Entries Tagged 'Startups' ↓

By now we’ve discussed the fact that you should first plug your funnel, then improve conversion rates, then work on sending as much traffic as possible to your website.

But we haven’t talked about how big of a role traffic quality plays in determining your conversion rate.

Traffic Quality
By “quality” I mean the following: how close each visitor is to your ideal customer, and how much of a relationship you have with that visitor.

High quality traffic means each visitor is very close to your ideal customer and they know and trust you.

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I had a realization recently while talking with a Micropreneur Academy member: focusing on increasing traffic and improving conversion rates is a fantastic game plan for a startup. But if you offer a recurring service a third step is required: retaining your existing customers.

If you’re focusing hard on optimizing your website sales funnel it’s easy to ignore what existing customers are saying. It’s also hard to prioritize what to work on next: traffic, conversions or new product features. And traffic and conversion rates are the forces that grow your business.

But adding new features is at times more important than focusing on sales. I talk a lot about marketing/sales on this blog because it’s crucial to your success, but in this case there’s a real trade off between growing revenue and keeping your current customers happy.

So to put this idea into perspective I’ve started referring to a customer cancellation as losing someone through the bottom of your sales funnel.

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Here’s an interesting exercise: find a startup or microISV founder and ask the following:

What are the top 3 approaches you use to find customers?

The most common responses will involve search engine optimization, AdWords, blogging, podcasting, and perhaps social media. And this is good – these methods can drive substantial traffic to your website.

Then ask about the next step in the process:

Once you have traffic coming to your site, how will you turn prospects into customers?

This is where you’ll be greeted by open-eyed stares, head tilts and puzzled smiles. Most startup founders think about driving traffic to their website. Almost no one thinks about improving conversion rates. Why is this?

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My roof is leaking. In five places. Whoever thought it was a good idea to build a house with a flat roof should be forced to duplicate Google’s PageRank algorithm in assembler.

So I called a roofer, Fred, to give me a quote to fix this mess. His skin is like leather and his voice sounds like a cheese grater…signs of a good roofer in my book. And damn does this guy knows what he’s talking about.

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This morning Seth Godin published a post titled Debt, equity and a third thing that might work better. The third option he covers is pre-selling future income by offering someone $x of every widget you sell forever (it may be a sliding scale that decreases after x units are sold).

I was surprised by this, as I thought Seth was going to discuss another option I’ve seen used with great success: customer financing. That’s when you find one or more (future) customers that help fund your product development in exchange for input into the process and free or highly discounted use of the software.

This situation is so unbelievably advantageous to a startup it’s like strapping rockets to your running shoes. Not only are you getting financing with little risk, but with customer financing you have someone in the industry with a vested interest in your product succeeding.

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Hot off the press, hear the hosts of the Startup Success Podcast interview Mike Taber and I about the Micropreneur Academy. You can download the MP3 here.

P.S. I did a written interview a few weeks ago for LocationIndependent.com. You can find it here.

These days you can’t throw a brick at your computer without hitting a story about Twitter and Facebook (and each time I read one I find myself with the urge to throw a brick at my computer).

Yes, Twitter and Facebook are the darlings of the media for the time being, and it seems no one gives a rip about blogs anymore. That hot topic of yesteryear is now a fad of the past, much like Chia pets and Snuggies. Wait, you haven’t heard of a Snuggie? Be really disappointed you missed out on that one.

Where was I? Oh yes, blogs. They’re over. Done. Kaput. They are so 4 years ago…

But wait…actually, they’re not.

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We just moved to Fresno, CA and I’m looking for a new mechanic. I needed a smog check to get my car registered and went to the closest place – a Shell gas station about 3/4 miles from my house. The mechanic was very nice and the service was prompt. It was a pleasant experience, but nothing remarkable (I didn’t even mention it to my wife).

Two days later I received a postcard that read:

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When I talk to people who are thinking about launching a software product, whether a high-growth or Micropreneur endeavor, from time to time I hear that if they could get to the front page of Digg or get a mention on TechCrunch that they would be “set.”

The problem is, your market is most likely not the people who read Digg. Nor the people who read TechCrunch.

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I’ve heard for years about the importance of finding a market before building a software product.

“That’s ridiculous!” I would think, “How can you find a market for something before you build it?”

Years later I’ve realized that the single most important factor to a product’s success is not the founders, not the marketing effort, and certainly not the software itself.

Nope. It’s whether there’s a group of people willing to pay for it.

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