After conducting interviews, the task of transcribing, structuring, and summarizing the gathered information into actionable insights can be time-consuming and even uninspiring.

Solution: Automate the “Transcribe” and “Structure & Summarize” steps

1. Transcribe with MurmurType

Convert speech into text. Describe the entire interview process, including questions, answers, and customer-centric insights.

This approach yields comprehensive, essay-like documents for each interview, saving time on manual transcription.

2. Summarize with ChatGPT

Instead of sifting through lengthy transcripts, employ ChatGPT’s capabilities to craft concise, readable and shareable summaries.

It takes just a few iterations to refine your request for the perfect output.

P.S. You can often hear that talking to your customers is a must. Replace “talk” with “listen to” in your approach.

Can you think about something for a moment? Here is what I’d like you to do:

“Close your eyes and think about product marketing, and what you understand about it.”

I believe that should help you put this article in context, and why it’s useful, especially if you work in marketing.

Your eyes closed for 1 min. You are giving product marketing some thought.

Now, note down your definition of product marketing, especially if you’ve given some thought to your favorite products or ones you are working on, and see how it compares to what’s outlined in this article.

Back to reading.

Although product marketing is a known professional description, often found in the names of departments across multiple organizations in different industries and verticals, as well as in the job titles of the members of those departments, it is not a rare case when people struggle to understand its meaning. One reason for this is, product marketing is the job function that sits at the intersection of product management, sales, client success, user experience, and marketing. And, as a result, product marketing function varies significantly from company to company and it sometimes even means different things at the same organization.

So, what is product marketing?

Product marketing is the process of bringing a product to market and driving product growth.

A product marketing manager’s main goal is to make it happen. To bring products to market in the most efficient way possible, PMMs are focused on things like customer development, competitive analysis, pricing, positioning and messaging, and effective launch plans. What is really important, product marketing is not over once the product has been brought to the market, it does last. After the launch, PMMs are focused on ensuring the right audience is aware of the product, customers understand how the product works and have enough reasons to return to the product over time, and feedback of those customers and their behavior are analyzed and acted on throughout the product development lifecycle.

What does a Product Marketing Manager (PMM) do?

The ultimate goal of any company is to build the product a lot of customers want, which translates into finding, holding, and scaling the product-market fit. PMMs are prominent “players” in this “game”, and their responsibilities are tailored to each and every stage of the company’s path from an idea to the released product and its success.

Key responsibilities that pretty much every PMM has, are the following:

1. Understand the customers and define the market
2. Craft product positioning and messaging
3. Assemble the go-to-market plan and launch the product
4. Measure impact, iterate, and improve the strategy

One way to understand product marketing managers’ responsibilities and day-to-day work, is to imagine a repeatable process with the ordered steps they follow to go from insights to decisions and actions.

A path from insights to decisions and actions

A less logical and more artistic way to understand these steps is to think of a product as a story, and the PMM a storyteller, an author crafting what he or she wants readers to experience and engage with. PMM should create and tell a story about the problem that the product solves, the user who is facing this problem, how the product solves the problem, and what the product does that competitors don’t do.

Success in this game, for all the PMM’s storytelling efforts, is after hearing this story users realize they have a problem that needs solving, and this product solves that specific problem. Users then understand the value of the product and start using it. As part of that, when users recommend it to others, the product generates its own viable and self-sustaining network effect that increases growth beyond direct marketing (user acquisition) efforts.

Next, we look at the following four steps, outlining what PMMs do, from insights to actions and measuring outcomes.

Step 1: Understand the customers and define the market

Just like building a house starts with a foundation, marketing a product starts with understanding the market and target customers. Usually, product marketers collaborate with various cross-functional teams, or third-party providers, to conduct market and user research. But at the end of the day, it is PMM’s responsibility to put together all the research results and turn them into prioritized actionable insights in order to:

1. Define the target market
2. Understand potential customers and their needs
3. Define the problem that the product will solve for the target customer and how the product will solve it
4. Decide whether there is a big enough opportunity to chase: a) measure the market and validate whether it is big enough; b) verify whether the problem is painful enough
5. Identify how the product should be differentiated from the competition
6. Make sure the product won’t lose its relevancy as the market evolves

All the learnings and insights distilled during the research process, serve as the foundation of what the product story should be about and for whom it should be created and told.

Step 2: Craft product positioning and messaging

Once there’s sufficient understanding of the market and target customers, PMMs craft the positioning statement leveraging everything they pulled together from the research.

It may seem that the positioning statement is built formulaically and all a PMM has to do is to simply plug in the outcomes of the research into the positioning template, which technically is the right thing to do (e.g. Product X does Y for Audience Z, with A, B and C benefits).

But if it was so, all the product stories would be the same. (b-o-o-o-o-r-i-n-g).

In reality, it is about being able to discover, validate, polish and finalize the right variables for this formula in order to define and explain why customers choose and use the product.

Having crafted the positioning statement, PMMs use it internally to communicate the unique value that the product delivers to the target customers and to explain how the product stands out from the competition. This way, with a company aligned around a positioning statement, product development can move forward more coherently and logically.

As a product develops, positioning statements should be used as the framework that guides the messaging for external communication across multiple channels. And, it is PMM’s responsibility to guarantee that the right customers always receive the messaging that resonates with their needs most. Same as positioning, messaging must come from data-driven confidence in its relevance. PMMs usually need to experiment with different messaging, positioning, and channels, to identify the most effective to concentrate on.

After making it through the first two steps, PMMs have to synthesize all the input data from customer and user research, map it with the company’s business goals and its growth stage, and then develop a strategy around the product that will drive it forward.

Step 3: Design and execute the GTM

One of the main PMM’s responsibilities is to design a go-to-market (GTM) plan, a plan on how, when, and where to tell the product story. Many people confuse GTM and advertising or think of it as a launch plan. Whereas, in reality, GTM starts way before the product launch and goes far beyond it — throughout the product lifecycle.

So, what is GTM then? To answer this question let’s review the definition of product marketing once again.

Product marketing is the process of bringing a product to market and driving product growth.

To succeed in this process, a company needs a carefully thought-out plan. Which is the GTM plan. So, the definition of the GTM is the following:

GTM is a comprehensive action plan detailing how a company brings a product to market and drives product growth.

To create the GTM, a Product Marketing Manager has to do the following:

1. Define who the product is for, what problem the product solves, and how the product is different
2. Design the product launch plan along with the launch stages and a reasonable and realistic timeline
3. Orchestrate the acquisition & engagement channels
4. Strategize the pricing & unit economy
5. Choose the sales model
6. Understand and visualize the customer journey
7. Develop the growth plan
8. Know how the success will be measured
9. Put it all together into a clear, and shareable go-to-market plan

It is important to understand that because today’s world is very dynamic and very noisy, the GTM is not a set-and-forget plan. It should be built to execute and iterate, again and again. PMM must test and optimize the GTM, throughout the product development lifecycle to ensure the product stands out as the market evolves.

So, the main PMM’s responsibility with the GTM is not to simply launch a product. It is to communicate the value of the product before, during, and after the product launch.

Step 4: Measure the impact

Once the product has gone to market, PMMs are to deliver a reliable assessment of product marketing impact. Having product marketing impact measured means having these product questions answered:

1. Is the audience we target/attract the right audience?
2. Is the market we chase the right market to chase?
3. Does the product differ from the competition?
4. Is the product positioned right?
5. Does the messaging resonate with the users and their needs?
6. Does the value proposition get traction?
7. Are the channels we choose the right channels for the segments we target?

Answers to these questions are not just Yes or No. Actually, at the end of the day, they are either Yes or No, but they should not be intuition-driven Yeses or Noes. PMM has to define the set of metrics that would collectively or separately serve as indicators as to the strength of the Yes or No for each of the questions. Data can demonstrate whether a new strategy is needed, whether the GTM, channels, or the messaging and value proposition needs to change.

If No dominates, it means the product is not likely to fit the market. And PMM has to find out what causes No, and how to convert it into a Yes.

When PMM has a confident Yes as an answer to all of these questions, it means that the product is likely to fit the market, and it is the right time for PMM to scale product growth.

Measure impact is a constant work in progress, combining quantitative and qualitative data. The main challenge here is that PMMs have to focus on analyzing multiple interdependent and complimentary things at once to hypothesize new and more innovative paths from insights to decisions and actions to achieve the Yeses and scale the product growth to new levels while holding the Yesses for all or majority of the product questions.

Although measuring impact is highlighted as the last step in the PMM’s path, this is not crossing the finish line after a long run. A better analogy is this is a checkpoint and one that a PMM reaches on a regular basis, to measure the progress against the goals. Depending on what the data shows determines what changes to the strategy need to be made, and how quickly or not a PMM needs to adjust direction, or even ensure changes to the product are made.

Being a PMM is not a linear journey; it is a loop

As you can see, PMMs have a heavy stack of responsibilities. They have to travel the journey from insights to decisions and actions. This path can be explained like this: Discover → Strategize → Launch → Measure → Repeat.

The good PMM is a pathfinder, trailblazer, groundbreaker, pioneer — whatever you call it — the one who is responsible for a successful journey on this path. A successful journey means that the outcomes of the journey help the company to succeed on its ultimate goal: to build the product a lot of customers want, which translates into finding, holding, and scaling the product-market fit.

It doesn’t matter whether PMMs have to reframe the entire product story or scale the product to new horizons, the journey starts over and over again. And neither competitors nor market changes (both of which can cause adjustments to the journey) should keep PMMs from making every next journey better.

It is not a linear journey; it is a loop

PMM has to innovate a lot. Although the journey looks framework-ish, every next one should be different and unique.

PMM has to support the speed of the journey. Acting on insights fast, finding the next opportunity faster than competitors, and redesigning the next route based on the measurement results quickly are critical to understanding where the product fits with the market and how to scale its growth.

Company’s Growth Stage and PMM’s Professional Maturity Level

Depending on PMM’s experience and professional maturity level, they are either going to be leading teams on the journey from insights to actions or will be supervised along the way.

The company’s growth stage influences the range of PMM’s responsibilities a lot. In a startup, PMM (most likely one PMM in the entire organization) is responsible for everything, and very likely implementing the marketing plans too. As the company grows, responsibilities become more specific, more PMMs join the team to take care of each step of the path separately and build the hierarchical structure of the product marketing teams.

The article was originally posted on Setapp blog.

What is Product-Market Fit? It is a simple question that is (not) difficult to answer.

Getting to product-market fit is the only thing that matters and it is not possible to build a company if you have not found your product-market fit.

But what is it? And how do you know you have reached product/market fit?

Unfortunately, it is not a rare case when the term product-market fit is used incorrectly and it is often stated that product-market fit is different for every company and there is no clear explanation on how to measure product-market fit.

The truth is that product-market fit is an absolutely clear and measurable entity, and it is not different for every company. Well, products and markets can be unique, absolutely. But the process of getting to product-market fit is not unique at all.

Let’s dive in.

PRODUCT. MARKET. What’s in between?

If we say that product is interpreted as a combination of the value proposition, product features, and UX, and the market is defined as users and their needs (which is hard to argue with), the fit between them lies in achieving the following:

If these 5 statements are true, it means you are in the right market with a product that can serve this market.

It is important to understand that those are not five ordered steps, since it is almost impossible to argue with the equal importance of each of them. If we remove at least one of the product or market-related variables, the fit between product and market might not happen.

FIT = (statement 1 = “true”) + (statement 2 = “true”) + (statement 3 = “true”) + (statement 4 = “true”) + (statement 5 = “true”)

Question: What to measure?

Although this formula is very logical and difficult to question, it only shows what is true when the product-market fit is already found; and it does not help you understand, which metrics have to be measured to monitor whether the product-market fit is happening.

You can constantly experiment with your value prop, validate hypotheses trying to understand which features are important and which are not, proudly announce the winners of multiple A/B tests, and debate on the criteria of the MVP. But, not measuring the impact on activation, engagement, retention, and customer loyalty leads to building a product for the sake of building it. While the ultimate goal of any company should be to build the product a lot of customers want.

Answer: Always have a customer on the Radar

Achieving product-market fit means you’ve built the product a lot of customers want. To understand when this happens, you have to know how healthy your activation, engagement, retention, and customer loyalty indicators are.

4 key areas for measuring Product Health:

1. ACTIVATION — are new users becoming active users?
2. ENGAGEMENT — how engaged are your active users?
3. RETENTION — are you giving your users enough reason to come back?
4. LOYALTY — are your users happy enough to become your promoters?

What is more important? Retention? Activation? Or Loyalty? What should you focus on first? Well, building a product a lot of customers want is not a single variable problem. So, you have to pay attention to all of them? How?

Focus on a customer. A persona whose life you are trying to improve, and who actually hires your product to do the job.

In short, have a customer on the radar.

Product-Market Fit Radar

The Product-Market Fit Radar is the framework that makes product-market fit measurable and tangible, and thus easier to manage and discuss.

The Product-Market Fit Radar has 4 dimensions that collectively indicate whether the company found product-market fit.

1. With ACTIVATION, you check whether new users have experienced the value of your product.
2. With ENGAGEMENT, you measure the level of a user’s commitment to your product and find out whether they find value in your product.
3. With RETENTION, you can understand whether you are giving your users enough reason to come back.
4. With LOYALTY, — you know whether you have enough loyal and enthusiastic customers, who recommend your product to other potential buyers.

Having these 4 Dimensions on the RADAR is a good way to measure the health of the product.

1. Activation

Activation is a moment when a new user takes a specific action to get value out of a product. In Instagram’s case, for example, that specific action might be posting 3 photos and following 4 other accounts. For other types of products, activation could be defined as signing up, making the first transaction, viewing three videos within a specified time period, etc.

The activation metric answers the question “What percentage of new users have experienced the value of your product?”

Percentage of new users who have experienced your product’s value = # of specific actions divided by # of new users.

For example, 100 completed first purchases / 1000 new users = 10% of new users who got the value of E-commerce product X.

How to identify the activation metric?

It is your job to define what should be a key milestone in driving long-term product usage. Do not try to guess. A good way to start is to analyze user behavior to find out what return users consistently do in your product.

What is a positive activation rate indicator?

You can start with 30% as a benchmark for the activation rate, and then check whether it is the right number.

• Negative activation rate: <10%
• Neutral activation rate: <30%
• Positive activation rate: >30%

2. Engagement

Engagement rate helps you measure the level of the user’s commitment to your product and find out whether they find value in your product.

Engagement rate answers the question “How engaged are your active users?”.

To measure the depth of engagement per user, you have to divide the # of key actions completed by users (i.e. transactions, songs listened to, movies watched, reports created, etc) by active users count (i.e. WAU — weekly active users, MAU — monthly active users).

For example: 10 000 000 songs listened to / 100 000 000 MAU = 10% Engagement rate for the music streaming service.

What is a positive engagement rate indicator?

You can start with 50% as a benchmark for the activation rate, and then set the goals for improvement.

• Negative engagement rate: <20%
• Neutral engagement rate: <50%
• Positive engagement rate: >50%

3. Retention

Retention rate is the metric that helps you understand whether you are giving your users enough reason to come back and whether you are bringing the right users.

Retention rate answers the question: “How many of your active users return to your product over time?”

To measure your product’s retention you have to use a retention curve.

Let’s say this is a retention curve for Product A, and we’re analyzing users who started using Product A for the first time on Jan 1 through Jan 31.

This graph shows the weighted average of Nth day retention numbers from cohorts of users acquired within that time period.

According to the retention curve, for example, Day5 retention is 50%. This means out of all the users who first used the product on January 1 (Day 0), 50% came back and were active on January 6 (Day 5). Looks like a huge drop-off, but we can see that the curve stabilizes on Day 15.

We can say that Product A has a product-market for this particular cohort. Yes, retention can indicate whether your product has a product-market fit problem.

In the graph above, Product A has achieved product-market fit. Its retention stabilizes at 30% active users.

Product B’s retention trends to zero pretty fast. This means that it does not give its users enough value to return and take the key actions. Product B has not found product-market fit.

Before building a similar graph to measure your product’s retention, make sure you have clearly defined the following:

1. Key action — an action that you want a user to do every time they use your product.
2. Usage interval — frequency (daily, weekly, monthly, etc.) with which you expect people to use your product.

4. Loyalty

The 4-th dimension on the Product-Market Fit Radar is not to check whether your customers have established the habit around your product and you give them enough reasons to come back. This one is aimed to measure how loyal your customers are.

Why is it important to measure customer loyalty? Mainly, because a loyal customer is the one who: a) is less likely to look around for an alternative solution; b) is more likely to recommend your product to others.

There are multiple ways to measure customer loyalty. Some companies associate it with the $-related metrics like CLV (customer lifetime value) or repurchasing levels and multiple product purchases. Others prefer to measure CLI (customer loyalty index), which is derived from customer surveys. When thinking of customer loyalty and trying to understand whether you’ve built a product a lot of customers want, NPS (net promoter score) is the right metric to apply.

NPS is measured with a single question survey and reported with a number from -100 to +100.

Respondents give a rating between 0 (not at all likely) and 10 (extremely likely) and, depending on their response, they fall into one of three categories:

• Promoters (9–10) — loyal and enthusiastic customers, who recommend your product to other potential buyers.
• Passives (7 or 8) — satisfied customers, but not happy enough to be considered promoters.
• Detractors (0 to 6) — unhappy customers who are unlikely to repurchase your product and can damage the product’s reputation with negative word of mouth.

To determine the NPS you have to subtract the percentage of detractors from the percentage of promoters. NPS can range from -100 to 100.

What is a positive NPS?

It varies by industry. For the software/apps industry, for example, 30 is the average score.

You can compare your NPS against other companies to set your goals, but the main goal is to constantly experiment to build the experience that creates promoters — build the product a lot of customers want.

So, Product-Market Fit is happening when all of these 4 statements are true:

FIT = ACTIVATION + ENGAGEMENT + RETENTION + LOYALTY

Achieving product-market fit means you’ve built a product a lot of customers want. A lot cannot be true when at least one of those 4 is false.

The Product-Market Fit Radar makes them possible to measure, and thus easier to manage and discuss with your teams.

Why these 4 metrics? Why activation, engagement, retention, and customer loyalty? Why not others?

1. None of them is a vanity metric.
2. They are about a customer.
3. They are about the value of your product.
4. They are actionable.
5. They are measurable.

And, once again:

FIT = ACTIVATION + ENGAGEMENT + RETENTION + LOYALTY

Why? Because your product’s core value is not the main benefit for them. And if you develop every single feature they request, it is very unlikely that they won’t look around for alternatives.

2. Do act on feedback from those unloyal users who define your product’s core value exactly like your loyal users do.

Why? Because your product’s core value is the main benefit for them. And if you develop the features they request, it is less likely that they will look around for alternatives.

To follow this route, make sure that:

• You have a clear definition of a loyal user
• Your segmentation for the loyal and unloyal user is accurate
• Loyal users’ understanding of the product’s core value is exactly the same as yours. If not — one of the variables (either loyalty criteria or product’s value) is defined improperly
• You act on feedback from active users only: your goal to scale the experience that brings retention
• You should have a clear definition of an active user. If you do not have one, pay attention to those users who’ve established a habit to come to your product over time
• Never give any incentives. Your goal is to get actionable feedback, not a list of compliments, even if they come from smart people

People wanted a OnePlus One.

But getting hold of one wasn’t as easy as going online or taking a trip to the local phone store and handing over the cash. You couldn’t even stand in line for it. There was no pre-order or exclusive carrier pay monthly deals.

The only way to purchase a OnePlus One was by-invitation-only — by winning an online contest or being lucky enough to be chosen from the company’s online forum.

It was a unique way of marketing a phone that sent demand through the roof. People were intrigued. Traffic to the company’s website hit 25.6 million in December 2014, putting the brand well ahead of the competition in the online search stakes.

People like exclusive things. They want to feel like a VIP; to have what others don’t or can’t have. The appeal of exclusivity is how brands such as Gucci and Louis Vuitton can thrive without the kind of mass marketing used by so-called “lesser” brands.

3-Step Successful Product Launch

Being able to instil the feeling of exclusivity is a way to build intrigue and interest, and create demand. Make people feel like they’re part of a select group experiencing something special, and they’ll become invested in your product, and brand, for life.

This is something we were able to achieve with the launch of Setapp and, with the right approach, something you can do with your own product launch.

Our approach involved a three-stage process whereby growth was accelerated by giving people access to a product that only they, and a select group of other Mac users, could use. This go-to-market strategy can be implemented at the start of your own launch with equally impressive results. Here’s how it’s done

1. Closed Beta

Beta is an essential and natural step in any product launch. It relies on a willing and dedicated group of participants using a product before the release to test and provide feedback. This gives a chance for bugs to be fixed, improvements to be made and kinks to be ironed out before a product is released to the public.

It’s a great way to give fans a behind-the-scenes look at your product while allowing you to glean indispensable info on what works and what needs improvement. It’s a win-win.

Typically, Beta is the step immediately prior to public release. And it was in the case of Setapp too. However, first, we opted for a “Beta before Beta” approach, where we’d get to choose the target audience of exclusive users.

This is a key stage in the launch period because it takes a LOT of work. The closed Beta stage involved us defining a target audience, and crafting unique pitches to over 1000 people in the media — from industry influencers to journalists to bloggers and vloggers.

It would have much easier to take to social media to find willing participants, but that would have removed the exclusivity and potentially watered-down the audience.

At this stage, you want to find people in the know within your industry. Respected people with audiences of their own. Target these people and, providing they’re willing to get on board and are enthused by your product, the marketing takes care of itself.

In order to bring the right people on board, there are some crucial steps that you need to take:

• Define your target audience. Understand who you’re marketing too. Pitching and promoting your product to the wrong audience wastes time and money. Conduct market research and talk to potential customers to gain a clear insight into demographics, interests and buying habits.
• Craft the perfect pitch. Make it unique. And get your key points across as concisely as possible. Industry influencers are busy people — they probably receive dozens of emails offering up new products every day. Make yours stand out. Our pitch included the core message: “we are revolutionizing the Mac market, you are invited to be one the first to try and share your feedback.” Simple, effective and straight to the point.
• Personalize every message. Avoid sending out anything generic. It won’t be read. Remember you need them, they don’t need you. Take the time to find out something about the individual and mention it. Compliment their blogs or articles or videos. Make it clear that the message has been written specifically for them.
• Be prepared to follow up. You might not receive an immediate reply to your first message. You might not receive a reply at all. Don’t let that put you off. And don’t assume that because someone didn’t reply that they’re not interested — the email could have simply been overlooked. Have a follow-up process in place that targets people that haven’t downloaded your product. Again, make sure the message is personalized. The 3–3–7 method is a good one to follow. If there was no response to your first message, follow up three days later. And then three days after that. Finally, wait seven days and send a final follow up message.

2. Invite-only Beta

The next stage is what many consider to be the first stage. But by offering a closed Beta, our exclusivity was already paying off.

Done right, after testing the product, your initial target audience should be keen to talk about it. Let them do so. Let them spread the message far and wide. This will build interest and anticipation in your launch and work in your favour when it comes to invite-only Beta.

With growing awareness, pitching to the press and bloggers becomes easier. It also brings people to you.

To capitalize on the growing buzz around Setapp, we introduced a mailing list where people could sign up for early access if they promoted the product via social media, online or in blogs. This brought along tech-enthusiasts and early adopters to complement the industry audience of journalists and influencers, who at this stage were receiving between 50 and 100 invite-only beta accounts to help spread the word further across search engines and social media.

Opening up a mailing list allows you to showcase your product to an audience that will most likely become end-users — your target audience for when the product goes live. This makes the user experience part of your launch critical. Make sure that everything from product access to feedback submission is seamless for early adopters. And make an effort to let them know feedback (even if it’s criticism) is valued. After all, these are the people that will shape the product that goes to market.

Don’t rush this stage through, though. Invite-only Beta is the stage before your product goes live. Make sure no stone is left unturned in development, branding and marketing.

3. Product Launch

This is where all your hard work during the Beta phases comes to fruition.

Providing everything has gone according to plan, you should have an active community talking up your product online. You will have retained that feeling of exclusivity too.

Now you’re dealing with a paying audience that isn’t already invested in your product. This is where it becomes important to have a product that delivers on expectations and offers value, as well as a customer experience that answers the user’s every need.

At the launch of Setapp, we introduced a free trial.

This is something worth considering for your own launch as it puts the power in the hands of the customer. They get to sign up for free and trial the product in-depth for 30 days. That’s plenty of time for them to decide whether something is to their liking. Signing up also gives that feeling of exclusivity — allowing the customer to get hands-on with a product that website visitors can only read about.

Through planning, marketing, development, and a willingness to adapt, it’s possible to launch a product that achieves both exclusivity and industry-wide appeal. It’s not easy, but we’re proof that it can be done, so there’s no reason why you can’t make it work too. Good luck!

The article was originally posted on Setapp blog.

We put together this article to provide those in software marketing roles a practical guide for how to create and implement a product-market fit survey. And crucially, how to dive into the numbers, then what to do with the information you get from customers/users.

Product — market fit doesn’t happen overnight. Although a lot of experts claim that product-market fit needs to be figured out before launching a new product or feature, many entrepreneurs and companies iterate with a live product and real customers. Figuring out along the way. That works for a while, but every company gets to a point when it needs to get a clear idea of what it is doing right and what needs improving.

To further refine our product and marketing, we used the product-market fit survey to find out what our customers think, and also, how we can improve.

How to run a Product — Market Fit Survey

Firstly, what is product-market fit?

Marc Andreessen, Silicon Valley entrepreneur, author, and founding partner of VC firm, Andreessen Horowitz (a16z) coined the term. It means:

“Product/market fit means being in a good market with a product that can satisfy that market.”

Basically, if you want to grow, you need to know customers want your product and, ideally, can’t live without it. And the market is large enough to sustain your growth: that enough potential customers exist and enough of them are going to love the product that growth can and will sustain itself.

For companies that didn’t manage to do enough research into a product-market fit before launching, you can use the Sean Ellis approach. Sean Ellis is a veteran startup marketing professional, responsible for marketing LogMeIn and Uproar from launch to IPO. He also worked with Dropbox, Eventbrite and Songkick, amongst others, and is now a consultant and Founder/CEO of GrowthHackers.

From his experiences, Ellis created a product/market fit survey. Each of the questions in the survey was designed by Sean Ellis to understand what users think about your product, what is their relationship with your product. We have applied this to our customer base to understand what we are doing right, to make sure we have product-market fit and see where we can improve.

Here are the questions we used:

8 Simple Questions:

How to use this information?

Collecting survey data is always useful. We use this sort of information on a regular basis, to check we are on the right track with product updates, new releases, and new features. But with this data, we — and any company that does something similar — is asking questions fundamental to why and how people use a product. It takes on new significance.

At the core of this survey is the question: “How would you feel if you could no longer use [product]?”

If 40% of those who answer say “very disappointed”, then you have achieved product-market fit. Imagine if Google didn’t exist? Or Slack? Or Spotify? You want a response somewhere in the ballpark of: “I’d hate to have to figure out how to get what I need without this product!”

However, on its own, finding the answer to one question isn’t going to change your business. You wouldn’t be able to ask that question if you didn’t have enough customers, so on some level, your product is viable. The real value is in the context surrounding that question, and the extra information you can gain by asking a few more questions.

One question, always worth asking, according to Hiten Shah, founder of KISSmetrics is “What would you likely use as an alternative”, if your product didn’t exist?

As Shah said in an interview: “It helps you understand how you fit against competitors, or what space you fit into. You might think that you’re a customer feedback tool, while customers might weigh you as a customer support tool. So that question is actually pretty telling in helping you understand, from your customer’s perspective, what other products they would compare your product with.”

All of the information you get from this survey is well worth discovering.

When you are putting together a survey, here are the steps to take:

• Send it to those who will give you valuable responses.To get the best, most relevant results, send it to those who’ve experienced the core of your product offering and have used it in the last two weeks.
• Send it to a minimum of 100 customers (the more, the merrier);
• Create your questions and input them into a survey tool — something you can use to send the questions and capture the information (we used SurveyMonkey);
• Know what you are going to do with the data after you get responses.

What we have learned from Setapp:

We sent out a survey to 9000 paying customers and got over 1600 responses. It helped us discover how our customers really feel about Setapp and what we have to improve.

We used SurveyMonkey to collect the responses.

The good news, we found from this survey is that:

Setapp Does Have Product/Market Fit

The key question in the product/market fit survey is the one that asks “How would you feel if you could no longer use Setapp?” The options for respondents were:

• Very disappointed
• Somewhat disappointed
• Not disappointed (It really isn’t that useful)
• N/A — I no longer use Setapp

48% of people said that they would be “very disappointed” if Setapp no longer existed. According to Sean Ellis, if at least 40% of survey respondents make this choice, you have achieved product/market fit.

An Interesting comparison: Hiten Shah ran a product/market fit survey for Slack users, and here is what they found out:

With Slack’s massive customer-based and brand awareness, it’s no surprise that it has a successful product/market fit. But it’s cool to see that our numbers are even better when “somewhat disappointed” and “not disappointed” are compared.

Diving Deeper Into The Numbers

And here comes the segmentation. Every next question has to be analyzed by the choice users made in the key question: “How would you feel if you could no longer use Setapp?”

The segmentation is aimed to show the difference between users who consider Setapp a must-have (very disappointed respondents), users who see the value but aren’t there yet (somewhat disappointed respondents) and people who don’t find Setapp useful (not disappointed respondents). Which helps get a deeper understanding of what makes people love the product.

Action Item: These conclusions have to be used to take action within Setapp on a product and product marketing level with one single goal: Get more customers that love Setapp.

Understanding Loyal Customers

Loyal and happy customers use Setapp as their main source of high-quality apps that they need. Here is what the survey results found:

• Setapp gives customers easy access to great apps they do not use often, but need to use on occasion.
• For them, it’s convenient to always have access to a wide range of useful apps for daily needs, both personal and business.
• Setapp introduces them to a variety of really cool apps they did not know exist. And they have cool options to choose.
• With Setapp, customers can explore and discover a useful range of powerful apps to enhance their productivity, without them taking hours to find one. This has made Setapp a sticky product for them.
• Survey respondents say that Setapp helps them stay organized and saves a lot of time.
• These users like the fact that they are able to try out different apps without having to pay for each one separately or try for a while before buying.
• Since apps upgrade automatically, and with so many choices, customers rarely need to use Apple’s App Store anymore.
• Pricing: incredibly decent/fair/low price — according to survey responses.

Words and phrases people used to describe the benefits of Setapp included the following: Productivity; Easy; Flexibility; Convenient, Convenience; Time Saving; Ease of Use; Manage in one place; Single entry point; Access to apps; Always current version of app; Automatic upgrades; No headaches; Simplicity.

What is very interesting is that:

Respondents used emotive/negative language when talking about whether there are alternatives to Setapp. Although they can name the alternatives, (e.g. buying apps separately or in different bundles, finding free alternatives to apps available on Setapp), they sounded unhappy when thinking of the alternatives. This differentiates them from “somewhat disappointed users”, who don’t mind buying several apps they need separately.

Some of the responses included:

• Is there an alternative? Give me a break!
• Mac App Store :-(
• Nothing. there is no alternative!
• I don’t know about alternatives!
• If there was such a thing. You are making me worried with your questions!
• I’m not aware of one, but I would look hard.
• Buy the apps individually (like before my Setapp days) but only the “must-have” apps :-(
• Buy selected applications which I feel are most beneficial to me, and sadly lose a number of others which are not vital to my work.

80% of these user recommended Setapp to someone else.

While describing Setapp to others, they were mostly referring to:

• Apps, their quantity and quality, and naming some on the list they have;
• Price;
• Ease of use;
• Comparing Setapp to Spotify and Netflix;
• Used lots of complimentary language: awesome, cool, fantastic, love.

What about customers who aren’t as passionate about a product?

In many ways, the differences weren’t great between very disappointed respondents (those who are most likely to recommend Setapp to others and love the product) and somewhat disappointed respondents, but we did find some when survey results came in.

1. They are not as concerned when considering an alternative to Setapp. Even if it does not exist, they will just go and buy some of the apps they need.
2. When defining the benefits of Setapp, they refer to quality, quantity, value for money, but they aren’t as likely to mention the benefits of discovering new apps and productivity. Which tells us that these guys like the apps we have, the price, but they are not as interested in searching for new apps, beyond those they need to use.

Open-ended responses

Open-ended responses are a key part of the product/market fit survey because they represent the thoughts of the people who actually use the product. We will use the words and phrases customers use to improve our marketing copy and increase conversions.

Why people chose their answer to “How would you feel if you could no longer use Setapp?”

What is the primary benefit that you have received from Setapp?

What type of person do you think would benefit most from Setapp?

How can we improve Setapp to better meet your needs?

From our survey, we found we have a product-market fit. We were relieved to have found that, but also knew we were doing something right to have achieved our growth so far. It is one of those questions that is either best asked before launching, or when you’ve got sufficient traction to be sure you are on the right track already.

For those wanting to do the same, we’ve found the following approach useful for getting a better understanding of product-market fit:

• Create a questionnaire. Use the Sean Ellis method, making sure to include the key, “what if you couldn’t use?” product question in this;
• Know who to sample — decide your criteria based on which group of customers/users has the biggest impact on the business, It is suggested to send it to those who’ve experienced the core of your product offering, and have used it in the last two weeks.
• Use survey software — something easy-to-use, for those answering questions and for collecting qualitative and quantitative data.
• Analyze the responses and make a plan for implementing the results.

The article was originally posted on Setapp blog.

Customer or User interviews are invaluable for product and SaaS marketers, providing you go about this the right way. At MacPaw, we love data. If we don’t measure it, we don’t keep investing in something. Data has guided a lot of our decisions since before and after launching Setapp.

Some data points, however, aren’t quantitative. We can’t always fit them neatly into graphs. In some cases, if you’re following Lean principles, part of the learning process means talking to users, seeing their experience through their eyes, instead of through dozens of intricate data points and analytics tools. We’ve learned a lot from this experience, so I would like to share with you some of our key findings and hope they prove useful.

In this article, we will cover the following:

1. Why you need to run user interviews
2. How to invite someone and who should you invite
3. What to ask and not ask
4. How to make use of the collected insights, data and feedback

Conducting User Interviews

At the heart of every startup should be a fundamental essential that they are, in some way, solving customer problems. Creating something of sufficient value that customers are happy to pay money to have that problem solved. Without user interviews, how will you know you are achieving these core aims?

#1: Why you need to run user interviews?

With that in mind, you could be forgiven for thinking that user interviews are all about giving your team feedback, or a well-deserved pat on the back. Neither is really the case. Yes, if a customer says “Well done, keep doing what you’re doing!”, that’s wonderful, and you should ask if that could be used as an online testimonial. Every positive review helps.

At the same time, if someone says they’ve had a terrible user or customer experience and they welcome the chance to complain, this is equally useful. Startups need feedback. Good or bad, every single one is a learning experience.

But beyond positive and negative feedback, user interviews are one of the best, if not the best way to get the information you need to shape product, marketing and customer service questions. If you aren’t doing these yet — START NOW! We can not recommend user interviews highly enough. One reason these are useful is the results can indicate what product features to build quickly and what to keep further down the pipeline.

Despite a lot of marketers knowing user interviews are useful, one reason we know they fail is not everyone asks the right questions at the right time, and marketers don’t always talk to the right audience. After conducting hundreds of interviews over the previous ten months, we’ve now got a pretty good idea what to do/not do.

#2: How to invite someone and who should you invite?

Something we learned very quickly: Don’t offer an incentive for the interview. All you end up with is data that isn’t really helpful, from customers who aren’t big advocates, who only wanted whatever you were offering.

Before and after launching Setapp, we were keen to talk to as many users as possible. We offered incentives, including the chance to win one of five Apple TV’s. Pretty soon, we were overwhelmed with people tripping over themselves to sit down for an interview. The time in my diary I used to leave free for lunch soon disappeared.

We were delighted with the response. A lot of the feedback was positive, which was great — it re-enforced our assumptions that we were on the right track and giving customers exactly what they wanted. Brilliant! Everyone could relax and finish early. Except, not really. Voices of reason chirped up in the office, and alarm bells soon went off. We checked most of the user accounts, to see who was actually using the apps on a regular basis and were surprised to see that most of our “passionate brand advocates” hardly ever used the product. The majority weren’t even paying customers; they had only created accounts then done nothing, not even downloaded the product.

All they wanted was the chance to win an Apple TV. Even if we’d made the incentive smaller, such as an Amazon gift voucher, the result would have been similar. We learned the following:

• Don’t offer an incentive. Genuine users are always going to be willing to talk to a company without a prize;
• Invite the right people. Active customers, those who will have something to talk about;
• Clearly define, for your product, an active user. Make sure they’ve got beyond the download screen.

#3: What to ask and not ask?

Asking the right questions (to the right customers/users) is essential. Unless you get this right, the whole process will be a waste of time. You need to create a questionnaire, print it, stick to it — or change it if you’re finding that some of the questions don’t, on reflection, make sense.

Firstly, know what you want answered, what questions need to be asked. But don’t ask questions that lead customers to pre-determined answers. Leading question isn’t allowed in a court of law, and they’re not useful when conducting user interviews.

For example, “Why would you prefer to pay annually, not monthly?” is a question we asked. It could have been worded differently, skewing it to sell the benefits of annual instead of monthly payments (e.g. get a discount), but we needed to know what other reasons customers would give for going with an annual plan. Some of the answers included that it’s easier to pay annually, no need to worry about another monthly payment, no need to update card details if they’re changed/lost or stolen. Customer’s reasons for doing something and company’s aren’t always the same. User interviews shine a light on customer’s reasons, which is how you design better products and experiences.

Here are a few other vital things we learned when designing a questionnaire:

• Structure your questions logically. This isn’t a police interview on a crime drama. You aren’t trying to catch them out. You need sensible answers you can use, so create a structure — with a beginning, middle, end, and the chance for them to ask questions too.
• Ask open-ended questions. This isn’t about more data metrics, this is about getting real insights from real customers, and you can only do that when you give them a chance to talk about experiences that relate to your product/service. For example, “What apps have you bought recently?” is completely different from “How do you find good apps?” The second gave us loads of insight, something that even analytics tools can’t provide. Asking the right questions will give your marketing and product the teams the chance to sift for golden insights that could make a huge impact on product development.
• Never ask, “Would you buy [insert product name]?” Users will almost always say “Yes.” They don’t want to look silly, especially if they’ve been invited by the company selling the product. As humans, we feel obligated to say yes, even if it’s not true.
• Build rapport. It sounds obvious, but this interview is another interaction point between a brand and the customer. Show them the human face of the company and make sure they leave with a good impression. Also, don’t be afraid to ask for a positive testimonial or something you can use on social media, providing the interview has gone well.

#4: How to make use of the collected insights, data and feedback?

Of course, this information is so valuable in the product roadmap.

But that isn’t the only part of the business that could find these insights useful. We compile the information and share with other operational areas: Marketing, Business Development, Account Managers, Customer Support, Project Managers, and Stakeholders.

We also print this information, making sure everyone can see who we are creating products for, putting a User of The Week Profile in a high foot traffic area of the office.

Why User Interviews Fail: Key Takeaways

User interviews are one of the most useful ways we have to create apps used by people across the world. Make sure you ask the right people. Don’t offer incentives — they’re a waste of time. Ask the right questions — open, not leading, giving you the chance to have questions answered you need to know and uncover unexpected nuggets of gold insight. User interviews are real insights, from real people, shaping how we build and improve our product and apps.

The article was originally posted on Setapp blog.

Revenue didn’t start rolling in until late February. Everyone gets a free trial, which means it was another month after the launch before we started generating any revenue from new customers. To go from a standing start to over $1 million in 6 months is, as most in the startup community would agree, a positive sign that we’re offering a service that customers around the world want.

It has not been easy.
Not that we imagined it was going to be easy.
Growth takes time, patience and consistent effort.

As anyone who’s done a similar journey knows, generating a healthy revenue from a fast-growing customer-base is far from plain sailing.

Growth brings its own challenges. Achieving this sort of growth in a relatively short space of time — only 6 months — is equally challenging.

We have learned A LOT from this journey, so we wanted to share with you 9of the most valuable lessons. Hopefully, if you’re a founder, entrepreneur, working for a startup, or want to launch a new app into the world, these lessons, from practical, hard-won experience, will prove useful.

9 Lessons From Generating Over $1M ARR in 6 Months

For anyone in a hurry, here is a list of the lessons we cover in this article:

Lesson 1: Make a Product Launch EXCLUSIVE

Lesson 2: Work with Innovators and Early Adopters First, every time. No exceptions

Lesson 3: Build a community before aiming for revenue

Lesson 4: Winning new customers is only half the battle

Lesson 5: Not all metrics carry the same importance

Lesson 6: Create a referral program

Lesson 7: Decide when to go global

Lesson 8: Segment packages around customer needs

Lesson 9: Plan and deploy resources and teams effectively. Increase collaborative opportunities

So, you want to learn how we did it?

Lesson 1: Make a Product Launch EXCLUSIVE

From 1920 until 1933, during Prohibition, buying alcohol in America was illegal.

Not that stopped anyone from buying, drinking and selling liquor, spirits, wine or beer. You name it, Americans drank it in great quantities during that period.

In some places, the local cops didn’t care. They looked the other way. However, in other cities, mayors and police chiefs had to take action; especially New York, Boston, and Chicago, drinking socially became an exclusive activity. You had to know the right people, the right places, and know how to gain access to secret underground speakeasies. Bars and clubs, usually hidden, in the basements of bars, restaurants, shops, sometimes even churches. Once alcohol was legal again, drinking was no longer an exclusive activity.

In recent years, consumer demand for new and exciting dining and drinking experiences, especially in big cities, such as New York and London, has brought the speakeasy concept back in fashion. You can walk into phone booths in restaurants, speak an access code, or hand over a key, and find yourself buying cocktails in a 1920’s style bar.

People love exclusivity.

We love to feel part of something that not everyone knows about.

Humans are hardwired to find out what’s behind a locked door. There are hundreds of academic and consumer research studies that marketing professionals can reference that demonstrates the need to create demand through exclusivity appeal.

So instead of shouting our marketing from the rooftops and tell everyone how Setapp was going to “revolutionize the way people use software”, or some other marketing buzzword bingo-style slogan, we decided to take a different approach. Instead of blasting every single marketing channel with our content, adverts and other thoughts, we took a gradual, steady approach.

In practice, that meant rolling out a three-stage go-to-market strategy, starting with a closed, then invite-only beta. Emphasis on exclusivity, which in turn, created opportunities that accelerated our growth faster than if we had taken a different approach.

Our three stage Go-to-Market Strategy

Closed Beta

Target audience: journalists, editors, bloggers, vloggers, and industry influencers.

Beta is a pretty well understood and logical milestone when launching a product.

Give people access to a new product, get feedback, find out how to make improvements and then launch a new version with improvements and new features. Setapp is the most ambitious project we have launched at MacPaw, where we create great products for Mac customers, so we are experienced at managing the beta phase of product development.

This, however, was different. We launched an exclusive “Beta before Beta”, with a product that was as near to perfect as we could make it. Instead of reaching out to people on Twitter, Product Hunt and other social networks, we kept this one exclusive.

We crafted unique pitches to a list of over 1000 journalists, editors, bloggers, vloggers, and industry influencers. It took time. It hard graft and hustle, but with determination and intros from those we initially contacted, we had a great group of people giving Setapp a go. This was all done under a media embargo, since we didn’t want anything releasing early. If you want to do something similar, this is the approach we took:

• Put effort into your pitch. Make it unique. Ours included the following simple but effective core message: “we are revolutionizing the Mac market, you are invited to be on one the first to try and share your feedback.”
• Don’t blast a mailing list with the same message. Personalize the message so that those receiving them want to open them, want to click on your links and join in your beta before beta.
• Treat this phase the same as other marketing campaigns. Don’t expect an immediate response from the first message, have follow-up emails and monitor whether or not someone has downloaded your product, started using it. With email and app data, you should be able to follow-up with a tailored message, instead of the usual: “I just wanted to touch base.”

For us, the key achievement was giving those who could/would (we hoped!) tell others about our product a decent amount of time to experience it long before the public launch.

Invite-only Beta

Target audience: tech enthusiasts, early adopters, influencers & journalists/bloggers.

The next phase started sooner than we expected.

A few journalists and bloggers, eager to write about us and the revolution about to take the Mac app market by storm, published some articles. Embargo was over. Early adopters started to hear about us for the first time, which is when we started seeing “Setapp” as a keyword in Google Analytics traffic sources — people had started searching specifically for us (an awesome feeling, btw!) — and awareness was growing.

Now the floodgates were open, almost everyone in the private beta started blogging, vlogging and tweeting about us. We didn’t rush to public release, however. We kept beta private, maintaining an exclusivity that proved to be an invaluable growth engine. Pitching to the press and bloggers became easier now, since they were already aware of the product, showing that we were achieving brand name recognition and awareness.

On the website, we gave early adopters the option to subscribe to a mailing list and gain early access if they promoted the product: Tweeted, shared on social media, mentioned us online or in blogs. We also gave bloggers and journalists between 50 and 100 invite-only beta accounts which further accelerated the viral loop, generating more inbound traffic, social mentions and email subscribers on a daily basis.

One risk, at this stage, is slowing down the user experience. If someone wants something — such as to get on a mailing list or a private beta invite — you need to create a seemingly frictionless user flow. Don’t make it hard for early adopters. They are often willing to talk about new products, services and apps, providing you look after them. Early adopters are awesome. Alongside reviews and promoting you to their audience, they will always give you honest feedback, feature requests and actively contribute to a product roadmap, which in the long run, helps everyone.

Public Release

Target audience: Anyone, anywhere in the world with a Mac

The big day was finally here.

It was time to push the button on the public, worldwide release of Setapp.

Despite the early success in the first two stages, we were all a little nervous. This was the biggest launch we had ever done. We wanted it to go smoothly, as much for our customers and fans as ourselves. A lot of work had gone into the first two phases. Now it was time to release the product to everyone, with a launch date set for 25 January 2017.

On that day, anyone could create an account with a 7-day free trial.

Getting press attention was easier now that we had a growing user-base who already loved the product, which is essential if you want to grow at an accelerated rate. You need to have a product that delivers on expectations, delights users and creates value. Without this, achieving viral growth is a lot harder, if not impossible.

Our main mistakes (from the pre-release and launch phases):

Based on current revenue figures, you could say the strategy worked. We achieved viral growth early on and had kept growing. However, not everything went as planned and were we to do this again; there are some things that would be done differently. If we could, we would:

• Ensure the Invite-only Beta phase was longer. It was a little over a month, which may sound like enough time, but when you think that 50 days is only 3 development sprints, it was not really enough time. You should also expect, anticipate, that pre-launch, private and invite-only beta activities are going to take longer than planned. Reaching out to thousands of busy people while implementing other marketing activities is time-consuming, requires planning and as many resources as you can throw at the challenge.
• Get a better definition of the target audience. We had figured out product — market fit and spent time interviewing potential customers, but we could have spent more time pre-launch understanding the audience and validating hypotheses, which is something that emerged during the beta stages and after the launch.

Lesson 2: Work with Innovators and Early Adopters First, Every Time. No exceptions

Always, always, for the sake of your company, team and budget, keep the product adoption lifecycle at the front of your mind when scaling and growing.

One of the most painful ways a startup can die is through spending more than it can afford to scale too quickly, only to end up with money running out the building like water and the wrong customers, who don’t stay for long enough to generate a meaningful return on investment (ROI).

We rushed things, jumped the gun, and paid the price. It was an expensive lesson for everyone. But you can also understand how it happens and why so many companies scaling end up with crazy burn rates. Things were going well. Customers loved the product. Hundreds of bloggers, journalists and influencers were writing about us every day, users were — and still are — happy, and traffic continued to grow.

It was exciting.

It wasn’t just the emotional relief of seeing a plan we had worked hard on coming to fruition. The metrics, the data, supported the assumption that now was the time to scale.

So, we thought, why not: Let’s dial this growth up, let’s get Setapp out to a much wider audience!

We dived into marketing like crazy. We went from organic and gradual to promoted and paid (alongside organic activity) overnight. We bought tons of traffic. We produced massive video campaigns, bought prompted ads and posts on social networks and paid for email blasts. We were spending money like they were going to stop printing it. This was working on the assumption that spending loads up front would generate tons of profit down the road.

Pretty quickly, we were spending $3750.00 to acquire 1 paying customer (customer acquisition costs).

We charge $10 per month for a subscription.

We are working on the model that subscribers will stay with Setapp for 21 months.

That gives us a customer lifetime value (CLTV) of $210.00

Meaning we were making an eye-watering loss of $3540.00 per customer.

In the end, the CLTV to CAC ratio was beyond scary. It was time to scale back. Think about things. Slow down. Stop.

We stopped, thankfully. We put a halt to everything, took some time out to think, then went back to the drawing board. We scrapped the flawed assumption that took us down this road. We started to do what had worked so well for us during the beta phases. Focus on the users, the customers. Think about early adopters. Appeal to what they need and want.

We spent time designing a value proposition canvas, identifying buyer personas and then creating marketing that would appeal to them.

With that done, it saved us a lot of time and budget. Costs were under control. Growth continued at a sensible pace.

Lesson 3: Build a community before aiming for revenue

Build a community before launching a new product. Communities need to be active and engaged, interested in what you publish and should grow alongside your company.

Before Ryan Hoover launched Product Hunt, he wrote about startups, entrepreneurship, products, companies and apps he found interesting. He was published online, quoted on Twitter, hosted brunches and meetups, and created an email newsletter for other startup professionals, founders, investors and people in the community. This meant he had a small but growing and engaged community before launching Product Hunt. As he explains in this blog, those relationships, connections and online audience “became the seed of the Product Hunt community.”

Without this growing and engaged community, “Product Hunt would have been DOA.”

Buffer, the social media sharing app, took a similar approach. In six months, an MVP was launched, and they got a handful of paying customers piggybacking off communities other companies, blogs and media outlets created. Buffer Co-founder, Leo Widrich wrote over 150 guest blogs, which generated enough traffic and revenue for them to keep working on Buffer full-time. Now Buffer has a team of over 70 around the world and generates an ARR of $15.6 million, with an MRR of $1.3 million, according to the real-time Buffer Open dashboard.

Of course, not every company and product needs a community. Engaged fans, people who interact with your brand, read or watch and share what you publish, are essential if you want to own instead of renting your audience and traffic, which means paying less for customer acquisition than brands who pour money into advertising and promoted content. Here are a few ways you can start building an audience:

• Know your customers. Get to know your audience, never ever think of them as metrics and data points. You’ve — hopefully — created something that people want and love, so, as much as possible, ensure new customers find you naturally, instead of spending a fortune on buying traffic and sponsored posts.
• Craft and promote an authentic message. It doesn’t matter if that message is a little rough around the edges. In the early days, no one expects flawless videos, carefully thought-out blogs, or unique GIFS that go viral. Just start talking. Reach out and start talking anyway you can (just don’t spam people: that kills a community before it even gets off the ground).
• Find smart ways to engage potential beta users, those you know are having a problem that your product/app solves, to find out more, gain feedback and invite to engage with you on social media, in email lists and blogs.
• Build a “home” for your community. Every community needs an online home. Facebook, Slack, Twitter and Medium are some of the most popular platforms to establish a community when you want to reach out and connect with early adopters. In time, this community will change and grow as your product reaches a wider audience. However, in the first year, you will normally want to work with an online community of early adopters.
• Creating content, engaging with the community and slowly spreading the word (in a non-spammy way), can encourage people to join who could become beta users and, in time, paying customers.

Our primary community is on Facebook. We created a Facebook Group for our most engaged customers, with over 2000 members in the group, and this keeps growing. Those are out super loyal users, advocates and promoters, and the best people to go to for feedback and insights that shape products. We invite them to test new features (it’s often the case that if we get negative feedback or a pushback from the community, we will stop building something, or change a feature).

We are delighted that they are always happy to answer questions, respond to surveys we send, and they are happy to help each other out, which is something our support team loves to see :-)

Setapp would not be the same without them.

Lesson 4: Winning new customers is only half the battle

It takes a lot of work, a lot of hustle, content, organic and promoted social and search campaigns to generate traffic and signups. So when you start seeing those sign-ups, it can feel like a victory. Signups are a great metric, but unless you are paying close attention to the conversion rate, signups are a vanity figure.

Now you need to show them the value of the product; you should aim to ensure a decent percentage (every company will have a different definition of what’s a successful conversion KPI, depending on revenue and profit targets) of those free trial customers convert into paying customers.

Take new users on a journey. From your end, this journey needs to be supported all the way. It will involve a combination of design (UX, UI), marketing/sales and customer support staff. New customers need to go from “this could be useful” to “aha!” through a short yet informative journey. Unless yours is a product people just “get” instantly, most new users need to walk the route of the product in action to understand the benefits.

As Reigan Combs, Lifecycle Marketing Lead at Asana, rightly points out: “New user onboarding starts before someone even enters your product. It’s collective of all the touchpoints that a user experiences — from the first brand impression to the first web visit, to their signup experience, to product setup and tours, to onboarding emails.”

Give trial users the tools to understand the product themselves. FAQs, product tours and videos are useful ways to educate and get them to wow through a short, logical journey.

Giving potential customers access without any self-serve tools or pointers is a quick way to lose them. You also need to make sure they can quickly contact customer support should they need help. And finally, engage them using emails and in-app messages. Content should be helpful, easy-to-digest, and informative, without spamming them or overloading inactive users.

One mistake that is worth avoiding, from our experience, is assuming what works for one segment of your audience will work for everyone. It really doesn’t! Unless your users all fit into the same profile, there will be some who need and will respond better to a tailored onboarding user flow. Give customers a user-experience and on-boarding process that is right for them, that fits with the needs of their demographic, age, location and other preferences.

As a result of realizing that a tailored approach was needed, we soon witnessed improved conversion rates:

• Visit to SignUp: from 7.11% to 12.71%
• SignUp to Engaged User: from 32.24% to 54.35%
• Engaged User to Paid User: from 8.35% to 14.81%

User acquisition costs dropped. More people converted at the end of the free trial period, and subsequently, our CLTV increased. Churn reduced. Revenue went up. There is no trick to this; simply make sure you are promoting the right aspects of a product’s value to the right segment of customers during the most relevant and timely stage of the funnel for those users.

Lesson 5: Not all metrics carry the same importance

Here at Setapp, we measure everything.

We love data!

I’m not sure if there is a metric we aren’t measuring. Every step in the marketing funnel is measured, monitored and turned into reports and graphs to track progress and make decisions. We are a little obsessed with data.

We have built a predictive analytical model which shows us, on day four after someone signs up for a free trial, how likely, or not; they are going to convert. This, in turn, ensures we can keep iterating and improving the user onboarding experience and process accordingly.

Sounds perfect, right?

It is, except there was one HUGE problem that we failed to address. Across the company, we were swimming in a data paradise. Each team, however, had different metrics, different KPIs and for a while, we couldn’t agree on key metrics. What was essential for the Product Owner (PO) and Product Marketing Manager (PMM) to measure wasn’t important for stakeholders, other managers, and the business owners.

We soon realized that having a clear, agreed upon, “North Star” would mean that everyone was on the same page and focusing efforts towards the same goals. After a couple of meetings, where we played business buzzword bingo, throwing around words like “CAC”, “CLTV”, “Revenue”, “Profit”, “Cost”, “ROI”, we decided on a clear vision on what really matters to everyone, which in turn influenced the product roadmap and marketing activities. For us, we decided on the following:

1. Month over month market share growth
   The number of new paying customers every month, e.g. 10% month-on-month growth.
2. Month over month profit growth
   With these metrics as a North Star, we could more easily assess the impact of new product features, marketing activities and stop buying traffic and new users for huge amounts. It enabled us to more easily align product development with marketing and the needs of managers and stakeholders.

Lesson 6: Create a referral program

Creating viral groups is how some of the world’s fastest-growing startups have achieved market dominance.

Dropbox is probably one of the most well-known examples. In 15 months, they went from 100,000 to 4 million users. Viral loops, an active and user-friendly referral program played an important role in the growth they achieved, and best of all, this is a free/low-cost marketing channel.

Andrew Chen, responsible for Rider Growth at Uber describes it this way: “Viral loop are the steps a user goes through between entering the site to inviting the next set of new users.”

Airbnb, Uber and dozens of other startups have viral loops built into their marketing channels. The concept is pretty simple. When people love a product or service, they tell others. When you give them an incentive for doing so, they’re far more likely to refer people to the same product or service they’re using.

For us, customers can invite friends and family to try Setapp. Every time someone signs up on another Mac with an invite link, the person who referred them gets a free month. You can invite up to 6 people, thereby getting 6 months free, saving $60. Once an account is created using the referral link, a free month will appear in the account of the person who referred a friend. It’s that simple, and we are happy to say, customers love it!

We are currently working on improving and enhancing the program, with the aim of launching the Setapp Referral Program 2.0 early in 2018.

We recommend creating a referral program for the following reasons:

• Acquire free users. Word of mouth is powerful and free!
• Your acquisition costs go down, which means, potentially, you could increase CAC knowing you will generate larger returns through referrals.
• There is no better way to achieve viral growth, at scale, while lowering costs and making your customers feel good — all at the same time. It’s a win, win, win scenario.

Lesson 7: Go global, when the time is right

Going global is an ambition most startups have. New markets. New audiences. New customers and hopefully, multiplying revenue streams. What works in one country should work in another, right?

Not always. You need to make sure new customers know you are speaking their language. In some cases, this means a simple translation from one language to the next. Making sure your message is conveyed in the voice of the target country.

1. Figuring out where to go?

In other cases, you need a higher level of translation, known as marketing transcreation. Instead of translating from one language to another, transcreation, makes copy and marketing messages more meaningful for a local audience. Something that makes sense in one country does not always have the same impact in another. It’s usually worth speaking to a professional translator before going local, especially when entering a completely new market, one that is unknown to anyone on your team.

To start with, our first target market was America. We have a track record of launching dozens of apps that appeal to a US audience, so it made sense to start where we already had traction. Once signups and conversions were strong in the US, we looked at web traffic data to determine where to go next. The top five, after the US were the UK, Germany, France, Australia and Canada. Although the Google Analytics data was an obvious indicator where to go next; and we also asked our 2000+ strong Facebook Group where they were from, which supported our decision to enter these new markets.

2. How to test a theory in a new market?

Google AdWords is the fastest way to start acquiring new customers; something we learned when we ramped up marketing campaign spending. We designed campaigns focused on Germany, France and Brazil to check the level of demand and in those non-english speaking markets.

Before investing more in localization, we delivered the same message to the new target markets as the English-speaking PPC campaigns. We translated keywords, ad copies, and landing pages, so they were mirroring the campaigns exactly.

These tests returned two really important conclusions:

1. The number of impression and clicks in the localized campaigns was 402% higher compared to English-speaking campaigns.
2. Our cost per signup was nearly 50% lower in the localized campaigns compared to English-speaking PPC campaigns.

We knew we had taken the right course of action, so we moved forward with a local market ramp-up, starting in our top 10 target countries, except for China, which we decided to postpone it until we have a local partner who knew the country and region from a local perspective.

3. Impact of localization?

Scaling in new markets means ensuring everything — not just a local website or landing page — is translated into a new market. Everything should reflect a local approach, every touchpoint, marketing message, email and all of the copy and other information within and around a product should be translated by a native speaker into the relevant local language.

Some countries have several dominant languages, so make sure you are aware of those and cater to the needs of a diverse customer base.

Here is an example (image below) of what happened once we rolled forward with the global campaign, with a conversion funnel showing the percentage of web visitors who signed-up for free, then the percentage of those that engaged with the apps, followed by the number who converted into paying customers.

Lesson 8: Segment packages around customer needs

Not all customer needs are created equally. Even when your product does the same thing for everyone, solves the same problems and creates the same value, you are going to find that some customer segments except or want different packages, add-on services or price points.

Within a growing global audience for Setapp, we found two unique user-bases with different pricing needs. Here is how we adapted the standard model for a wider variety of requirements than we initially expected:

• Annual Plan. Some customers didn’t want to remember that a payment of $10 was going to leave their accounts every month. We kept hearing, “It’s easier to pay annually.” So we created the Annual Plan, which proved popular, since the data showed that 14.53% of our customers switched immediately from monthly to annual. For any product-orientated company, this makes cashflow easier, allowing you to re-invest in customer acquisition, support and product development.
• Student Plan. All around the world, students love and expect a bargain. We heard this request a lot of noticed that other software and tech companies do the same, so we quickly created and launched a Student/Education Discount Plan in August, with plenty of time to gear the marketing around the needs of students before a new academic year.

Lesson 9: Plan and deploy resources and teams effectively. Increase collaborative opportunities

Rapid external growth is impossible without getting the internal structures organized beforehand. Companies need clear processes, reliable resources to deploy (staff, internal teams, managers and external suppliers), and a natural collaborative approach between these resources, with everyone on the same page and moving towards the same goals.

Here is an org chart showing where the teams sit and how they work together.

At the centre of this is the working process between the Product Marketing Manager (PMM) and Product Owner (PO). For us, this process works as follows:

• PMM is responsible for the go-to-market strategy.
• PO is responsible for the product.
• PMM and PO have to work together, in the same room — to ensure ideas can be discussed immediately and implemented within the context of the data, marketing and product roadmap plans.
• PMM is responsible for the marketing team’s performance and PO manages the development team; ensuring these are aligned means that new features and apps are integrated into marketing plans and promoted to increase sign-ups and conversions.
• Other teams, such as Business Development and the Support Team are aligned with the marketing and development teams, which means each team has a manager who works and collaborates with the PMM and PO.
• Twice a week, the PO team, PO, PMM and other managers or stakeholders as needed conduct sync meetings, to discuss broader challenges, plans of actions and other details. The PMM and PO then report back to their teams and implement action points.

This works for us. It may not work for every company.

However, we know that collaboration — whether your team is in the same room, or spread around the world — is a key driving force for innovation, for companies of all sizes, from high-growth startups to global brands. Actively implementing the chance to maximise collaboration benefits everyone, particularly your customers.

Summary and Takeaways

One month after Christmas Day we launched Setapp, after months of pre-launch campaigns. One month later, the revenue from paying customers started rolling in. Six months later, we had already achieved $1 million ARR, reaching over $1.4 million ARR in November 2017. Along the way, we learned nine valuable lessons. To recap, here they are:

• Lesson 1: Make a Product Launch EXCLUSIVE. Reaching out to hundreds, then thousands of pre and private beta users proved essential. You need to work with influencers, bloggers, journalists and early adopters.
• Lesson 2: Work with Innovators and Early Adopters First, every time. No exceptions. Don’t try and jump the chasm early. It won’t work. You need early adopters, not only to promote products they love to their audience, but to give you valuable feedback and feature ideas you may not have considered.
• Lesson 3: Build a community before launching. Put your community first. Create content for them, put on events, engage them, show them you care. Only after that, focus on revenue, but never risk alienating your community/audience with too much marketing and advertising. Never lose sight of your audience.
• Lesson 4: Winning new customers is only half the battle. Don’t spend more than you can afford winning new customers for too long. It’s not sustainable. Instead, make sure as many trial users convert to paying customers. Onboard new users, show them the value of the product. Use design, content, self-serve tools and customer support to take new customers from “this could be useful” to “aha!” through a short yet informative journey.
• Lesson 5: Not all metrics carry the same importance. Decide on metrics and targets that are important to your whole team. Focus on getting results, not hitting pointless KPIs.
• Lesson 6: Create a referral program. Once you’ve got a viral loop that works, a way of encouraging existing customers to refer others, you are on the path to sustainable growth.
• Lesson 7: Decide when to go global. Going global means thinking local. Start with the data, then localize the message and every touchpoint a customer will encounter. Conversion rates will always be higher than attempting to go global without changing to language.
• Lesson 8: Segment packages around customer needs. Find out what your customers want, then tailor packages accordingly.
• Lesson 9: Plan and deploy resources and teams effectively. Increase collaborative opportunities.

We hope, if you are growing a company or launching a product, this article was a useful read.

This article was originally posted on Setapp blog.

Included in that data is spending through popular and established marketplaces, such as eBay, alongside newcomers, such as Etsy. However, at the same time, spending on subscription services, including Uber, Lyft already exceeds $36 billion in America — according to 2015 figures.

Other subscription platforms, from Airbnb to TaskRabbit are proving equally popular, with a more diverse group of customers spending with them, proving they are succeeding breaking out of the urban, time poor, financially comfortable Millennial (age 18–34) market. The Harvard Business Review confirms that “30% are between 35 and 54, and 22% are age 55 or older”, which is a positive sign of trust for subscription business models and brands.

Subscription Economy: Continuous Growth

Uber and Airbnb are still the market leaders, operating in most markets, with massive revenues, brand awareness and the amount they’ve raised — over $12 billion and $4.4bn, respectively. The model for both is relatively simple: Independent operators, contractors and freelancers sell services/skills/time (e.g. room rental, car sharing, freelance services, etc.) to customers through the platforms, they, in turn, earn revenue from facilitating the service exchange.

Zuora, an online platform that powers subscription companies, have been promoting this sector for other a decade. Now they have more than enough data and market-leading research to show that subscription companies are growing 9x faster than S&P 500 revenues.

Subscription services are also growing 4x quicker than US retail brands. Based on the most recent Zuora® Subscription Economy Index™, for companies between $1 million and $100m+ revenues, annual average growth goes from 14% to 28%.

McKinsey notes that twenty-eight percent of subscription businesses exceeding $100 million in revenues, and once you’ve hit that rate of growth, revenue usually keeps accelerating.

Hence an explosion of “Uber for” services in almost every sector we can imagine. An article in The Guardian rightly points out that: “[If you can] think of a service, and if someone hasn’t invented an Uber for it, they’re probably working on it.”

In the UK, nine out of ten Brits subscribe instead of making one-off purchases. Not only does this show an 11% increase since 2016, but the amount people are spending on these products and services has tripled in one year, from £18.49 to an average £56 per month on subscription services. We are living in a subscription economy.

SUBSCRIPTION SPEND TRIPLES IN THE UK AS NINE OUT OF TEN CONSUMERS BECOME SUBSCRIBERS.

Last year, Tien Tzuo, CEO of Zuora said in Forbes: “People are not buying more CDs and DVDs; the growth is in streaming music. People are not buying more software; the growth is in software as a service. And pretty soon you will start seeing car sales down because they will move to subscription.”

Cars, really?

It turns out, he was right, and it took less than one year for the first car subscription to go live. We aren’t talking leases, credit agreements, car finance, or using an Uber or Lyft. Now people can take out a subscription that includes taxes, cleaning and other costs associated with buying or leasing a car, with none of the stress.

In 2018, Cadillac and then Porsche announced monthly subscription services. As you can imagine, they aren’t cheap. Book by Cadillac costs $1,500 per month and can be paused at any time, with subscribers able to change vehicles up to 18 times in one month. Car swaps can be booked using an app, and if booked before 3pm, will be delivered the next day using a white glove concierge service. Cadillac launched in the New York region.

Porsche Passport launched in Atlanta, Georgia, with two price points — $2,000 (Launch) and $3,000 (Accelerate). Similar to Book, subscribers have a wide range of cars, no extra monthly costs, can control the subscription through an app and have the option to change cars whenever they want.

Why Are Subscriptions So Popular?

Understanding the subscription economy means thinking back to the recession, which started in 2007–08. The economy collapsed. Millions lost jobs. Businesses went under. Europe, America and other regions struggled to maintain growth and consumers stopped spending.

Buying ‘things’, from DVDs to property and cars was difficult for middle age consumers, but for Millennials (those born between 1984–2000) fresh out of education and straight into the worst employment market in a generation, it was almost impossible. At the same time, the digital economy struggled, but with the support of far-sighted investors, kept growing.

Subscription services emerged, making it possible to switch from buying to renting or subscribing. Subscribing to a product or service means consumers get to experience the same — if not more — freedom, quality and choice as those who buy, without the expensive commitments and need to own something.

Now subscription services are everywhere, with growth coming from wealthier generations who want the same convenience, quality and freedom. Subscribing creates a wider range of choices, which is why customers everywhere are embracing these companies and happily spending more with them as they grow comfortable with new services and brands.

This article was originally posted on Setapp blog.

There are dozens upon dozens of metrics that you can analyze to measure success, but some are more important than others. In fact, in our experience, you shouldn’t measure too many metrics at any one time. Things become too confusing if you do.

Instead, focus on the important key performance indicators (KPIs) — the most critical metrics for tracking, measuring and growing.

In taking your SaaS business to a new level, there are six stand-out KPIs that should be monitored regularly.

6 Metrics every SaaS company should track

1. Monthly recurring revenue

The SaaS industry deploys a bit of the same mentality as investment banking in that you have to speculate to accumulate. You invest your cash into building a product and marketing it to acquire customers, and then hope (however measured your decisions are, there’s always a bit of hope involved) these customers stay with you for the long term.

The fact that SaaS is a subscription-based model makes monthly recurring revenue (MRR) the most important metric of all. This is how you’ll know how much revenue you can expect to generate each month. MRR (not to be confused with monthly revenue) shows you how much revenue is being added, or lost, every month.

Both monthly and yearly subscriptions (yearly subs need to be divided over 12 months) should be factored in to give an accurate picture of where you’re at and provide a solid base to build from.

2. Average revenue per customer

This metric tells you how much revenue you receive from your customers. Average revenue per customer is calculated by dividing revenue by the number of paying users.

Once you have this number, the next step is to look at ways it can be increased, so that each user spends a little bit more. Typically, this is done through cross-selling or upselling. Upgraded packages with more features or annual plans to tie customers into longer billing cycles with the offer of discounts are two tried and trusted methods.

3. Engagement

How are people interacting and engaging with your product? This is something you should be monitoring daily.

Measuring engagement will tell you whether user numbers are increasing or decreasing, and reveal where and how things can be improved. You should track website/product usage, logins, bounce rate, conversions, and compare the results with your expectations of how users should act.

Users that behave as expected can be segmented from users that don’t engage in the way that you’d like to reveal common traits like demographics and traffic sources. You can then use this info to better tailor content marketing and ad campaigns.

4. Churn rate

Churn rate measures the number of people that leave every month.

Churn rate is measured by dividing the number of churns for a specific period by the number of subscribers at the beginning of that period. It should be measured weekly, monthly and quarterly.

A high churn rate is a sign that something is seriously wrong. The only way to find the problem is to talk to customers directly. Ask subscribers that have canceled accounts why they chose to leave. Understand what’s keeping potential subscribers from signing up. And find out from loyal customers what keeps them around.

Long-term success is based on retaining customers. It’s critical that the churn rate is kept under control.

5. Cost per acquisition (CPA)

How much does each new customer cost? Hopefully not more than you’ll receive from them!

In the early stages of business, it’s natural to see marketing and advertising costs outweigh income from subscriptions, but eventually, income will need to exceed expenditure.

Dividing marketing and ad spend by the number of users will give you the cost per acquisition. If you’re not making a profit, something’s not right. This could be a particular campaign, spending on a certain channel, or — and hopefully, it’s not this — your entire marketing approach could be wrong.

Analytics can help you work out which channels and campaigns are bringing in the most revenue, allowing you to reassess (or scrap) those that are underperforming.

6. Lifetime value (LTV)

Lifetime value is a prediction of how much revenue you’ll receive from customers during their lifespan as a subscriber. It’s different from average revenue per customer in that it looks at the total amount of revenue you can expect, rather than what you’ve already received.

LTV is calculated by dividing average revenue per customer by churn rate.

There are other, more intense, ways to calculate LTV by using customer acquisition, profit margins, customer retention costs, and a whole bunch of other metrics, but it’s best to start simple.

Measuring LTV shows you where your most valuable customers are and allows you to focus your efforts on attracting more of them. With this info, you’ll be able to determine your most successful traffic sources and marketing channels and build more profitable campaigns.

As said at the top, there are countless metrics you can track to measure business success, but the “K” in KPI stands for “Key”, and the metrics we’ve listed here are the most important in helping you structure your SaaS business for long-term profitability.

The article was originally posted on Setapp blog.

6 Metrics to Track for SaaS Company Growth was originally published in The Startup on Medium, where people are continuing the conversation by highlighting and responding to this story.