How we increased user satisfaction by 35% focusing on the “One Metric That Matters”

When you run a product, it seems there are dozens of ways you could go. One high-caliber customer requests feature A, several smaller customers say that feature B is really what they need, and the company’s founder has his own idea of what the product needs.

How do you decide what to spend your time on and improve your product? Which features should you be working on?

You need focus on a specific, measurable direction.

I’d like to share with you how we did it for a client I’ve been working with using a “One Metric That Matters” approach.

The project

  • Client: big public organization launching an innovative product for job seekers (in France).
  • User: unemployed job seeker.
  • User need: finding a job! but there are not that many job offers for most of our target population.
  • Product solution: recommendations based on company employment data and a prediction engine on which companies are looking for people like you (in France), without considering offers on job boards.
  • User success criteria: applying to companies and getting jobs.
  • Challenge: people won’t take action if the results we give them are perceived as irrelevant (companies outside their domain, that have been downsizing lately etc…). In that case, they won’t apply to companies and we would have failed them.
  • The “One Metric That Matters”: we decided to focus on “result relevance” as our “North Star” for a few weeks. Every product decision would be considered in the light of the following question: “if we do this, will it positively impact  result relevance?”. If yes, then we would make it a priority to do it. If not, it would be pushed to the backlog.
finding companies that will hire in the next 6 months - a previous version
finding companies that will hire in the next 6 months – a previous version

 

Measuring our “One Metric that Matters” and getting user feedback

To understand result relevance, we used Hotjar, a nifty online tool that lets you ask contextual surveys and polls on top of other cool features (session recording, heatmaps…).

You can learn A LOT about your users if you are strategic about getting user feedback. In particular, don’t just rely on a passive feedback button. Don’t rely also on after-the-fact surveys. The best feedback you can get is highly context-dependent. You need to ask the right question at the right time!

In my experience, lots of companies don’t use all the opportunities to get good user feedback. As a result, they rely on long out-of-context surveys which means:

  • little feedback: they receive few answers because a user won’t remember what he did with your product if you ask for it out-of-context
  • biased feedback: as a user experience with your product isn’t fresh, he will cover what he doesn’t remember with explanations that seem right for him at the moment.

Today you have the tools to get contextual feedback (Hotjar, Qualaroo, Web Engage, and a whole lot more) so use them. Contextual feedback is a good way to understand what drives user behavior in your app.

In our case, the right place to ask for it was the search result page and the right time was a few dozens of seconds after he arrived there (we did experiment with timing).

We also added an optional field inviting users to tell us more about the relevance. The freeform text turned out to be a goldmine of user feedback about how they perceived the result relevance. We learnt each and every objection in the minds of our users as to why our results were not relevant for them. As a consequence, the product roadmap incorporated all the solutions to users objections.

open feedback goldmine
open feedback goldmine (feedback is in French, but you can see lots of details)

Why having One Metric That Matters?

It forces you, in the midst of new project launch and many competing priorities, to focus on making progress on the One Thing that is more important than all others. It doesn’t mean you should drop every other worthwhile activity you’re doing, but it means you need to have a laser focus on having a specific number you want to see going up. And when you have that laser focus, it’s hard for that number not to go up!

For more about the One Metric That Matters, I recommend you read The Lean Analytics book. There’s a whole chapter about it.

Results of our pig-headed discipline on the One Metric that Matters

By analyzing every objection our users had about result relevance, we were able to drive result relevance from 58% to 78%, a jump of 35% in a few weeks. It involved a better mapping between the user’s occupation and a company’s industry, and more focus into explaining our secret sauce to users. We redesigned the User Experience to communicate about this (more on that in a future post).

Before focus on OMTM: Result relevance 58%
After focus on OMTM: Result relevance 78%

Challenging the One Metric that Matters and keeping the end in mind

As useful as the OMTM is, it’s essential to stay grounded in user-centered focus. At the end of the day, “result relevance” means nothing if users don’t take action and apply to companies.

But it’s true of any metric focus. For example, it’s very easy to focus on landing page conversion at the expense of full product conversion (from visitor to paid customer). You need to make sure your tactical “One Metric that Matters” focus doesn’t negatively impact your end-to-end metrics.

The end game for this project is doing everything to get job seekers to apply to companies and get jobs. So the next stage of growth involves improving another metric, now that “result relevance” has been significantly improved.

Using the One Metric that Matters in your project

What the “One Metric that Matters” should be specifically depends on what stage your product is, and so what the priority should be.

  • If you’ve just built the product, focus on rough engagement metrics (“can our customers use the product?”)
  • If your product has value but most users never get round to it, focus on activation metrics (“can our customers have a successful first experience with our product?”)
  • etc.

[I’m digressing, but most companies looking for “growth hacking” are actually mistaking what metric they should focus on.]

What’s the goal for your product right now?

Define a single “One Metric that Matters” that moves the needle for your most pressing goal and focus on it for a few weeks.

One of the worst things for startups and small teams is lack of focus. By using this tactic, you’ll sure have a lot of focus on one thing. Try it.

 

 

 

Why nobody converts to paid customer in your SaaS product

loneliness

There is a problem in the SaaS world I’ll name “Nothing ever happens in my free trial”. It unfolds this way :

  1. People sign up for my product and go for the free trial.
  2. They have 30 days to use the product, which should be plenty enough to make up their mind, right?
  3. Nothings happens (It seems they don’t use it a lot)
  4. At the end of 30 days, we send them an email to let them know their trial is about to expire
  5. Nothing happens
  6. We send them a survey to understand what happened
  7. Nothing happens (no one answers)
  8. I don’t know what I can do about all that !

The key here is number 3: “it seems they don’t use it a lot”. What does it mean ?

  1. You don’t measure and try to understand your user engagement quite enough
  2. If your user doesn’t engage with your product, he won’t become a paid customer

The first point will be covered in a later post so I will focus on the second point here.

If your user doesn’t engage with your product, he won’t become a paid customer

The visible problem (free trial users don’t convert to paid customers) is actually very often the logical conclusion of another less visible problem : a lack of engagement with the product. There is a time to obsess about maximizing the conversion from free trial to payment, but first you have to take care of your engagement problem.

Why do you have an engagement problem ?

It stems from a misunderstanding at the root of many struggling SaaS products: you can’t leave a new user who just signed up just using your product and staying in the back saying “let us know if we can help”. It’s like leaving a person in a labyrinth without a map and hoping he will quickly find a way to the exit.

Unfortunately, many SaaS businesses let the user end up in a full-featured interface and hope that he will figure it out. Instead, you need to actively design the free trial experience.

The same way as you take a person from stranger to lead to customer in a traditional sales process, you also need to take your newly signed up user in a journey towards becoming a paid customer.

The key question to ask for you to design a good free trial experience is: What actions do you need your user to take before he realizes the value of your product? This is highly dependent on the product, there is no universal answer here. Plus, the answer to the question will change as you gain a new understanding of your users and their wants and needs.

For example if your product helps musically challenged people to play music playlists specially tailored to their taste with minimal intervention on their end, you would need to figure out :

  • the onboarding challenge: how to get the users as fast as possible to taste the pleasure of listening to new interesting songs. Ruthlessly cut every other distraction to the pursuit of that goal.
  • the interest building challenge: how to surprise the user with new relevant songs they didn’t know about.
  • the retention challenge: how to hook them enough to create a habit to use the platform. Cue them to use your product at the right moment. One tactic to achieve this could be to send a well-timed notification or email to give them some fresh music to listen.

Once your users discovered the value of your product and you did a good job of engaging them by a well-timed free trial progression model, the sale is much, much easier and you’ll see a nice increase of the free to paid conversion rate.

Action steps for your SaaS product

Onboarding and engagement are complex to get right. The first steps to go in the right direction are :

  1. Look at your free trial first experience from a “just signed up” user perspective: “do I know what to do here?”
  2. List one or more actions you need the user to take in order to understand and get value from your product.
  3. Guide the user to accomplish these actions removing any distraction blocking him from accomplishing these actions.

Lessons Learned Growing a SaaS Product during 7 Years

 

What can you learn from someone who built and grew a SaaS product during 7 years?

Especially from someone who didn’t become an overnight success, but kept on going all this time while making a living from a profitable product?

We hear all the time about the Snapchat and Instagram of this world. But at the same time, hundreds of thousands of good businesses are being built outside of the TechCrunch bubble. Their founders are working hard on making their business succeed, and yet we never hear about them, even though they are successes by most personal standards.

They’re not billionaires, but they make a living from doing something they believe in. Isn’t that what we all work for, in the end?

This week, I organized the first Paris SaaS Meetup.

The meetup goals are to get French and European SaaS players exchange about best practices, share lessons learned and learn about marketing, growth, metrics, and everything related to creating and growing a SaaS product.

For the first edition, we had Chaib Martinez from Zyyne and Close More Deals share with us the lessons learned from creating and growing 2 SaaS products in 7 years. While not a big success story, it was a refreshing talk about what it actually entails to work on a product for such a long time.

We also had Guillaume Cabane from Mention explaining how they hacked customer satisfaction with a custom-built NPS tool (Net Promoter Score).

In this blog post, I will recount what was being shared by Chaib and add my own commentary.

Mistakes made while building and selling 2 SaaS products for 7 years

As Chaib shared, the most fundamental mistakes they made at Zyyne derive from two things:

  1. Not knowing enough about the AARRR framework
  2. Not being strict enough about measuring what worked and what didn’t work.

What’s the AARRR framework?

AARRR stands for Acquisition – Activation – Retention – Revenue – Referral. It describes a framework for understanding the customer lifecycle in a SaaS product.

  • Acquisition describes the “top of the funnel”: how people arrive on your website (Search? Social? Cold calling?) and sign up for your product
  • Activation refers to the first meaningful experience of your product (what happens right after they sign up)
  • Retention is for engagement or stickiness: when people come back to your product to use it again and again.
  • Revenue is for the time when they decide to pay you
  • Referral happens when your existing users/customers talk to other people about your product, hence driving further acquisition.

Chaib explained that the AARRR framework was helpful in splitting the big, unsolvable question:

“How do I grow my SaaS product?”

into several smaller questions, each relating to a specific moment of the customer lifecycle:

  • How can I acquire more users? (Acquisition)
  • How can I get a user to get value from my product as soon as he signs up? (Activation)
  • How can I get an activated user to engage with my product on a regular basis? (Retention)
  • How can I get a regular user to pay for the service? (Revenue)
  • How can I get a customer to spread the word about the service to other people? (Referral)

The big advantage of dividing the problem in 5 distinct areas is that you can prioritize better. Instead of saying “I want more users!” you can identify that you have a problem with Activation, and the question becomes “how can I get a user to get value from my product as soon as he signs up?”.

It’s easier to work on a specific AARRR goal (e.g increase Activation) than trying to “get more customers” (growth goal).

How do you identify that you have a problem with Activation for example? Most often things are not clear-cut and you have problems in every stage (you have  “leaky buckets” and your users drop off too much at every stage). However, you still should prioritize your goals. For that, you could try answering the following questions, in order of priority:

  • Do you have a product that your users use? Do you have a “reasonable” amount of users who get value from the product and use it regularly? If not, your first problem is retention, and you should work on that.
  • Do users who get value from your product pay you? If not, work on Revenue.
  • Do your new signups know what to do or do you get a big drop-off in usage right after sign-up? In that case, work on Activation.
  • Do you get enough traffic and do you convert the incoming traffic in leads? If not, work on Acquisition.
  • If all else is good but you’re not getting referrals, work on Referral.

I came up with that priority list and some people might disagree, for example some people would say Referral are the thing to focus early on. You could get into some pretty lengthy debates about that.

Zyyne lessons learned ordered by AARRR stage

zyyne_screenshot

Getting back to Zyyne talk, here are the mistakes they identified:

  • Acquisition:
    • not tracking their acquisition sources: not knowing where your users (and most importantly, your paid customers) come from means it’s pretty difficult to double-down on effective marketing. Where do you spend your time and money? If you don’t know the results of your investments, you’re leaving plenty of growth on the table. So Zyyne spent a lot of money on Adwords, trade shows and customer databases without knowing precisely which source was working for them (i.e was bringing customers at a good rate)
    • bad segmentation: too much time spent trying to sell to everyone. If you do that, you water down your message, because you cannot address a sales manager the same way you address a software developer. Zyyne wanted to have the same message for everyone (“we provide flipbooks in html5″) which was too technical for their customer segments and in the end it ended up convincing nobody, because it didn’t speak to the needs of their target markets.
  • Retention:
    • wanting to automate everything: Zyyne wanted a scalable product, so they were diligent in automating everything so that they would have the least contacts possible with their users. By doing that they cut themselves off from their users. Most users would use the product for a couple of times but would give up after a while and Zyyne employees didn’t understand why.
  • Revenue:
    • no price testing: They didn’t dare testing their pricing for too long because they were afraid of the potential consequences (“if a user would see one price and then few months later another price, wouldn’t they complain and make our life difficult?”)  In the end, when they did test pricing, they understood a lot of things that were wrong with their pricing model and were able to iterate to a better pricing.
  • Referral:
    • not asking for a referral at the right time: so in the end they didn’t get enough referrals. For example they tried to ask for a referral right after signing up for a free trial but it’s not the best time because users are not invested in your product yet, so it’s better to delay that until your user becomes a passionate customer.

Chaib also repeated to be testing everything. A problem with the startup world is that there’s lots of advice floating around and so you have a tendency to jump from an idea to the next:

  • let’s add live chat!
  • let’s change our onboarding
  • let’s send more emails

In the end, any of these ideas could be good, but you need to be testing, keeping what works, discarding what doesn’t, and most importantly creating hypotheses about it. With time you will develop a better understanding of things your customers need.

They also found things that worked for them

Mostly it was things they didn’t predict, but ended up being a win for Zyyne (can you see the importance of testing new things and keeping track of the results yet? :-) )

  • Acquisition:
    • long tail SEO: they spent a year writing 1 article per week that was targeted to long tail keywords. The big advantage of writing for the long tail traffic is that there’s almost no competition because everyone is busy competing for the big keywords. But at the end of the day, all these long tail traffic sources add up, and you get valuable traffic from it. But you have to be patient and track it well.
    • targeted landing pages: they created simple landing pages that were relevant to search traffic. They resisted the temptation to write too much on the page and instead just stick to the user intent (as expressed by his search query). So the result was a focused landing page that was connecting Zyyne to this very focused need, along with a clear call-to-action to test Zyyne.
    • A/B testing: at some point they started to A/B testing to see what worked and what didn’t work and could improve their conversion rates.
    • reaching out proactively on the pricing page: when people visited the pricing page, after a couple seconds a widget would show up asking the visitor if there was anything being in the way of them trying Zyyne. This ended up being a big win because Zyyne learned a lot about their visitors and their objections, and they managed to convert more visitors into users that way.
  • Retention:
    • In-app chat: on the website, adding a chat widget resulted in having lots of wannabees asking questions (but they were not really interested in trying the product). On the other hand, adding a chat on the product itself resulted in much more engagement: users were asking questions whereas before they would have just quit because they couldn’t figure out what to do.
    • Welcome call: people are happy to be called, it shows the company cares. The company learns a lot about their users, uncovers objections, and gets them to use the product. It’s not scalable but it doesn’t matter, if you have a B2B SaaS, target at least a few welcome calls per day (you can identify the most promising leads and call these ones).
  • Revenue:
    • Annual plans: by being more agressive on annual plans, Zyyne was able to improve customer lifetime value by 100%. The lesson here is: Don’t hesitate to test your pricing, and see what impact it has.
  • Referral:
    • Retargeting on social networks: what really worked for them was retargeting their customer base on Facebook. They were able to target each of their customers on Facebook and entice them to refer Zyyne to other people. This proved to be much more effective than asking for a referral over email.

Final words

To reiterate the biggest lessons that Chaib wanted to share with us, here they are:

  • focusing on smaller goals of the growth funnel (should we focus on activation or retention this month?).
  • being extremely data-driven and not being afraid of discarding what doesn’t work.

Thanks Chaib for the talk! check out the new SaaS product Chaib and his team are working on: Close More Deals.

And in case you can stand to watch a video in French for more than an hour, here is the video of the event (again BEWARE IT’S IN FRENCH :-) )

Designing a killer free trial for your SaaS product

 

Are you satisfied with your free trial to paid customer conversions? 

Not really? I know it’s frustrating: spending all this time and money to get people on your website and finally signing up for you app! And then… it’s like your free trial is a black hole that draws potential customers in: they never re-appear on the other side! What’s going on?

Should you change your free trial length? Offer 14 days instead of 30 days? Or maybe create a credit card wall upfront, in order to somehow better “qualify” users?

No, no, no. These are tactics that can solve part of your problems, but that’s not the main problem:

the main problem is that you don’t have a free trial strategy

Your free trial strategy should answer that question: How do you consistently move a user from being a new user of your product to being a paid customer?

The most common strategy (or lack thereof) I see in SaaS free trials is: dumping the new user in the product dashboard and hoping he will figure things out and buy your product in the end.

Hope is not a strategy.

And a free trial SHOULD NOT just be your product, offered for free during 30 days.

What free trials can be

When you create a free trial strategy, free trials can finally be what they were always intended to be: a conversion machine.

Instead of having your marketing website or a salesperson TELL what I can get, I can actually EXPERIENCE what I can get. I can see for myself if the product is a right fit, and I can show it to other people in my organization that it’s a great tool – all that before buying!

A free trial won’t do that by itself though. If you just dump the new user in your product dashboard with nothing clear to do next, the free trial is going to be a FAILURE MACHINE instead: it will take new users and transform them into inactive disappointed users.

A free trial can do much more, but you need to actively design it to achieve the results you want.

You need to actively design a free trial for it to engage your new users

By “actively” I mean your free trial is like a journey you want your user to go through. And you want to actively guide your user to go through success milestones (thanks Lincoln Murphy for this terrific concept). If at some point he can’t reach a success milestone and falls, you pick him up and gently indicate him how to achieve the next success milestone.

When he experienced enough success milestones with your product, you can assume he’s about as ready to buy as he will ever be. At that point, you can just ask for the sale. You have a new customer!

Does your free trial have a funnel?

You can’t dump your newly acquired users to your product and just leave them figuring things out by themselves. That would be cruel. Don’t do that.

Instead, see your free trial as a funnel, taking new users from the top and creating paid subscribers at the bottom. How can you move them from top to bottom? By answering this question, you can design a series of steps inside the funnel that brings your new users without fail to the bottom of the funnel: paying subscriber!

free_trial_design.001

The free trial funnel is about them, not you

If you want your users to convert to paid customer, you have to solve for their success.

Solve for customer success

A successful user is highly correlated to a paid customer (provided you have qualified traffic at the beginning and not people who are not serious about buying from the beginning). So how do you solve for your customer success?

  1. your customer success is NOT your success – it’s important to realize we’re talking about what your customer envisions as his success. We’re not talking about your product success, whether customers use all the features, or what you think success should be for your customer.  It’s your customer’s idea of their success.
  2. How does success look like for your customers? Sometimes organizations are so focused on themselves and their product and how it does everything… that they forget that what matters in the end is the customer. What does success look like for the customer? Do you ask your new users what their objectives are with your product? If not, you should.
  3. Solve for customer success – Third, once you know what success looks like for your customers, you can start solving for that, by identifying steps that bring them towards that success.

It’s not “feature A, feature B, feature C”. It is “success A, success B, success C”. Your users are not motivated by your features. They’re motivated by what your features enable them to do (success in their work/life with your product). If you make the free trial funnel about you, then you make it harder for your users to connect the dots and decide whether they want to go further with you or not.

Don’t drown them into features. Show them the potential success that is waiting for them.

Treat every new potential customer for what he is: a potential customer

I see some companies having this hands-off attitude: “thanks for evaluating our product, let us know if you have any questions!”. Sorry my friend, it’s going to take a little more work than that. You have 30 days (or whatever your free trial length is) to convince your potential customer that he should give you his hard-earned money in exchange of your product. How can you design these 30 days to convert him from intrigued free trial user to convinced customer? Your free trial can help, only if you design it so.

Don’t leave it to chance. Get your user moving to the bottom of the funnel.

How to start moving your free trial users through the funnel

It starts from before the free trial…

Your marketing site sets the expectations. It tells your potential customer what to expect, and why he should trust you. This is not easy, as you often have only a couple of seconds to convince a prospect you have something good for him. Make these count.

Then you have the free trial signup form. Is it doing a good job of convincing the visitor to take action? Be careful not to have too big of an ask here: every form field has to be carefully thought of. Can you ask for some information later in the process? Do you really need that company name now? Or you can ask later, once the user already signed up and it becomes easier for him to invest a bit more time. Don’t underestimate other elements on that page, such as social proof, or a summary of the benefits your product provides for example.

… It continues with user onboarding…

SaaS companies are becoming more aware that their onboarding experience matters. What would be a meaningful first experience of your product? It doesn’t have to be complex, just a glimpse of the good times to come. Maybe you can just ask for a little bit of data before displaying something interesting to the user. Don’t make him work too much before giving him a reward. Otherwise, if it feels like too much work, and he doesn’t think it’s going to be worth it, he will leave.

…and it continues with ongoing engagement…

Onboarding is just the beginning though. Once a user is on board he has higher chances to stick around, but is it going to be enough? After a meaningful first experience, think of the next quest to accomplish: how can you make your user a little more successful than he is right now? What does he need to experience to feel that way? When you find that, that’s your next step. How can you make sure your user goes from activated (meaning he completed the onboarding process) to fully engaged with your product? Or maybe it’s a series of steps. But you need to actively bring him to this next step. How do you do that? Well in 2015 you have plenty of ways to do that: with in-app messages (intercom), with behavioral emails, and of course with your product UX.

… and it ends (for now) with the sale…

Hopefully if you managed to get your user to being fully engaged with your app, and the potential he sees outweighs the costs, he’s ready to buy. That means you can ask for the sale (whether in an email, by phone or pigeon courrier).

Your assignments for designing a killer free trial

Don’t rely on hope for converting your free trials to paid customers. Start designing your free trial today :

  1. What steps must a user go to in order to realize the value of your product? Write the steps down.
  2. How can you move your user from one step to the next one? Draw a flowchart to express the transitions for each step.

Get your signups to actually use your product

 

50% of all users stop using your product the very first time they use it (source: Patrick Mckenzie)

They sign up, look around. After a few seconds or a few minutes, they’re not convinced and sail away.

You worked hard on making a product and spent money getting visitors and signups.

So, why pretend you can just dump your freshly acquired users in there & let them kick the tires by themselves and figure it all out ALONE?

 

how_saas_vendors_think.001

 

This is  a naive view and yet it’s how SaaS vendors (often) deal with free trial users:

  • They send a welcome email at the beginning of the free trial
  • They assume everything goes well and users play with all the features
  • They send an email warning them the free trial is about to end and they should upgrade to a paid product after 30 days

no_its_not_like_that.001

There’s a fundamental disconnect between the way SaaS vendors think their users evaluate their free trial and the way users actually evaluate it.

 

 

how_users_think.001

When you don’t help users getting up to speed with your product, they are left to themselves and they will very rarely take the time to do the work. They are confused and confused minds don’t buy.

There’s a solution for your problem: product onboarding.

Product onboarding is an explicit process you set up to get your users up and running (“on board”) with your product.

What product onboarding is not:

  • a “dashboard” of your application
  • a tour of your features
  • a full explanation of your product

It starts with the recognition that not all your features are of equal importance to the user when he starts.

There’s an optimal path your successful users take to discover your product full potential. They go through an “aha” moment (i.e an activation experience) and through several milestones where they realize the value of your application for their business/life.

Your job is to deconstruct this ideal user journey and design explicit steps in your product for the user to get to the end of this journey.

Don’t let your user lose himself in your application dashboard. Design explicit steps to quickly bring him to success.

Should you listen to your users?

 

UX designers say you shouldn’t listen to your users. Ah, but wait, the Wall Street Journal (and Forbes) says you should listen. No, wait, Jeff Atwood from Coding Horror repeats not to listen to them.

So guys? Decide already! Should we listen to users or not?

The answer is the same as it is for any controversial question: it depends what you mean by “listening to users”.

What does “listening to users” even mean?

Listening to users means paying attention to what they’re saying, and trying to understand why they’re saying that.

It doesn’t mean: to make what a user has requested. 

That’s where the problems start. A company thinks it “listens to users” when the right term for it would be “let users decide the direction of the product”.

Look at it this way: users are not product designers. They’re not well equipped to design good solutions to their problems.

On top of that, there’s another problem: you shouldn’t make what a user requests, simply because  …

… a user doesn’t know what he wants

It’s pretty well documented at this point, it’s even a UX myth: the myth being people can tell you what they want.

So take anything a user tells you about something he wants, very, VERY carefully.

What about feature requests?

One common form of feedback is feature requests. And a feature request is about the worst feedback you can get:

  • The feature request is their solution to their problem. But you’re really after the problem, not the solution. Customers pay you to come up with solutions to their problems after all. So why would you delegate this most important responsibility to someone else?
  • Your user only imagines what he knows, and is limited by what he’s seen before and what he thinks is possible. You should not develop your product with these constraints.

Implication:  feature requests are close to worthless, except if the user is able to give you better context about why he wants such a feature.

The path to feature creep is paved with good intentions

A lot of companies interpret “listen to your users” as “stop thinking and do what users have requested in our user feedback”. They even believe that they’re user-centric by doing this way.

There’s another problem with this thinking (or lack thereof): you’re abandoning your duties of boss of your product.

Being the boss of your product means you have to be ruthless of what goes into it:

  • Does this feature solve a real problem?
  • Does it help us make more successful users?
  • Is this feature a good addition for all our users?
  • What’s the price we pay for adding this feature? (there’s always a cost – see complexity cost)

By implementing every whim of your users, you have the guarantee of going full speed to feature creep land: a product bloated with features that doesn’t satisfy anyone anymore.

When you should not listen

User feedback is not very valuable when any of the following statements are true:

  • the user is not a paid customer, no matter how loud, passionate or demanding he is. This is of extreme importance and yet every day a startup listens to a free user and decides to change the product as a result. Listen to your paid customers, not the guy who plays with it but doesn’t want to spend any money on your product.
  • the user makes the case for a feature request (I want to have a file sharing feature!) or a user interface detail (The green button should be red!)
  • the user doesn’t belong to your ideal customer profile. You inevitably end up with users who are not a great match for your product. They were sufficiently convinced to spend money for it (remember not to pay too much attention to free users, right?) but the way they use your product is suboptimal. Maybe your product is geared towards web agencies and this user is a freelancer and so has unique problems due to his situation. By all means keep the customer happy but do not actively try to move the product in the direction this user requests. Keep your product focused on serving your ideal customer profile.

When you should listen

User feedback is valuable when all following statements are true:

  • feedback comes from a paid customer
  • it comes from a customer who matches your ideal customer profile
  • it’s expressed in terms of an outcome and not of a solution (a feature request or a user interface detail) but it’s very rarely the case! The outcome is what a user tries to do but is unable to do so, because your product doesn’t allow him to.

90% of all feedback is feature requests. What do I do then?

If a customer suggests a feature he wants, never stop here. Always understand why he wants this feature. Take the time to go back and forth with your customer in order to uncover the problem behind the solution he’s proposing.

An example of such an interaction:

  • HIM: “I want to have a file sharing feature!”
  • YOU: “I’m trying to understand your context. How would you use <our solution> if it had a file sharing feature?”
  • HIM: “I’d be able to attach this other document we’re always working on !”
  • YOU: “Can you tell me with who you’re working on this document, and what does your workflow look like?”
  • HIM:  telling you real insights about how he works

By really understanding the underlying problem, you as the product designer can imagine a much better solution than the one imagined by your customer. An it’s completely normal, because your customer is not in the business of developing products, but you are ! So you are the expert, and it’s your job to come up with a solution.

How to get started with customer feedback

feedback

Contact form? Live chat? Welcome emails? What about some surveys?

There seems to be a million ways to get feedback these days.

How can you get started on customer feedback? What are the important things to know before choosing a feedback tool and how to do it the right way?

Customer feedback is the primary way you know you’re going in the right direction with your product.

If you don’t have enough valuable customer feedback you’re wasting time and money by not working on what customers truly value. Time spent on developing a feature no customer cares about could be better used by working on a feature that truly delights your customers.

Why everyone does customer feedback wrong and how you should do it instead

When looking to get started on customer feedback, most people focus on the tools. “Do I need a live chat, a feedback widget, or should I stick to sending emails by hand?”

They install a tool, don’t change a thing and continue working on their product and market to potential customers.

Unfortunately, collecting valuable customer feedback is not about choosing a tool and forgetting about the rest.

The tool should follow the strategy. So first, devise a good customer feedback strategy. Then, choose the tool that best support it.

What is a good customer feedback strategy?

A good customer feedback strategy starts with the awareness that good customer feedback is extremely valuable for product development and should be a priority

You HAVE TO make customer feedback a priority in your business, in order to make the most of it. Don’t half-ass it by slapping a feedback form and leave it at that. You can do so much better.

Customer support # Customer feedback

Too many companies get feedback only by getting user complaints at the customer support. If the only time you’re going to have feedback is when a user is so angry he contacts your support, you’re going to have a very incomplete picture on what customers think of your product. Customer support is a form of reactive customer feedback. There are a million things you can learn in the normal product usage.

Customer feedback opportunities are everywhere

Be proactive, and find ways to get customer feedback. There is potential customer feedback everywhere:

  • A user just signed up? Great opportunity to get feedback on why they signed up !
  • A customer stopped using your product? Epic learning moment if you step up and ask why they stopped using your product.
  • A free trial user didn’t accomplish a key action? Understanding this will be key to increase your activation rates. How? By asking your users!
  • And so on, and so on…

Be specific

You want answers about specific questions you have, not a generic “give us your feedback” question. Good questions to ask are the ones you would usually ask in a board meeting where people are making guesses:

  • Boss: I wonder why users are not converting at the end of the free trial…
  • Employee 1: Maybe we just need a photo sharing feature and people will convert like crazy!
  • Employee 2: No actually I read in that blog post you should have a 14-day free trial because 30 days is too long
  • YOU: Let’s ask the users who don’t convert !

NB: obviously, there’s a balance to be found, you don’t want to be the new feedback maniac. Don’t spam your users 10 times per day.

Customer feedback outside your product

Not only behind every customer action is there potential product-changing feedback to be learned, you can also take it outside the product!

Don’t neglect the potential to learn more deeply about your customers by actually talking to them (and build relationships at the same time, which is a churn stopper and a big win for your business).

For that you can conduct customer development interviews in order to learn:

  • whether your customers like your product enough to recommend it or not (Net Promoter Score)
  • what your customers used before your product existed
  • what they think your most exciting feature is, how they would describe your product to other people
  • whether they manage to carry the task they hired your product to do (customer success)
  • how your product fits in their existing workflow, what they do just before using it, and just after…

Get started on customer feedback now

As a first step, you can do two things:

  • Make a commitment as a company to make customer feedback a big priority.
  • Schedule a time to talk with 10 of your current customers/users to learn how they use your product and what’s standing on the way of them experiencing success with your product (=for your product to become indispensable to their life)

 

What is the problem you’re trying to solve?

Some time ago, there was an interesting post on Hacker News:

Ask HN: what is the problem you’re trying to solve? 

With the following help text:

We see everyday startups/projects pitches that explain what they do. There’re often on hackernews lists the describe what the startups do.

But can you, in less than 140 characters, describe the PROBLEM your project/startup tries to resolve?

(thanks Vianney for the post!)

A LOT of the answers were simply describing what their product did, i.e their solution.

To me, this is very telling (and reinforces my experience) that entrepreneurs are over-concerned about their solution, and about themselves in general.

This has lead a lot of startups to the land of solutions for problems nobody has, so much that I posit the following:

Early on, instead of focusing on YOURSELF and your PRODUCT, focus on your CUSTOMERS and their PROBLEMS.

I know a lot of entrepreneurs will simply say they’re customer-focused because it feels good, but are you really? Or is it like the harmless little plaque at the realtor office that says “we value customer service” but is apparently completely forgotten since you’ve been waiting there for 45 minutes and no-one has apologized to you yet?

Questions to ask yourself about the problem

When you try to state the problem you’re solving, remember to ask yourself three questions:

  • Why is the problem a problem?
  • Is the problem really painful?
  • Do people who feel the pain have money to spend to solve that problem?

Let’s go for details:

  • Why is the problem a problem?

    You ask “Why is it a problem” multiple times to deeply understand the problem. It’s the Toyota 5 Whys analysis applied to business problem exploration (the 5 Whys is an iterative technique to explore the causes and consequences of a particular problem – it’s usually applied to determine the root cause of a problem). For example, let’s take the case of holiday rentals.

    • Entrepreneur: Not appearing on several big holiday rental sites easily might be a problem for a homeowner.
    • Why-is-it-a-problem bot (WIIAPB): Why is it a problem?
    • Entrepreneur: Because his property is listed on only one website and then doesn’t have many visitors.
    • WIIAPB: Why is it a problem?
    • Entrepreneur: Because if he doesn’t have many visitors, he might not book enough nights
    • WIIAPB: Why is it a problem?
    • Entrepreneur:  Because if he doesn’t book enough nights, his business might not be profitable
    • WIIAPB: Why is it a problem?
    • Entrepreneur: because if his business is not profitable, he’s going to be afraid of not making ends meet and losing his wife and having to sleep on the street.
    • As you can see, there are lots of hypotheses and beliefs buried in problem statements.

      Is it true that homeowners have their properties fully booked? Your job is to go out and make sure these hypotheses are correct or if they are incorrect, come up with another problem to solve. For example, to continue with our holiday rental problem, you could find that homeowners already have their properties fully booked except in not very touristy areas. You could then pivot your idea from solving the general problem to solving it for people in remote areas (I don’t have good data on this, it’s for the sake of the example)

      The only way to really understand the problem is by talking with your target market and researching it (via forums/twitter etc.), NOT by thinking hard about it.

  • Is the problem really painful?

    For you to make money by solving a problem, your customers must really feel the pain of not being able to solve their problem. Don’t fool yourself by going against strong evidence that the problem you’re trying to solve has a “good enough” solution. For example, I tried to make a file sharing solution for a niche that was satisfied with using emails and FTPs to exchange files, along with the occasional free file sharing platform. In that case, my market had a “good enough” solution and they didn’t feel the pain enough yet to think of switching.

    Don’t underestimate the power of “good enough” and switching costs.

  • Do people who feel the pain have money to spend to solve that problem? 

    If you’re selling software to small NGOs, it might be a tough sell, since they are not really used to pay for software. You might be solving a problem for them, but it won’t work in the end because the people you’re solving a problem for don’t have the money to spend on it.

Let’s grow your SaaS product

I can help you with immediate advice and consulting to grow your SaaS product. Email me with details about your product and company and we’ll work through how I can help you.

10 Steps to Optimal SaaS pricing

Are you losing money with your SaaS pricing?

If the same customer would pay $35 per month for your SaaS product and your current price is $10, you’ve just lost $25. Multiply that by the number of customers and you’ll get the total amount of money you’re not extracting each month.

Pricing is critical to the success of a SaaS product, you already know that.

In an ideal world, you’d extract as much money from your customers as they’d be comfortable with and still value your service and stay with you.

The problem of course is to find the optimal point, and pricing isn’t science.

How can we get to better SaaS pricing?

Neil Davidson in Don’t just roll the dice provides a very handy checklist with good questions to ask yourself about your pricing.

I’ve reused the questions below and added my own commentaries and suggestions.

  1.  What’s your strategy?
    Pricing has an impact on more than just the price you charge and the money you make. It influences how customers perceive you, it can be a signal of high value. It will impact your whole business.  Are you going to price low and sell lots, or price high and sell a few? It can be tempting to price low because it seems easier to avoid customers objections on prices, but it’s rarely a good answer because it becomes harder to make your business profitable.
  2. What’s your product?
    Your product is not just the software. It’s everything that matters to your customer. It’s personalized always-on support. It’s the guarantee to be on top of his field. It’s education-based marketing (these emails you send when a customer subscribes to your service so that he learns how to use your software to do a better job).
  3. How will your customers judge the fairness of your pricing?
    It’s okay to price high but your customers need to understand why you’re pricing high, so you need to do a great job to communicate value. Customers always use reference points, so what reference points do they use, and how can you provide reference points yourself? ex. a customer reference point for your all-in-one marketing software might be his simple accounting software, because that’s the only software he pays. He will compare the price of your all-in-one marketing solution to his accounting software and decide whether your price is fair or not. If this comparison is detrimental for you, you’d have to provide another reference point for him, for example by comparing his current marketing expenses to what your marketing software costs, and how great a deal it is for him.
  4. Who are your customers?
    To be able to set a pricing model, you have to know who your customers are. If you don’t know who your customers are, you can just aim for a blind guess. How does their business work, and how do they expect to be charged? If your customers have never paid for a SaaS product for example, maybe a SaaS product will be a tough sell for them. If they expect to talk with a salesperson for everything they buy, they will probably expect to do the same with your product (bad news).
  5. Who are your competitors?
    What’s your strategy to undercut your competitors? Just charging less than them might not be sustainable, as they will have more money than you to go into a pricing war. There are valuable things to learn from your competitor’s pricing model, but don’t assume they got everything right. They might not have done proper research on what pricing is best for their customers.
  6. How are you going to sell your software?
    This is critical to your profitability. Every SaaS company starts out thinking of the Holy Grail of SaaS (customer self-service) but the truth is few companies get it right in a short time. Maybe you need to sell through a retailer or an affiliate. Or maybe you need to wine and dine your prospects before they become customers (in which case, you can’t charge them $30 a month!). Here also, don’t just think it up and go with it, but try to really understand your target market and have some data to confirm or invalidate your assumptions.
  7. Can you segment your customers, and create different packages?
    Some customers are willing to pay more than others, because they don’t get the same value from your product. The 1-man army doesn’t get the same value as the design agency, so he doesn’t want to pay as much. To be able to extract value from both segments, you need to create different packages, with each package being specifically tailored for a segment. You have to think hard (and also based on data from real people) about how to segment your customers based on the value they receive. Then work out individual features or limitations to be able to provide this value, and not more. Finally, set a price on this value you provide, based on what money it makes your customers, or whatever value they assign to the pain you’re solving (saving 5 hours of a fortune 500 executive is not worth the same as saving 5 hours for a designer at an agency).
  8. How can you bundle your software?
    I’ve recently worked with a company that provided an iphone application generator for web agencies. If you think of the end benefit for customers, what this provides is a way for web agencies to tap into the lucrative mobile app market. With that in mind, I helped the company come up with a bundle that provided not only the software (the iphone application generator) but also an educational workshop aiming to give web agencies the best practices to penetrate the mobile app market.  So think of ways you can add other software, educational content, or specific support that can provide more value to your customer.
  9. Make an informed guess at your price
    Ultimately, you just have to pick a price. So pick a price and get started. It doesn’t mean you will be stuck with this price forever.
  10. Try it out
    With all this information, you should be able to have a decent price that you can tweak later. Yes, you can change your price, and this can be difficult, so I’ll write an article about it soon.

What’s the optimal free trial duration?

Question: How do you decide on a free trial duration for your SaaS app?

Short answer: as long (but no longer than) the time your users need to fully realize your value proposition.

For a longer answer, read on :-)

When you look around on the web, you see a lot of SaaS products include a 30 day free trial, so you might think it’s a sort of best practice. But, maybe 30 days is not the ideal duration for your app. Actually, maybe your app doesn’t need a free trial !

Story time: back at a previous company, we had a 30 day free trial for users to try our product. It was the most disastrous free trial ever: in 30 days, our users didn’t have the time to unlock value from our app (there was just a veryyyyy long time for our product to show results, because at the time it was dependent on integration from partner websites).  So we were shooting ourselves in the foot: we offered a 30 day trial, but for the vast majority of our users, using our product for 30 days just resulted in disappointment. The free trial value was actually negative: people were convinced our product couldn’t help them after 30 days. It made me cringe to hear salespeople trying to reassure doubtful visitors at the beginning of the trial that they would get results after 30 days. No way it was going to happen! We ended up shutting down this product because we couldn’t provide sufficient value to our users in a limited time for a reasonable cost. It was a very costly mistake.

Let’ suppose for now you already have a free trial in place, and you just want to optimize its duration. Please don’t just set a 30 day duration “just because other people do the same”. That’s not a very effective decision criteria!  Okay, what should this duration be? How do you decide?

It should be the minimal amount of days needed for your users to fully realize the value of your software.

So, if your software is very complex and needs a long training period before your users get good value from it, you should lengthen the free trial duration until enough value is created. Of course, the longer this training period is, the longer your free trial will be, and the more chances your users will give up before converting to customers. Another way to express it is that complexity kills conversion, so you should strive towards creating the most value as soon as possible in the customer lifecycle. If you need 3 months for users to realize value, it will be very difficult to keep them onboard that long.

If your software is simple enough, your users will realize its value the first day, or after a couple of days. You can then have a 7-day or 14-day trial period.

It also depends on your particular situation, so you should track usage metrics and understand what’s going on when a user tries your software. Finally, finding an optimal free trial duration is more art than science, so you should be testing different free trial durations, comparing the results and picking the one which gets you the more customers in the end.