SaaS Segments that Makes Sense
Have you ever signed up for a web app, and in their communication you get the feeling that they’re treating every customer in the same way?
I have. I keep getting email from web products that promote their latest, most advanced features - although I just signed up once and barely touched the product.
This is hopelessly ineffective, with the risk of the customer clicking the “unsubscribe” link and be lost forever.
Proper customer segmentation is the answer.
Step 1: Segments based on the customer funnel
Here’s the typical “Pirate Metrics”-style customer funnel:
If you’re in closed beta - as we are with Weld - you actually have an extra signup step:
To classify each of these steps in a metrics-driven funnel can be tricky, particularly Activation. See my separate blog post on the matter, “Defining Activation”.
Step 2: Defining the dropouts
So these funnel steps are perfect customer segments in their own right, but what about the customers that fall outside the funnel? They need to be taken into account, too:
…and with a closed beta:
Step 3: Customized communication
Now, with the segments defined, the fun (and hard!) part begins: writing customized communication for each segment.
First, we need a clear goal with the communication, and the goal is to bump up the customer back to the segment they fell out of. Follow the purple dotted arrows in the images above; “Non-Signups” should become signups, “Non-Activated” should become activated, etc.
Here are examples of communication:
The key takeaway here is that communication intended for customers further down the funnel, is useless for those who haven’t reached that point yet.
I’m a big fan of Dave McClure’s "Pirate Metrics" model, it’s both incredibly simple to understand and fundamentally relevant to almost any kind of business.
Most properties in the model are easy to implement with metrics systems - but one stands out: Activation, the 2nd “A” in “AARRR”.
Activation is defined by KISSmetrics as “the first point where you deliver the value that you promised”. Other ways of phrasing this moment is “when the customer has a fulfilling experience using your product”.
But saying this is one thing, defining it in a metrics funnel is something completely different.
What makes it tricky is:
- There might be different goals for different users.
- Even with the same goal, there might be different paths to getting there.
Again looking at KISSmetric’s examples from Dropbox and Shopify, Activation is tightly knit to a controlled onboarding experience, where reaching the end would indicate a completed Activation.
But what if the customer bails out of this process, yet manages to have a fulfilling experience on their own? How do you capture that?
In Weld, the app prototyping tool we’re building, we currently use “created >10 elements” as a proxy for Activation. But that’s a weak proxy.
I will revisit this post when I’ve learned more. Stay tuned.
Right now, 5% of Earth’s population knows how to create software. What would happen if that number was 50%?
Using Meetup.com as a recruitment tool
Here’s my hack for using Meetup.com to recruit developers and designers.
- Go through the member list and try to write down the names in a spreadsheet to as many as you can muster. I haven’t found a smart way of qualifying the candidates on Meetup.com so that’s a separate step (see #3).
- Go through the spreadsheet and do a Google search on "Firstname Lastname" site:github.com for each person. For designers, replace github.com with dribbble.com.
- A similar search but with site:twitter.com can give additional contact information, or at least a link to a personal website.
I consider contributions (can if needed be quantified with “Total Contributions number” on the user profile) on GitHub to be a great way of vetting developers. A strong Dribbble profile is a similar measurement for designers. I don’t care about LinkedIn.
Yes, the above process can take a bit of time. When I feel lazy I get help from my virtual assistant from GetFriday to collect the data.
leanstartup @Weld_io @SUP_46
To me, these funhouse stairs is the perfect metaphor for building a startup.
When you start, most things are out of reach: customers, talent, investors. So you work a bit more, building on your product, talking to people. And eventually you can take the next step up the ladder. New opportunities arise, but many things are still out of reach and you’re far from your goal. So you take another one, and another one.
Step by step, you build your business.
(Picture by Gullmars of the funhouse at Gröna Lund)
Circuit board business card is a minimalist credit-card-sized handheld console which includes Tetris. Videos embedded below:
A revolution in minimalist circuit board art design.
Capacitive Input Buttons
9+ Hours Playtime
1.6 millimeters total thickness
You can find out more about the project here
A business-card sized games console, nice!
Tips on finding outsourced talent
I’ve used outsourcing sites (oDesk, Elance*) and crowdsourcing sites (Designcrowd, Hatchwise) for both design and programming talent on a number of projects. Here’s my tips:
- Write a good specification. With images. Enough said.
- You can’t find design talent on oDesk/Elance. No good way to browse, and “good design” is hard to define in a requirements specification. Instead, use Dribbble to find designers you like.
- Ready-made design can be a better option than crowdsourcing. Crowdsourcing is time-consuming and/or expensive and/or produces low-quality output. The old project management quote "you can have it fast, good and cheap - now pick any two" comes to mind. A better option is buying a ready-made design from Brandcrowd, Stocklogos, or 99designs.
*oDesk and Elance are now the same company. But I used both when they weren’t. :-)