fbpx

GoDaddy’s Magic Metric For Crushing Churn

Heidi Gibson | Sr. Director Product Management at GoDaddy

  • | Acquisition | Activation | Engagement | Growth | Metrics | Onboarding | Pricing
  • April 2019
  • EP5

Churn is a direct result of not delivering value

Learn how to track and optimize for value

Today on the show we have Heidi Gibson with us. Heidi is a Senior Director of Product Management at GoDaddy. Heidi was tasked with building a cross-functional growth team of product and marketing, focused on acquisition, retention, and engagement over the last 3 years at GoDaddy.

Tune in as Heidi explains how they measure retention across their different products, their magic metric to success, how they use support as a secret weapon, and how GoDaddy is transitioning themselves from a commodity service company to a software as a service business.


Highlights

Time
How GoDaddy measures retention across their different products. 00:08:11
How GoDaddy personalizes their users experience so they get the most value out of their tools. 00:15:05
GoDaddy’s customers’ success sets them up for success: A company wide transformation. 00:18:10
User personas and user psychology at GoDaddy and how treating them differently increased activation. 00:21:35
Moving from a free trial model to a freemium model A multi-hundred million dollar business put at risk. 00:30:10
GoDaddy’s magic metric to success. 00:45:05
Jobs to be done at GoDaddy. 00:53:34

Don’t miss our weekly episodes

A new episode every Wednesday. Subscribe to receive the latest episodes and exclusive resources

View Churn.fm's Privacy Policy

Leave a Reply

Your email address will not be published. Required fields are marked *

Heidi Gibson

Sr. Director Product Management at GoDaddy

Heidi’s recommended resources on churn
What Heidi is reading right now

About the podcast

My name is Andrew Michael and I started CHURN.FM, as I was tired of hearing stories about some magical silver bullet that solved churn for company X.

In the real world tackling churn and increasing retention is one of the hardest problems a subscription business faces.

In this podcast, you will hear from founders and subscription economy pros who are taking a systematic approach to increase retention and engagement within their organizations.

Transcription

Andrew Michael:
Hey Heidi, it’s great to have you on the show. How are you doing today?

Heidi Gibson:
I’m well Andrew. How are you?

Andrew Michael:
Very, very good. Thanks. Once again, I mean, just thanks a lot for joining us. Currently you’re serving as a senior director of product managements at GoDaddy. Maybe you can let us know a little bit about your role and what your responsibilities are.

Heidi Gibson:
Well, yeah. I’ve been at GoDaddy for about three years now and I came from startup land before that where everyone did everything. So I’ve been able to stick my toes into pretty much every role in a company for my startup experience. At GoDaddy, I was tasked with starting a growth team within our website builder division and so I grew that team from scratch and I’m in product management but my team is a cross functional team of marketing product, program management. We work very closely with the analytics team and engineering teams and we work a little differently than most of the other product teams in the organization.

Heidi Gibson:
We’re focused on, acquisition, retention, engagement for customers who are interested in building their own website and over the last couple of years while we established a team, we sort of gradually expanded our charter, to go from just focused on kind of that one set of products to really the whole GoDaddy experience and engaging customers with our suite of products and making sure that they’re getting the right products for them in addition to optimizing just the specific products we’re responsible for them.

Andrew Michael:
Interesting. So you say that you established the growth team around three years ago. At GoDaddy, was anything established prior to that, that related to focusing on growth as acquisition or retention engagement?

Heidi Gibson:
There were teams focused particularly on acquisitions. So GoDaddy is a very mature company and there were and are definitely marketing teams focused on acquisition and that’s something actually that’s still a little different than maybe how most growth teams work a newer companies where instead of me sort of owning acquisition and all of acquisition and with growth team owning acquisition, we partner with the Marketing Organization and Company Wide Marketing Team owns the budget for acquisition activities and we work with them to create experiences, the product experiences that support those initiatives.

Heidi Gibson:
Our role starts at the point of signup. So, for my product we have, a free to pay conversion model, we have a free trial model now and we’re working hard on launching freemium soon. So those experiences of the free trial experience, we own and we kind of own the customer experience from the point of signup and we own conversion, but marketing technically owns acquisition. We’ve really changed how we work with them. It used to be that they sort of bring the customer in and throw them over the fence at us and that’s not the case at all. Now it’s very much a set of shared goals around acquisition.

Heidi Gibson:
Then we have primary ownership of conversion, free to pay trial conversion as well as engagement and retention and engagement is primarily done within the product and also in partnership, again with a global organization that’s responsible for customer communications, email push and other communication vehicles.

Andrew Michael:
Okay. So, then your team, would they specifically be making changes in product as well?

Heidi Gibson:
Yeah. So, we own the in product experience, which is very complicated experience for a website builder as well as this sort of marketing tools that go with the website builder. So our website builder experience has a dashboard where we’re sharing metrics about how your site is doing. We have recommendations on what else you can do with your site as well as things like email marketing, optimizing SEO, Facebook and other social media integration. So we’re recommending that customers engage with those tools and then telling them what those activities are doing for their business and for their website.

Andrew Michael:
So these tools, as well, GoDaddy has a lot of product and services that you do offer and obviously people come into different stages of the journey and they discover you. So myself personally, I own 20, 30 different domains and over the years I slowly started adopting new products from GoDaddy hosting in all sorts. Do you find there’s any difference in terms of the existing verse current customers in terms of the adoption of your products?

Heidi Gibson:
Yeah, it’s interesting. We see very stark differences in what we call new versus existing customers and with that large legacy base of customers like you, you know, of people who have a domain with us is, in some ways a blessing, in some ways a curse. So what we’ve found, it was kind of on the quantitative side, customers that have an existing relationship with us, it pretty much defined as having a credit card on file and 99 out of 100 times, what that means in practice is they have a domain registered with us and most everyone in the world has heard of GoDaddy and knows that we host domains and a lot of people have a domain with us. Those customers tend to, if we can engage them in a free trial or go straight to paid for one of our other products, they outperform customers just walking in off the street who have no relationship with us dramatically in terms of their willingness to convert to paid and the retention.

Heidi Gibson:
However, the flip side of that is, what we found is that we’ve got an uphill battle with those customers to educate them that we do more than domains. So it’s also really typical that when we go talk to those customers and say, you know, hey, have you considered building your website with us? What we hear is, oh, I didn’t know GoDaddy did anything more than domains. Even when we can see from the data that those customers have been on pages on our site, about our website builder products or even have a free trial. We still get this answer of I didn’t know you did anything more than that and we might sometimes have a credibility issue where they’re like, well, I do my domain at GoDaddy, but I go to Wix or one of their competitors or Squarespace to build a website because GoDaddy doesn’t do websites.

Heidi Gibson:
It’s like, no, no, we’ve been doing websites for 15 years, what are you talking about. Yeah, so it’s hard to re educate, it’s really hard to reeducate people and we spend a lot of money and a lot of effort trying to reeducate the millions and millions of customers who just have a domain with us and try and convince them that, to give our website builder a try.

Andrew Michael:
You’re more than just domains.

Heidi Gibson:
Yes.

Andrew Michael:
It’s interesting as well. You said, millions and millions of customers and it just makes sort of sense obviously with the sheer amount of domains out in the market, but interesting, I was thinking about is how you go about measuring retention. So do you measure retention at multiple levels then considering that you have these different products or do you specifically just focus on retention at your specific product that you focus on?

Heidi Gibson:
GoDaddy does measure retention in different ways across the different products and how we measure retention is actually kind of a good illustration of our journey from being frankly kind of a commodity service with domains, into being a SAAS, a real SAAS service provider, which is our current goal. So as a domain only company, we really measured, like when I got there, even a primary sort of retention metric was financial. It was, did the customer renew their domain, did they keep paying us, which is a very kind of retroactive way of looking at it and if you’re not looking at engagement, what they’re doing with even with those domains, and other products along the way, you miss all the opportunities for improvement.

Heidi Gibson:
So now, even with domains we look at, what are they doing with that domain? Do we own the A record for the domain? Is the domain activated as being the leading indicator for retention? So all of our efforts on domains, not all our efforts, but a lot of our efforts now on domains, are focused on activating that domain, getting the customer to do something with it. That could be activating an email address, ideally on one of our email products. GoDaddy is, I think the largest reseller of Office 365 and so we do a brisk business selling email accounts on our domains. Even if the domain is not activated on a GoDaddy product, which is of course, our number one goal, if it’s activated on someone else’s product, there still more likely to renew that domain and keep paying us.

Heidi Gibson:
If we can get that customer to activate that domain on one of our products, either like email productivity products or ideally our website products, then the value of that customer increases dramatically so that the financial reward to GoDaddy, it is 10X. So they might be paying $10 a year renewal fees for a domain, whereas they’re going to be paying a hundred up to a thousand dollars a year subscription fees for website builder or website design services. If we can get them using our email product and our website builder, multiple products in that domain, obviously the value of that customer is dramatically hotter. By the way, the customer is getting a lot more value out of that domain than if it’s just sitting there doing nothing too. So if they’re really running their business on that domain using our products, then the customers really getting value and GoDaddy is being rewarded too.

Andrew Michael:
Absolutely. I think as well, one of the unique things we chatted a little bit about is GoDaddy’s ability with the supports and services that they do offer. I know for myself personally as well have been several conversations with either of your support team or with the sales team just to help out and I’ve always found it super useful. What sort of role does your support and your services play in retention and engagement?

Heidi Gibson:
GoDaddy’s support services team, our care team as we call them, I really view as like our secret weapon. It’s one of the things that’s hardest for any competitor to replicate because it’s obviously a big investment. I think close to half of GoDaddy’s global employees, our support and care team members and as you know, as a customer and hopefully everyone knows, you can call us for anything 24/7 and we will talk to you. You can call us up to talk about your cats and we’ll be happy to talk about your cats. Ideally you are calling us up to talk about, how we can help your business, but support team does a lot more than technical support. It’s a huge area of investment for us, a huge area of pride and it’s real, as I said, real competitive differentiator to be able to help customers in a hands on way.

Heidi Gibson:
Not just with, troubleshooting and tech support and setting up their records or whatever, but really helping them get the most out of all their products to run their business. We’ve grown that organization to offer various sort of services as well as support. So customers who use those services, whether they pay for them or not, in many cases, we’ve got coaches that will help you out for free if you just call in, customers who use our services are much more likely to retain with us and keep paying for the subscription products.

Andrew Michael:
How do you go about measuring that specifically? So what sort of metrics do you have in place and measures?

Heidi Gibson:
So we’re able to measure on a customer by customer basis, which products they use, whether they call in, whether they’re using any of our coaching services, we know what they’ve used, as far as all of our offerings and support. We’re able to look at all that holistically and do analyses around if a customer calls in, are they more likely to retain, if a customer has a coaching call, are they more likely to retain? Then we look holistically across all of the subscription services. So domains, website builder, email, all the products together and look at the impact of coaching and support on sort of longitudinal subscription retention.

Andrew Michael:
You have the luxury having said having millions of customers to be able to run those correlations against.

Heidi Gibson:
Yes, we have a lot of data.

Andrew Michael:
So it sounds certainly like as well, you’re going heavy into the root of personalization and really trying to help users get the most value out of your tools by making it catered to their solution. How are you applying this now in the current product that you’re working on, the website builder?

Heidi Gibson:
Actually, one good one. Here’s one really simple one that might be obvious in retrospect. We recently launched an email series pushing out metrics around the customer’s website, how they’re doing and advice on how to improve that. So some of the metrics that we share with our customers, we’ve been doing this in product all along, are things like site visitors, sales for customers that have an online store, bookings for customers that have online appointments that take book appointments online. We’ve typically had those in product and sent the customer back into the product to see those metrics but we put together a very personalized, regular metrics email that we’re pushing out to customers with key metrics and also a list of recommendations on how to grow those metrics. Then those of course, drive the customer back into the product to actually take action on those recommendations.

Heidi Gibson:
It seems like a pretty obvious thing to do but GoDaddy historically had been really focused on emails going to customers as being revenue drivers. So we had primarily historically measured the success of an email in terms of sales generated of our products and kind of changing our thinking to away from our sales metrics towards the customer success metrics, was something that actually took some effort internally, to kind of change how we think and have our primary metrics be the customer success rather than ours. So an email like this, and we were doing more and more on this where we push out to the customer, hey, here’s some data relevant to your business and recommendations on how to grow your business, has had a dramatic impact in terms of getting customers to come back into the product, use features and services in the product that they probably didn’t even know were there.

Heidi Gibson:
To increase their success has had a direct impact in terms of retention on the product itself but it takes time. There’s a lot of analytics required to measure that impact, of the customers who get this email, we’ll measure of course open rate and click through rate. That’s nice but being able to measure the actual impact on retention, might be months, it could be months later, six months later by the time we’re actually able to measure a real increase. That’s kind of been a new way of acting for GoDaddy, even though I know this one’s kind of obvious.

Andrew Michael:
It sounds like there’s sort of an organizational transformation and it’s flipping, it’s really becoming sort of their customer success led mentality of really setting your customers up for success, which is going to set GoDaddy up for success in the long run.

Heidi Gibson:
Yeah, that’s true. I think I mentioned this before, it’s been a real transformation for GoDaddy to move from being kind of a commodity company, to really being a SAAS company that is, as you say, driven by the customer success and realizing that the customer success is our success.

We’ve also along with that, had to really develop a much more nuanced understanding of our customers’ needs and in particularly their emotional state. So that’s something I’ve seen change during my time there and that we still frankly have a long way to go and are doing a lot of experiments, is the sort of emotional engagement with our customers, rather than rational engagement. So when I got there three years ago, a lot of our marketing materials, were like unlimited bandwidth and X gigabytes of storage and those kinds of marketing points.

Heidi Gibson:
What we realized was that customers don’t know even what those things mean and they don’t know what they need. I couldn’t tell you from my website, you know, how many gigabytes of storage I need. I have no idea or how much bandwidth. Like, why should I care about that as a small business owner. Furthermore, when we go talk to small business owners about setting up their online presence, they’re very intimidated. Their emotional state is one of largely fear. They’re afraid of doing it wrong. They’re afraid that they don’t know what they’re doing. They’re afraid it’s going to be a bad website if they try and do it themselves, but they don’t have the money usually to pay someone else to do it. Maybe they’re asking, their sort of technical friends to help them, but they’re really intimidated.

Heidi Gibson:
They’re really frightened and they need a lot of handholding and they don’t know what to do. They don’t know which product to pick and they don’t know where to start and the whole thing is really scary. So we’ve learned to try and engage with them, not just with, here’s the tools you need and what to do, but be very reassuring and try to really optimize our language and visuals to give them the confidence that they can do this and also try to kind of reward them along the way and let them know they’re doing the right thing, with feedback through the product experience. Those kinds of experiments have been incredibly successful in terms of just the emotional engagement.

Andrew Michael:
And really bring about the user psychology. The thing is well with user psychology, you touched on sort of one persona, if you want to call it one users psychology in terms of you have this sort of newbie who’s really unsure of his way, but GoDaddy as well it is quite an old company and you do have a fair amount of sophisticated customers as well. How do you go about treating and working with the two different types of personas when it comes to your products and the different psychology states when they come into using your tool?

Heidi Gibson:
Yeah, that’s a great question and one that we’ve been grappling with a lot internally. GoDaddy has, as you pointed out, a number of different customer segments. Our primary customer segments is a small business and for us, small business is one to five employees. We’re all over the world. So, you know, I think 60% now of our business is US and 40% is international. That international segment is growing faster than the US, so we’re all over the world and our prototypical customer owns a hair salon or is a restauranter or this might be a side gig. They’re a blogger or are they’re manufacturing eyelash extensions or something like that. So it’s a lot of classic main street, small business as well as a lot of kind of side hustle kinds of things.

Heidi Gibson:
Actually, the segment of our business that are real tech savvy folks who might be using our hosting products, for instance, to host a number of websites, is relatively small. That’s a secondary audience for us in terms of numbers and those folks actually usually are pros. So, of the tech savvy audience, the primary profile is a web pro who’s building websites for others and hosting them. So historically, and even now, if you kind of look in a lot of our, on our website, we’ve kind of gone historically down the road of like through all the products there up on the website and let the customer try to figure out what product they need. That works well for the pro, for the tech savvy customer and also works well for the existing customer who already knows what they need.

Heidi Gibson:
Of course, when you’ve got this established experience, it’s really hard to change it for those existing customers because they’re just used to things being the way they are. We’ve certainly come to embrace the fact that for our primary customer, which is the small business, they need a much more simple experience and much more clear experience telling that helps them get to the right product for them. So, we have accepted that what we need to do is have a very clear hierarchy in our website and our materials. That’s like 90% for the small business owner and then very secondarily, for that pro, sort of tech savvy consumer. It’s harder to execute that kind of strategy than it is to describe it because there’s a vocal number of existing customers and that sort of tech savvy audience that doesn’t want anything to change.

Heidi Gibson:
So actually actually changing it is harder than it, it’s always harder than it should be but all of our kind of front of site experiments right now are based on that hypothesis that we really need to have one primary path and it is aimed at those small business customers and not try to be everything for everybody like we’ve historically tried to be.

Andrew Michael:
Yeah, and talking about paths as well, I think with GoDaddy you have a multiple different routes to becoming a customer. When you look at your specific product, how do you treat customers coming from different routes to get to your product, the website builder.

Heidi Gibson:
That’s a really good question. I’m sure this is true for all companies, but very much true for GoDaddy that we have a number of different sign up pathways and by sign up pathway, I’m not talking about the acquisition vehicle. So we of course do advertising and organic and SEO and all the different sort of acquisition marketing vehicles. Once they get to GoDaddy.com, customers will become or new kind of prospects will become new GoDaddy customers via a number of different pathways really within our website and off our website. So, our single largest kind of sign up pathway for new customers is what we call our domain purchase path. So, the largest pathway is customer comes to GoDaddy.com one way or another but then decides, okay, I’m going to buy a domain.

Heidi Gibson:
So they search for a domain and go through the domain purchase path where they select a domain and we offer the various other products on the way and they check out with that domain. So at that point, from my product, the website builder, the point of them buying that domain, is my single best bet for trying for getting them to try our website builder too. Like, what are you buying that domain for? Well, a research shows that 60% of them or so, intend to put a website on that domain when they buy it. Other people may be intend to just invest in that domain, resell it later, just use it for email. There’s various other uses for the domain than putting a website on it, but far and away the number one, objective of the customer is put a website on it.

Heidi Gibson:
So if I can engage them at that point of buying the domain to try our website builder, that’s my best bet. Many of them, but their sort of mental state at that point may not be, I’m ready to build my website. They may be starting their business and like, okay, this is a key step in starting my business is registering my domain. I need that to finalize my business name but I’m not ready to build my website. So we’ve learned to try and have a softer engagement with many of them at that point and offer them maybe a coming soon page, you know, hey, you just bought your domain, put a coming soon page up so that you can start collecting email addresses of people that go to that page or put up just contact information and come back later and build your site and offering them some different options there depending on their state of readiness has been a huge success for us.

Heidi Gibson:
We’ve dramatically increased actually the number of customers who end up activating their domain on GoDaddy versus one of our competitors by offering them different options at that point of domain purchase. Whereas a customer who comes to GoDaddy.com or a prospect who comes to GoDaddy.com and signs up not for a domain, but for a website builder free trial, that customer’s telling us, well, I’m ready to build my website. That’s what I’m here for. So we come at them directly with like build your website, build your website and not, hey, come back later maybe and do this when you’re ready.

Andrew Michael:
Yeah, that’s very interesting. So you almost offer them like a lighter version of your product just to get them in the door when they’re not totally ready for your solution, but then when it is they’re giving you the signal that, that’s what they want-

Heidi Gibson:
Exactly. Yeah, just starting that conversation with them and having a relationship and as I mentioned earlier, letting them know that GoDaddy even offers these products, which is news to many of them. Kind of getting our foot in the door in a lightweight way has been helpful to, a year ago or so, year and a half ago, when we first launched our product sort of within that domain purchase experience, we took a harder sell and we would give everyone a free trial and then push hard on like, start building your website. Because we knew based on data that if they didn’t build their website in the first 30 days, then they probably weren’t going to build it at all.

Heidi Gibson:
So we would push really hard on like, build your website now, build your website now. We got a lot of backlash from that. We had a lot of kind of qualitative negative feedback, that we were coming on too strong and you’re shoving this website builder down my throat and I just wanted to domain and very kind of negative hard sell kind of feedback. So, we’ve come back again now with this softer approach and it’s been a big win to have a more nuanced engagement with the product based on where the customer is and what they tell us they want.

Andrew Michael:
Yeah. You mentioned as well that, so this product now has a free trial currently. You said you’re looking into freemium as an option? What’s the thought process behind there and how did you decide that, that’s something that you want try?

Heidi Gibson:
Yeah. We are planning fairly soon on launching true freemium and it’s been a big journey to get there for a number of reasons. So we realized that we wanted to offer freemium product for a number of reasons. One, as I mentioned we’ve seen that if we can add value to any of our subscription products then the customer is more likely to retain on those products. For instance, we know that only a relatively small percentage of our domain customers are going to pay for our website builder product. We know that’s true, no matter what we do and that’s great. We want to maximize those paid subscriptions on our website builder but right now by not having any free website builder option we are driving our domain customers to activate their domain on our competitors.

Heidi Gibson:
Our competitors have like Wix, you know, there’s a number of free website builders out there and freemium sort of website builders out there and they’ve been very successful in terms of growing a large free audience that serves a couple purposes for them. One is that becomes a source of future paid subscriptions. So, Wix, one of our competitors has been kind enough to actually publish a lot of their free to paid subscription data and we were able to analyze that and come to the conclusion that, that will probably work for us too. Never underestimate your competitors as a source of ideas for your products and subscriptions. So we believe that we can continue to convert customers over time as their business changes and it makes sense for them. The journey of a small business owner might take years for them to go from having an idea and putting their toe in the water to being a real functional business, it’s generating revenue and someone might be living off of. So letting them make that journey in their own time on our products makes a lot of conceptual sense.

Heidi Gibson:
Also, we realized that we were really missing out on viral acquisition by only offering like a 30 day free trial. So right now, we have a lot of customers that come on, build a website, try the product out, and if they haven’t converted in 30 days, then you know, too bad, so sad, bye and that website’s gone. Some of those websites are getting traffic. So by just cutting them off, we’re missing an opportunity to potentially acquire new customers, you’re viral acquisition and build a loop there where then those customers, sign up those visitors to that website, start a free trial with us and build their own website and eventually become customers.

Heidi Gibson:
That’s also been successful tactic for many of our competitors. So both of those things really led us towards trying to freemium but we’ve been testing our way into that very slowly over the last year and going over the next six months or so because of course there’s risk. So we have a multi hundred million dollar business that we are potentially putting at risk by moving from a free trial model to a freemium model. So we’ve broken down our freemium hypothesis, our freemium kind of model into a number of different hypotheses and figured out how to test each one of these hypotheses separately to prove to ourselves and senior leadership that we’re not going to upset the whole apple cart and also figure out what a transition is going to look like.

Heidi Gibson:
So certainly when we move to freemium, in more than a very limited way, existing, there’s going to be a transition period where we go from this predictable free trial conversion over several months now into this freemium model and establishing this new conversion curve. As a public company, we’ve got a financial duty to figure it out what that’s gonna look like and set expectations appropriately. So I think that’s just some additional sort of tax that we’ve got as a public company and as a larger established company to manage that transition and really mitigate against risk in a way that a startup or a smaller company wouldn’t have to deal with.

Andrew Michael:
Yeah, and there kind of is a lot of unknowns in the course as of doing this. When you look at it now and moving, switching to freemium obviously there’s going to be some sort of limits when it comes to what you can do with a tool or service. How are you going about setting those limits and understanding what are going to be the drivers then to push people onto the paid plan?

Heidi Gibson:
Yeah, that’s a great question. We’ve, as I mentioned before, what we did is we did a merge of modeling a year or so ago and determined that we should move to freemium. Then of course there was a lot of efforts to sort of sell that vision internally, right? And convince everybody else that this was the right thing to do, even though this was a big risk because the risk are [inaudible 00:36:01] and then what we did is we said, we took this kind of freemium vision and broke it down into a number of hypotheses and identified the different risks. So for instance, we said, okay, what do we think the conversion curve is going to look like in freemium versus a 30 day free trial. So 30 days, we know exactly when they convert, what the conversion rates are.

Heidi Gibson:
We had a sense that we were leaving some conversions on the table. When you look at the curve, you see it spike back up at the end. So, people either convert right at the beginning of the 30 days, the first few days, like half of the people who are going to convert, convert, and then you see a trough through the free trial and then the other half convert at the very end. We had a sense, that there were additional paid conversions if we just sort of extended that time, we’d get more paid conversions. We had some qualitative data to back that up. So we had customers calling into support and saying, my website’s down, but I wanted, you know, we’d have to do restores and all this kind of nonsense. Then that of course begs the question of like, well, are you just going to have the same number of conversions over a longer period of time if you stretch that out or are there actually more conversions?

Heidi Gibson:
So we’ve done some experiments where we try stretching that timeout. We tried different communications at over different times to see if we can affect that curve and convinced ourselves that yes, we were leaving some conversions on the table. Also, being able to benchmark against some competitors, like I mentioned, some of our competitors publish their data, was really helpful too because we can see that those competitors are actually getting a larger number of conversions over the first four quarters of that freemium experience. So that convinced us, that yeah, there’s more to be had. The cost of course is another question. So there’s a cost to each one of these premium customers and for us that cost is different than our competitors because we offer, just as part of our core brand proposition, we offer unlimited support.

Heidi Gibson:
So it’s pretty easy to figure out what the cogs are for those customers over time. Harder to figure out what the support costs might be. So that’s actually a big experiment we’re launching right now is trying to measure what those support costs are going to be over a year versus 30 days and do those premium customers access support in the same rates that paid customers do. Probably not, but what’s it going to be? So we’re measuring that. Additionally, it’s a really different experience than the free trial and we have to take a very different marketing approach. So with the free trial, we offer unlimited, the product in an unlimited way. You can use all the features in the product just only for a month, but with freemium instead of, it doesn’t make sense to give them all the features of the product where else there’s no point to doing freemium, right?

Heidi Gibson:
So what kind of paywalls do we put in place and what impact are those paywalls going to have on conversion. So we broke that down and said, okay, attaching a domain, we believe is the single most effective pay while we can add. Additionally, online store, some of those digital marketing like, different, there are other features in the product that we believe will impact conversion, cause people to pay, and that also are sort of logical paywalls for the customer. It has to make sense for the customer. They need to view though that feature as a premium feature. It needs to just sort of be intuitively obvious to them, oh, of course online store should be a paid feature as opposed to a free feature or I should be able to try that feature in a really limited way while I’m in the free plan, to see if it’s going to work for me.

Heidi Gibson:
So we put a lot of effort into breaking down those features and putting them into buckets of free features versus premium features and then figuring out do we have a limited version of it or not. Now we’re in the midst of testing all those. So, once we did all that bucketing, which was a lot of qualitative and quantitative research, looking at, okay, how many people are using those and if those people had to pay to use those, what percentage do we think would pay and then backing all that up with qualitative research and talking to a lot of customers in different ways, conjoint analysis and interviews and everything to try and understand, does this make intuitive sense to the customer? Will they look at this lineup and say, oh yeah, of course that makes sense to me and are they getting enough value out of the free tier, once we added these pay alls for it still to be attractive for them and they’re still getting something out of it.

Heidi Gibson:
So we’ve done all that analysis and now we’re in the midst of actually testing as many of those individual hypotheses as we can. So we’re running, right now, 30 or 40 different tasks where we’ve got customers in different segments with different features and seeing if in fact those paywalls have the impact that we believe they will.

Andrew Michael:
Yup. Again, I think it’s being a super lucky position to have that amount of users coming to the table to test that many variations.

Heidi Gibson:
That’s absolutely true. A startup would just not be able to do this. They wouldn’t have the volume and they wouldn’t have the data and they wouldn’t have frankly the manpower either. This is a lot of work to do this.

Andrew Michael:
Have you considered as well in the interim, like offering a hybrid scenario where you have a freemium option with the free trial?

Heidi Gibson:
A freemium like, tell me more. What do you mean?

Andrew Michael:
So specifically like now you currently offer the free trial to anybody using, but potentially maybe just having a free option available for people to start that has paywalls that’s maybe not in your typical route to sign up. So you’re just at this point in time, have everybody signing up to the trial, but somewhere on your site or through the product is a way for them to start on a free version.

Heidi Gibson:
Yeah, so we actually are doing that. We backed into that on the domain purchase path that I talked about earlier. So, one way we are trying to add value to domain owners, I think I mentioned that we were offering like a lightweight coming soon page. So that coming soon page, which is just a one page website and we’ve tried sort of branding it different ways, a coming soon page, a business card site. What we found is that actually different countries kind of think about a very simple website in very different ways. So in the US we call it a coming soon page because everyone sort of understands what that means here, but it’s just a one page website and we have that set up so that it is free forever with your domain. So you can have a very limited one page website free with your domain as long as you have that domain and it’s got pay walls in it where if you want to have multiple pages, if you want to add a store, if you want to add a whole bunch of things then you need to convert it to a regular paid website.

Heidi Gibson:
It’s got a number of kind of limitations right now. We actually repurposed an old product that we had kind of laying around for that experience because we wanted to test this coming soon experience. So it’s a little hacky, I’ll be honest with you. It’s kind of hacky the way the experience is set up right now, but we’ve had a ton of success with that. So that’s, and behind the scenes, there’s a bunch of effort going into really cleaning up that experience and making it a lot more robust. We are doing that and it’s something where we got kind of lucky where we had this old product laying around that we were able to sort of gussy up and quickly repurpose and shove out the door as a test. We had so much success actually with the test of having that free product, free with domain that we’re expanding on that internationally right now.

Andrew Michael:
Very nice. It’s also another validation point as well for the freemium push then if you’re starting, seeing like offering the service and people are upgrading to the paid plan. So that’s very interesting Heidi. Maybe you want to talk to us a little bit about how you go about tracking your metrics. What are you looking at when you’re tracking success in your team?

Heidi Gibson:
Yeah, that’s a really good question. We of course track all the normal things that everybody tracks. They’re more sort of less leading indicators and more less leading] indicators where we track retention in terms of do they keep paying us, do they cancel, things like that. One of the most interesting metrics that we track, and this is fairly new, something we’ve developed just over the last year, is tracking what we call internally value achieved. So that is answering the question of, is our customer getting value out of the product? Of course, we have to use various signals that we can measure it to be able to take a stab at that.

Heidi Gibson:
So we look at number one is the site, the website that the customer built getting traffic. Actually, even before that, we look at do they publish the website because they’re not getting any value if they haven’t published the website, but are they getting traffic to that website? If they’re an E-commerce store, are they making sales? If they take online appointments, are they getting bookings? Then just recently we started to layer in other indicators such as if they have attached their Facebook page or a Yelp page or Google my business card, which are things that they can do within our product. In fact, we’ll automatically build those things, those assets for them if needed then are they getting visitors? Are they getting map requests, phone number requests, things like that?

Heidi Gibson:
On the site, we can look at our visitors to the site submitting contacts via the contact form, are they clicking on the phone number. So we look at those indicators of success and then we’ve got some magic behind the scenes where we built some algorithms to try and weigh the value of those different indicators across different types of customers so that they’re meaningful to as many customers as possible. We use that actually as are our key kind of churn retention metric internally and increasing value achieved across our customers is a primary goal internally. So it’s been incredibly helpful internally to use this metric because it’s really changed the way we think about churn and really changed the way we think about improving churn.

Heidi Gibson:
So instead of trying to think about how do we get more customers to keep paying us, which might lead you down the road of making it harder to cancel or features like that. Instead, we try to focus on how do we get more customers to get more value out of our products and we view that as just a win win. It’s just a healthier way to think about your customers and it’s been incredibly valuable. It leads us to insights that I think it might be tough to get otherwise, such as looking at the customers across the different, kind of slicing them by the kind of industry that they’re in and thinking about what success means if you are a restaurant versus an accountant versus someone selling handicrafts online, right?

Heidi Gibson:
So you’re gonna have a different sort of measurements of success for those different customers and that leads back to, okay, well what features do they need and most particularly, what kind of guidance do they need within the products and outside the product to find these features and use those features and know that they’re getting value out of that. So, from an experience standpoint, it’s really led us in a different direction where we’re now focusing on a much richer kind of guidance experience with the customers. We’re also focused on a lot more kind of hands on hand holding with the customers, where we can proactively offer them help from humans to get set up correctly and get the most value that they can out of the product.

Heidi Gibson:
So, I would advise everybody to think about, from the customer’s standpoint what is success and how do they get the most value out of your product and how do they know they’re getting the most value out of your product and start there for retention rather than how do you get them to keep paying you?

Andrew Michael:
Yeah, I think it’s incredibly powerful. Essentially, I think what it is with churn and retention, it’s like you’re not delivering value and that’s why people are leaving. So you’re touching sort of the metrics and the key focus against value achieved, I think is really, really powerful. What is some thing that you’ve noticed as well, now, when it came to these metrics in the beginning when you were setting them, how did you go about defining them and sort of what were you looking at? When was the correlation when it came to retention and engagement?

Heidi Gibson:
Yeah. So, this sort of value achieved insight, started with really, we kind of stumbled on it to some extent, I’ll admit. So, I’m not sure who, someone did some analysis and noticed that there was a strong correlation and this one’s obvious in retrospect between sites that get traffic, which is something that’s easy for us to measure and sights that keep paying us and we were like, oh, head smack, if this site gets traffic, they pay us. So we started there and once we saw the very strong correlation there, then we all kind of piled on with, well, what else correlates to retention. So we started, with that, with just one simple measurement of site traffic and now it’s a very complex kind of multifaceted metric that is sort of constantly evolving.

Heidi Gibson:
It took a year to go from this very simple observation that we had no apparent frankly, control over either. We didn’t understand why at that point some sites get traffics and you know, other sites don’t get traffic but that one observation led us down this path of developing this interesting metric that is evolving constantly. We’re always sort of finding you, activities that we can sort of add in there and also leading us down the path of trying to discover even within site traffic, just that one simple metric. What are all the things that contribute to success? So if we start pulling that sweater thread, then we found, oh well, sites that have multiple points of presence around the web get more traffic. If you’ve got a Facebook page and a Yelp page and depending on kind of business you are, a LinkedIn page or things that you get more traffic, great.

Heidi Gibson:
If you use our SEO tool to optimize your SEO, you get twice as much traffic. Awesome. If you do email marketing, you get more traffic, right? So we started measuring everything we possibly could to try and see what drove that traffic and then once we had that sort of observation, then of course that leads us down to, okay, well how do we get more customers to do this? So how can we offer more guidance to tell customers that these things will lead to their success and help them, either do it for them or help them do it themselves.

Andrew Michael:
I love that. I think also what you touched on it a little bit previously was going a little bit more focused on the jobs to be done and what these different companies and different sites and trying to achieve. So obviously you had your E-commerce component, you mentioned sort of the booking component, when you went about this, I think some of the use cases are pretty obvious. So when it comes to E-commerce and looking through sales through the cart did you do any further sort of research into what are the jobs to be done and what are people trying to achieve with their research when it came to trying to understand which metrics to define?

Heidi Gibson:
We did. Yeah. So once we started going down this path of value achieved, we of course did a lot of quantitative research and we had the luxury of having a lot of data. So we can ask them questions like what kinds of activities are correlating to success. We also did a lot of qualitative research too and for us, segmenting the customers by their business type was pretty critical to realizing that it’s not one set of jobs to be done for all of our customers, but that it really varies widely and what activities are important and what jobs are important really vary across the different segments of customers and vary for us, vary around the world as well.

Heidi Gibson:
So different regions and countries operate very different differently and what works and in the US may not work in India. So we’ve found that we’ve had to go pretty deep in terms of segmentations of customers and it’s kind of a bottomless ocean in terms of how far we could go. So of course we have to prioritize and really-

Andrew Michael:
That was gonna be my next question, is how do you prioritize?

Heidi Gibson:
Yeah, yeah. We could kind of do this forever. So of course we have to segment and look at the largest industries, the largest regions, what are the biggest opportunities in terms of, frankly the largest segments of customers, but we also try to look at, where are we potentially have a big opportunity that we’re not capitalizing on? So we can look at segments of customers where there might be a relatively large segment, say an industry where we see a lot of customers signing up for the product for the free trial. Maybe a lot of customers publishing their site, but a relatively low portion of those customers achieving value. That can be an interesting bit of research as well to try and understand where are we coming up short for that segment of customers and is there an opportunity for us to improve the experience for that segment and try to take them from a low value achieved with knowing that low value achieved is going to lead to high churn, to a high value achieved state. Because we’re already getting them in the door and that case, right? Like, acquisition we know is incredibly hard. So we’ve already-

Andrew Michael:
They signed up for some reason.

Heidi Gibson:
Yeah, they signed up, we’ve spent the money to get them in the door. We’ve paid for marketing, so where are we falling down and not meeting their needs. Of course, the answers are all over the board. In some cases it’s pricing, in some cases it’s, particular features that they want. Some cases it’s the kind of brand fit. So there’s never one silver bullet we found and so we are going hard down this road of kind of personalization like we talked about before of the whole product experience to try to tailor it to, kind of each industry and their needs.

Andrew Michael:
Nice. So let’s say somebody wants to get going with us and their business and they want to start shifting towards the company focusing on value achieved metrics. Where would you say is the number one place they should start and how would they go about implementing this within the organization?

Heidi Gibson:
Yeah. I think the first thing you’d want to do is look for, make a list of ways that your customer gets value out of your products, right? Just, start with like a sort of plain definition of like, what is value, right? Why do customers use this product and what do they get out of it? Hopefully that is not too hard to answer and then from there, try to brainstorm all of the indicators that you could measure that suggests that, that customer is getting that value. How do you know if they’re getting value? That may be tricky depending on the kind of product you have, I could imagine. In some cases it’ll probably be pretty easy. You could measure shares or sales or, I think there might be some easy ways to measure it, but it might be really hard.

Heidi Gibson:
If you can find, so once you’ve got that list of metrics, sorry, that are potential indicators, then do the analysis to look for correlation. Which of those indicators actually correlate to retention and your strongest correlation is probably where you should start. I would not advise that people start with a multifaceted, trying to factor in every potential indicator kind of analysis. I think that would be too complicated. Look for one indicator that correlates with retention and then measure that on your whole audience. Try to segment it, see if you’ve got real differences. You probably do, maybe look for some secondary indicators. You know, what else seems pretty strong, see if those kind of differ across the segments or if they track the same as that primary indicator.

Heidi Gibson:
Then once you get a few indicators, then you can kind of ask yourself the question of like, okay, what can I do to move these. Is it that customers don’t discover certain features or do they need more guidance or, you know what, right? Do you have those success indicators? Like are they only in some higher tier? Maybe you’ve got some product design issues or tiering issues and you can think about, but what can I do to move that indicator and run some experiments and see if you can change it? Philosophy is kind of simple, but doing it is actually pretty hard.

Andrew Michael:
Exactly. Yeah, but, still, again, I really love the concept and then you’re getting the whole organization, the whole company to align around delivering value to your customers. I don’t think there’s anything more powerful than increasing retention for your business.

Heidi Gibson:
Yeah, it’s extremely helpful to be able to boil it down to, at the end of the day, there’s one metric, even if it’s a little complicated behind it. Then we can show to the entire company, on a quarterly basis, on a monthly basis, as I mentioned, we can look at it across different segments of customers. So it becomes a really easy thing to show, to different audiences internally and get them on board with this idea.

Andrew Michael:
Right, I’m definitely on board with this idea, Heidi. I think it’s added a lot of value to the show as well and thank you very, very much for joining. It’s really been a pleasure having you and wish you best of luck going forward.

Heidi Gibson:
Andrew, the same to you. Thank you so much for reaching out to me. This has been fun.

Andrew Michael:
Thanks Heidi.

Heidi Gibson:
Thanks. Take care