its suppliers, so its cost-‐per-‐unit-‐sold tends to fall—so the company becomes more efficient because of economies of scale. This means the boost to your net profit is deceptively high.
In summary, if you increase your conversion rate, your business will grow much more than you might expect!
Why many companies can double their conversion rate
What’s your current conversion rate? 5%? 10%? Don’t know? A 10% conversion rate means that of every 10 visitors to your site, nine walk away empty-‐handed. Do you really believe you couldn’t lower that number to eight out of 10?
Look at it another way: To double your conversion rate, you just need to increase the conversion rate of your
Ads by 19%
Homepage by 19%
Product page by 19%
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Shopping cart by 19%
(Note that the figure is 19%, not 25%, because each improvement compounds upon the previous one.)
These increases may sound daunting, but to increase your homepage’s conversion rate by 25%, for example, you would have to make just a 2.27% improvement to ten aspects of your website. For example:
Your company’s tagline
Your headline
Your introductory text
Your offer
Your guarantee
Your picture
Your readability
Your usability
Your navigation
Your products
Your pricing
Your offers
Your premium (covered in Tip 45)
Your testimonials
Your call-‐to-‐action
Your site layout
Your return policy
And the list goes on…
Does a 25% increase sound more achievable now?
In summary, once you’ve finished reading this article, you need to clear your desk and start working on increasing your site’s conversion rate—and hope your competitors aren’t reading this too.
Will these techniques work for YOUR website?
Yes!
We have applied these techniques to almost all kinds of websites, such as
Business-‐to-‐business (B2B) and business-‐to-‐consumer (B2C) websites.
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Websites in diverse industries, including finance, health, travel, technology, leisure, and food.
Websites of all sizes, from start-‐up to enterprise level.
Websites that sell physical goods, services, and information.
Websites for merchants, affiliates, publishers, and e-‐commerce stores.
Here we go! These are some of the techniques we’d use if we were working on your site.
A word of warning: Don’t be daunted by this list! If you did everything on it, you’d probably be the best marketer in the world! In reality, doing just one of these 108 things could be enough to double your conversion rate. The most important thing is to do something—now!
So, let’s get started!
First, you’ll need to choose the kind of split testing to do:
1. Time split tests (also known as “before-‐and-‐after tests”)—These stink. We put them in the list only so we could mention how bad they are. If your orders go up and down week by week (and whose don’t?), time split tests tend to lead to wrong decisions.
2. A/B split tests—Many times, a simple A/B split test is all that’s needed.
3. Multivariate testing—Which multivariate method should you use? Check out this free resource for choosing split testing software.
Split testing software becomes much more powerful when you use it alongside other tools. Here are the other tools and techniques you’ll need in your marketing arsenal:
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4. Google AdWords—AdWords is valuable as a targeted source of traffic, but it can also be used to run split tests by creating two identical ads with different destination URLs. However, for several reasons, it’s difficult to create an accurate scientific test using AdWords, so we don’t recommend using AdWords to carry out split tests.
5. Live Chat—Few tools tell you anything about your “non-‐customers”—that is, the visitors who arrived at your site but then left for whatever reason. You rarely get feedback from these people. They are unlikely to call you, but you might just persuade them to use a Live Chat feature.
6. Web analytics—At the most basic level, the “Site Overlay” feature tells you where visitors to your site click, where they don’t click, and where they are when they leave your site. We’ve heard web analysts say, “There are piles of gold waiting for you in your log files,” and they are right—in a vague, over-‐poetic kind of way. It turns out that you can learn a lot from your web analytics package.
7. Usability testing—You can carry out this testing on pretty much anyone you can get your hands on. These tests are gold dust—literally.
If we could have just one testing tool, it would be usability testing. Web analytics tell you what visitors are doing, but usability testing tells you why. No other tool provides so many head-‐slapping, “I can’t believe I didn’t think of that” moments. If you want to know how to get usability tests done for free, sign up to receive our newsletterand we’ll tell you.
8. Here’s a clever one: In your “Refer-‐a-‐Friend” program, allow customers to send a personalized note to their friends. You will have access to these notes (privacy policy permitting), and they are a goldmine of information about why a particular customer actually ordered. In addition, you get to see the exact words customers use to sell your product to friends. It’s like having a team of free copywriters on tap.
9. Eyetracking—This tool shows you which things visitors to your site see but don’t click on. And it tells you which things they don’t click on because they don’t see them. Got that? Most eyetracking is carried out using custom hardware, so you need to get a company to do it for you. However, a startup called GazeHawk uses normal webcams to provide budget-‐priced eyetracking.
10. “Poor-‐man’s eyetracking”—About five seconds into each usability test, ask testers what they have looked at so far. They usually find it easy to tell you.
11. Clickmapping—A clickmap is an image of a page that’s annotated with information about where visitors clicked. Here are two good options:
Crazy Egg is a service that allows you to see the parts of your page that your visitors click on, and how far they scroll down your pages.
ClickTale is similar to Crazy Egg but allows you to view Flash movies of your visitors’ browsing sessions. You can see how far visitors scroll down your pages, view how they interact with your forms, and learn about many other aspects of their visit.
12. Customer surveys—Your customers know why they ordered. And why they nearly didn’t. Ask them about it. Many survey services are available. SurveyMonkey is very widely used.
13. Co-‐opetition—Short for “cooperative competition,” this is a technique by which you sell your competitors’ products from your website (usually via an affiliate program). Co-‐opetition can teach you a lot about your
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competitors’ conversion rates. And if your visitors prefer your competitors’ products, this is an easy way to find out!
Here are some tips for getting into the right mindset:
14. Stop having debates with your colleagues about who likes what. If in doubt, test. Your mantra should be “Let the customers decide.”
15. Start to think of your business as aconstantly shifting experiment. By continually carrying out tests, you will learn which factors increase your profits and which don’t.
16. Learn your other new mantra. When your colleagues object to the changes you’re making, remind them that this is just an exploratory experiment to “learn what happens,” not a long-‐term decision. Let this become your mantra: “It’s just an experiment; it’s just an experiment.”
17. Copy what works for others (within limits). In particular, copy companies that appear to be tracking and testing. You can spot them because they are using the techniques in this list.
18. Copy the techniques that marketers, who have been testing for decades, have developed; that is, copy direct-‐response advertisers. The internet may be new, but your visitors aren’t. For about 100 years, direct-‐response advertisers have been running split tests to find out what works. It’s easy to spot their ads in magazines, newspapers, and direct mail—they have tracking codes and coupons in the bottom corner. And the ads often look a bit cluttered.
19. Place bets with your colleagues about which test sample will win. You’ll be amazed at how often you are wrong. Only the top few percent of marketers appreciate that it’s impossible to always spot the winner. Race to become one of them.
20. Make sure you have great people working on this project. This is the most important job in your company. You have three options:
Do it in-‐house, with your best staff.
Get experts in, and do it in-‐house.
Outsource it to an expert who has a vested interest in making it a big success.
21. Locate (or become) your company’s best salesperson. Your website is your electronic salesperson. It has the advantage of being able to sell to thousands of customers at the same time. However, only person-‐to-‐person selling will teach you the reactions of prospects to certain types of arguments and approaches. It is by far the quickest and most effective way of finding out what appeals to your prospects and what doesn’t. The
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words on your website need to have been tested on real people. No amount of online testing will give you this gut feel. So, you have a choice: Either become your company’s best salesperson, or seek out the best salesperson and listen to how that person sells the product.
22. Don’t test the small stuff. Test big, bold changes. This has two advantages:
You’ll get the results quicker (it’s a statistics thing).
You’re more likely to achieve improvements.
23. Test changes in two stages:
Fix all the “broken” things (which you’ll discover during your usability testing). This is worth doing first, because it’s the easiest way to make quick improvements.
Test new ideas that could significantly grow your business. Do this next.
24. Don’t worry about temporarily lowering your conversion rate. If a test is a failure, you get one bad day of business. If a test is a success, you get a lifetime of success.
25. Don’t end the test too soon! Make sure you have enough data! Some marketers say you need to test for two weeks. Some say you need to collect at least 30 orders. Some use gut feel. They are all wrong. The only correct answer is to use the right statistical tool:
For split tests of AdWords ads, use this tool.
For split tests using multivariate testing software, use the software’s built-‐in statistical significance calculator.
The tools we just mentioned tell you whether your results are significant—or whether you don’t have enough data yet and your results are due just to chance.
26. The best place to start is to identify the weak links in your marketing funnel. Sketch out a brief overview of your marketing funnel, from advertising all the way through to closing the sale. This will include the following:
Your advertising
Your sales force
Your homepage
Your product pages
Your checkout pages
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Your “Order Confirmation” page
Your call center staff
How the package is sent out
27. Test stuff that your usability testers told you to change. (You ARE going to do usability testing, aren’t you? Promise us!)
Getting your message straight before you start
28. What’s your company’s positioning? In other words, what makes you different from or better than all your competitors? Have you ever tested your positioning against possible alternatives? Draw up a short list to test—and then your visitors can let you know which positioning is most important to them!
29. Rank the top five points you want to communicate to your visitors. You want to make sure that, whatever else your visitors learn from your site, they definitely learn these top five pieces of information.
30. Consider all the different types of visitors who might view your site and then try to write for all of them. You might find it easier to use customer archetypes (sometimes called “personas” or “avatars”) for this. A “customer archetype” is a single person who is used to represent a certain segment of visitors. Some tips:
You may choose to use real people as your archetypes (for example, a customer that you know well and that is characteristic of a certain segment of visitors).
Or you may choose to create fictional characters who embody the characteristics of a certain segment of visitors. Warning: If you choose to use fictional characters, be sure to base them on an understanding of your real visitors. Don’t sit in an ivory tower dreaming up people who don’t exist.
31. For each page, make sure you know what all the “visitor intentions” are. For example, some visitors might be looking to make a purchase, some might be looking for customer support, and others might be trying to apply for a job with you.
Instead of just guessing their intentions, survey them to find out for sure. The 4Q tool is a free, easy-‐to-‐implement tool for getting started. Some of our clients choose to create their own exit surveys.
32. Test everything! Seriously. Test everything. That’s it. We’ve finished. We’re going home now.
What’s that? You want more details? OK, then…
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33. Identify which products bring you the most overall profit, and then put them in a prime location on the page. We mean, above the fold (that is, on the upper part of the page so users don’t have to scroll down to see it), preferably on the left-‐hand side.
34. Headlines are extremely important. If your visitors don’t like the headline, they won’t read any further. A simple yet effective approach is to express your main message in a headline that
Is worded in terms of benefit to the customer, not in terms of product features.
Suggests that the customer will get the results with ease.
Is believable (meaning, it contains some kind of proof).
Is specific.
35. What you say is more important than how you say it. You’ll achieve the biggest improvements by changing the core message of your headline, rather than just tweaking the wording.
36. If you don’t know how to describe your product’s features in terms of benefits, carry out this exercise: Imagine customers are looking at your headline and asking, “Why should I care about that?” You would likely answer this question by describing a benefit.
37. Struggling to come up with a good headline? Adapt headlines from publications such as Cosmopolitan,Reader’s Digest, and MSN.com, which use formulaic headlines that have been proven to work consistently. An MSN headline might be “Seven ADHD truths you may not know.” Replacing “ADHD” with your product name would give an instantly compelling headline. Our newsletter offers you some great resources for writing winning headlines.
Headlines are vital: That’s why we used up four of our 108 tips on them (plus, writing 108 tips is starting to sound like a lot of hard work).
38. Visitors will view the tagline under your logo almost as much as the headline itself. Therefore, make sure it clearly expresses distinct “positioning”; that is, it should describe what you do and how you fit into the marketplace.
39. Test high and low prices, because customers don’t always seek out the lowest prices. There’s such a thing as “reassuringly expensive.”
40. Test odd pricing. “Odd pricing” means prices that end with a seven or a nine. Items with these prices tend to sell better than those with prices that end with a zero. Would you or I be fooled by odd pricing? No, of course not; we’re far too smart! But someone’s falling for it, because this phenomenon has been proven valid repeatedly.
41. Test different offers, such as
A one-‐month free trial
Buy one, get one free
Pay in installments
Longer commitment
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Shorter commitment
Buy now, pay later
First one free
Automatic renewal
We’ll hold your check for 30 days
In general, do whatever you can to get the product into the customer’s hands. If you’re so confident in your product, prove it by taking some of the risk.
42. Divide your product or service into a standard version (for the prospects who are price sensitive) and a premium version (for the ones who aren’t). This also has the psychological advantage of turning the prospect’s decision into an either/or decision rather than a yes/no decision.
43. Even more extreme than creating a standard version and a premium version is to try changing what you sell. For example, are you selling
The product itself?
A catalog of products?
A free report about the product or about the problem?
An invitation for a salesperson to call?
In general, the larger the purchase, the less effective it will be to attempt to sell it in one step.
44. Many of the visitors who leave without ordering exit the site because you don’t offer the product or service they are looking for. The answer is often to start selling what customers are looking for, or at least become an affiliate for it.
45. Test different premiums—that is, the bonuses customers get if they order. These include free reports, gifts, and accessories.
46. Add a guarantee, or test different ones. Start with the bravest guarantee you dare test, and if it works, test a braver one.
47. Add testimonials from happy customers. In general, a video testimonial is better than a testimonial with an image, which is better than a testimonial with just a name, which is better than an anonymous testimonial.
48. Add testimonials from the media. If you don’t have any currently, try giving media outlets free stuff in exchange for reviews and feedback.
49. Develop a systematic way for collecting testimonials. Train your sales staff to request a testimonial whenever they receive a compliment. Email your customers asking for testimonials.
50. Test different calls-‐to-‐action. The “call-‐to-‐action” is what you want customers to do next. It is often written on the “Proceed” button. Test direct calls-‐to-‐action such as “Buy Now and Get 10% Off” as well as indirect ones such as “Learn More.”
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51. Try making the “Call-‐to-‐Action” button nice and visible. Large, brightly colored buttons often convert better—they seem to draw the reader’s attention.
52. Test different reasons why visitors should act promptly (e.g., “Offer ends Wednesday” or “Only 42 tickets left”). Please note, we’re definitely not suggesting you lie to your visitors—your conversion rate depends heavily on credibility and trust. However, if you look at your own business, you’ll probably find that you already have real reasons why prospects should reply promptly. If not, you can find ways of rewarding them for doing so.
53. Make the right stuff pop. “Pop” just means “stand out.” You can do this in several ways, such as
Use bold.
Use italics.
Highlight important words.
Use hand-‐drawn annotation, which always commands attention. (This is higher risk and depends on the image
you want to portray.)
Having a great layout
54. Make sure the things your visitors see first are the things you want them to see. A single-‐column layout in the style of a long single-‐column sales letter allows you to control the order in which visitors view your site.
55. Where do website visitors look? Ensure that your most valuable content is placed where visitors actually look, which you can determine using eyetracking.
56. Remove clutter. Imagine that every pixel on your page either increases the conversion rate or decreases it—or just takes up space. If you can get rid of page elements that aren’t working, you create more space for those that are.
57. Ensure that the layout reflects the architecture of your information. Constantly look for ways to tidy up your information into ordered sections. Then ensure that each section uses the principle of progressive disclosure, so users see only the information they need at any given point. You can hide detailed information in many ways, such as in a less prominent font, in tooltips, in overlays, and in subpages.
58. Decide what to feature on your homepage. Write a list of the products or services your visitors are looking for. Chances are, you can divide their intentions into categories and subcategories. Allocate space on the webpage according to the popularity (and value) of these categories.
59. In the same vein, consider creating a list of your top-‐selling items. These lists are popular, because visitors find it reassuring to buy products that others have bought.
60. Test different navigation structures. For example, reword the headings on your navigation bar so visitors can understand them. Or rearrange the navigation entirely so the sections are organized in a way that is more intuitive to users.
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61. If you’re confident your visitors are on the most relevant page for their needs, consider removing the navigation bar (or at least moving it somewhere less prominent). In such cases, navigation bars can be a distraction.
62. If your website has a “cool,” unconventional layout, try a conventional layout. Conventions are conventions for a reason—they make it easier for visitors to find what they are looking for.
63. Does your site contain any gratuitous links that you never really considered your visitors might actually click on? Remove any distracting links that lead to places you don’t want visitors to go!
64. Use a nice, large font for your headline.
65. Make the first letter of your body copy a drop cap—that is, a letter that’s much larger than the ones that follow. A drop cap can effectively bridge the gap between the headline and the body copy.
66. Another way to bridge the gap is to have your introductory paragraph be in a slightly more prominent font size than succeeding paragraphs.
67. Test different images. The following kinds tend to increase sales:
Images of the product.
Images of the product being used, maybe by someone visitors perceive as a role model.
Images of the successful outcome of the product.
Images of happy customers holding the product (that is, a testimonial and product shot all in one).
Attention-‐grabbing images are great, but only if they help to communicate your sales message (which they rarely do).
68. Test giving your visitors the option to zoom in to see a larger image of the product.
69. Put captions under your images and test them. For some weird reason, people almost always read the captions under images.
70. Call-‐outs (that is, text pointing to particular parts of the picture) can communicate a lot of information in a small space, and visitors tend to read them.
71. Test violators, which are attention-‐getting shapes such as starbursts, ovals, and banners.
72. If your page is long and requires scrolling, consider repeating your “Call-‐to-‐Action” button several times on the page. Which reminds us: Have you claimed your copy of our valuable newsletter yet?
73. If your page requires scrolling, remove any “false bottoms”—that is, layout elements that imply customers have reached the bottom of the page when they haven’t.
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74. Many websites find they get higher conversion rates if their page is set out in the form of a sales letter with a personable one-‐on-‐one style of writing. Despite what your feelings might be about such websites, in some markets they often work.
Body copy
75. Marketers have been debating for a long time about how much copy to include. In general, write as much as it takes to communicate your entire sales message and to overcome all the likely objections. You are aiming to condense as many persuasive arguments and as much relevant information into as little text as possible. Conveying all of this information will usually require more words than most websites currently use.
76. Use straightforward language. No reader is too sophisticated for short, simple sentences.
77. Fill your body copy with benefits, not just product features.
78. Include all the information that customers could possibly require in order to make a purchase. (Note that it doesn’t all need to be on the main product page.)
79. Make sure to address all the common objections that your customers bring up. Compile a chart of objections and counter-‐objections, and then rank them in order of importance.
80. Test different font sizes to make your text more readable.
81. Test different font shades. For body copy, black on white is usually a safe bet.
82. Near the end of the body copy, consider having a series of bullet points (or better still, check marks) that summarize the major benefits.
83. Rewrite your article for visitors who skim as they read. Disperse subheads (such as our “Body copy,” above) throughout, and use bold to ensure the right things pop.
84. Consider putting the start of your order form on the product page itself.
85. Adding audio can be a very effective method of selling your products and services. Xiosoft Audio is an easy way to put audio onto your website.
86. Video can be effective too. Perhaps the easiest approach is to embed YouTube videos.
A service called OnSite Videos can be useful. You submit a script to them and then choose one of their actors to read it aloud. They then send you some code to add to your website. This code displays the finished video, which hovers at the bottom of the browser.
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You’d be surprised how many potential customers abandon their shopping carts before they reach the checkout. In fact, your web analytics tool will show you exactly how many do.
87. Repeat your offer and main benefits on the first page of your shopping cart or order form. Some customers click on the “Buy Now” button just to see what the price and shipping cost will be, so you don’t want to miss out on this chance to persuade them.
88. Don’t ask for too much information, which can be tiresome and off-‐putting for customers. Do you really need their fax number before they place an order? Even if it loses you a small fraction of orders (which it will)?
89. The moment that you request information is the right moment to provide timely reassurance as to why you need that info. For example
Under the email field, say something like, “We hate spam as much as you do.”
Under an email newsletter opt-‐in box, have a link to your privacy policy.
Under the “Order Now” button, remind customers of your guarantee and your return policy.
90. Having thumbnail photos of the products in your cart can increase the likelihood of customers completing their orders (presumably because they feel they can’t abandon the GIFs at your checkout?!).
91. Use Ajax or DHTML to hide the parts of forms that aren’t needed. Both of these technologies allow visitors to open or collapse sections of the page without needing the whole page to reload.
92. Replace long dropdown lists with a text field that has an auto-‐suggest feature.
93. Show additional ways to order (e.g., by phone or by fax). Some customers prefer to order in a certain way. Sometimes the presence of the phone number itself can increase reassurance, even if customers don’t actually call you.
94. Do you have an “Enter Your Coupon” field on your shopping cart page? Test whether this is turning customers away. (Shoppers often resent ordering when they see that others are getting a better deal.)
A nice bit of borrowed credibility
95. Try adding “reassurance logos” such as
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96. Test a different version of your“About Us” page. Show yourselves as real, likable individuals, not just members of a cold, faceless corporation.
97. Make your message consistent.Do whatever you can to ensure your sales message remains the same all the way from ads through to order placement.
98. Immediately after customers have ordered—or agreed to anything—they are in a particularly agreeable mood (seasoned salespeople refer to this phenomenon as the “yes set” or “yes ladder”). Take advantage of your customers’ positive frame of mind by offering them additional products or services.
99. A good “Refer-‐a-‐Friend” programplaced on the “Order Confirmation” page can be very effective at generating new, high-‐value customers. (Speaking of friends, would any of YOUR friends benefit from reading this article? Send them a link—they’ll love you for it!)
100. The “Order Confirmation” page is a great place from which to sell other products (this is known as “cross-‐selling”).
101. Be careful with entry pop-‐ups and exit pop-‐ups. These sometimes work well; sometimes, however, they just irritate users.
Usability
102. View your website using different browsers and screen resolutions to see how your customers see it. Handy tools for doing this are www.crossbrowsertesting.com, www.browsercam.com, and browsershots.org.
103. Minimize your website’s load times (here’s a nice tool for checking your site).
104. Get your “Site Search” feature working. Google Mini and Google Free Web Search both enable your visitors to search your site using Google. Then use your analytics package to discover what your visitors were searching for. Then, consider adding that content to your webpage—or making it more prominent.
105. Consider making everything clickable. Visitors click on everything—pictures in particular. And if they are clicking on something, it’s because they expect something to happen.
106. If you have advertising on your site, test that. With many advertising programs (such as Google’s AdSenseand Chitika), you can split advertising into channels. You can then test the following and measure which variations bring in the most revenue:
Different sizes of an ad
Different shapes of an ad
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Different positions of an ad
107. Another way of increasing the revenue per visitor is by increasing the average Lifetime Customer Value (LCV) of visitors who order. We address this area in our fantastic newsletter.
108. Sign up to receive your Conversion Rate Experts newsletter! It takes you by the hand through many of the 108 tips we’ve covered in this article—and lets you peek into our world of conversion rate testing. It’s free, and it will change your life (for the better).
Or, if you prefer, simply subscribe to our RSS feed.
Either way, let’s keep in touch!
The Anatomy of a Perfect Landing Page – FormStack
http://bostinno.com/2011/07/18/the-‐anatomy-‐of-‐a-‐perfect-‐landing-‐page-‐infographic/
The Anatomy of a Perfect Landing Page [Infographic]
July 18th, 2011 by Gregory GomerPosted in Landing Pages
With the plethora of analytics tools now available you have no excuses for a poorly optimized landing page. You can literally A/B test and measure every single feature on the home page from font sizes to colors and images.
Check out this incredibly valuable infographic from FormStack on how to design the perfect landing page.
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Landing pages that convert – Chance Barnett
http://www.chancebarnett.com/landing-‐pages-‐that-‐convert/
Landing Pages That Convert
Posted: May 20th, 2009 | Author: Chance Barnett | Filed under: Copywriting, Marketing Strategy, Search Marketing |Tags: conversion, landing page, subscriber conversion | 23 Comments »
Hey- if you’re interested in learning about how to get your online business off the ground and convert visitors to your site into customers, then you need to check out a video interview I did with Andrew Warner over at Mixergy on How To Ensure Success Before You Launch.
Now, I also want to share some things I didn’t share on the call- one of which is an easy Landing Page Formula. With the theory and insights and tips I gave about Positioning your business, finding your market online and “framing” your product to a hungry crowd… when it comes to actually sitting down and deciding what’s on your landing page, it can be a challenge knowing where to start.
Before I show you where to start, you should remember what I said in the interview-
Creating a great landing page (given time) is not all about being a great copywriter or designer. It’s also a function of being a great tester. (Although talent and experience are the ultimate time savers and leverage – considering time and expense)
So… with that, here’s a quick formula to follow as you’re developing your landing page and the elements to include and test within:
Element #1: Lead With “Finished Story” Benefits
Every page needs a place where the visitors eyes are initially drawn that focuses their attention. Traditionally this is a headline, image or tag line. Make sure that you have this initial element be an attention grabber that let’s your visitor know what they’re going to get out of staying and engaging with you. Remember, you only have a few seconds for a user to decide if your page (and your site/service/product) is or isn’t for them.
The way to make sure that this initial attention element has the result of making your visitor stay and then convert is to talk about what I call “Finished Story” Benefits. These are benefits about what the finished story will be for the visitor after they engage and/or take the action you’re suggesting with your product.
Making your visitor visualize and imagine what they will get and how they will feel after using your product is your goal.
Again, on our call I talked about the company I helped with their business plan template marketing. The “finished story” here wasn’t the obvious – a finished business plan. It was farther removed than that. It was having raised money successfully with the polished and professional business plan.
Long story short, make sure you’re not talking about all the work that might go into your visitor getting the result they’re after. Make sure you’re getting them to connect then ultimate end goal – the finished result and REWARD.
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Do this well, and you end up tying the purchase of your product directly to their desire for that end result. Once this happens, most resistance and objections from your visitor will have been removed.
Element #2: Social Proof
I’ll run through these quickly. There are LOTS of examples out on the web of each of these you can find if you just do some Google searched and click on the Paid Adwords ads and see the landing pages there.
• “As Seen On” – get your product or service talked about or reviewed on trusted sources and piggy back on the trust and credibility these sources already have with the masses. Present the image of these sources (CNN, Newsweek, etc.) early on and prominently on your landing page. And the images don’t need to be big. Just there next to the language “As Seen On.”
• Testimonials-‐ these are the tried and true workhorses of the direct marketing and copywriting world. Use them. Don’t get generic ones. Get specific ones of your customers talking about actual steps or tips or action taken from your product or material and the end result (finished story).
• User Count or Comments – it’s amazing, but simply displaying how many other people are using or have signed in or commented on your site or business raises the perceived value and credibility.
Element #3: Credibility
If you didn’t know, most people online are very very hesitant to click on links that they don’t know where they’re being taken… and they’re even more hesitant to share their email.
When it comes to buying and pulling out their credit card number, it’s a whole other ballgame.
As I’ve talked about before, for a visitor to your site, everything you want to ask them to do represents something very “risky” to them. For more on this check out some of what I wrote about removing risk in online marketing , along with some thoughts about how this applies to the current state of marketing music online.
Anyways, how can you reduce this risk? In short, start by demonstrating your Crediblity (building Trust)
There are a few simple ways I’ve tested, and that lots of other people have tested to this end.
An easy thing you can do and test along these lines that are likely to increase your clicks, signins, and sales is getting approved by some of the institutions that protect consumers and make users feel safe.
Examples:
• Sign up with the Better Business Bureau and add the “BBB” approved logo
• Get on one of the verified Safe Sender programs if you’re driving emails subs and sending emails… and display this programs logo close to your email sign up form
• Simply tell your visitor that you’ll never spam them or share their email (and mean it!)
Bottom line- new visitors to your site don’t know who you are. Make it easier for them to take the risky move of sharing something with you and inviting you into their world.
Element #4: Offer/Value
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You can write great copy on your landing page, and design a great layout… but if what you’re asking for and offering on your landing page doesn’t boil down to a great offer then you’re wasting your time.
A lot of people these days are trying to build their list, or build their social friendships or “followers.” If you’re asking for anything like this, let alone asking for a sale, on your landing page, you better make you’re visitor feel like they’re getting the better end of the deal.
So what do I mean by a great offer, and what does one look like?
A bad offer, if you’re looking to drive email signups from your page, is essentially offering nothing but the chance to “sign up” in exchange for the visitor giving up their precious email and expose their inbox to you.
Arguably, that’s not an “offer” at all. But the crazy thing is, most people’s email sign up forms on their landing pages are framed in this manner.
Instead, what can you create and provide in exchange for a user putting in their email? And how can you tie this directly into their “finished story.”
This question is exactly what I love the “free report” give away or white paper type free line content. It creates an instant “offer” that makes a visitor feel like simply sharing their email address in exchange for this information is giving them the better end of the deal.
Element #5: Call To Action
This is what inexperienced copywriters and marketers have the most problems with. They either don’t even use a call to action, or they make it so weak and passive that they might as well not have one.
A great call to action does the following:
Gives specific instructions on exactly what action you want the visitor to take Tells the visitor exactly how to do this Uses the already “anchored” benefits you’ve put in your visitors mind and reminds the visitor of what they’ll get by taking this action
Here’s a bad call to action if you’re trying to drive email subscribers-
“Sign Up Here And Get Our Emails.”
Just what we all want, more email. No thanks!
Ok, now go out and get on the web and look at 30 or more landing pages by doing all kinds of searches and clicking on paid ads. This will start to bring some of these 5 elements into your awareness and give you ideas on how to go about writing and designing your landing page.
And don’t forget to test, test, test.
Let me know how it goes.
And here’s some Recommended Reading:
To better understand how and where to “frame” and place your business in your market, read Position by Al Reis and Jack Trout.
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For a great overview of the psychological principles and operators to be aware of and use in your landing page copy and offer read Influence: The Psychology of Persuasion by Cialdini
For design guidance and insights, go get Universal Principles of Design (design insights with the psychology behind them) by Lidwell, Holden & Butler.
For your copywriting bootcamp, get all 3 of these books and study them regularly as you’re writing copy: Ogilvy On Advertising, Tested Advertising Methods and The Ultimate Sales Letter.
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