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How to Do a Competitive Analysis: A Step-by-Step Guide

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“Never interrupt your enemy when he is making a mistake.” —Napoleon Bonaparte

When your competitors make mistakes, it makes winning so much easier. But what if it’s you who is making a mistake, while your competitors are off to the races? You won’t know until you figure out what your competitors are up to.

Knowing what the competitors are doing—how they’re thinking about the market, which tactics they’re using, how they’re crafting messages and design—can make all the difference in the battle for customers.

In addition, competitive analysis can be a treasure trove of conversion optimization insights, yet it often gets skipped. And it’s not just a CRO problem—it’s a marketing-wide phenomenon.

A Conductor study found that 74% agreed that competitive analysis is “important or very important,” but 57% admitted that they weren’t very good at it. From start to finish, this post will show you how to conduct a competitive analysis the right way.

What is competitive analysis?

Competitive analysis is a broad term for the practice of researching, analyzing, and comparing competitors in relation to yourself. Companies do it for a wide variety of reasons—SEO, branding, go-to-market strategy, pricing, etc.—and you can definitely use it for UX and conversion optimization, too.

If you invest in competitive analysis, you’ll reap the benefits of clarity and confidence. You can’t beat a competitive analysis if you want to answer questions like:

  • What makes my company unique? How do we stand out?
  • How do customers think of my company compared to competitors?
  • How does the user experience on my website stack up to the competition?

There’s a great deal to be gained from thorough, regular competitive analysis—usability insights, design advantages, a more convincing value proposition, and of course, ideas for testing.

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The limits of competitive analysis

At the same time, competitor analysis should be done with proper context. As Peep Laja notes:

I hear this all the time. “Competitor X is doing Y. We should do that, too,” or “X is the market leader, and they have Y, so we need Y.”

There are two things wrong with this reasoning: First, the reason they set up Y (menu, navigation, checkout, homepage layout, etc.) is probably random. Often, the layout is something their web designer came up without doing a thorough analysis or testing. (In fact, they probably copied another competitor.)

Second, what works for them won’t necessarily work for you. You’d be surprised by the number of people who actually know their shit. Plenty of decisions are (maybe) 5% knowledge and 95% opinion.

Indeed, even if you knew that a competitor had a higher-converting site, how would you know whether that comparative improvement resulted from the site design or email strategy or brand recognition?

You wouldn’t. As Laja continues:

It’s the blind leading the blind! So instead of just copying something, have the mindset of experimentation. The thing you copy is a hypothesis—and you need to test it.

Run it against your current site and see if it makes a difference. Then either implement or discard.

With those caveats in mind, here are the eight steps to follow to run a great competitor analysis:

  1. Set your goals.
  2. Identify your competition.
  3. Conduct a competitive usability investigation.
  4. Compare competitor value propositions.
  5. Interview your competitors’ customers.
  6. Run a competitive analysis for design.
  7. Make a quantitative competitive investigation.
  8. Run a functional investigation.

1. Set your goals.

Before you start your competitive analysis, remember the first essential truth of competitive intelligence: How one thinks about the mission affects deeply how one does the mission.

The fact that your client, leadership, or colleagues believe something about competitors doesn’t mean it’s true. We all have blinders on at times. Make sure you go in with an open mind.

It’s just as important to have clear goals:

  • Which decisions will your competitive research impact?
  • Are you looking to refine messaging? Experiment with the funnel structure? Get inspiration for A/B or multivariate testing?

If you know your goals upfront, that knowledge will help you structure the research to meet those goals.

2. Identify your competition.

Let’s do this! This is the easiest part of the equation because you should know your industry like the back of your hand. Still, you should still conduct this step to see if there are any new players or if anything has changed with the old ones.

To find out who your top competitors are:

  • Run a Google search;
  • Check Google Trends, SimilarWeb, Compete, or Alexa.
  • Check the list of presenters and companies running booths at your industry’s conferences;
  • Ask your customers who else they considered.

3. Conduct a competitive usability investigation.

People comparison shop. But do you know how does your site measures up? This is where comparative user testing comes the rescue.

Ask participants to evaluate your website as well as the websites of your top two competitors. (More than three website evaluations is often overwhelming for participants.) To avoid biased feedback, try not to disclose which company you’re with and mix up the order in which you show the websites to participants.

A recent competitive UX benchmark conducted by CXL Institute.

If you’re doing a moderated usability study with a sample similar to your target customers, start by asking the participants to enter a query into Google.

Ask them to use the words they would naturally use when looking for a product or service you offer. Which results show up? What do they click? Why? If your company doesn’t show up in search results or get clicked, you’ve got work to do.

Next, do a 5 second first impression test. Give a participant 5 seconds to look at the first website, then ask them:

  • Which three words would you use to describe the site?
  • What is it about? What products or services are offered and for whom?
  • How does this website make you feel?

Then do the same for the two other websites. You’ll walk away with unstructured data as well as word clouds to let you see quickly how the first impression of your site lines up with the competition.

Next, test the key flow (e.g. check-out process). Give the participants a scenario in which they use the site to solve a problem or go through the check-out process. After each experience, ask:

  • What was the worst thing about your visit to this website?
  • Which aspects of the experience could be improved?
  • What did you like about the website?
  • What other comments do you have?

Once the participant has gone through all the websites, here comes the big question:

  • Which experience did you like best? Why?

Common themes in the participants’ responses are a great foundation for hypotheses.

Karl Gilis, a web usability consultant, is a big fan of comparative user testing:

Karl Gilis:

For me, it’s incredibly interesting to see what the users like and dislike about the sites of my client’s competitors. And I’m not talking about what they think of the design, but what makes them happy and what frustrates them. What elements and what tricks seem to delight them?

The users don’t have to fulfill full tasks on these websites. You can get good results by showing different versions of the same type of page and observe their reactions and behavior.

Don’t forget to do your own heuristic homework and go through the check-out process yourself.

Things to pay attention to:

  • Steps that don’t make sense from your customer’s perspective;
  • Steps that are combined or eliminated compared to your funnel, as they may be superfluous;
  • Upsells and cross-sells, which are additional revenue opportunities you could exploit.

Jaime Levy, a UX strategist and author, suggests looking at content types, personalization features, and community features on competitors’ websites.

As you’re doing your analysis, write down your observations, take screenshots, and give them descriptive names to make it easier to browse later.

André Vieira, founder of Looptimize, finds CRO extremely useful for ideation:

André Vieira:

You can look at many elements on competitors’ pages, such as copy, number and placement of images, page structure, page length, the next step in the funnel, amount of calls to action, types of calls to action, etc., and compare to what you have on your website and in your idea backlog.

When possible, I also find it useful to track the tests that my competitors are running. (You can use tools like Versionista or VisualPing). This gives me insight into what problems they’re trying to solve. Depending on the overlap between our audiences, I may have to solve the same problems in the future, so it’s good to learn from others.”

Karl Gilis recommends going beyond your main competitors and looking at websites in different countries or similar pages of websites out of your business area: “If you sell something online, every shopping cart or checkout procedure can be an inspiration.”

4. Compare competitor value propositions.

After leaving your website, people may remember up to three reasons to buy from you or sign up for your service. Most likely, they’ll only remember one—your main selling point. What is it on your website? Does it reflect your competitive advantage?

To create a value proposition that really differentiates your offer, you have to know how competitors position themselves.

To help pinpoint your unique value proposition, Chris Goward from WiderFunnel created a Venn diagram that covers three aspects:

  • Points of Parity (POPs) are features you offer that are important to your prospects and shared among you and competitors.
  • Points of Difference (PODs) are features that are important to your prospects and not available from competitors.
  • Points of Irrelevance (POIs) are features that customers don’t care about.

Your PODs are where you’ll win the game. That said, Goward offers a word of caution:

Chris Goward:

All PODs are not created equal. Some will be more important than others and some will be important only to certain customer segments.

No matter how much effort you’ve put into researching and brainstorming your value proposition points, you should test them to validate whether they’re best!

Tony DeYoung, an SEO and CRO consultant, uses competitive analysis to craft effective value propositions for clients:

Tony DeYoung:

Most companies try to be everything to everyone and don’t create value propositions that define/target specific ideal customers. The lean, aggressive ones do. Reviewing a competitor’s online presence helps me understand how to differentiate my client. I’ m looking for benefits that are unique, not just “more features” or “cheaper.”

Reliable lifts come from knowing your customer and tailoring the value proposition to match that customer’s motivations in a way that no other website will. You can enhance it with a bunch of human behavior principles (liking, scarcity, reciprocity, social proof, consistency etc.). But you have to have the foundation of what makes you unique to get people to return to you after they browse around.

5. Interview your competitors’ customers.

Competitors’ customers are worth their weight in gold. Not only can they tell you how satisfied they are with a competing product or service, they can also clue you in as to why they picked the competitor in the first place.

To reach your competitors’ customers, use your network: Who do you know? Who do they know? Also, try “snowball recruiting”—ask every research participant whom they could introduce you to for subsequent interviews. You could ask current customers to recommend their peers for the study. (Offer compensation to both parties).

Sean Campbell recommends asking your competitors’ customers these questions:

  • What caused you to start looking for a solution?
  • What were your top five buying criteria (in order of importance)?
  • What were the main reasons you chose the company you did?

The good old NPS survey can also come in handy. Ask:

On a scale from 1 to 10, with 10 being “Extremely likely,” how likely are you to recommend the competitor’s product to a friend or a colleague?

Please explain why you have chosen [number].

6. Run a competitive analysis for design.

Even though design is just one part of the conversion puzzle, it’s an important element of overall CRO success.

Growth designer Katya Lombrozo always does competitive analysis as part of her creative process:

Katya Lombrozo:

Before I take on a project, I ask the client for three competitor websites, as well as what their strengths and weaknesses are compared to my client’s product/service. Then, I perform my own search, going through at least two pages of PPC ads and organic results.

What I’m looking for are common trends within that vertical. They give me an idea of how to break from that mold with visual design and optimization tactics.

I analyze the story the competitors tell with their landing pages, their site UX, and transparency (e.g. reviews, trust). Then, I adjust my wireframe, making sure my client’s page can stand up to all that and more. Sometimes, all I need is a better visual design than a competitor, but, often, it’s a matter of better explaining the value proposition of the service/product and putting together a more logical flow of elements.

Khattaab Khan, Director of Experience Optimization at BVAccel, also uses competitive analysis to benchmark UX/UI and gauge user responsiveness:

Khattaab Khan:

You’re competing for mindshare with your direct competitors, especially mindshare of the users coming from organic search.

On competitors’ sites, I’m looking at the navigation, number of steps in the funnel, and structure of focused landing pages.

7. Make a quantitative competitive investigation.

You can pull a wealth of data about your competitors from SimilarWeb, including their traffic volume and key traffic sources, and organic and paid keywords.

With SEMrush, you can find your competitors’ best-performing keywords. You can also get insights into your competitors’ strategies in display advertising, organic and paid search, and link building.

Other keyword-related tools you can leverage are Spyfu and iSpionage—both allow you to download your competitors’ most profitable keywords.

Armed with your competitors’ most effective keywords, you’re in a great position to craft irresistible copy variations. Here’s Tony DeYoung explaining his process to do just that:

Tony DeYoung:

I always do competitive analysis for SEO and SEM. For SEO, I look at my competitors’ keywords and their page rank/authority. This tells me if it’s even realistic to try to rank or bid on a keyword, or whether I need to niche more. It’s also a great way to find useful sites to earn backlinks from.

This isn’t directly “CRO,” but it has an impact. The more specific I can be on search terms that uniquely lead to what I offer on my site, the higher the conversion rates.

8. Run a functional investigation.

Studying your competitors’ technology stacks can shed light on their level of maturity as a digital marketing organization. You might also get some ideas for tools to try for yourself. BuiltWith lets you take a peek under the hood of your competitors’ websites and find out exactly what software they use.

Brian Massey from Conversion Sciences uses functional analysis to help prioritize testing ideas:

Brian Massey:

In general, we find competitive analysis to be a great source of hypotheses in CRO.

Competitive analyses are also ripe for misuse. We want to “steal” ideas from competent competitors who aren’t making the same mistakes that everyone else is, namely, designing without data.

We can get a very good idea of a company’s capability by examining the tools they’ve installed. We start by installing the Ghostery extension in our browser. Ghostery examines the tags that live on a website.

You could score your competitors on a scale from “Rookies” to “MVPs.” Rookies have no analytics or experimentation tools on the site. MVPs have a full suite of analytics, UX tools, and A/B-testing solutions.

  • Give a company 1 point for an analytics package (usually Google Analytics).
  • Add 1 point for tag management (usually Google Tag Manager).
  • Add 2 points for UX tools. Look for heat-map and session-recording tools or survey and feedback tools.
  • Add 5 points for A/B testing tools. If they’re using these tools, they’re using some of the most reliable data available.

If your competitor scores 7–9 points, you should test ideas you find on their site first.

If your competitor scores 3–6 points, test their ideas second.

Anything less? You should consider their ideas with great skepticism.”

Conclusion

Competitive analysis, like money, is a great servant but a poor master. Being reactive to what competitors do can be worse than doing nothing.

At the same time, knowledge is power—simply knowing how you compare to your competitors in the minds of customers can make a world of difference.

You may find that adding regular competitive analyses to your CRO process and adapting your strategy based on that analysis will fuel your creative engine and positively impact conversions.

Competitive analysis doesn’t have to be a standalone, herculean effort—you can weave it right into the research you’re already doing.

The post How to Do a Competitive Analysis: A Step-by-Step Guide appeared first on CXL.


10 Principles of Effective Pricing Pages

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If you run a SaaS business or sell only one product (with some options), you probably have a dedicated pricing page for the whole thing. Here are 10 principles to get it right:

  1. Simple is best.
  2. Make it easy to compare.
  3. Help people choose a plan.
  4. Address FUDs.
  5. Offer currency options.
  6. Limit choice.
  7. Incentivize up-front payments.
  8. Add playfulness.
  9. Use a clear call to action.
  10. Tell them what happens next.

1. Simple is best.

Some fundamental truths about your potential customers:

  • They don’t read; they skim.
  • Nobody likes complicated stuff. Nobody enjoys figuring stuff out.
  • People prefer things that are easy to understand.

Conclusion: Make your product pricing simple, and the pricing page easy to understand.

When you build your pricing page, the first question to ask should be, “How can we make this as easy as possible?”

LessMeeting improved conversions by simplifying its pricing. Ash Maurya found that simplest pricing sold the best.

Can you figure out how much Basecamp costs? Simple = #winning.

example of simple pricing page.

Subway found success with its $5 footlong sandwich campaign. Fiverr probably wouldn’t have become known if it hadn’t had the $5 pricing policy. Apple gets it. The iPad Pro costs $799. The iPad Air costs $499. The standard iPad is $329. Simple pricing works.

Tiered pricing is the standard for SaaS companies, and many follow suit blindly. But maybe you should get rid of it? Assistly (now part of Salesforce) did just that.

Today’s businesses want to buy SaaS services like they buy apps in the Apps Store. We saw an opportunity to simplify our pricing and drive customer satisfaction through the roof.”

Matt Trifiro, senior vice president of marketing

My point is not that you should get rid of tiered pricing, but that you should strive for simplicity—even if it means disrupting the norm.

2. Make it easy to compare.

People do research and compare your offer to alternatives. You want to win these comparisons.

Let’s say I’m looking for a social media monitoring service. I’m an educated buyer. I know my needs. I’m not going to read through the websites. I’m just going to look quickly at the pricing options.

This is how most users compare options. They pay extended attention only when the initial conditions have been met.

Pricing plans have a role besides getting people to sign up. They’re also there to help people understand what they want. As Dan Ariely put it, “Most people don’t know what they want unless they see it in context.” Different plans communicate what’s possible.

The example below does many things well—but some things, not so much. The prices are huge, so they get more focus than the features/benefits. If you’re not competing on price, this might not be a good idea.

example of pricing page that focuses on cost, not benefits.

What I like is the how the features are presented—well built for comparison shoppers (and +1 for the tooltips).

On the negative side, the feature list is kind of long and doesn’t even fit on the same screen with prices. It’s a challenge for designers, I know. They’ve still done much better than some.

Some companies make it hard to compare on purpose.

Of course, you could try a radically different approach and make it very difficult to compare. Supermarkets and airlines do just that—on purpose. The cost of flying from Point A to Point B isn’t straightforward.

“For most travelers, the air fare is now the starting point rather than the end point in calculating what your trip cost will be,” said Henry Harteveldt, an analyst at Forrester Research. “You can’t rely on average air fare data anymore.”

There’s the price of the seat, then fees for checked luggage (often different for 1st and 2nd), sometimes even for carry-on bags, food, and so on.

Why do they do this? Nickel-and-diming you is one reason, but also so that you can’t (easily) compare their offer to the competition and decide based on price.

A common way to confuse people is bulk pricing. We know more or less how much a carton of eggs should cost. What about a bulk offer of 48 eggs? People assume that buying in bulk is cheaper, but often it’s more expensive.

While confusing pricing may work for some companies or industries, I advise against it. As-simple-as-possible pricing works best for 9 out of 10 companies.

3. Help people choose a plan.

When you offer multiple plans, people need to make a choice. The easier it is to understand the differences between plans, the easier it is to choose.

I like how Wistia explains who each plan is for:

pricing page with explanations of what comes with each plan.

DaCast is using meaningless names for their plans, which is unfortunately pretty common. If “Enterprise” users don’t need the “high-volume,” “Custom” plans, who does?

pricing page with generic names.

All that is to say nothing of the additional variables—annual, monthly, event, advanced(?!). If you need a calculator…

Which pricing plan should you emphasize?

There is no single best way to go about it. I would test these options:

  • The middle option. It makes sense to suggest the middle plan. Most people usually prefer something in the middle.
  • What fits most users best. From a user experience perspective, you should suggest the plan that (honestly) fits most visitors. Hopefully, you’ve planned your plans well.
  • The most expensive one. Price anchoring! Let’s say your most expensive option is $990/mo. If you emphasize this plan, that’s the first price they will see. When they see that the middle plan is just $59/mo, it suddenly looks cheap.
  • Free trial/freemium. Suggest the plan with the least amount of friction. Get them to sign up and see how great your product is (and that it’s worth the upgrade).

4. Address FUDs.

FUDs are fears, uncertainties, and doubts. Whenever you ask for money, there is friction. You cannot remove friction, but you can minimize it.

The best way to overcome objections is to prevent them.  First, make a list of all the possible reasons why somebody might not want to buy your thing. (Better yet, survey your leads and customers.) Identify which FUDs are most common. Second, write answers to all those fears and doubts.

The result might be something like this:

  • What if it’s not what I’m looking for? We offer a full, 30-day, no-questions-asked, money-back guarantee. If you don’t like it, you get all your money back.
  • I don’t think it will work in my case.  Show or link to testimonials or case studies in which “People like X” have used it successfully.

Work with your designer to find a place on your pricing page to include that information.

See how Kajabi is doing it. Notice the guarantee, testimonials, and FAQ section right below the pricing plans:

Trust and security

Will my credit card data be safe? Am I the only idiot buying this stupid thing? These questions might be subconscious, but they exist for a lot of people. Address them.

Sprout Social shows customer logos (and some testimonials) for social proof just below their pricing plans:

testimonials and company logos directly below pricing plans.

5. Offer currency options.

It’s a global world.  If you offer your product to an Argentine buyer in euros, pounds, or Canadian dollars, you’ll cause friction. Even for some Europeans, U.S. dollars are difficult.

I don’t have exact data on how many people are negatively affected by seeing prices in foreign currencies, but this thread on HackerNews (predominantly a U.S. audience) gives some idea:

Would you buy a service that bills only in €?

  • € is OK – 73 votes
  • € is OK but I would really prefer $ if possible – 65 votes
  • € is not OK at all – 19 votes
  • I would not buy in $, but only in € – 6 votes

So out of a total of 163 respondents, 84 (~51.5%) want to pay in dollars instead of euros. Foreign currency is causing friction. What’s today’s rate? Do I need a calculator? Does my bank take a cut? Since exchange rates change, and how much will I get billed each month?

People want to know how much they’re really paying! Let users see prices in different currencies, either by toggling a currency button or via IP lookup.

6. Limit choice.

Too much choice paralyzes.

The most popular number of pricing plans offered among SaaS companies seems to be 4. Still, I bet most companies just decided on a whim and never tested it.

RingCentral had four plans on their pricing page. Then they tested it. The page that showed three plans increased conversions by more than 37%. (The page that showed two plans decreased conversions.)

However, when you go to RingCentral’s pricing page today, they have four plans again (couldn’t find a case study to explain why). They must have conducted new tests and found a new winning page. Do your own testing.

You might have heard that choices should always be limited to 7 +/-2. It’s a myth. Three options is definitely safe and not too much:

pricing page with three plans.

7. Incentivize up-front payments.

Cash is king, and having users pay up front for a longer period (year, two years) is good for cash flow.

The main goal of the pricing page is to get users to sign up, so don’t be too aggressive with the upsell.

Unbounce offers two options right above the plans and defaults to “Annual” (20% off). I like how subtle yet insistent it is.

SurveyGizmo inserts up-front payment pricing right into the plans. Users will focus on the annual price first (translated into a monthly rate):

pricing page in which annual costs are divided into a monthly price.

I wonder how many potential buyers leave when they find out they have to pay more for true month-to-month pricing. Only one way to find out!

8. Add playfulness.

People like to play. They like to press buttons, drag stuff, and watch cause-and-effect take place.

A great way to increase engagement on the pricing page is to add some playfulness.

Here’s Heroku’s pricing page:

pricing page that has an element of interaction/play.

You can drag the dynos sliders, and the price changes before your eyes. Try it for yourself.

Was it fun? Many people think so. Years ago, one guy on a HackerNews thread wrote about Heroku’s pricing page:

… I literally spent ~15 minutes just playing with it!

Talk about engagement! How many other pricing pages do you know where people hang out for 15 minutes? (The fact that they’ve kept the interactive component around for so many years suggests that it works.)

We did something similar for (a former venture) Traindom. People could drag the slider to see their hypothetical monthly payment:

slider to scale pricing on page.

People absolutely loved it, and almost every visitor spent some time toying with it. There was a problem, however: The numbers confused some users, and our live chat was bombarded with clarifying questions. Simplify!

(Live chat is great for instant feedback.)

9. Use a clear call to action.

The call to action (CTA) button, size, and wording matter.

The best starting point is to make the CTA buttons big and avoid saying “Buy now.” I yet have to see a test where “Buy now” performed better than the alternatives (“Add to cart,” “Get started,” “Choose plan,” etc.).

Mixergy uses “Join Now”:

use of "join now" as call to action on pricing page.

Once you have the fundamentals in place, you can test colors and other minor things.

10. Tell them what happens next.

People like to feel in control. That’s why the elevators include a “Close doors” button (that often doesn’t do anything).

On a pricing page, users want to know what happens next. Make next steps clear. What happens after they pay? Put them in control of of the process. You’re dealing with their hard-earned money; nobody likes surprises at that stage.

This example from Awe.sm gets it right by showing a liner flow of steps above the plans:

linear flow of steps from pricing page through checkout.

What about having the sign-up form on the pricing page?

It’s something you have to test, but, from the user experience point of view, you usually shouldn’t include anything that the user doesn’t expect. Remember, people spend most of their time on other websites. Most pricing pages don’t have a form, so people aren’t expecting one.

Seeing a sign-up might seem like sales pressure or a distraction. It removes the focus from choosing the right plan and will cause some people to flee.

Do your own testing

Don’t just copy and assume stuff. Interview your customers. Try to understand how they shop for the things you sell. Simplify.

The post 10 Principles of Effective Pricing Pages appeared first on CXL.

How to Create a High-Performing Analytics Team

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Every company dreams about creating high-performing teams. For us at OWOX, that dream centered on our analytics department, which included 12 specialists—junior analysts, mid-level analysts, senior analysts, and QA specialists.

Collectively, our analysts were responsible for consulting clients on data analysis and improving our marketing analytics tool. While our company focuses on analytics, our challenge was not unique—many in-house marketing departments and agencies struggle to measure and improve the efficiency of their teams.

In theory, our analytics department would work seamlessly to make the whole business profitable. In real life, it often struggled for constant improvement—new people, new business goals, and new technologies disrupted steady progress.

How could we get our analytics team to spend more time doing the things they were best at, as well as those that were most valuable to the company? Here’s the start-to-finish process we implemented to benchmark team performance and then use that data to increase efficiency.

Our baseline: Mapping the ideal analyst workload

What is the most effective mix of responsibilities for each analyst position under perfect conditions? Our first step was to diagram the ideal division of work for our analytics team:

ideal division of time for analytics team.

So, for example, in our company, we expected senior analysts to spend:

  • 45% of their time on tasks from clients; 
  • 30% of their time on management and coaching;
  • 10% of their time on tech and business education;
  • 10% of their time on process development;
  • 5% of their time on internal tasks.

This ideal task distribution, as we later learned, was far from reality. That gap resulted from eight key challenges faced by our team. 

8 ways our analytics team was struggling 

A dream team can’t be gathered at once; it can only be grown. Analysts in our analytics department expect to grow professionally and be given a lot of challenging tasks.

To deliver on that promise of professional growth, we had to confront eight key problems facing our team:

1. Inefficient task distribution for each position

At some point, everybody gets sucked into a routine and doesn’t ask if the current way is the only way to do their work efficiently:

  • Our senior analysts had no time to teach and coach new employees, but they also had no time for managerial tasks because they were overloaded with client work.
  • Our mid-level analysts didn’t have enough time for R&D and improving their skills.
  • Our junior analysts were just studying all the time. We hadn’t passed them tasks so that they could dive into real work experience.

Each of these realizations became clear after we visualized the gap between expectations and reality (detailed in the next section).

2. No measurement of efficiency for each team member

We all knew that the ideal workload above was just a model. But how far from this model were we? We didn’t know how much time a particular employee spent in meetings, worked on client tasks, or was busy with R&D.

We also didn’t know how efficiently each analyst performed a task compared to the rest of the team.

3. Incorrect task time estimates

We couldn’t estimate precisely the time needed for each task, so we sometimes upset our clients when we needed more time to finish things.

4. Repeating mistakes

Whenever a junior analyst had to solve a complicated task for the first time, they made the same predictable mistakes. Those mistakes, in turn, had to be identified and corrected by their mentor, a senior analyst, before the tasks could enter production.

Even if they didn’t make any mistakes, it took them longer to complete the task than a middle or senior analyst.

5. Unintentional negligence

Sometimes, client emails would get lost, and we exceeded the response time promised in our service-level agreement (SLA).  (According to our SLA, our first response to a client email has to be within four hours.)

6. Speculative upsells

We knew how much time we spent on each task for the client. But this data wasn’t aligned with the billing information from our CRM and finance team, so our upselling was based only on gut feeling.

Sometimes it worked; sometimes it failed. We wanted to know for sure when we should try to upsell and when we shouldn’t.

7. Generic personal development plans

We had the same personal development plan for every analyst, regardless of strengths and weaknesses. But development plans can’t be universal and effective at the same time. 

For our analysts, personalization of development plans was key to faster growth. 

8. Lack of knowledge transfer

Our senior analysts were swamped with work and had no time to pass their skills and knowledge to their junior colleagues. The juniors grew slowly and made lots of mistakes, while seniors had nobody to pass tasks and responsibilities to.

It was clear we had plenty of room to improve, so we decided to bring all the necessary data together to measure the efficiency of our analysts. Let’s look through these steps in detail.

How we measured the performance of our analytics team

This process started by defining the problems and questions outlined above. To answer them, we knew that we would need to capture before-and-after metrics. (Top of mind were the words of Peter Drucker: “You can’t manage what you can’t measure.”)

Here are the four steps we took to gather the necessary data and create a real-time dashboard for our analytics team.

1. Identify the sources of the data.

Since most of our questions connected to analyst workloads, we gathered data from the tools they were using:

  1. Google Calendar. This data helped us understand how much time was spent on internal meetings and client calls.
  2. Targetprocess. Data from our task-management system helped us understand the workload and how each of the analysts managed their tasks.
  3. Gmail. Email counts and response statuses gave us information about analysts, projects, and overall correspondence with clients and the internal team. It was significant for monitoring SLA obligations. 

2. Pull the necessary data and define its structure.

We gathered all data from those sources into Google BigQuery using Google Apps Script. To translate data into insights, we created a view with the fields we needed.

Here’s a table showing the fields we pulled into the view:

metrics and dimensions for analytics team measurement.

Our key fields were analyst, date, and project name. These fields were necessary to merge all the data together with correct dependencies. Once the data was ready, we could move on to the dashboard.

3. Prototype the dashboard.

Don’t try to make a dashboard with all the metrics you can imagine. Focus on the essential metrics that will answer your questions—build an MVP, not a behemoth.

Typically, best practices of dashboard prototyping are to:

  • Define the essential metrics that will answer your questions.
  • Ensure that KPI calculation logic is extremely transparent and approved by the team. 
  • Prototype on paper (or with the help of prototyping tools) to check the logic.

4. Build the dashboard

We used Google Data Studio because it’s handy, is a free enterprise-level tool, and integrates easily with other Google products.

In Data Studio, you can find templates designed for specific aims and summaries, and you can filter data by project, analyst, date, and job type. To keep the operational data current, we updated it on a daily basis, at midnight, using Apps Script. 

Let’s look closer at some pages of our dashboard.

Department workload page

We visually divided this page into several thematic parts:

  • Project;
  • Task distribution by role;
  • Time spent by task type.
mvp dashboard for analytics team.

With this dashboard, we could see how many projects we had at a given time in our analytics department. We could also see the status of these projects—active, on hold, in progress, etc.

Task distribution by role helped us understand the current workload of analysts at a glance. We could also see the average, maximum, and minimum time for each type of task (education, case studies, metrics, etc.) across the team.

Analyst workload page

This page told us what was happening inside the analytics team—time spent by analyst, by task, and by the whole team:

  • Time spent on tasks and meetings;
  • Percentage of emails answered according to the SLA;
  • Percentage of time spent on each task by a given analyst;
  • Time that a given analyst spent on tasks compared to the team average.
analyst dashboard to measure individual performance.

This was useful to understand how much time tasks usually took and whether a specialist could perform a task more efficiently than a junior-level analyst.

Project workload page

This page analyzed the efforts of the whole team and individual analysts at the same time. Metrics included:

  • Tasks across all projects or filtered by project;
  • Time spent on meetings and tasks;
  • Share of emails answered according to the SLA;
  • Statistics for an individual project (with the help of filters);
  • Average, minimum, and maximum time for each type of task in a project.
dashboard to measure task performance.

It also included the analyst and backup analyst for each project, as well as the number of projects managed by a given analyst:

project division by analyst.

We can’t show you all of our dashboards and reports because some contain sensitive data. But with this dashboard in place, we:

  1. Realized that the workload of an analyst is far from what we expected and that average values can hide our growth zones.
  2. Proved that most of our analysts (~85%) answered emails on time.
  3. Mapped the typical tasks that we ran into, how long it usually takes to accomplish them, and how the time for each particular task can vary.
  4. Found weaknesses and strengths for each analyst to customize their personal development plan.
  5. Found areas for automation.

The number of dashboards isn’t as important as seeing the changes we made using them. The latter translated our measurements into strategies for team improvements.

Acting on our data to improve the analytics team

Let’s have a closer look at how we used the dashboard to begin to solve some of the problems we mentioned above.

Improving task distribution for each team member

When we compared the real task distribution with the ideal task distribution, we were, shall we say, disappointed. It was far from perfect.

Our senior analysts worked on client tasks 1.5 times more than planned, and our junior analysts were studying almost all the time without practicing their skills.

expectations vs. reality for time division.

We started to improve the situation with a long process of task redistribution. And after some time, we saw improvement:

expectations vs. progress for analysts' division of labor.

While everything looked better in the dashboard, we still had room to grow.

By aligning everything to the average values, we were trapped in a typical stats problem: treating the average as the real-world scenario. The average is a mathematical entity, not a reflection of real life. In real life, there’s nothing more blinding than focusing on the average.

When we drilled down to a particular role or analyst, the data looked quite different. Here, for example, we have data for Anastasiia, a senior analyst. On the left is the ideal, in the middle is the average, and on the right is her personal division:

expectations vs. reality for individual analyst.

The picture changed dramatically from the senior analyst average and the reality for Anastasiia. The time spent on client tasks was much higher than it should’ve been, and almost no time was spent coaching new employees.

That could be for multiple reasons:

  • Anastasiia is overloaded with client tasks. In this case, we need to take some of her tasks and pass them to another analyst.
  • Anastasiia didn’t fill out the task management system properly. If this is the case, we need to draw her attention to its importance.
  • Anastasiia might not be a fan of her managerial role. We need to talk and figure it out.

We redistributed some of Anastasiia’s tasks and discussed the bottlenecks that were eating the biggest part of her time. As a result, her workload became more balanced.

If we had only looked at the average stats for the department, we never would’ve solved the problem.

Automation and knowledge transfer to minimize mistakes

We had lots of atypical work in our department. That’s why it was hard to predict how long it would take to complete it (and which mistakes would appear). 

We started improving our task estimation process by classifying and clustering tasks using tags in our task management system, such as R&D, Case Study, Metrics, Dashboards, and Free (for tasks we didn’t charge for).

tags for individual analyst tasks.

When analysts created a new task, they had to define its type using tags. Tagging helped us measure which jobs we ran into most often and decrease repeated mistakes by automating typical reports.

Below, you can see a dashboard showing the minimum, maximum, and average time spent on different types of jobs, as well as their frequency:

count of task metrics for analysts.

This helped us estimate the time required for typical tasks and became a basis for estimating unusual tasks. An average is a useful estimate for a new client, and outliers helped us understand how much time extra features may take.

We also looked closely at the most frequent tasks and those that had the maximum time spent. To eliminate mistakes in these tasks, our first step was to write detailed guides on how to perform each task.

For example, to create a report on cohort analysis, the guide included

  • Initial data;
  • Business objectives;
  • Limitations;
  • Patterns;
  • Self-checks;
  • What to pay attention to.

These guides helped pass along knowledge and avoid typical mistakes. But we also had to deal with unintentional mistakes.

Automation can help prevent recurring, minor errors. We built (and sell) our own tool to automate reports, like the example below for CPAs:

sample dashboard for cpas.

We got rid of hundreds of unintentional mistakes and the never-ending burden of fixing those mistakes; boosted our performance and total efficiency; and saved loads of time for creative tasks.

Decreasing unintentional negligence

Client tasks take approximately half our analysts’ time. Even so, sometimes something goes wrong, and answers to important emails from clients are delayed beyond the four-hour commitment in our SLA.

This dashboard helped us monitor analyst adherence to our SLA commitments:

analyst email response metrics.

When we recognized that the percentage of responses within four hours wasn’t perfect, we created notifications in Slack to serve as reminders.

To activate a reminder, an analyst sent a status (described below) to a separate email account without copying the client. Here’s the list of statuses we developed for the system of reminders:

statuses for slack reminders for analysts.

Our analysts got notifications in Slack if the SLA time for a response was almost over, or if they had promised to write an email “tomorrow”:

sample slack reminders for analytics team members.

Personal development plans

When an analyst created a task in Targetprocess, they estimated the time needed based on their previous experience (“effort”). Once they’d finished the task, they entered how much time was actually spent.

Comparing these two values helps us find growth zones and define the difficulty of execution:

sample targetprocess workflow.

For example, suppose an analyst spent much more time than average on a task with the Firebase tag. If that’s caused by low technical knowledge, we’ll add Firebase to their personal development plan.

By analyzing analysts’ efficiency on the individual level—while focusing on the educational opportunity—we solved our problem of tarring all analysts with the same brush for development plans.

Now, each specialist had an exceptionally relevant step-by-step guide for self-improvement to help our specialists grow faster.

Conclusion

We still have some questions to dig into in our department. Launching analytics for a real-life team is an iterative process.

Where will we go next? Fortunately, we have strong analytical instruments in our hands to help not only our clients but also ourselves. As you look at your situation, here are key takeaways:

  • The sooner, the better. Collecting, merging, and preparing data is about 75% of your efforts. Make sure that you trust the quality of the data you’re collecting.
  • Start with an MVP dashboard. Focus on critical KPIs. Pick no more than 10 metrics.
  • Define what you’re going to do if a metric changes dramatically at 5 p.m. on Friday. You should have a plan if a metric rises or falls unexpectedly. If you have no idea why you should have such a plan for a certain metric, think over whether you need to track it at all. 
  • An average is just an average. Look at the extremes. Challenge the average when it comes to managing and developing people.
  • Use transparent and easily explained algorithms. Make sure your team understands the logic behind the algorithms and is okay with it, especially if KPIs influence compensation.
  • It’s easier to automate tracking than to make people log time. But you shouldn’t make it look like you’re spying on the people working for you. Discuss all your tools and steps for improvement with the team.

The post How to Create a High-Performing Analytics Team appeared first on CXL.

Promo Videos: What Really Matters (with Examples)

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Planning to create a promo video to increase conversions? Good idea.

What’s the most important part? Your video has to be damn good. Like interesting to watch. Compelling.

Quality = Attention span

Your promo video only does you good if people actually watch it. And like it.

As Seinfeld said, “There is no such thing as an attention span. There is only the quality of what you are viewing.” This captures the essence of a great promotional video.

For example, I had a fitness product that I sold (passively). I made a promo video for it. A pure sales pitch. These were the audience retention stats for that video (via YouTube):

video engagement statistics from promo video on youtube.

As you can see, the audience drop-off is pretty quick and consistent. Why? Nobody likes being pitched to. Your promo video has to be way more than just a sales pitch.

A few days ago, I sent out a promo offering the 20 fastest people a chance to get conversion-optimized wireframes for their website. The landing page had a prominent video (duration 1 minute and 35 seconds).

Stats: Some 25% percent of the traffic watched the video. (Average demo videos on a website get ~10% views or less.) Of those, 57% made it until the end. Much better than the video mentioned above, but it could be better.

Of course, there are some promo videos that are just amazing. Here are some examples of great promo videos:

1. Dollar Shave Club

This video was uploaded to YouTube on March 6, 2012. Within 45 days, it had 4.3 million views; by 2019, it had 26 million. Talk about a successful video.

It’s a promo video. Still, people love it, share it, talk about it. It’s proof that quality is everything.

The credibility they built from that initial video lingers: They have more than 35,000 YouTube subscribers and multiple videos with hundreds of thousands of views.

Their 2018 video “Get Ready” has earned more than 3 million:

The video is more of a brand spot than a straight-up promo video, but the bottom line is that their first video secured viewer interest in what they publish—even seven years down the road.

2. 4-Hour Body

Amazingly well done. Sets the tone for the book, makes attractive promises and captures your imagination.

Nearly 1.2 million views later, it continues to earn comments that show the emotional impact it has on viewers:

  • “I LOVE THE LAST PART OF THIS AD WHEN THE GUY JUMPS…”
  • “Every time i need inspiration to get my day starting, i come to see this video.”
  • “it touched my soul!”

Plenty of comments were about the music, too (e.g., “WHATA SONG… WHO KNOWS TO HELP ME FIND THIS BAND ?”). Keep that in mind when you choose a song for your spot. It can have an outsized influence on the emotional impact of your promo video.

At the same time, there are plenty of skeptical voices in the comments. A promo video is a way to generate attention for your product. It’s not a start-to-finish marketing campaign or a cure-all for a sub-par offering.

3. Double Fine Adventure

This video played a major role in raising over $3.3 million dollars for a game that was only an idea at the time.

[This post contains video, click to play]

While not nearly as slick as the preceding two examples, it came off as authentic. You get interested in the game because you know and like the creators behind it.

Need more promo video examples?

If you want to see a ton of examples of promo videos, check out:

  1. What are some good examples of startup product demo videos, and who made them? (Quora post)
  2. Startup Videos.

And for some ideas on how to make good promo videos:

Conclusion

Using video is a great idea, and video quality is everything.

I mean quality in the wider sense, although technical is very important, too. Jupiter Research found that 60% of users are less likely to return to a site if the video is low quality—and that was over a decade ago. (Imagine expectations now.)

So what makes the above promo videos so good? Three main things:

  1. Really good quality. Professional production. (Not cheap.)
  2. Tell a story. Give a promise of the future.
  3. Humor.

The post Promo Videos: What Really Matters (with Examples) appeared first on CXL.

Marketing Project Management: A Reliable, Reusable Framework

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Lurking beneath every goal are dangerous assumptions. The longer those assumptions remain unexamined, the greater the risk.

– Jake Knapp, Sprint: How To Solve Big Problems and Test New Ideas in Just 5 days

Imagine this scenario. You’re a marketer, and you’ve just launched a marketing campaign that you spent weeks or months building. You checked all your boxes:

  • You assigned roles and responsibilities.
  • You kept stakeholders informed along the way.
  • You activated all the right channels to reach your target segment.

But something is wrong. Hardly any prospects are opening your emails. Almost none are engaging with your ads. The only feedback you are getting is that certain elements on your landing page are broken and, worse, don’t load properly across devices and browsers. 

Your boss calls you into their office and asks: “What happened?”

The wrong answers would be:

  • “I just assumed prospects would open my emails.” 
  • “I assumed the team QA’ed the landing page.” 

Instead, the right answer is: “I’m going to find out where my assumptions led me wrong.”

In this post, I’ll walk you through a rigorous project management process to help you optimize your campaign strategy. Taking lessons from agile project management (specifically: sprints), I’ll show you how to build more effective, less assumptive, marketing campaigns.

Adapting sprints for marketing

sprint framework for project management.
(Image source)

Brands like 23andme and Slack have adopted the Google Venture design sprint because it works. For businesses aligned with the whole “lean startup” movement, the sprint offers a formula to quickly build, launch, and test products before committing too much time and effort to something that might not resonate in the market.

It can be easily applied to marketing because it’s built around making data-driven, research-backed decisions, which are critical to creating winning campaigns.

And even though Jake Knapp explicitly advises not to adapt the Sprint—I’ve done it anyway. Over the years, I’ve made small tweaks to suit the specific goals and needs of a marketing team and marketing campaigns. 

Here’s what my sprint looks like:

adaption of sprint framework for marketing campaigns.
This slide comes straight from my upcoming course on marketing project management.

Sprints traditionally happen during a five-day timeframe, when product teams set aside everything else they’re working on. 

In my world, I don’t do that. Sometimes, our team will spend one week on a marketing sprint; other times it might take six. That’s the nature of shipping marketing campaigns—the sprint is a framework, not a mandate, for guiding our work.

Marketing sprint phases and goals:

Although I’ve adapted the framework and timeframe, the goals during each phase of the sprint remain true to the process:

  1. Map. Set your targets and objectives for what you want to accomplish based on feedback and research.
  2. Sketch. Ideate and pitch ideas for achieving your marketing goal.
  3. Decide. Vote and decide on your campaign content, channels, and tactics based on ideas pitched in Phase 2.
  4. Prototype. Build just enough of the campaign to get it ready for testing.
  5. Test. Get feedback on every aspect of the campaign so you can go back, make changes, and launch.

Now let’s look at what’s done in each phase to achieve those goals.

Phase 1: Map

The Map phase is all about research, collecting data, and understanding the problem to set clear, measurable, marketing targets. 

The first thing you need to know is your objective. Is this a lead-gen campaign or a campaign to push a new affiliate program? Is it a nurture track to convert leads into paying customers or a brand play to increase awareness?

Once you understand the goal, you can move on to the research—how you’ll achieve it and the specific targets and metrics that indicate “success.”

There are so many ways you can collect data and do research. (In fact, CXL Agency has their own rigorous research process.) As a guide, I’d recommend a mix of primary and secondary research to inform how you set your targets, such as:

For example, for a recent campaign to launch new pricing at CXL Institute, we conducted a series of industry interviews with pricing experts, ran an average revenue per user (ARPU) projection analysis for new plans, and went through a suite of usability tests on pricing mockup designs and copy.

One piece of feedback from usability tests was that users were confused by the “Pay once” option in our pricing. Users didn’t understand if it was an annual payment or if they would keep the product for life.

example of pricing page.

The feedback triggered us to add a small disclaimer to our pricing block that made it clear that they would keep the course forever:

example of updated pricing page based on user feedback.

Phase 2: Sketch

Once you’ve collected all your research and set your targets, you’re ready to jump into the Sketch phase. This is where you put all your creative marketing ideas to work.

The first portion of this phase analyzes the research and comes prepped to an “ideation” pitch meeting with a fully baked campaign plan. Channels, content, messaging—it should all be there (or at least a skeleton of it).

A fully baked campaign prevents the meeting from turning into a mishmash of half-baked ideas that sound cool but might not make sense for the project. Often, asking for a full campaign plan leads team members to think of more complex, interesting ways of solving the problem.

It also helps marketers think more about connecting the dots across channels and assets since they’ve had to plan for it upfront. Here’s an example of what a campaign ideation pitch looks like, from a campaign I ran in my previous role at Unbounce:

sketch of marketing campaign ideas using miro.
Mocked up using Miro.

Each person explains their campaign to the team, and each person votes on individual ideas, concepts, or tactics from each campaign.

I usually give people three votes and one “super vote” (worth two votes). After voting, you’re ready to move into Phase 3.

Phase 3: Decide

In this phase, you collect all the top-voted ideas, organize them, and come up with your campaign plan.

Here’s where a decision-making framework like DACI comes in handy. In the DACI framework, you assign specific roles:

  • Driver. The person(s) responsible for leading the project and corralling all stakeholders.
  • Approver. The person who ultimately makes the decision.
  • Contributor. The person(s) with subject-matter expertise.
  • Informed. The person(s) who’ll be kept in the loop on how decisions are made.

In this phase, the DACI framework is especially handy because you need one person—the Approver—to decide how all the voted ideas come together into a plan. 

The Approver then comes back to the team and presents the plan to move forward, assigns roles to the Drivers, and pushes the campaign into the next phase.

Phase 4: Prototype

If you remember one thing about the Prototype phase, it should be this: Build just enough. Knapp outlines a four-step list of what he calls the “Prototype Mindset” in his book, and it goes as follows:

  1. You can prototype anything.
  2. Prototypes are disposable.
  3. Build just enough to learn, but not more.
  4. The prototype must appear real.
prototyping example from sprint book.
The prototype mindset from Sprint: How to solve big problems and test new ideas in just 5 days.

As a (self-aware) perfectionist, I can’t tell you how many times I’ve been in the Prototype phase and wanted to just spend a little extra time polishing a landing page, ad, or email. Resist the urge.

example of facebook post for unbounce campaign.
Prototype of a fake ad for launching Unbounce popups, created with stock imagery and quickly mocked up in Photoshop.

The whole point of this phase is to build only what you need to get an authentic answer from a potential user in the next phase: Test.

Your aim is to move through the Prototype phase quickly so that you can actually learn (and improve) based on real feedback. Plus, the more time you waste making something perfect, the more frustrating it’s going to be if when you have to change it later.

Phase 5: Test

Congrats! You’ve made it to the final phase—where the real magic happens. During the test phase, you get user feedback on the prototypes you’ve built.

First, conduct a series of interviews (ideally with your customers). According to Knapp, conducting at least five interviews during a sprint is enough to get real insight. Any less and you might be operating on false information.

screenshots of user testing for prototypes.
Real screenshot of prototype testing.

Ask all interviewees the same questions. You’re looking to discover:

  • Are they interacting with the prototype the way you intend? For example, if you want them to hover over a tool-tip on your landing page to discover more info, are they doing that?
  • Is their reaction positive or negative? For example, is your messaging resonating with them? If you added a joke to your email copy, did they get it? Did they laugh?
  • Are they motivated to complete the action? For example, are they finding and clicking the call to action? Is the offer something they seem enticed by?

After you conduct interviews, transform feedback into “How might we” statements. Originally an idea defined by Proctor and Gamble in the 1970s, the basis of “How might we” is to rephrase every piece of feedback (positive, negative, neutral) into a question that incites action.

For example, say you’re testing an email in a nurture campaign to convert leads into customers. A piece of feedback you might receive is: “Get to the point faster, I skim emails.”

Your role is to transform that feedback into a question: “How might we accommodate people who skim emails?”

The benefit of this technique is that it doesn’t immediately present a solution, empowering you and your team to come up with the best answer. For example, you could solve for skim readers in a few ways:

  • Reduce the amount of copy in the email. 
  • Use bolding and bulleting to break it up and call attention to the main points.
  • Reorder copy so the main call to action and thesis is at the top.

Once you’ve transformed your feedback into action items, you need to prioritize. Often, you’ll get a ton of feedback, and you need to decide which feedback to put into action. Sometimes, you might not have enough time to do it all, and that’s okay. 

Prioritizing feedback should be based on:

  1. How important it is to the campaign’s success. If something’s broken, you need to fix it.
  2. How often that piece of feedback came up. If everyone said they didn’t understand the headline, you probably need to rewrite it.
prioritization framework for marketing campaign ideas.
An example feedback prioritization sheet from an Unbounce campaign.

From there, you’re armed and ready with a tested campaign that you can remix, fix, and—most importantly—launch! 

Conclusion

Sprints are an effective and helpful project management process that you can apply to any and every marketing campaign. They ensure your work is data-driven and research-backed.

Ideally, sprints aren’t a one-and-done experience, either. A sprint lets you observe a campaign in the wild and, if it’s not hitting your targets, make tweaks and changes until it does.

If you want to learn more project management tools, techniques, and processes, check out my course at CXL Institute on project management for marketers. I cover the sprint process further, PLUS I walk you through how to iterate from annual to quarterly, monthly, and weekly planning so that your marketing team is set up for success.

The post Marketing Project Management: A Reliable, Reusable Framework appeared first on CXL.

How to Increase SaaS Prices the Right (and Profitable) Way

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Have you ever gotten a bill that—inexplicably—is two or three times more than usual? What was your reaction? Probably something like this:

[A SaaS vendor] pulled a massive price increase on us (over 300%!) and that was it. I don’t care how much I like their product, I’m gone. We use Drift now.

I got that from a user who junked her paid account after a vendor jacked up their price by 300%. Stories like this might terrify you if you’re thinking about increasing prices for your SaaS product. You might annoy them or, worse, lose them outright to a cheaper competitor. 

Your fear is reasonable. As CrazyEgg’s co-founder, Hiten Shah, puts it: “When customers have countless choices available to them in the market, they are prone to shop around for the best price.”

But there’s hope: Churn isn’t the only outcome of a SaaS pricing increase. You will anger some users. Some will churn. But, if done right, a net revenue boost is entirely possible.

Need proof? The SaaS brand I mentioned at the start is Intercom. And, as of now, they still boast 30,000+ paying customers (each of whom is paying more than before).

intercom homepage showing 30000 customers.

Much of the outcome depends on what you do before you announce the price increase. This post will help you get that (and a few other things) right:

  • Identify if the time is right to raise SaaS prices;
  • Know your strategic options for increasing SaaS prices;
  • Communicate a price increase to existing users effectively.

Is it time to raise prices for your SaaS product?

Justifying a price increase is almost always about creating more value—making your product better. But what’s the definition of “better”? And who defines it? An email from Seth Godin’s “The Marketing Seminar” has a profound definition of what “better” really means: 

When your better aligns with the better of those you seek to serve, you’ll have found an internal compass that can guide your work…” 

You may think your product is better, but users must agree before you can hike your prices. “Better’s not up to us. It’s up to those we seek to serve,” wrote Godin in another post. 

So how do you determine whether those value judgments align?

Talk to users to find out if your “better” is also their “better.”

Survey users about the features they find most useful, or the ones they’d like to see in your product. Neil Napier of Kyvio shared with me how they could’ve improved their price increase process if they’d found out what their users really wanted first: 

In the past, we messed up and raised prices too quickly because we “promised” certain people we would. Now, we are taking a more calculated approach, which involves running surveys and interviews to learn what people want and value. 

Have unstructured, in-person conversations with your users. In an interview with Hotjar, Drift’s founder David Cancel shared how he and his team would get on a plane and have lunch with their users—big and small—so they could chat with them like normal people and get quality product feedback:

Every week, we do things like meeting up with small groups of customers. We’ll fly out to a city, one or two of us, and meet up with some prospective customers, some people in the industry, some existing customers, and I’ll do a lunch with them. I’ll do a dinner with five of them. I do it a lot.

We want to have a mix of successful customers, unsuccessful customers, new customers, old customers. So, we try to mix it up.

And this is not a product pitch for Drift. We just let everyone talk. Let’s just be real people and have a conversation.

And it’s amazing that in every one of these cases, without coaxing them, the conversation naturally goes into Drift.

And we just sit back and mostly listen to them.

But discovering your users’ definition of “better” isn’t the only factor to consider before raising SaaS prices for existing customers.

Other factors to consider before you raise prices

In addition to aligning on value with your users, there are three other things to keep in mind.

Slow vs super-active periods 

There may be times (e.g. Black Friday, Christmas, summer, etc.) when your users are inactive or significantly less active. Those are not ideal periods to increase your prices.

If, according to your data, paid users seldom engage with your product over the summer, it’s best to wait until they’re more active before you introduce a price change. 

If users aren’t engaged when you increase prices, you won’t get an accurate reaction to the price change. CEO at KlipFolio, Allan Wille, recounted his experience with seasonal fluctuations in his SaaS business:

With more data to compare, I can see evidence that there are seasonal fluctuations in our business. For example, this summer, organic traffic to our website was flat. And perhaps most telling, the percentage of daily active users (%DAU) of our dashboard was down.

It makes sense … people are on vacation. Likewise, seasonality is evident at Christmas and New Year’s. There is a precipitous drop in activity on both those days. It’s clear almost nobody’s working.

Similarly, Better Proposals’ founder Adam Hemphy shared how raising prices around a Black Friday deal wasn’t a good decision:

My advice would be to do a price increase when you don’t have anything else affecting it. In our case, doing it in February or March would have been a better immediate test for whether the price increase was a good move or not.

When users are active, you may even get unsolicited feedback that it’s time for a price increase.  

Buyer confessions

If you’re getting comments from paid users like, “You could really charge more for this,” then it might confirm that your prices should go up—especially because they may be speaking for many paid users.

But does that ever really happen? It does. A paid user once told the Appcues team:

You guys should find a way to charge us more $$$. $450 isn’t enough—we should be paying you well over $1k.

They raised their prices soon after. Sarah Hum of Canny had the same experience:

live chat customer telling company they should raise prices.

If you’re getting comments like these from your users, it’s probably time to lift your SaaS prices. 

However, if you never hear from ready-to-pay-more buyers, take a more methodical approach with a competitor pricing analysis.

Competitor pricing

Competitor pricing and the Van Westendorp Price Sensitivity Meter (PSM) are two market-research strategies that can give your price increase a safe landing.

Your competitors’ prices help establish expectations. You don’t want to price your SaaS product far outside the established range—unless you’re sure that your product justifies the premium.

The PSM approach to SaaS pricing asks four key questions to determine viable price points:

  1. At what price would you consider the product to be so expensive that you would not consider buying it? (Too expensive)
  2. At what price would you consider the product to be priced so low that you would feel the quality couldn’t be very good? (Too cheap)
  3. At what price would you consider the product starting to get expensive, so that it is not out of the question, but you would have to give some thought to buying it? (Expensive/High Side)
  4. At what price would you consider the product to be a bargain—a great buy for the money? (Cheap/Good Value)

The CMO of Paubox, Rick Kuwahara, recommended the PSM approach for finding ideal price ranges:

After you survey enough people (through the PSM approach), you usually get a range of prices where you can see how elastic pricing is between the answers for each question (in the PSM). Like too cheap may be between $10 and $20, and too expensive between $50 and $75. 

Additionally, you can then do some market research and see how that would bear out in the marketplace. While I don’t like competitor-based pricing too much, you also don’t want to be way out of the range that the market has set.

If your research suggests that a price increase is justified, you may be able to move on to execution. But, as Alexa Hubley, Head of Marketing at CXL cautions, there are other factors to keep in mind:

“Research” should include more than just determining acceptable price ranges. It’s also important to do projections/predictions of churn and retention related to new pricing, as well as business impact analyses, etc.

Once you’ve completed all relevant research, you can choose any of three strategies to execute on it.

3 strategies to increase prices for SaaS users

1. Create a more expensive pricing tier with more features.

Time and again, subscription businesses take heat from users because they increase prices. Many (or even most) businesses weather it out.

Take Netflix. In the spring of 2011, they hiked their price, and many (800,000) of their subscribers deactivated their accounts. The company’s stock price dropped 77% in four months, battering its management’s reputation. 

But did Netflix survive? Actually, they did better:

graph showing netflixs revenue growth even after raising prices.

Zendesk had a similar experience—a poorly executed increase from which they recovered, even thrived. (After their debacle, they apologized.)

Still, these companies could have avoided the painful process of trying to explain their price hike after the fact. One way they could have improved their execution? Creating a new, more expensive tier with added features for interested users. 

Avoid angering users by introducing a new pricing tier

Pricing experts at Price Intelligently say it like this: “Pricing changes don’t always mean higher prices. It could be [. . .] shifting features within tiers.”

In other words, instead of raising prices for all users, you can announce new features (or shift existing ones) into a more expensive tier. 

example of higher-priced tier for saas platform.
(Image source)

But will existing users switch to the new tier? It depends on two previously covered topics: value and the market: 

  • Which features offer users more value?
  • Do competitors provide this value? Could they start providing this value quickly?

If your new pricing tier provides exceptional value and is protected from competitor challenges (i.e. is an economic moat), you may compel users to upgrade.

Growth expert Ammo Singh shared a success story from a client:

I created a new tier that included some features I knew users wanted as they requested them. (I can’t share specifics due to an NDA.) Users liked it and understood that if they wanted more advanced features, they had to pay extra.

If, however, you’re convinced that existing paid users won’t fuss if you increase the price of their current plan, you don’t need a new tier. Here’s what to do instead.

2. Increase the price of plans for existing customers.

Not all SaaS businesses that raise their prices end up regretting it. Appcues increased their price, and sales grew by 263%. ChartMogul’s customer base and revenue kept increasing as their minimum price did. Since 2014, Netflix has increased their price by about $1 each year:

netflix history of price increases.
(Image source)

It is possible to thrive after a price increase for existing users. Companies that have done so usually share three characteristics:

1. They have the size to take the heat. Losing a few hundred (or several thousand) customers won’t crater their revenue.

2. They notify customers well in advance. Appcues talks about how they did it:

We tried to write the email to be clear and upfront, and dispel any concerns around our motivations behind the increase. Most importantly: we thanked our customers and gave them sufficient notice to change their plan before the price adjustment. 85% of our customers opened our email and not a single one churned :)

Kuwahara seconded the importance of clear communication:

It’s just communication, over-communication if you can. Do it ahead of time and often enough so it’s not a shock when someone receives their bill.

3. They increase pricing significantly only for bigger customers. Some SaaS brands roll out large price increases only for customers with deeper pockets who may not feel the effects of the price increase as significantly (and who, in theory, should be getting far more value from the product).

Alternatively, an across-the-board increase could work if you’re willing to let smaller clients churn and, instead, focus on more valuable enterprise accounts. The former product manager at Yotpo, Adi Ben Mayor, shared a story with me:

I was working for Yotpo, which started as a product for SMBs and now serves enterprises (Staples, for example). The prices went up significantly, way out of reach of SMBs, and some did churn. But it allowed the company to focus on our Enterprise features.

But what about grandfathering people in?

3. Grandfather existing users into their old pricing.

One way to avoid trouble from a price increase is to grandfather paid users into old pricing, taking out much of the risk (and some of the profit) from a price increase.

You can inform existing users that prices are increasing for new customers but that pricing won’t change for them. It shows loyalty and can strengthen their bond with your brand and product.

But how long should you grandfather them in? A few months? A year? Forever? I put the question on some SaaS groups on Facebook. Most SaaS marketers and founders in the group say they’d rather grandfather old customers forever. 

question to saas facebook group about grandfathering customers into current prices.

And it makes sense. The trust you build by grandfathering in current users may even spawn word-of-mouth marketing (and more revenue). 

One response also highlighted the similarity between time-limited grandfathering and simple advance notice:

I would give like a 3- to 6-month email of why the increase and the date that the customer can plan ahead…sort of how Amazon did with their Prime increase.

So how should you explain your price increase?

How to communicate a SaaS price increase

Emails are a primary method of communicating a price increase. Here are two price-increase emails you can borrow ideas from—especially when grandfathering users in:

1. Appcues

These emails were sent to Appcues’ current customers (left) and free-trial users (right):

appcues emails sent to customers about price increases.
(Image source)

If, like Appcues, you’re increasing prices primarily for power users, that can have benefits. Wes Bush, the author of Product-Led Growth, explains:

If you’re charging based on value metrics (i.e. the number of users, videos uploaded, or MAUs), your new pricing plan will charge your power users more while limiting the price increase for accounts that are not getting a lot of value from your solution. All in all, this reduces your churn with a price increase.

2. Close.io 

Here’s an email that Close.io sent, which increased their average customer lifetime value by over 10%. As their CEO Steli Efti noted, “When we increased prices, our conversion rates stayed the same, our customers stayed happy, we had a huge bump in paid seats.”

email to customer about a pending price increase.

In a previous article CXL published on raising prices, they identified one theme for successful communication (email or otherwise) that stood out more than any other: transparency.

If you feel compelled to obscure the reason—or if it takes thousand-word essays and charts to justify it—that’s a sign you don’t have a strong case.

Still, focusing on key points can help justify an increase:

  • The length of time since the last price increase;
  • The value you’ve added to your product or service during that time;
  • If you have service limitations (e.g. consulting hours), the increase in demand.

Conclusion

While price changes are often “one off” events, few experts recommend treating them as such. Price Intelligently, for example, recommends reviewing your pricing every few months. Pricing, like a website redesign, may be best understood as an iterative, not radical, process.

Regardless of your cadence, remember these four points:

  1. Make sure your “high value” features are high value for users, not just your product team.
  2. Consider the PSM model to find out how a proposed price fits into the broader market.
  3. Grandfather paid users into their old pricing plan or create a new, more expensive tier they can opt into.
  4. Give users plenty of time to make a decision, and give yourself plenty of time to remind them of your value.

The post How to Increase SaaS Prices the Right (and Profitable) Way appeared first on CXL.

B2B Influencer Marketing: 4 Strategies that Move the Needle

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Influencer marketing has been around long enough to generate great case studies—and skepticism. That’s especially true for B2B marketers. An Instagram model gushing over a new fashion product seems infinitely remote from strategies they might deploy.

Still, about 65% of brands planned to increase their investment in influencer marketing in 2018, which puts the strategy on track to top $10 billion by 2020. Yet, according to another study, only 11% of B2B companies have ongoing influencer marketing programs, compared to 48% of B2C brands.

B2B brands shouldn’t feel left out, even if they lag behind. Professional communities on social media are strong. We’ve all given and received one-off recommendations in Slack groups or via email. Those under-the-radar endorsements can influence purchasing decisions for cloud-based CRMs as much as cleansing teas.

But too many case studies tout the strategies of SAP, Salesforce, and other behemoths who have resources and networks that dwarf most companies. This post offers four B2B influencer marketing strategies that move the needle in any industry and for companies of all sizes. 

1. Partner with industry experts to co-create content.

  • What this strategy achieves: Adds instant credibility to your content and provides a natural distribution network.

Like every good influencer strategy, this one is a win-win. Ross Simmonds, Digital Strategist at Foundation, explains why:

When you collaborate with an expert in your field [. . .] the expert/influencer has a chance to connect with a new audience and you have the opportunity to bring new value/perspective to your existing audience.

This strategy is also flexible: You can select the right type of content based on your resources.

Here are several ways to co-create content with B2B influencers:

Brand endorsements

Even if you don’t have a roster of influencer-users, reach out for a quote about your product or brand. Co-created “content” can be as simple as a few lines to add social proof to your offer.

A pop-up on the cognitiveSEO blog has a quote from Bill Sebald:

use of an influencer quote to provide social proof.

Start with influencers who are already connected to your brand; the chances of getting a reply are much higher. Who follows your brand account on Twitter? Who shared your content in the past?

If manually culling a list is too much effort, use a tool like Followerwonk. With just a few clicks, you can identify the most influential users among your followers. (You can learn more about this strategy on my recent post on Moz.)

how to identify your most influential followers on social media.

Similarly, Buzzsumo allows you to see who on Twitter shared your content:

example of how to find influential people who have shared your content.

Case studies

Involving experts in case studies can help win more likes and shares—promoting the content is in influencers’ self-interest because they get to share their success stories.

You can catalyze that sharing, something Ann Smarty of Viral Content Bee does regularly:

Any time I feature influencers in my content, I tag them on Twitter, not just in my own tweets but also in updates from everyone else. This gets my influencers back to my site with every tweet.

We add the project to Viral Content Bee and include the influencers’ usernames in the project name. This way, every time the article is tweeted from the dashboard, the influencers are tagged on Twitter, driving them back to the content.

example of call-outs to influencers in article tweets.
Twitter is the easiest social media network for tagging. Tagging on Facebook is trickier but still worthwhile.

Matthew Barby, along with other well-known HubSpot employees, shared how Accuranker helped them double their traffic. Those names (and that brand) added credibility to Accuranker’s case study.

But, of course, there’s a limitation to these collaborations: The targeted influencers have to be your clients—for long enough to have gotten great value from your product and liberated from a self-imposed NDA that keeps them from sharing their story.

Video content 

Video has won marketers’ hearts and minds: 83% believe that video content grows sales. But it may require some penny-pinching since videos need a generous budget (compared to, say, a blog post or whitepaper). 

Justin Champion, author of Inbound Content and contributor to HubSpot Academy’s video marketing course, explains the potential of optimized video content:

When Google offers video search results, they’re generally near the top of the search engine results page (SERP), even before the coveted #1 website listing.

Mots of those video results are YouTube videos, making them another opportunity to claim real estate atop a SERP.

If you’re on a shoe-string budget but still want to produce content featuring experts:

  • Record a short webinar-like Q&A. I use Zoom for its ease-of-use and decent video quality.
  • Live stream on Facebook or YouTube. Pick your brand channel that has the most engaged community (i.e. most followers, subscribers). After the live stream, promote the video across other social media platforms.

While production may be more demanding, it may also make it easier to find experts who will collaborate with you. Videos are among the most expensive content types to produce, so the perceived value of collaborating is often higher.

Ross Hudgens at Siege Media has successfully uses this formula. His “Content and Conversation” video series features a veritable “Who’s Who” of the digital marketing world:

example of youtube channel that interviews lots of influencers.

There are ways to reduce production costs, too, like shooting videos at company-sponsored conferences and events. The experts are already there, so just start rolling.

Research collaborations

Want to co-create content that will really stick with readers? Already have a cache of data? Share it with a B2B influencer to publish on their site.

In the digital marketing space, Brian Dean does this often. Most of his research is based on data provided by other companies. Here are a few examples from his recent posts:

If you need ideas of what kind of content you could create with your data, check out the post on B2B content marketing strategies, or use a tool like BuzzSumo or Ahrefs to surface popular topics.

using ahrefs to surface popular topics for content collaborations.

Partnering up with experts in your field is a great way to create new and interesting content while also building relationships. But influencers aren’t the only people who can help you promote your brand. 

2. Turn loyal, influential clients into brand ambassadors.

  • What this strategy achieves: Builds word-of-mouth referrals and cultivates a community of user-advocates.

If someone tells you that building relationships with influencers is a piece of cake, they’re either: 

  1. From a well-known company that influencers are eager to work with;
  2. Have never never done it themselves. 

Persuading influencers to collaborate is anything but easy. Get ready to be ignored by hundreds of them. It’s just a part of the process—if you thought to reach out to them, so did dozens (or hundreds) of others. 

Loyal clients may be an easier target, especially since you don’t need to “sell” your brand; they’re already sold. So how do you get them to share their experience with your business?

Here are options to turn happy clients into vocal supporters:

Special community programs 

Moz was among the first digital marketing companies to create a bonus system (“MozPoints”). For various activities—like a “thumbs up” for your blog post comment—you receive a certain number of points.

example of point system to motivate participation by users.
I have just over 900 points and rank #97 in the Moz community. (Wow, I had no idea before writing this post. LOL!)

SEMrush has also invested in their community, building something similar to motivate people to participate and engage with their brand:

example of loyalty/gamified participation in company programs.

The gamification can motivate users to engage with your content or to help other users on your product forum. That engagement, in turn, may help you create and identify your champions.

Nick Dimitriou, Head of Growth at Moosend, highlights other benefits of loyalty-type programs:

  • Stay ahead of the competition;
  • Reduce your advertising spend;
  • Increase customer retention;
  • Move existing customers further down the funnel;
  • Identify brand evangelists;
  • Find customers who have influencer potential for your brand.

Closed groups

Make your customers feel truly special by adding them to an exclusive group. Many companies have closed Facebook groups to help clients feel more connected to their brand. However, you can go a step further and create a VIP group accessible only to hand-picked clients. (A community feature can also be added quite easily to your site.)

This will streamline conversations about your product/service, help you collect feedback, and—most importantly—allow you to share special offers (e.g. beta access, company swag) and invite influencers to your community meet-ups. 

Engaging with loyal customers is an affordable strategy to earn endorsements from clients whose opinions carry weight in the industry. But clients may not be your only die-hard fans. Your brand might already have loyal influencers.

3. Organize offline events to develop relationships.

  • What this strategy achieves: Builds brand awareness by celebrating others and creates the personal connections you need to execute influencer strategies.

Establishing personal connections at offline events is key to building out your influencer network. But it’s also important to give your new contacts an easy way to get in touch with you after the event, which is where branded links come in handy. Distributing a short, memorable link (e.g. YourBrand.is/Better) at the event can continue the conversation long after it’s over.

Davide De Guz, Founder of Rebrandly

I know tons of people that I’ve never met in person (but would love to meet one day!). Thanks to digital marketing conferences, I have been able to grow many of those digital-first relationships. 

An old-school, face-to-face chat can’t be beaten, even by video calls. My team knows this, which is the number-one reason we host our own annual event, Digital Olympus. Even if you’re not in a position to run a conference, there are some options to consider:

Closed VIP events

For instance, SEMrush Summer Jams brings together the very best digital marketers. Being a part of this event is a big deal. Or take SEOktoberfest, organized by Marcus Tandler from Ryte. Even though it costs quite a lot to attend, it remains an invitation-only event with a feeling of exclusivity.

event landing page promoting experts.
You know it’s exclusive when the site promoting an SEO event is a single page of basic HTML!

Awards

If there’s no award in your niche, it could be your chance to start one! Recruit a group of trustworthy experts to act as judges (Influencer Engagement Opportunity #1). Then, promote submissions for Best XYZ and celebrate the winners digitally or, if you have the budget, with a one-night award ceremony (Influencer Engagement Opportunity #2). 

Existing award programs highlight best practices. For example, Search Awards are well-known in the digital marketing niche. I was a part of Search Awards a few times, and I think they’re so popular because:

  • Even being shortlisted is a huge benefit to brand awareness.
  • It’s a great opportunity to meet experts that you’ve known on the web for ages.
  • Shortlisted companies invite friends and influencers to their tables to build stronger bonds.

If experts see that your award benefits them, they’ll be more willing to participate and maybe even help organize or sponsor the program.

Parties before or after big events 

This is a shortcut if you’re on a tight budget and can’t afford VIP events or awards. Search for an existing event and announce that you’re running a pre- or post-party for it. (Lots of companies, for example, run BrightonSEO pre-parties; some are “official” parties, sponsored through the conference.)

Face-to-face communication will always be the best way to catch up with loyal influencers, whether they’re clients or experts. Now, let’s see how to identify more of those people for future collaborations.

4. Keep hunting for new influencers.

  • What this strategy achieves: Grows your network of potential influencers and opens the door to new or expanded strategies.

The game never stops. As with other marketing strategies, a one-off approach is least likely to work. Keep in touch with people you already know (through, for example, the aforementioned VIP groups), but always seek out new connections.

At any point, your most vocal influencers might move on to collaborate with other brands. There are many ways to find new potential influencers:

Round-ups

(Too) many round-ups are average at best; there are exceptions. For example, Robbie Richards’ round-ups are valuable and rank well. His article on the best keyword research tools earns more than 600 organic visitors a month:

example of successful round-up posts.

Richards’ round-ups are successful because of their structure and those involved—the experts he includes help him promote round-ups effectively and win links back to the posts.

For your next round-up post, start with a question that’s likely to yield insightful answers. Here are some that I’ve used in the past:

  • What’s an outdated strategy in [industry]?
  • What’s the best thing you’ve ever done to improve [topic]?
  • What’s the best tip you’ve ever received about [topic]?
  • What’s your favorite piece of software for [task]?
  • What’s a new strategy you’ve uncovered recently to improve [topic]?

Any question that tackles an area of expertise and asks for an actionable tip will generate meaningful answers. That said, avoid topics that are overused in your industry. (In digital marketing, for example, no one needs another round-up on “how to write a blog post.”)

This post can help you find motivated influencers who are eager to participate in a round-up.

Top XX experts posts 

These posts are, essentially, a type of round-up (a round-up of names rather than ideas). However, I strongly recommend that you connect with the experts you want to feature in your post beforehand. That will help ensure they promote your piece once it goes live.

Here are a few examples to inspire you:

Link to experts’ content

Pick who you want to build a relationship with and link to an article on their site, not a guest post they’ve published elsewhere. You might want to connect with your potential influencer to see if it’s okay to share a link to their new post. (The answer is almost certainly “yes,” but it’s a frictionless way to break the ice.)

A modest amount of personalization can go a long way, as Right Inbox co-founder Sujan Patel notes:

As someone who has received plenty of the generic, “I linked to your article” emails, I’m much more likely to connect with you if you’ve taken the time to check out my content and link to it.

To be more strategic about it, see who links to your competitors. The authors of those posts likely contribute to many sites, which makes them valuable targets for your outreach. Here’s a great post that shares how to find them.  

Support influencers on your social media channels

Promote content that needs (and deserves) promotion. Obviously, if an expert writes a new post for Moz, it will do well regardless—the author isn’t likely to notice if you share it. That story may be different when they publish on their personal blog. 

Take the time to make a custom, visually appealing social media shoutout for the influencer’s content. People love visuals, and the 10 minutes you spend to make a nice image on Canva or Venngage—especially if the influencer didn’t do the same for their work—may earn their attention.

Invite guest hosts to Twitter chats and webinars

You’ll have better luck convincing an influencer to host if they have some history with you. Spend time warming them up—include them in a round-up or ask for a quote—then move on to webinars and chats. 

Send company swag

You don’t even need to know the person to do this. Just send some swag to their company, with the package addressed to them. (Still, sending gifts to people you know is better—they’re more likely to share their excitement on social media.)

This works well for event promotion. For Digital Olympus, we made cookies with the logo and sent t-shirts to our friends. That campaign was a definite success.

example of customized swag on instagram.

Congratulate influencers on life events

The life events of influencers provide opportunities, too. Catalog personal details in a CRM-type system (in a non-creepy way) and set reminders.

Small but memorable gifts work well. For example, Deepcrawl sends the cutest onesies for newborns: 

Conclusion

B2B influencer marketing has carved its own path. Success is less about the one-and-done “viral” efforts common in B2C marketing and more about generating a regular undercurrent of interactions with industry influencers.

The biggest benefit of that strategic bent? It makes influencer marketing accessible to nearly every business. You may not crash your servers with a successful campaign, but you can build credibility for your content, product, and brand.

As Michael Sadowski, founder and CEO of Brand24, summarizes it:

B2B Influencer Marketing has become one of the most effective customer acquisition channels. However, it’s not easy to implement. Building relationships with the industry’s most influential voices takes time and skills.

In our humble experience, the best solution is to give maximum value to these power users, ask for nothing in return, and let karma do the rest.

This way, we managed to build a lasting connection with dozens of influencers that brought hundreds of thousands of users to our product.

There are so many ways to get started:

  • Working with established clients;
  • Organizing events;
  • Networking with respected industry figures;
  • Co-creating content, and so on.

Ideally, you’ll implement multiple strategies to reach more people. Pick those you like most, but go out of your comfort zone and try something new, too. 

The post B2B Influencer Marketing: 4 Strategies that Move the Needle appeared first on CXL.

After the Lead Magnet: How to Nurture B2B Leads

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When a prospect downloads your lead magnet, their journey to paying customer has only just begun—it may never finish. 

Most B2B leads don’t become customers. Benchmarks for download-to-customer conversion rates are scarce. But Salesforce revealed that less than 0.5% of webinar leads ever convert to customers. That’s a grim portrait, even if conversion rates for other lead magnets are multiples higher.

Still, there’s hope. Email automation lets you nurture leads at scale, so you can compensate for lower conversion rates with volume at virtually no cost. Additionally, most B2B marketers aren’t nurturing lead-magnet downloaders properly. Or at all.

I downloaded 25+ B2B lead magnets and discovered an array of shortcomings:

  • Sending one or no follow-up emails, even when I opted-in to learn more.
  • Emails arrived far too infrequently to capitalize on my interest.
  • Sequences did little to nurture my awareness before asking for a sales call.

All this means that the statistic—a 0.5% lead-to-customer conversion rate—doesn’t have to be your statistic. Here’s how to address those common issues, and many more.

Begin with an end in mind: How to choose a primary KPI

What’s this campaign for? It’s great to get your content read, watched, or shared. But don’t lose sight of your campaign’s primary purpose: turning leads into customers. Choose a single metric to help you measure your campaign’s ROI.

This post from CXL includes some good examples of meaningful KPIs for an email sequence:

  • Gross customer adds;
  • Marketing-qualified leads;
  • Time-to-close;
  • Revenue.

Companies with a product-led growth strategy may focus on:

  • Free-trial starts;
  • New users.

Some of these metrics are easier to track than others, but the point is to set a goal that accurately reflects the business outcome you’re after.

Once you’ve picked your KPI, it’s time to…

Choose the “Big Ask” to drive your KPI

An email sequence can include several offers, such as webinar invitations, blog posts, case studies, and more. But somewhere in that sequence, you need one offer that drives your primary KPI. I call this offer the “Big Ask.”

For example, if your primary KPI is revenue, your Big Ask may be to make a purchase. Other Big Asks may include:

  • Start a free trial.
  • Schedule a call with sales.
  • Watch a product demo.

The nature of your Big Ask is one of three factors that determine how long you need to nurture leads.

How long does your sequence need to be? 

After someone downloads your lead magnet, couldn’t you simply invite them to take a sales call, watch your video demo, or sign up for a free trial? Shouldn’t you strike while the iron’s hot?

At the outset, to estimate how much nurturing you’ll need, consider:

  1. Friction. Is your Big Ask easy for prospects to accept?
  2. Proximity to value. How soon will leads get value from your Big Ask?
  3. Awareness gap. How much do leads need to know before they’ll sign up, talk to a sales rep, or make a purchase?

Let’s look at these one by one.

Factor 1: Higher friction requires more nurturing.

Which sounds easier to you?

  • Start a 7-day free trial (no credit card required).
  • Get on a 15-minute sales call.

If you’re like most B2B buyers, the perceived effort of getting on a call is much higher. Friction comes from other sources, too: 

  • Leads may need to switch from a competitor.
  • Your product may be expensive.
  • Your product may have a steep learning curve.

In general, high-friction Big Asks require more nurturing.

Factor 2: Proximity to value

Another quick test: Which of these Big Asks gets you closer to value?

  • Start your 14-day free trial.
  • Schedule a demo.

If I start a free trial now, there’s a chance I can get value from the product today. If I schedule a demo, any value will exist only in my mind’s eye.

Behavioral economists use the term temporal discounting to describe the human tendency to prefer rewards that come sooner rather than later. If your Big Ask has low proximity to value—such as booking a demo—you may need to nurture leads a little more.

Examples

Let’s contrast two confirmation emails I received after downloading lead magnets:

Ebook download confirmation from Litmus

confirmation email from litmus.
  • Big ask: Start your free trial.
  • Perceived effort: Low. Starting a free trial seems easy.
  • Proximity to value: Close. Starting a free trial might mean that I can get value immediately (though the copy could do a better job of telling me how close I am to those benefits).

Guide download confirmation from Iterable

  • Big ask: Schedule a demo.
  • Perceived effort: High. Scheduling a demo sounds like work. After I click on the link, I see a form with six required fields.
  • Proximity to value: Far. Scheduling a demo doesn’t really feel like I’m close to any benefits.

Due to the high perceived effort and low proximity to value, Iterable will likely need a longer sequence than Litmus.

Factor 3: Awareness gap

When a prospect downloads your lead magnet, they’re either trying to solve a problem or get a desired outcome. For example, if I download your ebook about “How to Generate More Leads,” the outcome I want is obvious.

While some prospects may be ready to jump on a sales call right after downloading, many won’t. Before prospects are ready to try your product or speak to sales, they’ll need to reach a certain level of awareness.

This means they need to know what your product is, how it solves their problem, and why they should trust you. Eugene Schwartz’s five stages of awareness can help identify the start and end for your sequence.

Since most lead-nurture sequences exist somewhere between solution and product awareness, let’s look at the middle three stages. See if you can identify where your leads are mostly likely to be when they download your lead magnet:

  • Problem Aware. Your prospect senses a problem but doesn’t know there’s a solution.
  • Solution Aware. Your prospect knows the desired result but not that your product provides it.
  • Product Aware. Your prospect knows what you sell but isn’t sure if it’s right for them.

Let’s contrast the awareness gap in these two download confirmation emails:

Confirmation email from SharpSpring

  • Lead’s starting awareness: Solution-aware. Since this is a vendor-comparison guide, we know that downloaders are aware that solutions to their problems exist. But leads might not know anything else about SharpSpring.
  • Big Ask: Schedule a demo.
  • Awareness gap: Small. Since leads who download this guide are already evaluating solutions, SharpSpring relies on social proof and desire-building copy to bridge the awareness gap before presenting the Big Ask.
  • Summary: While one email may not be enough, this email does a good job of bridging the gap between solution-awareness and product-awareness by communicating benefits, using social proof, and handling objections.

Confirmation email from Iterable

  • Lead’s starting awareness: Pain-aware. This guide is for marketers who are struggling with a marketing platform migration. There’s no evidence that leads would be aware of solutions for this problem.
  • Big Ask: Schedule a demo.
  • Awareness gap: Large. At this point, the lead knows almost nothing about how the product works, why they should trust it, or how it differs from competitors. While the lead magnet itself includes some awareness-building content on the last page, it’s risky to assume that prospects read that far.
  • Summary: Iterable may need to build more awareness before prospects are ready to schedule a demo. 

A longer sequence isn’t inherently worse—nurturing leads builds liking, familiarity, and reciprocity. Busy sales teams also benefit from the sequence’s ability to build awareness and screen unqualified prospects.

On the other hand, companies with product-led growth strategies and lead-hungry sales teams may not care as much about qualifying leads. If qualifying your leads is important, consider adding more emails to your sequence before going for the Big Ask.

Now that we’ve reviewed the three main factors that determine how much you need to nurture your leads, it’s time to discuss what your sequence needs to address.

What does your sequence need to do?

We know that we need to build awareness before leads will accept our Big Ask. The next step is to identify which of your prospects’ beliefs need to change during the sequence.

For this section, I’ll use an example from a lead-nurture sequence I worked on for a B2B SaaS company, Culture Amp.

Case study: Culture Amp

  • Audience: HR professionals who want to improve diversity and inclusion at their company;
  • Lead magnet: Diversity, Inclusion, and Intersectionality Report;
  • Big Ask: Watch a 3-minute platform demo video;
  • Primary KPI: MQLs;
  • Product: Culture Amp’s Engagement product, which includes the Diversity and Inclusion Toolkit;
  • Starting stage of awareness: Pain-aware;
  • Friction: Low (watch a 3-minute video);
  • Proximity to value: Far. They’ll get the information they want immediately, but their pain points and desires won’t be solved for some time.
  • Qualification/Sales readiness: N/A. We’re using the Big Ask to qualify leads for targeted sales outreach. In other words, the Big Ask is what qualifies leads.
  • Awareness gap: High.

To figure out what our sequence needed to include:

  1. I brainstormed a list of beliefs that our leads would likely have at the beginning of the sequence. (Do this after you’ve completed lots of customer research so your list is based on reality.)
  2. Then, I made another list of how those beliefs would need to change, and what new beliefs they would need to have before accepting the Big Ask.

Here’s a small sample of what I came up with:

Leads’ beliefs, thoughts, or feelings at the time of download:Beliefs, thoughts, and feelings that would make leads more likely to accept the Big Ask:
“Our company should be more diverse and inclusive.”“If I want to make my company more diverse and inclusive, I need to know how to collect, measure, and act on feedback from my employees.”
“I’m not really sure what Culture Amp does or how it works.”“Culture Amp is a People & Culture platform that includes a Diversity & Inclusion Toolkit.”

“Prominent companies have solved the same problem I have with Culture Amp.”

When you’re brainstorming your list, you’ll want to think through the following:

  • Pain points;
  • Desires;
  • Objections;
  • Priorities.

Here are other questions to get you started:

Do your leads know…

  • That you understand their problem?
  • What your product is?
  • How your solution solves their problem?
  • That your product can give them an outcome they desire?
  • That your solution has been proven to do what you claim it will?
  • That companies they trust get results with your solution?
  • That your solution might be better than the alternatives?
  • That your company aligns with their values?
  • Why their current solution might be falling short?
  • What will happen if they don’t take action soon?

You can provide answers throughout the emails and offers that make up your sequence.

Emails to include in your sequence

The confirmation email

What belongs in your first email will vary based on the three factors affecting sequence length discussed above. That said, your confirmation email should include:

  • A statement that reinforces your lead’s progress towards solving their problem or getting what they want;
  • A link to the content they requested (even if they received a direct download);
  • A reminder of the value inside your content (for those who may forget to read it).

This example from TravelPerk includes each of these nicely:

The offer and call to action you include in that first email also varies based on your strategy. 

From the dozens of nurture sequences I reviewed, here are the most common confirmation email offers B2B marketers are using:

Present the Big Ask

As we’ve already seen, some companies present their Big Ask in the first email. The three factors that affect sequence length determine if this is appropriate. As with all best practices, they’re a starting point—testing will tell you whether this works for you.

Email marketing expert Samar Owais cautions against presenting your Big Ask too early:

Samar Owais

Samar Owais:

Think of your offer and nurture sequence as a package deal. That first email may be the most opened and clicked but it’s also a terrible place to make a sales pitch.

That’s like opening your door and finding a sleazy salesman who just wants to sell you a vacuum cleaner—not help your house stay clean.

If you take this approach, build awareness, show social proof, and address objections before presenting the Big Ask, like SharpSpring did here:

Ask a question

In the nurture sequences I reviewed, many companies asked me to reply to a question.

Here’s an example from TravelPerk:

I asked Owais about this approach:

Asking a question has a few benefits. First, it allows you to collect voice-of-customer data, which you can use to optimize the sequence. Second, it humanizes the brand a little bit.

B2B copywriter Dayana Mayfield told me that, in her experience, “people who engage, even in a small way, are more likely to hop on a demo later.” If you’re scoring leads for MQLs, a reply could be a powerful indicator of sales-readiness.

Ask them to share

Some companies invite subscribers to share the lead magnet, either through social media or email:

This approach was common with companies like Intercom and HubSpot, which suggests that it may work better for marketers who are playing the (very) long game with their nurture efforts.

Intercom knows this isn’t their last chance to connect with you, and they’re betting that they’ll continue to grow most effectively by asking you to spread a little brand awareness.

How many people actually share the content? Who knows. But adding the option to share your content is unlikely to hurt you.

Build anticipation for the rest of the sequence

Instead of (or in addition to) your call to action, you may want to include some anticipation-building copy to get leads excited about subsequent emails.

Market8 does this well in their confirmation email:

Emails for the rest of the sequence

The rest of your emails focus on the following:

  1. Training prospects to open and read your emails by providing relevant, valuable content;
  2. Building awareness, demonstrating value, and proving your claims to prepare leads for your Big Ask;
  3. Offering other ways for leads to stay engaged with you once the sequence is over.

Ideally, you’ll tackle Points 1 and 2 (and possibly 3) at the same time.

For example, we designed the third email in the Culture Amp sequence to do the following:

  • Provide relevant, valuable content—we used a case study about improving workplace diversity and inclusion.
  • Connect their problem (“How do I make sense of my survey results?”) to the product.
  • Prove that prominent companies got results from working with Culture Amp.

Here’s the email:

Here’s another example in which we offered value freely and built awareness at the same time:

This time, we wanted to build awareness around the idea of taking action on survey results—one of Culture Amp’s key differentiators. At the same time, we provided valuable content and offered proof that the solution works.

If you don’t have lots of relevant content to link to, you can always deliver valuable content within the email.

The Big Ask email

You can go for the conversion multiple times throughout your sequence. Different subscribers will be ready at different times.

Owais estimated that, in a 12-email sequence, she’s likely to present the Big Ask three times. Some of those offers may be softer, added in the postscript rather than the email body.

But since the point of your sequence is to get leads to take your Big Ask, you’ll want at least one email dedicated solely to that goal.

So how should you write that email? All the usual principles of effective copywriting apply. But let’s look at some of the nuances of B2B email copywriting:

Lead with pain.

Copyhackers’ email specialist, Nikki Elbaz, points out that, in B2C, some products are solutions to problems, while others exist for sheer delight (or amusement). On the other hand, B2B is all about solutions.

For this reason, Elbaz says, “the Problem-Agitation-Solution (PAS) framework can be particularly effective for B2B sales emails.”

Here’s another example from the Culture Amp sequence:

This is how the PAS framework works in this email:

  • Problem: “You want to become a champion of diversity and inclusion, but there are obstacles in your way.”
  • Agitation: “Specifically, you’re probably struggling with these three challenges.”
  • Solution: “Culture Amp helps solve these problems. See how (plus social proof).”

Empower your content consumer.

Seth Godin reminds us that, unless you’re communicating with the final decision-maker, B2B sales is all about the story your lead gets to tell their boss.

As Elbaz explains,

In B2B, your consumer isn’t usually the customer. You’re often selling to someone who isn’t the final decision-maker. How can you help prospects get buy-in from their bosses? Offer content that speaks to this need. A PDF sales sheet, a comparison blog post—what do they need to see to convince their boss?

In your sequence, see what you can share that might help your prospect sell your product to their superiors.

Stand out in their inbox.

There’s a good chance your leads are getting emails on the same topic from other companies. It can be really helpful to know what else is in their inbox so that your most important emails—like Big Asks—stand out.

In the Culture Amp sequence, the open rate of one subject line outperformed the average of all others by nearly 60%: “Diversity ≠ Inclusion.”

Why did it work? I have a couple of hypotheses:

  1. Our audience is used to seeing “diversity and inclusion” and was surprised to see a new spin on the relationship between the two terms.
  2. Our audience may have been excited to see a company finally talking about the topic in a way that aligned with their existing beliefs.

Regardless, the subject line stood out from emails that leads were receiving from other companies on the same topic. How can you make sure your subject lines do, too? Subscribe to other lists and sequences your leads may get in their inboxes.

A full nurture sequence plan

Here’s a (simplified) breakdown of the strategy behind the Culture Amp nurture sequence:

DaySubject lineStrategyOffer/CTA
1Here’s your Diversity, Inclusion, and Intersectionality ReportReinforce their decision to interact with us. Remind them of the value in the lead magnet.
A link to make it easy for them to share with someone else
2Making an impact on D&I starts with thisBuild awareness and empathy. Offer value freely to train them to expect benefits from reading our emails.A link to relevant blog post
5How [prominent tech company] builds a culture of belongingGain trust through powerful social proof. Build awareness.A link to [prominent tech company] case study
8“We’ve been talking about this for a while, but what exactly are we doing about it?”Build awareness and empathy. Gain trust through powerful social proof. Offer value freely.A link to relevant long-form content; soft offer: Watch a platform demo video (Big Ask)
9This is how you become a champion of diversity & inclusionUse PAS framework to drive to the platform demo video.Big Ask (watch demo)
12Join 7,015 other People Geeks on SlackOffer a way to stay connected long-term.Join our Slack community
14Diversity ≠ InclusionOffer value. Build awareness.Watch a relevant, recorded webinar
18What’s next for <first name>?Get them to stay connected after the sequence ends.See webinars and live events; get a free guide on another topic (triggers new sequence); subscribe to our newsletter; Watch the demo video.

Leads who engaged with higher-intent content, particularly the platform demo video and case studies, became MQLs. That status triggered direct outreach from a sales representative to get the lead on the phone.

Of course, some leads will make it all the way through the sequence without ever graduating to MQLs. What should you do with those prospects?

Beyond the Big Ask: Nurturing leads for the future

Some leads won’t convert during your nurture sequence. But that doesn’t mean they won’t be ready for your solution later.

To keep your audience connected, consider offering:

  • Free, relevant content that trains prospects to expect value from opening your emails;
  • Invitations to future events, like webinars or conferences;
  • Other email lists they can join, such as your newsletter;
  • Invitations to join your group or community.

You can test which offers generate the most engagement. In general, I limit the number of offers per email since more options tend to lead to analysis paralysis.

You can use engagement data to allow subscribers to “self-segment,” which, in turn, will help you deliver more relevant content via email.

There’s one more option: a follow-up offer that triggers another nurture sequence. At Culture Amp, we did this with a guide to workplace well-being.

Conclusion

Turning lead magnet prospects into customers is tricky, but email nurturing can help grow your campaign’s ROI. As with everything in marketing, there is no substitute for testing strategies and techniques with your own audience.

That said, if you need to plan and write an email nurture sequence, start with these principles:

  • Choose a meaningful KPI.
  • Choose a Big Ask to drive your KPI.
  • Plan longer sequences for
    • high-friction Big Asks;
    • low proximity-to-value Big Asks;
    • leads with larger awareness gaps between the lead magnet and the Big Ask;
  • Build awareness, demonstrate value, and prove your claims.
  • Keep not-quite-ready leads engaged with other offers.
  • Test, test, test.

The post After the Lead Magnet: How to Nurture B2B Leads appeared first on CXL.


The 4 Types of Value Propositions Every Business Needs

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Humans are value-rating machines. Every day, all day long, we size up different decisions by appraising the value proposition of that action.

Should I buy this product? Sure, that’s the obvious one. But also:

  • Should I go to lunch with this person?
  • Should I open this email?
  • Should I even spend the time to ponder this decision?

When most marketers think about a value proposition, they’re thinking of the 10,000-foot-view—an overall company value proposition. This can make them feel powerless, especially in a large organization. The CEO controls the company value prop. What can you do?

But there are multiple levels of the value proposition. And understanding the value prop at each level will make you a more effective—and perhaps more fulfilled—marketer. Not convinced? Here’s why you should care.

Why care about the value proposition?

Organizations create value. If they don’t, most are not long for this world.

However, value created is not the same thing as value perceived by the customer. The marketplace is rife with hidden value. The core job of marketing is to discover and articulate that value.

What’s hidden value look like in real life? My wife’s scale stopped working recently, and she tasked me with fixing it. I searched for Taylor scales online, and found an FAQ with a reset protocol. It also said, “If this doesn’t work, email us.” It didn’t work, so I emailed.

Customer service replied but couldn’t help, so they said they would replace it under warranty. I replied and said it’s too old—I don’t even remember when we bought it. They told me to send a picture. Turns out it was from 2013, and they’re sending me a new one!

scale
If you have great customer service and warranties, make sure you communicate it (or risk losing all that value).

And yet, I don’t see anything on their homepage or landing pages about their outstanding customer service and warranty. This is a product in the $20–35 range. They didn’t even make me pay to ship the old scale back.

When my daughter broke her JLab Audio headphones, JLab insisted I pay to ship the broken ones back. For $20 headphones, it’s not worth the cost and effort. And JLab promotes its lifetime warranty heavily.

Despite how phenomenal Taylor scales is, you’d never know that hidden value by looking at its website. And there’s the rub: a company providing great value, doing great things. But to potential customers, that value doesn’t exist because they don’t perceive it.

Value props: Challenging? Yes. Fun? Yes.

While discovering and articulating a company’s value proposition is hard, it is fun. It’s what I love about marketing. There are many inventors, researchers, craftsmen, educators, and other value creators in the world who just can’t put the value they create into the right words. You can see the struggle on their face as they try to get their creation out into the world.

Apple is an overused and abused example, but it’s so widely known, let’s trot it out again. Coming up in the advertising industry, I always loved Apple computers. But if you told your friends and family about them, you got a skeptical response. Apple was different, and that was bad.

And then the beautiful brilliance that is Lee Clow collaborated with creatives like Craig Tanimoto and Rob Siltanen and (yes, of course) Steve Jobs to write an ode: “Here’s to the crazy ones [. . .] and while some may see them as the crazy ones, we see genius…”

And now they’re the most valuable public company in the world. Before, they were on the brink of bankruptcy. Sure, they made all sorts of great products when Steve Jobs came back. But Apples were better than PCs even before then. Ask anyone who worked in the advertising industry in the 1990s.

When I was a copywriting intern, I remember an art director who bought stock in pre-Jobs Apple because he loved the product so much. Seemed foolish back then. Today, he probably has a yacht that shuttless him to his bigger yacht. That’s the power of value discovery and clear articulation.

Depending on your political views, modern capitalism is:

  • An unbiased innovation machine;
  • Unforgiving hellscape;
  • Other.

And, in this environment, value-creators will perish (like Apple almost did) without the ability to communicate value.

Personally, as a marketer, I’m rarely good at creating “the thing” myself. So helping these makers communicate the real value they’re adding to the marketplace is fulfilling. My colleague Paul Cheney has even gone so far as to argue that the value proposition makes marketing a morally “good” and worthwhile endeavor.

Harrison McCann said that advertising is “Truth well told.” A value proposition helps you get to that truth, so you can tell it well. These are all the places you should tell it.

The value proposition spectrum: primary, prospects, products, and process

chart showing the different types of value propositions.

The primary value proposition

The primary value proposition is the one you’re familiar with. It’s the value proposition of the brand itself. It’s the explanation of the value the organization is creating in the world. And when communicated credibly and clearly, the value proposition enables the company to meet its business objectives.

Here’s a great example of the impact of a credibly and clearly articulated value proposition. Before working with MECLABS Institute, a database company was using the page below.

Take a look at the headline. Does it express a powerful value proposition? Perhaps it has appeal, but there’s no credibility. And you can’t clearly understand how it’s exclusive compared to the competition.

Now look beyond the headline. This page actually had some pretty significant hidden value, buried in small print.

example of landing page without clear value proposition

Here’s the treatment we created:

example of updated landing page with clearer value proposition.

The fact that the company made 26 million phone calls a year to verify the accuracy of its mailing lists was on the control page. But it was hard to find. (It’s the first line in the second-to-last paragraph.)

By credibly and clearly communicating the value proposition, the treatment generated a 201% increase in lead capture.

Surf around the web, and you’ll find many definitions of a value proposition. We describe a value proposition as the answer to the question, “If I am your ideal customer, why should I buy from you instead of any of your competitors?”

For the above example, the value proposition would be:

Because we have the most comprehensive1 and accurate2 lead database.

  • 1Includes access to over 210 million U.S. consumers, 14 million U.S. businesses, and 13 million executives.
  • 2We have a team of 600 researchers that verify the data daily and make over 26 million verification calls a year—80,000 calls a day.

I won’t go too deep into the primary value proposition in this article since there are many other good resources out there. (CXL has one here.) 

Or, you can check out this video in which Flint McGlaughlin, CEO and Managing Director of MECLABS Institute, shows how to amplify the power of your value proposition:

Beyond the primary value prop 

Branching out from that primary value proposition are derivative value propositions. They should pull from the main value prop and show how it relates to other elements of the company experience.

For an analogy, let’s look at The Wu-Tang Clan. The group has a primary value proposition. But out of that overall value prop, Method Man has a value prop of his own. The album “Ironman” by Ghostface Killah has a value prop of its own.

While these value propositions are unique in their own way, they draw their power from the group’s main value prop. This quote from the RZA sums up the primary value prop’s effect:

I strive to be like the sun sitting in the middle of the solar system with all the planets spinning around it—millions of things going on. It’s just sitting there being the sun, but exerting gravitational effect on everything.

A good primary value prop has gravity. But it’s not the only thing that matters to the customer. They also need to understand what’s right in front of them. Marketers overlook that at their peril.

Prospect-level value proposition

Unless your company is very small and very targeted, you likely have different types of prospects with different motivations. If we communicate to all of them in the same way, our conversions will suffer.

Many tools can help you. Segmentation. Targeted advertising. Personas. But before doing any of them, you should clearly answer (and distribute to your team or agency, if necessary) the fundamental prospect-level value proposition question:

If I am Prospect [A, B, C, etc.], why should I buy from you rather than any of your competitors?

Sometimes, companies confuse a primary value proposition with a prospect-level value proposition. I recently came across an example. I was helping lead a value proposition workshop, and one of the hypotheses a company had for a primary value proposition was “payment flexibility.”

point of sale payment system.

At a surface level, it seemed sensible. They were the only company in their marketplace that offered this flexibility. Uniqueness is important. But it’s not the only factor in a powerful value proposition.

As I came to understand the payment flexibility, I discovered that only 25% of customers selected that option—the one that was truly unique. The rest choose payment options shared by competitors. An overall value proposition that focused on payment flexibility wouldn’t appeal to three-quarters of their customer base.

However, they hit on something valuable. For the prospect group interested in that payment option, this company was the only place they could get it. That brought up the opportunity to test targeted advertising and messaging around the unique payment offer to attract customers interested in those specific payment terms (not just overall payment flexibility).

They could send that traffic to a unique landing page that highlighted the specific payment option along with other elements of value.

Product-level value proposition

Should you create a new brand when launching a new product? The product-level value proposition can help your organization make that decision.

Get key leaders and stakeholders together, and answer this question:

If I am your ideal customer, why should I buy Product [A, B, C, etc.] instead of any other product?

If the answer doesn’t include elements of the brand’s primary value proposition—if it isn’t influenced by the top-level value prop—consider launching a new brand with a value prop more in line with this product.

It’s always fun to notice when a product-level value proposition doesn’t quite tie into the brand’s primary value proposition. I was shopping for eyeglasses with my daughter, and I noticed some of the glasses were made by Wrangler. 

Yes, that Wrangler. Cowboys. Rodeos. Brett Favre being “comfortable in jeans that are tough.” Real. Comfortable. Jeans.

I don’t have data to say they’re wrong. But I will say that when I think of Wrangler’s value proposition, I think of this:

Not this:

pair of glasses.

On the other hand, I drive a Nissan LEAF. Nissan could’ve launched a new brand for its electric car. It rebranded the entire company from Datsun back in the 1980s, so it’s no stranger to the possibility.

But while certain elements of LEAF’s product-level proposition are distinct from Nissan’s primary value prop (e.g., zero emissions), the model still connects to the company’s overall value prop. In fact, you might argue that it enhances Nissan’s primary value prop. After all, their tagline is “Innovation that excites.”

nissan logo and tagline.

There’s one important point that marketers overlook when it comes to the product-level value proposition: Products are more than just cars and toasters and haircuts. Email is a product. Content is a product. A website is a product. Recycling, eating healthy, getting out to vote. Product, product, product.

Marketers have a blind spot for their own products. We focus intensely on our products and are financially rewarded for their success. But customers couldn’t care less about our products. If you tell a marketer that, they logically know it.

However, when we’re in the heat of creating a campaign or a website, it’s all too easy to forget. Creating a product-level value prop forces you to overcome that blind spot.

Process-level value proposition

Some 45% of consumer behavior is habitual. The rest requires a process-level value prop. At this level, you need a value proposition for every action you’re asking someone to take:

  • Open an email.
  • Follow your brand on social media.
  • Go out with you on Friday night.

You need to answer the question,

If I am your ideal customer, why should I [click this PPC ad, read this blog post, listen to your phone call] rather than [click on any other PPC ad, consume any other content, hang up the phone]?

The process-level value proposition is a micro value prop and, as such, can easily be overlooked. It’s unlikely to necessitate a value proposition workshop with key decision-makers (unlike the primary value proposition).

Where are there opportunities for improvement? Buttons are a great place to start. Think, for example, of how many buttons on the Internet simply use the word “Submit.” What is the perceived value of that click?

Here’s an example from a recent experiment for a publisher that encouraged professors to get a physical copy of a textbook mailed to them:

  • Treatment 1 button copy: “SIGN IN AND ORDER A SAMPLE.”
  • Treatment 2 button copy: “REQUEST A FREE COPY.”

Treatment 2 generated a 132% increase in click-through rate at a 99% level of confidence. For users, the value was hidden behind that button. Our hypothesis was that “copy” (the thing) conveyed a higher perceived value than “sample” (a portion of “the thing”). That, in turn, would persuade more customers to provide information and click the button.   

Beyond optimizing the wording of your calls to action, a good understanding of process-level value propositions can help you optimize for conversion in general.

For example, HealthSpire was trying to get Americans 65 and over to call its TeleAgents to choose the right Medicare plan. The original landing page took a familiar approach—focus on the primary value proposition and keep it short. (Rationale: People don’t want to read a long landing page.)

When they tested an approach focused on the process-level value proposition, which used a longer landing page to communicate that value, the team generated 638% more leads for its call center.

Why? It was attuned to the customer’s thought sequence. Nobody wants to be on a sales call, so HealthSpire had to communicate the process-level value proposition of making that call. And they needed a longer landing page to do that. They used the space to add:

  • A tip from a real TeleAgent with a picture of the agent;
  • A Q&A with a real TeleAgent with a picture of the agent;
  • “Our Pledge to You” of what would happen on the call.

Conclusion

If your company has formulated and communicated a clear, credible value proposition to all employees, agencies, vendors, consultants, and partners—congratulations! That is a great first step to effective marketing. (And you’ve nailed an important component of positioning.)

But don’t stop there. As a marketer, you need to understand and use value propositions at every level of customer decision-making.

I’ve separated different levels of value propositions to communicate their differences clearly. But they’re most powerful when used together. In tandem, the biggest question you’re trying to answer—the one that will earn you the most conversions and revenue—is this one:

If I am Prospect [A, B, C, etc.], why should I take [Action A, Action B, Action C, etc.] toward buying Product [A, B, C, etc.] from your company instead of anything else I can do?

The post The 4 Types of Value Propositions Every Business Needs appeared first on CXL.

Webinar Emails: A Start-to-Finish Promotion Process

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Webinars can establish a relationship with leads and teach them how your product can improve their lives. Some 75% of marketing and sales leaders say webinars are one of the most effective methods to generate high-quality brand awareness.

But not every webinar is a success—78% of webinars have 50 or fewer attendees. A major reason? Poor promotion. If you can promote your webinar the right way, you can gobble up more viewers and increase conversions. 

Email is the primary promotion channel for most webinars—not just for initial sign-up but for pre- and post-webinar reminders, and everything in between. 

This article shows you the step-by-step process to promote your webinar via email. First, of course, you must set your goals.

Set goals for your webinar

Webinars can work throughout the customer journey, gauging how qualified your prospects are and nurturing them throughout the buying process.

That wide-ranging potential risks broad goal-setting (or none at all). Before you start promoting your webinar—or even choosing a topic—decide if you want to:

  • Build your email list;
  • Be seen as a thought leader in your niche;
  • Gain customer feedback;
  • Boost sales from existing customers;
  • Increase your customer base;
  • Build stronger relationships with your customers;
  • Create how-to tutorials;
  • Launch a product or service.

That decision, in turn, defines how you measure success: the number of registrants, attendees, views, post-webinar sales, etc.

Once you know your goal, you can figure out which type of webinar will best help you achieve it.

4 types of webinars for any stage in the funnel

Webinars can work at all stages of the funnel. All you have to do is adjust your webinar topic to match the buying stage of your prospects.

From initial discovery and education to conversion and retention, you can build a stronger relationship with your audience.

1. The educational webinar (discovery stage) 

In the discovery stage, you’ve got just one goal in mind: to educate your audience. What you educate them about depends on your product or service.

Potential topics for educational webinars include:

  • Best practices;
  • Industry trends;
  • Expert panels;
  • Interviews with single experts.

Whatever topic you choose, focus on value—how can you share your deepest expertise? Some 88% of technology buyers said thought leadership was important or critical to short list vendors.

2. The nurturing webinar (consideration stage) 

A nurturing webinar begins to bridge the gap between industry-relevant content and product-relevant content.

Think of things like workshop webinars that address a real-life problem of your prospects. Focus on solutions—and the consequences of not addressing the problem that your product solves.

Case studies work well. They show your prospects how a customer just like them used your product to solve a problem.

Another option is a one-on-one, personalized webinar. This approach, of course, doesn’t scale well—and shouldn’t used as a way to sucker unsuspecting prospects into a sales pitch—but it does have potential for account-based marketing strategies.

3. The onboarding webinar (conversion stage) 

Customer onboarding sets new users up for success. A better onboarding experience can double trial conversion rates

A customer onboarding webinar helps shorten the time between when a user signs up and when they receive value from your product. It demonstrates features and shows your product’s use cases.

webinar promotion email for onboarding.

Keep in mind, however, that lectures on product features can come off as overly promotional. As Val Geisler points out:

If you must talk features, do it from a value-based perspective. What benefit will the customer get from using this feature? Make it about them and their goals.

4. The upcoming releases webinar (retention stage) 

Some 40–60% of free-trial users will use your product once and never come back. 

“Upcoming releases” webinars can keep paying customers excited and encourage free-trial users to jump back in. 

As mentioned at the outset, choosing a goal and webinar type is often the easiest work. The quality of promotion ultimately affects the success—or failure—of your webinar.  

The six-part email series to promote your webinar successfully 

Why email? Email drives 57% of webinar registrations, nearly four times that of any other channel:

This section walks through a series of emails that cover the promotion process, from initial awareness to registration to building excitement and post-webinar follow-up. It also offers templates—starting points, not endpoints—for your webinar email series.  

If you want to supplement these ideas and templates with those of other (really smart) people, check out:

The email series begins with the webinar invitation email.

Note: If you’re running the webinar on your own, you’ll send it to your email list. If you partner with another organization, you may get to send it to their list, too. That can mean exponential audience growth.

1. The webinar invitation email 

You don’t need to include much information. A compelling subject line, the date and time of the webinar, and a few short sentences or paragraphs about the benefits will do.

Skubana kept things simple with bullet points and direct language: 

initial webinar invitation email.

They also include photos of the hosts and finish with a strong call to action

There are, of course, other routes. Tarzan Kays told a story to her subscribers to motivate them to take action (i.e. register for the event):

Her copy is narrative, full of paragraph breaks, and generally a breeze to read. So which route is better? One way may be obviously on (or off) brand. If either might work, you’ll have to test to find out.

As you consider what to include (or exclude) in your invitation email, here are some options to keep in mind:

  • Social proof. If past webinars were a hit (and you have the comments to prove it), use that social proof in your webinar invitation email.
  • Magnetic headline. If your headline doesn’t stand out, your email won’t get read. Find tips on creating a strong headline here.
  • Conversational tone. Your body copy needs to be engaging, light, and personable. Speak to your prospects as though you’re already hosting the webinar. Include a photo of the host(s). 
  • Storytelling. Stories are emotional, and emotions are persuasive. The stories you tell should lead your readers to your call of action. Joanna Wiebe, the original conversion copywriter, explains how:
Joanna Wiebe

Joanna Wiebe:

Narrative-style, rather literal storytelling in emails…a great story (joined at the exact-right moment) can be a fantastic hook for emails.

If you can drop your reader into the middle of the story and move them swiftly from there to the point of action, storytelling can be very useful in emails!”

  • Urgency. Phrases like “last chance” and “one time only” trigger fear. If authentic, create a sense of urgency in your initial email.

To expedite, you can riff off this template:

SEND TO: Everyone

SUBJECT: you’re [concern your webinar will solve], so I’m holding a masterclass about it

BODY:

Hey [subscriber first name],

You want your [topic of webinar] to perform better.

If you don’t, your [topic of webinar] may [concern of target market] over time…

Even if it is meeting your goals right now, you know it can do better…

Tomorrow’s free, live masterclass is for you. You’ll walk away with everything I know about how to [solve pain point webinar is addressing]. Not just the basics, but a masterclass on how to [topic of what webinar will be teaching].

Just some of what you’ll take away:

● [takeaway #1]

● [takeaway #2]

● [takeaway #3]

● [takeaway #4] 

The masterclass will kick off on [Date] at [Time].

Save your spot: [insert link to webinar registration]

Speak soon,

[Your name]

P.S I’ll also be hanging around after to answer your questions.

2. The confirmation email 

The primary purpose of the confirmation email is to:

  • Thank prospects for signing up;
  • Remind them of the date and time of the webinar;
  • Reiterate the benefits they’ll get by joining the webinar;
  • Link to any supporting resources.

It should also include a link to the webinar and, perhaps, a call to action to add it to their Google Calendar.

User Testing created a stellar, no-nonsense confirmation email:

webinar thank you for registering email.

Here’s a template to get you started:

SEND TO: Everyone that registers

SUBJECT: You’re in! Just one more step

BODY:

Hey [subscriber first name],

Thanks for saving your seat for [name of webinar].

Here are the details of the live masterclass you registered for:

Date: [insert date]

Time: [insert multiple time zones]

Link: Click here to join using your personal masterclass link [insert link]

And one last thing: Be sure to add this date and time to your calendar.

You’re going to learn how to solve:

● [problem #1]

● [problem #2] 

● [problem #3]

● [problem #4]

The goal? To help YOU ACHIEVE [POSITIVE RESULT].

I’m also going to send you a reminder before the masterclass starts.

Speak soon,

[Your name]

P.S: We are going to cover A LOT of information. Download our worksheet to take notes during the webinar. [link to worksheet]

3.  The reminder email 

There are a couple of types of reminder emails based on previous behavior of recipients.

The first webinar reminder emails go to anyone on your email list who hasn’t registered and didn’t open the first email. This email should remind your subscribers of your previous email and use the pending webinar to up the urgency. 

Take a look at how Foundr did this below. They reminded the prospect of their earlier email, outlined the benefits of their webinar, then tapped into FOMO:

webinar second invitation email

The email doubles down on the call to action to register and includes another link to the webinar. 

Template for you to adapt:

SEND TO: Send to subscribers who didn’t open the first email

SUBJECT: [target market’s biggest pain point]

BODY:

Hey [subscriber first name],

Ever wish you could ignore the whole [topic of the webinar] thing?

If you’re not 100% happy about the results from the time you’ve spent on [topic of webinar], you are not alone.

The biggest struggle I see [target market] obsessing over is always related to the details of [pain point webinar will address].

This is why I’ve set aside [X hours] to work with you LIVE and focus on ONE THING: [pain point webinar will solve]. 

During this time, you’ll find out everything I’ve learned over the past [X years] about [topic of webinar]. It doesn’t matter if:

[3–5 core objections your target audience may feel is holding them back from registering] 

You WILL come away from this masterclass armed with the skills to resolve [pain point].

Speak soon,

[Your name]

You can send a different email to subscribers who opened the first one but didn’t register. For this email, you can assume that the prospect has some baseline awareness of the webinar. That, in turn, lets you reduce the copy and focus on getting them to register.

CoSchedule reiterates the benefits with bullet points, adds two links to the webinar registration page, reminds prospects of their problem, and finishes with a lovely picture of the host:

Template to get you started:

SEND TO: Send to subscribers who opened the first email but didn’t register.

SUBJECT: I never thought it was possible

BODY:

Hey [subscriber first name],

There was a time when I endured bad [topic of webinar] many times. I wasted time trying to fix [problem webinar will solve] until I felt completely lost.

[subscriber first name], I don’t want you to waste your time like I did trying to solve [pain point your webinar will address].

You don’t have to struggle to [goal prospects want to achieve related to the webinar] and [second goal].

I’ve been putting together an amazing masterclass about [topic of webinar] for the past 6 weeks for [target audience] just like you.

I will share my exact X step [topic of webinar] strategy that I have been using to [grow/increase/etc.] my [topic of webinar].

But you will not get it if you don’t register. 

Click this link to register now and save your seat: [insert link][Your name]

4. The “It’s happening now!” email 

Registrants will forget that they registered for your webinar. The super-simple “It’s happening now!” email can save the day. 

Take a look at how Mindvalley lays out this email. They keep the email short and use a familiar cue—a play button overlaying an image—to encourage recipients to watch.

(They also include a regular link for recipients whose browsers may block images by default.)

Template for you:

SEND TO: Everyone

SUBJECT: It’s happening—time to grab your seat.

BODY:

Hey [subscriber first name],

It’s time to roll up our sleeves and start producing [desired results they will achieve after attending webinar].

Time: Right now!

Link: [insert webinar link]

See you there,

[Your name]

5. The post-webinar email 

After the webinar, there’s still work to be done. The post-webinar email is your chance to

  • Catch the attention of prospects who missed the webinar (by offering a replay).
  • Thank those who showed up.
  • Solicit feedback from attendees.

Here’s what Lianna Patch of Punchline Copy did:

post-webinar email offering a replay of the webinar.

Template for you to use:

SEND TO: Everyone

SUBJECT: [REPLAY] time sensitive

BODY:

Hey [subscriber first name],

Thanks so much for hanging out with me at the masterclass [webinar name].

The [length of webinar] webinar was chocked full of practical, proven tactics and strategies for ramping up your [pain point webinar addresses], and I hope you enjoyed it.

I wanted to hook you up with the temporary replay. Here’s the link: [insert link to webinar replay]

I’m adding a cool new bonus. For the next X hours only, we’ll offer [insert promotion/offer] of our [product/service]. 

Click this link to gain access to the [your offer].

Speak soon,

[Your name]

P.S. Remember, this offer is available only until [insert time and date]. This special deal will not be repeated.

6. The “X hours left” email

Okay, so you’ve already reached out to prospects who missed the webinar. You’ve offered a link to the replay. There’s one last thing to do—send them an “X hours left” email to remind them that the replay won’t be available much longer.

Remind prospects of the knowledge they’ll miss out on. Include a bit of social proof if you already have some feedback from attendees. Highlight the burning questions your host answered. (And if the webinar included a special offer, you can tease that benefit, too.)

Here’s what teachable did:

Template for you to use:

SEND TO: Everyone

SUBJECT: there’s still time…

BODY:

Hey [subscriber first name],

As someone who works with a lot of people in [target audience field of expertise], I know how challenging it can be to make progress on [pain point webinar addresses].

It’s easy to get discouraged and frustrated. 

That’s why I want to ask you…did you find the masterclass helpful?

If you did, then stop what you’re doing and grab [your offer]. Don’t wait—it’s not going to be up for long.

When the masterclass replay is gone, the opportunity to get [your offer] will be gone for good.

Here’s your link: [insert link]

If you didn’t find the masterclass helpful, let me know why. I read every response.

Speak soon,

[Your name]

Conclusion 

Templates are templates. You’ll need to test copy, design, etc., to figure out what works for your audience.

Measure the results after a campaign is over. Did you achieve your goals? If not, where did you struggle? Signups? Attendance? Offer acceptance? Triage which emails in the series you should review first.

Also, remember that email can catalyze other marketing campaigns for your webinar. An initial open can grow a list for an email remarketing campaign on Facebook, for example. It’s one more way to promote your webinar.

Iterate on this outline to get more sign-ups, more show-ups, and a higher ROI for your efforts.

The post Webinar Emails: A Start-to-Finish Promotion Process appeared first on CXL.

Open-Ended Questions in Marketing Research

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A good conversationalist knows that asking closed-ended questions is no way to make real friends.

Similarly, in marketing research, there are good survey questions, and there are bad ones.

There’s a lot of value in asking both open and closed questions in a survey. This article, however, dives into the intricacies of asking and acting upon open-ended questions in your research.

  • Free UX & Usability course

    By Karl Gilis

    Asking open-ended questions brings deeper insights from your customer research. Watch free courses on UX & Usability and learn how to get the most out of your qualitative research.

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Open-ended vs. closed questions in survey design

A closed-ended question is a question for which the answers are limited to a set of structured confines. This could be “yes” or “no,” “true” or “false,” or scale-based questions. But what’s common to all closed-ended questions is a set limit on the number of answers you’ll receive.

Here’s an example of a closed-ended question in the context of website research:

example of closed-ended question for website research.

An open-ended question is the opposite of a closed-ended question, designed to encourage full and elaborate responses that are entirely free of restraint. They’re great for eliciting deeper connections, emotions, and insights you may not have thought of prior to designing the survey.

Here’s an example of an open-ended conversion research question:

example of open-ended survey question.

While any survey question elicits attitudinal responses, closed-ended questions result in quantitative data; open-ended questions are inherently qualitative. You can codify and quantify them later, but in their raw form, they are qualitative.

It’s often the case that closed-ended and open-ended questions are used in conjunction. It’s easier to answer a Yes/No question, so if you lead with that, you’ll often get greater participation in the follow-up qualitative question (from what we’ve seen, anyway).

Open-Ended questions provide greater insight and connection

It’s not just in survey design and market research that you can use the power of open-ended questions for greater insight.

If you’re doing customer interviews, these questions give you the most value. If you’re doing sales, open-ended questions lead to greater connection. In client meetings, open-ended questions facilitate greater communication and understanding.

Sales Hacker put out an article about transforming boring closed-ended questions into what they call “hyper open-ended questions”:

While some are a bit cringworthy on paper (“Gosh TARGET…”), I’m sure they spur a better conversation than closed-ended ones.

Open-ended questions in customer and client interviews

HubSpot wrote an article on open-ended questions and gave this short list of example questions to ask (specifically in regard to in-person client meetings):

  • What are the top priorities in your business at the moment?
  • What are some of the best decisions you’ve made related to ____________?
  • How are you feeling about your current situation related to _____________?
  • If we were meeting 5 (10, 20) years from today, what must happen for you to feel good about your situation related to ___________?
  • What opportunities do you see on your horizon?
  • What challenges do you see in making this happen?
  • If we were to work together on this, what are the top two or three outcomes you’d like to see?
  • How will you be measuring our success related to these outcomes?
  • What’s the biggest risk for you to not make progress on this situation?
interview at a table.

In regard to customer interviews, UserVoice gave these 7 examples, useful for any product manager:

  • What do you think of this product?
  • What is the one thing I should do to make things better for you?
  • What should we stop doing?
  • Can you give me an example?
  • Why and Why Not? (always helpful for elaboration)
  • What annoys you about this product the most?
  • How does or doesn’t this product solve problem X for you?

These examples are specific to the situation/individual/problem, but they all have this in common: they’re designed to elicit meaty, valuable responses.

Transitioning from the customer interview questions, which are useful for a product manager developing and validating a product with customers, I’ll go over some specific use cases for user experience, CRO, and digital marketing.

Open-ended questions for conversion optimization research

We can learn a lot with surveys for UX and CRO. You can:

  • Uncover UX issues.
  • Locate process bottlenecks.
  • Understand root causes of abandonment.
  • Distinguish visitor segments whose different motivations for similar on-site activity go undetected in analytics.
  • Identify demand for new products or improvements to existing products.
  • Figure out who the customer is, feeding into accurate customer personas.
  • Decipher intent. What are they trying to achieve? How can we help them do that?
  • Find out how they shop (comparison to competitors, which benefits they seek, what words they use, etc.).

Similarly, user testing and other forms of qualitative research can be super valuable for optimization. And, of course, there’s a trick to how you derive insight from whichever qualitative method you’re using.

According to Susan Farrell from NN/g, open-ended questions are especially valuable in 1-on-1 usability testing where you’re exploring questions that may not have limited answers:

susan

Susan Farrell:

“Closed-ended questions are often good for surveys, because you get higher response rates when users don’t have to type so much. Also, answers to closed-ended questions can easily be analyzed statistically, which is what you usually want to do with survey data.

However, in one-on-one usability testing, you want to get richer data than what’s provided from simple yes/no answers. If you test with five users, it’s not interesting to report that, say, 60% of users answered “yes” to a certain question. No statistical significance, whatsoever.

If you can get users to talk in depth about a question, however, you can absolutely derive valid information from five users. Not statistical insights, but qualitative insights.”

NN/g also gave a super handy list of when you should use open-ended questions. Here are some of the methods and situations where you would do that:

  • In a screening questionnaire, when recruiting participants for a usability study (for example, “How often do you shop online?”)
  • While conducting design research, such as on:
    • Which problems to solve;
    • What kind of solution to provide;
    • Who to design for.
  • For exploratory studies, such as:
    • Qualitative usability testing;
    • RITE (paper prototype) design research;
    • Interviews and other field studies;
    • Diary studies;
    • Persona research;
    • Use-case research;
    • Task analysis.
  • During the initial development of a closed-ended survey instrument: To derive the list of response categories for a closed-ended question, you can start by asking a corresponding open-ended question of a smaller number of people.
two people in conversation.

There’s well-founded skepticism for attitudinal data and observational research. When you can access and analyze large data sets, you can bring quantitative behavioral data to the table that usually provides greater insights than simply asking people what they think.

However, when planning preliminary tests or doing early-stage customer and product development, this type of research can help you lead and prioritize product features and experiments.

How we’ve used open-ended questions for conversion research

Both open-ended questions and closed-ended questions have been a big part of the design, development, and marketing process at CXL Institute.

Here’s an example of an on-site poll we put on the Institute homepage. It asked a closed-ended question (“Do you have any questions?”) and then allowed the person to follow up with an open-ended response:

example of survey that blended closed-ended and open-ended questions.

Here’s another example of a poll that asks a closed-ended question first and allows further elaboration on the second question:

another example of a blended closed- and open-ended question.

Similarly, we often run customer surveys to get more insights from our customers as well as those on our email list who haven’t purchased. Here’s an example of the latter:

open-ended question about purchasing.
closed-ended follow-up question.
open-ended question on survey.

We also run closed-ended questions to quantify traits that we’ve already discovered through open-ended research and exploration. We knew the following were the top motivations for the Institute (at the time), and we wanted to quantify the proportions and further analyze each segment:

closed-ended question based on responses to open-ended questions.

This is a big part of our conversion research when we start a client engagement as well. Here’s a sample survey we would send out to recent customers:

sample survey sent to customers.

In general, a good strategy to use in survey design is to turn useless closed-ended questions into open-ended questions that trigger better responses. The key word here is “useless.”

If you plan on doing something with the quantitative data, such as segmenting your customers via Net Promoter Score (NPS), building user personas with scale-based questions, or tracking the user satisfaction during different stages of feature development, closed-ended questions are the way go.

But if you honestly ask yourself what you plan on doing with the data, and your answer is weak, attempt to tease out more qualitative insight via open-ended questions.

An easy way to do that, if you can’t fully reform the question, is simply to ask the person to elaborate.

“Did you find value in this process?” If so, please explain further. If not, tell us how we can improve.”

Avinash Kaushik really summed it up well in this article:

Avinash

Avinash Kaushik

“Any good survey consists of most questions that respondents rate on a scale and sometimes a question or two that is open ended. This leads to a proportional amount of attention to be paid during analysis on computing Averages and Medians and Totals. The greatest nuggets of insights are in open ended questions because it is Voice of the Customer speaking directly to you (not cookies and shopper_ids but customers).

Questions such as: What task were you not able to complete today on our website? If you came to purchase but did not, why not?

Use the quantitative analysis to find pockets of “customer discontent”, but read the open ended responses to add color to the numbers. Remember your Director’s and VP’s can argue with numbers and brush them aside, but few can ignore the actual words of our customers. Deploy this weapon.”

More examples of questions to ask with on-site surveys

With a customer survey, you strategically architect your questions to reflect your specific situation. With on-site surveys, that’s true too, but the questions that work on on-site surveys are generally more applicable to a broad suite of sites and companies because they deal with anonymous traffic.

Here are some questions you can steal for your research purposes:

  • What’s the purpose of your visit today? (establishes user intent)
  • Why are you here today? (also established user intent)
  • Were you able to find the information you were looking for? (can identify missing information on the site; best asked on product pages)
  • What made you not complete the purchase today? (identifies friction; only ask this as an exit survey on checkout pages and beware that some people are still considering the purchase.)
  • Is there anything holding you back from completing a purchase? Yes/No (and then ask for an explanation; again, this identifies sources of friction)
  • Do you have any questions you haven’t been able to find answers to? Yes/No (identifies sources of friction, missing information on the site)
  • Were you able to complete your tasks on this website today? Yes/No, and, if “No,” “Why not?” (identifies friction and missing info)

Common mistakes with open-ended questions

The most common mistake with open-ended questions—and with research and analysis in general—is the inclusion of bias (or artifacts, if you want to use the academic term).

This is when the researcher unconsciously adds a personal opinion into the scientific process or when that opinion or expectation is unintentionally communicated to the research participants.

There’s been a lot written about bias, especially on this site, so I won’t write a book about it here. But it’s important to note that bias can inject itself at any stage of the process—into the questions you ask, how you code answers, or how you take action upon the “insights.”

For example, it’s common to analyze qualitative data by coding and clustering common responses. Suppose you’re looking at three or four separate answers that, on face value appear, to have a degree of commonality:

  • “I liked the logo.”
  • “The logo was cool.”
  • “The logo made the site.”
  • “The logo stood out.”

You could lump all of those into a category called “positive comments about the logo,” but just imagine the amount of bias that could inject itself into this categorization structure.

As Dr. Rob Balon noted:

Rob Balon

Dr. Rob Balon:

“The most critical part of avoiding the blind spot is to recognize that even the most objective among us has one. Above all, you want to avoid the temptation to default to that bias-ridden comfort zone.

That’s the first step in conducting effective qualitative research.”

Other common mistakes are what you would think:

  • Analyzing your data incorrectly (treating qualitative like quantitative data when you shouldn’t);
  • Surveying the wrong people (and getting accurate but unhelpful insights);
  • Ignoring business and strategy objectives and blindly asking questions;
  • Asking unhelpful questions.

Most of these can be solved with a bit of rigor and some strategic foresight.

Conclusion

Closed-ended and open-ended questions both have their place in research.

Closed-ended questions allow for a quantitative approach, which is especially useful for segmenting, persona building, and time-based analysis (i.e. Are you improving?).

Open-ended questions dive deeper, teasing out the why behind the actions or closed-ended responses. They’re great for deeper insights, connection, and for learning things you may not have thought to ask.

When building surveys or conducting customer interviews, employ both strategically to get the best value from your research.

The post Open-Ended Questions in Marketing Research appeared first on CXL.

How to Build Robust User Personas in Under a Month

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Customer personas are often talked about in marketing and product design, but they’re almost never done well.

[This post contains video, click to play]

There are certainly companies doing them well, but not a lot of detail goes into instruction, and the blog posts out there on how to build personas are generally pretty bad.

I recently created robust user personas for CXL Institute (on inspiration from a course in our CRO certification program taught by Stefania Mereu and Eric Taylor), and it went well.

This post will outline the entire process, giving code examples, data analysis examples, survey questions—the whole thing. You should be able to replicate this process after reading it (or at least follow the resources in the article to learn more about specific parts).

Table of contents

A quick primer on user personas

What’s a user persona? A research-based archetypal representative of your customer based on various attributes, attitudes, and characteristics.

One of the best definitions I’ve found, which expounds a bit more, comes from Tony Zambito circa 2002:

tony

Tony Zambito:

“Buyer personas are research-based archetypal (modeled) representations of who buyers are, what they are trying to accomplish, what goals drive their behavior, how they think, how they buy, and why they make buying decisions. (Today, I now include where they buy as well as when buyers decide to buy.)”

The first mention of personas was in Alan Cooper’s 1991 book, The Inmates are Running the Asylum. Cooper framed personas as a way of avoiding designing for an “elastic” user, and thus cementing some sort of common properties across segments to aid cohesive design strategy. The alternative, an “elastic user,” would be a design target that stretches to the whims of the design team.

They’re also known as buyer personas, customer personas, customer profiles, or just personas depending who is selling the idea to you. They all mean the same thing, though.

Personas are essentially fictional representations of segments of buyers based on real data reflecting their behaviors. You use them to make better marketing, product, and business decisions and to keep your customer top-of-mind when doing so.

They can be utilized across teams—UX, CRO, social media, SEM, SEO, etc., can all benefit from a better idea of the customer.

Where marketers tend to go wrong with user personas

Not everyone believes user personas to be valuable.

They launched to much applause, but a few trends wore down their appeal with time. The first, according to Dr. David Travis at UserFocus, was agile development:

david

Dr. David Travis:

“‘Development’ teams morphed into ‘design’ teams. Engaging with users became more of a norm and less of an exception. This is good for user experience, but it’s bad news for ‘traditional’ personas.

Traditional personas began to look too finished, too final. Teams were savvy enough to know that fully formed, completed descriptions of users are an impossibility at the early stages of design. Instead, they wanted conversation starters.

To use the agile terminology, design teams wanted to get a ‘shared understanding’ of their users and they were suspicious of any attempt to set requirements in concrete.”

Another reason is a common one: marketers ruined it for everyone. Essentially, personas were largely a parody of themselves, with made up data (or irrelevant data like the eye color of a persona). They took on cheesy stock photos and cringey names like Big Spender Billy.

Alex as a cheesy persona example.
Artistic and Aspirational Alex…?

In addition, the adoption of personas by marketers led to distrust in the validity of the methodology by designers and developers. As Dr. David Travis put it:

david

Dr. David Travis:

“Marketing teams created versions of personas to represent market segments. Because they used the magic term ‘personas,‘ development teams were discouraged from developing their own, not realising that a market segment might contain multiple personas.

More cynically, the purpose of marketing personas is primarily to sell more stuff, whereas design personas need to reveal the user behaviours relevant for a product. Development teams couldn’t use marketing personas to make design decisions, so they decided personas weren’t that useful.

(It wasn’t helped by the fact that marketers seem fond of giving their personas silly names, such as “Social Butterfly Brenda” or “Value Hunter Valerie,” that attempt to collapse nuanced research into a single concept. This trivializes the research, resulting in designers rolling their eyes and shaking their heads.)”

The power of user personas fades when people don’t trust them or they aren’t based in reality. Generally, the big mistake marketers make with personas is treating them as a subjective projection of values on some useless canvas. More specifically, that tends to fall within five categories of mistakes:

  • Making up data;
  • Using too much irrelevant data;
  • Using only qualitative data;
  • Using only quantitative data;
  • Believing your personas to be perfectly representative of reality, or that they never change.

You can also create too many personas (three or four is the recommended amount), but I don’t see that problem often. What I see more often is a persona created with no attempt to fit that model to reality, or no use case in actual business decisions.

Remember: your personas are only as good as the research behind them.

A better way to build data-driven personas

So how do we move past those mistakes and create trustworthy and actionable user personas?

There are many methodologies out there. I want to note now that the way I did it is not the only valid way. It might not even be (and probably isn’t) the most sophisticated way. But it’s fast, effective, and data-backed.

Even better, anyone can do it—and usually in under four weeks. That allows us to move quickly and maintain an agile product design strategy as well as an agile marketing strategy. We’re not rendered complacent by too much research.

It’s based on a combination of qualitative and quantitative data, of exploration and analysis. You’ll walk away with personas you can use for marketing decisions, as well as data to further explore for copy ideas, design guidance, and marketing experiments.

Step 1: Outline your goals and plan your approach

What do you want to know? Plan your audience in this step. Who will you survey and how will you reach them?

This also presupposes that you have a certain level of user knowledge, i.e. you’re not starting totally from scratch.

We did an analysis quite a long time before in Excel to find our most valuable customer segments, and we use Intercom to trace their common behaviors. We never did a full structured analysis on behavioral correlations (e.g., running regression analyses against success metrics), but we knew what our “ideal customer profile” looked like for the most part, and we knew which customer profiles were worth the most money to us generally.

Step 2: Write your survey and send it to your audience

Writing the survey was one of the hardest parts for me. It involved thinking about what my goals were with the project and tying those into questions that would produce actionable answers. Not only that, I wanted to remove bias from the questions and also keep the survey short enough that people would actually take it.

If I could go back, I’d actually improve my survey questions a bit. That’s where the data comes from, it’s the part you should focus on most. Measure twice, cut once here, and get your team involved if you can.

We used Typeform to send the survey. Here’s a section of the actual questions:

Some were categorical questions like “Which best describes your company?”

Others were scale questions like “When purchasing digital marketing training, how important are the following factors?” followed by a series of factors like “cost,” “reputation of instructors,” and “interactivity.”

And we also asked a few open-ended questions like “What’s the most challenging skill used in your job?” and “What blogs do you read regularly?” These ended up being the most valuable, in my opinion, for actionable marketing campaign ideas.

Small note on incentivization: We also wanted to incentivize people to take it, and did so by offering a free gift. Our specific play ended up being a logistical headache, so long story short, do what you can to get people take it without a one-for-one gift. The data is valuable, though, so find a way to get quality data.

Step 3: Explore the data (Part 1: EDA in R)

Let the data roll in.

Once you get about 300 responses, you can think about analyzing the data. You did plan ahead on your sample size, though, so that’s arbitrary. Again, 300-1,000 respondents makes for good data. You can do it with 150, probably. There’s no magic number here, as there are many moving pieces (survey quality, audience targeting, your own data analysis skills) that matter more than pure sample size.

You data will look something like this when it all comes in:

Screenshot of what your survey data will look like.

It needs to be organized the right way, with columns as survey variables and rows as responses (or observations) to analyze correctly. You can’t have blank cells (NA values). There are ways to remove or fill these cells within Excel or in R, or whatever statistical tool you use.

For this part, we’ll break into exploratory data analysis in R. If you use a different statistical programming tool, that’s fine. If you don’t use any of these, you’ll miss out on this level of analysis, but you can still use the data you’ve collected to build pretty accurate personas (more accurate than most companies build).

Note: the following gets into the weeds a bit. Everything I’m about to discuss is done in R and is for the purpose of analyzing the data and hopefully breaking it into “chunks” that help to find distinct personas. PCA and factor analysis do this by analyzing variables/columns, and clustering does this by analyzing rows (or responses). It’s not possible to go over these subjects in depth in one article, but I’ve provided links if you want to learn more about them.

First thing we’ll do is exploratory factor analysis. The goal here is to identify the underlying relationships between variables (specifically, columns/survey questions). Basically, can we find factors that predict how people will answer certain questions?

There are many ways to do this in R, most commonly the out-the-box factanal() function. Another popular way is “psych” package, as outlined in this blog post.

I didn’t get much out of factor analysis, but I did find some patterns in three factors, though they didn’t explain much of the data’s variance. So I explored principal component analysis, which is similar and often confused with factor analysis but conceptually different.

I wanted to see if plotting it would clear things up. Here’s the code in R for that (where x is your data frame):

pcanalysis <- prcomp(x, scale = TRUE, center = TRUE)
plot(pcanalysis)

Graph of pcanalysis.

What this means is there’s one component that explains a decent amount of the variance in the data but it sort of fizzles out after that.

There’s more to talk about with PCA (and factor analysis), but I’ll keep it concise for the practical purposes of this post. Here’s a good explanation article if you want to read more.

After this, I went into clustering, which is like PCA or factoring but attempts to group data according to observations (the survey responses, or rows in your spreadsheet). This is the bread and butter for us when we want to find distinct user personas, as it separates our respondents into chunks based on how they answer things.

First thing’s first, make sure you scale and center your data if you have certain variables that are much larger than others (we have answers on a scale of one to five, but also employee counts that go into 50,000+). Here’s basically how I created scaled and centered data and did hierarchical clustering:

scaledpersonas <- scale(personas123, scale = TRUE, center = TRUE)
d <-dist(scaledpersonas)
c <- hclust(d)
plot(c)

This produces a dendrogram, which is a tree diagram used to illustrate the arrangement of the clusters produced by hierarchical clustering.

Cluster dendrogram.

This was pretty messy, though it showed a few high level clusters, and one a few levels down that had many common values.

I moved onto a k-means cluster technique, which allows you to pick the number of clusters you’d like before you do the analysis. We wanted to explore what our clusters looked like with three to five personas. Here’s with three:

A three-persona cluster.

Looks pretty decent. Lots of overlap in the middle (due to common responses to what now seem like obvious variables like the importance of the reputation of instructors), but some uniqueness as well. Much better than with four clusters:

A four-persona cluster.

Here’s how I created that data by the way:

kmscaled <- kmeans(scaledpersonas, 4)
km <- kmeans(personas, 3)
kmscaled

And the visualizations:

require(cluster)
clusplot(personas,
kmscaled$cluster,
color = TRUE,
shade = TRUE,
lines = 3,
labels = 2)

Clustering was more fun. There were pretty clear cut clusters, and at the very least I could explore some of the observations individually to see what set them apart (in Excel).

Doing that allowed me to open up a whole new area of data analysis because I knew that the personas were largely segmented based on a couple variables (mainly company revenue, yearly training spend, and the importance of two to three variables when it comes to training). I could throw down some pivot tables to explore the rest and see where clusters differed in terms of the attitudinal questions, and if there were any variables I was missing.

Step 4: Explore the data (Part 2: Pivot tables and Excel)

You know how to work a pivot table, right?

Pivot tables are a stupidly simple yet incredibly powerful feature in Excel, and totally invaluable for data exploration. They’re a bit hard to explain without actually seeing one in action, but they essentially let you interactively explore data from different angles by placing different variables in columns/rows and analyzing averages, standard deviation, sums, etc.

For this project, they were wonderful, because I was able to set up different worksheets with respondents that fell into each cluster from the analysis above, and see how they answered various survey questions.

Screenshot of a pivot table with our research data.

As you can see, then we could compare the means of different variables as a function of things like job title, job experience, company size, or even whether someone has an allotted and planned training budget.

I did this across personas (from clustering) and compared the means of different variables to find key differences. I also explored other factors, such as the those in the top 15% of reported yearly training spend, or those with allotted budgets vs. those without, to find common and different data between them.

It’s hard to really give a step-by-step here because it’s just part of the “insight generation” process. You have an idea of data you’d like to explore, a hunch of where you might find some interesting information, and you explore those factors. As I’d mentioned, we already had a lot to look at with our statistical clusters and a pretty good idea of our current customer makeup (and which ones were the best customers generally), so it wasn’t a hard process of building reports and pivot tables.

In fact, it was fun!

You can also make pivot tables that contain more than one row variable. Here’s one I just made that shows the average rating of how important cost is by 1) type of company and 2) seniority of employee:

A pivot table with our research data that contains two row variables.

Some of them turn out not to be incredibly valuable (the above being an example of that), but there’s not really such thing as wasted time here, especially if you’re just learning. Spend a lot of time exploring the data. Look for surprises, things you didn’t expect. This isn’t a clear “do this in the following order” process, unfortunately.

Step 5: Explore the data (Part 3: Qualitative)

As part of our survey, we also asked some open-ended questions:

  • What blogs do you read?
  • What is the most challenging skill you use at your job?
  • What software do you use on a daily basis?
  • What’s the last training you completed for digital marketing?

These ended up being the most valuable for a variety of reasons, not least of which is the actionability inherent in the questions we asked.

For example, if we can segment by personas and find common blogs that each persona consumes regularly, we know where to guest post, advertise, or build partnerships.

If we know what software they use, we know who to partner with for events, webinars, and content, we know which tool-specific courses to teach, and we can even do some sales development campaigns based on software segmentation.

More than that, what blogs they read and what they consider their most challenging task tells a lot about who they are.

To start with, the data will likely be a mess. People will write “Google Analytics” where others will write “GA” and there will be a lot of discrepancies like this.

So do what you can to clean up this qualitative data. If you’d like to quantify the information, you can codify the answers (Adobe Analytics and Google Analytics both go under “analytics” category, etc.).

There’s a whole body of literature out there on qualitative data analysis. If you’re curious, look into it (we have a course on it in our CRO certificate program). If not, be scrappy and use the data to inform your personas.

We used the same persona segmentations we’d discovered via the last two (quantitative) steps, cleaned up the data (as best as we could), and built word clouds to get a high level view of what people were saying:

Word cloud from our persona segmentations.

This step will help you cement the qualitative differences between your personas. It’s actually not a bad thing if they all read the same blogs, or they all fall under similar job titles, or whatever your open-ended questions produced. But if they’re different, you can infer different information about them.

One of our personas was incredibly interested in CRO blogs like ours, Unbounce, and Optimizely. Another was filled with general marketing content like Fast Company, HubSpot, and Inc. Another was a hybrid of CRO stuff and analytics-focused stuff like Occam’s Razor. Easy for us, these lightly corresponded with the quantitative segmentation we found as well, and sure enough, this information will help us with marketing and advertising in the future.

Step 6: Organize the data into rough but distinct personas

At this point, you know your data like the back of your hand. You go to bed thinking about which pivot tables you can create to pull new insights, and you’ve got an idea of how your personas break down in reality, not just how you wish they would look.

It’s at this point that you start to crystallize them into distinct personas. Find their core values. Maybe you found one persona clusters around survey components that emphasize value (over quality and whatever else), they read X blogs, and they make more money than the average respondent, but spend far less. These details begin to form a distinct persona.

What you have here is almost finished. In fact, if you’re really lazy and don’t want to do one-on-one interviews, you can be finished (you should do one-on-one interviews, though). At this point, you can fully segment your users based on any information you asked for on your survey (see why early I said the survey creation is the most important part of the process?).

We had three pretty clear personas at this point. I won’t go into too much detail, but the loose personas were those who wanted to grow their business and have an edge on the competition, those who were ambitious self-learners and were determined to be top 1% T-shaped marketers, and those who managed teams and wanted structured education (and clear ROI and progress tracking).

From there, we found some prototypical customers who very closely resembled the fictional personas we’d created and asked them to spare 15-20 minutes for a one-one-one phone interview.

Step 7: Conduct one-on-one interviews

I’m a marketer, so I’m primarily interested in insights I can use for growth and advertising. However, I had also done a behavioral analysis (in-app) of our customers previous to setting up the user persona research, and I work closely with our product team. They also conduct customer interviews, so I roped them into this to kill two birds with one stone and share data across teams.

We planned a series of questions that could aid both product and marketing. They’re deliberately open-ended and designed to spur emotion and depth:

  • What’s your role at your company? Explain at high level and day to day.
  • Career background?
  • How big is your marketing team? How are they organized and distributed? Who do you work with on a daily basis?
  • How does your company organize training and ongoing education?
  • Is training individually motivated or assigned to you?
  • Who in your company found CXL Institute? How did you find it?
  • What makes you feel successful when using the Institute?
  • What made you sign up?
  • What’s the single biggest challenge at your job?
  • What are you motivated by? What keeps you up at night?
  • Say you have a genie, and you could magically develop one skill in the next few years, what would you wish for?
  • Do you use, or have you ever used, a training tool like the Institute? If so, which ones?
  • IF you have used similar tools, how did they compare in quality and style to the institute?
  • Whose advice do you trust? Who do you follow or ask when you have a challenge?

These questions represent a template. In other words, this isn’t a checklist, it’s a conversation. Take a journalist’s attitude and go into the conversation with a sense of curiosity and exploration. The point is to make it feel unlike an interview and more like a conversation with a close friend.

You don’t want surface level answers, shit you can look up in your product analytics.

You want soul-baring answers about their fears of looking inferior in front of their coworkers, their motivations about growing their business to $100M a year in revenue, or their assertions of the thought leaders they trust and why they think most of the industry is full of hucksters, but not you.

If you do this right—and there’s a whole art to it—it should be one of the most insightful parts of the process. It’s really the ornamentation on the foundation; you’ve already got the basic personas segmented on attitudinal and behavioral data, and now you want to find emotional triggers to help you with messaging strategy, emotional targeting, and design.

This stage should take a few days to a week, depending on how quickly you can organize and conduct these interviews (we did ours in a week). Try to get two to five interviews for each distinct persona.

Step 8: Put it all together and share with your team

That’s it. You’re done. Quick and dirty user personas, in only three to four weeks. And you can actually use them.

Design them and communicate them so they actually get shared with the team and used for decision making. This is where you can get creative (there’s no one way to do this and certainly no prototypical template). Here’s an example template I really like from buyerpersona.com:

I think this example provides the most granularity and actionable information, while also segmenting the information with tabs.

Here’s one from Smart Insights:

I don’t think there’s necessarily a right or wrong way to do it, so long as you concisely include actionable information and communicate it effectively. These things should live on their own and not need further questions from teammates who haven’t seen all the raw persona data

You can also map them out on GE/McKinsey’s Matrix. This shows you how ideal the customer persona is vs. how strong your business case is for them, allowing you to visualize where the best opportunities are for future marketing efforts:

A GE/McKinsey customer persona matrix.

The top left (Persona 3) means they’re our most ideal customer but we are executing the least effectively on selling to them, and the bottom right (Persona 1) means we’re selling to these people the best but they’re not the most ideal for our business. The opportunity then is in Persona 2 and Persona 3.

After this is the fun part: execution. Just because you have a pretty poster on the wall with your hard fought and researched user personas doesn’t mean you’ve actually done anything. All of that research is wasted if you don’t use it. If it doesn’t aid design and product decisions, you’re doing it wrong. If you don’t change a thing about your marketing, you’re doing it wrong.

Important caveats

A few notes:

  • This is not the only way to make user personas. There are tons of ways. There’s also not a lot of research on which method is more effective, but I tend to side with the one with more objectivity, less conjecture, and more rigor/structure. That’s why I like this approach.
  • This approach also still leaves some factors up to subjectivity. In ours, we knew that while persona 3 represented a smaller portion of our current audience, they represent the highest value customer segment. So we wanted to keep them as a persona, regardless of their lower representation in this set of data.
  • Just because you make them doesn’t mean they’ll be effective. You have to first decide your goals in making them. What will this information let you do differently?
  • This is a fluid process. As you learn more about your customers, you can tweak or change your personas. You should. A static persona isn’t just lazy, it’s almost certainly unrepresentative of your customer because 1) you never have all the data you need at one time, and 2) your customer profile changes with time.

I’ve heard it recommended that you should update your personas once every six to eight months or so. We’ll do it once a year. You do what works best for your organization, but keep it evolving and improving.

Conclusion

This is a lot of information, but if you take it step-by-step, building accurate data-driven personas isn’t hard (and it can be accomplished in under a month).

Realistically, you don’t need to do everything I outlined. Especially if you’re just starting out and haven’t really discovered Product/Market Fit, you shouldn’t be investing this much into personas because they won’t mean anything.

We’ve hit a point of traction and have defined customer profiles. Adding user personas that are backed by quantitative and qualitative data helps us produce landing pages, design, and messaging, as well as product development roadmaps and targeting and partnership ideas. It truly adds a level of depth to our marketing and adds value.

Even if you’re at the level where building personas will help your marketing, you can likely skip clustering and PCA if you don’t have an analyst willing to do that. Plus, those methods tend to be less clean than they seem on paper, so you can likely pull easier insights with pivot tables and a few customer interviews.

I realize this article went through a lot of different subjects relatively quickly, so if you still have questions or want help doing your own customer personas, comment below and I’ll answer to the best of my ability.

The post How to Build Robust User Personas in Under a Month appeared first on CXL.

B2B Video Marketing: A Strategy for Lead Generation

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Video marketing is booming. It’s no longer news. Cisco predicts that, globally, video traffic will be more than 80% of all web traffic by 2022 (up from a prediction of 75% made in 2017).

Other recent reports claim a 17% leap in video content usage in 2018, with the average person watching more than 90 minutes of online video every day. In the same report, 85% of surveyed consumers said they would like to see more videos from brands.

However, simply creating videos isn’t enough. Content marketing in general—and video marketing in particular—needs strategic planning to work.

For B2B marketing, the primary goal of content, video included, is often lead generation. That’s why, when it comes to B2B video marketing, a great strategy weaves individual videos into a “hub”—a long-term asset that can attract and nurture leads.

Let me explain…

From “videos” to “asset”: Planning your B2B video marketing strategy

When it comes to B2B video content, two potential long-term assets make sense:

  1. On-site knowledge base. Possibly gated, since the focus is lead generation.
  2. On-site and/or off-site video course. Your own video-on-demand channel for potential customers to join and stay engaged with.

Of course, there’s nothing preventing you from creating both. For example, Yoast offers a free gated knowledge base on their site as well as a repackaged version as a free video course on Udemy:

example of yoast knowledge base and video course.

Planning your video marketing strategy around a lead-generating asset has two main benefits:

  1. It allows you (and your whole company) to understand how video creation efforts should come together.
  2. It helps create content for both the top and middle of your sales funnel, turning your site into a destination. People find videos more memorable and more useful than text content or pictures (e.g., infographics slideshows), which makes video a perfect fit for the purpose.

A video hub can attract traffic through search (if you come up with a searchable topic) and create new traffic via third-party sources. If you put a free course on LinkedIn Learning or Udemy, for example, you tap into those platforms’ user bases, discoverable through their internal search function.

Further, all sources are lead-nurturing mediums to engage with students or email subscribers on a regular basis—and get them closer to the final conversion:

  • With a video course, you can engage your students by providing updates, hosting Q&A sessions, sending out a survey, etc.
  • With an on-site knowledge base, email automation can reach out to leads to invite them to access new videos, provide feedback, etc.
diagram showing how three videos fit together into a course to attract and nurture leads.

Let’s look at the component parts of this overarching asset—individual video types that generate leads. 

Choosing video types for lead generation

The first step is to come up with the “final asset” topic, which, ideally, combines all of the following criteria:

  • Be based on a popular search query to rank and generate traffic on its own. Selecting keywords for your content is a huge topic that deserves a separate article, but you can refer to my detailed keyword research guide here as well as this quick exercise to see the process in action.
  • Complement the products or services you sell. Videos should cover problems your product or service solves.
  • Not be too specific. You’ll want to add fresh videos on a regular basis to re-engage your current viewers or email subscribers. A super-specific topic is a hub without spokes.
  • Be on brand. Yes, determining what’s “on brand’ is a huge and complex topic. This thread from Wistia’s Phil Nottingham is an excellent summary (and justification) for creating videos for “brand affinity” not just “brand awareness.”

Moz has repackaged their popular Whiteboard Friday videos into a free standalone course on Udemy that ranks third on Google for “SEO training.” The course walks you through SEO basics—while also mentioning Moz’s tools as solutions to solve common SEO issues.

Plus, the topic of “SEO training” is broad enough to give limitless possibilities to add new videos as they’re created.

example of how to repurpose videos into a course to engage with students via Q&A and announcements.

Once you have an idea of the topic for your video hub, create a video editorial calendar to align with it. You can mix and match video types to diversify your content:

  1. Influencer-driven videos (e.g., live videos, webinars, etc.);
  2. Demos and product walk-throughs;
  3. Customer-generated videos (e.g., live Q&A, video reviews, etc.).
example of video types within a video course.

All of these video types can address (and solve) relevant problems while suggesting your product as the solution. Let’s look at some examples of each.

1. Influencer-driven videos

To see a brand-owned, webinar-driven channel in action, check out SEMrush. They continue to grow their library of on-demand webinars featuring industry experts. You don’t have to opt in to watch a webinar, but you can put your questions or comments through a lead-generation form.

example of b2b company with large group of webinars.
Take note of that “Discover SEMrush” label on the right. Some influencer-driven webinars mention the platform as solution to the discussed problem, funneling participants into trying the platform.

The beauty of collaborating with influencers for creating videos is that you can use their authority and existing community to generate leads before and after the webinar or live-video session:

Webinar marketing is multifaceted: Webinars educate, engage, automate, and convert, and each process supports the other in a cycle. That makes webinars a perfect medium for building a long-term video marketing strategy.

ClickMeeting refers to this strategy as the Webinar Flywheel,” showing how you can use webinar marketing at every stage of the sales funnel and—at the same time—how it transforms the idea of the linear funnel into a cycle:

flywheel marketing concept applied to webinars.

There’s no beginning or end here: Every part supports the other, similar to Hubspot’s Flywheel and, earlier, Jeff Bezos’s “virtuous cycle.”

As you’ll see later, the concept of “the whole drives the parts, and every part supports others as well as builds the whole” is exactly what a lead-generating video content marketing strategy should be.

2. Demos and product walk-throughs

If you’re selling a SaaS product, you’re likely doing product demos on a regular basis. There’s no reason why you can’t reuse some of those demo recordings to give your audience a glimpse inside your platform.

Product demos make great content assets. For example, Salesforce uses demos as gated content. And Coschedule uses them for blog content, even ranking some for pretty generic (i.e. high-volume) terms:

example of product demo video that ranks well for high-volume search term.

You can use your webinar solution to create product demos, or any of the many tools out there.

3. Customer-generated videos

Encourage (satisfied) customers to create video reviews of your tool. It can even be a contest to reward the best video creators. Depending on what you’re selling, you could also set up regular live video meetings with brand advocates to address audience questions.

It can be as simple as inviting your customers to ask questions through a branded hashtag for you to respond to in a (live) video. Google’s #AskGoogleWebmasters video series is a good example of this tactic in action. 

Or, it can be a more advanced approach: Invite customers to make a video for you or join you in the video. For example, back when it was called “Google Hangouts,” we invited our community brand advocates to join a monthly video chat to discuss the best ways to use our platform.

Later, over at Viral Content Bee, we invited our current users to submit video tutorials of how they use the platform to include in our official Udemy course:

example of udemy course based on user-generated content.

Seeing how established users use the platform helps our new or soon-to-be leads better understand all the possibilities. It also adds credibility—it’s not just us claiming what can be done; it’s real users showing how they’re getting value from it. 

4 ways to repackage video content

One video may take plenty of time to create and edit. There’s no reason to use it only once. The beauty of video marketing is that it’s highly repackagable: You can come up with lots of alternative formats to use across channels:

1. Use the full video on your blog. Wistia offers custom branding as well as clickable calls to action and even opt-in forms inside the video—you could generate leads right from inside your video. Read about other video platforms here, or review this guide on how to embed videos on your site.

2. Create a text summary or put together a full transcript. This makes great content to go on your blog together with the video. You can also re-use screenshots or other images from the video to make the content more useful for people who choose not to watch the video.

This makes your page search-friendlier and more accessible to people with visual or hearing disabilities. Obviously, use best SEO practices as well as structured markup to ensure visibility in organic search.

Other options:

  • Convert each article into a PDF and offer it as a bonus download through your course or knowledge base as an alternative way to review the content.
  • Collect all those articles and combine them into an ebook. This one can also be a free download for your students/subscribers.

3. Create annotated video takeaways to publish on YouTube, Facebook, Twitter, Instagram, LinkedIn, etc. for brand visibility. Releasing shorter versions of your video using third-party platforms prompts users to look for the full videos, which can be found only on your site.

Tools like Placeit help you put together annotated videos and slideshows in seconds. Link everywhere you can to your blog post to try and build some traffic:

  • YouTube: Link from the video description and (possibly) pinned comment.
  • Facebook and LinkedIn: Link from the update or comment.
  • Instagram: Link from Instagram stories.

4. Extract audio from your video, especially if it’s an interview or Q&A, and upload it to SoundCloud and iTunes. You could end up getting known as a podcaster if you do it regularly enough.

  • The audio files can then be turned into an audiobook and offered as a bonus download through your course or knowledge base as an alternative way to consume the content (e.g., while driving).

To give you a better picture, this is what your final strategy may look like:

diagram of how all pieces of a b2b video marketing strategy fit together.

That’s exactly what I did when putting together my own video courses, including one on reputation management:

  • Each chapter was based on a public article.
  • Each chapter offers downloadable materials (ebook, audio version, and sometimes cheatsheet).
  • Each audio file was reused as a podcast chapter on Soundcloud and iTunes.
  • I market the ebook on my site as well as Slideshare.
how to create bonus materials as resources within a video course.

This strategy generates multiple, complementary assets that increase brand awareness, generate traffic, and bring in leads:

the components of a b2b video marketing strategy that act as top-of-funnel content.
I didn’t visualize the strategy as a cycle, but you can see how it works like one: You use the idea of a whole—what you’re working toward—to drive the creation and marketing of all the parts, and each part helps create and promote the whole.

When your course or knowledge base is live (i.e. fully formed), you can use all those channels to promote it, too.

Promote your asset via collaboration

To plan the whole strategy more effectively, use an editorial calendar like ContentCal. With ContentCal, you can:

  • Schedule content campaigns and create content briefs.
  • Add your whole team and manage permissions.
  • Get your whole team working on promotional assets to support each channel effectively.
example of how contentcal tool helps manage content publication.

Finally, the influencers you included when creating videos (via interviews or webinars) can help you promote your video course or knowledge base. All you need is to ask!

  • Email them with pre-made tweets to make it easier for them to share.
  • Create custom images for your participating influencers to use when promoting your content.
  • Tag them in tweets and Instagram updates whenever you share their video, or even the whole course.

You can also reach out to their friends by creating a follower targeting ad on Twitter or via Facebook remarketing.

Conclusion

B2B video marketing can be much more effective if you focus on creating a long-term asset that consolidates all your video creation and promotion efforts.

Embracing this approach also grows the number of channels that can increase brand visibility, providing new avenues to acquire and nurture your leads.

The post B2B Video Marketing: A Strategy for Lead Generation appeared first on CXL.

Channel Partner Strategy: 7 Steps to a Successful Program

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A 1,983% boost in annual revenue and 1,000% user-base growth within six months—all with no upfront costs. Can this be true? These are actual results that startup Ringadoc got from their channel partner program.

In today’s environment, if B2B organizations are going to make it, they need to grow sales. Partnerships can be a big help.

As Chris Samila, Partnerships Manager at Optimizely shares:

We saw building and supporting a partner ecosystem as a massive opportunity. Early on, the agencies kept getting in contact, wanting to engage, and there was no clear way to do that. So we started building out the partner program.

Today, Optimizely has a rich partner ecosystem consisting of 150+ solution partners and 60+ technology partners. The benefits are significant:

  • accelerated growth;
  • higher brand awareness;
  • increased revenue;
  • presence in new markets and verticals.

It does take work, so is it worth the effort? The answer is a resounding, “Yes.” However, to reach this level of success, you need a sound partner strategy that takes technological and consumer changes into account.

3 factors that affect B2B partner programs

In a nutshell, there are three forces that influence B2B partnerships:

1. Technological factors

As companies look to digitally transform their businesses, their focus is shifting toward solutions that deliver complete business outcomes. This creates a unique window of opportunity for strategic partnerships.

2. Social factors

With the buyer’s journey becoming digital, partners are increasingly offering a mix of services that cross cloud platforms and apps. This brings to the forefront the importance of winning partner mindshare and loyalty.

3. Economic factors

B2B tech partners are now targeting business leaders instead of IT. In this light, high-quality business training becomes as critical as product training.

These three forces are important for a successful partner strategy. Go against them, and you will struggle. Go with them, and you will win.

This post takes you step-by-step through the process of building lasting and profitable relationships with channel partners.

Step 1: Select partners

It all starts with choosing the right partners.

According to Tai Rattigan, Head of Partnerships at Amplitude:

The most important thing is to be able to qualify an opportunity—inevitably, there are going to be a lot of people who will want to partner with you, but you have a limited amount of time.

To focus on cultivating the right relationships, create an ideal partner profile.

Who is your ideal channel partner?

Customer success guru Lincoln Murphy talks about the ideal customer profile. We can use Lincoln’s framework to select the best partners. For each partner candidate, ask these questions:

  • Are they ready? Do they have the resources to invest in the partnership?
  • Are they willing? Will the partnership help them reach their goals?
  • Are they able? Is there a technical fit? A competence fit?
  • Do we have similar values? Is there a culture fit?

This is where research comes into play.

Marj Koppelaar, Head of Strategic Partnerships at Mirakl, explains her process:

I do a lot of research into the company to find out what they are trying to achieve. Are their clients matching up with ours? Are their goals aligned with ours? Do they have the skill set they need to for a successful implementation?

These are the questions that Rattigan tries to answer:

What are the potential partner’s key objectives? Where is the company trying to go? Will the partnership help them get there?

Rattigan succeeded in finding an ideal partner for Amplitude. Will Mahony from Five Agency talks about their partnership:

Will Mahony:

“We decided to partner with Amplitude because we view them as the leader in the product analytics space.

A few of our clients were already using their platform or had expressed interest, so we were familiar with the value they bring to the table. More importantly, Amplitude’s mission really aligns well with Five’s, which is that we want to deliver measurable value through everything we build.

Being metric- and business-outcome focused throughout a product’s lifecycle is important to us, and using Amplitude allows us to measure and achieve our goals in that regard.”

To track down partner candidates with the highest success potential, look for agencies that are comparable to your current best partners, or ask existing customers who they work with. Then match your requirements against partner teams and prioritize partners who check the most boxes.

Note: Your ideal partner profile isn’t set in stone. Chris Samila from Optimizely shares his experience:

As the product matures, ideal partner profiles may change. For us, it used to be independent consultants, then teams, and it keeps evolving.

Step 2: Discovery

At this step we’re looking at what the potential partner is already providing and the customer’s ideal outcome. If there is a gap, can a partnership help fill it?

Talk to your potential (and existing) partners to get a feel for what matters most to them. Some questions to ask are:

  • What is important to you in a partnership?
  • What are the major growth drivers of your business?
  • What is your unique value proposition?
  • What are you struggling with?
  • Who are your best customers?

Helen Curtis from Coterie Marketing recommends getting a potential partner on a phone call and evaluating the big picture together:

  1. What will our biggest hurdle be?
  2. Is there market appetite for our joint offer?
  3. Can we really stand out in the market?
  4. Do we have the right information and skills to deliver this?

The result of this conversation should be complete clarity regarding the opportunities and challenges the partnership will bring.

Before Hotjar launched their Agency Partner Program, they sent out a survey to their email list:

  • What are your biggest challenges, frustrations, or problems using Hotjar with clients?
  • What are some agency partnerships that you’ve found to be valuable? Please be specific in what delivered value.
  • What are some common frustrations or challenges you’ve encountered in past partnerships?
  • What is the single most important benefit you’d like to see in a Hotjar Agency Partner Program?

A little prep work like this can go a long way, especially for a new channel partner program.

Step 3: Set goals and outline commitment

I asked 10 executives from digital marketing agencies what, in their opinion, are the most critical pieces of a successful partnership. The top response was clear and measurable goals. Here are a few quotes from my interviews:

It’s understood that, in a partnership, each side has their own vested interests. Good partnerships are transparent about those interests and are built upon the understanding (and reality) that the success of one partner contributes to the success of the other.

Echoing that:

Both parties need to know what the expectations are, how you are defining success, and what contributions (on both sides) will help you get there.

On the flip side, their biggest frustrations with partnerships were the following:

  • “Partnerships by handshake only, with no formal plan and nothing formalized to track success ”;
  • “one-sided relationships”;
  • “partnerships that go just one way.”

Curtis recommends creating, in collaboration with the partner, a clear written plan—a one-page document with:

  • A set of objectives;
  • Specific view of the target market;
  • Strategies and tactics;
  • Who’s going to do what;
  • Resources both parties have committed;
  • Realistic view of the ROI.

Once everyone is on the same page, the next step is to outline the commitment for both parties 12 weeks out:

  • What is the partner going to do?
  • What are you going to do?
  • Are the commitments realistic?
  • Do you have everything to deliver them?
  • Are there any potential barriers?

Lastly, you agree on how—and how often—you’ll communicate, and how you’ll track what’s getting done. A collaboration tool like Basecamp, Trello, or Huddle can be helpful.

Step 4: Facilitate introductions

The partnership is under way. Now it’s time to invest in relationships. Ideally, there would be a dedicated resource (i.e. Partner Manager) to facilitate introductions between teams and foster relationships.

Chris Neumann:

“Getting to know the Optimizely salespeople personally was critical to our success.

We work together closely to close deals, so knowing them has allowed me to build trust with them that we will deliver for the customers.”

Partners can be a source of valuable product feedback. Connect them with product managers and engineers for feedback from the front lines.

Often, you’ll find that a lot of internal negotiation and positioning of the partner program is needed to make sure your organization is willing to work with the partners.

Jeffrey McInnis:

“When you’re getting your partner program off the ground, it can be challenging to get your own organization to work well with partners.

Your company needs to consider partners when making decisions.

Advocate for your partners so your colleagues understand their point of view.”

Step 5: Enablement

“If you don’t put it in, you don’t get it out,” applies in partnerships.

Companies can empower channel partners in three key areas: technical training, building industry expertise, and sales training.

Technical training

Partners need to be experts in your products.

Chris Neumann:

“You need to make sure the partners are able to use the product for free so they know what they have to sell.

Lots of companies mess this up—people call me and ask me to help them sell to my customers, but then they don’t allow me to use the product.

How can I help them sell something that I don’t understand how it even works?”

Bob Ruffolo, CEO of Impact, shares his experience of partnering with HubSpot:

Bob Ruffalo:

“We received a lot of support when we were starting out.

It took a long time to get fully up to speed, but we were willing to put the time in, learning about the inbound marketing methodology, of how to actually do it, learning how to sell it.

The hardest part was finding the right people who can do the work.”

Once the partners are trained, keep them up to date with the products and give them access to new functionality early. That way, when it hits the market, they’re experts from Day 1.

Industry Expertise

Timely and relevant industry information shared with partners consistently can put them at a sizable advantage over the competition.

Chris Samila:
“I look at content through the lens of the partner—what would be useful for them that they can take and brand for themselves?

An example of a useful piece of content for our solution partners would be a report like, “What leads to a winning experiment?”

This is a great place for the “Challenger Sales” approach: Know more about the market than the partners do and help them grow. Educate them on what they don’t know they don’t know.

To do that, you have to be on the cusp of what’s happening in different industries, keep your eyes open, and inform partners about the trends.

Jeffrey McInnis:

“I read a lot of content on LinkedIn. If it’s relevant for your industry, chances are one of your contacts is sharing it.

You can also set up Google Alerts for certain terms.”

Sales Training

Since B2B tech partners are now selling to business leaders, a partner enablement program needs to include strong business training.

Tai Rattigan:

“You almost become their sales manager.

You are consulting the company on how to improve their business, helping them set up new service offerings on top of your platform. Often, account managers who don’t have much sales or business development experience end up doing sales.

If they don’t know how to manage the pipeline, you need to guide them through it.”

Many companies are struggling to figure it out: How much should we handhold? How much should we invest in bringing partners up to speed?

The 80–20 rule says that a few of your partners will provide most of the revenue. Some vendors take this rule too far and focus only on the larger players, providing no support to their mid-tier and smaller partners.

They don’t realize that enablement of smaller partners doesn’t have to be messy and time-consuming. This is where the same 80–20 rule can come in handy—we focus on the most valuable and effective content, and offer it in a structured way.

Marj Koppelaar:
“Aim for an enablement process that is standard and add custom layers as needed. The partner’s sales team needs to have a clear understanding of what you do, value points, pain points.

Make a cheat sheet for them—one page with all the information. Follow up with the partners and ask them what has worked very well, what we should be doing more of, what we should avoid, success stories, etc.”

High return, high productivity of the channel—that’s what we want. However “As you sow, so shall you reap.”

Investing in partner enablement pays handsome dividends. Ideally, you’re able to scale it using resources you already have. For instance, product marketing assets and internal sales enablement assets make great partner toolkits.

Step 6: Sales support and account management

Here’s the worst-case scenario in the partner’s’ eyes: “lack of transparency and lack of deal flow and lukewarm leads that never turn into anything.”

The best-case scenario? “The company is bringing us leads and keeping us up to date with the product. We have forged real win-win partnerships with us, where we do business development together. They send us referrals and we do pitches together.”

A few key things guide our partners’ experience toward the best-case scenario:

  • Always give the partners a heads up; share information about the prospective customer; and help tailor the pitch to that customer.
  • Identify roadblocks partners face and provide strategic recommendations; make sure that the company is providing the required support.
  • Work hand-in-hand with the partner to make customer success a continuous process.

Now comes the million-dollar question: How do you keep bringing in partner-influenced revenue when so much is out of your control? Partner managers have unique approaches.

Jeffrey McInnis:

“Focus on what is in your control.

Do the right behaviors with the right frequency and, if the strategy is sound, you will hit your goals.”

Katrina Razavi, Director of Business Development at Shippo:

Katrina Razavi:

“This is the fun of partnering up with folks—you have to think outside the box and try new initiatives you haven’t done before.

Look at others in the space who are successful—what are they doing? How are they gaining traction?

Do those things, talk to executives at those companies, figure out how to replicate it.”

Chris Samila:

“Create your own luck, pay attention to the trends, be in constant communication with partners, always touching base.

Keep a large network if you can. If you come across something really cool, share it.”

Tai Rattigan:

“Be entrepreneurial when running a portfolio of customers. Be ready to switch hats, not just doing sales.

One day, a marketing event; the next day, a pitch; next, a demo.”

Marj Koppelaar:

“It’s important to have a commercial mind.

You need to get the training right, but the goal should always be revenue.

Keep the eye on the bottom line, not just logistics and administration.”

Step 7: Evolving the partner program

By taking ownership of the program and making an honest commitment to never-ending improvement, we can take things to the next level.

Valuable ideas can come from partner feedback. Surveys, 1-on-1 interviews via phone or Skype, and in-person chats at events can help evaluate the health of a relationship and tease out process optimization opportunities.

We can enrich our research by collecting feedback from everyone involved in the partner program—partners, customers, and our own teams.

Federico Menapace, Director of Partnerships at Segment:

Federico Menapace:

“When challenges with partnerships come up, we need to look at the root cause, not the symptoms.

The root cause is usually the absence of a human relationship.”

Menapace is planning to conduct Partner NPS surveys to measure partner satisfaction across the entire relationship.

When it comes to process improvement, Tanusri Jammalamadaka, Global Technology Partner Program Manager at Adobe, advocates constant iteration.

Tanusri Jammalamadaka:

“I create a product canvas and see what the loopholes are.

Some of them are related to partner onboarding process, providing access to resources, etc. I have been working on creating a totally new experience for partners via the partner portal.

These partners are all developers, and they don’t have the time to call support or help desk. Even finding marketing guides should be simple.”

Pilot new tools and processes for one channel partner, incorporate feedback and learning, then roll it out to other partners.

The best practices you learn from your most successful partners can prove invaluable to all the partners in your ecosystem. A word of caution here—in partnerships, trust is everything, so share with other partners only what’s ethical to share.

At every stage of the partner program evolution, keep working to raise awareness internally of the value partners bring to the company. Share stories of how the partners are helping customers realize the value of company solutions.

Be a champion and evangelist for the partners; be their voice in discussions with product and engineering teams.

Conclusion

You will get maximum juice out of your partner program and your partner development resources if you avoid the most common mistakes:

Mistake 1: The Partnership goes one way.

Instead: Have a written plan with a set of goals, resources committed by both parties, and a realistic ROI. Define who is going to do what in the next 12 weeks and track progress.

Mistake 2: No Buy-in.

Instead: Facilitate introductions and help the partners build relationships with internal teams. Consider the partners when making business decisions.

Mistake 3: Poor training.

Instead: Offer comprehensive product training combined with business training. Keep the partners up-to-date with the product and industry trends.

The bottom line: To cement good partnerships, be willing to invest in them.

The post Channel Partner Strategy: 7 Steps to a Successful Program appeared first on CXL.

How Much Do SaaS Companies Spend on Their MVPs?

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Eric Ries once described the minimum viable product (MVP) as a version of a new product that allows a team to collect the maximum amount of validated learning about customers with the least effort:

Instead of spending years perfecting our technology, we build a minimum viable product, an early product that is terrible, full of bugs, and crash-your-computer-yes-really stability problems. Then we ship it to customers way before it’s ready. And we charge money for it.

The reasoning behind releasing an MVP is simple: The longer companies wait to release it—and the more money they spend building it—the riskier their product becomes.

An MVP released at the right time that’s had just enough money spent on it will also reduce a company’s return-on-risk and help with cash flow down the line. 

For this article, we asked 14 SaaS CEOs a simple question: “How much did you spend on your MVP before you had your first dollar of revenue?”

The answers ranged from $0 to $1 million. Let’s take a look at who spent what. 

1. Rejoiner spent $0 on their MVP.

rejoiner dashboard.

Rejoiner, an email platform for ecommerce sites, began as a side project. Mike Arsenault and his two co-founders—all with technical backgrounds—built their MVP while working full time for other SaaS companies.

“We didn’t spend any real cash prior to getting our first paying customer,” recounts Arsenault. “I’ll actually never forget it. It was Govacuum.com, and they paid us $199 per month.”

“We also got lucky and qualified for some startup benefits with companies like Rackspace, who covered our infrastructure costs for the first year,” continues Arsenault.

“We did spend a lot of nights and weekends over the course of six months getting the first version of the product working, so there was definitely an opportunity cost there.”

Running comparative calculations, Arsenault figures that “two senior engineers plus a product manager/marketer for 40 hours per month, times 6 months, would be 720 hours to get to our MVP. At $150 per hour, that’s a little over $100K we would have had to invest if we had outsourced.”

Presently, Rejoiner serves about 150 direct-to-consumer brands, including well-known companies like Hydroflask and Titleist. Their typical client spends between $2k and $5k per month.

2. Envoy spent $0 on their MVP.

Envoy builds “workplace experience products,” including a visitor management tool for iPad-based check-in, and delivery management to organize the onslaught of personal packages coming into the office.

envoy dashboard.

An engineer by training, Founder and CEO Larry Gadea built the MVP of Envoy’s first product, Visitors, by himself using only free versions of software. “I was fortunate that the first product I built proved to be successful,” Gadea concedes.

The MVP took around four months to build, during which time the company earned no revenue. Gadea leveraged his connections in Silicon Valley to seed viral distribution of the product, which, in turn, generated the revenue to hire engineers and scale the company.

Today, more than 100,000 people use Envoy’s Visitors product at over 13,000 workplaces in 72 countries.

3. Qualified.io spent $1k on their MVP.

Qualified.io is a SaaS tool that companies can use to assess engineers before they hire them. 

qualified.io saas tool.

It’s now used by companies like Apple, Vimeo, and GE in their recruitment processes. The company’s CEO, Nathan Doctor, says Qualified.io’s MVP was built over a single weekend. It cost less than $1k to build, and they released it in 2016. 

Doctor says the company had its first customer on the Monday after their MVP was released. They then spent the first year qualifying the product and testing out their revenue model. 

Their growth since their MVP release in 2016? Qualified.io now has 350+ customers who spend between $6k to $17k a year to use their software, depending on the size of the company. A $1k MVP built over a weekend now brings in $2.5 million in revenue a year. 

4. Socio spent $9k on their MVP.

Socio is an event-management platform that helps companies launch custom apps for their events.

screenshots from socio.

Now, companies like Google, Microsoft, and ICAO are among Socio’s growing base of 400+ customers. The company’s co-founder and CEO, Yarkin Sakucoglu, says Socio’s MVP was built for just $9k.

Sakucoglu says he got Socio’s first 10 customers by cold emailing event planners he found on LinkedIn. He searched and pitched planners who worked at companies with 500+ people and closed $200k himself before he made his first sales hire. 

And what about Socio’s numbers after its $9k MVP? With a growth rate of 225%, Socio is now making $133k+ in monthly revenue. 

5. Vested Technology spent $17k on their MVP.

Vested Technology is a recruiting-automation platform that works alongside teams to identify, engage, and hire passive candidates. 

bested technology saas demo.

Prior to his role at Vested Technology, co-founder and CEO Akash Srivastava worked on Wall Street. He spent $17k to launch Vested Technology’s MVP. 

With just 30 customers, the SaaS product is now pulling in $36k a month, and each customer has an average revenue of $1,200. 

6. Justcall.io spent $20k on their MVP.

Justcall is a cloud phone system that sales teams can use to make calls using local numbers.

justcall.io interface.

Justcall’s Founder and CEO, Guarav Sharma, is a chemical engineer by trade who just happens to love writing code. He already had two exits before he created Justcall, selling his last business to The New York Times.

His latest company was launched on Product Hunt at the end of 2016. They landed their first customer the following March. Sharma says the first line of Justcall’s code was written about four months before the MVP, which was launched for roughly $20k. 

Now, the fully bootstrapped company is turning 60% of its demos into paid customers and hitting $2.5 million in revenue a year. 

7. Pixlee spent $40k on their MVP.

Pixlee is a visual-marketing platform that helps companies connect with influencers. 

pixlee interface.

Co-founder and CEO Kyle Wong, who was featured on Forbes’ 30 Under 30 List, says the company’s MVP was built using “sweat equity.” It was launched in 2014 for $40–50k, and Wong says that he and his co-founders paid themselves only minimal stipends in the beginning. 

Now, 500+ brands use Pixlee, and the company pulls in monthly revenue figures of $1.5 million. They’ve spurred growth, in part, by charging for usage—not seats. 

8. Wigzo spent $80k on their MVP.

Wigzo is an AI cloud automation tool that ecommerce merchants can use for personalization, analytics, and advertising.

wigzo demo interface of saas tool.

The company started coding the first version of their MVP in August 2014, which cost Wigzo $80k. For seven months, they didn’t have a single customer; the company brought in their first dollar of revenue in March 2015. 

Since their launch, the company has focused on two core audiences: Small businesses earning between $2 million and $20 million in revenue, and enterprise customers earning more than $20 million.

Wigzo’s customer payback period is on the higher end of the scale (18 months), and each customer costs $7k to acquire, due mainly to the company’s focus on acquiring enterprise customers.

Wigzo’s CEO, Mohd Umair, says that since their launch just over four years ago, the SaaS now has more than 600 customers and is making $240k in revenue a month. 

9. Hotjar spent $140k on their MVP.

Hotjar is a suite of tools that offer “behavior analytics” on site users—mouse tracking, scroll tracking, etc.

CEO David Darmanin shared a breakdown of costs during the company’s first year, when it rolled out a public beta. Most of the money went to employee wages and, to a lesser extent, advertising:

hotjar breakdown of first-year expenditures.

Since Hotjar released that beta in late 2014, the Malta-based company has grown: It now has nearly 100 team members and is used by over 350,000 organizations in 184 countries.

In addition to a freemium version, its paid tiers range from $29 to $589 per month, based on the number of pageviews tracked per day.

10. CXL Institute spent $200k on their MVP.

CXL Institute offers online training for digital marketers from top industry practitioners.

“CXL started as just a blog—and just me—in 2011,” recounts CEO Peep Laja. “That same year, I started a web development and CRO-focused design agency. In 2013, we stopped doing all web development work and focused 100% on conversion optimization.”

With the company already in the business of expertise, building a training platform was a logical next step to scale revenue. In early 2016, Laja put together a new team, and the CXL Institute MVP launched in May 2016. “I think my cost—office, salaries, and everything else—was about $40,000 or $50,000 a month.”

screenshot from course on google tag manager.

“The start was rough, and we almost went out of business,” notes Laja. “We made only about $25,000 in the first month.” The revenue kept dropping each month after that, for four months in a row. “One month before running out of money—we’re bootstrapped and were using agency profits—we managed to turn the sinking ship around with constant user research and nimble action.”

By 2017, CXL Institute was profitable but unstable—monthly income levels varied by as much as 2x. The following year was more predictable, with about $1.4 million in revenue, and, this year, the company is approaching $2 million in annual sales.

(Laja currently has another product, Copytesting, in beta. So far, he estimates that they’ve spent about $65k on the MVP.)

11. Ambit spent $250k on their MVP.

Ambit provides companies with conversational chatbots, which they refer to as “digital employees.”

sample chat from ambit.

The product was developed three years ago by CEO John Comrie, and Ambit’s MVP was built at the end of 2016 for $250k. Comrie said the main cost behind the MVP was developer talent; the founder’s time was also factored into the cost. 

The product morphed from a coaching bot to the platform offering it is today. The reason for the pivot? Ambit decided that the bot space was too constrained, so they opted for a platform-based product instead. 

Now, the product serves 18 customers, each of which cost $50k to bring on board. However, Ambit’s monthly revenue numbers are now $250k, matching the cost of their MVP.

12. UberFlip spent $300k on their MVP.

Uberflip is a “content-experience platform” to help companies create content for every stage of the buyer’s journey

uberflip demo.

When the company morphed an earlier product and built Uberflip’s MVP in 2011, it cost them $300k, with no capital—and a lot of sweat equity.

The company started bringing in revenue in 2012. CMO Randy Frisch says Uberflip was initially selling to content-marketing managers. The company later changed its focus to sell a “content experience” to higher-level marketers instead.

Fast forward to 2019, and the company has raised $32 million in capital, with monthly revenue numbers of $1.3 million from 500+ customers. 

13. Rallyware spent $500k on their MVP.

Rallyware is a performance-enablement platform that embeds workforce training in daily workflows. 

rallyware homepage.

The company wrote its first line of code for their MVP at the end of 2012. By the time it launched, the investment had risen to $500k. Rallyware CEO George Elfond says the company hit $3 million in annual revenue in 2018, and they’re on track to double that this year, with a customer base of just 50.

Elfond anticipates that, next year, the company’s annual revenue will crack $12 million. Oh, and they wouldn’t sell to Salesforce for $10 million. 

14. Loop Email spent $1 million on their MVP.

Loop Email offers to “transform your email into a powerful business hub.”

loop email interface.

Before the company earned their first $1 of revenue, they had spent $1 million building their MVP. Despite raising $5 million to date, the company’s CEO, Bostjan Bregar, says the company is burning $130k a month. 

At the time of my interview with Bregar in July, the company was making $40k a month, with a customer base of 100. 

Conclusion

When it comes to MVPs, there is no one way. 

Spending more isn’t always better. Qualified.io built their MVP in a weekend for under $1k, and now they’re earning more than the company that spent $1 million.

Wherever you’re starting, success or failure hinges on something other than your MVP budget. 

The post How Much Do SaaS Companies Spend on Their MVPs? appeared first on CXL.


What 15 CEOs Learned Building Top Agencies

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I asked more than a dozen successful agency CEOs to share how they’ve navigated critical moments—getting started, landing (and keeping) clients, scaling teams, and marketing their agency.

Spoiler alert: It all comes down to people.

  • Professional networks are the starting point (and growth engine).
  • The familiar name of an agency CEO is a proxy for trust.
  • Scaling a people-intensive business requires hiring and retaining exceptional talent.
  • Client retention hinges on relationships—and the people who maintain them.

Here’s how they’ve done it—and what they’re still working on.

From individual contributor to agency owner

“I’m your stereotypical great independent contributor who was fantastic at the work and then ended up running a business,” recounts Michael King, founder of iPullRank. He isn’t the only CEO whose individual consultancy grew into an agency.

For many, that transition was possible not just because of quality work but because of a network built over a career. Bill Sebald of Greenlane Marketing explains:

bill sebald.

Bill Sebald, Greenlane Marketing:

“I had a network of people I built through previous jobs. I spent many hours building those relationships by being kind and helpful.

But I always let people know what my special powers were. In this case, I was a pretty good SEO. So when I went solo, and people in my network needed SEO, they naturally thought of me.”

WiderFunnel’s Chris Goward had a similar experience:

chris goward.

Chris Goward, WiderFunnel:

“Before I started WiderFunnel, I had worked for many large enterprise brands in my ad agency days. I had actually won an innovation award for planning a hugely complex, digitally printed, dynamically personalized direct mail catalog campaign for Tourism British Columbia as a client.

When starting WiderFunnel, I parlayed the experience, insights, and connections at that brand to bring them in as WiderFunnel’s first client.”

Those nascent networks—nurtured through speaking events, writing, and social media engagement—can grow into a personal brand capable of bringing in not just a client but that first whale of an account.

“I got my first big client simply by announcing I was starting an agency,” recalls Siege Media’s Ross Hudgens. “I was only able to pull this off by putting in work to build a personal brand, though—that made the risk lower for them.”

The formula has worked for others.

Landing that first big client

In 2011, “I was speaking at Mozcon in Seattle,” remembers Conversion.com’s Stephen Pavlovich.

I noticed that Facebook’s director of growth was speaking at the same event. So I quickly changed my deck the night before to use some examples from Facebook. Long story short…

If that experience seems serendipitous, only a slightly more structured approach worked for others, like Distilled’s Will Critchlow:

will critchlow.

Will Critchlow, Distilled:

“We got a referral to a pan-European hotel chain back in about 2007 after doing some highly visible and reference-able work in partnership with Moz (SEOmoz as they were back then).

It was a retained piece of work where each month was worth about as much as our biggest projects had been in total up to that point.

I remember finally closing them in an hour-long call on a Sunday afternoon. I remember it because I made that call from my mobile phone internationally to Spain, and I’m very glad it was successful because it cost a fortune.”

It doesn’t take a prominent speaking gig or compelling research study to land big accounts. The common thread? A genuine interest in helping marketers. 

Samantha Noble of Biddable Moments used a training course:

samantha noble.

Samantha Noble, Biddable Moments:

“My biggest client has come off the back of a PPC training course that I run.

The marketing manager of the company attended the course and then got in touch to ask me to audit their Google Ads account. Following on from the audit, they asked me to take over the management of the campaigns.”

André Morys of konversionsKRAFT offered companies a free experiment:

andre morys.

André Morys , konversionsKRAFT:

“In the early days of A/B testing, we made the first experiment free.

One of those was a 12% uplift for an insurance company. Out of that result, we created a client with more than €5 million in revenue.”

Sebald developed tools:

bill sebald.

Bill Sebald, Greenlane Marketing:

“We created some free tools that solved SEO problems. (Some are still online today.) These tools got mentions in all of the industry trades, at conferences, in SEO groups, and so on.

The original intent was just to create some cool stuff to give back to a very generous industry. I assumed it would have some kind of branding halo effect, but the good press was really more than I expected.”

Others, like Goward, won the attention of big brands not from industry inspiration but, rather, ignorance:

chris goward.

Chris Goward, WiderFunnel:

“When I started WiderFunnel in 2007, I didn’t know of any other company doing what we were trying to do.

That naivety saved me from blindly copying the model that everyone else was using at the time. I literally started with a blank piece of paper and designed the process and methodologies that would get the best outcome for our clients.

Maybe that’s gotten me into trouble in some cases, where I’ve had to reinvent things that had already been figured out, but I think it netted out to be a benefit for our innovation.”

John Ekman of Conversionista took a similarly contrarian approach:

john ekman.

John Ekman, Conversionista:

“We chose to try to help everyone. So we created a range of services, ranging from free webinars and blog posts to consulting services costing millions. And for everyone who contacted us, we always had some way we could help.

Let me give you an example. This one guy, let’s call him Lars, was an ecommerce manager at a small sports store. He had almost no budget and very little competence to be a buyer of our services. He came to a lot of our webinars; he read all our blog posts.

He contacted me and wanted me to comment on questions and ideas he had. We spent a lot of time on this guy. And there was nothing we could sell him. By normal standards, this is stupidity.

Guess what happens? Lars gets a new job. He becomes the CEO of a much bigger online sports retailer. And guess who he calls the first week on his job?”

A similar investment paid off for Animalz and its founder, Walter Chen:

walter chen.

Walter Chen, Animalz:

“We had done great work for a small but highly connected client. That person referred us to a former employee there who had just returned to big company life.

We got a great reference, so the sales cycle was extremely short, maybe one call and one email. We kicked off as quickly as we could, and they became a marquee customer of ours and one of our biggest success stories.”

There are traditional approaches, too, like the one King employed to win his first big client:  

Michael King.

Michael King, iPullRank:

“I badgered them for a full year until they invited us to an RFP. Then once the RFP came out, we offered a more compelling take and won.”

Or the simplest option, from Seer Interactive’s Wil Reynolds: “I knocked on their door.”

Winning big accounts isn’t just to add a logo-trophy on the homepage. There are other benefits, as CXL’s Peep Laja explains:

peep laja

Peep Laja, CXL:

“As an agency, it literally pays to work with larger companies. It’s the same amount of work but much more money.

The impact for the client will be much bigger, too. A 10% relative increase in conversion rate for a large site makes them millions—but gets you fired with a small client (as that’s nothing for them in absolute dollars). Because the ROI will be better for larger companies, they will be happier with you and refer you more business.

Larger companies also have budgets, so the people sending you money are removed from ownership. Paying your invoices is easy. In small companies, the owners often feel it’s their money and squeeze whatever they can out of you, resulting in scope creep.”

Big success means a new challenge: scale.

Scaling people, processes, and financial acumen

There’s an old joke: How do porcupines mate? The answer: carefully. The same, it seems, applies to scaling.

“If you try and scale too quickly,” cautions Noble, “all your processes and way of working gets left behind.” Scaling is a people challenge: hiring the right ones, getting them up to speed, building career paths for them, and keeping them around.

It’s a challenge that’s difficult to anticipate, admits Goward:

chris goward.

Chris Goward, WiderFunnel:

“In the early days, I knew everyone and had a really solid pulse on the mood, productivity, and challenges. As we’ve grown, I’ve had to implement different reporting and communication structures.

The most important thing to never lose sight of when scaling, though, is hiring quality.”

1. People

“One of the hardest parts of building an agency is hiring,” agrees Talia Wolf of GetUplift:

talia wolf.

Talia Wolf, GetUplift:

“Not doing the work itself, not even getting good clients—the most challenging part of building and scaling an agency is hiring valuable people.

Skills and techniques can be taught, but passionate, dedicated people are extremely rare to find.”

Nor, in most cases, is keeping those people around a financial issue. “It’s rarely about the money for people,” adds Wolf. “It’s mostly about continuous growth and a sense of achievement.”

Defining “growth” can take several forms. Wolf has given every team member a niche to own:

talia wolf.

Talia Wolf, GetUplift:

“Their job is to learn, read, experiment, and research the field and test it on their own clients. Then they need to present their findings to the team, and they become the go-to person on the matter for everyone else.

The result: Each team member becomes the in-house expert in their own field; they can review their team member’s work; gather reports; and train others within the company, giving people a higher sense of responsibility and purpose.”

The sense of purpose, Reynolds learned, may require explicit acknowledgement:

wil reynolds.

Wil Reynolds, Seer Interactive:

“Giving people titles allows them to track progress in their career—that was a shift that I think helped a lot, maybe not with retention, but I underestimated its importance.”

A team of expert analysts may also need development paths outside of management, something Brian Forrester of Workshop Digital discovered:

brian forrester.

Brian Forrester, Workshop Digital:

“We learned the hard way by promoting team members who weren’t ready, not providing good training (for new leaders or teams), and not providing a clear path forward.

I was so busy in the weeds doing the work in the early days, I didn’t have time (and perhaps enough experience) to look for natural leaders, provide training, and spell out what the future looks like for team members.”

For Forrester, the solution was a process:

  1. Defining paths forward to identify necessary skills for each role.
  2. Using the list of skills to create Individual Development Plans for analysts to move from junior to senior roles.
  3. Adapting those plans to inform hiring and train new employees so they can take on client work as quickly as possible.

A final component, adds Forrester, has helped spot analysts who might excel as managers:

Building management pathways into career advancement for certain team members who are interested—and giving those team members exposure to some of the management concepts early—has been hugely successful.

As Chen details, exceptional managers, in turn, are critical to agency profitability: 

walter chen.

Walter Chen, Animalz:

“Most agencies generate profit based on leverage of labor. The ratio of, e.g., managers to people on the ground could be 1:5 or 1:8. The bigger the spread of the ratio, the more profitable you can be.

The biggest mistake I’ve seen is trying to push this ratio too far. You try to do too much yourself, and you don’t trust the team with enough.

A couple years ago, we hired three people and paid them $100k+ to build this management layer. They were experienced folks who had managed people, built teams, etc. It was a big risk at the time, and it wrecked havoc on our profitability.

But with them, we’ve scaled revenue by several millions per year and set the stage to scale farther.”

2. Processes

Johnathan Dane of KlientBoost built his team’s processes by codifying then refining his workflow:

I’ve made the infrastructure to have a system work before I hand it off.
Then I audit the system over time to make sure it still produces the same or better results.

And yet, notes Sebald, the temptation to scale quickly—often to meet demand—introduces potential problems:

bill sebald.

Bill Sebald, Greenlane Marketing:

“Scaling is something I think about constantly. And, it’s something I’m not very successful with. But I’m fine with that.

In my field, many agencies try to scale their company by giving clients the same thing. If you are a kitchen that only makes soup, and all your customers only get soup, then you can cut back on creation and training expenses. Thus, you are scaling your output.

You can collect revenue on the ‘product’ and less on the service hours—things like putting a client on autopilot for PPC, or putting a client into a ‘maintenance mode’ for SEO.

But I think that scale hits a point of diminishing returns much, much sooner.”

Where’s the balance? King has experienced both sides—overbearing processes that restricted analysts and the flawed assumption that work would get done the right way without them:

Michael King.

Michael King, iPullRank:

“I worked at five different agencies, and we only had process in one of them. In that one, I felt like process was more of a constraint to creative problem-solving, so I never respected the value of process.

However, since everyone doesn’t care to take ownership the way you do, process is everything.”

Another challenge? You can’t scale people and processes unless you scale financial management, too.

3. Financial acumen

“Before I started working for myself,” says Noble, “I understood bits about the financial and tax side of running a business, but flashing forward two years, I know so much more than I did previously.”

Financial expertise is something agency founders, Sebald included, wished they had picked up earlier in their careers:

bill sebald.

Bill Sebald, Greenlane Marketing:

“It’s incredibly valuable to get your head around the legal and tax items before you start focusing on clients. I knew there’d be a learning curve, but didn’t realize it was such a steep one. We jumped right into client work, which is already a ton of work.

I would have been better suited choosing a business lawyer and accountant with startup experience and asking for more hand holding. We didn’t have a rocky start by any stretch, but we could have had a quicker start.”

Good financial management may even slow company growth, as it did for Reynolds:

wil reynolds.

Wil Reynolds, Seer Interactive:

“I turned away a lot of business to keep our team small, so once I decided to start hiring over that 10-person threshold, I knew I had a sustainable business because for two years I was turning away enough business to double my team.”

Pavlovich echoed Reynold’s caution: 

stephen pavlovich.

Stephen Pavlovich, Conversion.com:

“It’s easy for an agency to scale the team to match today’s workload without keeping a close eye on tomorrow. You can come unstuck and find yourself losing money quickly.

Aim to build your business with retainer-based contracts (rather than one-off projects), and use freelance/overflow resources instead of hiring during the ‘peaks.'”

The structure that helped Hudgens was a revenue-per-analyst calculation:

ross hudgens.

Ross Hudgens, Siege Media:

“I was really profitable the first few years, then had a year where I wasn’t because I hadn’t thought this through.

I was able to correct for it, but wish I had done more revenue-per-employee type adjustments earlier.”

Those calculations can be complex. There are confounders: “The bigger the client, the lower the likelihood that they pay on time,” says King.

The temptation to offer a full array of services can similarly undermine stability, King continues:

Michael King.

Michael King, iPullRank:

“We, historically, focused on a more comprehensive series of services because I felt as though doing strong SEO required it. However, it required that we hire a FTE person for one project and then try to get more of those projects.

That is far more difficult than limiting yourself to a small series of services with a small set of repeatable processes.”

Ultimately, scaling requires greater financial stability—something referrals alone won’t bring you.

Marketing an agency that’s lived off referrals

“Doing great work for clients has been our single best strategy,” says Reynolds. “That builds trust and word of mouth.”

The value of referrals isn’t news to agency owners—nor are the risks of a live-and-die-by-referrals strategy. As Laja explains:

Referrals are great, but you don’t control the inputs or outputs. If there’s a slow month due to seasonality or whatever, you can do very little. You can’t wait harder for referrals. 

Among the other options, what doesn’t work? Paid ads, apparently.

  • “We tried some boosting of our content on Facebook. I’m still not convinced that did too much for us.” (Hudgens)
  • “Ads for clients (haven’t really tried to be honest). We’ve done lots of paid on Facebook for our lead magnets, courses, etc., but not for ‘landing clients.'” (Wolf)

To be fair, Dane argues that a half-hearted commitment to campaigns often explains their failure:

johnthan dane.

Johnathan Dane, KlientBoost:

“So many agency owners go surface-level deep on referral marketing, content marketing, paid social ads, etc., for themselves and stop when results aren’t there.

We decided to compete with agencies that offer SEO/content in that realm that have been at it 10 years more than us, but I wasn’t convinced their execution was correct.

Four years later, we have stronger domain authority than them and get over 600 inbound leads per month.”

As you go beyond word-of-mouth, says Hudgens, inbound marketing is a natural fit:

In general, you are competing on knowledge in most areas, so by standing out with that you are, by default, showing you are worth hiring.

Laja agrees: 

peep laja

Peep Laja, CXL:

“Agencies are in the business of expertise. You need to demonstrate it, all day every day. Content marketing and social media are ideal for this, yet so few are gung ho about it.

Yes, it’s hard. The competition is nuts. You need to stand out, be different, be bold, have a point of view. You need content volume and consistent quality. It’s tough. But your business depends on it.”

Too often, Chen says, agencies get stuck:

walter chen.

Walter Chen, Animalz:

“I’ve tended to see agencies follow a growth path that looks like this:

1. The initial clients come from your professional network. You know some people who need help, and you help them.

2. You do good work, and you start getting customers through your professional network and word of mouth. Your successful clients tell other people about you. You bring those folks on as clients.

The problem with #1 and #2 is that they’re both based on the agency founder doing sales. I’ve seen many agencies stall because sales are so dependent on the founder that they don’t have time to think longer term about how to set up the agency for growth.

They never get to #3, which is when a third-degree connection or beyond visits your website, talks to you, and then buys your service. That’s when the founder can really disconnect from sales and the business can scale.

The best way I’ve seen for agencies to do #3 is to do content marketing. That’s because content marketing for agencies is basically an extension of #1 and #2—telling your success stories in a scalable form of media (i.e. blog post, video, etc.).”

The long-term value of inbound marketing was a common refrain:

  • “The most effective thing for us has been content creation at the edge of thought leadership for our space and public speaking. We haven’t seen much measurable impact from anything else.” (King)
  • “We have two in-house, full-time writers and an outsourced team of writers. We also have an in-house, full-time person running our podcast (another form of content) and an in-house, full-time videographer (another form of content).” (Dane)
  • “Our business grows mostly from all the content we create, and I’m producing content nonstop.” (Wolf)

The strength of inbound campaigns is a perfect fit for CEOs like Ekman, who love that work far more than the traditional wine-and-dine strategy of client acquisition:

john ekman.

John Ekman, Conversionista:

“To be honest, I wasn’t really great at that.

Instead, I focused my efforts on building thought leadership. I spent an insane amount of time pitching myself to conferences, writing blog posts, pitching to journalists, etc.—just to build the image and the idea that I was the top dog.

If you build thought leadership in the category first, you can, more or less, build any business or service on that. But if you try to build the business and the consultancy service first (without the thought leadership), you are going to struggle—getting clients, closing sales, pitching new clients, etc.”

Even if speaking isn’t a natural fit, contends Pavlovich, that doesn’t make it less important:

If you’re the founder, you have to be out speaking and networking. That wasn’t a natural fit for me, and still makes me uncomfortable, but it’s been crucial to our growth.

That’s not to say that a single speech will change your agency. “Speaking at events has rarely delivered clients for me,” says Wolf.

The benefits, Noble explains, are often downstream:

samantha noble.

Samantha Noble, Biddable Moments:

“Speaking at conferences and events is by far one of the best ways I have found to promote the agency, although it isn’t just about speaking at the event—the networking with other speakers, the organizers, and the attendees is what really matters.

Conference speaking doesn’t necessarily drive immediate leads for a company; you tend to find people reach out months later who may have seen you speak.”

Of course, once you’ve put in the effort to win clients, you want to keep them around.

Keeping clients around (so you can step off the treadmill)

“Agencies are hard to run,” concedes Pavlovich. “Without wanting to state the obvious, to grow you have to win/retain more clients and lose fewer clients than you did before. At times that can create a relentless treadmill.”

The key to keeping clients around? It’s not results, says Wolf:

talia wolf.

Talia Wolf, GetUplift:

“If you don’t know your client, connect with them, and understand their personal desired outcomes, you will lose the client.

I’ve had cases where I’ve delivered 10X the results my clients were expecting, but something wasn’t working well in the relationship, and it just didn’t work out.”

Pavlovich agrees: 

I used to believe that our work and results would retain business. It does—to a degree—but it’s probably less important than your client relationship.

While “building relationships” is a soft skill, there are tactical steps to support it, says Noble:

Picking up the phone rather than emailing is one thing I try and do. You can build a relationship with your clients much easier over the phone or in person than you can on an email.

As Goward notes, hiring good people—not just talented analysts—can go a long way:

chris goward.

Chris Goward, WiderFunnel:

“As the leader of a services company, your quality of life is determined by the type of people you hire and the type of clients you bring on. We have such a smart, dedicated, friendly, driven, fun team that every day is an interesting adventure.

That’s the feedback we hear from our clients, too. They tell us they look forward to their weekly meetings with our team—that it’s often their favorite meeting of the week.”

It’s difficult to incentivize team members to build that rapport, Dane learned:  

We gave higher commission percentages to our account managers, hoping that rising and falling with the company revenue would make them more aggressive to want to keep clients—still didn’t have the impact we hoped for.

Not every client relationship will work. Indeed, it’s easy to fail at the outset. One of Wolf’s keys to retaining clients is to “only bring in clients that are a good fit for our service.”

Part of “fit” includes a client’s ability to execute on recommendations. To help solve for that, King says, analysts at iPullRank now write “Jira tickets and include them in our SEO site audits. That way, we cut down on the time it takes to get into the dev queue.”

It helps solve a problem that Hudgens has seen derail his agreements: “The thing that has hurt us has been saying yes to work we couldn’t properly fulfill.”

In rare instances, Hudgens adds, they’ve given refunds or extra time and attention—a salve to retain clients while an agency improves client fit or strengthens existing relationships. 

Conclusion

There’s a final thread that’s gone unmentioned, though it was implicit in so many responses: humility.

When I asked, “Compared to when you started your agency, which of your skill(s) have improved the most?”, the answers had a constant—there was so much room to improve:

  • “Financial acumen went way up, but I still suck at it :)” (Reynolds)
  • “Definitely management. I still feel like a beginner, but I also look back on some of the mistakes I made, or things I didn’t know to do in the early days and cringe. I hope to look back on today some day and cringe, too, because I have improved so much from where I am now.” (Critchlow)
  • “Leadership. Hands-down. But I’ll still be learning that for the rest of my life.” (Sebald)
  • “Self-awareness. I now know more than ever that I still have a lot to learn in all areas.” (Goward)
  • “I understand that the things that motivate me aren’t necessarily what motivates my team, and the whole thing is to identify what motivates them and leverage that to help them improve their performance. However, I still feel like there’s a lot for me to continue to learn in that area.” (King)

For successful agency owners, humility sparks motivation, even though there are few quick fixes to look forward to:

ross hudgens.

Ross Hudgens, Siege Media:

“Overall I think everything slowly levels up as you get more experience—’game reps.’ We’ve learned how to hire, how to fire, how to do sales, etc.

It’s the 1% improvement every day over seven years that allows you to get to the next place.”

If that sounds exhausting, it is. “You don’t ever switch off,” says Noble, “You are constantly working!”

“Running your own business means you’re working 24/7,” confirms Wolf. “You sleep, eat, walk, and talk work—especially when you have employees and you’re paying monthly salaries. The stress is 10X stronger, and every dollar matters.”

But then again, Wolf offers, “I can’t even imagine going back to working for someone.”

The post What 15 CEOs Learned Building Top Agencies appeared first on CXL.

Social Commerce: What It Is, What It Isn’t, and Why You Should Care

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Seth Godin once said, “You can use social media to turn strangers into friends, friends into customers, and customers into salespeople.” [Tweet it!]

Strangers into friends? Of course. Friends into customers? Yep, it’s relatively easy to promote your site (where followers and friends can make a purchase) on social media. Customers into salespeople? Sure, read up on NPS.

But with the introduction of social commerce, which allows friends to become customers on social media sites (without making the trip to your site), we’re taking Seth’s thoughts to a whole new level.

What is social commerce?

In this article, social commerce is defined as the ability to make a product purchase from a third-party company within the native social media experience.

For example, you can browse and compare products on Facebook and then make the purchase on Facebook itself instead going to the company’s site to make the purchase. Or you can learn about a product in a tweet and make the purchase on Twitter itself.

Right now, there are three social media sites that are owning the social commerce space: Facebook, Instagram, and Pinterest.

1. Facebook

Facebook has doubled down on social commerce. Companies can create entire “Shop Now” stores, and Messenger is being used by companies to interact with consumers (both pre- and post-sale).

With a Facebook store, you can…

  • Upload products and product information;
  • Curate and customize your shop’s product catalog;
  • Sell directly from your Page;
  • Manage orders;
  • Run a Facebook ad to promote one of your products;
  • Get insights.

You’ll start off with something like this…

And build it out however you like. A word of advice: select the right products for the audience and be aware of product order. You don’t need to put your entire inventory in your Facebook shop. Try releasing products to Facebook first to see how they go over, rerelease old products on Facebook, focus on your top sellers, and so on.

Experiment to see what works for you, but remember that Facebook is a social network and not everyone may be sold on this social commerce concept yet. Don’t overwhelm your audience with choice—narrow it down for them.

Case study: MVMT Watches via Shopify

Shopify released a case study of MVMT Watches, who wanted to simplify their path to purchase as their social media presence grew…

“Spencer

Spencer Stumbaugh, MVMT Watches:

“It’s really important to cut out steps in the purchasing process. It’s almost like having a new landing page, but one customers can purchase from instantly.” (via Shopify)

So, Spencer and his team launched their Facebook store. The results:

  • Approximately 1,500 people visited MVMT’s Facebook store within seven days.
  • Approximately 60,000 users visited the store in a 90-day period.
  • The .5% conversion rate resulted in more than $15,000 in revenue.

Now, those numbers were released back in 2016, so it’s safe to assume revenue has increased since. In addition, it’s worth noting that MVMT Watches did have a Facebook ad budget, which would have assisted with this traction.

Spencer believes this is just the beginning of social commerce, and not just for MVMT Watches…

“Spencer

Spencer Stumbaugh, MVMT Watches:

“I think this is what everyone is going to be doing in the future. Getting in on this early and cutting the number of steps in the conversion process improves the customer experience and helps us grow in new ways.” (via Shopify)

2. Instagram

Some 70% of shopping enthusiasts turn to Instagram for product discovery—at least that’s what Facebook data reveals.

It’s no surprise that Instagram introduced Instagram Shopping, a feature that allows users to tap on images and stories to view products featured on it.

Instagram Shopping is currently available to companies in over 70 countries that…

Instagram also offers an in-app checkout feature to a limited number of merchants like Nike, Outdoor Voices, and Kylie Cosmetics, further confirming Facebook’s and Instagram’s ongoing focus on social commerce.

3. Pinterest

Buyable pins were released in June 2015. At the time, there were 30 million on the site, but just three months later, Pinterest reported that the number had doubled to 60 million. According to Shopify, the average order value of sales from Pinterest is $50, which is higher than any other social media site.

Here’s a look at the Pinterest commerce flow…

Pinterest has worked with a number of major retailers, like

  • Macy’s;
  • Nordstrom;
  • Bloomingdale’s;
  • Wayfair.

What’s unique about Pinterest is that a small portion of the site’s content is original. According to one source, 80% of Pinterest content is repins. This is a major benefit for you, an original content creator.

Be sure to feature your products in various colors. I don’t need to tell you that the visual representation of your product is clutch, so spend the time (and money) to perfect your product images.

Why is it so popular?

Shopping offline is, inherently, a social experience. You’ll ask your friends and family for their opinion on products, you’ll buy the same brand of household items that your parents do, or you’ll simply go shopping as a pair / group.

But ecommerce? Not so social by nature.

Heidi Cohen agrees that that could be a major reason everyone is talking about the concept of social commerce…

“Heidi

Heidi Cohen, HeidiCohen.com:

“While shopping is essentially a social experience, think girls shopping at the local mall, online shopping is distinctly not social. Yet, regardless of where the purchase is made, many shopping decisions involve more than one individual’s input, be it a couple, parent and child, or friends.

With evolving technology, notably increased use of smartphones, and social media platforms, online shopping is changing and becoming more social. 74% of consumers rely on social networks to guide their purchase decisions. As a result, it’s a no brainer to sell where your customers are rather than trying to lure them to your site.

Social commerce is a nascent market that encompasses a broad array of options including group buying, social shopping, mobile apps, retailers adding social features, and shopping integrated into social media. Social commerce has taken off recently and is a growing trend as reported by Google.” (via HeidiCohen.com)

She goes on to offer some reasons you might want to add social commerce to your repertoire. Here are five of those ten reasons, in summary…

  1. Make smarter inventory and product development choices by asking customers to vote on the products they’d like to purchase.
  2. Increase the number of conversations taking place about your products and company.
  3. Increase the market for your products, reach new customers you might not have otherwise.
  4. Improve product discovery and awareness, personalize the customer experience based on known preferences. (Social media sites have a lot of data, right?)
  5. Encourage peer recommendations and reviews.

The benefits are clear, but one major question remains…

Does it actually work?

In a previous version of an article about the rise of native social commerce from a few years ago, HubSpot made some bold statements: “Remember when ecommerce was the go-to tactic for increasing brand awareness, finding new customers, and boosting sales?” and “Newsflash: The golden era has come to an end.”

(The article has been updated since then to focus solely on social commerce, but it’s still a valuable discussion starter.)

Is that really true? Is social commerce going to dwarf traditional ecommerce?

The truth is simple: more people are turning to social media for product recommendations and reviews. So, naturally, the concept of native social commerce sprouted up. Here’s how data about its adoption adds up.

A while ago, Statista released a prognosis for worldwide social commerce revenue from 2011 to 2015…

Worldwide Social Commerce Revenue graph from Statista.

According to MarketingWeek, 56% of those surveyed are liking and following brands on social media to see products. Another 35% are doing so to get ideas for when they go shopping next.

Adoption among retailers in North America is growing, according to eMarketer.

But do people actually want to shop on social media? Not really, according to this particular study from a few years ago.

Note that this “social commerce boom” is driven heavily by the younger generation, according to the same study. Some 33% of 18- to 24-year-olds say they would like to purchase items directly on Facebook, 27% on Instagram, and 20% on Twitter. Ages 25 to 34 decline a bit; 30% on Facebook. People 54- to 65-years-old? A disappointing 10%.

Another study, conducted on social media users worldwide ages 16 to 64, found that only 9% of respondents have an interest in using Facebook’s buy buttons…

Statista’s data from 2018 show that as many as 82% of online consumers in the United States haven’t purchased products directly via social media.

Another study still, found that only 35% of millennials, typically a tech-friendly crowd, are likely to use a buy button on Facebook. Only 24% said they’d be interested in a Twitter buy button (which has since been deprecated).

According to Time Magazine, both Twitter and Facebook have claimed that approximately half of their users come to their sites to seek out products for purchase.

Yet the rate of ecommerce growth from social shopping exceeded the overall growth rate for ecommerce in the United States by about 10%, according to the Internet Retail Social Media 500 Report from a few years ago.

Why so much inconsistency? We’re still unclear on what social commerce is and is not. Is it native social selling? Is it encouraging social interaction during the traditional ecommerce flow? Is it buy buttons that take you from social media to the ecommerce site?

Nora Barnes, Director of University of Massachusetts Dartmouth’s Center for Marketing Research, says

We really know very little about these buy buttons. As a consumer behavior specialist, I’m looking at this and saying, ‘Who wants or needs this? Who’s going to use it?’ I think millennials are saying the same thing.

Andy Atkinson of Morrison Supermarkets shares Nora’s skepticism…

“Andy

Andy Atkinson, Morrison Supermarkets:

“We were a bit late to digital and social, it’s only been a focus for the last 18 months. But what we’ve noticed is using social channels purely to sell products will result in failure and most companies are making that mistake.

Social media isn’t a platform for selling. It is about reaching out and building a relationship. We want to adopt that progressive mentality.” (via Marketing Week)

Here’s what even the toughest critics can’t deny…

  1. Native social commerce will extend your reach and help you reach audiences who might never have found you otherwise.
  2. If done correctly, native social commerce removes the friction of having to browse on social media and then convert on another site.

What does it mean for ecommerce companies?

That’s the big question here. Should you make changes to accommodate this new interest in social commerce? If so, what can you do today?

The truth is that no one can tell you whether or not to experiment with social commerce because, well, it’s an experiment.

If you’re killing it right now without social commerce and have higher priority hypotheses to test, focus on that. But keep an eye on this “social commerce revolution.”

Take note of how it’s evolving, keep up with the latest features, maybe even play around with an account. But do you absolutely need to be on this bandwagon today? No.

Let’s say you do decide to experiment with social commerce, though. The first thing you need to do is your research. If you haven’t done any qualitative or quantitative research lately, it’s time to. You need to understand who your audience is, what they like and dislike, how they prefer to buy, where they’re spending their free time, etc.

The older your audience is, for example, the less likely they are to be responsive to social commerce, as we discovered earlier.

Once you have your demographic data, cross-reference it with the demographic data of the three social media sites. Here’s a look at Facebook’s…

Facebook's user demographics.

While Facebook is fairly well-used across all demographics, it is especially popular with women and those aged 18 to 49.

And Instagram’s…

Instagram's user demographics.

Instagram is most popular among those under the age of 30, and skewed towards urban population.

And finally, Pinterest’s…

Pinterest's user demographics.

Pinterest continues to be dominated by women, but men are slowly but surely closing the gap year after year.

Choose one social media site to start. Don’t try to conquer all three right out of the gate.

Finally, optimize endlessly. If you choose the social commerce route, you’ve effectively doubled your optimization work. Two stores, two user experiences, two sets of product pages, two checkout flows, etc. Be prepared for the amount of work you’ll need to put in to get this right, especially because it is still relatively uncharted territory.

If you want to see the results you’ve been reading about from big brands, you’ll likely need at least a small social advertising budget to expand your audience as well.

Conclusion

Social commerce seems to be a natural, slow-moving evolution of online buying. Here’s what you should know and do next about social commerce…

  1. Not everyone is sold on the concept of social commerce yet. The evidence (and definition) is conflicting.
  2. Decide whether your other hypotheses are a higher priority. There’s no rule that says you need to be involved in social commerce (yet).
  3. Keep an eye on how the trend develops, maintain an understanding of the features and possibilities.
  4. If you do decide to start with social commerce, conduct qualitative research to better understand your audience, what they like, how they like to buy, etc.
  5. Cross-reference your audience data with demographic info from the three social media sites. Choose one site that is the best fit.
  6. Optimize, optimize, optimize. You’ve just doubled your workload.
  7. Consider paid social ads to give you that little traction boost.

The post Social Commerce: What It Is, What It Isn’t, and Why You Should Care appeared first on CXL.

How To Calculate and Increase Customer Lifetime Value

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That it costs five to seven times more to acquire a customer than it does to retain one isn’t entirely true.

The origins of this myth can be traced back to the 1980s when the Technical Assistance Research Project published research that stated the cost of customer acquisition was significantly higher when compared to the cost of customer retention.

Soon after the research was published, other institutions like the Customer Service Institute, Consumer Connections Corp., and ITEM Group all “found” similar data.

Truth is, it was mostly propaganda designed to sell high-level executives new customer loyalty programs. If you don’t believe me, try to find a single linked source that supports the five to seven times claim.

Definition of propaganda.

I bring this up because time and time again, I see business owners reallocating budgets based on soundbite statistics and ending up with disastrous results. If you want to see your business grow, analyzing your own data is essential for establishing viable benchmarks and goals.

In this article, I’d like to help you understand the different metrics associated with customer lifetime value (LTV), and explore how we can use this information to make more informed, data-driven decisions as it relates to how we budget our marketing spend.

Even if you feel like you’ve got this nailed, keep reading, because there’s some very surprising research that I’m sure you’ll find useful.

Why determining your customer lifetime value (LTV) is so important

Before we get into the math, let’s talk about why figuring all of this out is so important.

In this must-read article by venture capitalist David Skok, he says that the biggest reason startups die is because their customer acquisition costs versus their customer lifetime value often look like this:

From my experience, that’s because so many businesses focus on transactional customer value, and forget to invest in the experience that happens after the conversion.

It should go without saying that you need to invest in making the product better. But if we’re not also focusing on ways to make our existing customers happy and even marketing to people who already bought from us, the cost of acquisition can greatly outweigh how much we can make from a single customer.

In David Skok’s post, he says:

Lifetime value (LTV) > cost of acquisition (CAC). (It appears that LTV should be about 3 x CAC for a viable SaaS or other form of recurring revenue model. Most of the public companies like Salesforce, ConstantContact, etc. have multiples that are more like 5 x CAC.)

CAC should be recovered in under 12 months (for subscription businesses).

In other words, if it costs you $400 to acquire a customer you should have a plan to make $400 off of that customer within the next year to have a healthy cash flow. (This rule is less important for companies with access to lots of capital.)

This is why software companies like Salesforce might have a marketplace, where they’ll make between a revenue percentage from apps sold through their service…

Salesforce marketplace.

…or Freedom, who partners with other companies to offer members-only perks, which likely operate the same way as an affiliate program.

Freedom perks.

The point of improving your customer lifetime value, as David points out, is to ultimately create balance in your business model that allows you to offset the unavoidable high-cost factors that inevitably go along with running your business.

Visualization of what drives the balance in your business model.

He also emphasizes doing continuous optimization to build a sales and marketing machine.

Seriously—read his post when you get the chance.

Determining your customer acquisition costs (CAC)

Ok, so now for the math. Let’s start with the basics. The simple way of finding your your customer acquisition cost is to divide the total amount of marketing and sales dollars by the amount of actual customers that come from those efforts. (Total marketing + sales expenses / number of new customers = customer acquisition cost.)

Of course, this is an overly simplistic view of the entire process, but if you’re not currently measuring anything, I’d recommend you at least start there.

If you want to get deeper than than, Brian Balfour (HubSpot’s former VP of growth) wrote about CAC in-depth and covered some myths and potential mistakes when calculating your customer acquisition cost.

Brian claims that the above CAC formula is correct on the surface, but lacks details and definitions.

He then makes calculations with some sample data…

Sample data for calculating CAC.

…and adds the following caveats:

  • It takes about 60 days for a lead to become a customer.
  • Not all customers are new—some are returning.
  • This is a freemium product; there are costs of supporting those users before they start paying.

From here, he poses some key questions you should ask yourself (and adds key examples to help you answer them):

  1. How long does it take between your marketing/sales touchpoints and when someone becomes a customer?
  2. What expenses do you include in your marketing and sales costs? Most common mistakes are not including salaries, overhead, and money spent on tools.

For example, Spotify has millions of freemium users, which means there are certain costs to support them. HubSpot has a large customer success team, purely devoted to churn prevention, and it’s important to decide whether to include this in CAC calculations.

Similar dilemma goes for a subscription business like Dollar Shave Club. For example, their starter set promotion costs $15 while the full subscription for those same products is $75. Dollar Shave Club still has to pay for packaging, shipping, support, and more, despite not having the customer on the full plan yet.

As with many things, these calculations and decisions will depend on your industry and business model. Be sure to check out Brian Balfour’s article and the accompanying spreadsheets.

Calculating your customer retention rate

This is where it starts to get fun.

If you’ve been doing business longer than a few months, pay attention to your customer retention rates. Before you can determine the lifetime value of your customers, you should have some idea of how long they’re going to be sticking around.

In order to calculate your customer retention rate, you need to know:

  1. Number of customers at the end of the period – E;
  2. Number of new customers acquired during that period – N;
  3. Number of customers at the start of the period – S.

Once you have those, the formula is pretty straight-forward:

CRR = ((E-N)/S)*100

So to make things simple, let’s say you started the quarter with 200 customers (S), you lose 20 customers but gained 40 customers (N) so when the period was over you had 220(E).

Using the formula we’ve got ((220-40)/200)*100=90 or in other words, a 90% retention rate. Good for you!

Word of caution: Before we go any further, I must stress that you should not be running this calculation to find the average across your entire customer base! Broad sweeping averages like this could provide you with potentially damaging figures if you’re not careful.

The issue is that blending customers into an “average” significantly distorts reality.  If you gain two customers—one with a retention rate of 100% and another with a retention rate of 0%—you can imagine how the situation would play out. The first customer would pay forever, and the second would leave right away.

However, if you first average the two retention rates together, you’ll have two customers with a 50% retention rate.

From Corey Pierson on Custora

An example of what an averaging all customers together might look like is this:

Customer attrition over time - average retention rate.
Image source

Pretty bleak, right? In eight months you will have no customers. “Invest everything you can into acquisition, because they’re all going to be gone!”

Corey goes on to show what calculating retention rates the right way over three customer groups (Group Awesome, Group OK, and Group Sad) might look like:

Customer attrition over time with three different groups.
Image source

This is a far more realistic and, more importantly, this data makes it easier to make projections, budget allocations, and have a baseline to build strategies.

If you haven’t already segmented your customer base, I recommend reading this guide by Christopher Gillespie on Mixpanel, as it will give you some ideas around how and why to segment your customers.

Calculating your churn

On the opposite side of retention, you’ve got churn—the rate of which customers (naturally) stop buying from you.  

In an ideal world, figuring out your customer churn looks as simple as this:

Now, if you’re not currently measuring churn, this is an alright place to start. At least you’ll have something to benchmark so you can reduce your churn rate later.

But like Steven H. Noble talks about in this blog post on Shopify, it is not always that simple.

Variables like customers gained during the period, how long the timeframe you’re measuring, and whether or not churns are occurring evenly over the period, all factor into what your actual churn rate is.

If you want a realistic view of your churn rate for predictive analysis purposes, you need a formula that looks more like this:

Predictive analysis for churn rate.

 with the weights being

What this metric is useful for is keeping track of changes in customer churn behavior while giving a rough estimate of what percentage of your customers will leave in the next 30 days.

If this kind of math scares you (it sure scares me), don’t worry, Steven gave us an interactive spreadsheet you can download to plug your own numbers into. (Be sure to stop by Steven’s blog and say thank you!)

It’s important you keep this data as accurate as possible in to measure the impact various retention strategies have on your customer base. 

Calculating a more accurate customer lifetime value

There are several different ways to measure customer lifetime value and the infographic from Kissmetrics will cover a few in the next section.

But for now, we’ll use this really basic LTV equation:

(Average value of a sale) X (Number of repeat transactions) X (Average retention time in months or years)

Brad Sugars on Entrepreneur.com offers a very simple example of a gym member who spends $20/month for their membership for three years.

$20 x 12 months x 3 years = $720 in total revenue (or $240/year)

Now you could use this, but if you’re a gym owner thinking a large portion of your customers would be with you for three years, you’re delusional.

Averages lie. Again, I can not stress enough: segment your customers if you want to get an accurate picture of the data.

If you really wanted to know the lifetime value of your members, you’d have to consider the customer segments that:

  • Pay for personal training and group coaching;
  • Buy supplements;
  • Pay for additional classes;
  • Buys t-shirts, gear, refreshments.

You’d also need to analyze this data to find correlations between the members who stay and those who churn quickly.

  • Do people who sign up for classes have a tendency to have longer retention rates?
  • Is there any relation to people enrolling in personal training and supplements?
  • Do high churn customers also buy more gear?

Finding the lifetime value of these individual customer segments will give you a very clear idea about the value each type of customer will bring to your business. Once you know that, you can make data driven decisions about how much to invest in acquiring each customer type.

Beyond that, you can use what you learn to create upsells and cross-sells to increase the lifetime value of each customer segment (e.g., 10% off supplements when you sign up with a personal trainer, half off t-shirts when you sign up in January).

A hypothetical scenario: Starbucks

In this infographic by Kissmetrics, they illustrate various ways to calculate customer lifetime value.

Disclaimer: Commenters on the original post did point out a few issues (detailed after the graphic), but there is still a lot to be learned here so please take it all in:

Kissmetrics LTV infographic.

Even though there are some fundamental flaws, I wanted to share this with you because it is a perfect example of why you have to keep working with the data until you get something accurate.  

What did the commenters find wrong?

  1. Averaging revenues + profits (like they did with the total average) ultimately breaks the equation.
  2. It doesn’t consider the costs associated with delivering the product.
  3. It should factor in discounts and discounted profits.
  4. The sample size (five customers) is probably too low for a company like Starbucks.

Of all the commenters, Yosh gave what appears to be a viable solution:

Comment from Kissmetrics' infographic on LTV.

Imagine how much money you’d lose if the projections were wrong.

I know it’s a lot to take in, but it’s important you realize that data is unique every business and situation. It’s never as neat as using one catch-all formula and applying it across the board.  

That’s why there are several different methods of calculating customer lifetime value. 

Realistically, these formulas should only be used as a starting point to understand your customer behavior and then tweaked to fit your business.

This is why you need a good CFO, even if it’s just in the interim.

The effects of increasing customer lifetime value (micro case studies)

You’ve already come a long way and I don’t want to take up too much more of your time. But I wanted to share these three case studies of companies seeing explosive results after nailing their customer lifetime value:

HubSpot LTV case study.

Conclusion

This quote on Forbes perfectly sums up everything we’ve been talking about:

Brad Coffey, head of corporate development for [HubSpot], likens the formula to a machine: Put a dollar in at the top and the LTV:CAC ratio will tell you roughly how many dollars come out at the bottom. If your money isn’t multiplying, you’re going to want to spend some time tuning that machine.

Bonus: Six quick tips to improve customer lifetime value

  1. Use email to preemptively answer common questions, upsell, and provide customer education.
  2. Cross-market and provide lead generation for companies with similar customer bases.
  3. View every customer interaction as an opportunity to improve customer loyalty.
  4. Find ways to build habits around your product.
  5. Make customer service easy. According to Harris Interactive, 56% of customers will switch brands if the alternative offered more ways to connect.
  6. Incorporate customer feedback to improve everything from user experience to product features and design.

The post How To Calculate and Increase Customer Lifetime Value appeared first on CXL.

How We Took on Slack (and Lived to Tell About It)

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How do you compete with one of the biggest names in your industry—and with a brand new product?

Three years ago, we launched Chanty, a SaaS application for team chat. This was nothing new. Thousands of apps are born and die each year. There was one difference—we were going against Slack, the giant that is the SaaS role model. Call it bold or stupid, but we had our work cut out for us.

Three years later, we’ve faced a series of challenges. We solved some of them. We’re still struggling with others. Here’s that story.

Why compete with Slack?

When we first thought about launching a SaaS in the team chat space, we had a major decision to make. We could either grab a slice of the established market or carve out a new one (e.g., a team chat app for accounting companies).

A couple of factors influenced our decision:

  1. We wanted to stay bootstrapped.

We didn’t want to be guided by someone else. We had that luxury—we had three other profitable companies (focused on web design and development) when we decided to launch Chanty. Chanty was, at its outset, a fun side project.

  1. We wanted to spend money on product development, not market research. 

Because the idea of a team chat app was already validated, we had our target market right in front of us. We had a major competitor, too, but Slack had already done some of the heavy lifting by popularizing the idea of a team chat app.

Identifying a new market could have taken months and lots of cash. Instead, we saved most of that money for product development. We did do some research, primarily among our clients and some colleagues in the SaaS world. But our main guideline was to create something that worked well for us.

We had used Slack—and lots of other messaging apps—but they were either too complicated, lacked audio and video calls, or forced us to upgrade immediately. We also wanted a built-in, easy-to-use project management functionality.

Still, to make it in such a competitive field, we had to stand out. Even before we started, we constantly got asked the same question: “How is your product any different from Slack?”

Differentiating our product

chanty beta invites.

In the early days of the app, we asked a few questions during sign-up. Primarily, we wanted to know if a user had switched from another team chat app and, if so, why they switched to Chanty. This gave us a plethora of good ideas.

We also found out why people switched from Slack, which became the first of two ways we sought to differentiate our product.

1. We solved a primary pain point for Slack users.

The first way we positioned ourselves was to go after the biggest pain point for existing Slack users—that 10,000 message limit in Slack’s free plan. We decided to have an unlimited message history in our free plan, which became a main reason why people switched.

chanty beta invitation.

That hasn’t been the main reason why new people sign up for our app, but it’s been the primary way that we’ve “stolen” Slack users. Offering unlimited messages in the free plan got immediate results, and it was one of the main reasons that we got our first 100 users within a few days of our launch.

We realized that these Slack users weren’t likely to convert to paid users right away—our free plan solved their primary pain point. Some, of course, figured out that an unlimited message history means that they can continue using Chanty for free forever. We have a number of teams like this, but they’re the minority.

So how could we get the rest to upgrade?

We tried providing audio and video calls (and other features) in the paid version only. But almost no one upgraded to a paid plan because of features, which were nice-to-haves, not necessities. Our app usage data showed that most people used the chat function only—and that a good chunk of teams had more than 50 users. 

We realized that the only way to incentivize an upgrade from the freemium plan—without undermining our “unlimited messages” differentiator—was a cap on the number of users. This fit with our app’s adoption: A smaller team would sign up and decide whether it was worth upgrading for the entire company.

We settled on a limit of 10 users for our free plan, which has become the primary way we move people from freemium to paid users.

2. We were the affordable option.

The second way we positioned ourselves was with price. Many SaaS applications charge customers based on the number of seats, which isn’t that much for a landing page tool (often just a single user). But the costs for that model scale quickly for team communication apps—they work only if everyone’s involved.

So, if you have 300 employees, the difference between $7 per user per month and $3 per user per month means spending $2,100 per month instead of $900 (or more than $13,000 per year).

Our research found that it’s mostly new users who are attracted to the price (i.e. those who have never used a team chat app before). Users from Slack (and other apps) rarely switch to our app because of the smaller price tag.

So, we decided to have the most affordable plan out there, at $3 per user per month. The low price point became the way for us to differentiate our product for new users who were less willing to make a financial commitment on a new system of communication.

chanty pricing page.

Going after new-to-chat users also meant that we needed to be extremely user-friendly. For novice users, Slack (and other team chat apps) can be intimidating. We made our sign-up process and onboarding as simple as possible—you can get an account with an email, invite colleagues by adding their emails, and do just about anything in a couple of clicks.

Our positioning split our user base almost evenly between people who came from competitor apps and those who had never used a team chat app. That’s added a challenge: Our marketing—and product development—have had to address both target markets.

Creating and scaling a marketing plan

Our existing web design and development agencies had gotten most of our clients through word of mouth. When it came time to market our SaaS product, we had zero knowledge of other channels.

Getting through the first couple of months was really difficult—we were mostly developers and designers.

The first (and failed) attempt

We started with some clumsy PR—badgering our clients to mention us in their content in exchange for some free work on their websites. Needless to say, those efforts sucked. Plenty of clients ignored us.

As we considered other options, we ran into roadblocks:

  • We didn’t have a big budget to snag Slack’s customers through paid advertising.
  • Email marketing wasn’t an option since we didn’t have a big mailing list.

SEO and organic acquisition became the logical choice.

A simple organic strategy, with a twist

Our strategy was straightforward:

  1. Use content to get readers.
  2. Turn readers into app sign-ups.

There was one wrinkle: We wanted people to convert directly from reading our content instead of capturing their emails and showering them with drip campaigns until they converted. We didn’t want to be known as a pushy, annoying brand—we wanted motivated users, not reluctant ones.

That desire influenced our content (beyond the standard inbound marketing mantra of “be helpful”). We knew we’d need to go more bottom-of-funnel with our keyword research.

We wrote a lot of articles comparing team chat apps (Slack, Flock, Fleep, Microsoft Teams). We used each tool before we wrote about it and, in our reviews, highlighted strong and weak points.

Because we had no stake in, say, whether Slack was better than Flock, we published some of the most unbiased app reviews in the category. (There was an added benefit: We got to do competitor research at the same time.)

The decision to target branded competitor keywords hasn’t changed to this day. Organic traffic is our top source of new leads and customers, and the primary reason why Chanty has 10,000 active users today.

That said, getting new users via organic traffic took quite a while to pay off; it was at least six months before we started seeing results. But those results have been the primary catalyst of user growth.

organic traffic to chanty.

The most valuable topic we’ve hit on so far? “Slack alternative.” It has thousands of monthly searches and high intent. We’ve doubled down on posts like these:

  • Skype alternatives;
  • Discord vs Slack;
  • Slack competitors;
  • Microsoft Teams vs Slack.

We also found a way to make our content more competitive in search: Guest blogging to build links to articles with the highest potential for conversion. 

Guest posts to make content more competitive

In the beginning, we had abysmal results with outreach. Sending out emails en masse and just changing the recipient name and company didn’t work. Once we decided to write personalized emails one by one, we got drastically better results.

Over time, we perfected our pitch, which helped us graduate from getting posts on good blogs to great ones. (At one point, we realized that we had done more than 100 guest posts in a single year.) We ended up getting featured on sites like Hubspot, Entrepreneur, Marketo, and many others.

referring domains to chanty.com

A few guidelines that worked for us:

  • We reached out only to blogs that covered topics closely related to our product: SaaS, marketing, productivity, team communication, etc.
  • The blogs we reached out to had to have a Domain Authority (DA) of at least 40. As our own DA increased, we upped the lower limit. 
  • We checked the website’s traffic before we sent a pitch. A website with a big DA and little to no traffic smells like a link-building scheme.

We did all of this with two people. One was an outreach and link-building manager, whose job was to build a database of relevant blogs and get in touch with their editors.

The second was a dedicated writer who had a firm grasp on a variety of topics. (If we had scaled this approach, we would’ve needed to hire another writer first. We always had more pitches accepted than we could complete.)

Sometimes—as happens to everyone—our guest posts got rejected. It was rarely because the article was flat-out bad; the editors just didn’t like it for one reason or another. In almost every case, we got the article published on another blog with minor changes.

(One note: If you tell the target website’s editor that you already have a finished article, they’ll see right through it.)

Scaling the model 

Guest posts also opened the door to expand an initial partnership. For example, with each new guest post, we had an opportunity to cite past partners’ content.

We asked those partner CMOs and content heads if they would include us in their upcoming articles—and let them know that we would do the same. As a result, we multiplied our efforts, just by reaching out to a few partners.

The risk of relying on a single channel

More recently, we’ve again tested other tactics, such as paid ads, but the ROI hasn’t been nearly as good. That’s a liability. When SEO is a major part of your lead generation strategy, one algorithm update can undo years of work.

An algorithm update that rolled out at the beginning of November 2019 cost us 20% of our overall traffic—including a drop in rankings for a few really important pages.

rankings drop.

We’ve also tried to diversify our efforts with our Facebook group. We stay in touch with current and potential customers and answer their questions. We also use it to encourage discussion about team communication, to announce new features and releases, and, in the end, to have some fun. 

The Facebook group currently has a little over 600 members. We send out the link to the Facebook group as part of our onboarding email sequence, so it’s comprised primarily of active users. Creating the group was fairly easy, but keeping it active takes a few hours every month.

chanty facebook group

Finally, we’ve added a simple pop-up for visitors to join our newsletter and, over time, created a series of ebooks, each with its own opt-in form.

That’s helped us go after new users. 

A new challenge: going after a niche that isn’t looking for us

Publishing product comparisons has worked well to attract users already looking for an app. But we also wanted to attract and convert those who had never considered a team chat app—small businesses, organizations, non-profits, etc.

We needed to convince them to give team chat apps a try—and to use Chanty first. This generally was easier than taking Slack’s customers.

This gave us a two-tiered content marketing strategy:

  1. Articles to convert people actively looking for an alternative to something they’re using.
  2. Content to appeal to people who were problem- but not solution-aware.

To capture the attention of the second tier, we write about the importance of communication, collaboration, work-life balance, productivity, and similar topics.

These pieces have helped shape the Chanty blog into what it is today. 

Conclusion

Our journey is now three years in the making. We recently reached 10,000 active customers, but it feels like we started just yesterday.

While there are still major breakthroughs to make, getting 10,000 people to choose us in a market heavily dominated by one company already feels like a major victory.

The post How We Took on Slack (and Lived to Tell About It) appeared first on CXL.

The 10 Most-Read Articles of 2019

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Time flies when you’re having fun. We published almost 90 posts this year. Here are the articles that captured more eyeballs than any others.

10. 8 Keys to Value-Based SaaS Pricing Pages

As a SaaS company, both your product and service are unique solutions, and your pricing page should reflect that. Learn how to get value-based pricing right.

9. Cold Emails: Can They Work, Or Are They Just Spam?

When done well, cold emails can work. But they’re easy to get wrong. Here’s how to increase your chances of success with cold email.

8. How to Use Social Media for Market Research

Social media isn’t a perfect source of market research: It’s not a representative sample and, for small businesses, it’s simply too small of a sample. But it includes your most passionate fans.

7. Propensity Modeling: Using Data (and Expertise) to Predict Behavior

When we look at data and analytics, we’re focused on the past. But data becomes more valuable when we use it to predict the future instead of just analyzing the last week, month, or year. That’s where propensity modeling comes in.

6. Data Blending: What You Can (and Can’t) Do in Google Data Studio

Data blending in Google Data Studio lets you create charts based on multiple data sources. This underused (and relatively new) function can do a lot of cool things; it also has some limitations.

5. How to Use Google Data Studio for Client Reporting

“Getting great results” and “creating great reports” are very different skill sets. Google Data Studio can automate the time-intensive tasks of data compilation and report building without sacrificing important context and insights.

4. A Proven UX Research Process to Redesign Your Website

Website redesigns are a huge risk. You can throw away years of incremental gains in UX and site performance—unless you have a battle-tested process. But how do you know if your team (or the one you’ve hired) is focusing on the most important things?

3. Product Lifecycle Marketing: What Matters Most at Every Stage

Each stage of the product lifecycle has implications for marketing. But an MBA-friendly curve rarely translates to reality. The goal of product lifecycle marketing is not to match the curve but to outline what may work best now and plan for the future.

2. Business Apologies: What You Should (and Shouldn’t) Do

Apologizing is a human behavior that acknowledges and resolves an issue. In business, it’s more than learned behavior; it’s an essential part of a growth strategy. That’s especially true for SaaS companies that maintain long customer relationships and obsess over churn.

1. I’ve Built Multiple Growth Teams. Here’s Why I Won’t Do It Again.

Lars Lofgren spent years running growth teams. But he doubts that he’ll ever have a growth team again. In fact, he argues that most companies shouldn’t have a growth team. In this post, he tries to talk you out of building one.

Bonus: The most-watched CXL Institute lessons of 2019

Do you find yourself saying, “Yeah, yeah, I know that already,” when reading (just about) any blog post?

Courses go deeper. So what are people learning at CXL Institute? Here are the most-watched lessons from our course catalog:

  1. “The power of relevance” from our course “Heuristic analysis frameworks for CRO”
  2. “A big list of persuasion techniques” from our “Digital psychology & persuasion” minidegree
  3. “Big picture” from our “Conversion optimization” minidegree
  4. “Who are my visitors” from our course “Google Analytics for beginners”
  5. “Analytics fundamentals” from our “Conversion optimization” minidegree
  6. “How to ‘Tear Down’ Your Own Page Copy” from our course “Sales copywriting & product messaging”
  7. “FACT & ACT process” from our “Conversion optimization” minidegree
  8. “Google Tag Manager Basics” from our introductory course on “Google Tag Manager”
  9. “Introduction to heuristic evaluation” from our course “Heuristic analysis frameworks for CRO”
  10. “Getting started with Google Analytics” from our course “Google Analytics for beginners”

Conclusion

Happy reading, watching, and New Year! See you in 2020.

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The post The 10 Most-Read Articles of 2019 appeared first on CXL.

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