Valuing the Customer Journey

Once you understand the value of a customer in each stage of the customer journey, you can start making good decisions about not only how to spend your marketing resources but also how to invest your engineering time. For example, you can use Google Analytics to measure your cost of traffic or transactions as they relate back to your Adwords campaigns, but you need to know what those actions are worth to you to make smart decisions.

Let’s start by thinking about the stages in the customer journey. For a transaction driven website there is often a natural funnel, and this might look something like:

  • First time visitor
  • Repeat visitor
  • Registered visitor
  • First time buyer
  • Repeat buyer

The value of traffic

Let’s say you have 10,000 unique website/app visitors in a month and 500 transactions. That’s a 5% conversion rate. Let’s further assume that your average transaction is $50 with a 50% margin factoring all variable costs, so you are clearing $25 per transaction. But what’s the value of a visitor? That’s important to know, as it should serve as the upper limit for the marketing team when calculating the average cost to drive traffic to the site.   The simplest analysis suggests it is total margin divided by number of visitors or (500 x $25)/10,000 = $1.25. That is straightforward enough; but all traffic is not created equal. Visitors do different things when they come to your site. They might make a purchase, or register to be alerted about sales or to get a whitepaper, or just leave and never come back. Google Analytics refers to the positive actions as micro conversions (e.g. registration) and macro conversions (e.g. a sale).

The value of repeat visitors

You can use an analytics tool like Google Analytics to break the visitor behavior down further. How many of the visitors were repeat visitors and what percent of purchases were made by those repeat visitors versus first time visitors. Let’s say the data shows a standard 80/20 breakout where 80% of the visitors are first time, but they only account for 20% of the purchases. That suggests that 8,000 first time visitors generated 100 transactions worth a total of $2,500. So the value of a first time visitor on a first order analysis is $2500/8000 or only $.31! The value of a repeat visitor is $2.00, derived from $10,000 in margin divided by 2,000 repeat visitors. That suggests that marketing efforts designed to drive awareness and first time traffic to the site should not exceed $.31 per visitor. Programs focused on getting visitors to come back would make sense as long as they cost less than $2.00 – $.31 or $1.69, assuming that you had already paid $.31 for their first visit. That might include retargeting ads for example.

The first order analysis is very simple, but still valuable. Second order analysis would take into consideration the percentage of first time visitors that return on their own. Let’s say that is 20%. If returning visitors are worth $2.00 and 20% of first time visitors will come back on their own, then a first time visitor’s value is increased by the chance that they will become a returning visitor, numerically by $.40. So getting first time visitors to the website is worth $.71 because some visitors will transact on their first visit, and some will naturally come back and are much more likely to transact on that second visit. This refined analysis suggests that you should be willing to spend $1.29 ($2.00 – $.71) to get first time visitors to come back.

The value of registered users

Getting visitors to return is an important aspect of any online business, whether it makes money on transactions or advertising or subscriptions. For simplicity, we’ll stay with the transaction example above. Retargeting, specifically showing users ads for your products on other sites that they visit after leaving your site, is an effective tool to generate repeat visits and purchases. The other effective tool to generate repeat visits is email. But to email users, you need their email addresses! That is why so many sites try to get you to register.   Some sites ask, and some sites may require you to register. In the early days of Zulily, they forced visitors to register if they wanted to even see the deals on the site. Other sites may require registration to get beyond basic information. Forcing users to register to get access to a site is called a registration wall. We’ll get back to that.

To know what we gain when someone registers, we have to know the likelihood that we can get them to come back using email re-marketing. Remarketing can be very effective if it is personalized based on your behavior the last time you were on the site.   For example, if you were browsing shoes on a website and you later get an email saying that the shoe sale has just started, then you are highly liked to return.   We need to know what percentage of people will respond to our email campaigns (open rate x click through rate x number of emails sent). Let’s be generous and assume that 50% of registered users who get the email campaign over some relevant period of time return to the site. From our work above, we valued repeat visitors at $2.00. But only 50% of registered users are going to respond and visit again, so a registered user is worth $1.00. I am necessarily simplifying the analysis for the sake of clarity and brevity. We could account for the value of maintaining brand awareness from our email campaigns along with many other factors.

In all likelihood visitors who took the time to register are going to be better customers on average. The analysis above can help you decide whether to invest in a registration system. You’ll have to make some assumptions about how effective your email re-engagement marketing campaigns will be.   Once you have registration in place, make sure you segment your sales by those who registered before they purchased for the first time to understand how much you should invest in getting people to register. Follow the steps above, dividing sales from that segment by the number of users in that segment. Remember that any visitor who purchases registers in the process of purchasing, so track registration prior to purchase.

When you have determined the incremental customer value derived from getting someone to register you can then determine what level of incentives you should use to motivate that behavior or how much technical development resource to invest to optimize that process.

Registration wall

Getting back to the registration wall, why not just make all visitors register? How would you decide if this was a good idea for your business? Well, two things are going to happen when you put up a registration wall. Some people will register and some people will just leave and likely never return (abandonment). You can guess at what percent will do each or you can put up a registration wall for a brief time or for a fraction of traffic as a test and get your registration and abandonment data. If setting up a test requires an engineering investment, you can calculate the breakeven assumption and gut check that. We’ll come back to that.

We’ll use our example above to value a first time visitor at $.71. So for every new visitor who abandons we lose $.71, because we have driven the likelihood that they will come back or purchase on their first visit to zero. Registrations are worth $1.00 according to our example above. To calculate the incremental customer value from the registration wall you can use the following formula where Y is the percent of visitors who register: (Y x $1.00) –  ((1 – Y) x $.71). If 50% of users register the incremental value is $.50 – $.36 = $.14. If only 25% of visitors register, then the incremental value is $.25 – $.53 = -$.28, and you would be losing value. You can calculate the breakeven registration rate, which in this case is about 42%. If less than 42% of users register, you will be losing customer value.

The value of a first time customer and repeat customer

Let’s keep going along the journey. Some of your customers will transact with you only once, and some will become regular customers. One-time customers perhaps had a one time need, or found you through a search result to a specific product or via an ad or a sale or friend referral. They likely don’t have an ongoing need for your product/service or already have other sources that work well enough for them.  In some cases you can motivate a first time buyer to become a regular buyer by incenting them to come back to your site to explore your offerings. In other cases, first time buyers will love the value proposition you offer and become regular customers organically.

A repeat buyer is your holy grail. Repeat customers have the highest lifetime value (LTV). In a prior post, I provided an illustration of calculating an LTV which by definition is the value of the repeat purchaser. For purposes of our calculation below, lets assume that the LTV is $100.

At the top of this article, we were clearing $25 in margin on a single purchase. So again on first order analysis the value of the first time purchaser is $25. But if 40% of those first time purchasers organically or as a result of your email remarketing campaigns go on to become regular customers, then their value increases by the increase in value between first time and repeat buyer ($100 – $25 = $75) times the percentage of those that make the transition, in this case 40% x $75 = $30. So we should be willing to spend something less than $25 +$30 = $55 to get a first time buyer. We should also be willing to incent our first time buyers to become regular buyers. That amount of that incentive should be less than $100 – $55 = $45.


There is almost always more than one way to calculate the value of your customers through their journey. The more data you have and the more granular your segmentation the more effective your analysis can be. I have simplified the analysis and the scenarios above for clarity and brevity. There are always more nuanced ways to think through these calculations and this is meant to be a starting point for those without a lot of experience in this realm.

Next Steps

The more granularly you follow the steps in the customer journey and also segment your customers by how you acquired them and their purchase behaviors the more often you will be able to make smart decisions about how to increase value to the enterprise. If you assign those interim values in Google Analytics for example you can quickly see whether an A/B test is working for you. You can also make informed decisions around investments in marketing dollars used to acquire new and repeat traffic, motivate customer registration, and incent first time and repeat purchases.

I hope this has been helpful. Please reach out with any questions.




Calculating Customer Lifetime Value (LTV)

Crowd dollar bill

While working on some course material for entrepreneurs, I realized that it would be useful to build a foundational set of posts on calculating and using customer lifetime value.  In a follow-on post I’ll discuss how to think about customer value through out the steps of the customer journey and use that to make technology and marketing investment decisions.

Whether you are thinking through a new business idea, evaluating marketing channels, or trying to raise money from investors, you need to understand customer lifetime value (LTV). You will use LTV to convince yourself and others that you can make money on a per customer basis. Your LTV should exceed your cost of customer acquisition so that when you have enough customers to cover your overhead you will be profitable as a business.

This basic concept applies to any type of business, whether you make money on consumer transactions, SaaS subscriptions to businesses, or advertising. I will run through a transaction business below (think e-commerce for physical or digital goods), and then show how the approach is modified for other business types.

There are four important factors in understanding customer lifetime value: transaction margin, purchase frequency, customer lifetime, and a discount rate.

Transaction margin

I have seen examples of calculating LTV using gross revenue, but this is disastrous when using the LTV to determine what you can afford to spend to acquire a customer. I strongly recommend using transaction margin rather than gross revenue. To calculate the variable margin from a transaction take the revenue of the transaction minus the variable costs. Be honest with yourself about the costs in addition to the direct product costs (cost of goods) and shipping and handling costs (for physical businesses), including: a returns percentage, a percentage of transactions that require customer support, credit card fees, marketing discounts and coupons, etc. For example, if 5% of transactions require support, then add (.05 times the average support cost) to your total variable cost per transaction. Any cost that grows directly with the number of transactions should be subtracted from the gross revenue to calculate the transaction margin. If you have variable sales or marketing costs like a one-time commission to an inside sales person or channel partner, those are customer acquisition costs and are not part of your margin calculation.

Purchase frequency

If you are selling coffee like Starbucks is, your purchase frequency might be five times a week. If you are selling cars, it is more like once every three to five years. Purchase frequency is an incredibly powerful lever, and the role of retention marketing is to get your customers to come back as often as possible.   Subscription businesses are popular because you are automatically increasing the purchase frequency. If you don’t have a lot of history, you’ll have to make an educated guess as to what the typical purchase frequency might be.

Even before you have real repeat customer activity to analyze there are a couple of ways to triangulate to an educated guess. One approach is to benchmark your offering against other businesses and try to get some understanding of their purchase frequency by talking to them or their customers. Alternatively or complementarily, you can gather insight into purchase frequency from customer interviews, and then haircut the stated frequency as actual purchase behavior is often less than stated intent.


This is the most subjective measure for early stage companies that don’t have a lot of customer history. I saw an example of a hypothetical LTV calculation for Starbucks that estimated the lifetime of the customer at 20 years.   That’s pretty optimistic, but by now they may have the history to justify that.   It is tempting to think that your customers will be with you forever, but you will lose customers for many reasons.   Looking at the music business at Amazon for example, which I was directly involved in, we were acquiring incremental CD customers and we had ten years of history of Amazon customers to analyze. But some percentage of the CD customers moved to digital downloads as the CD format lost favor. Digital downloads then decreased across the industry in favor of streaming music services. As another example, Quicken consumer software had a long history of loyal customers but those customers are now moving to the free Mint SaaS product. No company or product is immune to losing its customers. If you are selling baby supplies, your customer will outgrow the need in a year or two. The general lesson is that your customers’ needs and wants evolve and their options for solving their problems and achieving their goals are constantly evolving.

For an early stage company with limited cash reserves, I would advise being very conservative on lifetime for another reason. If it takes a long time to recoup your customer acquisition cost, then you may not have the cash left to see the day that your margin from that customer recoups the cost of acquisition. At a minimum it will constrain your ability to grow if it takes a long time to recoup your customer acquisition cost. Ideally you can recoup your acquisition costs within a year, and I would think hard if your business model requires more than two years to recoup the cost.

Discount rate

This is the percent by which you should discount the future cash flows when performing an LTV or ROI calculation. Established companies typically use a number such as their weighted average cost of capital (WACC) to discount future cash flows for investment analysis. This might be 5% to 15%. For early stage companies I would suggest discounting the future cash flows by a much higher percentage for two reasons: 1) to account for the high degree of risk of those future cash flows, and 2) unless you have hoards of cash, you will need to acquire incremental cash through the sale of equity. In the latter case, you are giving up some percentage of all future cash flows of the company, and that hopefully is worth a lot.

Putting it together

Lifetime Value (LTV) is calculated by summing the margin on the transactions over the lifetime of the customer, while using the discount rate to reduce any margin that after year one. So if an average customer buys $50 of product with a margin of 50%, their average transaction value is $25. If they purchase four times a year, then their annual value is $100. If you estimate a lifetime of two years, and discount the second year’s cash flow by 25%, then their LTV is calculated: $100 + ($100 x .75) = $175. The present value formula for the year 2 margin is Margin x (1 – discount rate); for year 3 margin, it is Margin x (1 – discount rate) x (1 – discount rate), and so on.

Using LTV

If you cover your customer acquisition cost on the margin from your first transaction, then you are in great shape. If you don’t (and many companies don’t), then you need to calculate the LTV. It is critical to understand that your business will work on a per customer level. The margin they generate for the business over time, i.e. the customer lifetime value, needs to exceed the cost to acquire them. Then once you understand your marginal profit per customer, you can calculate how many customers you will need to cover your overhead at various stages of growth.

Calculating customer acquisition costs is obviously important to this process. How you calculate your acquisition costs is a function of the type of marketing channels you use and is beyond the scope of this post.

Revenue vs. margin

As I mentioned above, I have seen examples of using revenue rather than margin to calculate a customer lifetime value. This makes sense if you have no per customer or per transaction costs. For example, in some SaaS businesses all the cost is in the overhead of developing the software and in the hosting infrastructure. There might be a minimal additional server cost per customer or a small amount of support, but that is likely not worth factoring into your calculation. You can use revenue rather than margin, since they are essentially the same, and compare that to your customer acquisition cost. Businesses based on an advertising revenue model fall into this category as well. You pay to get your eyeballs (your customer acquisition costs) but there is not an incremental cost to deliver value to an incremental site visitor.

Next steps

Often a company uses multiple channels to acquire customers. To the extent possible you should track the source of those customers against their behavior over time so that you establish an LTV for the customers from each channel and compare it to the customer acquisition cost for the channel. You may find for example that customers you acquire through an aggressive discount program don’t become loyal customers (they are bargain hunters) and so their value is negative when you compare their LTV to the cost to acquire them.

Once you know your LTV for your repeat customers you can start to make informed decisions about many other aspects of your user experience and how you allocate financial and technical resources. That is the topic of another blog post.

I hope this has been helpful. Please reach out with any questions.



What Investors Look for in a Startup Founding Team

I often get asked about what investors look for in a founding team. These are my thoughts and not based on rigorous research, but my experience is that they are pretty common among angel investors and VCs. In no particular order….

Drive and passion

“I was born to solve this customer problem.” That’s what investors want to hear. Your life has been leading up to this. You are highly motivated to succeed. You have quit your highly paid job, because you were destined to be an entrepreneur. You have made the leap, cut the cord, burned the bridge, there is no Plan B. If the founders are hedging or only working part time or really only exploring the idea of this startup, then the risk is that they quit when the going gets tough. And it will get tough.

All that said, it is legitimate that someone on the team is working part time until the funding comes in. Some people are highly skilled but not in a position to work without income for the many months that it may take a startup to get to a fundable state. Investors are often fine with this scenario assuming the part timers are committed to coming on full time once the company is funded.

Domain expertise

Domain expertise means that you know the industry or the “space” that your startup fits in. You need to understand the ecosystem: customers, competitors, distribution partners, service providers, vendors, etc. In particular, you understand the customers and their pain points. You were one of these customers or you provided services to them in your last role with a company. You understand how to find these customers, who the decision makers are and how long it takes to sell to them. You understand the technologies and trends in this space and all this knowledge has allowed you to see the gap in the marketplace. You have the industry insights to “see around corners” in a way that those outside can’t.

Having been in the industry for a while means you have developed a network in the space and likely have the contacts you’ll need to get those early partnerships or customers that are so critical to initial traction.

Without direct experience in the domain the team will have to do massive research on the ecosystem and customer pain points. I have seen pitches where the CEO was not aware of a direct and much more established competitor in the space, and it blew their credibility in the Q&A section of the pitch when an angel brought them up. Often investors focus on what they know, so your best potential investors may well have expertise in your space.   You’ll have to prove you know your stuff, respect their experience, and then ask if they want to be an advisor or if they could provide contacts. Most angel investors like to help entrepreneurs they believe in even if they don’t invest.

Complete Set of Skills

The founding team should have the skill set needed to get the business off the ground.

Technical Expertise:  Executing most of the types of businesses that angel investors and VCs get excited about almost always requires some technical expertise whether that is software development, hardware development, robotics, mechanical engineering, or something else. You’ll want a technical founder to build the MVP and begin building the foundational technology. In theory this can be outsourced, but if you have a technical product and you have outsourced your technical architecture and execution, you have taken on a lot more risk. And you still have a critical early hire to make which adds execution risk. You don’t need to have a founder who is going to be the CTO, but someone who can lead the building of the V1 product.

Sales and Business Development:  You also need someone who is a natural sales person or deal maker. You’ve got to get those first customers or those first partnership deals done to move the business forward and show the traction that is so important to potential investors. This person needs to have the energy, skills, drive, and perseverance to be on the phone all day long prospecting and being told “no” nine times out of ten. This is most true for B2B businesses, but even if your customers are consumers the business often needs suppliers or data providers or distribution partners. This person is often the CEO, because CEOs are selling all day long: selling the idea to investors, selling potential employees on their vision, selling key customers, etc.

Marketing:  Marketing is important for any business, but critical for B2C businesses. Who on the team understands brand and positioning, segmentation, PR, copywriting, and is going to create Facebook ads, SEM campaigns, optimize SEO, drive content marketing, landing pages, etc. And spend their evenings grinding through the analytics to see what’s working. If you have a very technical product with real intellectual property (you are solving a hard technical problem), investors will put less weight on your marketing expertise, assuming that you (with the help of your advisors or board of directors) can hire that person.

9Mile Labs, the Seattle B2B incubator looks for teams that have a Visionary, a Hacker, and a Hustler.

Prior Startup Experience

When you work for someone else, you operate by their rules. When you are an entrepreneur, you make the rules, you make all the decisions, and you have to make things happen. You can’t operate by “magical thinking.” If you have been at all successful as an entrepreneur before, you have demonstrated that: You can execute. You have a “bias for action” as we used to say at Amazon. You know how long it typically takes to raise money. You have learned a bias for conserving cash. You know how important it is to get the first hires right. You have persevered through the hard times, when it took longer than expected to land the first big customer or hit a milestone or when some large player in the ecosystem announced a product just like yours. 


Investors, whether angels or VCs tend to think they are smart. As mentioned above, they often focus their investments in areas where they themselves have domain expertise. They like to think they can reduce risk by providing advice and guidance to the CEO. For that to work, the CEO has to be “coachable.” This criteria comes up over and over in discussions among investors who are looking at a deal. The CEO and the team in general should be open to learning from the experience and expertise of those considering the deal. You don’t have to do what any investor or advisor says, but you should be willing to hear and really consider their opinions, especially if you are a first time entrepreneur. Many angel investors have started their own successful companies or have invested in at least several and have learned painful lessons of why companies succeed or fail. Benefit from that breadth of experience and insight. You don’t know it all and investors won’t expect you to, but if you won’t ask for advice or digest the advice you get, then you will quickly frustrate and alienate your most ardent potential allies. Investors will have their own hard earned money in your company and they really, really want you to succeed. They have no ulterior motive.


If you don’t meet some of the criteria above you can still raise money, but you should think about how to close some of the gaps, either by finding the right co-founders or doing a convincing amount of research. Also think about how to position your experience and your co-founders’ experience as relevant against the above dimensions. Good luck.

Creating Effective Home Pages

I was at the Seattle Tech Meetup recently, where five local companies or product extensions were presented.  In a couple of cases it was hard to understand the actual product from the pitch, so I went and checked the websites later.  I decided to take look out how well these startups did in terms of capturing in a single page what their presenters were trying to convey in 6 minutes of talking.

 Here is how I think about the primary goals of the homepage:

Quickly convey the core value proposition (15 second rule) to a prospective customer

  • Target audience:  Am I in the right place?  Is this product for CEOs or plumbers?
  • Problem being solved: Are they trying to solve a problem I have?
  • Class of product/service:  Is this a SAAS product, a dating service, an accounting program?
  • Key features: What can I do with this product, will it meet my needs?
  • (Pricing): I put pricing in parentheses, as not all companies want to disclose pricing before customers start to engage.  I think those cases should be rare, (because I can’t imagine signing up for a trial without any idea of what a service costs), so each startup should test this.

Get potential customers to engage

  • Create a clear Call To Action for customers to engage:  It should be clear what is going to happen when customers hit the button.
  • Build trust and reduce anxiety:  The classic template for this for startups now seems to be a combination of citing press mentions, showing existing customer logos, and/or testimonials from users.  Free trials and cancellable subscriptions also serve to reduce anxiety.

Provide access and support to existing customers (I won’t touch on that in this context.)

How did they do?


Relaborate above the fold

Above the fold is a large graphic that doesn’t add any information.  It doesn’t give me any sense of who the audience is or what setting this might be used in, which are often goals of graphics on the homepage.  Picture the doctor in the clinical setting (for a medical product) or a family in front of the TV for Netflix, etc.; nor does it show me features of the product. “Rethink Collaboration” lets me know that this product has something to do with collaboration.  “Relaborate encourages, organizes and activates the ideas and insights from your workforce, creating a culture of innovation and collaboration.” – These are great goals, you have piqued my curiosity, but I need some specifics please.  Below the fold, there is a series of feature highlights. Unfortunately, the screen shots aren’t big enough to see what is going on.  I am still unclear who this product is for and how it works.  Parsing through the text, there is a lot of stuff about “content” and “content management system”, so I am guessing that this is targeted at people who are trying to produce some kind of content, like blogs or a magazine or something, or maybe a TV news show; as opposed to say nuclear scientists collaborating on an international experiment.  In the end, I still don’t know who this product is for or how it really works or what specific problems it solves.

“Try Relaborate for Free.” The call to action is above the fold, but I know nothing about the product yet, and it is overwhelmed by the higher contrast larger “button” above it telling me to rethink collaboration.   Is this different from the “Get Started” call to action in the upper right?  If I get started will it also be free?

For the trust building testimonials, there are two areas for improvement here.  First these are people no one knows.  Second if you read them closely, these people are “playing” with the product.  They haven’t applied it yet or seen results.  The best testimonial is on the page after you click Try Relaborate. The press logos don’t actually say “as seen in”, and none of them are hyperlinked, so for me this hurts trust rather than builds it.

Haiku Deck

Haiku Deck home pageIt’s immediately clear that this is presentation software, and the image and iOS AppStore logo make it clear that this is mobile centric.  I am less clear on the fanciful/aspirational “set your story free” part.  I don’t necessarily think of presentations as “stories,” but in the most generic sense I guess they are. Business managers don’t typically think about it that way, so I am thinking this is more for writers/artists than business people presenting a report or a new product plan.  I’m over-analyzing this, but perhaps enlightening the reader that all presentations are “stories” is part of the goal. Reading the small text helps me understand the breadth of the target audience, which is great.  My thinking is that the last line should be the headline:  “Haiku Deck makes presentations simple, beautiful, and fun.”  The play button on the video gets muddled by the text on the iPad, and it is not clear whether there is an actionable video, or whether that is part of the interface for the product.  I really like the step by step explanation of how to use the product, though I am not sure the icons are helpful.  If you take away the text, do the icons convey the meaning?  If you claim to make beautiful presentations, the pressure is on to show that you know beautiful design, and these icons just clutter this page.  So in short, I get the value proposition (audience, product type, features, problem to be solved, pricing), but I would pump up the fact that it is FREE!

Building trust is accomplished with the standard press mentions, which are actually linked to more detail on a page.  They are greyed out on the page, which makes them look inactive. But the press quotes are great, so I would lose the icons mentioned above and use the space to put in pieces of the press quotes.

That leaves the call to action.  If you are looking at this page on an iPad, you can actually download the app.  It’s worth a test, and I might pump up the call to action a little, create some excitement.


Attendible home page

The value proposition is made really clear by the two lines of text at the bottom of the page.  “Discover amazing events.” “Follow and stay up to date with your favorite venues & interests.”  It tells me what problem it solves and calls out the key features.  But why is that text at the bottom of the page!?  I like the Seattle skyline graphic (hey you know my city, and you have put some effort into my city), but that calendar graphic, yikes!  I it is not the way we are used to seeing calendars and the month doesn’t tie well visually to the dates. Why does it start with Sept, and why is June (the current month) way off to the right.  Is it Sept 2012 or 2013?  I like that I can actually see the product interface on the home page, but I would pump up the headers of the columns.  So I get the value proposition.  The call to action “Let’s get started”, makes it sound like I have a bunch of work ahead.  How about something like, “Find great events” or “Personalize your event boards”.  There are no trust builders, but I assume it is free, and I am getting value just from the homepage, so I don’t need someone’s testimonial to tell me that it helps them find events.

GeekWork from GeekWire

GeekWork home page

I am not a big fan of sliders, because you either end up waiting for the them to scroll through, and then you have to go find the one that caught your eye, or you have to be active and click through them.  That said the target audience and value prop are really clear.  It is clear that it is a matchmaking service for employers and employees.  What kind of employees?  Technology professionals, creative professionals, business professionals.  I immediately know what type of a service this is, and who the target audience is, what problem this is solving.  I can see some of the interface on the home page (the job listings), and I always like that.  I added a second image to show another component of the sliders widget.  What I like about this is that they have encompassed a shot of the UX in the graphic, showing the user how easy it is going to be to highlight your skills, and educating prospective employers how precisely they will be able to target skill sets.

GeekWork Slider image

Pricing?  No data, but I assume it is free for posters and costs money for employers.  Call to action?  I like the clear “Post a Listing” and “Sign Up to Get Work”, but there is also a vague “Join Us” in the upper right.  And the search box?  Is that so I can look at jobs without signing up?  Since GeekWire is already a trusted blog, it doesn’t need much in the way of trust builders, and since employers are desperate for tech talent and good knowledge workers, they’ll try anything…


TinyPulse home page

So this is a classic trick to engage the user, the surprise headline.  I think it is fairly effective in this context.  The last text block tells me what this product does and the expected benefits.  The reference to “ leader” and “your team”, suggest that I might be able to implement this just for my work group if I am a group manager.  (Part of the democratization of IT). The testimonials are all from CEOs though, and while they are good trust builders, they make me wonder whether this is a product that is targeted at corporate wide adoption, implemented by Central Services.  As you scroll down below the fold (not shown) there are key attributes called out, like “easy” and “insightful,” accompanied by screenshots and descriptions of features.  These are great in helping me understand details of what the product does, but the screenshots need to be bigger.  Also, you don’t need to show me that the screenshot is on a computer.  I get that.  Just make the screenshot bigger, so I can read it.  Call to action?  Clear 14 day free trial signup, no credit card required.  That’s great, and good to know that no cc is needed, but 14 days seems a pretty short time frame to engage, especially since you told me right up front that change takes “dedication and patience.”  If I were king, I might test 14 days without a cc, then get another 30 days if you put your credit card into the system.  Trust building testimonials are great.  There is a list of companies there, which I assume are customers, but it doesn’t actually say so.  And after seeing so many press listings looking exactly like this, at first I glossed over them thinking they were press mentions.  Make it clear they represent just a handful of the many satisfied customers.

Generally this is really good.  I am a little puzzled by the name TINYpulse though.  What is with TINY in all caps?  And “tiny” speaks to insignificant, not critically important.  You are positioning this product as critical to the organization, not insignificant.  I have to assume that all the names that were more descriptive were taken, but I would still lose the TINY.  Better to go with “EASYpulse”, or at least capitalize the part that is important.  tinyPULSE.  Flower logo?  How about heads to show this is about people management?  My two cents…

And if you own one of these sites, and you don’t like my comments, see my post on “How to Take the Feedback.” :-p

Optimizing Landing Pages for Conversion

Optimizing Landing Pages for Conversion

Due to my background in consumer eCommerce, I often get involved in optimizing conversion for clients.  Setting aside for the moment the important upstream work of developing a conveying a clear and competitive value proposition, I have compiled a short list of some available guidelines about how to design landing pages for better conversion.  I recommend any changes be A/B tested, so think of this as a list of things worth testing.


There is a plethora of good practical Design suggestions out there, which collectively are about making sure that the user can quickly find the call to action section of the page:

  • Large call to action (CTA) buttons
  • High contrast CTA buttons (orange is always a favorite as the color provides a positive vibe)
  • Encapsulate the area around the call to action (Any fields to be filled out and the actual CTA button)
  • Provide visual directional cues to lead the customer to the CTA area
  • Create white space around the CTA so it stands out
  • Reduce the text on the page to increase likelihood of being read and comprehension
  • Reduce the number of columns on the page

Reduce Anxiety (Eliminate Potential Concerns)

If you haven’t had 15-20 years to build customer trust for your brand like has (and they have made it a defining principle of doing business), then you have to build trust and reduce perceived risk.

  • Trials and guarantees –One way to do this is providing a free trial, or a money-back guarantee.  Both show that you have confidence in your product.  And of course it allows your customer to fully engage in the product to make sure it is a fit.
  • Social proof to build trust—This can come in many forms, including testimonials, which should come from someone that customers are likely to respect.  I think the random user testimonials are largely useless as trust builders, unless they are links to detailed use cases of success that prospective customers can review for relevance.  Review quotes from well-known media are a classic source of proof that your product/service has passed through the filter of anonymity and been recognized as legitimate and useful.  I increasingly see a shorthand version of this, commonly stated as:  “As seen in WSJ, NYT, Wired, etc.”  The cynic in me thinks that if a site advertises on these sights they could make this claim, while hoping that the potential customer reads it as an endorsement.  Lastly, the sheer number of customers you have is often the most powerful social proof, by definition. Two million paying Spotify Pro users can’t be wrong…

Increase urgency

If you can, provide a reason that your potential customer should buy now or sign up now.  When an airline booking site tells you that there is only one more seat at the listed price, that is pretty motivating.  When an event booking site has an “early bird” registration price, that is legitimate motivation.  “Limited Time Offer” might work if it does not come across as completely trite. Perhaps tie it to an event, or potential customers will recognize it for what it is, an artificial deadline.


Another useful guideline is to reduce the distractions on the landing page, sometimes simplified as a call to reduce the number of links off the page.

There is a tension if you are trying to upsell on a landing page to the paid or Plus or Pro or Super Deluxe version, or the two year subscription at a reduced rate.  My recommendation is to not try to upsell users to a better version before they have signed up, because now you have given them a choice to consider.  They pause and lose momentum, and then the dinner bell sounds.  Test upselling on the “thank you for signing up for the basic version page.”

Full Information

I strongly believe that it is important to give potential customers all the information they need to make a transaction decision either on the landing page, or linked from it, before asking them to commit.  If you need to provide details about the product or pricing options, you can summarize them on the landing page and have a link that says “details” or “learn more” or “additional options”. makes great use of the “learn more” link.  Often even the simplest sign up page has links to a privacy policy and terms of use page.  The way to minimize disruption in the conversion flow while providing this information for those who seek it, is to have those links open a popup window over your page in the funnel flow..

There are many other considerations in creating pages to drive transactions, including obviously making your value proposition clear and concise, and letting users know what they are getting into when the hit the call to action button; and I hope to address those in future blog posts.

A shout out to Unbounce, who inspired some of this information with their posts on Conversion Centered Design.

How to Take the Feedback

Someone on a startup tech community list that I subscribe to reached out to the community and asked for some input.  I looked at his web site and told him that the way I interpreted his brand name was counter productive to his value proposition.  For example, if you were a lighting company and your brand was “EmbraceDarkness”, that would not be reinforcing your value proposition and would be downright confusing to your prospective customers.  You can call yourself YippeeSkippee if you want, and that doesn’t hurt or help you with respect to reinforcing your value proposition, but don’t call yourself Un-Light.  His response was to the effect of “you should read the brand as ‘One Light’.” [This is a fictitious name to protect the innocent, in case you hadn’t picked up on that.]  As it turned out, other people on the list then shared that they had had the same confused reaction to the brand.

There is a general lesson here about being truly open to feedback, whether it about your brand, logo, web site design, user experience, etc.. After seeing this exchange, Ted Neward (, an active participant in the community, captured the lesson succinctly in his response to the entrepreneur; so I share it below (with his permission) unedited except to redact the actual brand.



Be kind of careful with your responses: one of the worst mistakes I’ve seen people make (whether at startups or at big established firms or even at writer’s workshops) is to ask someone for their feedback, then say, “No, you should see it <in this manner or the way I intended you to see it or…>”, which is very much like your response below about “XXXXX”.

It is VERY tempting to try to correct people’s perceptions about your baby, and it’s that exact defensiveness and protectionist intent that you should squash within yourself. Do NOT tell them what they “should” have seen, or correct them about their “wrong” perceptions–their perceptions are not only theirs (and therefore immune to your intent or desire), but also worth gold to you, if you have the stomach and ego to take them and ingest them honestly. To try and explain them is, in a way, saying that they’re wrong, or clueless, or stupid, or… insert your favorite excuse for why your baby is NOT flawed, here.

 One of the exercises that writing workshops will sometimes go through–and it’s both incredibly painful and incredibly educational–is to workshop a piece for a half-hour or an hour or so, but during the first half (or sometimes the entire time) of the workshop, the author may not speak.  Literally. The author may not answer questions, clarify confusion, explain intent, nothing. The author has to just sit there, and listen as people both praise and tear their work (their “baby”) to shreds. Why? Because the work has to stand on its own merits: the author will not be in every readers’ home, explaining the things that need explanation. The work has to stand on its own.

I STRONGLY urge anyone who asks for feedback from people (volunteers or otherwise) to just sit there, and listen. Don’t explain or respond unless asked a direct question–if your work cannot stand on its own merits, then it cannot stand.

Ted Neward

How to pitch your startup in 3 minutes

I attended Startup Riot (#occupystartups) yesterday, where 30 mostly seed stage startups pitched for 3 minutes each and then took 3 minutes of feedback and questions from two judges.  And thanks in large part to the feedback and questions asked by T. A. McCann and the other judges, it became a lesson in how to pitch your startup in 3 minutes. Below I have distilled some of the key lessons…with a few of my own thrown in.

1Clearly describe the problem you are solving. Whether your pitch is 3 minutes or 30 minutes your pitch has to paint the picture of pain that your product or service is trying to solve.  It is all the more compelling if you have felt this problem first hand or have specific customer examples. Explain what the problem is and convince your audience that you are passionate about solving this problem.  The audience is either going to personally identify with this pain or not.  If they don’t, you have to do more work to convince them that there are a lot of people that do have this pain. A note of caution:  I have seen presenters start the pitch with a detailed story, sometimes a real tear jerker of personal pain about a sick relative or something.  Often this story takes too much of the 3 or 5 minutes you have to make your pitch, it can make the audience uncomfortable, and they don’t know where you are going with this very personal story because you haven’t told them what the product is yet.

2. Make a clear benefit case with a before and after comparison.  Detail how your future customers solve this problem today and how much simpler/cheaper/faster the solution is once they use your product.  For example: Before I invented email, people had to write letters, print them, put them in envelopes which had to be addressed, and invest in stamps, then take those letters to a post box and hope that they arrived up to a week later.   With my new product called “email,” customers just type a note and hit “send.”  This type of comparison is helpful especially if your product is not something that everyone deals with every day, or if you can’t give a demo of the process.

3. Describe the relevant experience you and your team have.  Make sure you make the connection for the audience as to why your work experience is relevant to your startup. As CEO, you should know your domain.  If your product delivers high scale transaction infrastructure for purchases in games, you should know the game space and ideally the payment space too.   If members of your team have solved big meaty problems or built a big system at another company that is relevant to your product, make sure you say so. Your developer doesn’t have to know the specific industries, but it would be awesome if he built PayPal’s transaction processing engine, or any high scale, high reliability, highly secure system.

4If the team is compelling, share that information.  In any 10 minute pitch deck, you would have a dedicated team slide, but in some of the new demo day formats or the Startup Riot 3 minute format, you don’t have that luxury.  If your team is compelling, make sure you find a way to fit that in even if you just talk to it.

5. Show the product.  About a third of the companies didn’t even show a screen shot of their product.  I was amazed to see one company show random pictures of cats (no shit) instead of the UI of their product.  These companies were only allowed 3 or 4 slides and one company used two of those precious slides to show a picture of a happy cat and one of a sad cat.  We never saw their product. Another company had invented a hybrid between a poll and a discussion thread, but we never saw an example, so it was hard to grasp the concept.  Instead we saw simplistic diagrams showing a dollar sign going into a box or some such thing. Executing your concept well is critical to success, and you should want to show your audience how well you can deliver user experience.  You know how your product looks and works; your audience does not.  Show the product.  One note: Even if your product is a robust analytics dashboard, resist the urge to show screens full of charts or text that are too small for the audience to read on a slide.  Find a way to zoom in on key features or data.

6. Describe the best use case for the product.  If your product hasn’t launched, be clear about what the best use cases are. Which customer segment is going to be most successful with your product.  You have spent time putting your product in front of a range of customers; prove that you understand their needs well enough to know who will be the early adopters and passionate advocates.

7. Share the best examples of success with your product.  Big companies would call these customer testimonials.  “Customer X has achieved Y result with the product.”  If your product is live, provide concrete examples of how you provide value to your customers.

8. Share the exciting metrics.  If paying customers are doubling every sixty days, or the average customer generates $10/month, or 10,000 people are signing up a day, share those metrics!  In several cases, the presenters threw out these numbers as an after thought, or the judges had to pull them out with questions like, “Is your product live?  Do you have paying customers?”

9. Don’t try to be dramatic. You don’t have much time to tell your story and address all the points above, so don’t burn time being weird. One CEO started his pitch by saying very slowly and seriously “Everyone who doesn’t respect time loses something.” Pregnant pause. Then he says it again very slowly, while the audience is staring at a picture of a rusty watch.  Then “time is the only thing we can’t buy more of.”  I’m thinking, is the concept of time somehow unique to this guy’s product?  Has this guy invented fucking time travel?! As it turns out, the product had something to do with automating invoicing and payments for small businesses, but he didn’t have enough time to really explain it, and we never saw the product.  A few weeks ago, I saw a pitch in a large auditorium, and the speaker starts walking into the audience during his talk.  It was completely unnecessary; he just decided he wanted to be Phil Donahue or something and engage up close with people.  The audience was just bewildered and wasn’t even listening to what he was saying anymore, it was just such an odd thing to do.  Don’t try to be dramatic or use stunts. The audience is already listening.

10. Let your passion show.  This should be easy—your adrenalin is already pumping because you’re up on stage in the literal spotlight in front of 300 people you don’t know, but who could determine your success.  Don’t read notes verbatim.  If you can’t talk passionately about your startup for three minutes then how will you win over potential hires, investors, or customers?

Apologies to any companies singled out as examples…I hope this helps….


Six (6) practical tips to help you refine your concept

Concept Refinement.

I often meet entrepreneurs that are super pumped about their concept.  That’s great.  But too often those concepts are very broad and the core attributes and key customer use cases are not well defined.  When I check in with these entrepreneurs months later, they typically have refined their concept further, but it is a slow process and they consume lots of time and energy getting there.  Refine fast.  Save time and effort and have a much better chance of success.  Below are 6 practical tips.

Techniques for refining and communicating your concept:

  1. No bells, no whistles–We can all think of all the bells and whistles we could add to our offering, all the product and service extensions we could provide, and the new business model variants we could execute.  There are two reasons you shouldn’t spend any time on this.  1) Unless you execute the core components really well, none of the other stuff matters and spending a minute thinking about it takes away from your focus time. 2) By the time you have traction with your core concept you will have refined it and pivoted enough that those original extension ideas are likely less relevant.
  2. The elevator pitch–What and why.  As an entrepreneur, you should be ready to describe your idea in a sentence.  This would typically be the “what.”  If you’re lucky and your audience is still listening, you can follow on with a couple of sentences about what customer pain points you are solving.
  3. The tagline—The “tagline” is the sentence fragment that typically appears under a company logo if they have the space.  I find it a useful tool for idea refinement in that if you were trying to communicate the value of your company to your customers in two to five words, what would you say? [Madrona: We fund success stories][JimmyJohn’s: Gourmet Sandwiches] [Amazon: And you’re done]
  4. Analogies—It very tempting to describe one’s idea by referencing concepts that people already know, and this can especially useful in the elevator pitch, but make sure it is self-evident.  An entrepreneur recently described their idea to me as “yCombinator meets Etsie meets LinkedIn.”  Ok, I get it…Not!  On the other hand if you told me you were SocialCam, “Instagram for video,” I totally get it.  Or you’re building “LinkedIn for lawyers”; I can grok what that is and why it might be useful to lawyers. Avoid more than two companies in your analogy, make sure they are companies your audience is likely to know, and when you do the “meets” mashup make sure it is clear which aspect of the company mentioned is being incorporated in your idea.  For example, if you are “X meets Etsie” what aspect of Etsie is relevant—you cater to unique products, you are a seller driven retail environment, you take a small commission, or you focus on art and crafts?
  5. Buzz words—“we’re a demand-driven platform for crowd-sourced user generated content with a viral marketing strategy.”  Cool, I’m in!  WTF?  Buzzwords are sexy and make you sound ‘in the know’ and allow you to hi five each other at SXSW, but when you fall in love with them it’s a trap that allows you to avoid being specific about who your customer is and what value you provide to them.  When entrepreneurs rattle buzzwords at me, I inevitably ask them to describe who their customer is, what problem they are solving for the customer, and the user experience.  “I am your customer, what need do I have, what happens when I hit your homepage?”
  6. Eight slides—I find PowerPoint a great tool for refining ideas.  I typically have a startup concept in my head and do a little internet research to determine if that exact product or service already exists, and then I spend an hour with PowerPoint and create the following slides:
  • Mission
  • Customer Problem
  • Product/Service Solution
  • Key Features
  • Business model
  • Market
  • Competition
  • Go to Market Strategy

This set of slides is different from the funding pitch, because you are not worried about Team or Offer Terms, and you typically don’t have any customer traction or partners yet.  While I put the Mission slide first, I often find that I can fill this one out better at the end of the exercise.