Open Startup Report - March '24
Open Startup Report - March '24
You don't have be completely mad to do this... but it helps
I’ve heard of the long slow SaaS ramp of death but revenue at PriceWell is like trying to ride a rollercoaster at the fairground while holding a giant an ice cream.
Pricing updates
At the beginning of March, we increased the price of our monthly plan and introduced a yearly plan in an attempt to increase the average revenue per customer. Our customers tend to be solopreneurs, just starting a business. Often times they duck out after a few months if it doesn’t work out. You could say we’ve picked the wrong kind of customer (and you might be right) but I’m still trying to make this segment work for us.
There’s a small group of customers who do seem to be a good fit, existing small businesses who have hired a developer to help them build a SaaS product. For these customers, paying a few bucks a month to have their billing system work well (and not have to pay their dev to maintain it) is a no brainer.
Your mum would say it’s a good idea
That’s the principal behind The Mom Test, the book I’ve been reading recently. The conversation goes:
Me: Hey mum, I’ve got this business idea to help non-technical people collect subscription payments without hiring a developer. Do you think people will pay for it?
Mum: Hey honey, that sounds like a great idea. Anything that can help people make money is a surefire winner.
This of course fails the Mom Test. Mums are duty bound to tell you you everything you say is great. The trick is to talk to potential customers without mentioning your product. Ask about what they do currently and what they’ve done in the past (rather than what they might do in the future). The idea is to have a conversation where even your mum couldn’t lie to you because you only ask factual questions. Some questions I’ve asked in the past
How do you solve this currently?
What other options did you consider before you chose this one?
How did you look for that solution and where did you find it?
What frustrates you about the current solution?
If you are talking to your target customer, you’ll find out what you are competing against and where to market the solution to more people like that. If you don’t get strong answers to these questions (maybe they are really happy with the solution they have) then your idea (or target customer) may need some work.
The eternal Mom Test…
I reckon I’ve had over 100 customer conversations over the years. In fact I encourage all new customers to schedule a call with me (I’ve found those people I talk to stick around longer). I’ve definitely got better at talking to customers too.
I start with the following question:
Can you tell me what you are trying to achieve?
I’ve found this to be extremely useful for a few reasons
I get a bit of “Mom Test” context, the person already thinks my product is the solution to their problem but this question lets them tell me what they think it’s going to do for them. A good source of insights.
I can cut off non-fit customer early in the call. PriceWell is not an ecommerce tool and I’ve had a few people mentioning adding products to a basket. Instead of me giving them a pointless sales pitch, I can simply explain that they’re better off using Shopify.
When a good fit customer starts talking I find myself nodding, hardly able to wait to tell them we can
With this one question, I’m constantly reevaluating the business, our positioning, marketing and even the product itself. If enough people on a call mention something they expect the product to do, it goes on the backlog (and often prioritised because I can’t wait to work on it). Now, I’m not saying this is the ideal way to work but it’s working for me and until I feel like PriceWell has the mythical Product-market fit I’ll keep chipping away at potential customers until I unearth a gem.
