Written by Rebekah Campbell
Zambesi is a start-up with limited resources and massive ambitions. We have two developers (Coderoo) and every 6 weeks we decide what’ll go into our fortnightly sprints. We’ve tried a series of ‘hacks’ to get customers. These usually deliver a hit of traffic which disappears after a few days. I know that to build a unicorn (like Canva), we’ll need to design our product for growth. And with just two developers and a ticking clock, that means making the right decisions.
Andrianes Pinantoan joined Canva when there was 20 people, a few hundred thousand users and little revenue. In his five years at the company, Andre led ‘Growth’ and Canva exploded from promising start-up, to billion-dollar tech unicorn with tens of millions of users, more than 300 staff and profitability. Andre recently moved to his next challenge – leading Product and Growth at Airtasker.
I asked Andre why Canva took off like a rocket-ship while almost every other company (including us) is stuck peddling on the runway chasing customers one-by-one. And what are some of the biggest mistakes he sees start-ups make that inhibits their growth.
This article is Andre’s approach to user conversion and activation. To learn Andre’s acquisition, retention, referral, pricing, content and broader growth strategy and to get individual advice on your company’s growth strategy, come to his workshop.
What’s in this article:
- Why most product teams are working on the wrong things.
- Examples from Canva and Airtasker
- Use instincts and research as well as data
- Applying ‘survival bias theory’ to growth
- What three questions you need to ask your customers
- The four reasons customers won’t convert
- Eliminating dead ends
- How to maximise revenue
Why most product teams are working on the wrong things
Andre says: ‘Start-ups or innovation teams will ask their users what they want. They’ll go out and interview customers or send out a survey and then build what they’re getting asked for the most.
The problem is that they’re asking the wrong people. Here’s why…
Companies have four types of customers.
- Potential customers: people who’ve never heard of you and don’t know what you do.
- Casual customers: people who know about you, they might have bought something but use your product infrequently.
- Churned customers: People who have used your product at least once but stopped purchasing, left or unsubscribed.
- Power customers: People who love you.
Power customers are responsible for disproportionate amount of revenue so often have disproportionate influence. If you send a survey to everyone who’s used your product, then you’ll get a disproportionate amount of power customers responding. What power customers want will be different to what the three other types of customers require before they adopt your product. If you want to grow, then you need these other customers!’
Examples from Canva and Airtasker
‘When I joined Canva, we’d survey customers and ask about our product. Power users, who’d created a lot of designs would ask for folders and a search function so they could file and sort their designs. But if you’re a new user and you haven’t created your first design yet, or if you’re a casual user with one or two designs then searching your designs and putting them into folders isn’t something you care about.
In order to grow, we had to work out how to activate the new and casual customers. But this is quite hard to do. Casual and new customers are much more difficult to reach.
We noticed a common user behaviour was to start creating a greeting card and then never publish. I’d done this myself before I joined the company. I’d started to design an anniversary card for my wife but I didn’t finish it because I didn’t know what to write in the card.
We did some keyword research and found a huge amount of search traffic for ‘what to write in birthday card / anniversary card etc’. Obviously lots of people had the same problem as me. So we experimented creating templates with pre-filled in text to help new users and this improved our conversion rates considerably.`
At Airtasker we see the same thing. Power users will ask for features to manage tasks. But the fact that they need these features means they already use the product a lot. To drive growth, we need to convert casual and new customers and save churned customers.’
Use instincts and research as well as data
‘A lot of product teams make too many decisions based on data alone. This often misses the point. For the Canva greeting card example we applied a combination of data, instinct and research.
- Data: Data identified that lots of first time user didn’t complete and publish greeting cards.
- Instinct: I had the problem - I didn’t know what to write in a card for my wife.
- Research: Keyword research helped us learn that this is a widespread problem.
- Competitors: We researched competitors like Hallmark, who’ve understood the need for pre-written greeting cards for years.
It helps to think: What is your customer’s job to be done? In this case, it’s to make my wife happy. There will be multiple clues to help you work out the solution. As a design company with design software, we could have remained pure to our product and not included pre-formatted copy. But this would have missed the point. Our customers came to make a greeting card.’
Growth and survival bias
Andre’s growth theory is based on the statistical framework ‘Survival bias’ developed during World War 2. America was losing a large number of bomber planes in the campaign over Europe. In an effort to reduce casualties, the Defence Department began monitoring planes that returned and identified parts of the aircraft that were getting hit. Of the planes limped back to base, the crew compartment was taking on more damage than any other part of the plane. It seemed logical to add armour plates to the crew compartment so it would be more resistant to bullets.
But this had no impact in survival rates…
Statistician Abraham Wald was tasked with finding out why.
Wald studied the data the Defence Department had collected and concluded that they’d been analysing the wrong planes. Why? Because the data had been compiled from survivor aircraft; the planes that had sustained heavy fire and still managed to return to base to be tallied for the study. In order to know where to plate, they’d need to recover planes that never made it back.
They discovered that planes that were hit in the engines never made it back to base. The Defence Department adjusted the way the aircraft were plated and thousands of lives were saved.
This incident is credited as the birth of survival bias theory. If we’re only analysing surviving customers, then we’re missing the point.
I asked Andre how we could apply this at Zambesi
‘You need to interview people who have churned or who have come to a couple of workshops but have remained casual. These are the people you want to save. It’s hard to reach these people; they often won’t reply to surveys. Like the planes that were lost, you need to find them one-by-one.’
What questions to ask churned and casual customers
Andre recommends asking three questions.
- Why did you sign up to our service / visit our website in the first place? What was it you wanted to achieve?
- Were you able to achieve what you wanted to achieve?
- If not, why not.
Then ask if you can contact them to dig a little deeper.
‘You should only ever ask customers about their problems. What are their jobs to be done? What are they trying to achieve when they land on your site or use your product? It’s your job to come up with the solution – don’t expect the customer to come up with solutions for you and take their word at face value.’
We sent out a survey to everyone who had downloaded a workshop syllabus but hadn’t attended an event and asked these three questions. Out of over 1000 churned customers only 32 replied.
The overwhelming answer to question 3 was time and money. A day out of the office is too long or the workshop too expensive for their business.
I took this feedback from our ‘lost planes’ back to Andre and asked for his advice.
There are four reasons why customers won’t convert or activate.
- Motivation: People aren’t motivated enough to sign-up for your product right now. It’s not important enough in their life for them to invest the time, energy and money.
- Product: People might be looking for features your product doesn’t offer.
- Technology: The site isn’t working on certain devices or perhaps you don’t support their preferred type of payment.
- Skills gap: People don’t know how to use your product. This is a challenge for SAAS businesses in particular, and why companies like Canva and Mailchimp put a lot of effort into educating customers on the skills necessary to use their products. For example, Mailchimp teaches its users not just how to use its product, but how to do great email marketing’
Andre’s advice for us: ‘For Zambesi it’s clear that your problem is motivation. Think of Zambesi like a gym. A gym first needs to motivate people to want to exercise. You first need to sell the problem - motivate people to want to learn. Then you should experiment with pricing and duration. ’
We also interviewed people who’d taken one workshop but hadn’t taken a second. There were two clear reasons our customers churned.
- They’d been in the wrong workshop. For example, they’d attended advanced growth strategy when they didn’t yet understand basic digital marketing.
- They didn’t realise the other workshops existed. They’d signed up to Mark Baartse from Showpo’s ‘Brilliant Digital Marketing’ and didn’t know about the other excellent growth programs.
The first issue is fairly simple to fix. The second is a bigger strategic challenge of ‘dead ends’ throughout our product. Once you’d read a piece of content (like this) or attended a community event or workshop, there’s no clear path of what to do next.
You must eliminate dead ends in your customer experience
‘A product that’s designed for growth will always be flowing. There should never be a dead end. Even a ‘Thank-you’ page should lead a customer to the next thing.
With Zambesi, it’s clear you have a problem with dead ends after people attend a workshop. You need to design your customer experience so there’s always a natural progression.’
How to maximise revenue
‘If your focus is to get more people using your product, then you need to interview churned and casual customers. But if your goal is to maximise revenue, then you should interview your power customers. Find out what problems they still have, even though they love your product, and you’ll be able to work out to encourage them to use you even more.’
For this task, my cofounder and I interviewed three of our power customers. They were all CEO or COO of fast-growing technology-enabled companies and they use Zambesi consistently to upskill themselves and their teams. These customers didn’t have any problems with motivation. They wanted more transparency around what team members learnt at the workshops and their next goals. And they wanted participants to return to the office better equipped to share their learnings with the rest of their team.
The solutions we’ll create to solve these problems are very different to the solutions we need to address a lack of motivation in our casual customers. Understanding this distinction will enable us to plan our product development more strategically and set the right goals to measure the success of new features.
Andrianes Pinantoan leads a small-group ‘growth’ workshop for SAAS and marketplace businesses. The workshop is designed by Andrianes to share his personal strategies and the approach he’s taken to rapidly scale businesses like Canva, Tyro, Spaceship, Open Colleges, Airtasker and many others. The workshop is limited to 12 people to enable Andrianes to give individual feedback and advice to each business.
Andre is also available for a limited amount of in-house training, lunch and learn sessions and consulting. Contact us for availability and rates.
If you like this article then check out our other growth and marketing programs:
Advanced programs for marketers:
- Ruthless Performance Marketing with Tim Doyle, Head of Marketing and Strategy, Koala Mattress
- Brilliant Digital Marketing with Mark Baartse, CMO Showpo
Programs for startups:
- Growth Hacking with Jared Codling, Australia's best known growth hacker and Slingshot Mentor
- Social Media Bootcamp with Tim Hill, Cofounder Social Status