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Lincoln Murphy is a Customer Success Evangelist at Gainsight, a Customer Success Management SaaS startup, and the Founder of Sixteen Ventures, a SaaS Growth Consultancy. Four things he LOVES to talk about are:

  1. Free Trial Optimization - Nearly every SaaS company offers a Free Trial; I love helping optimize this crucial part of the sales process.
  2. Customer Success - Everything about helping your customers achieve their Desired Outcome
  3. Growth Hacking - I'm particularly interested in distribution and viral expansion strategies/tactics
  4. Content Marketing - From Demand Generation to Thought Leadership to Sales Acceleration

But feel free to ask him anything about anything beyond that as well (hints: the meaning of life, pro-wrestling, karma, UFC, etc) He is LIVE today Tuesday July 14, 2015 starting at 9:30 AM Pacific Time for one and half hours and will answer as many questions as possible in that time. He'�ll continue to answer them later in the day, too, so keep the questions coming. You can follow him on Twitter @lincolnmurphy, too!

  • FG

    Ferran Gascon Burgada

    over 1 year ago #

    Hi Lincoln,

    We have a pricing question:

    We are a SaaS B2B startup and we are currently rethinking our pricing.

    We read quite a lot of material / posts regarding this topic and we now have a clear idea on how to segment our users, what plans should we have and that we what to calculate the pricing based on the value we're offering to the user ("your" WIIFT).

    However, when it comes to determine the exact price of the different plans we are not sure how to calculate the number that is optimal in terms on not leaving money on the table and at the same time not decreasing sales too much.

    How can we guess / calculate the optimal price points of our plans? What techniques do you recommend us to do so? Surveys? Asking our current users, and if so, what questions? Benchmarking competitors? Benchmarking similar products of other industries?

    Thank you!
    Ferran

    • LM

      Lincoln Murphy

      over 1 year ago #

      First, never ask people what they’re willing to pay, they won’t tell you the truth; the truth comes out along with their credit card (or contract-signing pen).

      Also know that pricing is never static. What you start with will change over time as you learn more about the market, as your market evolves, as your product and company evolve, etc.

      I always suggest (now… I’ve learned my lessons, too) starting out with very simple pricing that encourages deep use by your customers. We’re looking for breadth and depth of use by our paying customers (even if what they’re paying is “leaving money on the table”).

      I want to do that for some specific period of time - 6 months maybe - and then start looking for patterns. You’ll probably find that the 80/20 rule applies… 80 percent of the customers will use 20% of your features… 20% will use the other 80%. There’s a natural demarcation point for price segmentation. Then you can further segment the top 20% into another… if it’s right. Don’t have 3 plans just to have three pricing plans.

      You don’t know what you don’t know so don’t pretend you do.

      Some other thoughts...

      it may just be semantics as you said how do we “calculate” price, but I want to be very clear; in value pricing, the price will be an input on a spreadsheet, not the result of a formula

      You have to understand the customer

      It’s good to know what your competition is charging, what that’s based on, etc. but we can’t assume they got it right.

      If you’re going to look at other companies for inspiration, look to other products that have a similar position in their world (i.e. you sell to departments, so look at other departmental apps they subscribe to), to see what they’re used to paying.

      Also be clear on their procurement process (can they pay by credit card or do they prefer to be invoiced and pay by check), discount rules (i.e. if they decide to go with you, and you offer a discount, they have to take it).

      try to figure out their ROI; if you’re delivering > 10x returns for the customer, you probably have upside potential

      http://sixteenventures.com/ideal-customer-profile
      http://sixteenventures.com/saas-pricing-strategy
      http://sixteenventures.com/develop-pricing-strategy
      http://sixteenventures.com/saas-pricing-complexity
      http://sixteenventures.com/saas-pricing-discounts

      • FG

        Ferran Gascon Burgada

        over 1 year ago #

        Thanks for your reply Lincoln!!

        We actually did that: our price is 99 eur/user/year for the last 6 months. It is a farm management tool for farmers that helps them stay organized, save time and paperwork.
        After these 6 months we are able to differentiate different segments and therefore 3 plans.

        But, which method would you use to set the price of this 3 plans? How can we know if we are leaving money on the table or on the contrary we are increasing sales cycle time, or reducing sales? Thanks again!!

        • LM

          Lincoln Murphy

          over 1 year ago #

          Gotcha... the key is to have a very specific customer and use case in mind for each plan and go through that process on each tier.

          • FG

            Ferran Gascon Burgada

            over 1 year ago #

            Still not getting it... What process do you mean? Do you mean we have to talk with this customer and see how much is he willing to pay?
            Or in the end is a matter of guessing the price and test it?

  • AA

    Anuj Adhiya

    over 1 year ago #

    The one thing that's always struck me about your writing is how human it all comes across as.
    In other words, there's no gimmicks or tricks of any sort - almost taking what should be obvious about human psychology and the way we think (or most rational people do, at least) and applying those lessons.

    Is that a skill that you think can be taught/developed or is that just an innate thing?
    If it can be developed - what advice would you have for someone to hone this skill?

    • LM

      Lincoln Murphy

      over 1 year ago #

      First, that’s the most awesome thing anyone has ever said to me, ever.

      Hmm…. well, I’m a human, raised by humans.

      The reality is it wasn’t always that way. Look at some of the early stuff I wrote - back in 2008 when I first started Sixteen Ventures - and I was trying to be someone I’m not. I tried to be “professional” and write like everyone else in this industry at the time… and I wanted to punch myself in my face.

      When I started being myself everything changed. I absolutely pushed some people away (some people don’t like the way I write or to see my face), but the ones I didn’t push away seemed to become even closer to me.

      So I just kept doing that.

      Everyone who reads my stuff should know that Robert Cialdini is my go-to resource for all things psychology when it comes to marketing… but what most people don’t knows that before Cialdini, my main psychology influence was pro-wrestling.

      Yep, everything I know about marketing I learned from watching (and participating) in Professional Wrestling like WWE.

      Which may account for some of my more over-the-top and - as someone once called me - bombastic approach to getting my point across. But it’s worked for me.

      The only part of what I do that anyone should emulate is to be themselves. Don’t be like Lincoln… just be you.

  • JS

    Joseph Seo

    over 1 year ago #

    We're a 2 year old startup that recently went through a seed round.

    How would prioritize channel development around demand? OR would you forgo cost-bearing channels such as SEM, online advertising and focus on content development and distribution, organic rankings etc.

    How would balance between short term demand (which is critical to getting to the next step), and long term investment in activities such as content and marketing infrastructure where the demand and revenue realization is further off in the future.

    • LM

      Lincoln Murphy

      over 1 year ago #

      I prioritize distribution strategies around my Ideal Customers. I work with one Ideal Customer at a time for a specified period of time (i.e. 90 days). When I get specific on an Ideal Customer, the channels to leverage will appear.

      Most people start with the channel or tactic… and that’s why most companies struggle to gain traction. Yes… most.

      When you find something that’s working for your ICP, after the time frame you were working with is up, you can either double down (if it worked), modify and keep going, or pivot away from that.

      Basically, the ICP Framework is a way to test your customer hypothesis where most people test only tactics.

      There’s a presentation embedded in the post that details my Ideal Customer Profile Framework… I would suggest flipping through it and then going through the processes laid out in the ICP Framework.

      http://sixteenventures.com/ideal-customer-profile

  • JD

    Jimmy Daly

    over 1 year ago #

    How can content marketing and customer success teams collaborate? Also, any big challenges you forsee in the content marketing world in the next few years?

    • LM

      Lincoln Murphy

      over 1 year ago #

      Customer Success and Marketing collaborating is awesome.

      To get new customers, learning from Customer Success what the customer challenges are, the language they use, the tone they prefer, where they get their news, who they trust (influencers), etc. is awesome. Few companies leverage their customer success teams this way.

      It goes the other way, too… Customer Success and marketing should be collaborating to market to the existing customer base, too. Not just new products and features, but content that will help the customers achieve their Desired Outcome. Nurturing your existing customers to help them be successful will keep them around longer and get them to pay more over time… all while achieving their Desired Outcome. It’s beautiful, man. Just beautiful.

      As for what’s going down in the content marketing world… I think Quality will have to go up… maybe quantity won’t be so important. What will continue to be effective and what needs to change really depends on your market and how mature it is at consuming “content marketing.”

  • RL

    Roland Ligtenberg

    over 1 year ago #

    We've steadily increased our price for our SaaS offering (http://www.tryhousecall.com/pro) every month from $4/month/user to $30/month/user for the last 5 months.

    We have no Free Trial, just a 30-day money back guarantee.

    How would a company evaluate whether or not to implement a Free Trial or not?

    Do you think including a Freemium tier would be beneficial or do you think it would devalue a product that is now already considerably more expensive?

    • LM

      Lincoln Murphy

      over 1 year ago #

      First, Freemium isn’t a pricing question or even a marketing question… it’s really a fundamental business model question.

      Now, how to figure out if you should offer a Free Trial is simple… do you want more people to try your product? If yes, then offer a Free Trial.

      Seriously. Remember… Free Trials are for people that don’t already know, like, and trust you. They need to see things before they commit. And yes… pulling out your credit card to enter it for a Free Trial is pretty much the same move you do to buy… so there’s a lot riding on whether or not people will do that.

      And if they don’t already know, like, and trust you (or your company, brand, etc.) then they might not sign-up. Even with a money back guarantee.

      The best lift I’ve seen - pretty much overnight - on removing the CC-wall and moving from a money back guarantee to an opt-in Free Trial (opt-in to convert, vs. opt-out where you have to actively cancel lest your CC be charged), was 600%. A 6x increase in sign-ups overnight.

      In case that’s not coming across correctly, that’s 100 people signed-up yesterday with the CC wall in place.

      We took the CC-wall down and 600 signed-up today.

      Yeah, but what about the conversion rate?

      Good point. You’re right, the conversion rate went down for that cohort (those that signed-up in the days immediately following the CC-wall removal)… from 25% to 15%… down from 25 customers to only 90 customers. :-)

      But then we worked diligently to get the conversion rate back up to 25% by actually optimizing the free trial.

      I will say this… if you are already known, liked, and trusted you can probably get away with putting up a CC-wall and it won’t hurt too much… but it probably will.

      If you’re requiring a crd

      That said, it looks like you guys have demo request so (at least at this point) I assume you have a higher touch sales process. Good news! Free Trials work great in high-touch settings.

      More on all of that here:

      http://sixteenventures.com/freemium-or-free-trial
      http://sixteenventures.com/one-dollar-trial
      http://sixteenventures.com/free-trial-customer-qualification
      http://sixteenventures.com/free-trial-abuse
      http://sixteenventures.com/ideal-customer-profile

      • RL

        Roland Ligtenberg

        over 1 year ago #

        Super helpful Lincoln. Some of the features we have (postcard remarketing) would require a CC on file to use since it's a real cost. We're just working over some of the features which we would have to lockdown (but give a huge amount of value unfortunately) in the free trial mode.

        It's interesting you mention the correlation between brand trust and ability to pull off the CC wall. In one of the more established channels (one of our ICP) we have great name recognition and trust so it works there and you're definitely right from my experience.

        On the others where we are "new kid on the block", it's much more difficult to pull off.

        Our TAM of service based businesses are notoriously known for starting something and not fully implementing - so we've found the fact that we charge them upfront good at helping them follow through (ex. "hey you made an investment, might as well set it up).

        Have you ever seen a reverse charge work? For example, setup cost is $99 that gets refunded entirely if you do X amount of jobs by Y date in the software?

  • LM

    Lincoln Murphy

    over 1 year ago #

    Hey hey.... let's do this!

  • MR

    Moira Reilly

    over 1 year ago #

    Hi Lincoln,
    We recently implemented a new free trial process for our SaaS product, which automatically sets a user up with a 15 day trial, sends them nine automated emails with calls to action, provides them in-app support, and tracks their activity using other SaaS products that we subscribe to. We have found that our level of engagement in the free trial has increased, but we have not solidified our post-free trial follow up process. We want to ensure that we are following up at the right time to keep our conversion rates as high as possible:

    • What have you found is the most effective follow up process for a 15 day trial SaaS product?
    • How frequently should we be in contact with leads once a trial is complete, and what mode of communication would you recommend using (call, automated email, personal email, etc.)?

    Thanks for your help in advance!

    Moira

    • LM

      Lincoln Murphy

      over 1 year ago #

      You're definitely doing more than most SaaS companies, so that's cool.

      The main thing I'd look at - without knowing too much about how successful your trial is at converting customers, where the bottlenecks might be, etc. - is that you're aligning your follow-up messages with success milestones and not just time-based intervals.

      Unless you have a rigid post-sale onboarding process that takes your customer from contract to first value delivered - some enterprise deals are structured this way - then you can assume customers will achieve success within your Free Trial (and in your app overall) on their own cadence.

      Figure out what the point in your trial is where becoming a paying customer is the most logical next step for the customer and figure out the steps required to get there. Each of those steps (we could break it down into macro and micro steps, so in this case the macro steps) is a success milestone.

      Your messages - leveraging whatever modality is appropriate for your customers (I can't tell you what that is) - should be based on where they are on the success milestone path and get them to do the next thing. That's all. Check to see where they are and get them to do the next thing.

      When the next logical thing is to become a paying customer, ask for the sale.

      I've had 30 day free trials where we ask for the sale on day 3 because we pegged the message to the success milestone and they go there quick... if I relied only on timed intervals 1) I'd be out of sync with the customer and 2) I'd have to way 15 or 30 days to make the sale.

      Some posts to check out...

      http://sixteenventures.com/effective-free-trials
      http://sixteenventures.com/email-follow-up-sequence
      http://sixteenventures.com/active-users-vanity-metric
      http://sixteenventures.com/customer-success-desired-outcome
      http://sixteenventures.com/ideal-customer-profile

  • SE

    Sean Ellis

    over 1 year ago #

    Hey Lincoln, thanks for doing this AMA. Given your breadth of skills across multiple potential growth levers (customer success, trial/pricing, content marketing, viral expansion...) which broad growth lever do you believe is most commonly underutilized by companies? In other words, if companies were to focus more on X, they'd likely see better results. What is X and why should we all pay more attention to it? Thanks!

    • LM

      Lincoln Murphy

      over 1 year ago #

      Free Trials... they're usually just a box on a flow chart. It's time to open that box!

      The reality is that for many SaaS companies, 100% of their customers come in through the Free Trial. If you go from 5% to 10% - and nothing else changes - you just doubled revenue. That's a pretty nifty lever.

      And in my experience, that isn't incredibly difficult to do - and often can be done with little to no engineering.

      Given how many pieces of low-hanging fruit there are in most Free Trials, you can often significantly move the needle on customer acquisition by spending some time optimizing your Free Trial.

      I mentioned in another answer why I think Free Trials are so neglected... why this growth lever is rarely pulled.

  • YS

    yassin shaar

    over 1 year ago #

    Lincoln, thank you for doing this and for sharing your knowledge with us.

    How do you introduce customer success into an organization?

    This is going to be different from from company to another... but how do you generally go about it, what things do you make sure you have in place that will set the organization up for success, what makes an organization ready for customer success etc...

    I'm currently going through your "Guide to customer success" and planning to start on implementing the framework/role next month.

    Thank you

    Link to the guide for those interested: http://sixteenventures.com/customer-success-definition

    • LM

      Lincoln Murphy

      over 1 year ago #

      Thanks for linking to the Customer Success Guide… I’ll link to a couple of other resources that we put together at Gainsight below.

      In my experience, for Customer Success to work, it has to be a top-down initiative… everyone in the company has to have the LEGIT idea that we’re here to make our customers successful.

      That doesn’t mean make them “happy” … and it doesn’t mean bend over backwards and do whatever we can to please them… no, it means helping our customers achieve their desired outcome.

      The CEO and top leadership have to buy into this and push it throughout the organization.

      I think some organizations get confused…. since there’s a “Customer Success” team, then it falls on them and them alone. But that’s just not true.

      If marketing is attracting and sales is closing wrong-fit customers, if product is building stuff that doesn’t actually help the customer achieve their desired outcome, etc. then Customer Success the team is going to have a hard time delivering customer success the objective.

      It takes a village… and - for better or worse - most company villages have leaders that they look to for cultural and strategic guidance… it’s up to them to ensure that the culture of Customer Success permeates every aspect of the company.

      Tactically how to do this varies across companies, depending heavily on company maturity level/size/locale/industry/etc.

      I’m going to Toronto later this month to attend a Quarterly Business Review or a 2-year old startup that’s trying to bring customer success into their culture. The CEO will introduce the concept and me to the entire company and I’ll share all of what I said here (and more)… but that’s certainly one thing that can be done.

      Another is for the CEO and other leaders to act as if customer success is what you’re there for. Watch your language, for instance… no more “dealing” with customers, but rather helping. Little things like that go a long way.

      http://access.gainsight.com/10-laws/
      http://access.gainsight.com/customer-success-buyers-guide/
      http://sixteenventures.com/customer-success-desired-outcome
      http://sixteenventures.com/ideal-customer-profile

  • SR

    Santiago Rodriguez

    over 1 year ago #

    Hi Lincoln,

    Big fan over here. Q: What's your view on tiered clients? Do you have any recommendations on structuring higher tier and lower tier clients to adjust customer service?

  • JG

    Jeremy Gillespie

    over 1 year ago #

    Lincoln,

    Huge fan! Thanks for taking the time to do a AMA.

    I'm going to keep this short - In my opinion, the majority of SaaS companies spend very little time optimizing their Free Trial and as a result, receive poor conversion rate.

    1. Why don't companies focus on their trial as a scalable growth lever?

    2. What is one metric they should focus on when optimizing their FT?

    • LM

      Lincoln Murphy

      over 1 year ago #

      1. Because most SaaS companies didn’t design their Free Trials to convert prospects to customers so they have horrible conversion rates… and people see that and think that’s just the way it is so they go onto another company or start their own and think “hey, 10% conversion is pretty good” and they assume nothing can be done to improve that. It’s a vicious cycle.

      Or they confuse Freemium with Free Trials (a fatal mistake) and compare their Free Trial results of 10% with the “best” Freemium results of 3% and feel like they crushed it. But they didn’t.

      2. Paid conversions.

      Some resources:
      http://sixteenventures.com/ideal-customer-profile
      http://sixteenventures.com/freemium-or-free-trial

  • MK

    Michael Kawula

    over 1 year ago #

    Lincoln,

    Our startup has had a really good 3 months bringing on new customers and improving the experience along the way.

    The investors in the company don't want us advertising on the site initially a "Free Trial" thus i'm rolling out a Freemium account for our product that does 1/2 of what our service provides.

    I'm then going to over that Freemium account after 3 days the ability to have a 14 Free Trial no CC required to test drive our full service.

    My question is how many emails do you think we should be sending during the 14 Trial to convert them into paying customers?

    Our service is really good at building quality Twitter followers so I believe we should convert nicely, but should we email daily with their results/account growth stats with an offer or every few days?

    Obviously going to test it, but was wondering your thoughts.

    Cheers ~
    Mike Kawula

    • LM

      Lincoln Murphy

      over 1 year ago #

      Three things...

      1. Get really clear on the difference between Freemium and Free Trials:
      http://sixteenventures.com/freemium-or-free-trial

      2. don’t overcomplicate things

      3. properly manage expectations… getting people in for free (with the perception that they get everything for free forever) and then saying “well, to actually do this you need to go through this process and pay us…” is bait and switch, causes the customer to throw-up… some psychological barriers, and can hurt your trust. You can alleviate a lot of that by just being honest and upfront.

      • MK

        Michael Kawula

        over 1 year ago #

        Thanks Lincoln and I have read that post of yours in the past. (Shared it a few times, really good)

        Definitely not looking to bait and switch as I agree that would piss me off myself.

        We're simply looking at offering 1/2 of what our service does for free (advertising it that way also) and a 14-Day free trial to experience the entire service together.

        Our service builds a large quality Twitter following using keywords our clients give us. The free part we're looking to offer would be having our service unfollow accounts not following someone back. The Free Trial would be to test us for 14 days and see how we can increase a following that is more engaged because they're quality followers.

        What part are you feeling isn't "honest" or what would you recommend doing differently?

        Thanks for your input.

        • LM

          Lincoln Murphy

          over 1 year ago #

          If you're managing expectations properly (that's better than saying not lying because doing so implies that you were before and I didn't mean to do that), then the free + premium w/ trial may work.

          The main thing you need to be clear about is the catalyst that will make someone move from free forever to a paying customer... it's a fine line that means the free version has to be good enough to use and get value from on its own... but something has to happen where becoming a premium customer is the most logical next step for a cohort of users.

  • AE

    Alim Erkin

    over 1 year ago #

    Dear Lincoln,

    Hope you are well.

    I am one of your firm follower and enjoy reading and learning from your blog posts.

    If possible, i do have a question?

    What sort of customer lock in strategies enterprise or SaaS companies can use?

    I know that having a great product is the best possible answer. However, apart from that, what other techniques do you advice to reduce churn rates?

    I have made an extensive research and i have come across with some strategies.

    If let's say, you are a testing/personalization software company, then you can do following:

    - Integrate customers' other channels like CRM , Analytics etc.

    What other strategies would you suggest? I appreciate if you can also mention some specifics for enterprise software companies as well.

    I deeply appreciate your help.

  • SS

    Shashank Saurabh

    over 1 year ago #

    What advice would you have for building traction for a Wikipedia-like product (focussed on Hollywood)?

    • LM

      Lincoln Murphy

      over 1 year ago #

      Get a bunch of Hollywood people to talk about it on the various social platforms and possibly invest in it (not just for their money, but to build buzz). And leverage all of that as hard a possible.

      Brute force is often required to gain traction… then (hopefully) momentum takes over.

      And if you can't get anyone in Hollywood interested... that might be a result, too.

  • ST

    Simon Thomson

    over 1 year ago #

    Dear Lincoln,
    We're in the midst of launching Source (http://sywrld.com) on Indiegogo - the initial funding drive has been fantastic, and now we're reaching out to passionate like-minded tech people to join us our the Source journey. To ~ literally ~ build the platform our Users wish to see.

    Where would you advise is best to focus on first of all, to introduce us to our first hundred / thousand super-awesome, Source-loving, sports/beer loving, tech maven evangelists? :)

    Thank you!
    Simon, Source

  • AC

    Andrés Castañaza

    over 1 year ago #

    How do you suggest we should approach to negative feedback from users? when they wanted something different that what we currently offer.

    • LM

      Lincoln Murphy

      over 1 year ago #

      Maybe don’t look at it as negative feedback… look at it as your customers telling you what they want. Now, whether you give them what they want is another story.

      The request for a feature shouldn’t determine whether that feature gets built. Several requests should give you a reason to investigate it. But a good sanity check on features (or on your development roadmap in general) should be “is this going to help my customers achieve their Desired Outcome?"

      If not, it’s in everyone’s best interest to not build the feature… and you can communicate to them why you chose not to do that. In fact, you should do that… let them know you looked into it and you think it’s not necessary. It might be a hold over from how they used to do it. Then explain how they can achieve the same thing with your product as-is.

      Then again, if it truly is *negative* feedback - like, they're actually mad and saying mean things - maybe you're misleading them in your marketing and sales. Perhaps you're (even inadvertently) over-promising on what you can actually deliver.

      Perhaps you're simply bringing in customers that don't have Success Potential (at least with your product in its current state) and you need to refocus your marketing and sales.

      http://sixteenventures.com/customer-success-desired-outcome
      http://sixteenventures.com/ideal-customer-profile

  • WA

    Wayne Allen

    over 1 year ago #

    When dealing with a product that is seen as a commodity what are the strategies for either leveraging that perception or re-educating your market or is there some other approach?

    • LM

      Lincoln Murphy

      over 1 year ago #

      Talk more about how your product helps them achieve their Desired Outcome… focus on that rather than the product. Look for places where your competitors - I assume there are many due to the commodification issue - are dropping the ball messaging wise and swoop in and recover their fumble. (Sports analogy!)

      Check out the presentation slides embedded in this post… look at the part about entering the conversation in the customer’s mind:

      http://sixteenventures.com/ideal-customer-profile

  • SG

    Shashank Ganesh

    over 1 year ago #

    Hey Lincoln! Thank you for giving all of us this opportunity to participate in an AMA with you

    We are a app- based startup.

    We have plans on offering our services as free trials, so
    we would love to hear your views on strategies we could use to achieve up-sells post the free trail periods

    And if time persists, please enlighten us on what are the best app Analytic tools in the market? Which one of these are best from the conversion funnel standpoint

    Once again, we appreciate you taking the time to do this. Thank you!

  • LM

    Lincoln Murphy

    over 1 year ago #

    Okay folks... that's it for now. I have to run. I'll check back later today and answer any questions I missed. Thanks for playing.

  • BJ

    Ben J

    over 1 year ago #

    Hi Lincoln,

    Thanks for doing this - quick one for you: what kind of SaaS companies do you think would not benefit from free trials ? We have a platform that requires significant effort from our clients to change their customers behaviour before they can see the full benefit of what we offer - in our case therefore since its not a solution in isolation, I feel it might actually have a negative impact.

    Thoughts ?

    Thanks
    Ben

    • LM

      Lincoln Murphy

      over 1 year ago #

      Your customers almost always benefit from a Free Trial... and Free Trials will almost always act as a sales cycle accelerator.

      There may very well be times when a Free Trial simply won't work, but I would push back on that until we're absolutely sure it won't work and we're not simply trying to avoid it.

      And just because it won't work now doesn't mean it won't work later... especially if you continue to evolve your product in a way that will make Free Trials a reality.

      Often when products are "big and complex" it's common to assume - or purposely decide - that a Free Trial won't work. Often we're able to actually figure out ways to reduce complexity or carve out a portion of functionality that the customer can try out... and it moves the needle significantly.

      But, when you know that Free Trials aren't going to work, there are other options like Proof of Concepts (Proofs of Concept? Proof ofs Concept?).

      I go into a lot of detail on those options here: http://sixteenventures.com/enterprise-free-trial

  • CZ

    Chris Zemdegs

    over 1 year ago #

    Hi Lincoln, any tips on achieving "pre-sales" for a pre-launch SaaS - methods for identifying and acquiring customers including pre-payment before the service is actually launched? Cheers, Chris

    • LM

      Lincoln Murphy

      over 1 year ago #

      Go through the Ideal Customer Profile Framework, develop your Ideal Customer Hypothesis, use that to determine the appropriate channels to get in front of them, and direct them to a pre-launch page. If you get a bunch of people interested, you know you’re onto something (and have your messaging right).

      From there, check out this post Liam from Trak.io wrote for me that detailed what they did to take that tactic and turn it into revenue (spoiler: they charged people to jump the line):

      http://sixteenventures.com/pre-launch-growth-hacking

      You could also direct them to an Crowdfunding site like @sourcesimon (who posted on this thread) did.

      No matter whether you take Liam or Simon’s ideas… the way of thinking should help.

  • JL

    Jon Livingston

    over 1 year ago #

    Big fan Lincoln. Thanks for all your great advice over the years and for doing this.

    I was wondering if you have any experience with a SaaS giving free hardware with subscriptions. Our product (http://deerlab.com) is seasonal and is specifically for hunters using trail cameras to pattern big game animals. As an incentive to encourage annual subscriptions we are about to update pricing and include free trail cameras (between $100 & $230) with higher tiered annual accounts.

    I would love to hear your thoughts on this approach and if you have any experience or knowledge of others doing something similar (I have not been able to find an example yet). In addition, would you recommend dropping a monthly plan and just using an annual route instead? We currently have both. I know there's a lot of factors to consider but your advice would be very helpful. Thanks!

    • LM

      Lincoln Murphy

      over 1 year ago #

      My typical response to people looking for examples of people doing things they think is a good idea is “what if no one has ever done it before?"

      Would you still think it’s a good idea? Would you still think it’s the tactic that might move the needle? Is it worth testing with a handful of customers? If so, do it.

      Test it with the next 100 customers… and put a countdown timer (sign-up in the next x days/hours/whatever) or scarcity gauge (only 15 left!)… see if that works. Then see how much support costs over the next 3 or 6 months. If it’s obvious this is crushing it, great. If not, then wait a year and see if this cohort renews at a higher rate than the non-hardware-included cohort.

      Because your product is seasonal, I’d probably just do a yearly plan based around the annual customer value I want… then I’d do a monthly price that - if they typically stay 3 months - equates to 1/3 the annual value… I get the same from them either way. But I’d push the annual plan and include the hardware as an incentive. But that’s without knowing anything about your actual situation so take it with a giant grain of salt.

      That said, off the top of my head I can think of a few types of companies that do this: wireless carriers, home security, point of sale software companies, etc.

      I even know of a subscription ice service that includes the freezer.

      I think it’s a great idea and much better than giving a discount. In fact, including that hardware could be the reason to raise prices… it definitely increases the value perception of the bundle.

      I’d create a bundle just for Bigfoot hunters.

      Also, since we know bears can throw rocks and break the glass at zoos, are the rock throwing Bigfoot encounters just angry (or playful) bears? hmm...

  • AS

    Amit Soni

    over 1 year ago #

    Hi Lincoln,
    What in your opinion is the best way go about gaining expertise in Growth Hacking?
    Thanks.

    • LM

      Lincoln Murphy

      over 1 year ago #

      You're probably not going to like this answer... JFDI.

      You have to go out and do it... and if you don't have anyone to do it for, do it for yourself. I don't know any other way to gain expertise in anything - growth hacking or otherwise - than to just go out and do it.

  • HG

    Hannah Gn

    over 1 year ago #

    Hi Lincoln,

    Thanks so much for sharing your expertise and offering this AMA for starters like me.

    I have a product that i need to market. Im a bit torn between this 2 school of thoughts in terms of pricing.

    My product is called Karmascope and its a SaaS tool for freelancers to manage their out-of-scope requests and communicate these requests to their clients. It is in its testing phase and we haven't went through the typical flow of talking to customers first before developing the product.

    So for now, the approach is to offer the product for free in exchange for user feedback which i think its easier to get people to say yes to. Then again there is the opposing school of thought, that no matter whether you have just an idea or a MVP, you need to charge to get valuable feedback. If you don't charge, you won't push the need of feedback from customers.

    Hope you'll be able to help with this problem and hopefully i'll get a direction to scale the customer validation process. Thank you so much!

    • LM

      Lincoln Murphy

      over 1 year ago #

      You should build an MVP based on customer development work... and you can get some people to test that for you in exchange for something... it may be free access during the "beta" or it may be limited free access (6-months or whatever) after you go live.

      But keep the time you have your MVP in "beta" (you're just trying to stress test it, look for bugs, make sure it's actually VIABLE) as short as possible so you can roll it out to actual, paying customers. And structure the beta so that you have your testers actually doing certain things and giving you feedback. Too often we just let 'em in to kick the tires and see what breaks... get deliberate with this process.

      And remember that those who are beta testing may NEVER become paying customers and their feedback does not represent that of paying customers so you want to get the product into the hands of paying customers ASAP.

      Also remember that those early MVP customers (who are paying you) may not represent your later-stage customers... so just be aware of all that as you move through this process.

  • AC

    Alex Chaidaroglou

    over 1 year ago #

    Hi Lincoln, thanks for doing this AMA. Here are my 2 questions:

    1) What's the best traffic sources you have found for SaaS?

    2) Would the best and fastest way to reduce churn be a customer success manager? If not, what would it be?

    Thanks in advance.

    • LM

      Lincoln Murphy

      over 1 year ago #

      1. It 100% depends on the SaaS business in question, who their Ideal Customers are, what stage they're in, etc. From Adwords to cold outreach emails... it runs the gamut, but it totally depends.

      2. More "it depends" answers I'm afraid. What's causing the churn? If it's that sales and marketing are bringing in wrong-fit customers, not only will you churn through customers, you'll churn through customer success managers because they won't be able to solve the problem.

      Churn has many causes... you have to figure out the root cause and apply the appropriate remedy.

  • MK

    Mario Krivokapic

    over 1 year ago #

    Hey Lincon,

    One short question: What would be some growth hacking methods for B2B and enterprise software?

    Thanks :)

  • MD

    Miloš Dakić

    over 1 year ago #

    We are BlogIn (http://blogin.co), SaaS startup offering internal company blogging platform for companies. We offer a full 14-day free trial of our service.

    What should we do about users who completed free trial, but did not upgrade to premium account? We already ask them via email why didn't they upgrade and for general feedback, but only a fraction of them bother to answer. Should we email them after a period of time again highlighting new features or changes in the product to see if they are still interested? If yes, how long should we wait?
    Any other ideas/advices what we can do to re-engage them?

    • LM

      Lincoln Murphy

      over 1 year ago #

      Read everything else I've shared today, then implement it, and you should have many fewer people getting to the point of their trial expires and you have to re-engage them.

      In other words, before you focus on re-engagement, focus on initial engagement (most people tend to focus on the engagement only when it's too late!).

      While I've said elsewhere in this thread not to peg your follow-up messages to timed intervals, you can after x number of days see if they've achieved any of your success milestones and if not, personally reach out or even call to see what you can do to help them get started.

      I do like to follow-up to see why they didn't convert, but you have to be careful how you do it. Make sure it's about them and their experience and if something was missing. Often it's just the way the message is delivered (the way it's worded) that people don't like. This is a great use of my "Customer Success bot" method, in the link below.

      You could also offer in-app surveys or "feature request" boxes that ask if any features are missing. If they don't convert, you can do the math and figure out that's probably why they didn't convert. When you implement that feature, that's a perfect time to reach out. But if they say they need a feature, that's also a great time to reach out and either provide a workaround or just a different way of doing things (sometimes people have expectations coming from other systems and they just don't actually need that feature).

      You could use retargeting to get them to come back and try the new features, too.

      http://sixteenventures.com/personal-emails
      http://sixteenventures.com/onboarding-flow-unstuck

  • AJ

    andrew James

    over 1 year ago #

    Hi Lincoln,

    A quick questions: We are a SaaS B2B company which utilizes both hardware and software to provide solutions to our customers. How do you recommend offering and scaling a free trial when our hardware cost are around $100? Does it make sense to offer trial for this type of business?

    Thanks for your help!

    Andrew

    • LM

      Lincoln Murphy

      over 1 year ago #

      It's hard to know how to answer this without a lot of other info… but I think if you’re sending hardware that has a real cost to you to your customers, you may at least want to have a deep conversation with them before you send the hardware. You may want to get their CC upfront for this.

      If they can use the product with out the hardware, then I think you could let people in without the Credit Card and then - if they order the hardware - ask for the credit card for them to try the hardware, too. But only do that if they can legitimately try the software product without the hardware.

      If they have to have the hardware in order to use the product - and you need the credit card before you can send them the hardware - don’t call it a free trial… position it as creating an account and/or getting started. Say you’ll require a credit card before sending them the hardware.

      Then you can help them get comfortable with the product, to know, like, and trust you prior to asking them to request the hardware so that when you ask them to put in their CC, they will be willing to do that.

      I’d also try some other things… like looking at the legit acquisition costs (CAC) for your customers and seeing if by including the $100 product in with the trial that doesn’t reduce CAC overall by actually increasing conversions. It could have a profound affect… or none and people will just steal your hardware. If you’re going to test this, set aside a finite number and test only with the number of hardware units you’re willing to smash on the ground with a hammer.

  • JG

    Jeremy Geadrities

    over 1 year ago #

    Hi Lincoln,

    Where do you draw the line between customer success and technical support? If a SaaS startup has yet to define a long term strategy for overlapping responsibilities and/or a full separation, what actions can be taken to avoid potential complications in the future?

    Bonus Question: Favorite ladder match? My money's on Wrestlemania 2000 (Hardy Boyz v. Dudley Boyz v. Edge/Christian).

    Thanks in advance, always great stuff.
    - Jeremy

    • LM

      Lincoln Murphy

      over 1 year ago #

      The simple demarcation point is:
      Customer Success = Proactive Support (Plan of Action, Onboarding, Ongoing Guidance, Training, etc.)
      Technical Support = Reactive Support (break/fix, bugs, etc.)

      Customer Success should proactively help the customer achieve their Desired Outcome. In fact, “customer success” should be part of the entire organization (see many other posts on this thread that cover this), including having it built into the product, the first in-app experience, the onboarding process, etc.

      How-to’s and other questions about using the product, getting value from it, etc. should be directed to Customer Success, who should take any questions they get asked more than one time and post it somewhere that they can point people to. And if there’s a clear usability issue - not a bug, per se, but just something in the UX that could be better - the workaround should be posted publicly (or at least for customers to see) and that should be submitted to Product by the CSM.

      CSMs should tee-up the relationship between the customer and Tech Support immediately when a customer signs-on, letting them know that if they encounter any problems, to contact support, but that - as their CSM - you’ll be in the loop and will know if they’re being taken care of.

      And you can do all of that with only one person (and you should) so that when you start to scale you already have the processes in place and a nice separation between customer success and tech support.

      Some resources:
      http://sixteenventures.com/customer-onboarding
      http://sixteenventures.com/customer-success-definition

      Bonus Question: Favorite ladder match? My money’s on Wrestlemania 2000 (Hardy Boyz v. Dudley Boyz v. Edge/Christian).

      My favorite anything tends to change with my mood.

      If I’m feeling nostalgic, I might look to a Dusty Rhodes vs. Tully Blanchard (Barbed Wire Ladder Match) from 1987 or even the “original” (there were ladder matches before it) ladder match between Shawn Michaels and Razor Ramon.

      Sometimes I’ll just look up Japanese light tube matches and watch those for hours on youtube (NSFW... not safe for anyone, actually).

      But if I’m looking for a spot fest, the one you mentioned is probably my favorite. Or the first TLC match with those same three teams at SummerSlam later that year.

      • JG

        Jeremy Geadrities

        over 1 year ago #

        Thanks for the detailed response, greatly appreciated! Also love the shout-out for Ramon; one of many underrated stars and a personal favorite.

  • KJ

    Karthick JL

    over 1 year ago #

    Hi Lincoln,

    We are a data integration product based company, integrating ecommerce, marketing and accounting apps.

    Currently we offer 14 day free trial offer for the customer who sign up to play with the product and have them move to the paid segment based on their integration usage.

    Can you please advise should we continue with the free trial option or add useful videos and documentations that will help them learn the basics of the product. Post that can we have them pay for the product to utilize the facility?

    Of course we provide demos to the customers who ask for the same.

    • KJ

      Karthick JL

      over 1 year ago #

      Also if your suggestion is to continue with free trial option, can you please provide best practices to make the free trial customers convert to paid customers?
      What would be the frequency of email that need to be sent to keep them engaged and move them to paid customers segment?

      • LM

        Lincoln Murphy

        over 1 year ago #

        I think Free Trials are usually a pretty good idea. I'd suggest looking through all of the other responses I gave on the thread and read through the resources I linked to.

        That said, one thing I would encourage you to do is get away from the concept of having prospective customers "play with" your product.

        Toys get played with.... we want our prospects - the people that work for companies that will be our customers and give us money - to use the product. We need to create a path to success for them... just letting them play around, kick the tires, check things out... that's a recipe for a very low Free Trial conversion rate.

  • RK

    Richard Kuwahara

    over 1 year ago #

    Hi Lincoln, thanks so much for giving your time and knowledge today.

    I really enjoyed your article on Ideal Customer Profiles (http://sixteenventures.com/ideal-customer-profile), and that's pretty much been the starting point for me in developing any growth/marketing plan.

    How fluid do you see the ICP being as a product matures and (hopefully) is scalable from SMB to larger enterprise? Especially since a bigger shift in ICP would affect other areas like building a sales team, sales cycles, onboarding, etc.

    Thanks,
    Rick

    • LM

      Lincoln Murphy

      over 1 year ago #

      Your Ideal Customer Profile is for a very specific situation (goal + timeframe) which means it is totally fluid... by design. In fact, you should not assume your ICP will still be your ICP after this time frame is complete.

      And yeah, you're totally right... different ICPs will have different sales processes, support requirements, etc. I've found the ICP Framework to be one of the only ways to easily and repeatably put a process around what generally amounts to throwing stuff at the wall to see what sticks.

      The only caution I can give is when looking for reasons ICP won't work for them - not saying you are, but people do that all the time - is to make sure it's not FOMO getting in the way of progress.

  • KA

    Kathy Anton

    over 1 year ago #

    We currently have an on-premise software product and will be delivering a SaaS version. Current target is companies with 150 or more employees. Our first SaaS offering will be a lite version targeting small businesses. My concern in this transition is not getting most of our revenue upfront. Any thoughts on monthly subscriptions vs. paid annually to the small business market? We will certainly be testing, but your thoughts?

    • LM

      Lincoln Murphy

      over 1 year ago #

      One of the biggest challenges for on-premise software vendors moving to SaaS (or the cloud) is in dealing with the revenue model switch. I cover a lot of that here: http://sixteenventures.com/cloud-magic

      Now you said that you're looking to go down market with a lite version... that's cool. I'd be careful about positioning it as "lite" as that seems like inferior branding. You may be carving out a subset of functionality for your SMB customers, but if it helps them achieve their Desired Outcome, their experience is anything but "lite."

      One of the big lessons I have to teach enterprise (or otherwise on-prem) software vendors is this: SaaS is not lesser software.

      If anything, SaaS is much more complex from the vendor side.

      That said, if you need cash, do annual prepayments. But read this first:
      http://sixteenventures.com/annual-pre-pay-renewals

      Also read in one of my responses in this thread where I talked about ensuring your monthly plan revenue multiplied by the average customer lifetime (assuming higher churn in the SMB market) add up to the ACV you'll get from annual plans.

      • KA

        Kathy Anton

        over 1 year ago #

        Thank you Lincoln. I appreciate it. I have gotten a lot out of reading your articles and blogs.

  • AM

    Alex M

    over 1 year ago #

    Hello Lincoln, very happy I have subscribed to your newletter, help us get ideas to grow our startup. Thank you!

    We are developing a payroll-related SAAS product targeted at all small and medium-size businesses. We would like to find a way that would make small & medium accounting firms across the country interested in using our product as a way to add value to payroll processing services they offer. Any recommendations on how to make this profitable for both us and accounting firms? Our subscription cost is $7/active employee/month. What models could we consider when trying to make accounting firms to be our resellers? They get a commission? They pay us for their clients using our system and then change their clients whatever they want?

    Feel free to recommend other resources or material. Thank you in advance!

    • LM

      Lincoln Murphy

      over 1 year ago #

      I'd take a look at what Xero is doing... they get a massive amount of their business from non-traditional technology-intermediaries like accounting firms, and they that not by pushing the rev share (which for them wouldn't be that much... for you it might not either, though $7/employee at scale might be good), but by going a different direction.

      Xero helps accounting firms do more of their core business by building into the product support for things that are valuable to the intermediary. Xero helps the accounting firm have stronger and more frequent connection with their clients... that's MUCH more exciting than a rev share only.

      It just so happens that Xero is an accounting SaaS and that's the industry you're in, but I use them as an example across the board... they nailed it.

  • JK

    Junaid Kalmadi

    over 1 year ago #

    Hi Lincoln,

    No questions to ask, just want to thank you for the insights on your blog!

    After reading and absorbing your content, we've directly improved our onboarding %, retention % and revenue. Even though we are a B2C app, the core ideas you communicate work beautifully.

    You are awesome! Thank you :)

    Junaid

  • SA

    Stephen Alberts

    over 1 year ago #

    Hi Lincoln,

    Big time fan. I'm designing my backend as we speak and already have paid beta users. Figured I'd prove the concept before I dump my $ into it.

    I thought I read somewhere that a SAAS company locked a certain feature and didn't unlock it until the user used the software and hit a small goal. Do you recommend that?

    Thanks!

    PS: To get a growth hackers account I had to sign in to twitter, then provide my email, then click a link in my email and then sign into twitter again. Isn't that a not so good sign up process?

    • LM

      Lincoln Murphy

      over 1 year ago #

      I just had a conversation with someone about locking features until certain actions are taken... it may have been here on GH but I can't find it.

      I don't know of a company that's done this, but I believe my response was "try it, but..." and the but had to do with the fact that what you're going to unlock has to be perceived as valuable enough to want to unlock it - and therefore you really want to take the actions that unlock it - but that the thing not be needed to get there.

      It seems messy and I'm not sure it's based on sound customer behavior principles.

      Honestly, it just seems like overcomplicating things for the sake of overcomplicating things. I'm not a fan of that.

      That said, if a case can be made to try it, then treat it like a hypothesis, know what success means for that hypothesis (i.e. it increased some metric by 10%), and put some bookends on it (like 90 days or 100 prospects in the trial).

      A good sanity check is always "wait, why are we doing this?"

  • PW

    Phil Wolff

    over 1 year ago #

    Have you thought about applying your understanding of human behavior to political activism and community organizing?

    • LM

      Lincoln Murphy

      over 1 year ago #

      I do this in various ways... from working directly with non-profits or other organizations doing what I perceive to be good in the world, to sharing concepts publicly so everyone can benefit.

      I also try (try, because I'm human and humans are flawed) to do things in my life to create a world I'd like to live in, knowing that actions speak louder than words and if I can offer some social proof for others through my actions, awesome.

  • FF

    Fabricio Ferrero

    over 1 year ago #

    Hi @lincolnmurphy !

    It's been 4 years I think since I ready your first article!

    We launched just 2.5 months ago, a SaaS for registered dietitian and nutritionist. Even though, we installed our credit card processor just 1 month ago so we're "just able" to start selling it.

    I didn't start making that much promotion because I don't want to waste a lot til our tunnel is optimized. We're having a great +13% conversion from visitor to trial. Still, we're struggling with retention and conversion to client.

    The market is there. People like our software very much. But we've only got 1 paid client yet. Am I being too impatient or there is something I need to know on how to improve that.

    It's good to know that we're implementing Active Campaign at this moment to see the conversion goes higher.

    Any advice on this?

    Thanks!
    Fabricio

    • LM

      Lincoln Murphy

      over 1 year ago #

      Wow... thanks for being such a long-time reader of my words... very cool.

      I've written a ton about how to optimize Free Trials (links below, plus read some of my answers in this thread), but I want to focus on something you said because I don't think - I could be wrong since there's so many unknowns here - that it's Free Trial optimization issue.

      "People like our software very much. But we’ve only got 1 paid client yet."

      You either have a legit Product / Market Fit issue... or (more likely) you just have a marketing issue.

      I would say that people - the people that you're talking to - either don't actually like your product (in the commercial software business, you "like" software by paying money for it) or you're talking to the wrong people. If your product solves a legit problem, it's likely the latter (though you do need to be aware of Desired Outcome and how important one part of that - Appropriate Experience really is... see the link below).

      One thing you might do is look at the 1 paying customer you have and see what the difference is between that customer and the others. How can you find more like that one customer? But then again, just one may indicate an outlier that doesn't actually represent a legitimate segment to target.

      I'd definitely suggest going through my Ideal Customer Profile Framework and getting clear on the type of customer that's a great fit for your solution as-is right now, who's ready, willing, and able to pay for it, and who would be most likely to be an advocate for you (to help you bring in more customers like them). The link to the ICP Framework is also below.

      http://sixteenventures.com/customer-onboarding
      http://sixteenventures.com/effective-free-trials
      http://sixteenventures.com/customer-success-desired-outcome
      http://sixteenventures.com/ideal-customer-profile

    • FF

      Fabricio Ferrero

      over 1 year ago #

      *read your first article :)

  • BM

    Breno Magalhaes

    over 1 year ago #

    Hi Lincoln,

    I'm from a Brazilian Startup specialized in Content Marketing and our prime goal is to reduce our churn rate. One of our decisions was implement the Customer Marketing Department, but we couldn't find any great references about it.

    Like, how can we structure it? What kind of actions can we take? How should we start?

    So I wanna ask if you have any references, articles or anything about it (sure we already check Sixteen Ventures). =)

    Thank You!

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