EP25 - Features, or marketing? (Part 3 of a series)

Amy Hoy: I read something a long time ago that stuck with me, but clearly didn’t stick with me enough. I believe it was on Naomi Dunford’s blog that she wrote, “Success is 90% marketing and 10% product”. You’re like, “Oh, of course! That’s a nice catchy phrase. That makes so much sense. Haha! Let’s go talk about marketing!”, much harder to implement because whenever you get sucked into working on product, you tell yourself or, okay, let’s be honest – I tell myself – this time is different. I really need this feature to make sales.

Alex Hillman: Yeah, I mean you but also me and everybody else.

Amy Hoy: That’s true!

I no longer succumb to this very much, except 30x500 when all my logic goes out the window.

Alex Hillman: That is a world where we learn hard lessons over and over, right?

Amy Hoy: Over and over again! I mean the production of the class itself, it’s basically our white whale. Right. But I have a story about Freckle. In fact, I have multiple stories about Freckle with regards to product versus marketing and the conflict there because, well, this series is all about my Software as a Service experience.

So, let me set up a couple scenarios. You don’t have a product and you’re working on your product and you think, “All the other products like this out there have this feature.

If I don’t have this feature, people won’t even consider me. Therefore, I must do this feature before I ship”

Alex Hillman: I know I’ve fallen into that trap…

Amy Hoy: Yes, so have I.

Second scenario is you have a product you have shipped, and people start writing you emails, tweets, or slacks or whatever…slacks as a noun is not good…it sounds like pants – people send you pants and embroidered on the pant leg…if all your product had feature X, I would buy. And then you’re like, “What the hell am I supposed to do with these pants?!”

Alex Hillman: But back in reality…

Amy Hoy: So, people write you emails, and they say, “If your product had feature X, I would buy it.”

Alex Hillman: Which is such a head game.

Amy Hoy: Right, yeah. Then there’s the third scenario, which is very much like the first one where you want to grow in your market, such as you see it and you think, oh well, to reach the customers, I have to have this feature.

Alex Hillman: So these are all situations – what I’m hearing you say – where the thing in common is some external input is indicating that a feature should exist.

Amy Hoy: Yes. You may have imagined that external input, but yes. And actually in our sort of pre-roll you were saying, “Hm, that sounds a lot like if X then Y”, which is kind of the inflection point thing, which is kind of the crux of the whole series. I hadn’t even seen that until you pointed out, it is the same underlying mistake when it comes to marketing as well.

When we shipped Freckle, I knew that if we did not cut the features to the bare minimum, that we would not ship it on time because I’d see this happen so many times that my clients and my friends’ businesses and so on. So, we shipped with very little, we had really great and fast project creation and time entry and we had pretty decent reporting and that was pretty much it.

We didn’t even have a way for you to reset your password automatically, you’d have to email us, and our billing code wasn’t complete. So, it was very exciting. Then nine to 12 months later we’re like, “All right, well, we need to take this product to the next level. Everyone says that they would love to use Freckle, except we don’t have invoicing.”

And so, we developed invoicing and because I’m me, I had to develop and design and then develop a much better invoicing than all the other tools – and it is superior and most ways, but it took us like multiple months, part time, but still, and people did use it and for a while, our sales did spike, but I can tell you today from the perch and the future of 2016, looking back on our decisions in 2009, that none of our best customers use invoicing.

Alex Hillman: So this was not a needle-moving feature in spite of the significant effort that you put into it?

Amy Hoy: The needle moved a little, but it didn’t continue moving. It didn’t stay moving. So I feel like it did reduce some objections for signing up, but in the end, I think that even people who said that they wouldn’t sign up without invoicing, don’t really use it for the most part. A very small percentage of our customers use invoicing. And actually, for our bigger accounts, our corporate accounts, we’re turning invoicing off so that they don’t have to look at a tab that they don’t use.

Alex Hillman: Oh that’s got to sting a little bit!

Amy Hoy: A little bit!! I feel like that’s one of the canonical examples that you can have, like the story goes as follows. You think the market is telling you that you have to do this, you do it. And then you’re like – fizzle noises.

Alex Hillman: Yeah, why did that not happen? Why did it not go?

Amy Hoy: Yes, because it wasn’t ever really an issue to start with , I fixated on the people telling us that they would buy IF and I think I was thinking about it as a loss, like, “Oh, we lost their business”, and so we worked to overcome that loss.

Alex Hillman: But you can’t lose something that you didn’t have in the first place?

Amy Hoy: Correct, you cannot lose something you don’t have in the first place and also in my experience now, I can tell you that typically, when people say, “if you had X, I would buy”, are usually lying. Either they’ll buy anyway, or you can go back and say, “I have this feature now” and they won’t buy. I’ve seen this repeatedly.

Alex Hillman: Or that now you’ve given the mouse a cookie, and they believe that anything you ask them for will be implemented as well?

Amy Hoy: Dangerous! So, if we had instead spent those three months on our marketing to reach people who didn’t care about invoicing, we would have come out much further ahead. So, another example, outside of the software and service world, info-products can also balloon to infinite size.

If you think you have to compete with the idea of a book, for example. Any programmer out there who’s older than about 25 will remember those giant red Rocks books that have like 15 scary author photos on them and they’re big enough that you can use them as a monitor stand.

Alex Hillman: Yeah. Basically, every technical book ever. I think they went for, in order to justify their $80 price tag, they went for as many pages as humanly possible.

Amy Hoy: Quantity over quality, shall we say? So, my husband Thomas wrote a book on how to retina-fy your web app or website graphics, so that they’re all going to look good on retina screens – back when this was still pretty new thing and no sites had done it yet. It took them quite a bit of research to figure out the best way to do it and then I told him that you should put that into an ebook and sell it. And so he did, and he included everything you needed and it was 49 pages. He sold it $39, or something like that.

He started getting emails from people complaining that they just spent $39 on 49 pages. He was like, “Should I lower the price?” and I was like, “No! Wrong! Don’t lower the price, because the price is based on how many hours it would save you, it would save you hours to put together that information.” So, I told them instead, change the copy on the sales page. Make sure it emphasizes that it includes no fluff, that you can get started and get the work done in an afternoon, and it will save you hours of trying to cobble together the resources from the various webpages and conflicting information and trial and error.

After we changed the copy, we got almost no more complaints, because instead of changing the product and listening to those complaints about the size of the product, we changed the way the product was positioned. Either those people were like, “Oh, that makes sense”, and were happy when they bought 49 pages, or they were so deterred by the number that was nice front and center that they decided not to buy.

Either way it’s a win – sales did not suffer, but complaints went down.

Alex Hillman: So, by helping the person realize that this book was created, not for someone who needs to make their web app look good on retina screens, but for someone who does not have time or who values their time more?

Amy Hoy: No, definitely, but it definitely was made for people to make pages look good on retina screens. It contained literally everything you needed to know. It’s just that everything you needed to know is only 49 pages. It helped people select, but it also eliminated surprise. I feel like so many complaints are actually surprise – they say they’re complaining about a lack of feature or a price or something, but what they actually are complaining about is that they weren’t prepared sufficiently in advance.

Alex Hillman: There was something that did not match expectations.

Amy Hoy: Exactly so you can either change the product, change the person or change the expectations. The expectations are definitely the cheapest to change, and the results may be the same for the least amount of effort.

Alex Hillman: Can you define marketing a little bit in this case? I think that people that are listening to this know exactly what we’re talking about when we think about product and features, but marketing is such a fuzzy, funny word, that conjures feelings and emotions and resistances without even understanding what word is that we’re really talking about. What is marketing?

Amy Hoy: What is the sound of one hand clapping? What is design? What is art? Why are you making this so hard on me?

Marketing. Well, I’m going to revert to Peter Drucker here because why not? Peter Drucker said that “the goal of a business, the job of a business is to create and keep a customer”.

So that’s marketing. Marketing is not just promotional blog posts. In fact, it’s definitely not promotional blog posts or, John T’s sponsored tweets or any of that stuff. Marketing is connecting with people who have a problem that you can help solve. People who are willing to pay to solve that problem. People who are a good match for your business.

It’s like there are lots of businesses that use invoicing or that don’t use invoicing that should never use Freckle. For example, we are never going to get HIPAA compliance. So, we do not want to reach medical people because that’s not going to work for our business, nor would we work for theirs. So, it turns out that big organizations really like Freckle because it’s not the usual godawful enterprise software they’re forced to use. So that’s what we’re working on reaching now.

Alex Hillman: So in that case, how are you actually reaching those people?

Amy Hoy: We definitely get search traffic. We have a landing page that is somewhat tuned towards their interests, which I can go into a little more detail. When people email, we are happy to set up demos for them, we tailor to their organizational needs. We ask them questions. We actually are working on a new feature after we’ve seen its need over the past two years, we waited a long time to start working on the team’s feature. But as our customers actually get bigger, or rather we get bigger and bigger customers – one department talks about how awesome Freckle is, another department wants to join. They actually require this feature to function.

We are paying attention to these customers very closely and seeing what they do. So we monitor in an anonymized way, the sizes of accounts, we figured out who are our best customers in terms of who have paid us the most, who has stayed with us the longest.

We’ve figured out what they need, how do they use Freckle? How can we make their lives better?

Alex Hillman: It was interesting because this section, when we opened up the section of the blog post we’re talking about was 90% marketing, 10% product. I’m hearing you describe marketing and it sounds like marketing is 90% observation, 10% some kind of thing that you actually put out there, some kind of actual thing that you do to give to your potential customer?

Amy Hoy: I think that that is pretty accurate. I mean, we do put out some stuff. We should put out a lot more stuff than we do now, but currently we’re working on figuring out what is we should do for these customers to best reach them.

But when we changed our landing page copy – it used to be something really stupid. The headline was “Goodbye, Administrivia”, which was really aimed at people like me, who hate dealing with the administration crap. The problem is those people probably aren’t going to continue using a time tracking tool because it is administration.

We found out through listening to what our customers said to each other and to us that one of the big reasons people love Freckle is because their team will actually USE Freckle and they don’t have to have that system of punishment and rewards to get people to fill out their time sheets. So, our headline is now words directly from our customer’s mouth. I think they said, “We tried three or four other time tracking tools before and our employees just wouldn’t use them, but…” and then kind of segues into some information about Freckle. Then the rest of the quote is that “the team loves Freckle and uses Freckle.” So that is pretty pure marketing. That headline has outperformed literally every other headline we’ve tested.

Alex Hillman: And that came from finding words in the audience’s own description, their own language.

Amy Hoy: Somebody spontaneously wrote that into us, but we hear that type of story a lot. When we do the Net Promoter Score or when we just send out an email, people sometimes just write a nice thing back or they submit something to the feedback box and just say something nice. It’s often that Freckle actually is pleasant to use and people use it.

Alex Hillman: I want to get you to react to something - fair warning, a phrase that gets bandied around a lot in the product and startup world, which is, you know, make things and then tell people about it. I want your reaction to that statement in this context – you’re making a face; you’re sticking your finger in your mouth!

Amy Hoy: I was pretending to make myself vomit actually, not just any old finger in the mouth, you know!

That’s cool if all you want to make are little side projects for funsies and then tell people about it so that your cool designer, developer, friends can pat you on the back for how cool your little side project is.

That’s not even said with condescension. I know it sounds like it, but that’s awesome for side projects, for fun, for building your portfolio or whatever. That’s not how marketing works, because if you sit in a room by yourself and you build a product and then you go like, “Oh, who’ll buy this. I’m going to tell them about it”, and then you actually tell people about the product you bought, you’ll find that’s not how things get sold or bought. That just isn’t the way the process works. People don’t hear about a product and immediately go, “That will solve all my problems!” and then buy it.

How many times when you’re walking to work or whatever, have you passed the store and thought, “I should go in there” and then you never do. Then one day they’re having free cocktails or like an even and then you finally go in because there’s a reason for you to go in.

Alex Hillman: So marketing in this case is creating those reasons for people to go in?

Amy Hoy: Yes and ensuring that the product is what they need before you make it. So obviously this is the whole central thesis of our class. We teach people how to do research, to build something that will out-of-the-gate solve an expensive problem for people who pay for things, through observation and research.

I don’t want to beat a dead horse about that, but it’s marketing to say, “Okay, we’re actually going to hide this tab for you so you don’t see it cause you won’t use it.”

Its marketing to say, “Here are actual words from actual customers, just like you that are very persuasive”.

Alex Hillman: Does it make sense to define marketing as intentionally making decisions that help your audience achieve whatever it is they’re trying to achieve?

Amy Hoy: I think so. I think marketing, I kind of think marketeering like you’re creating a market. You’re forging a market, as well as shouting about your wares.

Alex Hillman: So, when you think about marketing effort that you’ve put in over time, we talked about time where you put effort into product, or you should have put time into marketing. Can you think of an example of where you put time into marketing at the right time and the right place and you got proportional or potentially disproportionately good results?

Amy Hoy: Yeah. In 2009, I tripled the revenue that Freckle was making through the application of blog posts.

Alex Hillman: What kind of blog posts?

Amy Hoy: So at that time we were aiming Freckle at small development and design agencies. So, I would write about development and design stuff and I would write about consulting stuff and that would get read by those people, and then they would go, “Oh, we hate time-tracking, you made time-tracking that is unhateable – great! Let’s click that, try that.” That worked really well.

We have not been as good about that lately, but I think that we’re actually getting quite a lot of word of mouth sales now. So one of our next steps then is to talk to the happy customers who are in these large enterprises and ask if maybe they have other departments that would be interested in trying Freckle, that kind of thing, because the enterprise people don’t tend to read fun, little blogs. I’ve worked myself into a customer base that the 30x500 Safari method doesn’t work on very well. So, we have to try and do something different.

Alex Hillman: Some adaptation…

Amy Hoy: Yep. We went from, I’m being a $27,000 a year business to being a $100,000 a year business. That’s more than three times, in the span of a year after being pretty steady at 27 and then now we’re at like $680,000 a year. So, I mean, we’re growing, but ever since 30x500 came on the block, I’ve kind of neglected our first baby.

Alex Hillman: So it’s just a function of effort and time and any amount of energy that you’re putting into it. You know, that at this point, adding new features to Freckle is not where your time and energy is best spent?

Amy Hoy: With the exception of the team feature, because there’s no reasonable way to manage a team of 200 which keeps landing in our inbox. People saying, “I have a team of 130”, “I have a team of 200”. There is no way for them to use Freckle right now without it being crazy. But the Team’s feature is nearly done.

Alex Hillman: That’s great!

Amy Hoy: This is going to sound crazy, but I said earlier that you don’t want to worry so much about losing a potential sale to actually spur you to then spend months building a feature because of a potential sale that you think you lost, we’ve actually lost quite a lot of customers, to my mind over the lack of this feature and so now I feel like it’s justified.

Alex Hillman: Because they’ve grown and had to leave to something, they were paying customers, they outgrew you.

Amy Hoy: Exactly! And they were like, “we would love to stay” – and this sounds crazy to people, but when you look at a project, a feature, that costs six to eight weeks to develop, that’s tens of thousands of dollars of man time. We have not lost that much; we’re getting up to that point where we’re losing that much and so it’s time to do the feature. That sounds crazy.

Alex Hillman: How will you approach marketing that feature to existing customers and moving forward?

Amy Hoy: So I’m all about marketing to the existing customers. We’ll write a series of emails because you only get this feature if you upgrade your account to the newer plans. So, you may have 100% plan already, but if you’re grandfathered in from the pricing from three years ago, because I’m a big believer in grandfathering, we’re going to offer them an option to upgrade to the new pricing, which is higher to get this feature. Then we’re also going to start with, there’ll probably be a series of three emails are so laying out that we’re listening, here’s what we hear from you guys, we’re aiming specifically at teams and not the tiny freelancers or like two person accounts, like only at teams of maybe 10 or bigger. Then after people upgrade especially, we’ll ask them if they can refer anyone to us.

Alex Hillman: That makes a ton of sense.

Amy Hoy: I love showing people that we’re listening to what they need, and I listen, regardless of whether I’m going to do it, but people really love hearing that you’re paying attention.

Alex Hillman: What role does – and you mentioned this briefly before about support, but what role does support play in that as well? At this point, you know, whether you’ve got a team or even just an individual who is not part of the product team, interacting with customers, how do you make sure that that information – or what kind of information comes through support and informs this kind of process?

Amy Hoy: Everybody in our company does support, and everybody does support the way I told them to!

Alex Hillman: Go into more of that, because I know that you have a very strong philosophy and goals around how support is done.

Amy Hoy: That could be multiple podcasts all to itself. In fact, that probably should be several episodes! The most important thing about support is to realize that the goal of support is not to solve whatever thing that they’re writing in about, it’s to keep them happy as a customer.

Alex Hillman: They sound like they could be the same thing, but pull those apart, what’s the difference?

Amy Hoy: People pay lip service that idea, and they really don’t do it. So for example, if a customer makes a stupid mistake, be like, “do not get brusque or nasty with them, which I hear a lot, actually read everything they say, if you don’t understand what they’re saying, try to figure out why they’re doing something weird.”

So often times people will write in and they’re like, “Well, I did this, this and this”, and you think, why would you do that? The key is to ask. What are you trying to accomplish so that I can help you get that done? Not, “Here’s where the button is”. I feel like a lot of people fall down on that.

I’ve reported issues to people who run Software as a Service apps. I pay for it and I’m like, “This graph. I expect to be able to click this graph. It’s not labeled and I can’t click it. What is it? Just decoration? That doesn’t make sense”. I see a graph, I want to use it. It’s a statistic and they’re like, “Oh, well, it’s just for decoration.” They write back that it’s just for decoration or they explain why it’s broken, and you’re like, “I don’t want to know why it’s broken, I want you to listen to the fact that I’m telling you that it doesn’t work.”

People don’t care why you made a stupid decision as a software designer and they don’t care where the button is, what they want to do is they want to get something done

and so, your job is to help them achieve whatever it is they want to do, not just answer their question.

Alex Hillman: At the very least, if you’re not able to give him that right there to feel heard.

Amy Hoy: Yeah, validated. If something’s frustrating, we say, “I’m sorry. That must be frustrating”, or, “Oh, that sounds frustrating”, or something of that nature, as long as it’s natural, because if people are heard, then they don’t get angry – 99 times out of a hundred. And that hundredth guy is just a jerk. I mean nothing ever goes horribly wrong with time tracking, it’s not like a medical device crashed and killed somebody.

Alex Hillman: The other thing about what you’re describing though, that stands out to me is that you open the door for a dialogue, right? I feel like a lot of people are just trying to close tickets, close tickets, close tickets.

Amy Hoy: In fact, that is a major complaint I have about with customer support tools and why we designed our own and unfortunately we had to shut it down for various reasons, but all customer support tools are set up to close tickets. That’s not the job of support. Support is to assist the customer and also to understand the customer and to build relationships. So, when we designed a customer support tool – and by we, I mean, when I screamed about it and drew it out and was like, “we have to build this”…

Alex Hillman: Isn’t that how most of your best work gets designed?

Amy Hoy: Yeah, absolutely designed by rage! Definitely, screaming is involved, just in general. Angst in general, not an individuals. We built it so that we could assign a support request to any kind of case and so we could then track how many feature requests are for a certain feature, how many people are affected by this bug, as well as writing back to them.

Even though we wrote back to them, it wasn’t necessarily closed. We would have that on our radar and so we will be able to see how many people are affected by a bug. And then one bug is fixed, we can write them all at once to tell them it’s done. As far as I know, no support tool currently, does that.

Alex Hillman: You designed for follow-through?

Amy Hoy: Yeah. Actual customer relationship management, not ‘get the sales leads through the funnel’. Which is what most CRM tools are.

Alex Hillman: I think that maybe puts a neat little bow on this conversation because I think that’s what we’re really talking about here. When you say marketing; marketing, again on a tactical level, involves blog posts, sales, customer support…

Amy Hoy: Copywriting…

Alex Hillman: All of these things. But what is marketing? If we’re going to get that philosophical, that metalevel again?

Amy Hoy: It’s to create and keep a customer…

Alex Hillman: …through understanding them.

Amy Hoy: Absolutely!

Alex Hillman: Actually paying attention.

Amy Hoy: [00:24:27:] And supporting them, giving them value…

Alex Hillman: Cool. Way cool.

That’s actually a great segue into our penultimate topic in this series, which is focusing on your best customers.