Posts Tagged ‘Product’

Shifting from a product company to a sales/marketing company

targetAt the risk of overgeneralizing (although to be fair as a VC that’s pretty much my job description) and understanding that there’s plenty of grey area here, I’ve really been noticing recently just how challenging it can be for organizations to move from being product focused to sales and marketing focused. It seems worthy of a post (and hopefully getting some feedback on).

Early on in their lives most companies are built around a focus on product. They tend to be engineering heavy, key deliverables center around feature releases and sticking to a dev schedule and success is measured by the progress a business makes on building and releasing product vs. revenue generated from that product.

Then, at some point in an organization’s life this focus starts to shift. It generally starts slowly. Perhaps a sales person or community manager/user advocate is hired. Sales and usage related goals start to show up more prominently in weekly reports. You start thinking about marketing and outreach. Eventually you realize that you’ve fundamentally shifted the focus of the organization from one that existed to build product and get early usage to one that is focused on scaling that early usage and showing that you have a customer/user acquisition model that actually works. It’s not that product goes away or that the product is somehow “done” (all great companies are intensely focused on product in my experience) but that almost complete emphasis that you had on product from the early days is replaced by a true emphasis on customers.

This can be a challenging time for an organization. For starters many CEOs of tech companies are product people. And frankly it’s easier to map out a product roadmap of success (delivery dates, feature completion, etc.) than it is to live in the more spurious world of early customer adoption and sales. I think companies that make this transition most successfully embrace this shift completely. They acknowledge it within their organization. They set clearly defined goals and report openly whether they are meeting them or not. They develop strong feedback loops between sales and engineering to ensure that the future product roadmap reflects the reality on the ground. They measure everything they do on the sales and marketing side to learn what is working and what is not. And, of course, they treat their early sales process just like they did their early product development – getting as much feedback from the market as possible and quickly shifting course (the equivalent of reprioritizing a feature or shifting a design principal) if something’s not working.

I’d love to hear your thoughts on this transition as we have a number of companies in the Foundry portfolio going through this metamorphosis right now.

January 24th, 2013     Categories: Startups     Tags: , ,

How long should your “trial” period run?

I’ve had this running debate with a handful of friends – I’d love to throw it out there for comment. The questions at hand are 1) whether companies should offer a “free trial” period for their software/web service; 2) if they do, how long should it last; and 3) what information should you ask for before starting a trial (specifically should you ask for credit card information up front).

Here are a few thoughts. I’d love to hear your opinion.

While you know that your web service is the greatest thing since sliced bread, it’s really really hard to convey the chocolaty goodness that is your product to the average consumer. You have to pull them in and offering a dry run of what you do is a good way to do this (maybe you have a free version of the service as well, but even so, you’re saving the best features for your paid users and you need to show them what can do).

Now on to the question of how long your trial should last. While avoiding the obvious cliche answer (“as short as possible”) I’d point out that many (most) companies default to 30 days. I think this is a mistake. If you can’t show value in a week or two you’re doing something wrong. And by waiting 30 days you’re just extending the number of people in your trial funnel and making more work for everyone involved (not to mention stretching out the trial and potentially losing customers). Your product should be designed to quickly get people up and running and to show value right away (see some ideas on that here). I believe your trial period should have three parts: 1) onboarding – quick and as painless as possible; 2) show value – make sure you’ve designed what you do in a way that you’re in front of your customers immediately after they input information; 3) ask for the conversion to paid – once you’ve shown them what great value you add, ask them to fork over the dough. Most companies err in all of these categories. Onboarding is too difficult. Value comes over time, not right away and the product forces users to remember to come back to it rather than the other way around. The “ask” comes too late, after people have forgotten what the service did in the first place.

Lastly open for debate is the question of how much information you should collect up front. On the one hand are people who believe that you should collect as little as possible – probably just and email – and get people into the system and up and running. On the other are people who believe that since you have their attention you should grab their credit card information up front so you can start charging if they don’t opt out. I’m in the former camp. I couldn’t find any scientific study on this, but in my experience asking for a credit card (or even having a two page sign-up form) significantly drops the number of people who get from the beginning to the end of the sign-up process. In one case, asking for credit card information resulted in 9 out of 10 people who started the free trial process dropping out.  That’s not worth the back-end trade-off of having the information to charge them later (plus the opt out thing isn’t cool in my opinion).

Your thoughts are welcome/encouraged!

October 30th, 2009     Categories: General Business     Tags: ,