(These are my notes from Rob Walling’s talk at MicroConf 2012, on April 30, 2012)
Before Rob spoke, his wife got up and introduce him. He has mentioned her on his podcast a few times, but she had a couple of interesting things to say. I wrote down one quote:
- This group is engaged in building the kind of life you want. As a clinical psychologist, I’m 100% behind that.
I suggested via twitter, as did a few others, that I would like to hear a talk from her about her perspective on the “micro-entrepreneurship” life, and how we who engage in it can be better to our families. Hopefully that can be on the program for next year, or better yet, on a podcast in the near future.
Anyway, on with Rob’s talk:
- One of the most important things to learn is how not to invest so much time before failing.
- “In order to succeed, your desire for success should be greater than your fear of failure.” –Bill Cosby
- The 4 tiers of customer need (or why products have a better chance of success):
Sold on value? Need is obvious? Customers actively looking for it? 4: Entertainment No No No 3: Complex/New Yes No No 2: Vitamin Yes Yes No 1: Aspirin Yes Yes Yes
- 1 isn’t necessarily the best, but it’s the easiest one to sell.
- Examples of 2: AppSumo, Salon Management Software
- Examples of 1: Invoicing, Time Tracking
- Fulfilling demand is easier than creating it
- Why is this important? The two most important numbers for a business are LTV and CPA (Jacob says: that’s Lifetime value, and Cost per aquisition (of a customer))
- Another table: What are the necessary LTV and CPA for a business to work at each tier?
Sales Touch CPA LTV 4: Entertainment None Varies Varies 3: Complex/New High High > $5,000 2: Vitamin Moderate/Low Moderate/Low > $150 1: Aspirin Low Low Y$1
- For the Micro-ISV, tier 1&2 are where it’s at.
- Rob discussed various marketing channels for tier 1&2, such as podcasts, writing guest posts, SEO, Adwords, etc… The point is that you have to know how much is costs to acquire a customer, and how much that customer is worth, so you know whether you’re making or losing money on the acquisition.
- How to increase LTV: Increase retention, increase pricing, or sell more things to existing customers
- On retention: Convince customers to stick with you early, before they decide they want to cancel.
- Rob measures some “Chi Factors” on HitTail, and has learned to recognize the factors that determine whether someone will actually buy: Did they install it? Are they using it? How recently did they use it? Are getting better with it? (CHI may have stood for something, but I didn’t catch what it was)
- Action item: What are the Chi Factors for your software/service?
- On increasing prices: You can raise prices or restructure them. If restructuring, increase price as the value for customers increases (see the many modern web applications with tiered pricing as an example)
- What else can you offer your customers?
- Things that are hard to do probably have a lot of value.
I came away from Rob’s talk with some great ideas about retention and how to think better about my value proposition. My major action item: Figure out the “Chi Factors” that determine whether someone gets value from my product or not.
Coming up next: Peldi, of Balsamiq Studios, who conducted an open-ended “ask me anything” session.