Avsnitt
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Earlier this year I failed to sell Baremetrics for $5m. But I learned a heaping pile of things from that and one of the biggest things I learned about was the world of asset sales and stock sales.
This is about to get real nerdy but this is crucial if you're trying to sell a company. It could literally save you millions of dollars.
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I failed to sell Baremetrics for $5m. While failure is 100% a part of success, it's only useful if you learn something. So, here are some of the things I learned from this little failure.
Hopefully these are some things you can apply to your own company (present or future) that can save you a bit of pain.
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Saknas det avsnitt?
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In the past six years of Baremetrics' existence, I've received dozens upon dozens of emails from folks interested in acquiring Baremetrics. When you're running a transparent company that's growing, it just comes with the territory. Generally these conversations quickly fizzle once they realize I'm not even remotely interested in some quick, 1x revenue sale.
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Yesterday I wasn't feeling great, mentally. I had a level of anxiety I hadn't felt in a long time that started in the morning and really persisted through the night. I can't pinpoint it to any one specific thing. It was more the sum of a dozen small things. I felt like I hadn't been leading the team well through a big product change, parenting has been taxing lately, I was second guessing all sorts of life decisions, the things that typically bring me joy day in and out have just felt really uninteresting and on top of that, the weather yesterday was dark and stormy...which perfectly matched how my brain felt.
https://baremetrics.com/blog/founder-mental-health
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As founders, a lot of our identities get wrapped up in our companies. Certainly within our industries, but even to family and friends it’s how people know us. And over time, we sort of become our companies. Most founders or CEOs are the “face” of their businesses and eventually they’re inseparable. Being wholly consumed by your company hurts not only you and the people around you, but even the company itself.
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A couple of years ago, we were in a hard spot. I had just realized we were mere weeks away from running out of cash and had asked the whole team to take a pay cut while we figured out how to get profitable. But in addition to cutting costs, we needed to figure out how to speed up growth. One of the things we did to speed up growth was figure out who our “perfect customer” was. We’d spent the first two years making some big assumptions about who our ideal customer was and who we should target, but had no imperial data to back that up.
https://baremetrics.com/blog/perfect-customer
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When you’re just getting started, everything feels like a big deal. Everything. The tinniest things can turn in to huge showstoppers that drain time and, in many cases, money. But the longer you’re in the game, the more you realize how few things actually matter.
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Where to publish something has becoming a difficult decision for a lot of businesses. You read so many stories about using various channels to distribute content and grow traffic, it's hard to know what does and doesn't work. Medium, in particular, has become a major player in the world of startup content, but is it really that great?
https://baremetrics.com/blog/medium-back-to-blog
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When building a startup, so much emphasis is put on “the product” or even “the customers”. Everything else takes a backseat. On some level, and at some points in a company’s lifecycle, this makes sense. Of course you’ll make sacrifices and you’ll have to work really hard and work really weird hours.
But eventually, you’ll have to stop. The downsides far outweigh the benefits and the damage done to you and your team can be detrimental. That’s what I’m writing about to day. Managing the long term health of you and your team.
https://baremetrics.com/blog/startup-health-well-being
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Last week I hit some sort of boiling point with life and work. July was an incredibly stressful month for me both, personally and with work. Just lots of extremes, and it wore me down.
Every single founder is struggling with something. Maybe it's big, maybe it's not. But there's always something. Even the most successful founders deal with this stuff and don't know what to do.
Everybody’s winging it.
https://baremetrics.com/blog/winging-it -
There can be some really exciting days when you’re building a SaaS company, but the large majority are a slog. Just one foot in front of the other, slowly trudging your way up the hill in the muck. The hockey-stick growth you’ve envisioned feels laughably far away. Amazingly, you are growing every month, but it’s just…so…tedious. This, my friends, is the long, slow SaaS ramp of death. It’s perfectly normal and par for the course for the large majority of SaaS companies.
Check it out! https://baremetrics.com/blog/long-slow-saas-ramp-of-death
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Founding a company is hard. You’ve got an infinite number of decisions to make while simultaneously trying to catch lightning in a bottle with creating something out of nothing. It’s even harder when you’re doing it alone.
Being a solo founder, in many ways, stacks the deck against you. You’re left shouldering the weight of every single decision and don’t really have any one to share it with. However, there are some ways to make it easier and, in many cases, it can actually be a major pro to start a company solo.
Let’s take a look at some of the benefits as well as drawbacks so you can figure out if being a solo founder is right for you. Then we’ll tackle some ways to make being a solo founder a pretty great thing.
Check it out! https://baremetrics.com/blog/startup-solo-founder
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https://baremetrics.com/blog/most-startups-are-not-crushing-it
Ask any startup founder how things are going and they’ll tell you it’s “going great”. They’ll talk about some new feature they’re rolling out, or a new round of funding. Or maybe they’ll mention how much user growth they’ve had or that they just got covered in TechCrunch. All signs will point to “crushing it”.
But, for better or worse, there’s a very high probability that they are, in fact, not crushing it. The exact opposite, actually.
We’ve conditioned ourselves to fake it until we make it, but most companies never make it…so we’re perpetually faking it and never actually being honest about our struggles.
That prevents us from getting the actionable help and feedback we need and just perpetuates the false narrative that you’re some sort of failure if everything isn’t roses all the time.
“That’s great, Josh, but certainly things aren’t that dire, right?” Wrong, little Jonny. Let’s look at the numbers.
The dataIf dig in to our live SaaS Benchmarks you’ll find a few of interesting data points about small to medium sized SaaS companies.
Average User Churn is 7.7% per monthAverage Quick Ratio of 1.4Average Monthly Recurring Revenue is $19,000Then one additional, crucial data point not listed on the Benchmarks page: the average SMB SaaS startup has 12 employees.
Now, let’s translate that.
Average User ChurnAverage User Churn of 7.7%. You may think that’s not terrible, and you’d be right. The companies that have 25%+ user churn are in a much worse spot. But what does 7.7% user churn functionally mean?
It means that every single year most businesses are losing all of their customers! Every 12 months, they’ll not only need to replace the lost customers but add new ones as well.
There aren’t an infinite number of customers and at that churn rate, you’ll quickly plateau. Outgrowing your churn will becoming impossible.
Average Quick RatioWe’re going to have a quick lesson in growth efficiency, because it really puts things in perspective. To measure growth efficiency, we use a metric called Quick Ratio. How reliable can a company grow revenue given its current churn rate? That’s the question the Quick Ratio metric answers.
To calculate your Quick Ratio you simply divide new MRR by lost MRR. The higher the ratio, the healthier the growth is at the company.
To put it in a formula: Quick Ratio = (New MRR + Expansion MRR) / (Contraction MRR + Churned MRR)
Say a company has $10,000 in MRR growth. That growth could be made up of any combination of MRR types (New, Expansion, Contraction, Churn) and the Quick Ratio shows you the difference in “growth efficiency” between them.
Let’s look at a few scenarios of how that company got its $10,000 in MRR growth and what the Quick Ratio would be.
Scenario A
$12,000 (New + Expansion) / $2,000 (Contraction + Churn) = Quick Ratio of 6
Scenario B
$15,000 (New + Expansion) / $5,000 (Contraction + Churn) = Quick Ratio of 3
Scenario C
$20,000 (New + Expansion) / $10,000 (Contraction + Churn) = Quick Ratio of 2
Scenario D
$50,000 (New + Expansion) / $40,000 (Contraction + Churn) = Quick Ratio of 1.25
All four scenarios result in $10,000 of Net New MRR, but Scenario A is vastly more efficient at growth as the company is adding the same amount of Net New MRR with much less effort.
So, now, when you see that the average Quick Rate of most SaaS companies is 1.4, you realize how untenable that is.
There simply aren’t enough customers in the world for any company to survive when your growth efficiency is in the pits.
Average Monthly Recurring Revenue + Average Team SizeIn the companies we benchmarked, the average monthly recurring revenue was $19,000.
I want to be very careful here and not imply that “$19,000 a month” isn’t impressive or something to be proud of. It’s a heck a lot more than a lot of startups ever make and for you, individually, it may be exactly what you want or need out of your business.
But there’s another metric that when paired with this number is just frightening: the average team size is 12.
Let that sink in for a moment.
The average startup is making $19,000 per month…with 12 people on their team.
Sweet beard of Zeus.
Still crushing it?Still think all those startups are crushing it?
This is the reason founders and teams get burned out. This is why CEO’s become Chief Fundraising Officers. This is why so many companies get “acquihired” for the people instead of the business (because there wasn’t much of a business there at all).
This is why the fairytale “everybody’s crushing it” mentality is insane. It normalizes terrible economics.
Now look, if revenue isn’t your goal (or you’re delaying revenue in the name of growing another metric for a while), that’s cool. Everyone has different motivations and outcomes they’re pursuing. There are certainly multiple ways to get what you’re after.
But can we just be honest for a change? Can we stop pretending everything is amazing when the economics clearly show they aren’t? What’s the benefit of that to anyone?
Next time someone asks you how your startup is doing, try not sugarcoating it. Maybe say, “You know, we’re having a tough time with user acquisition” or “churn has been a beast to tackle”.
Then, instead of the incessant high-fiving and pats on the back, you’ll get legitimately useful feedback. You’ll likely find others are struggling with the exact same things and they may even have some business-altering advice for you.
Remember, we’re all winging it.
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https://blog.baremetrics.com/startups-keep-it-classy-5bba13285cc6
Building a business makes relatively sane humans do some insane things. The past 10 years have been the modern day gold rush for tech. And I mean that in the sense where lots of people risk everything and make nothing while a few hit it big.
And that “gold rush” culture makes people do some desperate things in the name of business survival.
Every day founders have an infinite number of tiny decisions to make and it’s easy to get decisions fatigue. In a moment of weakness you may do something dumb that hurts you, your team, your company, your brand or any one of a thousand other things.
So here’s an easy rule of thumb to help you when making decisions: keep it classy.
Seriously. It’s that easy. Just ask yourself, “Am I being classy?” If the answer is anything other than “yes” you’re likely taking the route that may have short term gains but long term negative consequences.
You don’t want to be a low class business. You never want to leave a bad taste in someone’s mouth. You’ll almost always regret your decision later on if you go the low-class route.
Copying others’ product designs, badmouthing competitors, taking advantage of customers, overworking your team…there are just so many problems that aren’t solved but actually completely avoidable by keeping it classy.
There are so many things working against the success of your business. So many variables out of your control. Don’t make it harder on yourself by choosing the low-class option.
Successful businesses, the ones that survive the ups and downs, are built on having class. Sure, the occasional bad apple slips through and for whatever terrible reason the universe lets them succeed, but nobody actually wants to be the sleazy used car salesman. Deep down we all want to be respected by friends, family, peers, coworkers and customers. That doesn’t come from taking the low-class route.
Make decisions you’re proud of. Decisions that, although maybe not the easiest route, don’t leave you feeling icky at the end of the day.
Keep it classy.
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https://blog.baremetrics.com/the-startup-echo-chamber-is-making-you-deaf-771eec220181
Being an entrepreneur is a lonely place, especially if you’re the founder/CEO. Sure, you may have co-founders, but the reality is, there’s a lot of weight on your shoulders, a lot of pressure (self-applied or otherwise) to not drop the ball.
To combat this, we’re basically permanently in “problem solver” mode. Everything needs a solution. Which is a natural fit because most entrepreneurs are self-taught and love to learn!
“The widget sales page isn’t converting? Well how about imma throw myself in to a hole and RISE FROM THE ASHES LIKE A WIDGET SALES PAGE CONVERSION PHOENIX!”
Yes, it’s naive, but it’s also how we were able to make something out of nothing. We just figured it out. We’re really great at just figuring it out.
But here’s the thing: solutions aren’t binary. There aren’t “right” or “wrong” ways of doing things. There are just “ways”. Yet, we treat business problems as if they’re all just a series of variables that we just need to find the right combination of and BOOM! #winning
##Startups are like kids
I’ve got three amazing kids. The other night I was chatting with my oldest (she’s 14) and she asked, “Dad, what’s the hardest part of being a parent?” My answer? “That you’re not a robot.”
I said it jokingly, but explained to her that so many times as a parent you ask your kids to do something and so many times they just don’t do it. They don’t do it how you asked them to do it or when you asked them to do it. And I explained that even after years upon years of making the best decisions we can as parents, there’s still not a guaranteed outcome. It’s all kind of a crapshoot.
Running a business is very much like having kids. You so desperately want to control all the variables. You run in the startup rat race because everyone else is too, so that seems to help solve for many of the variables.
You read every startup article you can and your “to read” list has a backlog of 1,000 articles that are sure to change your business. You follow, favorite and retweet popular founders and marketers and feel like you’ve done real work. Then after you’ve done that, you go get drinks at meetups for entrepreneurs.
Then after you’ve had your free drinks courtesy of Blorg.io you head home and read Lean Startup for the 9th time and go upvote some stuff about AI and machine learning on Hacker News because #thefuture.
You fall asleep after your iPhone hits you in the face lying in bed and then you do it all again tomorrow.
##The echo chamber
You, my friend, are living in an echo chamber and you don’t realize yet, but you’re deaf.
In your effort to become an amazing problem solver, you’ve become the worst. You can’t see the forest for the trees, because you’ve completely limited the scope of your thinking to random things you read on the internet from other people just like you who are reading random things on the internet!
It’s a big nasty cycle of everyone regurgitating the same rehashed tips and tricks in the name of “content marketing” and #growthhacking and it just doesn’t make you any smarter or better at your job.
Every business is different because every problem is different. The way Joe solves problems for his customers are not the same solutions that Sally needs for her customers. Yet founders spend inordinate amounts time surrounding themselves with people just like them doing the same things over and over and expecting different outcomes.
##How to get out of the echo chamber
Getting out of the echo chamber doesn’t make you a bad founder. It makes you an exponentially better one.
You know how all of your good ideas come to you in the shower? What if I told you that you could be in the proverbial shower all the time? Getting out of the echo chamber lets you do that.
Solving problems isn’t linear. Your brain doesn’t just run along the same path, connect all the dots in perfect order and magically arriving at an amazing solution.
You need input from lots of sources. In many cases, you actually need no input at all. Your brain needs a break. It’s why when you’ve been staring at a coding problem for four hours and then go grab lunch and come back you’re able to solve it in four minutes.
So, how do you get out of the echo chamber? There are two easy ways.
###Get a hobby
Seriously. Something just absurdly analog. Take up gardening or woodworking. Make stuff out of concrete. Teach yourself jazz flute. Doesn’t matter. It just needs to be away from a computer or anything related to “businessing”.
###Get friends who aren’t entrepreneurs
This is crucial. Living outside of Silicon Valley makes this really easy for me. None of my close friends are in tech. My friends are filmmakers, teachers, writers, florists and print designers. Their jobs are fascinating and we never talk about the tech world.
The key here is giving your mind a break and gaining input from seemingly unrelated areas.
Stop reading business/startup books. Most are 90% fluff anyways and they’re not covering anything new. Stop surrounding yourself with people and things that are just other versions of yourself.
Go be interesting. Not only will it help you actually run your business better, but when you’re done with that business or have moved on to other things, what’s left is that you’ll still be an interesting person and not just the shell of someone good at adding noise to the echo chamber.
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https://blog.baremetrics.com/getting-out-of-the-startup-rat-race-66a5a0ca3055
I’m done. I’m tapping out. I’m bowing out of the startup rat race. No, we’re not shutting down Baremetrics. Very much the opposite. I’m just finished subscribing to and following the traditional startup mentality as we build our company.
In June 2016, I realized we had less than two months of runway left. We had an existential crisis on our hands, the kind that you’ve read about hundreds of times. The kind where the business was there one day, then all of the sudden just…wasn’t. We were just burning money way too fast.
We had to course-correct very quickly. The whole team took a 15% pay cut and I took a 30% pay cut. Long story short (a story that I’ll write about more in depth in the next month or so), we got back on course. Everyone is now back up to full salaries and we’re profitable on top of that. We’ll be a million-dollar company by this summer. But getting here has been quite the struggle.
Playing the part
The way that we ended up in that situation was just such a classic “silicon valley” scenario that I’m honestly embarrassed to even talk about it. Raising multiple rounds of funding (we had 2 rounds totaling $800k, which is honestly small by most SV standards), hiring fast, spending faster, pushing hard for the mythical “hockey stick” growth. Beating ourselves up when we didn’t have that growth. We were embracing it all.
It wasn’t like our investors were breathing down our necks demanding this, they categorically were not. It was self-prescribed. I was choosing it. I was willingly playing the part. “Hey! We’ve got a bank account full of money! We should spend it! Right? Right?!?!?”
I wasn’t trying to be negligent with the money. I was just overly optimistic about revenue growth. Our revenue was definitely growing month over month, but my eternal optimism believed that it’d magically start really growing in “just a few months”.
Instead, our revenue growth has been annoyingly steady. There’s no hockey stick. Just good ‘ole fashioned “normal” growth.
Baremetrics MRR for the past 3 years
Then the lightbulb went off
This past November I took a much needed break, completely disconnecting from work for 10 days. It gave me a chance to pull my head out of the startup hole and get some clarity on things.
I realized that for the past couple of years we’d been in this weird quasi faux-startup “gahhhh we need growth!” mode. I say “faux” because we actually have revenue, which the majority of the typical SV startups don’t, but we needed so desperately to get profitable that we were just throwing out things left and right hoping something would stick and be the magic pill.
We were launching things and immediately heading to the next big idea on the list because our time was running out.
And yes, I understand, this is borderline comical to anyone in the bootstrapped world or really anyone outside of “startups”. But like I said, we had found ourselves fully embracing “silicon valley startup” mentality.
The non-existent race
That 10 day break gave me actual perspective. We’d been trying to build Baremetrics like there was this imaginary startup finish line. As though we could lose or even come in first. We were treating our company like we were in some race for time. But there is no race. There isn’t another runner we could lose to and we can’t “come in first”.
Everything you read about building a startup implies there’s a formula. That doing X and Y gives you the highest probability of Z outcome.
Jason Lemkin, who really does have some amazing advice around building SaaS companies (especially on the topic of sales), wrote this a couple of years back:
Can you really, honestly, commit to obsessively thinking, worrying, futzing, stressing about how to do The Impossible. Every. Single. Moment of the day.
Nothing else, but work. Even when you are playing with the kids. Having dinner with your husband. Because that’s what it’s going to take.
What the actual hell. Not only is that not necessary, it’s incredibly unhealthy and completely unproductive. Do not obsessively think about your startup “every single moment of the day”.
Doing that is what kills startups every day. Founders get burnt out. CEOs make terrible decisions inside of a vacuum. All because they lose perspective working inside their bubble.
I get why people read stuff like that (or any advice from people who’ve had some big payout). We try to find patterns and formulas in everything to make sense of it. We think “well if they did those things, then I can do those things too and also succeed!”
But that’s not how life works and that’s not how business works.
Redefining success
So many entrepreneurs think that the end goal is a big acquisition or going public. They model their actions based on the handful of atypical and statistically improbable stories they read about. They read advice like the stuff above talking about sacrificing every facet of their life for their business, and they think that’s some way to live.
But it’s not. It’s not a way to live. It’s not healthy. It doesn’t make you interesting. It’s not fun building anything that way. It, statistically speaking, likely won’t even make you very much money.
So what if you changed what “success” is? What if success was paying yourself $150,000 a year and building a real sustainable business that you build up for 10 years and sell for a few million? (No, that’s not considered a success in Silicon Valley.) Or maybe you never sell it?
What if “success” was paying yourself $30,000 a year and traveling the world with your family?
What if “success” is building an amazing place to work where your team is paid really well and actually enjoys working there (instead of having people who jump from startup to startup playing the equity game)?
What if “success” wasn’t attached to team size but instead was attached to customer happiness?
There are an endless number of ways to define “success” and it’s the definition of insanity to think there’s only one way to do it. Redefining success to something different than the way Silicon Valley defines it doesn’t mean you aren’t ambitious. I’d argue following a formula is the thing that isn’t ambitious.
No, creating your own definition of success and doing things the way you want to do them…that’s success to me. That’s the ambitious thing. Because doing things your own way, on your own terms, is where you’ll find fulfillm
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https://baremetrics.com/blog/self-serve-cancellations-saved-our-business
There may be no topic in the world of business that spurs such impassioned responses than self-serve versus manual cancellation of a subscription. Let’s just say the word “evil” gets tossed around a lot.
There’s a lot that gets overlooked in the conversation about this, so I want to walk through the different sides of the arguments for/against and try to keep things as rational as possible. I sincerely want to have a constructive conversation about this topic as I believe there are in fact scenarios and reasons when removing self-serve cancellation makes sense for a business.
So, we’ll talk through when it makes sense, how to do it in a way that is as customer-friendly as possible as well as how not to do it. I’ll also address some of the common concerns people have with removing self-serve cancellation.
Note: This is a topic people feel incredibly passionate about. The one thing I ask is that you at least entertain the idea that the world isn’t black and white and that most businesses (especially small startups) aren’t inherently evil. Everybody’s winging it.
One startups experience with removing self-serve cancellationBack in February 2015, we were having some serious issues with churn. It had been creeping up from an already-less-than-stellar 6% to an unsustainable 13%.
If prior months’ trend were any indication, in a matter of months we’d be hemorrhaging customers at a rate that would have put us out of business. Something needed to change.
We were trying all sorts of methods of getting feedback, from including a “required” open text area for feedback when cancelling, to requesting phone calls, and everything in between. Our one and only goal was to figure out why people were cancelling.
But none of the feedback we were getting was actually actionable. Those open text areas would just result in either people slamming their hands on their keyboards at random or at best writing “cancel. bye.” The emails and phone calls we were trying to schedule generally fell on deaf ears.
No matter what we tried, we just weren’t getting enough actionable feedback to fix anything.
So, we decided to take a more drastic measure. We removed the ability to cancel directly in the app. You’d need to message us if you wanted to close your account.
We certainly had some reservations about this. No one loves an extra step to cancel a service. But we were committed to handling cancellations requests as fast as possible while being as genuinely useful as possible (which I’ll talk about in a moment).
The results were fantastic. Not only was the feedback actionable, but we were actually able to save about 15% of cancellations! People would write in saying they wanted to cancel because we lacked certain functionality, but in many cases we either had a feature they needed or were about to release it.
For a solid year, the feedback from manual cancellations continued to be quite actionable and we could count on one hand the number of people who responded negatively to the process.
We cut our churn in half during this period thanks directly to the feedback we received. And more importantly, this literally saved Baremetrics.
But as our churn decreased and the major holes were plugged, we found the feedback less and less useful. The reasons for cancelling were boiling down more to things we had no control over (going out of business, changing business models, acquisitions, etc).
After nearly 2 years of manually processing every cancellation, we reimplemented self-serve cancellation.
How to do manual cancellations in a way that doesn’t bring out the pitchforksThe reason our manual cancellation process worked for as long as it did is that we were committed to doing it in a timely and helpful fashion.
When I say that someone was required to contact us to cancel, most people instantly think of some terrible experience they’ve had with their cable provider. Sitting on the phone for hours, getting transferred to a dozen different sales reps, being offered increasingly larger discounts to stick around.
Nothing could be further from reality with our process.
The key to doing manual cancellations correctly comes down to two things.
Make it unbelievably easy to get in touch. We had a whole pile different ways to get in touch nearly instantly. You could live chat, send in an email, send an in-app message, tweet at us or yes, if you wanted, you could call us.Respond quickly. They’ve made the move to get in touch, now you need to reply as fast as humanly possible. Many times we’d respond within seconds or minutes, and almost always within a few hours (even during the evening).After someone would write in asking to cancel, we’d respond with something to the effect of…
Hey Sally, happy to take care of that for you! Before we do that, would you mind letting me know why you’re canceling? Would love to learn how we could have served you better.
Most of the time, we’d get great feedback about exactly what was going on and why Baremetrics wasn’t a good fit for them any more. We’d then promptly cancel their account (and many times refund them) and wish them well.
What you definitely should not do is argue with the person to try and convince them to stay around. You should try to be as genuinely helpful as possible throughout the process. You want to understand why they’re cancelling and then act accordingly.
This is why we were able to save some 15% of cancellations because we found that those customers didn’t want to cancel, we had just done a bad job of surfacing functionality within the app. So when we identified what was going on, it was actually more helpful to show them they didn’t need to cancel than it was to just go ahead and process without asking any questions.
When to try out manual cancellationsSo when does it make sense for your business to test out manual cancellations? It certainly isn’t for everyone and I don’t believe it’s a great long term solution, but it can be a really effective tool.
If you’re churn rate is double-digits and you aren’t sure of the exact reasons why, then trying out manual cancellations for a period of time is likely worth it for you.
Churn is ultimately the result of your product not solving the problem the customer has. If you have double-digit churn that’s increasing and no clear path to reduce it, you’ll soon have an existential crisis on your hands.
Manual cancellations can make a huge difference in your ability to grow (or to even continue existing as a business).
John O’Nolan of Ghost said it well…
Do A+ thing & go out of businessDo B- thing & survive“Founder” means making this decision 100x per week. 1 user’s poor cancellation UX can fuel positive UX changes for 100,000 new/existing users to have a better experience.
You should keep doing manual cancellations only as long as the feedback is actionable and you’ve pinpointed what needs to be done to fix your churn problem.
Common objections to requiring a customer to contact you to cancelI believe I’ve covered most of the reasons why doing manual cancellations can be really beneficial to your business, but let’s tackle the two most common objections.
“It’s a dark pattern”I’ve heard this one so many times, so let’s be clear: “I don’t like this” does not mean it’s a “dark pattern”.
A dark pattern is “a user interface that has been carefully crafted to trick users into doing things.”
Manual cancellations aren’t tricking anyone. They aren’t preventing anyone from cancelling their account. Are they the most ideal UX? No. Building a business is constantly making the “A+ and die/B- and survive“ decision.
“It’s not customer friendly”Partially agreed. There’s more to it, though. Yes, being able to click a single button and be done is the easiest thing for the customer, but remember the scenario I mentioned above about missing features? Many times (15% of the time in our case) a user wanted to keep using Baremetrics but thought we were missing a feature they needed.
Manual cancellations surfaced that in a way that “instant, self-serve cancellations” never would have. The feedback from those cancellations not only let us help those customers, but it helped us as a business improve the product in a way that future customers wouldn’t have those issues.
Arguably that makes the practice “friendly” for many customers. Again, temporary less-than-ideal user experience for a few in exchange for long-term positive improvements for many.
Business is a balancing actAt the end of the day, you will frequently have to make tough decisions to stay in business. That doesn’t make for great marketing copy, but neither does “we’re shutting down because we couldn’t figure out how to make the product better”.
The most dangerous thing you can do in business is assume that there’s only one way to do it, that there’s a formula for success, that what worked for Company A will also work for your company.
None of those are true.
Businesses are unique, living, breathing, ever-changing organisms. If you sit idly by assuming things will just magically improve, your business will die. Some decisions will result in unhappy customers, but no decisions will result in more unhappy customers than the one to shut the business down.
Find the balance of doing what’s the “most best” for both the business and the customer. The two go hand-in-hand. Some days the scales will tip more towards one over the other and vice versa. But as long as you work on simultaneously improving both, you’ll be just fine.
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https://baremetrics.com/blog/feature-framework
“What feature should we build next?” Ain’t that the question of the year? While that next feature won’t save your business, it’s still important to actually improve your product and create more value for your customers. And figuring out what you should tackle next may be one of the hardest decisions you make on a regular basis.
Most founders (heck, most people) are overflowing with ideas. The problem is, most ideas are, you know…terrible. But they seem great right when you have them.
Mix an overflow of ideas with the difficulty of prioritizing what to do next and you’ve got yourself the makings of bloated, messy, hard-to-use software that lacks real direction and has little impact on customers.
To help combat this, we created a simple scoring system that guides and influences what we tackle next.
Our marketing prioritization system is geared towards marketers and marketing efforts, while this is geared towards product teams.
This system is quite a bit more simple as it’s nearly impossible to fully quantify and measure the impact or effort required to build something. Building software is a mix of data and gut feelings. You throw everything together in pot, mix it up in the best way you know how, but at the end of the day, you just have to make a decision.
So how does it work?
The SystemAll those ideas that you and your team have for ways to improve your product? You shouldn’t just throw them out the window. You should write them down. In a spreadsheet. Where you generate a DIE score for them.
“A DIE score?!?! OMGBBQ, that’s scary!” Don’t worry little Johnny, it’s okay. Let me explain.
DIE: Demand, Impact, EffortSo my acronym on this is slightly morbid, but at least you’ll remember it. Whenever you have an idea for a feature, you add it to the spreadsheet and then assign three factors a rating.
The result of those ratings is a score where the lower the number, the more likely it is you should proceed with that feature next.
DemandDemand is how much your customer base and target market wants the feature. If you’re constantly getting a specific feature requested or frequently hear of a problem your customers are having that would be solved by a given feature, then the demand for that would be “High”.
If you had some random idea in the shower that you just have a “hunch” people would want but have no tangible evidence of such thing, demand on that would be “Low”.
ImpactImpact is a factor that will mean different things to different companies, depending on what your primary goal is at the moment. It’s the thing you want to affect. Revenue, customer growth, product usage or any number of other things.
How much will this feature impact that goal? That’s what this factor is about.
EffortHow much work will this feature require? Will your design team need to spend a lot of time doing research and customer interviews? Will you need all of your engineering team heads down on this for weeks or months?
Effort is crucial as it ties back to your most scarce resources: time and money.
We rate the amount of effort something will take on a scale from XS to XL (extra-small to extra-large). You could change this to some other unit such as number-of-days or even a dollar amount, but we’ve found keeping the unit somewhat ambiguous keeps us from getting overly critical of this step.
The ScoreOnce you’ve set the Demand, Impact and Effort factors, you’ll get your score! Again, the lower it is, the more likely it is you should tackle that feature next.
As an example, the most ideal feature to tackle next would be High Demand, High Impact and Low (or XS) Effort. For us that’d be a score of 3.
On the other end of the spectrum would be Low Demand, Low Impact and High (or XL) Effort, which would generate a score of 11. You probably want to stay away from these.
Putting this to useThe goal of this is not to create something that categorically makes decisions for you, or to somehow quantify exactly how much business impact this will make so that you can’t screw things up. The goal here is to help guide your decision-making process and reduce some of the unknowns.
The purpose here is to systematically build out features in a way that appropriately balances the impact they’ll have on your customers and business with the effort and resources available to your team.
Whenever you’ve got a feature idea, before you throw it at your team and tell everyone to start hacking away right now, put the idea in to the feature spreadsheet to give yourself a dose of reality.
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https://baremetrics.com/blog/marketing-idea-scoring-system
What if you could put a system in place that instantly scores and prioritizes any marketing idea you had? You could focus in on exactly the strategies that are most likely bring you a return on your effort while minimizing costs and increasing impact. #synergy amirite?!?
Lucky for you, we’ve got a system for doing just that, and I’ll walk you through how to set it up and get going today!
The implementation of this is in a Google Spreadsheet, which you’ll want to make a copy of to follow along. But, I’m getting ahead of myself!
Looking for tractionEarlier this year I read Gabriel Weinberg & Justin Mares’ Traction. It’s jam packed full of ideas for growing your business with a “3-step framework called Bullseye”. The framework really is great and got me thinking about all sorts of marketing channels and strategies I hadn’t considered before.
The book mentions using a spreadsheet to put all of your ideas in, categorizing them and tracking a few variables to prove their viability as a strategy, so that got my wheels turning.
I liked having a place to dump all the random marketing ideas. In a matter of minutes you can drum up dozens of ideas. But actually prioritizing what to go after first was much harder to come by. Given the size of our team (and that we don’t have a single person focused full-time on marketing) I wanted to be as efficient as possible with our time.
To prioritize our marketing efforts, I created a scoring system that instantly priorities any marketing idea you’ve got. It tells you right away what you should be testing out next. This lets you knock out some low hanging fruit right out of the gate and help kickstart your marketing plans!
Marketing Prioritization SystemYou’ll want to make a copy of this Google Spreadsheet so you can follow along.
At the basis of this is the Traction Bullseye framework, but we’ve added a full weighted scoring system on top of it to help prioritize what to go after first. I’ll walk you through the whole thing and then you can jump right in and start using it, or tweak to your heart’s content.
Channel + StrategyThe Channel column is for choosing one of the 19 channels mentioned in Traction.
Targeting BlogsPublic RelationsUnconventional PRSearch Engine MarketingSocial & Display AdsOffline AdsSearch Engine OptimizationContent MarketingEmail MarketingViral MarketingEngineering as MarketingBusiness DevelopmentSalesAffiliate ProgramsExisting PlatformsTrade ShowsOffline EventsSpeaking EngagementsCommunity BuildingIt’s easy to write off some of these channels. “No way would a trade show ever work out for us!” But when you’re brainstorming ideas, it’s important to put it all out on the table. Mix in a scoring system for your ideas and magic!
The Strategy column is where your actual idea goes. The Channel is just for categorizing them.
StatusYou’ll likely be going through multiple ideas as the same time, so the Status column helps you keep track of where you’re at with a given idea.
It’s options are Idea, Testing, Focusing, Abandoned.
TestingAfter you’ve come up with a marketing idea, you need to test that strategy to see if it’s viable and cost effective. You’re basically starting with an educated guess on this.
Not all ideas are testable or even repeatable in any sort of scalable manner, but if they are, there are a number of additional data points you’ll want to track.
Customer Acquisition Costs (CAC)Response RateConversion RateCustomer Lifetime Value (LTV)These are numbers you can make educated guesses on from the start and then update as a test progresses. This can help you prioritize and purge ideas, especially when it comes to the economics of things.
LICE: Lead Quality, Impact, Cost, EffortNow that we’ve established some baseline data points for you to collect and input as you’re creating ideas, lets look at the meat of this: scoring.
Scoring here lets you quickly identify what you should try out next based on four factors.
Lead QualityImpactCostEffortLICE makes everything nice. :)
We use these four factors to generate a score where the lower the number, the more accessible the marketing idea is. Let’s take a look at the four factors.
Lead QualityNot all sources are created equal. Usually your highest quality leads will come from a source that sends you the lowest number of leads and the lowest quality leads will come from a source that just hammers you with traffic.
Your AirBnB for Hamsters service may get lots of traffic from TechCrunch, but lets be honest…very few of those visitors will, you know, need that. But a writeup from Petco?!?! Those leads would be fantastic!
ImpactImpact will, many times, match up to your Lead Quality, but it’s geared more towards what the purpose of your marketing is. For instance, maybe brand awareness is a much larger focus to you as opposed to lead generation. In that case, a marketing idea could have a lower lead quality score but a high impact score.
CostNot all great ideas are expensive (in fact, many times your best ideas are actually dirt cheap). But the fact is, some ideas really can be pretty expensive (trade shows, advertising, sponsorships).
If cost isn’t a big factor for your company, you can lower the weight of the “cost” in the final score (which I’ll talk about momentarily).
EffortHow much work will this idea take? Does the idea rest on convincing someone else to do something? Does the whole team need to get involved to pull off the idea? All of those things affect how much effort something takes.
MultipliersEvery company is in a different stage and what factors have an impact on you will vary. Maybe you’ve got all the time in the world but no money…that makes cost a huge multiplier. Maybe you’ve got limited time but lots of money, in that case effort would be a big multiplier.
In the Settings for the system, you can set multipliers on all four variables to adjust importance.
The ScoreOnce you’ve set Lead Quality, Effort, Cost and Impact (and adjusted the various multipliers) what you get is weighted score that helps guide what marketing ideas you should try next!
The lower the score, the more in line the idea is with the current stage of your company!
Putting in to practiceUsing the Marketing System spreadsheet, you should be able to start scoring your marketing ideas instantly. It works right out of the proverbial box.
I suggest jumping in and doing a brain dump of everything you can think of and then let the scoring system do its work.
Don’t overthink the ratings you assign to a given idea, just go with your gut. This system obviously doesn’t actually do the marketing for you…it’s here to help you know what to go after next. If you don’t actually put it in to practice, you’ll be no better off!
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