Update 3: The struggle is real
It’s now been two weeks since we launched Lowdown and we’ve still to acquire a paying customer. Why is that? This week I’d like to delve deeper into the early struggles of an online software business to find and convert their first paying customers. A variety of issues contribute, but I believe it’s down to two main things:
- We aren’t getting enough people to sign up to increase the chances of conversion.
- When they do sign up, they aren’t experiencing enough value to pay.
The solution to these problems might seem straightforward enough — get more users through the system and get them to feel the value of our product immediately. However, achieving this is anything but simple, and not being able to do so is why most online software businesses fail. Let’s look at exactly what is going wrong with Lowdown so far.
We need to better understand who our users are
The first step to find users is to identify who you think they are. Lowdown was developed to solve my own problem with community engagement therefore it’s easy to assume they are people like me. But are they? And even if by some miracle they are just like me — are they the right user to target — will they pay?
From our initial research, we did discover others who have the same problem. But only some of these were running their own independent community, for many, it’s a job they’re employed to do for a large company. These community managers might not be the right person to talk to within that company as they may not have the authority to purchase new products.
With Lowdown we have yet to effectively define and validate who the right user is to target and it’s making it more difficult to work out how to communicate with them.
We need to get better at finding and communicating with potential users
So far we’ve been looking for people who run Slack communities. That means we’ve spent hours hunting for them in directories, sub-reddits and good old Google searches. Once a potential user was identified the next step was to figure out how best to contact them. Our approach so far has focused on cold online outreach via email or from within a Slack community. I’ve discovered cold approaches are tricky to get right with a poor reply rate.
We’ve had our best success from within the CMX Slack – a community for community managers. Beyond this, we’re not yet sure where our users live and how best to engage them.
While figuring this stuff out is hard, it’s important to stick at it – your technique will improve over time. If you stay resolute it’s likely you’ll eventually figure out where your customers live, and the right questions to ask them to aid in your products development.
We need our users to feel value
For those who have signed up to Lowdown, the value we currently offer is not high enough (or at least obvious enough) to convince them to pay.
New sign-ups to Lowdown get show an auto-generated newsletter instantly. This is a good demonstration of the potential value of Lowdown, but until they send it and start seeing positive results, there’s no guarantee that it will actually provide value. As mentioned last week, not enough users are adding subscribers and sending their newsletters. It’s important we get our users to this point as quickly as possible. We made an assumption upfront that our users would want to ask their members to opt-in to receive newsletters, but it turns out most just want to import an existing mail listing or all of their Slack membership.
Today we launched a way for our users to Import all members from Slack in one-click. For new sign-ups we suggest they do this immediately after their account is created. We hope this helps with the issue but we know it won’t solve the value problem entirely.
We need to improve our value offering
We believe the value in Lowdown is it gives you a newsletter with minimal effort that can help increase engagement in Slack.
The Lowdown newsletter as it is today is fine, but it doesn’t look amazing. One thing we can do to increase our value is improve its visual appeal — so it becomes a more desirable commodity you can’t wait to share with your audience.
Proving to our users that their members become more engaged as a result of Lowdown is the next step. We think we can begin to achieve this by presenting our users with data on what their members click on in their newsletter. That way they can learn what’s important, so they can create and promote more of this content.
This is just one way of providing value that we hope to test soon. We’re basing this all on conversations with our user and our own assumptions, but we haven’t spoken to enough users. It’s important we keep talking to them to validate further before we go too far and potentially provide value that’s not what our users really want.
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