Lincoln is the founder of Sixteen Ventures, a consulting firm that works with SaaS companies to help them acquire, retain, and, monetize users. In this episode Lincoln gives us a lot of insight concerning beta launches and pricing models.
TOPIC LINCOLN MURPHY COVERS
→ What does mean Conversion rate Optimization
→ How did he start working with SaaS companies
→ How SaaS companies help to acquire, retain and monetize users
→ His insights concerning beta launches and pricing models
→ What do companies do during that beta phase for success
→ What does beta look like
→ How does he help people price their offerings
→ What are bits and bytes worth
→ What are some best practices to lower churn
→ And a whole lot more
LINKS & RESOURCES
WATCH THE INTERVIEW
READ THE TRANSCRIPTION
Bronson: Welcome to another episode of Growth Hacker TV. I’m Bronson Taylor and today I have Lincoln Murphy with us. Lincoln, thanks for coming on the program.
Lincoln: Oh, absolutely. Thanks for having me.
Bronson: Yeah, I’m actually really excited about our conversation today. I’ve read your blog before, before I even started Growth Hacker TV. I’d come across it, read some articles and just kind of made a mental note like, All right, this guy has an angle that I like. And then you kind of resurfaced as someone to interview, and I initially said, Yeah, get him on the show. I want to talk to him. And so I’m actually really excited to have you here. But for but for those that don’t know you, maybe like I have before, let me tell you a little bit about you. You’re a consultant with a very specific focus. Since 2006, you’ve helped hundreds of companies as a conversion rate optimization expert. A little bit of a mouthful there. And you’ve been guiding SaaS companies to acquire users, convert users and reduce churn. So let’s start with your title there, a conversion rate optimization expert. And I don’t know if that’s what you print on your business card or not, but it’s one of the many titles you probably use as you do what you do. What does that mean? Conversion rate optimization?
Lincoln: Yeah, well, it’s funny. I think I use a different title at least every week, and it depends on who I’m talking to. And I haven’t had business cards for like three years. Yeah. So yeah, I mean, conversion rate optimization, you know, forget about the expert stuff, you know, really what it means is let’s get people to become paying customers. And then, you know what’s funny, though, that particular title, you know, I don’t even like that because I don’t want to start with just getting people to become paying customers. I want to keep them. So what is that? You know, it’s retention rate optimization, right? So, I mean, it’s really runs the full gamut of sort of, you know, customer lifetime something. I don’t know. We’ll figure out a good title. But, you know, the reality is what I do is I like you said, I help companies get customers and keep customers. And that’s that’s the gist of it. My focus is primarily on B2B, SAS companies and that that in and of itself is it’s not incredibly clear what that means. Right. Because you have your very large enterprise, SAS companies all the way to sort of a very self-service utility type of companies and everything in between. So, you know, even there it’s it’s not incredibly clear, you know, who who really benefits from what I have to offer. But, you know, it’s definitely within that, that niche.
Bronson: Yeah. I think B2B and SAS breaks it down enough where we go an idea of, you know, what your target is there. How did you start working with SAS companies? Is it just something you fell into or was it a strategic decision? How did that come about?
Lincoln: Yeah, so I think this will be be relevant if we give you a little bit of my background. So all the way, way back into like the nineties, I actually started out doing stuff in supply chain management and I don’t tell the story very often because it’s I don’t get asked about it, but I think it’s relevant here. Yeah. Supply chain management, basically, you know, where, you know, so I was working in with grocery stores and that kind of stuff. So we were literally moving product from the from the distributor down to the retail side. And what’s interesting about that is this was really a business processes that were driven by technology, right? So I kind of came up in this very network centric business processes driven by technology world, and I did that until about 2004. It, my, my, that part of my life kind of culminated with our position as a business architect at McKesson Corporation, which was like Fortune 17 at the time. And we were selling we were pharmaceutical distributor selling drugs to like, you know, Tylenol and stuff like that to Wal-Mart and the federal government. And really, one of the only companies I’ve ever been even that I have any exposure to that could tell Walmart what to do. So, I mean, they’re very powerful and we’re doing really crazy stuff with with using technology to drive very interesting business processes. So this is this is the mentality that I kind of came up with. And, you know, towards the end of my run in supply chain management, obviously we were using the Internet a lot more when I first started. We were using private networks and things like that, but that’s not really the point. The point was even way back then and then back into the sixties and seventies or whatever, you know, it was still this network centric model. And so I’ve always sort of even though I was doing that and I was working for big companies and really McKesson was my last real job. I always had this sort of entrepreneurial drive. And so I quit and started a company which was actually in mail center management mail rooms. It just this weird idea that I had actually it started even earlier than that with being able to sort of visualize your mail at like private mailboxes, like mailboxes, etc., at the time or what. UPS store. And as you realize that that was maybe not a big enough plane. So I kind of went back to my enterprise roots and I was like, how do we get this into big companies like Exxon Mobil, for example, Chad? You know, they actually have automation equipment for inbound mail. I mean, it was really a big deal. So, like, how do we how do we build something for that? I didn’t have really an idea of what it was going to be. Start talking to people, doing what we would now consider to be customer development. Figure out where the problems are. Build a solution for that. And here I am selling basically it’s a web based product. Everything else in the market was, you know, installed behind the firewall, whatever, actually, you know, in this case, on really crappy old computers in really dirty rooms, you know. And I came in with this really new way of thinking about stuff, and it turns out I was selling SAS. Turns out I was selling SAS into large enterprises and it turns out I was unsuccessful in a lot of ways. And, you know, a couple of years later, by 26 basically gave up and in a way, it didn’t at least came off not owing too many people, too much money. But I learned a lot about I mean, we had some success in actually selling this stuff. But, you know, I also learned a lot about what wasn’t working, and I basically started making a lot of noise. Silicon Valley was saying SAS, because the term now SAS had come out, you know, it’s ubiquitous, it’s everywhere. And here I am in I’m in Dallas, Texas. You know, and I was basically selling to a lot of local companies and I’m like, whoa, whoa, wait a minute. You know, no, SAS is not ubiquitous. It’s really hard to sell the enterprises. Here’s the pushback we’re getting. Here’s the lessons learned. And you know that actually at the time was enough to get people to sort of take notice of me even not being out in Silicon Valley. I started making some noise like that. And, you know, I realized that I actually had some some interesting perspectives and some some things that people might be interested in hearing. So I started consulting some earlier SAS, which is at the time, then about 2008, actually early 2008, I joined a startup that was a platform as a service company called Morph. Very similar to Heroku. Heroku one more ran out of money by the end of the year. And, you know, I went back to consulting, kind of said no more, you know, putting all my eggs in one basket kind of thing. And I formalized my AI consulting from that point at 16 ventures. Anyway, so long story short, I it wasn’t a strategic decision to become a SAS guy. It was more I was an entrepreneur. I really wanted you know, I am an entrepreneur. I wanted to start something. I quit my job to do that. And, you know, it wasn’t necessarily the biggest success that thing was, but it was the catalyst, you know, to to get to me to sort of where I am today. So I think it’s really that background. Like, I didn’t come from enterprise software. I didn’t come I used to be a developer. I mean, I used to write code. I kind of had to in that world, a lot of really weird mid-range code. And I did end up doing some web stuff in like code and things like that. But, you know, that’s a long time ago. But I had that, that, that the more network centric supply chain upbringing, that’s what allowed me to so like, you know, in 2008 I published like seven SAS revenue streams, which is a kind of a, it’s a PDF report. It’s on my side, it sticks to intercom, you know, sort of the the first time something really ever broken down that all the different revenue models that could come from the network centricity that the SAS has, you know, and I started looking at SAS as a business architecture because again, that’s sort of how, how I was thinking about it. It wasn’t just a software delivery method, you know. And so that’s I think what was what kind of allowed me to look at things differently was not coming from like, let’s just write installed software that sort of can sit there by itself. I was never in a world where technology in one company wasn’t affected by technology in another company, or where we didn’t share things on a network that just didn’t exist in my world. So it was a it was a very easy transition, but it certainly wasn’t strategic. Next.
Bronson: No, absolutely. And it’s a great story. And I’m glad you kind of told us how you got here. And that’s a part of the problem I had when thinking about where I wanted to take this conversation. Because you have so much experience with your own ventures and with all the people you consult for that. Every time I said, Oh, I want to make the conversation about this, I feel like it’s leaving out something. So I decided not to leave out anything. So here’s what I’m going to do. We’re going to kind of walk through SAS from the beginning to the end. And I want us to talk about some of the major questions, some of the major concerns, the major hurdles that you see a lot of people have. So let’s start at the beginning. What should a SAS company be thinking about before they actually deploy a product, before they have a product, before they start production, before they have a design, before they start coding? What should be going through their head to set themselves up for success, in your opinion?
Lincoln: The customer, yeah. Above all now. I mean, we all have great ideas. Ideas come to us all the time. And and I don’t want to get into the ideas are a dime a dozen discussion. I don’t actually agree with that. But I think at the end of the day, if you’re trying to build a business, even if you’re looking at something that’s horizontal and could serve, you know, just about anybody, I still think you need to go to go to the idea with a specific customer in mind. So I’m of the of the idea of, you know, going in for that specific customer and then doing the the the bowling pin analogy of hit one and then start knocking down the rest as you, as you, as you grow, rather than trying to go sort of product centric and say, Hey, everybody, we’re here for anybody. Come find us. And then at that point, you’re not really talking to anybody. You’re not getting really good feedback, you know? So go in with a specific customer in mind. I think you’ll you’ll avoid a lot of the problems that a lot of entrepreneurs and startup founders and startups, even funded ones, you know, they get to a point where they can’t they can’t figure out how to kind of grow. They can’t really figure out how to get started. It’s because they don’t they’re not really they don’t know who they’re they’re doing this for. So, you know, a lot of the companies I talk to, I talk to a lot of just sort of single founder, you know, very early stage companies. And, you know, most of the time I just give a little bit of advice and, you know, then when they’re ready, they can come back and we can discuss working together. But, you know, one of the things I tell them is if you can’t figure out, well, I’ll ask the question, who did you why did you build this? Did you start on this? And very often it’s it was something that they were doing for themselves. Right. Okay, cool. Are there more of you out there? Okay, cool. So let’s let’s talk about you and let’s think about why you would use this product and why did you switch? Why did you have. Why was it so compelling for you to actually go out and build this thing? That’s the thing about like with technology founders, and I think that’s probably the case for technology. This is the case if you’re a carpenter, you know, you can build something really easily or, you know, easily. It’s it’s all relative. And you don’t really respect what you’ve built because it was easy, right? I mean, Ron Swanson on Parks and Rec and then actually really can build, you know, a coffee table in his sleep. And it was nothing. You know, to me that’s like the craziest thing in the world. And the same thing is for for technologists can sit down and just write code and all of a sudden there’s a product. You have to respect that. Other people are going to really value that, but they may not immediately see that. But there’s probably somebody maybe just like you, you know, that the reason that you build it, you see this this problem. There might be other people just like you. And so that can be your first customer is other people like you. So I say absolutely focus on the customer. You know, technology. I don’t I don’t want to say it doesn’t matter. But you know what? At the end of the day, sometimes it doesn’t matter. It’s not a product. It’s really about making sure that you’re you’re aligning with somebody out there that’s going to resonate with what you’re doing so that eventually they’ll pay you money because otherwise it’s hard to make a living.
Bronson: Yeah. And I love one of the things you said in there, which is, you know, it’s obvious when we’re talking about a vertical product that you need to understand the seller. It’s not as obvious when we talk about a horizontal product, they start to start with the first bowling pin and then move out from there. You have to have a target that’s narrow, at least initially, even if long term the target is broader. I think that’s a very wise kind of strategy. Early on, kind of before you have a product the way you need to be thinking. So I’ll like that. Now let me ask you this. When it comes to rolling out a beta, what do companies do during that beta phase that can really set them up for success? What are they? What are they trying to accomplish? What are they trying to avoid? What does beta look like if they know what they’re doing?
Lincoln: Yeah, you know, I think the key point is that if they know what they’re doing, I mean, what does beta typically look like, you know, and what are people typically what are what are the entrepreneurs or the startups typically doing with a startup or with a with their beta? You know, I don’t even think we need to talk about that because what they’re you know, they might be trying to literally avoid going to market so that they don’t ever have to fail. You know, if they can always just be in this perpetual beta, then then, you know, it takes a lot of the pressure off. And, you know, I I’m sympathetic to that. I understand. I mean, this is human nature. On the on the flip side, look, if you’re if you’re doing this because you want to build a business, then we need to get serious. And, you know, you need these start you need to get out there and get paying customers because the feedback that you get from somebody who’s paying you money is going to be completely different from the feedback that you get from anybody else, whether it’s free users, you know, after you’ve actually did beta or certainly whether it’s your beta users. So what you do to be successful with a with a beta with the beta launch? Well, first of all, it should be a finite amount of time. And really what I say is, you know, I would rather put out, you know, getting into lean startup stuff and, you know, sort of this MVP idea. You know, I would rather put out in a an MVP. That is that’s something that people will pay money for then in beta, because again, it’s all about feedback and learning and then being able to iterate on that. If you put out beta. It’s basically telling people, you know, this is not ready for prime time. This is not a commercially viable product yet. And that may not be what your intention is, right? Your intention is, well, gosh, you know, other products put beta tags on there. You know, I just I’m trying to ease in I’m trying to put my, you know, sort of tip toe in the water. But the reality is you’re sending some messages. And the very first message is, at least today, still, I think that there’s still enough enough people out there that sort of understand what it used to be, which is literally just, you know, we’re testing it outside of our organization. Right. I think that there’s still enough people that say, you know, I’m not going to invest my time and effort energy into this product yet because it’s clearly not ready. Mm hmm. If if you took your MVP approach and said, well, here’s the minimum amount of features that we know and people need. Some people may find that it’s not complete enough for them, but some people are going to say this is just enough. It’s it’s ready for prime time. I’m going to go ahead and invest my my effort and energy into it, as well as money. And that’s what we want from people. We want them to to do that. Now, if you are going to to do a public beta, you know, you have to look at it from a lot of different angles. Number one, it’s marketing. It’s a way to drive interest. It’s a way to get people excited. And you can do an invite system and sort of stagger, you know, allowing people in. But I say also it should be structured. You know, if you just let people just it’s just like and we’ll talk about, you know, getting people on board and engaging them later. But if if you look at the data as the same sort of thing when people come in. If we just let them kick the tire.
Bronson: Mm hmm.
Lincoln: You know, fend for themselves in there and then hope that they report to us, which is what we. You know, again, if we’re doing beta right, it’s because we want some feedback from a larger swath of potential customers. You know, we basically let them in and they just kind of walk around and and, you know, kick the tires and poke at things. We may not get the feedback that we really want. So what I suggest is having a very structured, you know, say here, I’m going to give you some tasks that I would like you to accomplish, and then I would like your feedback on those. Now you can also go and do other stuff, but every week you basically send out, you know, here’s a couple of things we’d like you to accomplish. And then the way that you learn from that is so very different than just sort of this random, you know, occasional feedback that you get. So I would go at it in any in sort of twofold. One, have a very structured method. Once you do let people in of of having certain scenarios that you like them to walk through and then give you feedback on as well as, you know, being able to monitor them. You know, there’s tools that you can record their sessions. I would use all of those things. There’s a lot at our disposal to really make this super powerful. On the flip side, on the marketing side, I would use your data as a way to to build a list of people that you can eventually launch to and then, you know, and to build interest in anticipation. There’s a lot of psychology that goes into it, but beta can be part of that, that launch. I also think you need to understand that you’re beta users are really a super, you know, even before the early adopters. Right? They’re the innovators. They’re the they’re the folks that really want to they believe that there’s something here or maybe they just want to be a part of something new. You know, they’re going to go out and try stuff, but they may not be you may not be potential customers. So we just have to recognize that. So don’t be discouraged if you have a lot of people using your your beta. And when you launch, when we finally pull the trigger, you don’t get a massive influx of new customers. We just have to you know, I like manage those expectations. It depends. You might, but, you know, kind of temper your expectations there and then, you know, but still use that list that you’re building to to, you know, to to launch against. And I think that that’s where, you know, people that are coming out of beta or they’re going to launch, when you ask them, what do you what does that mean, they’re there. They don’t really know. I wouldn’t really think about it. We’re going to, you know, take the beta tag off on on the 31st or whatever and say, okay, well, have you built a list up? And you you’ve done a lot of work to build that anticipation. Your launch is probably going to go a lot better. I’m not sure that’s the other thing. If you do have an invite system or, you know, you have this this way of sort of building this list, make sure you’re communicating to that list frequently. Otherwise, if you once you do send the invite or once you do launch, you know, you’re you may your email may go right to spam. People might delete it, you know, because they hadn’t heard from you in the three months since they signed up for your beta. So make sure, you know, it’s it all has to be orchestrated, just like all of all of this stuff is, you know, it needs to be fully orchestrated. And so yeah, so take it serious. I have a couple of videos on my site, you know, talk about beta and you know, and pricing, you know, when do you display your pricing? So. There’s like a at least an hour’s worth of video just on that one topic. Yeah, I think it is. It’s interesting, you know, but again, you’re mixing sort of commercial aspects like pricing with this idea of beta being not ready for you’re not commercially viable yet. That causes a lot of confusion too. Yeah. So yeah.
Bronson: You know, other than what you just said, it seems like you’re saying use data as a tool and not a crutch. Don’t go into beta because you’re afraid to launch and because you’re afraid of rejection. Go into beta with a set of goals. I want to know this. I want to learn this. I want to try this. I want to have accomplished this. So it’s not just removing a beta tag on the 31st, it’s I reached my goals and now we’re in a better position to launch because of beta. Is that kind of a fair summary?
Lincoln: That’s beautiful. We could have saved, like, 10 minutes.
Bronson: Perfect. Now, talked about pricing a little bit and since you gave us a teaser, you got to tell us what you think about it. Should we price during beta? That’s one of the things I want you to answer. But then also talked about pricing in terms of, you know, do is the three kind of staggered pricing the best idea? You know, they always have the middle one highlighted and it’s the one that most people use best value. I mean, we see all this stuff, so we assume it’s what works. Is it really what works? I mean, how do you help people price their offerings? Because it’s always tricky. I mean, what are bits and bytes worth? I mean, what people will pay you? I mean, it’s hard to know exactly how you approach pricing.
Lincoln: Okay. So first of all, on the beta pricing idea, I’m I’m of the opinion that you should probably not publish your pricing during beta or at least, you know, put a lot of sort of disclaimers there. But when you have to do disclaimers, I’m I say probably don’t do it. The reason is if you’re using your beta correctly, you will get some interesting feedback and you might not. So not just feedback literally from the people to you, but watching their behavior, seeing where things are going. And so this goes into how do you develop your pricing? Well, you need to make sure that your prices are based around things that people find to be valuable. And I, I follow the value pricing model, which is, you know, we’re going to price it based on, like you said, what value somebody is going to get from it. So I don’t care about, you know, I need to reach this margin or whatever. We’ll talk about that. So in beta, while you’re observing, people use it in ways that you may you hadn’t before, you might start to see that, you know, they don’t really care about this particular file upload thing yet you’re you were originally going to price based on number of files uploaded. Right that’s not what they’re they’re using it for. So then you have to go back and change your pricing. Or maybe there’s just other learning that you got that basically says what you had originally published is is wrong and you need to go this other direction. So what happens is then you go back to all the people that you attracted, the data, who saw your pricing, and now you have to change it. And so you’re launching you’re you’re you’re basically starting out with some unnecessary baggage. The other thing you can do during data is ask questions, do some customer development. So at the very least, your beta customers feel like they were a part of it or you beta users feel like they were part of it. So maybe they’ll be like, Hey, that’s the pricing I came up with. They can’t really complain that it was too high or too high because they’re the ones that were a part of the process. Yeah. So, so from a beta standpoint, let’s be really careful because it’s it’s not a commercial part of your, of your life cycle. Mm hmm. You know, theoretically and putting pricing on that, you know, when you’re not really ready, it’s just a problem. I’ve seen a lot of companies. It hasn’t happened in a big way in a in a while. I think we’re if people are starting to learn. But, you know, I’ve seen some pricing fiascos in the last few years or probably like I said, it hasn’t happened probably about a year and a half that I can do a thing. But, you know, for a while there, people would change their pricing on their on their site and it would upset a lot of people, including their current customers, because maybe they dropped the price or maybe they increase the price and their current customers got scared. So let’s just avoid a lot of that mess by not doing it. Not publishing your prices during beta. Yeah. If you need a compromise, you can just manage expectations by saying at this point we think it’s going to be this, you know, because people may not want to invest in, you know, the time and effort in getting to to sort of know your product. If they aren’t sure at the at the other end that they’re going to be able to afford it. Yeah. So you need you may need to do that, but I would say don’t publish it. And then if a lot of people are asking you questions, then sort of talk about it behind the scenes with your beta users. Keep the outside world kind of guessing. Now going into how do you develop your pricing, there are several inputs that you need to figure out. One of the things I like to say, I’ll screw it up, but I normally say something like Price is an input on a spreadsheet, not a result or not an output from a spreadsheet from a formula. See, I screwed it up. So that means you can’t really sit there and figure out what you should price your product based on. A formula is based on inputs. And, you know, you say, here’s the price and here’s the margin one, whatever. And you can’t even really say that based on what your competitors are doing. You can, but it’s probably not advisable because we don’t know if our competitors are doing things right. You know, it’s the assumption is everybody in our market is is doing everything right. They know what’s best and we should just copy them. And, you know, so we’ll talk about sort of pricing, layout and design and stuff like that in a minute, but you really need to know about your customers. And so, you know, some of the things you need to know are in what value are they going to get out of this? And, you know, if it’s if it’s something to do with financial transactions or, you know, just things that are sort of really quantifiable. And I mean, you can really sit there and figure out, like, you know, this is the value that they’re going to get on the ROI from using your product. Then all of a sudden doing something like what I say is the ten x rule is very easy. What that means is if they can get a $100 in ROI from your product and charge them ten bucks, that’s the easy, easy calculation to do some things. You’re not going to be able to do that really, very, very easily, you know, especially if it’s new. But this goes back to just go go understand your customers, you know, figure out, you know, are they going to save time. Okay, there’s a value on that. Are they going to save money? Are they going to be able to take advantage of new opportunities? Try to figure that out. And I guarantee you at first you’re not going to get it perfect. You know, and pricing isn’t something that once you once you’re done with it, you’re done. It’s it’s a continually evolving thing. And that might mean that the actual price is going to change. It might mean that you’re going to start with one plan and they’re going to add multiple plans as you as you start to see where the where things sort of, you know, maybe the different market segments start to appear. You’re going to, you know, take that one price and now you have three. But it’s very three very different use cases or very different segments. So basically you take the value that your customers are going to get. Then you take things like, you know, the, the, the metrics that you’re going to base your price around. So storage is a typical one. But, you know, storage is so awful because it’s a it’s a it’s such a commodity metric. And, you know, if I’m buying storage, you know, if I’m if I’m buying something that’s all about storage, then maybe that’s fine. But if I’m buying a CRM system and you’re, you know, one of the things I get with that is a gigabyte of storage and then the next pricing tier up is two gigabytes of storage. Is that really where I’m finding my value, you know, one of the biggest problems? So I don’t want to talk about the stuff that, you know, everybody always, always talks about. I want to get to some, you know, specific examples. But, you know, like one of the things that that will see, you know, with with like storage based pricing, one of the problems that I see is companies trying basically taking their underlying cost structure and trying to sort of replicate that or mimic that with their pricing. So I’m charge for S3 storage, so I’m going to try to take that cost structure and somehow mimic that with my with my pricing to my customers. And that’s just that doesn’t make any sense unless it makes sense. But most of the time it doesn’t. Right? So you need to sort of separate those things. So don’t try to like pass on the cost of your, your storage when it when it’s just minimal, you know, to your or to your customers. So, you know, one of the things that happens when you sort of base your pricing around something that’s not really valuable like a, you know, like storage is you’ll see people maybe gaming the system. So if I’m going to if I’m on on the edge of having to move up to the next pricing tier, and the only real difference is that storage, you might find people deleting objects or their usage might slow. And you know, what I like to say is not only are they gaming your system, they’re out there looking for a company that actually understands them and understands the value that they’re getting from it. Right. Because you don’t you’re you’re so focused on storage. And I just I like that metric is because I think it hits the hits home and it’s something that happens across the board with all sorts of different types of companies. So you take you take the value that comes from understanding your customer, right? You take the value that they’re getting and that that comes from understanding your customer. You take the the metrics that you need to build your pricing around. And again, that could be it could be features, it could be things like storage or it could be users, you know, perceive. I mean, that really depends on on on your on your customers. Per seat licensing. You know, that’s the way that things are done in the enterprise world. That’s the way we we tend to think of them, you know, going forward users, you know, users proceed however you want to want to think about it. And I think that that’s just that’s just a carryover. But it doesn’t necessarily mean anything unless it does. And let me be clear. You’re selling into an industry and this goes back to the first point, knowing your customer, you’re selling into an industry that thinks about users or thinks about seats. Then you have to figure out if you want to change it up. You know, you don’t want to be clever for clever sake. You want to you want to do something that’s aligned. So, you know, if you come in with something completely different, you might actually throw them off a little bit. And they’re not going to feel comfortable doing business with you if that’s the way they’re used to doing business. So you need to understand your customers. So then there’s all sorts of other things like, you know, how how do they want to buy? You know, it’s so easy to say, Well, I want to I want to do a monthly recurring fee. That’s what that’s what I’m I do, you know, I want to be in the recurring revenue business. Well, that’s cool. If that’s how your customers want to buy now, it doesn’t mean that they, you know, just because they want to buy on an annual basis doesn’t mean that that’s not recurring revenue. But it changes the way that you put your pricing out there. Right. A company that I’m working with, we just we’re looking at some data and it turns out three quarters of the people that sign up for their product sign up for the annual version. And, you know, there’s lots of reasons that could be the case. But, you know, that’s an interesting piece of data that we need to now look at and see, you know, where do we go from there? You know, we could maybe put the annual practice in as a little bit. It would just put it out there first rather than making them jump through separate hoops to go from, you know, what, the monthly pricing to the annual and that that sort of thing. It could be that. And this goes back to knowing your costs, or it could be that in some industries, especially older industries, ones, especially where there’s bigger companies, especially where you might be dealing with a procurement department, you know, some companies if you offer a discount if they were going to do business with you. So they already made the decision to do business with you and you then offer a discount. They have to take the discount. It’s like their rules, right? So, you know, they can’t sign up for the monthly plan because you offer a discount on the annual plan. On the flip side, I’ve seen companies, I’ve seen people who who buy things on a company credit card, you know, be willing to pay $100 a month on their company credit card because they can do that without any additional paperwork. So it’s going to be 1200 dollars at the end of the year, right. They would rather do that than pay $600 for an initial discount because of that $600, even though it would save the company $600 would require additional paperwork. So if you but if you didn’t know that, you might try to do something different and you might end up leaving a lot of money on the table, or you might end up not even being able to sell to that person because they’re going to be like, I’m not going to do this. It’s too much work. I’m going to go to your competitor that will allow me to pay the way I want to pay. So you have to know, you know, how your how your how your customers are going to buy, you know, and it could not be a credit card, right? So this isn’t really a pricing thing, but it does sort of go into that that whole the whole commercial side of this, which is, you know, you can’t force a particular way of buying on your on your customers. You know, there’s a lot of stuff going on out there, you know, that people don’t really talk about. I mean, I have some some clients that, you know, they don’t really care how you’re going to pay a lot of their their folks, their customers still pay my check. You know, they invoice me every month. You know, it’s not all just credit cards. And, you know, we have to know how your your market is going to pay. So there’s there’s all sorts of inputs in terms of pricing now. I mean, I can I can’t think of them off the top of my head any more. But, you know, there’s there’s lots of different inputs. And, you know, it really is individual to the company and to the to the market that they’re serving, which is why I say don’t copy other people don’t copy what other one other companies are doing now, you know, in terms of pricing, page layout and things like that, I mean, there’s some there’s some truth to the fact that I think we’re used to that three column layout now. So if you come up with something very different, you you better be it better be really clear, right? Because we’re so used to that at three. But even within those three columns, people do it right. Some people really put no thought into it. When I say right, I mean, there’s a lot of stuff going on there. You know, you have to there’s it’s still a marketing page. You have to do you know, you have to you have to have like good headlines. You have their social proof and trust factors and all that stuff. But even within the pricing, you know, there’s something called Goldilocks pricing, which is, you know, you have one that’s too low. Maybe doesn’t have all the features. You have one that’s that’s really high priced. You know, it’s probably not going to be that. Probably nobody’s really going to go for that. Then you have that middle one that’s just right, you know, and that’s where you want to send people. But that’s a lot of times, you know, that that one price is really what you want people to go for it. So you put those others on there. Those bookends, you know, just to be just sort of arbitrarily put them on there. And, you know, I think it you end up confusing things because you end up with something that’s not value oriented, don’t have prices just to have prices on there. We’re seeing a lot of companies now sort of have one price and and, you know, simplify it, you know, like, you know, buffer or helps go. I mean I if I’m if I’m from remembering correctly, you know they like have just one price.
Bronson: Yeah. Yeah, right. Right.
Lincoln: Yeah. I mean, it’s it simplifies it. Now, some could argue that those are maybe too low price. I don’t that’s that’s not my they know their market, you know, and and by all accounts, they seem to be doing quite well. So the point is, though, you know, don’t don’t do something just to do it, understand why and what’s going on. And I would say you’d be much better off with one price out of the gate that’s really built around an understanding of your customers than trying to play these these games. I’ll tell you, because I think this will be interesting, but I could be wrong. So if if you know, a lot of the pricing sort of theories that we have today come from like the late 1800s. So I’m, I actually, I, I did a lot of study on like P.T. Barnum and stuff like that. I mean, and then a lot of the mail order stuff from the late 1800s or early 20, early 1900s. You know, it’s it’s really interesting to see what was going on back then. And a lot of the theories came from there are a lot of the the sort of the variety pricing like $0.99, things like that, all came from those those times. What was interesting about that is other than the direct mail letter that you might get, you know, selling, selling books or something in the newspaper maybe once a week, you know, you get maybe the the store, you know, just sort of the the general store that you might go to once a week. You really didn’t see prices. Right. So it was really those, you know, very seldom during the during a one week period would you actually see prices. So you could play these games with people and it would work. But those theories, I mean, they have sort of been with us and those tactics and those gimmicks have been with us for, you know, well over a hundred years lately. You know, how many times a day do we see a price? I mean, it it’s exactly it’s constant. So I think that what we’re seeing is sort of a backlash against a lot of those gimmicks. And and you see this high interest, you know, they’ll they’ll literally have just a nice round price. You know, I’ve seen at fast casual restaurants, there’s one that I go to here. It’s a new one in town, you know, where every taxes even include it. So sales tax is included. So it’s a nice round price. You know, it’s like ten bucks for, you know, a burrito and a drink in a side. Very simple. So I think what we’re seeing is, is this idea of simplicity coming back into place. I don’t want to say that across the board this is going to hold true, but people are inundated with prices. So we need to be thinking about how that might be changed. So I don’t know that there’s a lot of empirical evidence that I don’t know that there’s a lot of research into that. That’s just my own observation and sort of understanding where this stuff came from and trying to understand how it applies today. So, you know, long one explanation there but I think that that really understanding your customers, understanding your goals, it’s another thing. I mean, let’s be honest how many people go into let me take a step back. You get to basically pick your own customers, right? Anybody that complains about their customers has no one but themselves to blame. So if you go into the 99 cent store business, you know, and all of a sudden the people that are coming in, you kind of wish weren’t the people that were coming in. Sorry. You’re the one that you’re the one that opened the 99 cent store. Right. So we need to figure out, you know, who do we want to do business with, you know? And I think for a lot of startups that are that, again, have technical founders, but I would say this is across the board. It doesn’t just have to be a single technical founder. I think the idea is we want to be we want to be cheap. We want to make it really super simple for people to sign up online. We want to have, you know, no touch. Really. I hear that. I want no touch. What you want probably is no, you know, very low human touch. You know, you can still have a high touch automated system. But, you know, we basically want all these these things that when you look at it means you’re going to have a cheap product that’s probably going to a market segment that maybe isn’t ideal. So, you know, if you really understood your customers and understood the value that they were going to get from it, you would probably go into things, you know, a lot differently. So, you know, understanding the price and all the stuff that goes into it is great. But understanding who you want to do business with is super important. So, you know, quality versus quantity, you know, a higher priced product certainly doesn’t mean that you’re going to have, you know, a small business. You know, it can be very successful. It just means you’re going to attract the right audience. The other thing is, you know, while I said that, you know, value pricing is really based on what somebody is going to get from it. Mm hmm. Well, let’s explore that for just a second, because I think it’s important if you have a price that you want to charge it, it doesn’t much matter what what it costs you to do that. If the market won’t pay that, that’s that’s the the issue. You either need to figure out a way to lower your price, maybe lower your costs or increase value perception, go after a different market segment. Right. So that’s that’s that’s really important to understand that if you if you want to go to a certain market, you better have the ability to support that market the way that they need to be supported. And so sometimes you go into a market with a $10 a month product, they’re just going to laugh at you because they know full on you’re not going to be able to support them in the way that they need to be supported. They pay 100 times that to get the appropriate support. So that’s so there’s there’s a lot of stuff that goes into pricing. And, you know, a lot of it is at first it’s going to be it’s all going to be based on your understanding of the customer the way that they buy. And a lot of it’s going to be your gut. And, you know, I’ve never seen anybody be able to sort of, you know, have this magic wand that they can wave and say, here’s your perfect pricing right out of the gate. You know, so it’s an it’s an ever evolving thing.
Bronson: Yeah. Yeah. I mean, what do you think about freemium? It seems like it was super popular for a long time. And then just recently, there’s some people saying it’s actually really hard to convert freemium people to paying people. And maybe it’s not the best round for every, you know, start ups, ask company or whatever. What do you think about it? Do you like freemium? And if you do, when do you encourage them to go freemium? And when do you encourage them just to charge out of the gate and, you know, don’t look back. What do you think about those kind of things?
Lincoln: So, yeah, freemium is interesting. I think you’re right in terms of I know you are right in terms of the way that sort of things are being perceived out there. And I think that you’re seeing a lot of companies sort of I say pivot to profit. You know, they’re moving away from freemium to profit.
Bronson: That’s the best pivot ever. I like, though.
Lincoln: I if I had to boil down why freemium doesn’t work most of the time it’s it’s the psychology. People come in thinking that they’re going to get something free forever. And then you you hit them up for money later on. It’s just it’s a nonstarter. It’s just not going to happen. That’s that’s my, you know, very boiled down version of why it doesn’t work. I think that ultimately, though, that comes to comes down to managing expectations. If you look at a lot of I would even say most freemium products out there, the process of getting a user into the system involves basically never telling them that there’s a premium offering. So if you just said at some point, hey, just as a reminder, we have a premium version that might change the psychological barrier that you’re putting up of that any gap or however you want to look at it so that later on when you when you when they hit that barrier or they see that offer, they’re like, oh, yeah, okay. I knew that was there so little I mean, just something like that. So LinkedIn and I just went through the signup process the other day just to kind of see what was going on. And, you know, I think it’s their second or third screen in their onboarding process. They tell you about their their premium version. You can skip it. It’s not that’s not meant to convert you as much as it is. And this is my I’m just extrapolating here. But, you know, it’s not meant to convert you as much to do as it is to remind you that there is a premium version. And then later on, of course, as you as you start using the product, they’re going to they’re going to trigger messages to you to try and get you to go for the free trial of their premium. So I think it comes down to managing expectations. Now, who should do freemium? I think you have to know your goals as a company. I think you have to figure out, you know, what what it is you’re trying to do. You know, if you just and you just want to you can just be seeking to build a massive user base of of free users that you will sell to somebody else to monetize like Instagram. And and that’s cool. In that case, don’t do freemium, do free, forget the freemium, just build that user base. But also understand that you probably going to need, you know, $100 million in U.S. money to be able to do that or whatever. If you’re bootstrapping, you know, I’m thinking probably don’t do free freemium, you know, sell a. Product and you make some money and do it that way. So it really depends on what your goals are. It also depends. Once you figure out what you want to do, the next input would be the market. At some level, it is a numbers game because conversion rates are so small, you know the best the best room and companies are still in the 3 to 5% conversion rate. You know, Evernote is, I think in the I want to say upper single digits, but that’s on a six month active user cohort. So it take, you know, the of the people that that are active users for six months, about nine or 10% of those will convert. But overall it’s like 1% or something like that. So I mean, you know, it takes it’s it takes a massive user base. So if, you know, if you’re going into the fitness center or gym management business and there’s only like 35,000 gyms in the entire United States, you know, is that really a big enough market to make a 3 to 5% conversion rate work for you? You have to know those things. You have to say, I think it’ll be great. I think it’ll work. You know, it’s a it’s a process. And then we’re starting to see lots of different flavors of freemium, which are very interesting. Like Yammer was is a great example. You know, $1.2 billion exit for them is awesome. You know, they would basically come in sort of bottom up, let let the people within an organization bring them in and then they would come back in once want some level of you know a penetration into the company happened so maybe you know 25% of their of the people within an organization they backfill data and say this company based on that domain you know has a thousand employees. Once we get to 250 employees using it, then we’re going to go back to their i.t department and sell them. Right. So that that’s that’s a great, a great way. And we’re starting to see, you know, things like Dropbox and Box and those guys, you know, doing the same thing. They recognize they have a thousand people within an organization, all have a Dropbox account. Hmm. Maybe it’s time to go consolidate those, you know, so it’s a thousand free accounts. You go in, you consolidate those at the enterprise level. Now, that’s a, you know, a $500,000 annual account because the people that are willing to pay for that, that control and that that that aggregate visibility and all that stuff, you know, are willing to pay that money. The people that brought it in from the bottom up, they weren’t. That’s okay. So there’s lots of different sort of takes on freemium. And I think that’s what’s most exciting about it is the evolution. But just about everybody is trying to figure out how to get away from the very simple free forever with a with a premium upsell. That’s just that’s hard. That’s really difficult.
Bronson: Well, talk to me a little bit about churn, because, you know, as I was struggling in this interview, you know, I thought about, okay, there’s the pre launch, there’s the beta, there’s pricing. And then another big piece of the pie is churn. You know, for a SAS company, churn is massively important. I mean, if it turns to high, it’s hard to make the numbers work. What are some best practices to lower churn? To think about churn, what do you help people with there?
Lincoln: Yeah. So so the main thing you want to do to to to combat churn is to keep people as a customer. It’s that it was not by definition.
Bronson: Yeah.
Lincoln: That’s the look. And here’s the deal. I think we need to sort of define churn to begin with. And I think what we’re really starting to see I just got a ah, somebody just sent me a message through LinkedIn yesterday and he used an acronym, acronym that I hadn’t, I hadn’t heard which was d r which was right. Yeah. No, I can’t hear what the acronym was anyway. It’s basically oh dollar dollar revenue retention. The RR. I hadn’t heard that before. I thought that was cool. He just said, you know what’s what’s important now is is it customer churn? Is it or is it this dark are like, well, no, definitely it’s r I just hadn’t heard any other day where VCs were basically saying, look, you know, the companies that are excellent from our perspective have, you know, a 95% customer retention rate and 110% revenue retention rate. So getting back to what churn is, churn generally means, you know, it’s the people that leave at some point, right? But then there’s there’s a better way to look at it, I think. And that’s that is revenue churn or now we’re looking at, you know, instead of revenue churn, you’re looking at revenue retention. So, you know, at the end of a year, we don’t really care so much about how many companies leave or how many customers leave. What we want is to make sure that in that same group of people, our revenue actually went up. Right. If you can do that, then we don’t really care about the number of people leaving. So this is all the understanding of churn, the understanding of customer retention or customer success and all these things that are driving that. You know, it’s definitely evolving quickly. But, you know, bottom line is, you’re right, especially in a recurring revenue business, but let’s be honest, in any business, we don’t want our cost. To no longer be customers. So we want to make sure that they’ve that they stick around. And you know what? One of the things that I’ve heard several times and it’s kind of annoying is I just want to get customers now. I worry about retention later. And I just think that’s such an amateur statement that’s so bad. I’m not saying that you have to dedicate a whole team to customer success at this point, especially if you’re first starting out. But you have to think about what can I do within my product to make sure that people are going to continue to stick around? The metric that I use, which is what’s a metric, is engagement. And engagement. Basically, the way that I define it is that that means somebody is getting value from your product. What that means is that at various points within the lifecycle as a customer, they are going to be engaged in different ways. Right. So, you know, you’re sitting down to figure out your you you’re building your product, you’re thinking about, you know, your all the different things that are going into that in terms of user, user experience and stuff. You’re thinking about the onboarding process. You’re thinking about, you know, once they’re in the product with a lot of times that’s sort of it. Well, it’s true that during the onboarding process, the engagement is going to be different than what you would need from six months, six months from now. But most of the time we don’t think about, you know, what is what what is, what does engagement look like? Six months. You know, once they’ve been a customer for six months or six weeks or six, eight or six years down the road, look, if you have a business plan and you’ve mapped this thing out and you said our average expected lifetime is going to be three years, you better know what engagement looks like for a customer three years down the road doesn’t mean you have to know it perfectly. It doesn’t mean you have to. I mean, you know, especially if you’re just starting out and people haven’t even been a customer for three days, but you kind of need to be thinking about that because these are things that need to be built into the product. There are things that need to be built into your back end systems, and there are things that need to be built into your organization. And most of all, they need to be part of your mindset. So, you know, when you get a customer, you need to do everything you can to keep them. And so engagement, so, you know, making sure that they get onboard as quickly as possible, you know, I like to say, get them to that wow moment. You know, if you have something that’s a wow moment, get them there as quickly as possible. If it’s something that, you know, if you can break it down into little wins, you know, if they can just if they feel like they’re making progress, we want them to do that. Pushback I get is often, you know, my, my, my, my product is too complex. You know, like, that doesn’t fly, man. You can you can you can always simplify it. So simplify the process, get people in there, get them engaged and keep them engaged and look for things where engagement is going down. So I said earlier, you know, if you if you have a storage based pricing and people are starting to delete things that can be a churn threat, those keep those people can be on their way out. So you need to figure out how to just sort of intervene and make sure that they’re that they’re happy and, you know, will stick around. So churn is basically customers are dollars leaving retention as customers are staying but dollars for for a company that’s looking to to to build revenue not the you know, not a company that just has a bunch of free users. If you’re looking to build revenue in revenue churn or revenue retention is probably with the metric ultimately that you need to be focused on.
Bronson: You know, no, it’s a. Let me ask you this. You know, as you consult these companies and you have kind of these mindsets, these philosophies, these best practices that you try to communicate to them and teach to them, what are the aspects of what we’ve talked about today or maybe things we haven’t talked about the day of the hardest time with? Because I’m sure some of the things you say they go, Oh yeah, that sounds awesome. We never thought of it. Thanks for sharing, Lincoln. We’re going to do it. Other pieces are probably like, I don’t know, I think you’re wrong here. We’re the places you get a lot of pushback because I think that’ll be interesting.
Lincoln: Yeah, it it really most of it is mindset stuff. So it is kind of this idea of just changing the way they think. So, you know, most of the time, even though we don’t really believe that if we build it, they will come, a lot of people believe that. So because they’re different, right? The rules don’t apply to them. And I just I kind of see that, unfortunately, way too much. You know, I think that’s actually I mean, that’s that’s a dangerous way to go about building any company, you know? And I think so it really comes down to, you know, you’re getting out of this idea that your product is going to sell itself. We’re just going to come there that you’re going to have to put in some effort. One of the the things I usually end up being almost a a coach. And at some point I had plenty of again, a lot on the technical side. But, you know, of of founders that’ll say, you know, I don’t like marketing. I’m not a marketing person. And I just think that’s. Yeah, you’re right. And the more you say it, the more it’s going to be true. You know, so stop saying it. First of all, stop saying that you’re not good at marketing and you’ll figure out how to be good at marketing. You know, you figured out how to write really great code, build scalable systems and do all this other stuff. You know, marketing is a process. So let’s go figure out how to make that process work. So it really comes down to, I think, just just some some weird beliefs that are that have been perpetuated. You know, when I’m when I’m working with non technical founders and executive teams, then you get into interesting things like that are just cultural. You get into silos. And with SAS, the SAS business architecture is really something where the product and marketing and, and finance and, you know, metering and billing and support, all that stuff comes together, right? Yeah. And, and then bigger companies or companies that are founded by serial entrepreneurs that came out of a bigger company, you instantly get into this very siloed, very siloed world. And, you know, to come in and say, you can’t do that. You know, at some level, these things have to all be brought together. You know, in the old days, you know, we have a DVD with with code on it. There’s your product. Now everything else, you can sell it however you want. You can market it however you want. But there is you product. Well, in, you know, in this world, your, your, your sales funnel has to be built into your product and continues into the product. And by the way, it never ends because there’s upsells and cross sales and even down sells and we need to have all of that sort of built in. The meter in billing has to flow directly to both your marketing, your behind the scenes marketing systems as well as your finance. And it’s it’s an integrated business architecture. And so at the higher levels, it’s figuring that out. And with the very large companies that I’ve worked with, it’s, you know, it’s that SAS DNA and, you know, they’ll be like, well, we want to go acquire a company so we can get that DNA in here. And it’s like, you better keep it separate, because if that DNA comes in here, it’s going to get rejected or eaten or whatever happens in that company. The DNA is basically not going to be enough to change your corporate culture. And, you know, so there’s it runs the gamut depending upon the type of company that I’m working with. But most of the time it is just coming into this business architecture with a preconceived notion of of that that doesn’t fly with what what needs to happen. So sometimes I am a coach, you know, and sometimes I just have to be blunt and say, you know, okay, you don’t like marketing either. You need to figure that out or you need to get somebody in here that likes marketing because without marketing, you don’t have a commercially viable product. I mean, it’s nobody’s going to buy it, you know, or or at worst. And I want to touch on this. You know, it’s not that you’re going to fail. It’s that you’re you’re not going to grow substantially. You’re going to stagnate. And I think maybe be interested in your take on this actually is just this idea that people are more afraid of stagnation than failure. You know, failure in this industry is almost you know, it’s a badge of honor. You know, there’s fail con, right or whatever. And, you know, it’s cool. I mean, I get that. I understand that. But I think even worse than failure is this idea that I’m going to build something and it’s going to be mediocre and then it’s going to be a burden. Right. And a lot of the companies that I work with are not failing. A lot of the companies I work with, they’re doing just, you know, doing great. They just want to do greater. But a lot of the companies, they’re just they’ve stagnated. Maybe it’s due to high churn. Maybe they’re pulling in a lot of new customers, but they’re losing a lot out the back. Or maybe they’re not getting a lot of new customers. They’re they’re doing just fine in terms of retention, but they can’t figure out how to get new customers. So they’re stagnated. And that’s the worst place to be. And I think that’s where I think a lot of people get afraid. What’s your take on it?
Bronson: Yeah, well, I know when I think about stagnation, it’s almost like entrepreneurship. Without entrepreneurship, you’ve created a business where you’re just an employee running the day to day and it’s not exciting, is not visionary. You’re not conquering mountains. You’re literally just working for the man again. Only you’re the man now. So stagnation. That’s why it’s terrible, because you create your own prison. Stagnation is worse than failure because now you’re working 9 to 5 without the hope of it breaking through because, you know, nothing’s up into the right. You’re just running on the treadmill. Personally, I hate failure and I hate stagnation, but I’m not going up into the right I don’t have anything to do with it. But I think the absolute right stagnation is a horrible fate. And you have to be willing to kill your own dogs, you know, to say, absolutely, if something’s not working, let’s kill it. I mean, I’ve had products before that are making money but not making enough money. And so we just stop supporting them and we tell our customers, all right, that’s that we’re going to turn it off on this date. You know, it was a good run because it’s not worth it to support it. It’s not worth it to go sideways. It’s not worth it for me to have created my own prison and then live in it and act like everything’s okay. And by killing those projects, I’m able to move on and do really exciting things and keep the entrepreneur alive. Me and not killing an office stagnation. That’s kind of my take on it.
Lincoln: Well, let me let me touch on there real quick. I’ve been thinking about it. I saw somebody wrote a blog post the other day. I remember what it was with somebody that had several products. It killed off a couple of them because of lack of traction. And I got thinking about that. And you hear that, you know, maybe not every day, but you hear that every once in a while. And I wonder if that lack of traction had anything to do with their lack of marketing or their lack of understanding about their customer or their lack of ability or not ability, but their lack of interest in focusing on a specific customer segment. And so they put their product out there and just sort of let people come to it and then it fails and then they go, I didn’t get traction, so I’m going to kill the business. It’s like really interesting. And I think this goes back to something we talked about earlier, not really, especially from the technical side, not really respecting what you, you know, what you’ve built. I mean, there’s there’s some stuff that I’m all for. I mean, I don’t want I’m not married to anything here. You know, if it’s not working, get rid of it. But I wonder if a lot of times it’s not working. Isn’t that it’s not working. It’s the you’re not doing what’s right. Yeah. To you know, to make it work. So. I agree. Absolutely. There’s I like to say a lot of times, especially when I talk to sort of legacy software or enterprise software companies, you know, about going to go into the cloud are going to sass. You know, there’s no equity in source code. Mm hmm. You know, there might be equity in the IP and whatever. But there’s, you know, just because you’ve written code does not mean that there’s something there. Mm hmm. It doesn’t mean that that’s what somebody is going to buy it. So you have to figure out how to you know, it’s a it’s a pretty hardcore analogy there. But, yeah, sometimes you do have to take them out back and shoot them. Yeah. It’s for the. It’s for the betterment of everyone. Yeah. Yeah.
Bronson: I got, I mean, whenever I had a cool project, just to be clear, it was obvious they weren’t working and I could put in a hundred X more time and get one X return, you know what I mean? It was it was that kind of scenario, you know, and there was a lot of mistakes. It wasn’t just one. I mean, my margins that was one of things I learned is margins matter. So I stopped charging razor thin margins trying to be competitive. And I just realized I was going to lose my customers and they weren’t going to be the dollar store customers, you know? So that was all the mistakes I made. There was customer acquisition mistakes. I mean, there’s just there’s a million mistakes. And so I’m not in favor of killing things prematurely because sometimes you got to run through brick wall after brick wall to make something work. But sometimes you can imagine I can run through 100 more brick walls and it doesn’t matter at that point. You got to turn it off and move on. And so you’re absolutely right, though. It’s there’s no one case scenario. You know, people say, are you in favor of failing fast? It’s like, well, I don’t know. Like, tell me the details. Like what? What are the real numbers and what are the things really look like? Because I’m in favor of filling fast if it’s obvious it’s going to fail over the long term anyway. But if there’s some hope there and you’re just not really honing in on your marketing or who you’re selling to and that case, well, maybe let’s not Belfast pivot may be an escape instead of, you know, what it needs to be. So I think it’s just all the details, you know. Let me ask you this. You know, with with all that you’ve seen, I want to give you a chance to brag a little bit. Right. What are some of the success stories? You know, what are some of the companies? And maybe you can name names, maybe you can’t or you came in there were specific problems that you noticed. You tweaked some things or maybe overhauled some things, and then things started to work. Because I think those examples are going to be good for you. People can come to you as a consultant, but also good to give people hope of like, oh, changes actually matter when they’re done right and businesses turn around because some people have never actually seen a business turnaround because of a smart decision.
Lincoln: Right. Right. Absolutely. So, yeah, it’s interesting. And you started out, you know, saying, I’m a consultant. I’m probably a little bit different than a lot of folks that come on here who either work for the company that they that they were talking about or they started the company and they can really talk about it. And I’m usually a little bit because I don’t remember, you know, where I’ve signed in days or where I haven’t. So I usually just don’t don’t say things unless the companies have just absolutely given me explicit permission. So it’s it’s it’s kind of a it’s a it’s definitely a catch 22. I it’s hard to do that.
Bronson: All right.
Lincoln: Yeah. But, you know, like, just as an example, Project Bubble is a is a project management company out of UK still was in my free trial dominator course which he basically did a 240% increase in in paid free to paid conversions in 30 days. You know, just simply making some changes to the to the to what happens during the free trial, you know, from onboarding, you know, making it simple to get to get people to get started, getting people to to go from that point where they’ve started in the free trial to actually using it. You know, that’s the thing is free trials is as an example is is this part of the the sales process where we usually think. It’s like just a black box on a on a flow chart. But really there’s a lot of stuff to it. You know, it’s another one of those things where we think, just let them in, they’ll kick the tires. But if it’s an orchestrated process, that’s that’s driving people to not just use not just this thing where they think they’re coming in to try the product. Right. The companies that succeed with free trials don’t have that. Don’t don’t share that mindset. They know that that’s what people think they’re coming in to do. But we are actually here to get them to use the product so that they’re not even going to look at the other seven products that are on their checklist. Right by the end of the trial or by the end of the first day, they’re going to be actively using our product. So, you know, Stew Stew has written about that. He’s been he’s been pretty, pretty explicit with some of the results from that. So, you know, in all that was I mean, changes to, you know, what happens the first in-app experience changes to the email follow up. You know, it’s amazing. We don’t want to we don’t want to spam people. That’s what I hear all the time. Look, spam is unwanted email. Email is powerful. I want to be I want to but I want to temper that in a second book. But email can be very powerful. And I think a lot of the founders these days, you know, we don’t want to I don’t want to because I think what happens is we forget that maybe in some cases we’re not our customer. Right. And so we might not like email, but our customers are just fine with it. And by the way, I would I would challenge anyone who says they don’t like email to, you know, whether or not it’s you really just don’t like him at all or it’s you don’t like email that that sucks. You know, if it’s value I bet everybody says they hate email. I bet there’s at least one email that they get every once in a while that they like because that one adds value. Right. So if if you know. But how many times a day do we get something from a company that’s all about them, all about their product, all about, you know, the great thing that they did? And I’m just like, who cares? But when you get something from somebody that’s about you or how to, like, better yourself. Cool. And even if there’s an offer in there, you know, or a call to action to go sign up, that’s. That’s cool. The whole thing was really useful, right? So email can be very powerful. And most companies that I see that are that are struggling really don’t use it right at all. No, no. Same credentials, right? When somebody signs up for their free trial and then it’s a 30 day free trial on like day 31, they’ll be like, your trial expired or, you know, or maybe if they’re really aggressive on day 29, they’ll say, your trial expires tomorrow and that’s it. And then they’re you know, they wonder why things didn’t work. So, you know, going back and making your email work in your favor is, is, is, you know, that said, if everything else is terrible, then email isn’t probably going to be that effective. I mean, so I can see here until all the stories of where we’ve had successes with that, but I’ve seen failures. I come in and, you know, companies want me to just help them rework. I will never do this again. I did this for one company. They brought me in to help revamp their emails during the follow up on a trial, and I found a whole bunch of things that were wrong within the product itself, like the email was going to send somebody back to into the app, but not to the right place. So it was not going to be the streamlined process. So I said, you need to make these changes. I ended up giving them their money back because it was not going to work. And I will never, ever do that again because, I mean, I’m not going to come in and just do email for you. If there’s other stuff that is not working. I’m going to tell you about that. And we’re only going to work together if you are willing to to look at everything that needs to be changed. It’s all a part of a process, right? So so that’s that’s one storm force is a is a company that has been publicly said that we work together. You know, we’re working right now to to do some they’ve got some really great stuff in terms of getting people to that. Wow. Right now, what we worked in pricing with them, they went from a freemium product with like a million or so hits a month. I mean, it was like it was crazy because people basically were treating them like the Weather Channel and they had people using their product for free, their stories out there all over the place. I suggest, you know, definitely go, go, go find it and read about them. You know, they basically had people like ExxonMobil using their product to plot their their billion dollar oil rigs in the Gulf on their, you know, on their map for free. Right. And or for 40 bucks a month or something like that, you know, maybe. And it was just like we talked to them and said, look, you know, you have to understand the value that your customers are getting. So they went from freemium to like $400 a month to like 4000 or something or $40 a year to like 4000. So they’ve, you know, just exponentially raised their prices because they understand their customers. And every time they do that. If you look at the sample site today, it’s all about like different use cases. If you go there and you are a logistics person, you quickly get to the point where they’re speaking your language as a logistics person or a supply chain person, and you’re going to come in and it’s just a streamline, that whole process. So those guys, I mean, they basically went from almost going out of business to, you know, hundreds of thousand million. I think they got to a million and they are really quick. Now, there are, you know, 500 startups funded. And so that’s that’s a great sort of success story from all sorts of things, from pivoting away from freemium to raising their prices to streamlining the onboarding process using email the right way, all those things. So, I mean, you know, lots of different things like that. But I it’s I wanted to mention that that sort of that failure, it wasn’t a failure. It just didn’t really it didn’t move the needle right. And I was so fed up with them that it was just a just a bad experience. And, you know, one of only a handful of times I’ve ever, you know, given somebody their money back. And every time it was because I mismanaged expectations, I said, well, okay, let’s let’s hit it, you know, let’s figure this out and didn’t really do anything. So you have to understand, you know, some but if you’re not doing any email, you know, maybe, maybe something worth and sometimes it’s not an email follow up sequence, maybe just adding some transactional messages that, you know, sort of drive people. You know, if somebody hasn’t added any projects, if they see an email from you and it says there’s no projects, that could be a motivator to go add projects. But one thing that I like to talk about is never having a dead end. This is you see this all over the place. Even SlideShare sends out messages that say this is actually this was the this was the catalyst for like a blog post that I did SlideShare. Since sent me an email every week that says, you know, here’s the here’s how your your presentations have been doing. And they’ll have like a red down arrow on on them, which is sad. And, you know, not all of them, but there’s no, like, what do I do to fix that? Mm hmm. Right. You haven’t given me away. I mean, what if they had a link that said get more, you know, get more views, click here. And then it went to, you know, a blog post or a video or something that or even just another share button that allowed me to then tweet it to my my followers again. You know, don’t don’t ever don’t forget to close those loose. And so you see that I mean, email marketing companies could do the same thing. You know, how many times do you say, well, here’s here’s the results of your your campaign. You had all these unsubscribed, you had these bounces, whatever. And I’m like, thank you. I don’t know what to do with that information. What if you gave me a way to to go back and figure out how to how to fix that? So little things like that. So even if you’re doing transactional messages and not doing a big impact so that that could be doing your trial, it could be during regular use. Mm hmm. Close those loops. Positive feedback. Let me actually do something, you know, and. And the result is going to be a happier customer, you know, that that is able to take advantage of of what you’re doing. Otherwise, you know, how many how many things are you doing right now that are causing frustrations for your customer? Right. That’s a big deal. The other thing is, I think it’s a super important ask for the sale. Mm hmm. I mean, during your free trial or very, you know, even even freemium, you know, at some point, you know, just don’t be afraid to ask for the sale. I mean, if you if you build a product, you’ve gone through this process of actually putting something out there at some level, you must feel like it’s it’s worthwhile, right? Maybe you even feel like the the product itself, you know, it’s really good. It solves a problem. Then then don’t be afraid to to ask people to buy it, because if you believe that it’s useful to them, then you should believe that it’s okay to to to put it in front of them. Mm hmm. So I’m, you know, I’m in favor of being even maybe a little bit more aggressive than you would feel comfortable with within the confines of the reality of who your customers are. And you have to be cognizant of that. But, you know, I would I would rather kind of err on the side of of of being a little bit aggressive than than not otherwise. You know, if if you don’t ask for the sale, don’t be surprised when you don’t get it. Yeah. Yeah.
Bronson: So, Lincoln, this is not an incredible interview. I mean, I’ve learned a lot personally, just I don’t think we’ve had a deep dove into SAS this far, especially on the pricing, because there’s a lot about pricing and premium and those kind of things here and that was needed on growth narrative. So again, thank you for for coming on the program and sharing your expertize.
Lincoln: Absolutely. Thank you.
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