A few weeks back, I spoke to 5x entrepreneur and angel investor Dan Martell for The Lean B2B Podcast. We talked about customer development, customer research, growth, and various strategies to learn from early product engagement.
Etienne Garbugli: My guest today is Dan Martell. Dan is an angel investor. He’s the founder of the SaaS Academy where he trains and coaches high-performing SaaS founders.
Before that, Dan founded several technology companies, three of which – Spheric Technologies, Flowtown and Clarity – were acquired. He raised millions of dollars in funding. He was an advisor to billion-dollar companies like Intercom, Hootsuite and UDEMY and he’s a fellow Canadian 🇨🇦. So, Dan welcome to the podcast.
Dan Martell: Thanks for having me man. I am super pumped to be here and I appreciate the opportunity.
Etienne Garbugli: That’s great. So, maybe start with a big question. If an entrepreneur were to start a new business tomorrow, how would you recommend they go about doing that? And what would be the starting point?
Dan Martell: Dude, that big question freaked me out. I thought it was gonna be like, you know, what’s the meaning of life. I was worried I wasn’t ready for it. So, I mean here’s the way I think about it. The biggest risk of any business or entrepreneurial endeavor is building something for a customer that doesn’t want it and.
So, every company I’ve ever started. I’ve always gone to the consumer, to the customer to the individual first, and then work backwards from that. The way I do it is pre-selling, and people are like, oh you can’t pre-sell this or you can’t pre-sell that. Well, the beauty of today is I’ve got crowdfunding to just you know point to and say hey, you know, crowdfunding is probably about a three or four-billion-dollar market a year, maybe even bigger at this point and every one of those projects essentially are pre-orders, pre-sales to the product before for most of them ever build it, right.
They might have a design. They might have a prototype, etc. So, the first thing that I have always done in every company is pre-sell it so maybe some examples will help. When I started my company Maritime Vacation, my first customer was my dad. He owned a cottage. I thought you know, he kept getting phone calls from people because he was listing the vacancy in newspapers. It’s hilarious now that I think of it. He ran classifieds.
And he kept answering the same questions, you know. Yes, it’s available these dates. No, it’s not. No, we don’t allow pets. It’s in this location. It was built thirty years ago. Like, all literally. I mean, this is 97-98. So, I just asked him if he’d be willing to pay and I charged him a lot more than everybody else because I needed the money for the servers, but he paid I think it was a charged him 500 bucks or 600 bucks because it was like a hundred dollars a month for these servers that built in this programming language called Cold Fusion.
But I pre-sold it to my dad and then I went as far as pre-selling it to a bunch of Bed & Breakfast. So, the way I did that is I found a list in in every province there’s a tourism guide and I looked at I found out that they have all their addresses in the tourism guide and I created a mail merge in Word an Access database for the data that I got my little brother to fill in. A Word doc form-letter that said hey, there’s this thing called the Internet. You want to put your Bed & Breakfast on the you know, and it cost like 30 bucks. Send me some photos and some cash and dude people did it. They sent me money in the mail, and I was 17 at the time. So, I’ve been doing this my whole career, you know, this is 20 years later.
I’m 39 now. 20 years later and I’m still doing this with every company I’m involved in because it’s just, the fastest way to validate that your idea. Etienne, here’s the big thing is people disconnect the fact that it’s not that the customer may not have the problem. It’s just they may not want the solution you’re selling.
So, some people think they’re doing customer development or pre-selling by saying. Hey, do you have this problem? I’m going to solve it, pay me money. But what’s more interesting to me is the I’m going to solve it this way, do you want that. Because those two things can definitely get you in trouble.
Etienne Garbugli: So, how would you adapt that to B2B SaaS for example. Like you’re talking about an example that’s more B2C, like if you’re looking at B2B specifically.
Dan Martell: No, that was B2B. I mean every one of those vacation Bed & Breakfast, those are all business customers, right? It’s no different.
Same thing. So, so I coach a ton. I think I’ve got over a hundred coaching clients right now in my SaaS Academy program. All incredible B2B SaaS founders. And I would say 60-70 percent executed the same playbook and what cool is they continue to do it for new product iterations, right? So, they’ll pre-sell new add-ons modules, etc., and then co-create it with the customer.
So, the way you do that is you want to essentially create a one pager. So, you spec out, you know problem, solution, feature. So, let’s say three core features product, product promise. And then you go and talk to your what I call a perfect-fit customer, right your ideal customer profile, your target, whatever you want to call them.
But essentially, I think this is the right customer for this solution, and you try to get 10 people to buy. Most people make the mistake at that stage of changing the specs on the product for every conversation. So, if I’m talking to you Etienne, and you’re like, hey, Dan, I love this. You know, but it’s missing this feature.
If you add it, I’ll buy. I’m in, right and then all of a sudden now, you’ve got 10 new customers, and 10 new features to add, and it’s essentially professional services. It’s not you know, so what I always tell people is pre-sell based on, because here’s the deal is and again I’ve been doing this for so long that I know all the rebuttals like people going to say, well my customers are not early adopters blah blah blah blah blah like you name it, I’ll give you the reason why you got to overcome it, but it can be done.
I mean just the idea of an early adopter, right if you look at I think it’s Geoffrey Moore’s Crossing the Chasm. I always mix up Geoffrey and Clayton Christensen. I think it’s Geoffrey Moore. Yeah. So, essentially the people that you know are the early adopters, the innovators they’re willing to invest to have competitive advantages before the rest of the market gets something and those are the people you actually want to find. Those are the ones that you want to figure out where they’re hiding and they’re the ones that are going to be early adopters and help you co-create the product and I mean, even one of my mentors and again I can walk you through dozens of examples, but one of my mentors are Marcel Lebrun, another great Canadian, essentially from New Brunswick built a company called Radian6 and they did the exact same thing with Radian6 for Fortune really 2,000 customers, where they pre-sold, they co-created and they built out the product from that point of view.
Etienne Garbugli:I interviewed Alan Klement a couple weeks back, the author of When Kale and Coffee Compete, and there’s a great story in that book on how your team used the Jobs to be Done framework at Clarity. So, what’s the role of JTBD, and how do you use it today?
Dan Martell: Yeah. I mean, to me, it’s kind of like, you know, I think it’s Bob Moesta, really who’s the pioneer behind it the idea.
I think I actually. First off, I’m going to say I think Jobs to be Done is probably the worst-named framework ever, and I say that with a lot of love and admiration obviously. Because it’s not sexy, right? Lean Startup is sexy, agile is sexy, Jobs to be Done is a little flat, right? Now, I think they would have called it.
Yeah. So, like I just always thought it hasn’t got as much prominence as it should because it’s so incredibly powerful, and a large part to that is probably some positioning. That being said, the way I think about it and it’s you know, it’s Henry Ford, you know, his whole thing was the job that people wanted was not a Faster Horses, they wanted to get to point A to point B faster, right? And in many ways, this is the way Elon Musk thinks when he talks about First Principles, right when he looks at transportation or rocketry or electric cars, etc. He looks at the First Principles of physics involved in saying, if this is the Jobs to be Done, then how do we really look at reducing the cost of making it a better product?
So, for me when I was looking at Clarity, the biggest challenge like, you know, and I’ll be honest when I started I was full of, you know, enthusiasm and excitement because I was like, wow, I can’t believe nobody had thought of this yet. Right nobody thought. Hey, there’s all these experts in the world is all these micro-celebrities, how do we connect them with the people that want their attention? If they obviously have a followership, if you have people following you on Twitter, Instagram, Facebook, et, reading your books many of them would pay a premium to get on a call to ask you specific questions around their context and get some solutions.
So that was the premise for Clarity. Now, when you dive into okay, you know total addressable market, you know, specifics. What is the Jobs to be Done? Here’s what I realized, what I remember. I came across one of my early early adopters guy named Omar out of Miami and he spent like seven thousand dollars on Clarity in a week, right?
So obviously I was like, okay, I need to figure out what he what does he believe, what does he know that made him do that ROI calculation, and him decide to pull the trigger. Like I didn’t know, I’m like this is this is kind of the first like not influenced by Dan Martell, don’t know their group of friends.
Like he saw the product, understood it, and went nuts and did about, you know, half a dozen, a dozen calls and the way he framed it for me was hey, man. I used to spend way more money traveling to events, standing in line in a Q&A to ask a question that might get answered that really only got answered high-level because it had to be relevant to everybody else, and even if I tried to talk to the speaker after they get off stage, it was hit or miss. And now you let me get access to those same quality of speakers today, and I don’t have to wait, and for honestly a fraction of the cost that I used to spend going to conferences and events. He goes, I can’t believe people don’t get that.
And that’s when I realized that the Jobs to be Done, one of the primaries was for a certain type of business owner, an entrepreneur that are looking to make strategic decisions that have a belief set that has to be true. I think that this is like when we talk about perfect-fit customers, I think if you don’t take into consideration the corporation or the individuals’ values, you’re missing a huge opportunity because what I realize is, you know, entrepreneurs in general if you grab a hundred of them. It’s actually only about 20 to 15 percent that are growth-minded. And people are like well, I don’t get it. Every entrepreneur is growth-minded. There’s a lot of people that are freelancers, you know, self-employed, etc that are quote unquote entrepreneurs.
That do not have the same belief, you know growth abundance mindset. And so, if you take about like that target market in the Jobs to be Done, it was really for a growth minded entrepreneur that valued council, advice, expertise that believe that investing in themselves or their team was a good investment.
So, all of a sudden now the market size gets a lot smaller, but the beauty is understanding that Jobs to be Done allowed me to say, okay. Well, what’s true about that customer, right? So, if I take Omar and I zoom back and I go okay, what’s true about Omar in the context of who he is and his values and his business, and etc. and we found out some really smart things one.
Most Omar’s use Evernote, right which is an obvious thing in hindsight because A) it’s an advanced tool back then, right. Most people didn’t know about Evernote. B) it showed that you were somebody who collected information, right. Because that’s the core premise of Evernote to just like capture, take your digital bond and put it in a better format and C) that you believed in kind of investing in yourself and like investing in tools, right?
So, a lot of people don’t invest in tools. They don’t invest in a day-timer. They don’t invest in, you know, simple things right software, project management, software workflow. So. That was the big you know again, I don’t want to waste all like you got questions, but that was the big thing is just trying to understand at the core of this when you, and I call them bright spots in your product, in your customer usage, there’s bright spots people that are getting a disproportionate amount of value in your product, you need, to you need to zoom in interview, Jobs to be Done framework then extract, what’s true, and then go validate that with your other bright spots. To see is this true there. Can I can I go and find that on these other companies and then if those things are true, then how do I use that understanding for positioning and marketing?
Etienne Garbugli: Okay, so maybe going to come back to this, but like if we take a step back so like once the product is out, how do you start learning from your users?
Dan Martell: Lots of different ways. So, it’s kind of like right time, right action. So that’s why I call everything I do growth stacking because I really believe there’s things you do when you’re at this stage and it’s different at this stage. And you kind of stack your growth tactics, but let’s say if you’re just starting, one of my favorite things is doing Smile and Dial Thursdays. So, every Thursday, I would pick at least eight clients because not everybody would answer and I would call new customers. And I would go through a series of questions.
I wouldn’t even tell them it was the founder because I felt like the advice was skewed. So, if you’re the founder of the product and people don’t want to hurt your feelings don’t want to say anything bad. So, I would always say, you know, this is John, you know product manager at Clarity. I noticed you signed up on Monday.
Some people would be like shut up, this is Dan because they knew me. However, I’ll get but the then it was really just trying to find out how they heard of you because like there’s all these things that you need to learn in the early days. It’s you want to figure out kind of like, what’s what made them sign up, right?
What did they understand about the product, I mean, this is the big thing I’ve learned is and this is another strategy that I call the Product Profit. It’s a survey format, but one of the questions you ask is how do you explain the product to a friend or colleague, right and if you then filter that answer in the survey to the people, that would be very disappointed, so essentially, if they could no longer use the product, how disappointed would you be, the very disappointed people those people have a different description than what you have on your home page. I see this 80% of the time. When I start working with a client we send out the survey I look at the data. I zoom in on it. I show them, and then I go okay. Here’s your home page, here’s what they’re saying. Do you see a disconnect?
So, what happens is the motivated users figure it out. And those are the ones that are very disappointed, and everybody else didn’t figure it out because your messaging is off.
So that’s what I’m always looking for in the early days is understanding, you know, how did you hear about us? What did they say? How did they explain our product? What made? What did you think you would discover when you signed up? What problem are you looking to solve? Etc, Etc, Etc. So, there’s all these like product questions, but I do that every week, you know, at least I want to get on at least three calls in an hour, and I usually have a queue of 8, so it means you gotta get some sign ups, but that’s the way you do it in the early days.
Etienne Garbugli: So, you’re trying to get at the value proposition like the messaging itself first, and then how it ties to the product?
Dan Martell: All of the above. I mean, because you have time you can get through all of that.
I think in the early days, usually your products’ pretty straightforward, you know, it’s almost like a feature, it doesn’t do a whole lot. First version of Clarity was pretty much you know, like you call. That was it. Like there was no Q&A, there was no there was literally it was like handful of experts. There was no marketplace, you know, you couldn’t search, as like here’s some experts on these topics. Okay, I’ll call them.
So, yeah, it’s all of the above, it’s figuring out. The way I think about it is there’s a mental movie that customers create in their mind, and we want to create that mental movie to tell a story that is deliberate, that we believe is the best story for them to propagate in the market, right? Like that’s that’s the way I think marketing’s marketing’s job is to craft the mental movie around the problem you solve and how you solve it, who you solve it for, and what makes it unique and interesting, and some of the results you’ve gotten further clients, and if you do that in a way that uses their words, right? So, this is the other thing, just from a copy point of view. You know some founders will call them. I mean think about different industries have different words for customers, right. Gyms call them members, doctors call them patients, lawyers call them clients, like every like so just little nuances like that makes such a big difference when you’re trying to position the product.
So, trying to figure out the way people describe the product, figure out what problem they’re trying to solve. The you know understanding how they wish it would have been solved. So, if there’s a disconnect between what they expected and what you did which you know goes back to the Kano model. I think is worth understanding that gap, but to me it’s refining the mental movie and knowing that everything from who first introduces them to the solution, to the homepage, to the signup flow, to the first-time user experience, to your retention re-engagement emails, etc are all going to, hopefully, be a thoughtful consistent clear, you know mental movie of the problem you’re solving, and I think if you look at the best products in the world, that’s what they either did consciously or unconsciously.
Etienne Garbugli: So, okay. So, in one of your talks, you were mentioning that you created a customer advisory board for Clarity, and how it really helped with validation, features, and all that stuff. So, how would you recommend founders think about that specifically, and maybe set it up if that’s that’s still something you advise companies to do.
Dan Martell: Yeah, so I call it the CAB, customer advisory board, or internally at Clarity, we called it the A-Team, you know, it was essentially our advisory board, our A-Team.
I think that, depending on the product engagement and the engagement of your A-Team, you might you know, you might want a dozen people to 25 people. I think at the height we had probably 30 because I just keep adding people. So, the big mistake people make is letting customers opt-in right which I call the vocal minority.
I think a lot of times there’s very enthusiastic. I mean, this is probably the saddest part about building a company is when somebody’s like oh my God, I love you. This is so amazing. What a great product. Oh, yeah. I love it. I love it. So great. You’re the got all this amazing and then you go look at their account and they haven’t done anything.
They’ve never used it. They signed up once six months ago, you know, which is not horrible because they’re out there being an advocate and an ambassador, but you know, they really. If you actually got their feedback because a lot of these vocal minorities will tell you stuff. Like you know, what you’re missing is you got to add a get add a bookmark link or you gotta add a mobile app or you gotta add integration with this tool and they’re actually not users.
So, the big thing for me is step one, you decide who you think would be a great person to add to the the customer advisory board. And then the way you engage them to me is I think is and even though so clickable prototypes is a kind of a concept that I’m a big fan of both in pre-selling and in product development.
So, a lot of people do the clickable prototypes to validate their idea to get pre-orders, etc. And then they stop doing it when it comes to product development, which I think is the hugest opportunity, right? I remember one time we were working on a browser extension for Clarity, and I was showing it, I built the clickable prototype, which is super simple. Like you can use Balsamic, you can use UX Pin, you know, if you want to get fancy and go to InVision app. We use Keynote. We literally built a design template style guide in Keynote with all the widgets and all the tools in the interfaces for our product, our designer built it, and then anybody on the team could literally just take the templates retweak things and easily create a new flow.
So, I was working on the browser extension for Chrome and I showed it to some customers and they they just said simple things like that doesn’t make sense. The language you use on that page, the way you asked me to add it to my just doesn’t make sense or when you did this, I expected to see that and you’re showing me these little blue dots but that doesn’t tell me that I can call the expert, you should change it to this.
So, like being able to use your customer advisory board for product design, pre-building I think is so incredibly valuable because they’ll allow you to come out of the gate with a new feature, module that’s way more polished and on point than if you just, you know, build it and deploy it so that’s how I use them.
And it was really just for focus groups as well. So, like I’m a big fan of actually going into a customer’s world and watching the way they work. Right. So, with Clarity, for example, one of the big features that we never got to build that we were going to release was integration in the calendars.
So, one thing that we believed is as the Jobs to be Done was expert advice for your team and most of those conversations happen in a meeting with 2 plus people around things that they’ve never done before like we’re going to work on our SEO or marketing or you know, I’m thinking of bringing on a VP of sales or whatever it is.
They have these calendar invites and I wanted to make it seamless so that it would prompt you and say do you want an expert for this call? Right and then give you three options and you could say yeah and then it would just like it’s a pretty straightforward. So where was I going with that?
Oh, showing the customers how that would work and getting their feedback around how they think of advice today, and what advice they would feel comfortable allowing their team to pull from because that’s when it got really interesting when it moved away from just being the entrepreneur and then it being the team that had a budget essentially for expert advice and really trying to understand the team’s approach or mentality to it because some team members felt attacked or they were worried that they would look like they didn’t know what they were talking about if they brought in an expert, right? Because they were paid a hundred twenty-five grand a year to manage marketing and all of a sudden now, they’re spending 500 bucks an hour to bring in an expert, you know, they were worried that if they did that their boss, the CEO, the founder would think well, they don’t know what they’re doing, right?
So, just even understand that nuance. I don’t think I would have came to on my own because our culture was totally different. I gave everybody on the team a $500 budget to do Clarity calls individually, every person on the team should and could make calls to help their betterment. So that’s the way I think of using a great customer advisory board to essentially validate early when there’s not a lot of invested cost on ideas to quick because it’s all about speed right if I have to you know go and create a survey structure and find people to take it, etc versus if I already got this group ready to go and then we would even do like pre-releases made them feel special maybe mention them in the release if they help kind of guide the shape the feature, etc.
Etienne Garbugli: How do the techniques you use and the insights that you look for evolve as the business grows, like now you’re talking about the customer advisory board, you’re talking before how you don’t do all these interviews. Does that remain or do you change the way you learn and the way it moves?
Dan Martell: What happens if you think about it, it’s qualitative versus quantitative, right?
So, you got these two ends of the spectrum and I think in the early days, let’s call it zero to a hundred million or a hundred million zero to a million in ARR, or annual recurring revenue, $83k a month in revenue for B2B SaaS. A lot of that is gonna be qualitative. Working with the customers, talking to the customers, watching them work, right?
One question I love to ask customers is what do you do three minutes before or three minutes after you use our product, right? To really get an understanding of what I call share of wallet. How do I get more of the full problem space that they’re looking to solve in our solution, etc. and that is very qualitative in the early days.
Right? And then, later on, million plus two-three-four million now, it’s more data analytics, surveys, etc because you have a bigger pool of customers. So, if you could in the early days it would be great to do that stuff, but you just don’t so it moves to more split testing, NPS scores. You know just product engagement data, right?
So, like when we work on product features, I use the RICE scoring concept, which is reach, impact, confidence and ease, and being able to then like get the data of like, okay, we have 500 and then segmenting out by like by plan so the other thing is a lot of people they look at retention as like this global number, but to me, it’s like you gotta separate the small versus the medium versus the large churn numbers because they’re different customers, they’re different appropriate experiences, they’re different expected outcomes.
And then once you’ve got that then you can use the surveys to dive in and look at things like pricing, would be like willingness to pay right. So, I just feel like that’s the way to think about it in the early days. It should be very like, to me the founders should be in the support tickets. Like there’s some gold in there.
I did support for two years at Clarity, the first two years and again under a pseudonym name because obviously if you’re the founder, it sounds romantic and people are like, oh I’m gonna do it as a founder, but the truth is is that it clouds and it muddies up the feedback and. You know. If it’s Jason at 37 signals, my email to him is going to be different than Sarah, our customer support specialist.
Etienne Garbugli: So, and today like how do you recommend that founders prioritize features or functionality groups by the value or by what brings most value to the user base?
Dan Martell: Well, that’s using the RICE score. Well, so there’s like a few things right because it’s one part of it is.
You know, it’s I remember Sean Ellis who created the term growth hacker. He said if all we did was split test everything we thought we’d end up at porn, you know, and I’ve never forgot that because it’s just a simple idea of like we can’t always look to just optimize the local maxima problem. Right?
So, you know, sometimes the big opportunity requires us to go down the valley and rebuild to get to this next level peak in opportunity. So I think. It’s yes, it’s using the RICE score right, reach, impact, confidence, and ease. And that’s for I think for existing customer bases, but you should also still have a product vision, and my rule and the underlying question I’m asking myself and the team always is how do we create more value for a customer than anybody else in the world?
And if we are always trying to answer that question from a product experience, to a customer experience, to a marketing experience, I think that it’s a good true north star and that I think can’t be forgotten in light of like we can make the product better that’s great, but at a certain point we need to bring innovation to this market. We need to be thought leaders. We need to we need to be pushing the innovation. If all we do. If Slack stopped at just chat and didn’t add other features, if Dropbox just stopped at file storage, etc. You know as they get more competitors out there then those people are going to be the innovator.
So, it’s kind of like a two-headed thing where you need to make sure the product keeps getting better for your install base. But then you also need to be looking at where’s this market going? What’s true in the culture? What’s changing? You know, and I look at Snapchat as just an incredibly innovative company, right?
I mean, if you’re getting if everything you build is being ripped off by Facebook, you know, or Instagram like you’re doing some really smart things. And yeah, so I think that’s the way I think about kind of prioritization is yes using improvements. But also, we need to have an eye on the vision.
Etienne Garbugli: Okay, and are there like in your opinion some customer research techniques that you think more businesses should be using like those that are maybe neglected by SaaS founders.
Dan Martell: Well, I mean, I don’t think SaaS founders are doing Jobs to be Done, so that’s a big one. The Kano model I thought was just a fascinating way to think about, you know, the customer needs, and this came from my buddy Merv.
He worked in a manufacturing business for years. It’s kind of more old school, but the idea that there’s kind of three things that we need to focus on is the three Es of the Kano models is Expected. So, what are the things the customer expected? What are the things that they’ve expressed? So, this might be in your support tickets, in your interviews, in your conversations or even in public chat, so like or public support group?
So, one of my favorite things to do is go read the Q&A on my competitors’ public Q&A chat sites if they exist which for the most part they kind of do or even community forums right to really understand, you know, where the gaps are in the market and then three is exciting, right which is back to that question, how do we create a product that adds more value to our customers than anybody else in the world, because in answering that I think we’re going to find those opportunities to excite the customer and that’s why I like, you know creating those surprise and delight moments I think are what separates the brands like a MailChimp to you know, Fresh books, you know sending birthday cakes, like just these simple things that are just so powerful when it comes to retention, loyalty and word-of-mouth marketing and that whole VWOM is what I call the Virtual Word of Mouth marketing like it’s more prevalent than ever. I mean, especially with like sites like Capterra, and others like your ability to get new customers from a positive customer experience is exponential and it continues to get better, right. Review sites, distribution channels, your mobile reviews, your Google reviews, Glassdoor for your employee reviews. I mean, it’s pretty neat that if you can do things that are just better than everybody else and get recognized for that, it has such an exponential impact to your growth.
Etienne Garbugli: Maybe the reverse, are there some techniques that you think less businesses should be using. Some that are overrated, that people use or things that people do that are not worth it, sort of.
Dan Martell: My biggest pet peeve is people hiding behind their data. So that’s like my biggest pet peeve. Yeah. So, the way I think about it, yeah super early on for sure they’re doing it and even later on.
I mean, here’s what I think about if I have a retail store. And I own that retail store and I hide in the back, you know in the closet, you know in and around me is like these closed-circuit televisions and I’m watching our customers come through the front door and they’re interacting with staff and I’m just like spying on them essentially. I’m just watching, you know as they come in the customer says, you know, do you need any help with anything and they’re like, no, I’m fine like okay or you know, like you just spy on them and then they leave without buying right? And a lot of these tech founders, they just sit in this friggin’ room and watch these TVs and see things happening and never once it like dude if I owned the retail store that sold jeans and people walked in and left without buying and like three or four people did that in a row. I would run out after them and apologize for frigging being out of breath and say hey, I just got to ask you. You came into the store. So, you were looking for something or you were interested in something what was missing or what were you expecting back to the Kano model, right, expected because if I don’t solve that that day like it doesn’t get better day 2-3-4 so I just think a lot of founders get really giddy on their Profit Well, or their Baremetrics, or their Chart Moguls or their, you know, their Segment data and they don’t actually stop and say those are people behind those emails or data points and if I see a behavior, I should engage.
So, like when we were building we built the product called Timely and our activation was like 10%, it was super low from what we expected. It was a simple tool to let you auto-schedule your tweets so that they would be published in the best time to amplify based on your audience, right? So, we looked at the data and then we say you don’t have to tell us when to schedule it, we’ll schedule before you just queue them up. And people weren’t using it and I didn’t sit there and try to fix it and try to guess. I picked up the phone and email I emailed them and said, hey John you just signed up for Timely, you got 5 minutes or you got three minutes? Here’s my cell, text me like, I just want to get on a call.
And the craziest thing happened they all kept saying this is amazing. I love the idea signed up, but I’ve queued it up. I’m going to look at it next week or look at it tonight or less so they didn’t take the action at the beginning, and then I realized is that the big reason was they had nothing to tweet.
So. What I changed is essentially I gave them a prompt. I thought what’s the most universal types of tweets that I could present for them to add so that they can if they don’t publish a tweet through Timely they’re never going to come back because we never showed them the core value, we never get them the aha moment and we showed them quotes, you know, motivational quotes.
It wasn’t for everybody but they were pretty generic, pretty straightforward that they thought. Okay, I could share this and then they would just add it to the queue and it would tweet but then they would get the email and it would say oh this quote and the cool thing is quotes get a lot more engaged in the most people’s, you know personal life tweets.
So, it was just a way for us to say like, oh shit this tweet got five retweets. My tweets never get retweets, you know, and then they’re like, I gotta go use Timely so it’s those little things that if you don’t talk to the customer, you know, you might just look at the data and think there’s something wrong with the product and there is but the real insights is going to be from the conversation.
So, I’m just not a fan of hiding behind the data and that’s the thing. I think people need to stop doing.
Etienne Garbugli: Why do you feel like founders are like some of them are afraid to do that, is it fear? What do you feel is the reason?
Dan Martell: Yeah, I think it’s I think its fear to have somebody criticized their product.
I get it. I’m the same way man. I don’t want to hear I already know it’s broken with the product. I already know that it’s not great. You know, I’m having a hard time getting out of bed just to keep building and grinding because I’m not getting paid and it’s you know, like the revenue didn’t happen the way like I get it it’s hard.
It’s like, you know, it’s like lining up to get kicked in the stomach, you know, but if you know that the opportunities on the other side of that activity you just you gotta you gotta have the faith and push forward.
Etienne Garbugli: Maybe last question. So, like if we try to put everything back together like so I’m a subscriber of your newsletter. There’s a lot of great content there. But also, I’ve noticed there are a lot of experiments. How do you go about validating and iterating the SaaS Academy like your current business like how do you go about experimenting, testing, growing.
Dan Martell: Pretty much everything I’ve just told you, I do for my coaching business.
So, I have a customer advisory board. I measure everything. I’m interviewing the customers, we get surveys, we get NPS scores. We get feedback at every event we do. We do a post event survey at the event so that there’s you know, a hundred percent completion. My customer success person is continuously monitoring and getting feedback.
We have a process for doing that so. My marketing team, same thing. They’re continuously split testing. We’re coming up with ideas every quarter to kind of say, Hey, let’s try this positioning. Let’s try this this messaging, let’s try this email format. So, I don’t know like to me what I’ve always just loved so with SaaS Academy, you know, essentially, it’s not a subscription there’s a commitment so it’s a three-year program with the one-year commitment, but I let people you know pay it off every month and I just love that. I’ve always loved business models and that’s why I fell in love with software that were just predictable right and because they’re predictable every month. They’re predictable in the sense that they pay every month and because of that every month I need to earn that investment, right? Because I think every time I pay $89 for Trello or $250 for my email marketing tool or you know a hundred bucks a month for Slack or whatever it is. I’m asking myself, did I get that kind of value out of the product and I just love that honesty and purity of that exchange and I think that you know, sometimes enterprise products don’t get that.
They don’t get that alignment and I just think it’s just such a beautiful thing that I will always I can’t think of a business that I’ll ever get involved in that doesn’t have a subscription model be even like some of my clients they pre-sell 2 years contracts, which is a great way to bootstrap up-front. It’s very dangerous in the future. So, again right time, right action. In the early days, it’s a great way for cash flow, you know, if you’re three or four years in 2 to 3 million ARR it’s actually really bad for you because you’re not getting the data set that you should be getting. You’re not monetizing as properly too because if you’ve got good retention, why would you give a discount just you know, so there’s all these things that to me I just love the purity of it, and SaaS Academy, I treat it like a software business and I do all of this stuff we just talked about with my clients because I also don’t want to be a hypocrite. I think a lot of coaches out there are, and that’s just a fact, you know, I mean I’m just going to say this, Etienne, most business coaches never ask their customers for their financial numbers.
I posted that one day, I asked: does your business coach ask you for your P&L like your financial numbers, do they ask on a monthly basis? Does your business coach and review it with you to help you understand it. Everybody was No, no. No. Yes. No, no, no like 90% was no. I don’t know man. If you’re a business coach, and you don’t truly understand the person’s like to me, the financial numbers are the scorecard. It’s the school degree. Yeah, it’s like all this other stuff that you know, the playing entrepreneur and doing fun things and feeling motivated and inspired. All this stuff is great. But if it doesn’t translate into increased gross margin, and you know retention and all these other metrics that are going to show up in the P&L, and they don’t matter. So, I mean, I just I just have a really hard time when I see.
I do what I teach and that’s just a personal thing from an integrity point of view. I think it’s really weird. You know, it’s like I say, you shouldn’t trust a fat life coach and I’m cool saying, you know, it frustrates a lot of people but it’s like dude if you can’t get your shit together, go start there, like that’s just my thing is start with your own stuff. And then if you feel compelled like I’ve done to share with others then that’s cool, right. But again, that’s you know, I also believe some people are researcher experts and they you know, blah blah blah blah blah. I get it.
There’s always exceptions, but the norm for the most part that’s that’s how I think about it.
Etienne Garbugli: Thanks for taking the time Dan, that’s really appreciated. Where can people go to learn more about your work?
Dan Martell: Yeah, so if people have retention issues because most people do, just go to danmartell.com/churnbuster, and I’ll share with you guys my Churn Buster cheat sheet.
It’s nine different strategies to increase your retention and really monitor your customers, and then on my YouTube channel, I published every Monday for the last three and a half years. So, I’ve got hundreds of videos there and if you want to see the behind the scenes like these folks here on Instagram because I’ve been live streaming, just follow me on Instagram. It’s kind of where I share my journey, the deals I work on, my client stories, my team, my family stuff. It’s kind of like the behind-the-scenes.
Etienne Garbugli: Perfect. So, we’ll share your links as well. Thanks for taking the time. That’s really appreciated.
Dan Martell: Thanks so much man.
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