David Cummings on Startups

Category: Product Mgmt

  • Generational Product User Experiences

    Have you ever used a web application and immediately thought that the interface was from a previous generation of software? Maybe I’m a technology snob, but I immediately notice it and start questioning the rest of the application. The front-end really sets the tone for the entire app.

    Of course, one of the big challenges for a successful product is to migrate to a new user experience, potentially alienating existing customers. Therein lies the challenge: people don’t like change. How do you manage that transition?

    I don’t have a solution here but I recommend entrepreneurs and product managers be cognizant of out-dated product user experiences.

  • Tradeshow Wrap Up

    We just finished up the second of our two MarketingSherpa.com B2B Marketing Summit conferences yesterday in Boston. These shows are small and highly specialized with just under 200 attendees. Next month we’ll do a show with 13,000 attendees in San Francisco and another one with 30,000 attendees in Denver.

    Here are the tradeshow wrap up steps for us:

    • Create a campaign, including costs, in our marketing automation system and import the new leads as a CSV file
    • Do a quick meeting and talk about what went well and what we can do better next time
    • Ensure that any outstanding commitments for prospects, partners, and analysts are followed through on
    • Share any competitive or industry intelligence learned with the rest of the team

    Tradeshows, while expensive, still play an important role in B2B technology companies and I recommend evaluating them.

  • Product Roadmap Discussion

    We had our monthly product roadmap discussion yesterday as part of our process to constantly update our 12 month product strategy. The discussion format was as follows:

    • Department sponsors discussed their new proposed items in order of priority from high to low while other stakeholders asked questions and clarified the intent of the idea
    • Engineering provided the difficulty level of the issue based on how long the specific request will take (low, medium, high)
    • Product management walked through the current roadmap for the next 60 days and will subsequently incorporate and prioritize some of the new items

    Product management is part art and part science. As such, we’re constantly working to improve our product management methodology. I am pleased with our opinionated approach on what makes it into our application based on feedback from internal and external stakeholders.

  • Software Roadmap Process

    In addition to watching the U.S. Open tennis tournament, I’ve been thinking about our product roadmap process. The previous roadmap process for our SaaS product hasn’t kept up with the pace of product demands due to success in the marketplace. Here are the general ideas for our new process:

    • Shared Google Spreadsheet with individual tabs for each department, a tab for the actual roadmap, and a tab for customer ideas from our idea exchange
    • Each department keeps a laundry list of what they’d like to see in the product in their respective tab
    • The sheets have the following columns:
      – Item
      – Description
      – Sponsor
      – Priority
      – Difficulty
      – Discussed
    • Department managers come together once a month to discuss items that haven’t been discussed yet and to lobby for their requests to be moved to the main roadmap
    • The product manager makes the final decision, based on input from the key stakeholders

    It’s a new process for us and I’m excited to see the results. The most important aspect of product management is to be opinionated about the product vision and fanatical about what does, and what does not make it into the application.

  • Software Pricing Proportionate to Sales Cycle

    Two days ago I had the opportunity to meet with a local entrepreneur who’s working on a SaaS product geared towards pharmaceutical sales reps. The gentleman and his co-founder are working on the business part-time while outsourcing the engineering to a contractor in NY. After the usual chit chat, he drilled into the area that he was struggling with the most: pricing.

    His product is currently priced at $99/month/user, and has one add-on with a per usage cost. Having a medical sales background, he’s enlisted several independent, commission-only reps to help sell the product, but with no luck. I asked him about the sales cycle and he said it usually takes a couple weeks for a rep to sell the product once the prospect is in the buying cycle. What’s the problem with this situation? A product that sells for $99/month, and requires a trained sales rep, isn’t going to work unless it can be done in a call center and is a mass market application (think cell phones or cable TV). Software needs to be priced in direct, proportionate relation to the sales cycle.

    My advice to him was to either make the web application more self-service with a price point that is in the $10 – $30/month range, or to go much more up-market and sell a $1,000/month product to departments. At $99/month, his product is too expensive to sell without an inside sales team, and not expensive enough to compensate trained sales reps. It requires selling, not order taking.

    Pricing is difficult and should not be under estimated. For more software pricing thoughts, please visit Joel Spolsky’s post from 2004.

  • Marketplace No Man’s Land

    I had one of my weekly entrepreneur lunches yesterday with a gentleman who took his first technology company public in 1995 and is currently in the process of building his second company, while remaining chairman of his original venture. We had a great conversation about our respective businesses and current challenges.

    One of the comments he made stood out to me — he was battling being in a marketplace no man’s land. The idea is that they are still struggling to find their place in a new market that is rapidly evolving. After we left, I spent a few minutes thinking about how to determine if a company is in marketplace no man’s land. Here’s what I came up with, based on my experience:

    • The length of the sales cycle for your goods or services fluctuates wildly on a regular basis (e.g. one deal takes a week while the next one takes six months)
    • The positioning of your product in the market is hard to articulate
    • The last three sales have been to very different companies, and it is tough to find overlapping need
    • The leads being generated aren’t consistent or predictable

    Part of what I’ve described can come from an immature market while part can come from the difficulty of finding a place in an existing market. Positioning is a critical part of success and comes with significant trial and error. If you find your product in marketplace no mans land, I would suggest spending more time talking with customers and letting them guide you. Customer input is invaluable.

  • Churn with SaaS Products

    One of the most important, and least talked about, challenges for SaaS products is churn, or customers leaving. There’s so much focus on selling new accounts, and providing a compelling product, that companies often don’t spend enough time addressing ways to increase their client retention rate. While we’re always striving to get better at what we do, here are some of the strategies we’ve found that work well:

    • Use dedicated client advocates to proactively call on customers and help answer questions as well as learn about issues before they are reported (some clients don’t bother reporting anything and let the disgruntlement build up)
    • Schedule weekly webinars for free customer training and vary the topics so that it also acts as continuing education
    • Track which modules are being used by the customer and offer up ways for them to get more value from the system
    • Monitor customer logins and reach out to clients that haven’t logged into the system within a certain amount of time as it is usually a leading indicator they are considering leaving

    I hope these suggestions help. Customer churn is a critical issue for SaaS products, yet doesn’t get as much focus as it desires. Please reach out and share any suggestions you have for reducing customer churn.

  • Defensible Market Positions and SaaS

    One of the topics we debated today was building defensible market positions with software-as-a-service (SaaS) companies. SaaS companies typically don’t have many of the traditional barriers to entry like high development costs, high infrastructure costs, and slow time to market. As we proved earlier this summer, many companies can be launched in 90 days for $20,000 or less.

    Certain SaaS companies like salesforce.com (proper spelling is with a lower case ‘s’) have built defensible market positions due to their proprietary AppExchange marketplace of hundreds of platform plug-ins. Salesforce.com, being one of the earliest and most vocal SaaS companies, required over $100 million in financing to establish their beachhead position and market dominance. They were the first SaaS company to go from $0 to $1 billion in recurring revenue.

    How does a SaaS company answer the defensible market position question? I think the answer lies in explaining that this new generation of products isn’t about defensible positions but rather about first mover advantage and grabbing market share. The barriers to entry are so low that the most important task is to sign up as many customers as possible, while offering such a compelling solution that they won’t want to switch or their switching costs will be too high to warrant making a change. SaaS is about economies of scale with a multi-tenant architecture whereby more engineering time is spent on innovation and less on solving one-off customer issues.

    The number of software companies that are going to succeed due to patents and significant networks effects is significantly smaller than in the past.  Today, it is all about innovating quickly and taking market share.

  • Tradeshow Exhibitors and Marketplace Positioning

    Yesterday I was talking with a successful Atlanta entrepreneur and he was asking about the competition for one of our products. I explained that it was a large market and that there were tons of companies out there doing similar things — it’s very noisy. We got into product positioning, focusing on what mind share we were working on capturing with our respective marketing and messaging.

    Shortly into the conversation, he made a simple recommendation: take the most relevant tradeshow in our industry and decide what we should do with each and every exhibitor there. What he meant by that was to decide if an exhibitor was a potential partner or competitor, and for the competitors, work on strategically placing where they fit into the market, as well as how we differentiate ourselves.

    Personally, I’m not one for paying too much attention to competitor products because I think it is more important to spend time with customers and prospects. With that said, analyzing a competitor’s position in the market is readily accomplished by looking at their website, social media, and analyst reviews. Superior positioning will frequently make up for inferior products.

    So, for all entrepreneurs and product managers, I encourage you to look at all the exhibitors of your most targeted tradeshow, and decide if they are possible friend or foe. Once complete, analyze your competitors positioning in the market, and use that to better your own positioning. Good luck!

  • Channel Billy Mays for Your Sales Demo

    This afternoon I had the opportunity to talk with a gentleman who co-founded a company that is now publicly traded on the New York Stock Exchange. Two of his major strengths are strategy and marketing, which became readily apparent when I asked for feedback about our site and Flash demo. He didn’t hesitate at all to provide solid critiques of what we were doing well and what we could improve upon.

    As for the meeting, one of the most insightful takeways I received from him was to redo our Flash demo and make it more punchy. We need to channel Billy Mays. He said I should watch the show Pitchmen on Discovery and really pay attention to how they construct and deliver the material. Here are some of the specific points he relayed:

    • Set the demo up like a story
    • Be passionate and enthusiastic throughout
    • Emphasize the benefits first and set up a hook for the watcher to need more
    • Highlight any superlatives, like #1 in a certain market
    • Provide a call-to-action at the end for a direct response

    We’re going to re-do our Flash demos and channel our inner Billy Mays.