What we cover in Episode 10
Let's face it; there is very little blue ocean left. Every market is awash with competitors who are after the same audience as you.
Your job as a marketer is getting more difficult by the year.
Focusing on a couple of acquisition channels and excelling at them is one way you can outmaneuver the competition.
The other is finding their weaknesses and making them your strengths so you can stand out from the crowd.
Luckily, we have an expert, Sujan Patel, to help us with both of those topics.
Happy Growing!
Podcast Transcript
1. How to Find Your Customer Acquisition Channels
Kieran: What up all of you awesome growth-minded marketers. We are here today to talk about how you can find your acquisition channels.
And if that's not good enough, how you can win in saturated and competitive markets.
We have no one of the best experts in the space to take us through this. We have Sujan Patel who is the founder of many companies and expert in growth. Sujan, thank you so much for joining us on The Growth TL;DR.
Sujan: Yeah, thanks for having me. Very, very excited to talk to you. Growing in saturated markets is something that I've had the privilege, and I say an opportunity because it's a load of experience always to work in for most of my career. So I've always been working in marketing stuff where there is a vast 100 million-dollar company or lots of competitors.
Kieran: Yeah, if you go through even just a couple of your companies, you have Mailshake, which is in the e-mail space, not a niche market. You have a successful web agency too. It's not as if you've tried to pick niche markets; you choose highly competitive markets.
Sujan: Yeah. And you know what, we came in relatively late in the game for a lot of these industries. And so, one of the ways we validate whether we should go and build something in the spaces and product/market fit, is you make something in an area that already has product/market fit. So the downside of that is you've got lots of competitors.
Kieran: Yeah. And the upside is there's money to be made. There's a lot of companies already in that space.
Sujan: Yeah. I think if you, and this is a good point, is that when we look at Mailshake, we took about nine months.
We hit product/market fit, and we pivoted over from a content marketing tool to more of an e-mail tool, pretty much e-mail was one part of that content marketing tool. And we ditched everything else because the e-mail part is what everyone loved.
The long story short, while my co-founder was building for nine months, I went into competitive research. A competitive analysis looking at who else is the space, what they're doing, everything about them, talked to their customers and talked to people in the space who we would want to market to.
And that's how I got to this, I found all the nitty bitty details about them, and I found out what not to do, what to do and what to build.
Kieran: Yeah. And it's something you touch on in both of your articles that I think is a real skill to possess, which is competitive analysis.
So we're going to jump straight into how to find your acquisition channels. It's is a great article that Sujan published in the Growth Marketing Conference website. And there are many great takeaways that we're going to get into, but things that we loved was that it was important for companies to focus on doing one channel versus spread themselves too thin.
We're going to get into that. A marketer should build their prediction models for tactics they're considering running so that they can better prioritize what tactics to pursue. That is a muscle that a lot of marketers do not possess.
So you should go check out the article. It will be in the show notes.
And the first thing I wanted to ask was you touched on something I think pretty significant in the first paragraph of that article. And the quote is, "It's better to do one channel well than do several poorly." An opposing view to that maybe from the likes of Gary Vaynerchuk who recommends that brands be everywhere, try to do everything.
Could you give us your thoughts on why you feel companies would be more successful if they focused on one channel? Like kind of went more in-depth on that channel versus spreading themselves too thinly.
Sujan: Yeah. So I think this is the biggest mistake I see in a market now is that there are so many people who go wide. And when you go wide with multiple channels, just even two, you split your brain power; you split your team, you split your focus. And all of those things split in two, three, four, five, means you can't compete or execute to your best ability.
Now, if you take that and combine that with an existing market or big competitors, people with bigger budgets, to win, you really to do a better job than them. You need to out market them, or you need to do something better than them.
Now, that recipe doesn't mix well with splitting your time. Because usually, I remember once upon a time, HubSpot was a small team competing with some big companies in this space. And I think you guys conquered it. You guys are a public company now, but I think it comes down to if you want to work on multiple channels, do it over time but get one working.
So my kind of rule of thumb is to focus 80% of your effort on one channel that you think can do well for you. Drive most of that growth. And then the other 20% of the time, on other ideas that are outside of that channel. So it's ideas that are just maybe testing new channels, it's perhaps... Like the other 20% of the time is testing one whole channel or perhaps it's like five ideas that are testing four, five, two, three different channels or whatever. But it's really about that focus and execution.
Kieran: Yeah, I think the reason for that is a lot of small teams may diversify their channels too early is because they don't know how to determine the one channel they should go deep in. And they're kind of scared about not doing them all because they think, "I don't know which is the one that's going to be most successful."
And in your article, you point out that it's essential for marketers to be able to prioritize their channels by building a predictive model on the upside you can get from each of those channels. Could you maybe go through that a little bit in more detail?
Sujan: Yeah. Here's kind of the way I look at this and it's a super simplistic view, but I think when you're thinking about the business side of marketing, meaning marketing is driving true growth and it's not just kind of traffic or awareness and buzz or whatever. You have to look at hard numbers. Like can this drive new customers for me?
So what I typically do is I'll look at all the channels I'm exploring. And what I ask myself is if I were to get the conversion flow right and let's assume you have product/market fit, everything is going to work at a realistic estimate of traffic to conversion or maybe traffic to lead to conversion or whatever. Just use some real numbers there.
Is the number of visitors going to relate and convert into a proper amount of customers? Is it going to move the needle? So, let's say I'm comparing three channels. So in the beginning when I start off marketing, I look at all the possible channels to grow. Maybe I'll do SEO, and I'll do content. And let's put that all into inbound as one channel. Then perhaps I'll do PPC. Maybe it's cold e-mail, perhaps it's partnerships through co-marketing efforts.
So let's say co-marketing, and we compare that to AdWords. With AdWords, I can tell you anybody who can do research or hire somebody who can do research and manage the campaigns. You can find out the demand, and you can estimate how much traffic you're going to get. You can predict how much it's going to cost you to get that traffic.
And let's say it costs you $1 and there are 10,000 visitors that you can get in a month from this. That means let's say 200,000 people are searching for it, so 200,000 search volume, you're going to need a 5% impression. A 5% click-through rate would be 10,000 and on that 10, 000, let's say you have your average 10% conversion rate which would be a high conversion rate. Well, that means 10,000 people will come in, it's going to cost you x amount, and that will get you, 1,000 customers.
Now, by comparing that same thing to partnerships. Let's say each of your partners that you're going to work with have 100,000 customers, and then you have to do the math of like, "Okay, if they're going to market to 100,000 customers, how many people are going to see that e-mail?" Let's say they do it through e-mail, how many people are going to, let's say join a webinar and then of the people who join the webinar, how many are going to wait until the end or even go to your brand? Now, when you do the math and whittle down the partnerships from 100,000 customers to how many people join the webinar, you're probably looking at a few hundred, maybe a few thousand. So how many people go to your website, perhaps that's now a few hundred, and that may be ten customers.
Now, it'd be great for branding but when you compare to 10 customers and an unknown amount of effort with lots of variables, compare to AdWords which can drive you 10,000 visitors that can convert at 10% each, at 10%, and that's 1,000 customers.
If I told you, "Kieran, hey, I'm going to focus on something that gets 1,000 or 10. What would you rather have me do?" The decision becomes very obvious. But I think what people forget to do, they forget to go through the flow of that would be in partnerships and whittle that down to actual customers. And I'll do that same thing for every single channel. And again, I'm not shitting on partnerships; I'm not saying partnerships is not a good idea. I think that's a great idea, I think it could be an explosive channel, but when you compare to all the other opportunities, it puts itself in its place by looking at the numbers.
Kieran: Yes, modeling out expected returns from each channel is so important. At HubSpot, we do a predictive model of how we're going to grow for the coming year. It allows us to prioritize our resources according to where we think we'll grow.
Sujan: Absolutely. I mean, we do the same thing. It's still not the end of the year, and I'm looking at 2019 I'm like, "How do I 2.5x the number of new customers we get?"
So I was like, I have two levers here. I can help reduce churn and increase stickiness in my product. And maybe that accounts for x amount, x%. Then I look at what do I need to do? So let's keep it simple numbers. I have 1,000 new customers a month, a total made up number, and I want to get to 2,500 net new.
If I have a 1,500 customer delta and let's say I can get 500 more by just decreasing churn. Again, made up here. I need to account for 1,000 new customers. That would mean I need to double growth. What are the channels that can get me double? And I always say like if it doesn't look good on paper, like if you write this out or put it into a spreadsheet, it's like, "Wow, that's going to be hard." Or it looks difficult and you're like, "Oh my God, I don't know if I'm going to do this or how I can do this." It generally means it won't play out properly either. Because when you look at best or average case scenario, you're not accounting for losses or things not all working.
Yeah, super simple. So again, as I thought about what I need to do to double the growth and what are the challenges are going to do it. And some of it is doubling down what we have, some of it is whatever but that helps me narrow down from this big ... Like what can we do in marketing with x amount of budget, with x amount of team to ... Like, I need 1,000 customers. How long is it going to get me to take there and what channel can I use to get there?
Kieran: And one of the things you talk about is that you can differentiate yourself by price. If you price yourself more cheaply than your competition that's kind of like why freemium is an excellent go to market for disrupting competitive spaces.
How do you think about the fact that over time you are going to want to put your prices up? Once you've set a price for something, it's hard to increase costs drastically without adding a ton of new features and overcomplicating your product?
Sujan: Good question and good timing because since we launched Mailshake and now we've 4x the price, and it hasn't affected our growth. We've had some complaints along the way.
So I'll answer the question and how to do it without pissing off everybody in the market and losing your market share.
Like people love Mailshake. The two common reasons are it's easy to use and pricing. I would say it was reversed two years ago, three years ago because we were way cheaper. We're still cheaper in the market, but the way I've done this and the way I'd recommend doing this is to continue to grandfather people in.
Now, probably Patrick Cambell from Profit Well, the pricing guy would strongly disagree with my approach or maybe has a different opinion. He's like the mathematician pricing guy. But again, from the simple business and marketing view, steadily increase your price. I think one of the things I've learned from guys like Neil Patel is that pricing and product are very different. You can test pricing without your product. I think many people are like, "Oh, we need to add more bells and whistles." Not really. That generally complicates the product more. But also, don't feel like you have to rationalize increasing prices by adding new stuff. You can increase pricing all day long.
We just did a switch like I think six months into the product. We switched from $9 to $19, just entirely switched over. Sure, people complain and anyone who complained or pinged us saying, "Hey, like what the hell? Have you increased prices?" We gave them the old price. Number two is any of the existing customers that were paying us before the change, we kept them and grandfathered them in. But, if they cancel their account and create a new one, they did not get the old pricing.
Now, we're getting to the point where we're A/B testing the pricing to really kind of see. I'd say like don't be afraid of pull the switch and go because worst case scenario; you can always revert. What you can't take back is you talking about that pricing change internally or idea internally for a long time. Because talking about it doesn't give you any clarity.
Kieran: So you think going into a market at a lower cost than competitors gives you the opportunity to gain some initial traction and you reward the early adopters, who take a chance with your product with better pricing.
But your product is worth more in the market and over time you're going to price it up to what you feel that it is worth in comparison to the other available options that are in that market.
Sujan: Yeah. That's one strategy. It was, again, if you're playing the price game. You could also justify increasing prices over time as you add new functionality, new features, whatever.
Kieran: Yeah. I think pricing and packaging is one of the biggest growth levers most companies have. And it's like one of the biggest areas of experimentation, so that makes total sense.
2. Growing a Company in a Saturated Market
Kieran: Okay, we are going to switch gears. If you want to find your acquisition channels, I think Sujan has given you some amazing information. But what happens if you find those acquisition channels but you're in a competitive or saturated market?
So we want to go into another post that Sujan wrote on his personal blog. You can find that in the show notes. Again, a ton of interesting takeaways and we're going to dive into some of the points he makes.
The first thing that jumps out to me about this market is you list customer service as a way to win in competitive markets.
I think it speaks to the importance of word of mouth and just earlier you mentioned that even Mailshake's number one source of referrals or source of signups is word of mouth, which is an envious place to be in for any company.
Do you feel most companies overlook the importance of customer service as a marketing tool? Like how do you think companies need to change the way they think about the customer service and how they implement it.
Sujan: Yeah. So I think that most companies undervalue not just customer service, the customer. Their opinion, their feelings, the value any company can provide to a customer. I think there is a couple of other customer-centric things that are important to stand out in a saturated market. But customer service is the most obvious one.
And so, I'll give you a very quick and hard example. Mailshake has 65 competitors that I'm aware of, that I've seen and are incredible. But 65 competitors. You can be different by just providing better customer service. Why? Because if you can provide better customer service, you're more helpful to your customers, you're more invested in being successful, so your customers being more successful.
And people always remember the best and worst experience, and I would say the worst experience first. So that's why I focus on it so much.
Kieran: Yeah. We have so much choice today when it comes to software. And, we're all acquiring customers from similar channels, like Google or Facebook. Winning on acquisition is hard.
The thing you can win on is customer experience because I do 100% agree that a lot more people will remember then negatives, but you do get the people who will remember the positives and those people will promote your brand for you, promote your company for you and be your best marketing tool.
And it's probably the thing that a lot of companies underinvest in. And they usually invest in it when it's a problem. They don't think of it as something that like I can invest in this and generate revenue. It's like, "Oh, this thing is turning to shit, and people are freaking out about stuff. I better actually do something about it."
Sujan: Yup. I mean, I'm just like nodding my head in agreement. Yeah, I think it's something that it should be a part of the principles of running a business these days.
Kieran: You make the point that you feel retention is way more important than acquisition and a critical metric for people to look at and I agree. If you can acquire, but you can't retain, you're screwed.
Regarding the companies that you run, is there anything that you can share that has moved the needle on retention? Any nuggets that you can share that has helped that metric improve for any of your companies?
Sujan: Yeah. Here's a simple exercise I went through that led me to come up with a couple of tactics and strategies that I use. Find out what your customers' biggest problems are in their universe, not like in the universe of using your tool, your product, your service, whatever. Their problems in their job, in their roles, in their lives.
And they could be for like WebProfits; we target VP's of marketing, CMO's like many other out there. We have millions of competitors for those roles. We create content that helps the VP of marketing, the CMO, keep up to date, stay sharp, hire, do all the things that they do in their role.
So, going back to that exercise, figure out what your customers' problems are or your ideal customers and what their problems are. You can figure this out by talking to them, hanging out where they hang out. And not talking about your product or anything like that, just figuring out what their problems are. One easy win is everybody can create content that solves people's problems.
You think for Mailshake, what's your biggest problem? What're our customer's biggest problems? It's not how to be more successful with Mailshake or how to use it; it's how to get leads from cold e-mails. So all of our content is geared around that. It's how to write good e-mails.
So I'm breaking out the big problem is how to get revenue from cold e-mails. Because the biggest problem to do that is how do you find e-mail addresses, how do you find the right prospects, how do you write a cold e-mail, how do you even write these e-mails or how do you structure them? So you can also solve them with customer success. So education and content is an excellent top of the funnel marketing.
The other part is maybe you can build tools or help get customer success or your marketing team to start solving these people's problems. From the six months of 2018, I tried to solve our customers' biggest problems. It's how to write e-mails. Again, that's the Achilles heel of cold e-mail. You write a shitty e-mail, it doesn't work. Send it to a bad list; it doesn't work.
So I talked to you about 200 or so customers, and I reviewed their campaign, and I helped them be more successful. And in using that, doing that, I made a list of about 20, 30 things that everybody makes a mistake on, the common things. And then my co-founder built a tool that is now within the product that anytime you write an e-mail, you open up the WYSIWYG editor to write an e-mail and craft it, it gives you live feedback.
Now, look, the reality is, every single one of our competitors can do this, anybody can do this. It's pretty much like really easy. But very few people are focused on solving this problem and looking at it from a customer's vantage point of what it takes for them to be successful.
Next month, we're going to release this as a tool so anybody that's not a customer can use this. So content that solves a problem, manually solving the problem with people, building tools that solve the problem. And the magic silver bullet here is if you can solve the problem and also use it as a top of the funnel source, an acquisition source, you win. Because acquisition and retention combined is the key to grow or sustain the business.
Kieran: You talk a lot about the importance of doing competitive research as part of winning in competitive markets and standing out in those markets.
What are the things that you want to know about your competitors when you're trying to win in a saturated market? Like what are the things that you're looking for that are useful to you?
Sujan: Yeah. So first and foremost, I'm trying to figure out what works for them to grow their business. I never take anything with face value. I'm trying to dig in to figure out why people purchase from them. So I'm talking to customers, old customers, existing customers and I'll type in a competitor name reviews into Google or go into YouTube, and I'll find the person who created the review, I'll contact them. And you can find them on G2 Crowd if they wrote a review on their site and if they have a LinkedIn profile, you can connect with them. So I can easily pin anybody that's a competitor.
I didn't talk to like 100 people; I just needed to talk to two or three, five people. But going back to find out what they're doing that's working, what I'm trying to figure out is what are their channels to success? How many customers do they have in the first place? And these are all guesstimates, but I can easily say, are they doing SEO or they're doing content."
I can use something like Ahrefs, SEMrush. I can do espionage for finding out what they're bidding on. I can go to their site and see if I can remarketed to. So you can see if they're doing all these channels.
All these things. I'm just trying to figure out is like what are they doing? What is their one channel and how much penetration do they have in that? And I'll do that for all the competitors.
I'm also trying to figure out what's their USP, what's their unique selling proposition? What makes people buy from them? Again, still a hypothesis or a guesstimate at best, but I'm trying to figure out what do they have that people love? And again, looking at reviews can tell you that because if everybody's saying ... If you looked at all reviews for Mailshake, you're going to see easy to use, like 1,000 times. Every single review says that or at least that's the most common answer. So easy to use is our value proposition.
So, I'll tell you, easy to use the result of nine months of competitor research and I was forced to do this because my co-founder was building for nine months, so I had nothing better to do to market the business so I just had to go digging deeper. And I hated every moment of it.
But anyway, my point is, all of the reviews for our competitor's tools talked about how cumbersome they were to use. So I said to my co-founder, "Hey Colin, why don't we do something different and just create something that's so simple to use, you don't even need any training?" And what we launched, we tested that.
So I put my money where my mouth was. We had no onboarding, no in-app onboarding, no e-mail onboarding. And we put people in the product, and we made you pay for it upfront. So we set a high friction point, no training, which made for a very motivated person and they just went through the flow.
And yeah, they had questions, and we looked at the questions over time and were like, "Okay, oh, people are having a tough time setting their e-mail addresses up." So guess what we do, we add a little bit of onboarding for that. But literally for the first seven, eight months, we had zero onboarding. Like 100% opposite of anything, I would do as a smart marketer to test out if our product was trying to do to our USP. And it stuck true.
Kieran: Yeah, makes total sense. I think there's a lot of interesting things you can get taking the time to look at how competitors are growing. So we have taken up a lot of your time.
I want to finish with one question that we ask people who come on the show. And that is, you are a very successful marketer, founder, you've founded many successful companies. What do you think are the skillsets that you have that have helped you to be successful? Like what do you think are those skill sets that have been an important part of your success?
Sujan: Yeah, that's a great question because I think from a service level it's easier to be like, "Oh, everybody's good at all these things." I think the big skillset I'm good at is I'm good at digging into a problem and trying to find ... Coming out the other end with a couple of solutions and then what I want to go after and what data to back it.
I'm just good at digging through things. My business partner is like, "How do you get all this information from the competitors or how are you friends with competitors?" Because instead of trying to be enemies and being an asshole, I try to figure out how to collectively kind of serve the customer better. And so, I think the number one skillset is the problem-solving and digging into a problem and coming out the other end with some solutions, whether they're good or bad. And trust me, not always good.
Second would be getting in the minds of the customer and their day to day and what they do. And lastly, I would say for me, and I think a really important skill set is inbound marketing.
And actually, one last skill. I know that you've probably asked for one, not expecting four, is sales. Every marketing person should know how to talk to people. So maybe it's interpersonal skills, perhaps it's communication skills, perhaps it's just reading sales books, or perhaps it's reading like Never Eat Alone.
It's important because whether you're doing sales externally or not, as a marketer you're always selling your idea, and you need to get the product team involved, the engineers, the founder, whoever it is. And if you don't get them involved ... Or let me put it positively, you get them involved, things would happen faster. They'll be smoother, and they'll be a lot less headache to get it done.
Kieran: Yes. That's so true. You are always selling an idea in marketing and particularly now that marketing is blending with product. With product-lead companies, marketing, product, sales, and engineering are going to work together even more.
Selling an idea to a PM and an engineer is a different prospect than selling that to a colleague in marketing. And I think all the things you've said are critical for marketers to get people excited about the reasons they should invest time and energy to build things.
All right, cool. Sujan, I appreciate you being on. We are going to add links to Sujan's blog, his Twitter, everywhere else we can find him online so you can stalk him, get great ideas. Appreciate you coming on the podcast.
What to Check Out From This Show
1. How to Find Your Customer Acquisition Channels
2. How to Win in Competitive Markets
3. Grow Your Business to One Million ... and Beyond
4. Sujan on Twitter / Sujan on LinkedIn
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Topics: Podcast, Founder, Customer Acquisition
