In this episode, Steli and Hiten answer the questions they received from the readers of their ebook From 0 to 1,000 Customers and Beyond. Steli and Hiten give practical advice about marketing, engagement, and how to prioritize feedback from your customers. They also provide you the links to the podcasts their ebook was inspired by and you can connect with them personally to receive the ebook. Jump in on this discussion of how to grow your customer base!
Time Stamped Show Notes:
- 00:04 – Today’s episode is about answering questions from those who read the ebook, From 0 to 1,000 Customers and Beyond
- 00:34 – Send an email to Steli to receive the ebook
- 00:48 – The ebook was based on four podcasts on how to increase the number of your customers
- 02:05 – What do we do when we have a product that can be sold to individual consumers and to businesses?
- 02:56 – Hiten suggests you pick one you can easily monetize
- 04:26 – Steli shares it is rare for a company to do both successfully, at the same time
- 05:27 – What are the some of the best practices to move free trial customers to fully paid accounts?
- 05:55 – Get your customers engaged during the trial period
- 08:03 – Where would you place your marketing bet if you have limited funds?
- 08:25 – Steli is critical of the mindset of people wanting to launch big, but only have limited funds
- 08:46 – It is not necessary to launch big, what is important is that you reach out to people and give them what they need
- 09:50 – Hiten advises how to use the money more effectively
- 10:30 – What feedback do you prioritize for a tool that you developed? What is a good sample size?
- 11:20 – 15 might be enough for a sample if the feedback is positive and there is a pattern in what they are saying
- 11:28 – Find the commonalities in their feedback and implement that
- 11:47 – If the feedback is different, listen to those who will pay you the most money
- 12:40 – Steli suggests looking at those who are actually using the tool
- 13:54 – Money in business is the strongest source of validation
- 14:26 – When should you start the marketing campaign?
- 15:00 – Hiten says it depends on whether you are ready for more customers or not
- 15:26 – Hiten’s personal preference is when the product is ready and people are ready to actually use it
- 15:52 – Retention is more important than acquisition
- 16:22 – The product launch and marketing launch do not have to be the same thing
- 17:20 – Steli says there will be a second episode as there are a lot of questions
- 17:33 – Steli suggests people to listen to the four episodes regarding customer acquisition:
3 Key Points:
- Customer engagement is a vital part of your marketing strategy.
- Money is the strongest source of validation in business.
- Retention is more important than acquisition.
Steli Efti: Hello everybody, this is Steli Efti.
Hiten Shah: And this is Hiten Shah.
Steli Efti: In today’s episode of the Start Up Chat we’re going to talk about the questions that you guys had after you read our newest e-book which is the going From 0 to 1,000 Customers & Beyond. For those of you out there that didn’t get a chance to read the book or get their hands on it, just shoot me an email: firstname.lastname@example.org, and I’ll send you the e-book, and you can take a look at it. It basically was based on four episodes of the podcast that we had recorded. The first one was How to Get Your First Customer, How to Get From 0 to 10 Customers, How to Get Your First 100 Customers, How to Get to 1000 Customers, and then How to Scale Beyond 1000 Customers. We had a bunch of episodes. These were some of our most popular ones, and so we put all that content together in a little book. The book is very, very popular. A lot of people seem to like it. I’ve sent an email out asking for people who read it to give feedback and ask questions, and we got a ton of questions, and I just want to go through them with you, Hiten, and see if we can help people even more with this topic.
Hiten Shah: Yeah. That sounds good. I’m glad that people ask questions, and it’d be great to answer to them because I always get frustrated when someone tells me, “Hey, do you want to know more?” Then I ask a question; I don’t get an answer. So, yeah, I would love to do that.
Steli Efti: Awesome.
Hiten Shah: Yeah. Let’s go at it. Rapid fire I’m assuming, right?
Steli Efti: Yes. Yes, but one quick disclaimer in case people haven’t noticed it yet. I just had surgery the other day. I’m under heavy painkiller medication. I feel slightly drunk. When I told this to Hiten, he got very excited.
Hiten Shah: Yep.
Steli Efti: He goes, “Let’s see what kind of shenanigans we’re going to be able to get out of Steli.” With that disclaimer out of the way let’s dive into the questions. The first question is, funny, is a question that two different people asked. I’m going to combine it, but the basic question is, “What do we do when we have a product that can be both sold to consumers as well as to businesses?” So, there’s a B2C and a B2B play. The question is really like, “Should we launch both at the same time, and try to acquire business customers and end consumer customers? Should we do one first, and then roll it out to the other? Should we do it under different brands? How do we market this?” Basically, the question was these two startups have something they think they can sell both to consumers as well as to businesses, and they’re trying to figure out, as they’re thinking about acquisition and growing, how to approach this. What’s your reaction to that?
Hiten Shah: Yeah. If you’re not building a marketplace where you need both of them on the same platform or the same product, then you want to actually just pick one and go after it. Pick the one that’s some trade-off between easiest to get to, as well as easiest to monetize. Get to meaning get to with your marketing, and monetize obviously means that they’ll actually pay you. Usually, that does end up being a B2B case unless you have some kind of virality or referral system that would work better with a consumer-oriented focus. Picking one is really important. The caveat is if you have some form of a marketplace like something – eBay is probably the most classic one where you have buyers and sellers and it’s two-sided — then you want to be a little bit smarter because you know you’re going to need both of them. In that case, you go after one that will get the other one to come on board. Often times, like with eBay early on, it’s like a lot of people who are selling goods already had people who were buying from them, or those people would promote to others, so it was easier to get the sellers on board before the buyers. That’s the kind of just high-level way I would attempt to answer the question. I always find it interesting when people think they can sell to both, and they don’t pick one because that tends to lead to a lot of flailing and a lot of loss of time. Best case is you lose time. Worst case is you don’t make it.
Steli Efti: Yeah. It’s very rare for a company to do both at the same time very, very successfully. It’s so rare I cannot think of an example on top of my mind. There’s many examples where a company is started — I think there are examples of companies doing B2C and then moving into B2B successfully. Dropbox might be an obvious example for this where they were super focused on end consumer, didn’t want to do enterprise or business deals, and then once they had massive scale they went into the B2B world, and they’re doing well there as well. Going from B2C to B2B seems to be the more common way. I don’t know of any examples, I think, of a company starting B2B and then transitioning to B2C. That seems to be rare, but I completely agree with you. Pick one and focus on that, and then you might grow into the other area, but doing both things in parallel at the same time — usually not the best idea. Next question is about converting trial customers or trials. Mary Ann asks, “What are some of the best practices and best ways for us to move our free trial customers to fully paid accounts? What do you guys recommend? Should it be a 14-day or a 30-day trial? Should it be a credit card upfront or not?” What are some of the basic advice that we would share with people to make sure that — as they’re marketing, get trial sign-ups — they convert as many of these into new customers?
Hiten Shah: Yeah. I have a very simple answer to that which is get them engaged during the trial. I don’t think it’s really about 30-day, 14-day, 7-day. I can definitely discuss trial lengths and what you should pick, and I’m sure you can too, Steli, but at the end of the day if they’re not engaged they will never pay you. So, the first step would be during a trial, no matter how long it is or how short of his or what kind of trial it is, you want people to engage. You want them to do the things that they’re supposed to do with your product. Just spending a ton of time making sure the interface, the emailing, even if you’re getting on them on the phone and doing account management, making sure all of that is set up in such a way where you can actually get them to engage and get active with the product, and you start using it. Inviting their team members in if that’s appropriate. Creating projects if it’s a project management tool. Adding customers if it’s a CRM tool, or potential customers. All those kind of things are really more important than anything else with any sales product, but especially during a trial period when you’re really wanting them to explore the product and understand it.
Steli Efti: Yeah. I agree with that. I think, obviously, there’s a lot of optimization that you can do down the line in terms of the trial length, credit card, or just the general sign-up form. What kind of information do people have to put in or not? Pricing. All these things will affect conversion rates, but in the early days — and we’re talking about people that go from having no customers to wanting to scale to a 1000 customers — in that first few hundred customers I would do anything and everything to get in touch with these people, to talk to them, to meet them, to understand them, to engage them in any way possible, and not worry too much about the automated part of this, or the optimize — it should be a 13-day trial or a 17-day trial. All this stuff is cool, and you can experiment with, but I don’t think it’s the number one priority when you begin with this stuff.
Hiten Shah: Agree.
Steli Efti: All right. Next question from Nathan. Nathan asks a funny question. He basically says that they are self-funding their startup. They’re trying to just finance it themselves in those early days and then push for growth, and he says, “We only have budget for one big marketing bet to really push our growth and the launch of the company. How would you decide what that big bet should be,” since they have limited funds? I have an opinion on this, but I’m interested to hear yours.
Hiten Shah: I’ve been going first so why don’t you go first?
Steli Efti: All right. I’m instantly a little critical about the mindset here of wanting to launch this with a big bang and saying we only have budget for one big bet. Even the word bet in this context is something I’m not a huge fan of, right? This is not playing the lottery. This is trying to build a business. I don’t believe necessarily that you have to launch with a big bang or place a big bet. Why not just hustle, and put sweat equity into this, and send emails, and write blog posts, and go to places and shake hands, kiss babies, meet people, and try to convince people to become customers of yours one at a time. As you learn more about those customers and their needs — and as you get more confidence and more data that you actually have a solution that works, that people want — you can start allocating more and more money into marketing this thing and growing it. The mindset of, “We have this idea, we have a little bit of money, and we want to put all this money into some big marketing push,” I think that that’s a really bad idea. The chances that you’re going to waste that money onto something that doesn’t work is very high, so I would just, in general, recommend a different mindset here.
Hiten Shah: Yeah. I fully agree with that. It’s already the logic that you and I both would want to break down and say, “Why are you thinking about it as one big launch?” The question for that person we would just pose back, I think, is just, “Why are you thinking about it as one big bang? How can you use your capital more effectively at learning what you need to do, and splitting up those resources into experiments instead of thinking that one big bang is going to solve a problem for you or the problem?”
Steli Efti: Yeah. All right. Let’s go to the next one. Next question was asked by Raheel. He had a two-part question. One was — so he built a technical tool. Launched it. He has 15 people right now that were kind of in his personal network that he got to start using his tool. He’s getting a bunch of feedback, but now he’s wondering how should he think about prioritizing that feedback? Which feedback should he act on versus ignore? He has 15 people using it. They all have their ideas, their feedback, their requests. Now, he’s in the situation where he wonders, “How do I know how to prioritize? What to build? What not to build? What to give people too?” A big question mark for him was also are 10 to 15 people enough in the beginning, or do I need much bigger numbers to get the amount of feedback I need to really build something that works?
Hiten Shah: This is one of the most common problems at any scale of a business which is like, “I’m getting all this input from customers. What do I do?” It’s something actually I’ve been digging into in my email and newsletter and learning a lot about it. It’s interesting that this question comes up in this context of getting customers too. The short answer is 15 might be enough if you’re getting a good signal, and there’s a pattern in what people are saying. I think the first easy thing to do would be figure out what the commonalities are in all the feedback you’re getting, and see if there’s any easy things you just know obviously you need to implement that would solve problems for in the majority of those 15 people — whether it’s like 7 of them, or 10 of them, or all of them, and implement that. Now, if you’re feedback is completely all over the place, or you don’t know who to listen to, just the simple trick and I think, Steli, you’d agree is go listen to people that are going to pay you the most money, or that are paying you the most money, or have the most potential to pay you the most money. I think those two things should get you pretty far when you only have 15 people’s feedback. I personally have seen 15 people’s feedback be very useful when it’s really either in a target demographic or a target persona that I’m looking for, target customer base, or if it helps me sort out who the right customer is for my product.
Steli Efti: Yeah. I think that that’s spot on, and I would add that the way that I think about this stuff is that there’s like a pyramid of validation. At the bottom, the lowest level of validation that you can get, is people taking a look at your tool and telling you it’s cool, or I like the idea, or something like that. A level above that is people actually truly using it. I would just look at these 15 people and say, “Are they all equally active using the tool as much, or did, you know, 10 out of those 15 use it for a day, gave you feedback, and never logged in again, and the other five are actually, you know, two, three, four weeks into this still using it daily?” Right? Usage is a much bigger vote of confidence or intent or interest, and much stronger signal. One level above that would be a verbal agreement that they would want to pay money for this or asking somebody, “Hey, if I start charging — in two months I plan to start charging,” whatever it is, 25 bucks, 50 bucks, 100 bucks a month, “are you going to be a customer? You know, is this valuable enough for you to make this a no-brainer?” So, the people that say yes, that’s a much stronger signal than people just liking and using the product. At the top of the pyramid in terms of validation is people that not just say, “Yes, I would pay for it,” but you might be able to do a limited outfit with them and tell them, “Hey, if you put down, whatever, $250 now you’re going to have a lifetime discount of this and that, and you’re going to get all these perks for being one of the first people to purchase the product.” Obviously, money talks, and money, in business, is the strongest form of validation, right? Not in life, but in business. I would just try to segment it that way. To me, I don’t know, 10 to 15 people enough or not. It can be plenty, but in the early days, I probably would start adding — just casually try to every week add a few more people to the platform, and try to understand who’s the target audience and then focus on them. All right, so the next question that Raheel had is another good one I think. Basically, the question is when should he start doing the marketing launch or marketing campaign? He says right now based on everything he read, and based on the stuff that he listened to from us, his plan is to wait until his beta testers are giving him a lot of positive feedback, and their retention is really, really high, and then really start thinking about being ready to do marketing and sales, and push this. He was wondering if we agree with this, and how we would time it in terms of when to start doing marketing. When is it too early versus too late?
Hiten Shah: Yeah. It just depends on if you’re ready for more customers or not. If you want more customers, and you feel like your product has some level of usage, and people do like it if not love it, it is good to — like you were saying even on the earlier question — to start getting more people in. It’s really a estimation and a call that you have to make based on your business and your needs of more customers or not. I do tend to prefer to wait until I know that the product’s ready, and that people are actually ready to start using it in the sense of you have retention, or there’s some level of a product market fit because otherwise you’re just, basically, going to waste a lot of effort, and time, and money on marketing. Again, that being said, bringing more people into the product’s always a good thing especially if that can help you start learning faster.
Steli Efti: Yeah. I agree. I think that, in the early days, I am a big believer that retention is more important even than just pure acquisition, right? If you’re a really good marketer, or a really good salesperson, or a really passionate entrepreneur and founder, you’re going to be able to convince a good amount of people to give your tool or your product a try, but then having them use it daily, having them stay with it, that’s really a much stronger signal that you’re onto something. Yeah, I think that you can do both at the same time, but I also think it’s important for people to realize that the product launch and the marketing launch don’t have to be the same thing. They can be completely disconnected from each other, and you can start adding more and more customers at a slower pace as you’re developing some core functionality, and as you’re getting to a real product market fit. Then once you really have — you know, you have testimonials, you have a good customer base, you know who your customer is. You have experimented a little bit with channels and know what works, what doesn’t work. You have, maybe, some resources in terms of team and financing. You’re in a place where you can handle a lot more. Then you can do the big public, like, we’re just launching, but a lot of companies that have a big marketing launch — they had launched the product a year before. Nobody really knows, so these two things have disconnected, and I think it’s good for people and startups to realize that and know that they don’t have to do both things at the same time. They can focus first in getting the fundamentals right on the product before they really pour a lot of money and energy into doing a big marketing launch. All right, so we have a ton more questions, Hiten, and I think what we should do to just keep the timeline that we typically have for these episode is just wrap this one up, and we’ll do a second part with the next list of questions. I would just encourage people to listen to the four episodes that we recorded on kind of the four key milestones in customer acquisition: going from no customers to 1,000 customers and beyond. We’ll link to these episodes in the show notes for this episode, so you’re going to be able to easily access them. Then, as I said, if you want to have the book and read it or circulate it you can — the easiest solution here right now is just to shoot me or Hiten an email, and we’ll send you the e-book no problem.
Hiten Shah: Yep.
Steli Efti: Let’s wrap up this episode, and then we’ll record one soon with the rest of the questions. You guys sent a ton of good questions. Also, if you listen to us now and you haven’t sent us an email or a question yet, but you do have a question along the lines of how to acquire 1000 customers and beyond, just shoot us an email and let us know. We might do even a third training session.
Hiten Shah: Yep. Thanks.