Category Archives: marketing

Microsoft adCenter over reporting conversions

I have long suspected that Microsoft adCenter is over reporting conversions. Here is the confirmation from my adCenter reporting:

I am guessing that the purchaser visited the ‘thank you for your purchase’ page (which contains the conversion tracking script) 5 times, for whatever reason. I can’t think of any other way this situation could occur – the conversion tracking isn’t set up to take account of multiple purchases in one transaction. How difficult would it be to only count the first visit? Google can do it.

Being cynical, perhaps the over reporting suits Microsoft? But it makes it much more difficult for me to assess the real effectiveness of keywords and ads. Another good reason to concentrate my efforts on Google Adwords instead.

How to generate traffic to your website

Fellow software entrepreneur and blogger Stephane Grenier sent me a review copy of his “How to generate traffic for your website” ebook a while back. I have finally had time to read it. It is an introduction to marketing your website, covering a wide range of topics, including: SEO, Google Adwords, social news sites, blogging, directories and PR.

On the whole I think it is a very good introduction to marketing websites. At 136 pages there is plenty of ‘meat’ and a good balance between depth and breadth of coverage. Steph illustrates many of the topics with his own real-world experience with landlordmax.com .

There is less there for experienced marketers, but I still picked up some useful tips and there were links to resources I hadn’t come across before. I found his illustration of optimising a Google ad particularly interesting. But I disagree with his recommendation to allow Google Adwords to optimise which ads are shown most. The problem with this is that Google may choose to show ads which are making lots of money for them, but not much for you (e.g. high clickthrough, low conversion). I prefer to show all ads equally and then kill off the under-performers myself.

I have a couple of quibbles:

  • Some of the writing isn’t as polished as the prose in Steph’s blog and there were a fair number of typos. I have pointed some of them out to the author, so they should hopefully be fixed in the next version. Also some of the screen captures looked a bit mangled. But this may be due to the vagaries of PDF formatting.
  • I am not keen on the use of undisclosed affiliate links in a paid-for ebook. Affiliate links call the impartiality of the author into question. Is he sending me to this site because it is a useful resource, or just for the commission? I feel that any affiliate links should at least be clearly marked as such. But this is a grey area and that is just my opinion.

You can read the first chapter for free here and purchase a copy here.

Full disclosure: I received a complimentary review copy.

Getting customer feedback

Lack of feedback is one of the most difficult things about caring for a small child. You know they are unhappy because they are crying. But you don’t know if that unhappiness is due to: hunger, thirst, too hot, too cold, ear ache, stomach ache, wind, tiredness, boredom, teething or something else. They can’t tell you, so you can only guess. Creating software without feedback is tough for the same reasons. You know how well or badly you are doing by the number of sales, but without detailed feedback from your customers and prospective customers, it is difficult to know how you could do better.

The importance of feedback is amply illustrated by many of the stories of successful companies in the excellent book “Founders at work” by Jessica Livingston. For example, PayPal started out trying to sell a crypto library for the PalmPilot. They went through at least 5 changes of direction until they realised that what the market really wanted was a way to make payments via the web.

So good feedback is essential to creating successful software. But how do you get the feedback?

Face-to-face meetings

Meeting your customers face-to-face can give you some detailed feedback. But is time consuming and doesn’t scale when you have hundreds or thousands of customers. You can meet a lot of customers at a exhibitions, but it hardly an ideal venue for any sort of in-depth interaction. Also, they may be too polite to tell you what they really think to your face.

Technical support

Technical support emails and phone calls are a gold-mine of information on how you can improve your product. If one customer has a particular problem, then they might be having a bad day. But if two or more customers have the same problem, then it is time to start thinking about how you can engineer out the problem. This will both improve the utility of your product and reduce your support burden.

In order to take advantage of this feedback the people taking the support calls need to be as close to the developers as possible. Ideally they should be the same people. Even if you have separate support and development staff you should seriously think about rotating developers through support to give them some appreciation of the issues real users have with their creation. Outsourcing your support to another company/country threatens to completely sever this feedback.

Monitoring forums and blogs

Your customers are probably polite when they think you are listening. To find out what they really think it can be useful to monitor blogs and relevant forums. Regularly monitoring more than one or two forums is very time-consuming, but you can use Google alerts to receive an alert email whenever a certain phrase (e.g. your product name) appears on a new web page. This feedback can be valuable, but it is likely to be too patchy to rely on.

Usability testing

A usability test is where you watch a user using your software for the first time. You instruct them to perform various typical tasks and watch to see any issues that occur. They will usually be asked to say out loud about what they are thinking to help give you more insight. There really isn’t much more to it than that. If you are being fancy you can video it for further analysis.

Usability tests can be incredibly useful, but it isn’t always easy to find willing ‘virgins’ with a similar background to your prospective users. Also the feedback from usability tests is likely to be mainly related to usability issues, it is unlikely to tell you if your product is missing important features or whether your price is right.

Uninstall surveys

It is relatively easy to pop-up a feedback form in a browser when a user uninstalls your software. I tried this, but got very few responses. If they aren’t interested enough in your software to buy it, they probably aren’t interested enough to take the time to tell you why. Those that I did get were usually along the lines “make it free”[1].

Post purchase surveys

I email all my customers approximately 7 days after their purchase to ask whether there is anything they would like me to add/improve/fix in the next version of the software. The key points about this email are:

  • I give them enough time to to use the software before I email them.
  • I increase the likelihood of getting an answer by keeping it short.
  • I make the question as open as possible. This results in much more useful information than, say, asking them to rate the software on a one to ten scale.
  • I deliberately frame the question in such a way that the customer can make negative comments without feeling rude.

The responses fall into five categories[2]:

  1. No response (approx 80%). They didn’t respond when given the opportunity, so I guess they must be reasonably happy.
  2. Your software is great (approx 10%). This really brightens up my day. I email them back to ask for permission to use their comment as a testimonial. Most people are only too happy to oblige.
  3. Your software is pretty good but it doesn’t do X (approx 10%). Many times my software actually does do X – I tell them how and they go from being a satisfied customer to a very happy customer. Also it gives me a pointer that I need to make it clearer how to do X in the next version. If my software doesn’t do X, then I have some useful feedback for a new feature.
  4. Your software sucks, I want my money back (rare). Thankfully I get very few of these, but you can’t please all of the people all of the time. Sometimes it is possible to address their problem and turn them from passionately negative to passionately positive. If not, I refund them after I get some detailed feedback about why it didn’t work for them[3].
  5. Stop spamming me (very rare). From memory this has happened once.

I consider them all positive outcomes, except for the last one. Even if I have to make a refund, I get some useful feedback. Anyway, if you didn’t find my software useful, I don’t really want your money.

Being pro-active like this does increase the number of support emails in the short-term. But it also gives you the feedback you need to improve your usability, which reduces the number of support emails in the longer term. I think the increased customer satisfaction is well worth the additional effort. Happy customers are the best possible form of marketing. Post-purchase emails are such a great way to get feedback, I don’t know why more people don’t use them. Try it.

If you make it clear that you are interested in what your customers have to say they will take more time to talk to you. If you act on this feedback it will improve your product (some of the best features in my software has come from customer suggestions). A better product means more customers. More customers means more feedback. It is a virtuous cycle.

All you have to do is ask.

[1] Only if you pay my mortgage. Hippy.

[2] The percentages are guesstimates. I haven’t counted them.

[3] My refund policy specifies that the customer has to say what they didn’t like about the software before I will issue a refund.

Business of Software FAQ

As a regular on FogCreek’s Business of Software forum I see the same questions come up time and again.

  • How do I do SEO?
  • How do I improve my return on Adwords?
  • Which hosting company should I use?
  • Which payment processor should I use?
  • etc.

So I have quickly thrown together a BOS FAQ page in an attempt to raise the level of debate. Hopefully other people will add it to it. Even if you don’t read the forum you might find some of the links useful.

Radical new software business model

David Heinemeier Hansson of 37Signals espouses a radical new business model: create something people want, then charge them money to use it.

The secret to making money online (video, 32 minutes)

I think it is well worth watching, especially if you have been brainwashed into the prevailing VC-funded, Facebook-or-bust, flip-it-before-we-run-out-of-cash mentality. If you still aren’t convinced, read this post by Dennis Forbes.

Selling your software in retail stores (all that glitters is not gold)

Selling your software in retail storesDevelopers often ask in forums how they can get their software into retail. I think a more relevant question is – would you want to? Seeing your software for sale on the shelves of your local store must be a great ego boost. But the realities of selling your software through retail are very different to selling online. In the early days of Perfect Table Plan I talked to some department stores and a publisher about selling through retail. I was quite shocked by how low the margins were, especially compared with the huge margin for online sales. I didn’t think I was going to make enough money to even cover a decent level of support. So I walked away at an early stage of negotiations.

The more I have found out about retail since, the worse it sounds. Running a chain of shops is an expensive business and they are going to want take a very large slice of your cake. The various middlemen are also going to take big slices. Because they can. By the time they have all had their slices there won’t be much left of your original cake. That may be OK if the cake (sales volume) is large enough. But it is certainly not something to enter into lightly. Obviously some companies make very good money selling through retail, but I think these are mostly large companies with large budgets and high volume products. Retail is a lot less attractive for small independents and microISVs such as myself.

But software retail isn’t an area I claim to be knowledgeable about. I just know enough to know that it isn’t for me, at least not for the foreseeable future (never say never). So when I spotted a great post on the ASP forums about selling through retail, I asked the author, Al Harberg, if I could republish it here. I thought it was too useful to be hidden away on a private forum. He graciously agreed. If you decide to pursue retail I hope it will help you to go into it with your eyes open. Over to Al.

In the 24 years that I’ve been writing press releases and sending them to the editors, more than 90 percent of my customers have been offering software applications on a try-before-you-buy basis. In addition, quite a few of them have ventured into the traditional retail distribution channel, boxed their software, and offered it for sale in stores. This is a summary of their retail store experiences.

While the numbers vary greatly, a software arrangement would have revenues split roughly:

  • Retail store – 50 percent
  • Distributor – 10 percent
  • Publisher – 30 to 35 percent
  • Developer – 5 to 10 percent

Retail stores don’t buy software from developers or from publishers. They only buy from distributors.

The developer would be paid by the publisher. In the developer’s contract, the developer’s percentage would be stated as a percentage of the price that the publisher sells the software to the distributor, and not as a percentage of the retail store’s price.

The publishers take most of the risks. They pay the $30,000(US) or so that it currently takes to get a product into the channel. This includes the price of printing and boxing the product, and the price of launching an initial marketing campaign that would convince the other parties that you’re serious about selling your app.

If your software doesn’t sell, the retail stores ship the boxes back to the distributor. The distributor will try to move the boxes to other dealers or value-added resellers (VARs). But if they can’t sell the product, the distributors ship the cartons back to the publisher.

While stores and distributors place their time at risk, they never risk many of their dollars. They don’t pay the publisher a penny until the software is sold to consumers (and, depending upon the stores’ return policies, until the product is permanently sold to consumers – you don’t make any money on software that is returned to the store, even though the box has been opened, and is not in good enough condition to sell again).

The developer gets paid two or three months after the consumer makes the retail purchase. Sometimes longer. Sometimes never. If you’re dealing with a reputable publisher, and they’re dealing with a major distributor, you’ll probably be treated fairly. But most boilerplate contracts have “after expenses” clauses that protect the other guys. You need to hire an attorney to negotiate the contract, or you’re not going to be happy with the results. And your contract should include an up-front payment that covers the publisher’s projection of several months’ income, because this up-front payment might well be the only money that you’re going to ever see from this arrangement.

Retail stores’ greatest asset is their shelf space. They won’t stock a product unless there is demand for it. You can tell them the most convincing story in the world about how your software will set a new paradigm, and be a runaway bestseller. But if the store doesn’t have customers asking for the app, they’re not going to clutter their most precious asset with an unknown program.

It’s a tough market. It’s all about sales. And if there is no demand for your software, you’re not going to get either a distributor or a store interested in stocking your application. These folks are not interested in theoretical demand. They’re interested in the number of people who come into a retail store and ask for the product.

To convince these folks that you’re serious, the software publisher has to show a potential distributor that they have a significant advertising campaign in place that will attract prospects and create demand, and that they have a press release campaign planned that will generate buzz in the computer press.

Many small software developers have found that the retail experience didn’t work for them. They’re back to selling exclusively online. Some have contracted with publishers who sell software primarily or exclusively online. Despite all of the uncertainties of selling software online, wrestling with the retail channel has even more unknowns.

Al Harberg

Al Harberg has been helping software developers write press releases and send them to the editors since 1984. You can visit his website at www.dpdirectory.com.

Consulting offer ends 31st March

graph.pngI am offering £100 off my daily consulting fee until the end of March. Could you use an experienced and objective review of your strategy, marketing and product? When you have been eating, sleeping and breathing your business it can be difficult to ‘see the wood for the trees’ and a fresh perspective can be a huge help. More details here.

Calculating volume discounts for software

discount.jpgIf people buy your software in bulk they expect to get a discount. But how much of a discount should you give them? A simple formula I have seen used is:

discounted price = unit price * n^f

Where n is the total number of units purchased and f is a scaling factor between 0 and 1. So, for example, if my unit price is 24.95 (pounds, dollars etc) and f is 0.8, the discounted price for 10 units is = 24.95 * 10^0.8 = 157.42, which you can then round to a more aesthetically appealing number.

This is a little over-simplistic, as it doesn’t take account of the cost to you of each unit (for example the duplication and postage cost of CDs and the cost of payment processing). We can get around this by breaking the price into a fixed cost and a margin and only applying the discount to the margin. Below is a link to a simple Excel spreadsheet that does this for you. You can change any of the values in the orange fields. f seems to give sensible results in the range 0.75 to 0.9.

discount_spreadsheet1.png

discount spreadsheet (29kb, Excel 97-2003 format)

This spreadsheet can be useful to give you a starting point, but you also need to consider what the customer is prepared to pay. You maximise your profit by giving the buyer the minimum discount that is required to make the sale. For example, a reseller is out to make a profit and will probably expect a bigger discount on the same number of units than a large company buying in bulk for their end users. When in doubt, reduce the discount. You can always increase it a bit later if they don’t buy.

MicroISV Sites that Sell!

47hats.pngI have belatedly got around to reading Bob Walsh’s new e-book: “MicroISV Sites that Sell! Creating and Marketing Your Unique Selling Proposition”. This is the first in a series of e-books for microISVs that allows Bob to go into selected subjects in more depth than was possible in his book “Micro-ISV: From Vision to Reality“.

The e-book is aimed very specifically at microISVs looking to create a website to sell their software effectively. It has a lot of detailed advice that I think will be invaluable to anyone creating their first microISV website. I have lost count of the number of microISV sites that make some of the mistakes Bob identifies, including:

  • it isn’t immediately clear what the product does
  • selling on features instead of benefits
  • too much text
  • inappropriate use of technical jargon

The content will inevitably be less useful for established microISVs, but you only need to find one useful idea to justify the cost of the e-book. My only real gripe is the comparison between programming patterns and marketing. I didn’t find this a helpful comparison. Marketing is a very different beast to programming and the sooner we face up to it, the better.

You can get a copy for $19 here.

Full disclosure: I got a free review copy of this e-book.

Facebook don’t need no steenkin’ software ads

facebook.gifI don’t really ‘get’ Facebook. Maybe that is because I am 42 years old and I am not supposed to. But I do get the advertising potential. Facebook have cunningly extracted detailed demographic data from their customers and are using this to offer highly targeted advertising to businesses. For example, Facebook currently has 32,080 females, aged 25-40, with a college education, in the USA who are engaged. These are the sort of people I would love to advertise my seating planner software to. But Facebook doesn’t want my money. A quick read through the Facebook advertising guidelines reveals:

No ad is permitted to contain or link, whether directly or indirectly, to a site that contains software downloads, freeware, or shareware.

This might possibly be due to worries about malware, but that seems to be covered by other clauses. Maybe they just want to keep their customers on the Facebook site, so they can click more ads? But, aren’t most URLs going to indirectly link to sites containing software downloads if you keep following links?