179 FS Reducing Churn with Steven Bristol

00:00 0:49:12
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02:06 - Steven Bristol Introduction

02:32 - “Churn”

03:08 - The Genesis of LessChurn

04:04 - How does it work?

06:45 - SaaS Products

  • Benchmarks

09:41 - Steven’s Background

10:58 - The SaaS Path (Advice)

18:36 - Churn University

21:48 - Outbound

24:14 - Pricing

26:43 - Customer Trust

32:44 - The Psychology of Churn

34:54 - Zombie Revenue

36:28 - Keeping Customers Around

  • Onboarding
  • Mandatory Field Feedback Picks

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Transcript

STEVEN: Hello Jonathan. Man, your voice is silky smooth man. I love it.[This episode is sponsored by Hired.com. Hired.com is offering a new freelancing and contracting offering. They have multiple companies that will provide you with contract opportunities. They cover all the tracking, reporting and billing for you, they handle all the collections and prefund your paycheck, they offer legal and accounting and tax support, and they’ll give you a $2,000 when you’ve been on a contract for 90 days. But with this link, they’ll double it to $4,000 instead. Go sign up at Hired.com/freelancersshow]**[This episode is sponsored by Nird.us. Do you wish that somebody else would handle all of those operation details when it comes to hosting your client’s web applications? Nird.us is a Ruby on Rails managed hosting designed to make your life easy. They migrate everything for you, and new sign ups or referrals come with a $100 discount or a referral fee. To sign up, go to freelancersshow.com/nird, and enter ‘freelancer’ into the contact form for a discount]****[If you're someone who runs your own service-based business, then spending less time on pesky admin tasks means having more time to focus on your clients’ work which is why you need to give FreshBooks a try. FreshBooks is the invoicing solution that makes it incredibly simple to create and send invoices, track your time and manage your expenses. It allows you to quickly see and track the status of your invoice expenses and projects, and allows you to keep track of your expense sheets in FreshBooks. For your free 30-day trial, go to Freshbooks.com/freelancers and then to the Freelancers’ Show in the ‘How did you hear about us’ section when signing up.]****REUVEN: Hi everyone and welcome to episode 179 of the Freelancers’ Show. This week on our panel we have Jonathan Stark. JONATHAN: Hello. REUVEN: And Philip Morgan. PHILIP: Hey, hey. REUVEN: And I’m Reuven Lerner. With us this week, we have a special guest – Steven Bristol. STEVEN: Hello! REUVEN: Steven, tell us about yourself. Why are you here? STEVEN: I’m here to talk about – to be part of the show and enjoy you guys and the whole thing, but to promote a new product we just launched called lesschurn.io which is geared at helping SaaS app owners reduce their churn, which is really great if you're a freelancer and you're trying to get your project off the ground. The last thing you want is to start dealing with this churn. REUVEN: So let’s start off with a basic question which is, assuming you're not in the dairy industry, what is churn? STEVEN: So churn is that terrible moment when all of your hard work stops paying off when your customers leave your app. So they sign up, they start paying and then they quite – that’s churn. So it’s usually talked about as a percentage, and there’s also a dollar amount obviously associated with it, so that’s what churn is. REUVEN: Okay, so this is really aimed at SaaS applications, right? STEVEN: Yeah. It’s for subscription-based applications. REUVEN:**Okay. Where did this come from? I know that you’ve been working let’s say [inaudible] and so forth for years, but can you give us a little bit of the genesis of this.**STEVEN: Absolutely. So we’ve had LessAccounting.com in production for over eight years now. A couple of years ago, we realized that we were losing customers often times not because they didn’t like the app or they were ready to leave; sometimes they didn’t have enough time in their trial to really try it out. Sometimes they just want a little bit of discount; sometimes they just wanted to pause their account or maybe start again at the new year, something like that. Sometimes they left just because they didn’t reach out to support, and so we did this thing where we replaced the ‘delete your account’ button in LessAccounting with a series of choices; we call them detours and it covers a wide gamut of things from applying coupons to extending trials – that sort of thing. Less than a year ago we thought, “Hey, this can really – a lot of people will get a benefit from this.” So we extracted it into its own application. Basically, it’s an iframe; we throw in your app and then we customize what detours you want. It’s like a hundred percent effective; everyone who signs up and puts into production reduces their churn, so it’s a nice product. REUVEN: Wow, that’s pretty great. STEVEN: Yeah, it’s pretty cool. We’ve got – wee actually offer a double your money back guarantee if you don’t reduce churn because everybody reduces churn to some extent. REUVEN:**So how does this work? I understand how it works in terms of – technically and so forth and as a business but are we as human beings so easily – I don’t want to [inaudible] the right reason but so easily – I think I wanted to leave the count and I see someone say, “No, no. Don’t do that,” you can offer this other – you have this other thing instead and I say, “Yeah, yeah, yeah. I’ll stick with that.”**STEVEN: Yeah. So there’s two things going on there. The first is that the answer to your question is often times yes. So if you did something like you replace the ‘delete my account button’ with a ‘hey, instead of deleting, would you stay if we gave you a month for free’ and then you apply month coupon then that in itself, there are lots of people that would just stay for – they’d just say yes. Then many of them, even if they didn’t use the app, would stay for it the next or several months and you’ve garnered some zombie revenue that way. But the reality is that a lot of people are deleting and they're quitting apps not because they're really completely ready to quit but they just feel like they're out of options. That’s really what we’re trying to address and so you can do things like downgrade your plan. We’ve got this nice link – obviously you can reach out to support but the couple of tricks in there, like one, we had a detour. You can create a detour that says ‘I’m really mad; I want to talk to one of the founders’. Basically, we’ll just send an email to your support team that says that they chose this but psychologically for people who have tried to reach out to support, or even if they haven’t, talking to a founder is like, “Oh, that’s a much bigger deal,” so that might get them to stay then and you can resolve whatever issue they have. So if there’s things like that that you can do, we also have – there are also ideas like if a lot of your customers are leaving because of one thing, maybe it’s the top couple of reasons people leave of misunderstanding your app, then you could put in a couple of detours that say, “Hey, did you experience this?” or “do you have a question about how to set this or that app?” Then you can redirect them to the fact page that explains that. In a sense, it’s a Hail Mary pass; it’s like a last ditch effort to get them to say. Obviously, it doesn’t work with everyone but it’s fairly effective. PHILIP:**Steven, I’ve got some questions if I may ask. [Crosstalk]**STEVEN: Absolutely. PHILIP: Just super-duper dummy questions about its SaaS. So how big is the SaaS market? How many softwares or services are out there? How much money did they make? I want to try to help put this into context for listeners. STEVEN:**I don’t have the answers to those question; I don’t know if anyone does. I know that there are a ton of SaaS products out there. GitHub is a SaaS product, Basecamp is a SaaS product. Truly they are making, in a whole SaaS vertical – tons of money, millions and billions, hundreds of millions, maybe billions of dollars every month or certainly annually, and there’s just a lot. I think as freelancers or as developers or business owners, we have all used these SaaS products. I know that we used [inaudible], we use Drip, we use GitHub. We spend money every month on SaaS products and I’m sure most of the people listening do as well.**PHILIP: Yeah, totally. What’s a benchmark standard turn rate where if you're trying to rate above X, it’s bad; if it’s below X, it’s better than industry average? STEVEN:**Yeah, it depends on what type of application you have but for online SaaS proc – because you have to think; you tell phone service you're cellphone service is also a subscription service. It’s not a SaaS service – so different verticals are going to have different churn [inaudible]. In the cellphone business, it’s pretty high; the monthly term rate is high – I don’t know. Maybe it’s something like 17% a month or something which is extremely high. It doesn’t actually sound that high but actually, the [inaudible] things is when you – the monthly turn rate is very different than the annual churn rate. So for example, if you have a monthly churn rate of about 5%. That equates to an annual churn rate of about 48%. So for a year, you actually have to replace 48 – if your churn rate is averaging 5% monthly – if we replace 48% of your customers every year just to stay even.**PHILIP: Oh wow. STEVEN: Yeah, so the churn rates that people throw around tend to be the monthly churn rates and then it doesn’t sound so bad until you realize what’s actually happening on an annualized basis. Most SaaS products are north of 5%, probably in the 5-9% range. I think a healthy – because obviously it’s next to impossible to have a zero percent churn rate because that means no one’s leaving. If you're down probably 1% monthly churn, maybe as high as two, you’re probably in a really good shape but most people – most SaaS products really aren’t at that level. PHILIP: Hm. That’s interesting. JONATHAN: I have a couple of meta questions about having a SaaS in the first place if that’s a fair game. STEVEN: Yeah. Let’s talk about it. JONATHAN: Yeah, so what’s your background? What are you doing? Are you a coder? What were you doing before you started building SaaS products. STEVEN: Yeah, so I started college as a music theory major, and after dropping out I started writing software. I actually – I went back to writing software. I wrote my first program in Atari BASIC when I was 9. I’m in and out of programming ever since but when I dropped out of college, I got really into it and started working professionally. So I’ve been writing software for most of my adult life. Spent some time at Silicon Valley – I’m from Los Angeles. I spent some time up there around 2000 and got a lot of good learning experience. Then about 2007, in fact January 2007, I have been doing consulting work for quite some time and I quite all that and started LessEverything with my partner Allan Branch. We have actually started working on LessAccounting a few months before we started the company, and then we launched LessEverything as a web consulting, making SaaS products for other people while we use that money to bootstrap the development of LessAccounting. I’ve been doing this for quite a while. JONATHAN: Do you think – freelance audience, do you think that SaaS path is for – obviously it’s not for everyone but do you think –. You guys have been successful but I’m sure you’ve seen a lot of horror stories. STEVEN: Absolutely. JONATHAN:**Can you give advice about – if people are considering doing a SaaS – because I know a lot of people, they are freelancing and they think ‘why am I building these stuff for these clowns when I can be building it for myself and be making that sweet, sweet monthly recurring revenue’? [Crosstalk] Yeah, but at the same time I think everybody that I talk to thinks it’s going to be a lot easier than it turns out being. They build something and like, crickets.**STEVEN: Absolutely. JONATHAN: So do you have advice for people who are thinking about taking the plunge from making that shift from working for other people to building their own thing? STEVEN:**I would recommend anyone to do it. I think it’s a great experience. I think that being successful at it is a fairly different skill set than being really competent at doing freelance work where you're maybe doing designing or re writing software, or even doing copywriting for someone else. When you have your own SaaS product, your own SaaS business, the whole crucks of that business which is really the crucks of any business is how do you get new customers? So if you're a freelancer, maybe you're doing this – it’s pretty common to be doing several week [inaudible] 12-week contracts, right? That’s probably pretty common. So you really only need your next customer every twelve weeks or so, whatever it winds up being whereas when you have a SaaS business, you need ten new customers everyday or whatever the threshold is. [Inaudible] stuff can be different from every business and that can change depending on where you are in business, how long you’ve been in business – that sort of thing, but it’s that difficulty; where do you find customers is tough and I can tell you it’s a lot tougher now than it was eight years ago. When we launched LessAccounting which was about three months after Twitter launched to give you a timeframe, at that point, we basically started tweeting out to our followers. Then we started getting sign ups and paying customers and just grew from there whereas now, there’s so many SaaS products out there that just becoming visible is such a – it’s so much harder. It’s a completely different landscape which doesn’t mean that someone shouldn’t try it or shouldn’t go for it; the reality is that it’s really tough. It’s a different set of priorities and if – it’s funny; when Allen and I tried and talked about how to build the business in this net, we always come back to we’ll design our code because that’s what we are – I’m a coder, he’s a designer. Generally, most of the time designing code isn’t what gets new customers so it’s a very different hat to wear.**JONATHAN:**Sure. So the advice so far is I recommend that people try it but – and you have to realize that it’s going to be a different skill set, but where do they acquire those skills? You can’t just be [inaudible] not because that’s – are there resources that people can – were there books that were pivotal for you?**STEVEN: no, I don’t really like business books. I don’t read a lot of them. I know a lot of people do but to me most of them really should just be a nice long blog post instead of 150 pages or more. I find them really boring and really difficult to get through so when I read I prefer to read literature or something like that. Surely there are great books out there. I couldn’t recommend one off hand unfortunately. JONATHAN:**Maybe not a book but some kind of resource like Signal v. Noise blog. People just like Adam [inaudible], they just have to earn the hard way.**STEVEN:**Yeah I think – eight years ago, we read the 37 Signals blog a lot. We wrote a lot of blog post so if you go back to LessEverything blog, there’s a lot of stuff, older stuff in there and you're stuff as well. But I think it’s – you make friends with people; we’re all kind of in this community gathering. We all have friends or a friend of a friend. Generally, I would say reach out and try and make –. Let’s say there’s a product that you love, try and reach out to the founder and see if you can get a phone call and get some inspiration, get some motivation, get some friendship – that sort of thing. Often times what people find is that these people who might be great mentors are really just one or two steps away from them connection-wise, so if that’s the case then you can ask your network to help you find ‘hey, does anybody have a contact? Here’s a new one [inaudible] contact there’ and talk to people, makes friends. Going to conferences is pretty good. Amy [inaudible] puts on the 500 by – whatever it is conference once in a while. I’ve not been but Allan’s gone and Allan’s spoken and that’s a nice, small venue where it’s all business owners so you go in there and make friends with people like that. We used to put on LessConf which was a similar but larger event. Conference certainly – many people has been asking for questions and asking for advice is a great way to go.**JONATHAN:**Yeah, I can [crosstalk].**STEVEN:**They can [inaudible]. That’s right. That’s what it is – Bacon Biz Conference.**JONATHAN:**I think in this phase it does make sense that a book is probably going to be out of date by the time you see it anyway. Things are changing so fast. Between 2006, 2007 and now – just look at it. Even in the US, the [inaudible] practically zero. If you know Rails and have 50 bucks, you can pretty much, over the weekend, you can have an MVP live [crosstalk].**STEVEN: Yeah, exactly where Heroku is is even easier, right? JONATHAN:**Yeah, Heroku is even easier. It’d be more than 50 bucks but yeah, [crosstalk] it’s a good example.**STEVEN:**The barrier entry is small but when we used to do consulting work, we used to caution our clients before we started working for them or with them, and we said to let them know that launching is really the starting line; it’s not the finishing line. For us as developers, we think we’re done when we launch the code but from a business standpoint, that’s the starting line. So we used to caution our customers that if you're spending all of your money on us then you're out of business when you’ll launch because you're out of business when you don’t have any money left. It’s things like that; you can – and there ae tricks you can do like you can put up a rocket launch page and – was it LaunchRock? LaunchRocket? [Crosstalk]**JONATHAN: LaunchRocket. REUVEN: LaunchRocket’s one of those, yeah. STEVEN: Yeah, something like that. You start collecting email addresses and gauge interest that way. That’s also a good way to test your marketing skills – can you get people to that page and can you get them to give you your email. If you can’t do that, how are you actually going to get them to your page and give you money? Again, it’s a different skills set, and just because you're excited about a product, it doesn’t mean that anyone else is going to be. So even with LessChurn, we’ve been growing nicely. And on the LessEverything blog, we decided we’re going to be really open about LessChurn so I’ve got a couple of blog posts plan where we’re talking about money, talking about our customers – how many customers have we gotten recently, that sort of thing. So if people want to see what’s going on with the real SaaS product, they can certainly follow along as we go. But it’s tough; I’ve reached out to friends and, “Hey, do you have some advice for me?” “Can you tweet this out?” “Can I get on your podcast?” – all that sort of stuff to just try and get our names out there, get people to be even aware of what we’re doing. PHILIP: I want to break in here and just grab the microphone and go on a rant for a minute, is that okay? STEVEN: Do it. PHILIP:**I don’t hear anybody saying that. [Laughter]**REUVEN: I’m curious to hear what a Philip rant sounds like so go for it. PHILIP:**There’s going to be a question at the end of this rant for Steven but – [crosstalk].**STEVEN: Make it nasty. PHILIP: Make no mistake – this is a rant. So if you’ve got a lesschurn.io and you look at the menu bar across the top, you see features pricing docs, why would you expect to see a blog? You see something I’m a huge fan of which I tend to refer to as like a content resource center or an education resource center. It says Churn University, which is awesome because if that was framed as a blog post, it would have less perceived value and no one is going to be fooled but this is a four year degree but I just love how you called it Churn University. And if you click Church University, what you see is essentially a blog but formatted very differently. So A, I’m a huge fan of this. B, I think it’s a much better approach than “blogging” or sitting down and trying to write a blog post every week. This is not just for SaaS companies, I think it also works very well for freelancers, small shops, etc. So my question is, how is it working out? I love the concept, I love that you went with that approach. How is it actually working out for a content marketing perspective? STEVEN: So here’s what’s really funny is that we haven’t actually launched this yet. By the time people are listening to this show it will have been launched. The only reason it’s alive right now is so that people who don’t have access to a source code could do editing on it. So hopefully it will launch tomorrow, launches in. it’s live now so we launched it. Hopefully tomorrow all the edits will be redone and it will be official. As far as how it’s going for content marketing, it’s too early for us to tell because it’s brand new. The reason we did it is two-fold – number one, we want to become the place where people go to learn about Churn, learn how to reduce churn, that sort of thing, just from a Google Guice standpoint. But is also makes some nice content for outreach marketing where you can send this to people, and rather than trying to sell them ‘hey, come check out LessChurn’, we can say ‘hey, here’s some really good information on Churn University’. And so gives us some really nice content right off the bat for outbound marketing. PHILIP: You just put your finger on something so huge which is rather than asking for a sale, whether there’s no trust, you're having this intermediary thing of ‘go check out these resources we’ve put together for you’. That leads to something that’s not as immediate as sale but probably a much easier sale to make after that trust is built up. STEVEN: Absolutely. When we look at our click rates and our open rates and that sort of thing, and we test so you can test this and you can see that when you're very salesy, it just comes across as spam. Because generally, when you're doing outbound, it’s to people who haven’t necessarily signed up on a list. Some of them has, some of them haven’t so building that trust, giving them a reason to open your emails before you ask for the sale I think is very beneficial. JONATHAN: So you do outbound for SaaS that’s – that feels a little unusual to me. I’m a fan of outbound but usually more for consulting or professional services. So can you paint a picture of who would you target for outbound marketing for Church University, just like go to 37Signals and say ‘hey, Basecamp’. STEVEN: No. I actually wrote some code to go out and collect email addresses. I called it less sniffer and we just use it internally. Basically, it’s got some algorithms to start. It has a place to start and it goes out and collects people. Here’s an example – I’ve got one algorithm that starts with Product Hunt. So we go through Product Hunt and from Product Hunt you go to Google and you search AngelList for that product. So whatever the first result is, you assume that that’s the AngelList address. Now, you’ve got AngelList, now you hit the AngelList API to get all the data from that, then you can take that to – out of the websites to collect the email addresses for the people that were listed on AngelList. Now what you have is this large collection of people who are potential customers for you. So you can go through that list and you can select – okay, I want to send – I want to add this guy to this list, this other guy to another list and so on, and start building an outbound list that way. It’s free other than the development time, and there’s lots of algorithms, there’s lots of different ways you can do this sort of thing rather than just going out and buying a list. But yeah, we definitely do outbound on LessChurn. We started to; it’s still relatively new so I can’t say that I’ve got a ton of data on the success or the lack of success on our outbound efforts. JONATHAN: Oh, that is great. REUVEN:**So here’s just – I just want to echo what Phil said about your Churn University which is this is such a fantastic way of displaying information. I may still [inaudible] at some point because at the end of the day, it’s the same kind as you would have in a blog that’s presented so differently and so much more effectively. I can totally see how this would get people.**STEVEN: Yeah, and one of the nice things is we didn’t have to write it all. We wrote most of it but we certainly opened it up to some of our friends who have businesses and let them write articles in the University about different aspects. For example, Richard from bestunning.net wrote an article for us and so now he’s got some nice links going back to his site and that sort of thing. REUVEN: I did want to ask you about one other part of the site, or this one other. So pricing – I don’t know if you guys have had a chance to look at this. I was like, “Oh, I wonder how much this costs,” and name your own pricing. So I can’t decide if this is incredibly brilliant or if this is totally looney, or possibly both at the same time but I’m curious to hear how you came up with this and how it’s working for you and how you don’t have thousands of views all paying a buck a month? STEVEN:**Yeah, I don’t know if it’s looney or not either. Basically, we went through a lot of conversation of how we price this thing. You can do a couple of different things; you can price, have one monthly fee and unlimited views, and you can base that on the number of – since we do – we integrate with your Stripe account or your Braintree account so we know how many customers you have, how many active customers. You can do some sort of a – you can automatically put them into a tier based on the number of active customers which is like what Richard [inaudible] said, it’d be stunning. You can charge per se; somebody comes, they delete their account, the cut [inaudible] customers and get charged. Someone doesn’t delete their account; they take a different detour and now we can charge them a buck, two bucks, maybe we can charge them a month’s worth of the subscription. We kept going back and forth in that initially LessChurn was free; everyone knew pricing was coming but we didn’t know what to price. So I got some feedback from our first customers and the feedback was all over the place. So then I had this thought that let’s try if we do a name your own price. So you can name your own price in one or two ways – you can either do a fixed monthly subscription price and/or you can do a monthly per saved price. So what we found is that most people are doing some combination of both. We’ve got some customers that are doing a large monthly fee and no saves. We’ve got some customers that are doing a medium, more small monthly and then a couple of bucks or more per save. So far, it’s working out really well. The pricing I have envisioned initially looks like it was too high based on what people are paying on their own, but I’m surprised that some people are paying a lot more than I would’ve – than the two they would’ve been in had I come up with the pricing. So it’s really interesting; we don’t have many people who are just using it for free although I would say that’s an option. People just set both prices to zero but we don’t have too many people doing that. It’ working out pretty well so far for us.**JONATHAN: Alright, so it’s now my turn to rant. This is more of a soapbox than a rant which is that I get this all the time. What you guy are doing is that you're making yourself vulnerable and you're basically crowd-surfing. You’re throwing yourself on to the crowd and saying, “You know what, don’t drop me on the ground.” I think that people should do this a lot more. I find a lot of freelancers are – they're decreasing the amount of trust that their customers would have in them by treating their customers – by trying to insulate themselves or protect themselves from their customers with contracts and terms and huge scope documents. All of that stuff is the opposite of – that’s a prenup. It’s the opposite of creating a deep relationship with somebody. For a freelancer, whether – this is I think the first time I’ve ever seen a SaaS do it which is amazing, but for a freelancer, it’s an obvious move to just be like, “Look, I want you to trust me,” and in order for that to happen, I have to trust you. If that works, if you're picky about who you work with and you only work with people that you clicked with the phone or you like the way they email because you can learn a lot about somebody just by the way they email. Even if you're not meeting these people in person, you can get a sense of whether they’re your type of people. When you find those type of people, you trust them and yes, that makes you vulnerable. So many people just completely freak out by that but I’m like no, that’s exactly what you need to do. How do you protect yourself from them screwing you over? I’m like, you don’t. You trust them and they’ll trust you back, and if they don’t trust you back then they're not a good customer for you so get rid of them. So I’m standing up and applauding that you're taking this approach on a SaaS which is just so cool. STEVEN: Thanks. Thank you. So you think that for freelancers and their customers, you think that they should have what – they shouldn’t use contracts or they should do a name your price kind of thing with their customers, or both. JONATHAN:**It’s a long answer but I am very anti-contract. It’s never bitten me [inaudible]. I’ve written an agreement. It’s tops five pages and it outlines the goals for the project, not the scope of the project, then I give them a fixed price for that outcome. So there’s no time estimate; there’s no hourly billing – there’s none of that junk.**STEVEN:**But don’t you find at the end of that phase or whatever that you have a big fight because what they expected doesn’t match what you’ve delivered. [Crosstalk]**JONATHAN: Only if I did a terrible job defining the outcome. STEVEN:**But isn’t that the point of scope documents, to define that outcome? We used to do that with clients as we’d have – we’d created some [inaudible] scope document to try and just get on the same pages to what it’s going to be, what it’s going to be when it’s done. Then what we found was at the end of every project, there’s a big fight because there’s just a misunderstanding, “Oh, when you use these words, I though they meant this but you thought it meant that.”**JONATHAN:**But you don’t [inaudible] stuff at the beginning. For example, if somebody comes to me – I’m fairly well-known for doing responsive web redesigns. So people go to me and say, “Hey, we heard you're the guy; we want you to do – we want you to make some changes to our site to bandage it and then we’ll do – we’ll rewrite it later. I’ll say, “Alright. That sounds great. I’m sure I can help you with that if you're a good fit, but why do you want to do that? Why not just leave it the way it is?” It could be fine. Are you actually seeing a drop-off? Are you actually seeing vending carts on mobile? And they’ll say, “Yeah, definitely,” and you say, “Okay. Well, do you have any competitors that you feel like they're eating your lunch at this or is this – can we wait and do this in six months after we study a little bit or after you’ve used it a little more?” And they’ll say, “No, no, no. these guys – our main competitor just launched a mobile site. We’re imagining it’s doing really well; they're getting a lot of link backs and we really feel like it’s urgent to do it right now.” And I’ll say, “Okay. If he gives [inaudible] his path –,” I’m not talking about what I’m going to do; we talk about what they want to achieve because no one’s hiring you to build a feature.**STEVEN:**But that’s a lot – I guess I’m talking about when you're starting with greenfield development. The vision of what it will be is a lot more opened interpretation. [Crosstalk] Yeah.**JONATHAN: So I don’t do that. Those are bad customers for me because a startup for me doesn’t work because they don’t – it’s like the value to them is somewhere between zero and infinity so there’s absolutely no –. I work with the Bootstrap startup who already has a cash flow and it got some kind of data but I won’t offer someone who has no data. STEVEN: I see. That makes sense. For me, the advice would be very different for greenfield development. JONATHAN: I think that’s a really – we’re totally off-track but I think greenfield development is a very, very low value. It’s not a great way to make a living as a developer. STEVEN: Uh-hm. JONATHAN: Unless you're building your own. STEVEN: Right. REUVEN: I’m curious – do you – it seems to me that you’ve found a problem. As Jonathan says – calls his site there Expensive Problems. You found a problem that is costing people a ton of money. It seems to me that this could easily dwarf LessAccounting overtime. STEVEN: That’s what we’re hoping. Obviously – interesting thing; so we’ve been in production now for a few months – I’m looking at the homepage of LessChurn where we keep the statistics. So far, LessChurn has saved over 11,000 user for our customers and over three and a half million dollars of revenue for our customers that they’ve retained; they didn’t lose. They would have lost if they just had ‘delete my account’ button. JONATHAN:**That’s wild. [Crosstalk] What’s the time [inaudible]?**STEVEN: Yeah. Like five months. JONATHAN: Wow. So it’s – I’m surprised as well. So clearly it’s something that works and is significant. REUVEN: How many sites is this across? STEVEN: So right now I think we have about 40 customers. REUVEN: That’s a lot of users. Wow! STEVEN: Yeah, exactly. So some of our customers are rather big. Obviously, the bigger you are, the more people you're going to have people floating through your ‘delete my account’ page just because you’ve got more people but it’s a significant savings and all you have to do is to throw the thing – throw this iframe in your app and you're pretty much good to go. Takes about an hour in total to get set up and it works. PHILIP: Steven, I’m curious if there’s a psychology of Churn that might be transferrable to a services business? The reason I ask is I have seen this in my own previous parts of my career and other people where overtime, you maybe have a long term relationship with a client and just overtime things kind of cool off for a project, maybe loses its momentum and then it ends less well than you might want it to. I’m just wondering if there’s something that you’ve seen and in the psychology of Churn that might relate to that situation with a freelancer. STEVEN:**You know it’s interesting; I think the psychology is pretty much identical. The difference is that is a SaaS app, you [inaudible] to try and automate all that stuff whereas when you have clients, you're actually imagining that relationship yourself. When we talked about this is Churn University, some of reasons why people churn and it’s all kinds of things including things like, well they're just kind of – like you were saying, the project cools down. In the SaaS world that would equate to people just started coming back and using it like they used to. So you have a customer who used it maybe for a month and maybe just stopped using it. So they paid for extra couple of months and they finally quite. In the SaaS world, you would try to keep them coming back, try to keep them engaged, and there’s lots of tricks you can do to do that. Whereas in the freelancer or services world, you really be imagining that relationship and reaching out more and having more conversations and that sort of thing. The psychology is very much the same in both domains.**PHILIP: Interesting. What’s the zombie revenue? That sounds awesome and interesting. STEVEN: I’m not sure if that term exists anywhere other than at LessEverything. I’ve not heard any other people use it but we use it to describe customers who aren’t using the app anymore but they're still paying for it. PHILIP: Gotcha. STEVEN: Some of them signs up, they put in their credit card, they pay for the user for a month or two and then they just forget or they get busy, and they just never quite get back to it. We all have – it’s like your gym membership; that’s how gyms stay in business is by zombie revenue. PHILIP:**Yeah. I’ve provided some zombie revenue to some gyms. [Laughter]**STEVEN: Absolutely. JONATHAN:**Then you need to cancel that thing. [Laughter]**STEVEN:**Yeah, [inaudible] and pause the podcast right now; goo cancel your gym membership. [Laughter]**REUVEN: There’s a next possible client segment for you on LessChurn. STEVEN: Most gyms do that by saying you can only cancel if you come in so then they have a real opportunity to talk to you in person, try and talk you out of it. REUVEN: Oh, that’s genius. STEVEN: Yeah. JONATHAN: That’s exactly why I haven’t cancelled. STEVEN: Yeah. JONATHAN:**They're like, “Oh, we know these people aren’t coming in; that’s what they're paying us.” [Laughter]**STEVEN: Right. JONATHAN:**They probably can’t [inaudible].**STEVEN: Exactly. PHILIP:**Well for those who do use contracts, that would be an interesting clause on your services contract. You can’t cancel the project unless you show up at my office to do so. [Chuckles]**STEVEN:**And a lot of clients don’t read that stuff. People will sign that. [Crosstalk]**PHILIP: I’m not recommending that. STEVEN:**I’m not sure if it’s a winnable clause. [Chuckles]**REUVEN: I would say LessChurn seriously is very good at stopping people from leaving through the ‘delete my account’ button but what are other things that people can do before someone reaches the delete button or tries to leave the SaaS app? Are there other techniques we can use to encourage them to use it or to speak up? STEVEN: Yeah, there’s all kinds of things you can do. The first thing is – and lots of these is covered at Churn University so go read all that stuff for more details. Most apps nowadays are difficult to use not because they're so complex but because they're trying to solve the problem in a unique way. So if you come to an app, you have to really understand the way to use that app before you can be effective at it. What was happening is a lot of people – so there’s this concept called on-boarding which is when you take somebody who’s new and you get them. That’s the time between when they sign up and when they're successful, confident customer of your app. So there’s all kinds of things you can do. You guys have all seen this; you’ve got your little setup in the beginning, you got the JavaScript overlays which points at a couple of things around the screen, tries to explain what they all do. A bunch of iPhone apps have this stuff as well. Customer on-boarding is super important especially if your app is complicated, if there’s a lot of stuff going on or if you're just trying to solve the problem in a unique way. Then once they're in the app, you still need to keep them coming back. Having some sort of at least weekly email that goes out and gives them an update of what’s been going on is a good way to remind people that ‘oh yeah, I did sign up for that thing’ and get them to come back and use the app. You can also use products like customer.io or Intercom which log how many people have done this or that. Based on those threshold, you can send particular emails. For example, if somebody signed up, they haven’t uploaded – in LessAccounting for example, they haven’t uploaded a logo within two weeks; we know they're not sending any invoices. So we can use that as a trigger to say, “Hey, come back in and upload your logo,” or “Come back in; we can also check to see how many invoices you’ve sent in the last 30 days,” that sort of thing so you can send emails based on that. There’s all kinds of little things you can do in that regard to get people backed in and using your application. REUVEN: And you find that people – obviously this work in terms of stopping churn but people don’t get upset like, “Look, all I want to do is delete my account and now you're clearly giving me a sales pitch.” STEVEN: Yeah. We’ve been using LessAccounting for two years, first by hard coding and then by putting LessChurn in it. Certainly, some people are not happy with that. Ultimately, what am I really risking? If somebody’s determined to leave their account, they're probably not coming back anyways. Are they going to tweet out, “Oh no, LessAccounting sucks. They made me go through this whole thing at the end.” No one’s ever tweeted that. I think the risk of upsetting a customer who’s not really a customer at that point is relatively small especially compared to the upside of the churn that you can reduce. We’re actually planning a feature which will make it even harder to quite because one of the things we do is as people as people are leaving, if they quite, you have the option to collect feedback and that’s a mandatory field and people don’t like that either, or some people don’t like that either. Although we find that we get a lot of really interesting and useful and thoughtful comments on that form. So lots of people do seem to like it as well, so it’s not just people getting angry because it’s there but we’re going to be adding this feature which will allow people to actually do proper exit surveys and ask a series of detailed questions instead of just one feedback field. We’ll see how that goes; for some people, it work out really well, for some people it won’t. I think part of that depends on what your product does and who your customer is. If you have a product that’s geared toward SaaS owners, they're probably going to be more likely to want to give you better feedback because they know what it’s like versus a product for thirteen year olds or something. PHILIP: In the world of services, some of – at least on my own experience, some of the most insightful and valuable conversations I’ve had with clients are just after they're no longer clients because it seems like that’s when if things went okay but not great, that’s maybe when it’s okay to really tell you the real deal. I see that happening with services as well. STEVEN: Yeah, I totally agree. In fact, Ruben from Bidsketch has a really great blog post with a link in Churn. We have the link in Churn University where he describes what’s the right way to do those type of interviews after they’ve already left the product to get really good feedback, so I suggest checking that out if you want some ideas on how to do that. REUVEN: Steven, anything that we should’ve asked that we didn’t? Anything – gems that people should know that you wish you could broadcast to the world because now you can? STEVEN: No, I just – thanks so much for having me on for the time. Hopefully, we’ve had a nice conversation, people have enjoyed it and hopefully people will check out lesschurn.io and find it useful and hopefully make more money by using it. REUVEN: Excellent. Let’s go to our picks. Philip, you got any picks for us this week? PHILIP:**I do have a pick. I want to recommend a book; it’s called Why Johnny Can’t Brand [chuckles] Rediscovering the Lost Art of the Big Idea by Bill Schley and Carl Nichols, Jr. Terrible title I think and there’s parts of the book that are little weird and some kind of weird framing devices throughout the book but the information is solid gold. It’s built on the idea that if you want to build a brand for yourself, for your business and – I’m not a branding expert by any means but I’m a positioning expert and what they say reinforces what I know which is that you have to pick one thing that you're going to build your brand around, one outstanding attribute. It’s hard for people to do. What I like about this book is A, that it speaks the truth about how people relate to brands and then B, gives them very practical exercises that you can go through to boil down to that singular point. So it’s good stuff; it’s available on Kindle and that’s my recommendation for this week.**REUVEN: Excellent. Jonathan, any picks? JONATHAN:**I got a free batch of something called MOO Business Cards+. Probably everybody’s heard of MOO; they make business cards and other sorts of stationary stuff. I got this batch of Beta testers because I’m a mobile guy for these cards that have NFC chips in them. When you put them on the phone, it has NFC so if you touch the card to the phone, it will launch a URL on the browser. Like I had, it goes straight to my page. It has my Vcard downloads and all that stuff. So it’s kind of cool; I thought they were kind of snazzy and people always get a laugh out of it. I went through the cards; I’ve been speaking in a fair number of conference in the fall and I went through all my cards and so it had this free batch [inaudible] and I’m like, “Oh, maybe I’ll order more of those. They were pretty good.” I was just so blown away by how smooth the reorder process was, how quickly they got there. I thought the quality was really high, the prices were – seemed reasonable to me for a card that did something like that. I was just really impressed with them all the way round, so if people are doing in real life things like conferences, meetups or what have you then I think it’s good to have business cards and it’s – definitely recommend people to try MOO – moo.com.**REUVEN: I must say I think I laughed to the business cards I think a year or two ago, and I had a print up – I think it was either 250 or 500 of them to have the printed batch and I still have three quarters of them. But if I had this sort of thing, boy I’d be pushing them on people as fast as possible because it just sounds super cool. JONATHAN:**Yeah, you can get really small batches and it’s not ridiculously expensive. [Chuckles]**PHILIP: It sounds awesome. REUVEN: On their site, they have the sample cards. It’s from a Martin McFly, Space-Time Continuum Researcher. Some of those have a good sense of humor. Steven, do you have any picks for us? STEVEN: Alright. So I’ve got four for you. The first is another app called tend.io which is written by a buddy of mine called Ryan Evans. He’s in Chicago. What Tend does is it finally tells you whether your marketing campaigns have been cost effective or not, and so it’s really cool; you drop into your site, it tracks people. For example, Reuven, just before we started the podcast, I got an email from Tend saying that you would come to the lesschurn.io site. REUVEN:**Maybe. [Laughter]**STEVEN:**Oh no, I know what happened because Tend knows who you are, and so I think everyone should check that out. It’s really, really cool. My second pick is a book by Sam Harris called Free Will. It’s been around for a couple of years now but it’s basically – Sam Harris was a neurologist or brain surgeon or something and he was talking about the research over the last few years that basically proves that we as human beings have no free will. It’s a fun read; not too long, not too difficult so I recommend that to everyone out there. My third pick for any musicians out there, the new version of Logic Pro X comes with a synthesizer plugin Alchemy which is really, really awesome. So if anyone’s thinking about trying it out or using Logic Pro, make sure you check out the new Alchemy; it’s really, really cool. My last pick is a gem that we wrote called less_interactions. You can find it on RubyGems and wherever GitHub and all the places. It’s basically a gem that helps you put together a middle layer, like a business layer for all your business logics so you can keep them out of your model so you can give the business [inaudible] guide your models out of your vies, out of your controllers, out of your helpers – all that sort of thing. So that’s the four.**REUVEN:Excellent. I’ve got a pick too for this week. A number of months ago, I had a phone that was really acting up and taking a long time to bring up my contacts. I have an Android phone, and so a friend of mine suggested that I look around for an alternative contacts manager. It never even occurred to me that this is possible even though obviously I did this on my computer all the time. So I found a Contacts+, and while I’ve moved on to a phone that does work and does work better, I’ve increasingly liked Contacts+ because it has this in-the-cloud cloud source caller ID thing. So if someone calls me and they're not in my phonebook or in my contacts list, it will still, after about two seconds or so using the network, tell me who it is, who’s calling. The best part of it is if you’ve got telemarketers or just general spam callers calling you it’ll say ‘this was marked as spam by X number of people’ and then you can block it forever. In Israel, we have this terrible problem of getting lots and lots of Russian language telemarketing calls. So you pick up the phone and say ‘hello’ and they start speaking Russian. And you say, “I’m sorry, I don’t speak Russian,” they say, “Oh, I’m sorry. That was a mistake. Wrong number.” [Chuckles] This is clearly either brilliant or terrible marketing campaign, and Contacts+ has saved me many hours of talking to mistaken callers in Russian, not that I speak Russian.STEVEN: That does sound awesome. REUVEN: It’s surprisingly simple and effective, and a great feeling when I don’t have to answer their calls. Steven, thank you so, so much for joining us. STEVEN: Hey, thanks so much for having me. REUVEN: Thanks everyone for listening and we’ll be back next week! [Hosting and bandwidth provided by the Blue Box Group. Check them out at BlueBox.net]**[Bandwidth for this segment is provided by CacheFly, the world’s fastest CDN. Deliver your content fast with CacheFly. Visit cachefly.com to learn more]

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