SaaS Marketing Mistakes – Targeting

HackerNews effect on traffic

A few months ago, we got together a cartoonist and a developer to create a crazy-ass parallax scrolling page. This particular piece of beauty is probably the easiest guide to A/B testing on the web. It is really good and we were mighty excited to share it all over the interwebs. As part of that, we first shared it on HackerNews.

What is A B Testing    Hacker News

Pretty sweet huh? The post was smartly shared on HN in the morning when most of the US was asleep and it stayed on HN’s front-page for almost the entire day. We got a lot of comments and our traffic saw an immediate (but obviously temporary) spike.

HackerNews effect on traffic

Even better, our active trials (the CTA at the end of the page was to sign up for a free trial of Visual Website Optimizer) shot up like there’s no tomorrow!

Active Trials shot up!

So all this felt really nice. We spread this in some other places and got interesting responses. I happily reported to the CEO that we’re reaping significant benefits and the campaign is working well.

The truth unfolds

This is what our active free trials looked like after the campaign (time frame: start of campaign to three months later).

Our active trials go down to pre-campaign levels

At the end of the day, this was a push that bumped up our ‘free trial’ signups, but couldn’t sustain that number. Kind-of obvious. One can’t expect HN to always be following you. But what was surprising was that not one of those free trials converted to a paid account. That’s right, not one single convert from all the HN traffic.

Absolutely no transactions from those who landed on the page!

Absolutely no transactions from those who landed on the page!

The mistake

We ran after vanity metrics like page views and “sign up for free trial” (yeah, in this case that’s a vanity metric). The bigger mistake was that the we got carried away with our work and ran to show it off to those who would appreciate the technical aspects of it. In the process, we neglected the Small Business Owners for whom it was originally meant, and who would actually be influenced by the page. The readers of HN understand A/B testing very well and don’t need a simple story/analogy like Bob. But small business owners worldwide would have really connected with it.

Unfortunately, very few of them actually got to see it.

What we learnt from this

Here’s what we (and you!) can learn from this:

  1. HN is great to introduce new technical concepts (we created a cool parallax page to explain A/B testing and introduce Visual Website Optimizer)
  2. HN might be good if your product solves the problems of technical people
  3. Before creating any marketing campaign/message, think very carefully about the target audience and how you want to reach them
  4. At the end of the day it is all about being relevant

Here’s another nugget of insight that we gleaned from the conversation that happened on HN.

Comment about how useful this would be for Small and Medium Businesses to understand A/b testing

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What Hooters and Apple Genius Bars can teach us about Customer Service

hooters-girls34

Once upon a time I wanted to get in to MICA. After receiving an interview call, I decided to look up some alumni. Out of the many I sent friend requests to, only Siddharth Soni replied. We’ve been friends ever since.

Siddharth recently wrote a blog post asking “How much should customer service guys be paid?“. In the post, Sid says that marketing and sales professionals attract customers to a business but it is the customer service people who actually “fulfill the promise” and therefore, they deserve to be paid equally well. Here, he’s not talking of Customer Service as the guys at the call centre, but anyone engaged in the “delivery of the promise”. This could mean the lady at the front desk, the Relationship Manager at the bank or even the aircraft pilot.

My answer to “How much should a customer service person be paid?” is, “it depends“. What does it depend on? How integral is the Customer Service to the Customer Value Proposition.

Let me explain. You go to a small family owned restaurant close to your place for a quick meal. It’s a slow Tuesday afternoon and the owner says that no waiters are available, so it’s “self service”. Will you be disappointed and expect to pay less? I don’t think so. It’s more like “Fine, I’ll get my own grub from the counter, no issues”.

Hooters

Now, let’s say you walk in to a Hooters and management informs you that there are no Girls available and it’s self-service. Would you expect to pay less?

Hooters Girls

These women aren't available to wait on you. Please serve yourself.

I would, because the Hooters Girls are an integral part of the experience at Hooters restaurant. In fact, for them, I’m ready to pay a premium price on the food. Why is this so? Because the value being promised by Hooters as stated in their Mission Statement is

We are committed to providing an environment of employee growth and development so that we can provide every guest a unique, entertaining dining experience in a fun and casual atmosphere delivered by attractive, vivacious Hooters Girls while making positive contributions to the communities in which we live.

As you can see, no Hooters Girls = “No complete value” as promised by them. My point is this, if the Customer Service (CS) being provided is an integral or a large part of the promised value, then the CS professionals will be paid relatively well. For example – in Management Consulting, the greatest amount of value is provided by consultants so they’re very highly paid. Take banks, where the highest paid professionals are the investment bankers that give awesome returns to investors.

Let’s get back to Siddharth.

Siddharth runs Mississippi Earrings, an online/offline store dedicated to earrings. As you’ll notice, earrings are products while all my previous examples have been of service based businesses. How much value then, can CS offer when customers are walking in for a product?

Apple Genius Bar - Image Courtesy http://www.flickr.com/photos/waynedixon/

To answer this, I would like to draw your attention, dear reader, to Apple’s Genius Bars. A Genius Bar is essentially a tech support centre inside every Apple Retail store where highly trained “Geniuses” help customers with any problems they might have. Quoting this Wall Street Journal article, stores have sales associates that are taught an unusual sales philosophy: not to sell, but rather to help customers solve problems.

“Your job is to understand all of your customers’ needs—some of which they may not even realize they have,” one training manual says

And the result: Customer Growth Partners says that Best Buy makes about 1% profit margin (before taxes and excluding online sales), while Needham & Co. reports that Apple makes 26.9% profit margin from its stores.

Can Siddharth do the same with Customer Service at Mississippi Earrings? I think he can. In my opinion, the two most important steps are

  1. Train his staff extensively on the products available, the latest fashions, the different segments of customers who walk in and make sure they’re super helpful when it comes to giving advice about selecting earrings based on event, dress, personality, budget, use, etc.
  2. Communicate the availability of this extra value to the customers.
Now, the CS guys will be providing increased value to the customer,  consequently, driving up customer satisfaction (sometimes even delight), repeat walk-ins, retention and lifetime value of each patron to Mississippi Earrings. In this case, I agree, Customer Service professionals should be paid as much as or even more than marketing or sales people.

At the end of it all, it isn’t about Customer Service, Marketing or Sales or whatever. It’s about who’s making the paying customer walk-in. Marketing and Sales guys do that since it’s their Job Description. A just-another-CS person doesn’t do that. An exceptional CS person becomes a reason for customers to walk back in, just to hear his opinion or tap upon his knowledge.

Dear reader, if you feel this isn’t correct or have examples that go against what’s written in this post, please do put that down in the comments. I’d love to have a conversation with you on the same.

The Trap of “Something for Everyone”

Safest Minimum

About a fortnight ago, around 14 of us went to a bar for drinks and dinner. Most were about to leave Kolkata in a day or two and this was one of those “we might never meet again” things.

At the end of the table where I was seated, the other constituents of the party were as below

And this is what happened: the three vegetarians started to decide what to eat. They went at it for a full 15 minutes while the rest of us waited for their group discussion to get over. Finally, they settled on “Mix-Veg and Dal Fry with Roti”. It was only then that the waiter, who was hovering on the sidelines, took the order and consequently, we had to wait about 21 minutes before we got our first round of drinks. The delay was a buzzkill but fine, there were lessons rife in this situation.

What I realized was that in an attempt to take into account the tastes of various different customers, they finally settled on something that had small bits of everything but didn’t fully target anyone (Mix Veg) and since they were trying to keep everyone’s tastes in mind, they did not decide on different stuff that was enjoyed individually, but had stepped down to something that was acceptable to all. It wasn’t about catering to preferences, but simply, meeting requirements.

Taking this to a business situation, it is of utmost importance to understand your target market segments completely and create products that cater to their specific tastes and usage. Sometimes it can be overdone, but I’d still err on the side of over-tailoring instead of over-generalizing.

When it comes to startups, many try to make products that are awesomely complete, which is where they make their first mistake. The better thing to do in most cases is to make a minimum viable product and then keep a short feedback loop with customers, which should guide further product development. What I am suggesting is the release-early-release-often model, for which a huge case already exists. Here’s a good post in support of the same.

Why our first startup failed

startup fail

Our first venture was a completely new experience for me. The three other founders had a fair bit of experience in setting up and running a business (13 years, 6 years and 3 years, in descending order) while I was the only fresher around. I guess my childish enthusiasm and general naiveté led them to christen me “Sid the Kid” but thankfully, they were nice enough to stop calling me that after some time.

The business model

The best engineering colleges are the ones with the best placements (stands true for MBA colleges too). Lots of times, a college is initially able to attract a recruiter (Infosys, TCS, Wipro, HCL, Accenture, IBM, etc) but since the students don’t perform in the recruitment process, the company might not take as many people as it was ready to.

That’s where we came in. Our Placement Development Programme (PDP) would integrate in the colleges’ curriculum and faculty members would go to different colleges to deliver the session. The programme consisted of Aptitude (Mathematics and Logical Reasoning), language (English) and soft skills training (group discussion and personal interview). So, if we were working with ABCXYZ Institute of Technology, their class timetable had 2 slots (usually 4 hours) in the week where our company name was written and during that time, a faculty member would come and deliver the session.

The beauty of this model was that none of the faculty members were our full-time employees, they were consultants who went and delivered as and when required. Therefore, we really didn’t need a big office (in fact, it was a one room setup in one of the partner’s office) and most of our work was done through mobile phones and laptops.

The numbers matched up pretty well too. One faculty member on average was paid Rs. 500 per hour. For a 50 hour course, our charges would be about Rs. 2000 per student. If we worked with one large engineering college, they’d have 180 students sitting for placements from three branches of B.E. So revenues would be 180 x 2000 = 360000 minus 50 x 500 x 3 = 75000 (faculty fees) and let’s assume Rs. 75000 as cost of providing transport through taxi for some faculty members and other miscellaneous expenses, we’re left with 360000 – 150000 = Rs. 210000.

As you’ll realize, that’s not a bad amount for basically sending faculty members to colleges. And if you were to think scalability, two faculty members (English & Aptitude) taking a 2 hour session each per day in the same college (total 4 hours) can cover 5 colleges in one week. Even then, they’re working only 2 hours a day each. If they were to go to one of the areas where colleges are clustered in Jaipur (eg. Sitapura or Kukas) and give 3 sessions each, they could cover 3 colleges per day making it a total of 15 colleges per week. Let’s suppose this continues for 12 weeks so after 3 months, our company nets a cool 210000 x 15 = Rs. 31,50,000. Now consider that there isn’t a lack of teachers in Jaipur since it is one of India’s larger educational centres. In the end, you have enough number of teachers to be sent to enough number of colleges and quite a bit of money to be made.

Fair enough, so what went wrong?

Two things:

  1. We were lazy and did not move our butts as much as we should have
  2. We didn’t understand the colleges’ incentives until it was too late – The engineering colleges don’t really care that their students should be smart enough to handle the companies’ recruitment processes. They just care that they get placed. Anywhere, anyhow. Therefore, a college focuses primarily on the number of companies coming to campus and not preparation of the students. So more often than not, the concerned Training & Placement Officer (TPO) said to us “If you’re doing training for placements, why don’t you just go ahead and get these students placed”. They were ok with getting them placed anywhere in any kind of company as long as they were “placed from college”. That is really shady business to get in to.
  3. We got distracted – You get a bunch of smart people together under one roof and go out to the market looking for work, you’ll realize there’s no dearth of it. In such a situation, navigating the trade-off about how quickly can it be done, how easily can it be done, how much does it pay and do I want to continue doing this forever?, is crucial. We sucked at that. We worked with these guys (they just got arrested) developing a marketing management course for them and got one very crucial bit of learning out of the entire project: don’t ever work with MLM companies. However, in spite of the awesome life learning and all that cute bit, we had burnt up the meager amount of startup capital we had while executing their project and basically received fuckall for it.

Therefore, to sum up: Not working hard enough, not understanding your customer, losing focus and consequently running out of cash. As you’ll realize, dear reader, these 4 are deal-breakers big enough to kill any business organisation.