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Value-based pricing for the win!

Janna Bastow | CEO and Founder of ProdPad

  • | Activation | Engagement | Onboarding | Pricing
  • February 2019
  • EP3

Negative churn

There's nothing negative about it.

We’re super excited to have Janna Bastow on Churn.fm for this episode. Janna is the Founder and CEO at ProdPad, a product management software that helps product managers develop product strategy.

Join us as she shares their unique approach to gamifying onboarding and how experimenting with value-based pricing helped them cross over the magic threshold to negative churn.

Highlights

Time
People get nervous about testing, changing and iterating on pricing, when in reality, pricing is just one aspect of your product. 00:04:27
Using grandfathered users to get valuable feedback on pricing. 00:05:08
Why and how Prodpad uses Value-based pricing. 00:07:38
How Prodpad gamified onboarding and how it impacted conversion rate. 00:17:50
Key Metrics of success. 00:32:17

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Janna Bastow

CEO and Founder of ProdPad

What Janna 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:
Hey Janna, thanks very much for joining us today. How are you doing?

Janna:
I’m good. Thanks so much for having me today.

Andrew:
It’s a pleasure. It’s really, really exciting to have you on the show. I know we’ve also had several conversations in calls that we’ve had in the past and you definitely have an interesting story to share with us today. And one really, really interesting part of that I think you recently mentioned is you very recently passed a negative churn and I think it’s definitely the holy grail of what everyone aims to achieve. So maybe you want to talk with us a little bit about where you’re at currently, in terms of your turn and retention and take it from there.

Janna:
Yeah, sure. Happy to share some of the details as to what we’ve done along the way. As I mentioned, we just recently crossed over that magic threshold to the negative churn areas, which has been one of these long time coming events that we had to really focus on in order to start getting there, but the trick behind that was to start getting more and more existing companies to upsell and give them opportunities to do so.

Andrew:
Yeah, I actually noticed that on your pricing page. And it’s something I think that’s critical when pricing any product is value-based metrics and making sure that you’re pricing according to the value that you deliver. One of those things I’ve noticed definitely from your side is that as the company size and employees increases pretty much how the pricing goes, so as you increase admins and editors for the product.

How did you go about initially setting up your pricing structures at the very beginning when you decided, okay, this is a new product we’re going to launch into the market? What were your prices behind setting that up?

Janna:
Our pricing has changed a ton over the course of the years that we’ve been running this. The initial pricing was simply based on taking a look at what we thought were comparable types of products, as in collaboration tools. We were looking at the likes of things like base camp, which was popular back then. And looking at the pricing there and came up with something that we thought made sense in our space, which was 25 bucks per month. And it was more or less a number that we pulled out just to see what would happen. And low and behold, we did get people paying for it at the point in time. And even though the price was vastly under-priced, we didn’t learn that lesson until months later. We started getting our first sign-ups and it started proving that what we had was something that had value. And from there we started being able to test pricing and figure out new ways of doing it.

Andrew:
Yeah, so you mentioned you realized it was severely undervalued and you only learned that months later. So how did you go about figuring that out and what did you do to understand a little bit better?

Janna:
Oh, you could certainly see from the demand through initial sign-ups when people were coming in. I remember at one point in time somebody said to me as I was talking through the pricing and they went to clarify. They said something like, “Oh, so you mean that this is the price per user”. And I was like, “Well, no, actually it’s the price for your entire company”. At that point in time I realized they wanted something like ten or 20 users and they would’ve been happy to pay ten or 20 times what we were charging. And therefore, it was very clear with conversations like that that we could’ve been getting away with much higher pricing per user or pricing per user as opposed to pricing just per package, for example.

Andrew:
Very interesting. And then, so you switched then, from the beginning of Flat Free from 25 to more pricing per seat. You mentioned as well, that one of the key things that you found was really trying to look at existing customers and how do you work on expansion revenue. What were a couple of things that you looked in there and what did you try out?

Janna:
Well, one of the things that occurred to us quite early on was that pricing was one of these things that a lot of people get nervous about changing, like as they get nervous about testing on and changing and iterating on. When in reality, pricing is just one aspect of your product. Just like you might be iterating on a checkout page in order to get conversion rates up, you should be iterating on your pricing and your packaging and your proposition to make sure that you’ve got the best combinations available there.

And so from the beginning, we’ve constantly tested and tried new things. And there are ways of testing pricing that allow you to still test pricing and get honest answers without scaring off existing users. One of the tactics we’ve always used is to have grandfathered pricing. If you were one of our earlier customers who got the ProdPad for 25 dollars in the very early days, if you’ve been with us for those five years you’re still paying that same price. We still do have customers who benefited from that, but along the way we’ve been able to go back to these customers and get honest answers about what would you pay. You know what’s the value that you’re getting out of this? Does this still make sense? And allows us to test pricing with new users who are coming in without worrying about upsetting past users.

You see that quite often where a company will change their pricing on their user base and it totally alienates everybody else who was an early customer and all of a sudden is getting a bill shock doubling their price or whatever else is happening. When in reality, you don’t actually need to do that. If you’re just optimizing four new incoming users, assuming you haven’t saturated the market and you’re doing to have new incoming users, you can learn so much from existing and future customers on pricing that allows you to change and find that best package. And the changes that we did over the years were, I guess you could say, are multi-faceted. I mean we’ve tried different packages. We played with what gets included in packages. We played with various ways of doing add-ons. We actually used add-ons as a way to test the pricing. As in, here’s what you get with this one, but you can buy these extra features, which actually was just helping us to represent these newer, bigger packages that were available.

And the pricing has always gone up as the value of the product has gone up. I mean that first version of ProdPad that we put out there was a much simpler version of what we have today. And therefore, the pricing of 25 was under-priced, but it wasn’t massively.

Whereas today, our pricing is a lot closer to what it probably should be based on the fact that we’ve added in so much more, which helps justify having different price packages. But what we’re able to do is as we added new functionality was still be able to cater to some of the people who had still simple needs by having different packages. And I think you knocked on that with the term “value-based pricing”. And that’s what we’re aiming to do.

Andrew:
Yeah. And the thing I think as well that’s probably interesting to hear is you mentioned that quite a lot of tests being run and typically I think companies … I mean there’s one of two options. You go with the pre-packaged solution or you try and build your own pricing and packaging. What route did you take and why?

Janna:
So our packaging or pricing is based on pre-set packages that can be customized to a certain degree. The main things that change from package to package is the level of functionality because of certain pieces of functionality that are actually only useful to companies who need them are indicative of companies who have much larger portfolios or much larger teams, advanced segmentation, and things like that. Whereas, the other piece of that is the number of users who are involved. And number of users in an account is a really interesting one in terms of a value driver.

Some companies charge for every user. Other companies charge per package and we’ve got sort of a blended one where we charge for certain types of users, but other users are free. And that’s because in the ProdPad world and product management world it’s often the product managers and the people who are wearing the product manager type of hat who are getting the most value and need to be able to do things like edit the roadmap or send things to development. They’re the ones who are getting the most value from it, but the entire package as a whole becomes more valuable if you’re able to invite your team members.

But realistically, someone isn’t going to pay the same amount for let’s say a support rep to access ProdPad as they might pay for the product manager to have access. So instead of charging a flat fee of let’s say ten dollars per user and that’s what it cost you to add everyone in your account, we charge for the people that are going to get the most value out of it and then allow you to have unlimited number of reviewers.

Cause at the end of the day if you’ve got 300 people in your company, you don’t have 300 product managers. You certainly don’t want 300 people editing your roadmap, but you do want the input of those 300 people and so you’ve got different levels of value that you’re adding to the different types of users.

Andrew:
That’s very interesting and, I think, a really great way to break it down. So you know you’re charging for those that are getting the most value, but you’re making sure that the rest of the company will still be able to extract the value from the tool.

Janna:
Yeah.

Andrew:
Sorry.

Janna:
And a lot of that also maps quite nicely to cost basis as well. So we don’t charge based on a cost plus type thing. We do charge based on value, but there are certain things that do map nicely to that. Like for example, we know that it costs significantly more to maintain and support an account that has, let’s say, Microsoft Active Directory Integration, but it does for somebody who just uses Google SSO, for example, so the accounts that include ADFS cost more and start at a higher price point than the ones that include more simple functionality.

Same thing with we support Jira for our more basic packages, but if you want to use something like TFS you have to be on one of our higher level package. And part of that is simply because it takes so much more effort to get somebody set up and get them running because those tools are just simply more complex. They’ve got more complex needs.

Andrew:
Yeah. So it does definitely sound like you’ve done a lot of work around this and tested a lot of different things. When you go about the tests themselves, you mentioned as well like grandfathering and I think it’s actually Ran Fishskin that mentioned increasing processes is one of the best ways to increase loyalty and I think that comes with grandfathering existing customers, but going forward for the new customers, when you run these tests, how do you go about doing them? Is it rolling out? Is it A/B testing or is just okay, let’s run this for a cohort? What is your typical process when doing pricing tests?

Janna:
We’ve attempted to, for the most part, just run them per cohort, but one thing that we realized we do have the capability of doing is changing the pricing on the public facing website before we changed the pricing within the web app, itself. And the reasoning behind that is let’s say I decide that we wanted to 10x our price. I could go into our pricing page and add zeros to everything that’s sitting on there. And then, I could look at the traffic and find out did fewer people actually start trials or did the same amount of people start trials or hey, maybe even more people started trials.

Now, some of those people might go in and see it says 500 dollars in the public facing website, but only 50 dollars in the app itself. If they go in and sign up with that 50 dollars, so be it. But the fact that we’ve now seen a whole cohort of people and this cohort might just be a week or two, this whole cohort of people go in and see this higher pricing allows us to find out as to whether it’s going to immediately put people off or whether it’s going to be something we’re okay to test with. If it passes that test and people still are happy to start trials with us even though they can see the pricing is really high, then we can change it in the app and go from there.

And the beauty of that is that to change the pricing in the website … I mean I could do so right now. It’s a WordPress page that I could go in and edit if I wanted to and check out how that works. Changing it in the app itself takes a few more steps cause you have to actually hook that up with your payment processing and make sure everything is lined up and is tested within the bounds of the app itself. But for the most part, allows us to test things before we make any sort of serious changes that we wouldn’t be able to go back on.

Andrew:
That’s all very interesting right. And you basically, as well, then just having a pre-screening and making sure you’re not hurting conversion as well before you make these changes ahead of time.

Janna:
That’s exactly right. Yeah. And we also make sure that we have conversations around it. We can run surveys with existing and with new leads with existing customers as well. We can ask them, in terms of hey, we know that you’re paying 300 dollars a month. We’re not going to change that, but we would like to have a conversation with you and find out what are you paying for other packages in similar spaces and what is this worth to you.

And as soon as they know that they’re not going to be penalized by having their price raised, they start giving much more honest answers. Going, well, actually yeah, I think I am getting a good deal. I would pay 500 a month. Oh, that’s great. We’ll try to get 500 a month off the next person who joins, but you get to stay where you are.

Andrew:
Yeah, and so you’re constantly doing this sort of interview style and I understand you’re pricing every time you’re making and running your experiments.

Janna:
Yeah, and some of them are just ad hoc conversations. We’re regularly talking to our customers and finding out how they’re getting on with things. Simply asking them, “Do you feel like you’re getting value out of this?” is a great question to ask because if they say that they’re not, then this becomes a turn prevention conversation and less about new pricing conversation. Both are hugely valuable.

Andrew:
So you’re killing two birds with one stone?

Janna:
Yeah.

Andrew:
That’s great. Yeah, so then, the next thing, as well, I was interested is you mentioned again, upsells and getting your existing customers to pay you more being one of the main ways that you got to negative churn.

What was some of the things that you felt that you did that really impacted being able to upsell and increase MRR from existing customers.

Janna:
So some of the key things, we’re just making it more obvious that you could, in fact, add things to your package and making it easier to understand that there are levels of functionality above what you have already.

So in previous versions of the app, the only place that you’d actually see the functionality available in a higher level package would be to go to the actual pricing or subscription page and to look at those details and make the decision there. Whereas, in the current version of the app we have various places that if you’re using one piece functionality, but you’re looking for something more advance, you’ll actually have that little notice within the app that you can say well actually if you want to try the advance package, here’s where you could get access to it. So the call to action, the option to upgrade is within the app, within the flow of things that they’re doing. So it’s catching them when they’re actually seeing and watching to see that value within the app.

The other thing that makes a big difference is having packages that people can start off and allowing them to go from there. So we actually do have a version of Prodpad that’s available for 20 dollar per year and it’s a single user, single product, very basic version of ProdPad that allows you to do the ideal management and basic road-mapping, but doesn’t’ have the levels of complexity or advanced integrations or anything like that that you’d need if you were using it with a entire team, but this simple version is small enough that any product manager could put their personal credit card behind it and start off there.

And at that point in time, they’re a customer just like any others except they’re a low value customer, but they’re a great opportunity for upsell. And so with hundreds of these customers now, it’s easy enough to reach out to them and say, “Hey, you know what you’re using this for your own personal use, is it time you started sharing it with your team and getting them involved. If you want to switch this open to your corporate company credit card and upgrade to one of our main packages”, and those are all things that help you with expansion MRR and our expansion monthly recurring revenue.

Andrew:
Excellent. Yeah, and I really like, as well, that you’ve taken that approach as an individual. I think it’s something that you see quite often as well, that’s not only an individual using it for their purposes, but sometimes somebody within an organization, once you test out a project, it has a way to do it before actually having to bring back to the team and rolling it out. It’s a nice little bridge and stepping stone there.

And yeah, talking about bridges and stepping stones, I think one of the most interesting stories I’ve read, in terms of onboarding and getting people set up actually came from yourself in a blog post that you wrote out how you use trials in your onboarding and you definitely took a unique approach to it. It’s sort of interesting and maybe you want to walk us through when it came to onboarding what sort of initiatives you ran and particularly how you impacted trials.

Janna:
Yeah, sure. And this is actually a story that came out of us focusing on one particular metric because we looked at all the different things that we could improve within the app. We could get more customers visiting our website, more of those visitors signing up and starting trials. We could get more people who are existing customers to pay us more, but we actually realized that if we were able to increase the conversion rate of people who started trials, get more of those to convert to paying customers that would make the biggest difference to our bottom line.

And so that is going back almost a couple years now when we were looking at these numbers and realized that if we’ve changed that one number it can entirely change our cash flow within the business. So we stopped everything and focused on that onboarding conversion rate and out of that we actually tried a whole bunch of different experiments, many of which failed. They weren’t good ideas, but the things that we learned that did work was actually changing the trial time.

So it wasn’t necessarily changing the things that they do with the trial, but it was changing how long they had for the trial. And this came out of a piece of analysis that we did, which was we took a look at all the activities, all the actions that users were doing in their first 30 days.

So you sign up for ProdPad and in those first 30 days, you might add your first product, you might add something to a roadmap, you might create some new ideas, you might send something to Jira, whatever it was, we talked all these activities and we played them back to figure out which of these activities were most indicative of your actually signing up. And we were able to tell with 85% certainty by day nine what company was going to sign up or not. And we realized that we knew by day nine who was going to sign up or not, why did these companies have another 21 days in their trial, as a night of full 30 days of trial time in order to find out if it works. All things indicated that they knew by day nine.

So what we did, we actually shortened the trial time. And what we were trying to do there was to figure out that we had a shorter trial time, could we get more people through the trial faster and therefore, more certainty money in our bank faster. And what it actually did, it shortened the amount of time it took for people to pay us, but it also increased our conversion rate so as soon as we shortened it to 14 days, the new cohort of users ended up using ProdPad more actively because they had less time. They didn’t think they had 21 days or 30 days.

Andrew:
Created urgency.

Janna:
Yeah, created that urgency. And so people actually started using it more and therefore, there were more people who were willing to pay us by day 14 when the trial ended.

As we started seeing those numbers going up, but we also did start getting a lot of messages from people who said, “Why is your trial only 14 days? That’s not enough time. Could I have more trial time?” Which was fine by us. We were happy to extend somebody’s trial because honestly it’s easier to get an existing company who’s already eager enough to try the first time and the second time to sign up and pay, then it is to say no to them and alienate them and hopefully get a new customer who is able to pay within the 14 days.

But at the end of the day, the 14 days is arbitrary. It’s just there to have an end date on it. If somebody was going to take … I don’t know 18 days or 30 days to get the company credit card, that’s fine. We can totally understand that. So we have a lot of people asking for extra trial time and what we actually realized what trial time was something we could offer them as an incentive to get them to use the app more. Because it wasn’t the act of shortening the trail time that added the value to get people to sign up more, it was the fact that they did more actions. They took more key actions within the app because they thought that they had less time. And so we looked back at those key actions and realized, well if we could get more people to do those key actions, in theory that would increase our conversion rates even more.

And so this is where this one experiment came in, which was to take that trial time and shorten it in half again. So we now shortened it to a seven days trial, but we created a mechanism that allowed people to link their key activities to the benefit of getting extra trial time. So we had people signing up. You come into ProdPad, you create an account, and it’s say, “Welcome, tell us the name of your first product”. And they’d tell us the name of their product and as soon as they did so, the app itself would give them a reward and say, “Hey, you’ve just earned one day free trial time”. You now have eight days left. Tell us an idea that you’d like to add to ProdPad and they’d enter an idea and it’d give two days. Do something more complex like setting up a Jira integration or a Sack integration, you’d unlock four days extra trial time. We even linked it to things that were more beneficial to us than the customer. One key example is entering your credit card. Obviously we’d like our customers to, whoever likes ProdPad in their trial, to enter their credit card. And the sooner they enter their credit card, the more likely they are to stick around. And so we actually reward the user by, if you enter your credit card before the trial runs out, you get four days extra or five days extra in your trial, at which point we saw people going through. We gave them a little checklist of all the things they could do and the number of days they’d get for each and we would see people going through and collecting all of these things, checking off all these things.

And really what it was doing was showing them that all this functionality existed. So it’s giving them that incentive to explore around the app and find these unlock triggers, but each time they did that they also went through a micro onboarding flow for that space. So they’d learn about why you’d integrate with Jira or Slack or why you’d enter feedback that you heard from a customer enter ProdPad or why you’d create or how you’d create a roadmap.

And so at the end of the day, it became something that taught them how to use it just by act of giving them rewards for doing so. And so the end result of this particular experiment was a quadrupling of our conversion rate from free trials to paid accounts just by changing the trial time. And essentially at that point of time we hadn’t changed a single piece of functionality except for how the app presented itself in those first 30 days, those first few days of usage.

Andrew:
Yeah, and so in a way you’ve gamified the onboarding experience and you’ve incentivized users to actually use that more and you provide rewards at the end of it. What was the inspiration behind the idea and where did it come from?

Janna:
So there are a few points of inspiration. One is you’ve probably seen this pattern in a whole bunch of different places like Slack, for example. When you use Slack you earn credits that you can then spend on Slack. We liked that idea, but we didn’t have a credit system. We didn’t really want to muck about with our billing system and add this whole credit system so we didn’t do that. Companies like Dropbox, if you invite friends or do key actions like install Dropbox on your desktop, I believe you still do this. I’m not sure actually, but you used to be able to get extra storage space so you can unlock and extra gig or whatever it was of space within Dropbox for free. And these were all things that yeah, they were giving you the storage space, but in reality they knew that if you did these key actions, you’d probably be more likely to actually pay for it in the end so it created things that were more sticky.

Another one was a company called UXPin who gave you extra trial time if you shared the app. As in, if you told somebody on Twitter about it or posted it to Facebook, which I thought was quite cool as well. But I’ve never seen anybody trade key actions within the app, as in things that you’d need to do in order to learn how to do it, like what Slack and Dropbox did, but trading that in exchange for extra trial time.

Andrew:
Yeah. And it really is interesting though, as well, that you said that you already had those existing customers coming to you and saying this is just not enough time to use the product, well then, here’s the solution. Use the product and you get more time to use it so.

Janna:
Yep, exactly. What we found is even know if your trial expires, you’re able to go into the app itself and push press a button to extend the trial because at the end of the day if you haven’t been able to convince your boss to give over the credit card and you just use that extra day to go in and check something and invite a colleague or whatever else, we’d rather you have the time to do that and that you feel comfortable and you love the app before you have to put the credit card then feeling like you’re having to put it in just to gain access to your trial stuff only to churn away later.

And that’s actually a reality of a lot of assess tools, particularly business-facing ones. Because often times you’ll find that people are still in trial mode in the first three to six months, even though in your books they look like a paying customer and if they leave and if they stop paying you that’s considered turn. Reality is is that you’ll often still have people who are paying you a hundred dollars a month and not really thinking twice about it because it’s not their money. It’s kind of their boss’s money. It’s the company’s money and they’re allowed to do a few months trial and if it doesn’t stick, then they cancel it.

And so you’ll often find that your turn rate is high in the first few months, particularly if you’re signing up people who aren’t seeing the value in the first place. And this often happens with companies who force the end of your trial, as in they force you to pay for it before you’re actually seeing that value.

Whereas, our methodology, our thinking around it was to make sure that they’re seeing the value and that they really love it before we force them to pay for it. And that way we don’t get that three month turn of people going, “Oh, well I was trying to get it all in my company, but it didn’t actually work”.

Andrew:
Yeah, it’s definitely, I think, the way forward in making sure and it makes a lot of sense, what you’re saying as well as people come in, they test out a tool, it’s not their money, and they end up turning later. How long is the period that you allow them to continue using it though? So if they extend a trial, what is sort of the timeframe that you give them to extend it?

Janna:
I probably shouldn’t say this. Technically, there’s actually not anything stopping somebody from doing it indefinitely, except for the fact that we do have a little trigger that tells us if somebody’s click it too many times. And at that point in time, we’ll then follow up with them going hey, buddy old pal, I see you’ve extended for the fifth time. Is there anything we can help you with that? And at that point in time, we’ll have a conversation with them and find out why they need to constantly do it.

We actually haven’t had anybody trying to abuse it. We’ve reached out to some people going, “Hey, what’s up? Is there any reason you’re not paying for it and you’re just constantly extending your trial?” But it’s also … While they could theoretically extend it forever, we’ll be getting into contact with people and making sure that they’re not stuck in that loop, but also it’s an annoying enough trigger in that it would lock them out and it would still have that trial banner at the top. So anybody in that account would know that the company’s not paying for it and they’d kind of look a bit cheap if they try to do so.

So we’ve kind of given the benefit of the doubt going go nuts. Keep coming back if you so wish and we’ll have the conversation when the time comes. If we see you’re getting true value out of it. You’re using it on a daily basis, we’ll ask for money. But more often than not, if somebody’s doing that, it’s because they’re actually honestly stuck on something and needed us to reach out and find out how we could help them out.

Andrew:
Yeah, definitely. It’s interesting and if someone’s going through that effort, they’re obviously somebody that wants to be using the tool as well so you want to make you’re looking after and nurturing them.

Janna:
Yes, exactly.

Andrew:
You mentioned something, as well, in the beginning around the non-days and you went out and you were able to predict with 85% certainty that they would end up becoming customers. Maybe can you just talk us through how you went about getting to that number and how you figured out that it was 85% with the non-days.

Janna:
Sure. Your listeners will be disappointed. I wish I could tell you about some magic tool or process. This was done with a spreadsheet and exports of an autotomized data that we just trolled through. My co-founder is very data analytics centric and so spent the time. And it was the type of analysis that took him a good month of looking at it and figuring out different ways of playing with it. And so it wasn’t an exact science, but it was enough to understand those types of patterns and make some decisions based on it.

Andrew:
Okay. So you’re looking at basically an export of your database and you’re just trying to understand what the usage is for your accounts. Was it using … obviously like something to query the database or you’re not sure?

Janna:
I’m guessing that we pulled a chunk of data and added it to a spreadsheet and then used that to dig through it. To be honest, I’m not sure, but it certainly wasn’t any of these … There’s all these new tools for figuring this stuff out now. We certainly weren’t using any of those. This predates any of that.

Andrew:
Very cool. But definitely, it sounds like it’s had a big impact in the way that you onboard customers and definitely worth the time to dive in and understand that a bit more maybe for follow-up call.

Janna:
Yeah, definitely and it’s informed how we’re building out our analytics systems for now cause obviously our onboarding data is much more complex now cause you don’t just have 30 days to look at. We have any number of days. It can be anywhere from seven to 45 days before somebody actually pays. So we’re using what we’ve learned from the previous version, iteration of this to inform how we’re going to measure customers going forward and further improve this onboarding flow.

Andrew:
Nice. And then, yes, talking yes, actually, about metrics and the way you’re rolling things out, what are using at the moment for your metrics and do you have sort of any key product metrics that you think are critical for you to be tracking, as in what is the definition of the account or?

Janna:
Yeah, we use a mixture of different tools and we’re actually influx right now making a change in tools. So perhaps next time we talk I can walk you through what we set up and walk you through what worked and didn’t work.

In terms of what it is that we are tracking, really important to us is finding out what makes a successful company, as in what makes somebody who sticks around for three years, what did they do differently in their first six months that somebody else hasn’t done, what results in somebody turning at one point versus another, what kind of usage of features are we having, as in were people using the roadmap tool versus the feedback tool or people use the feedback tool more successful or less successful than their roadmap tool.

So these are the types of questions that we’re asking and it’s very much looking at how people are using the tool and what kind of value they’re getting out of that and how that then, translates into value for us, as in the customer sticks around for a long time.

When we actually look at our high-level metrics, we don’t just gun for revenue in the door. That’s not our end goal. One of the key objectives or metrics that we measure is the revenue that we get from customers who’ve been with us for 12 months or more. And what that means is that when somebody signs up, if somebody signs up today we celebrate that. We’re like yay, another hundred bucks in the system. That’s great, but in reality, what we’re actually looking for is the success rate of people who signed up one year ago. How many of those just renewed for 12 months? How many people have now paid us 12 times or paid us for an annual package and has renewed that and has come back cause they found it so valuable? How do we increase that number?

And what that does is make sure that the entire team is focused on long-term sustainable revenue. If we just set our revenue goals to things like get more revenue that could lead to our marketing team trying to get in quick wins, but not necessarily people to stick around. Our sales team using high pressure tactics to get people to buy now, not even acknowledging that this person might cancel in six months times cause they were never a good fit in the first place. It leads to our product marketing.

What’s happening on the website matching really closely what’s happening on the app because otherwise if somebody signs up based on what they’ve read on the website, but the app itself lets them down, they’re going to churn. So we make sure that we’re focusing our entire team around the concept of things that will get people to stick around months longer or until that 12 months or beyond mark.

Andrew:
Yeah, absolutely. It’s a, I think, excellent way of looking at metrics, as well, and really focusing the company around a metric that’s more geared to retention as opposed to the short-term wins that potentially can hurt you in the long run.

So just wrapping up a little bit, Janna, maybe you want to run us through and obviously we didn’t start with this, but let the audience know a little bit about ProdPad. I think they’ve got a bit of an idea by now about what it is you do. What’s the company size at the moment? Just the general sort of updates on what you’re up to.

Janna:
Sure, absolutely. So ProdPad is a tool that was built by myself and my co-founder when we were both product managers ourselves working for a couple different startups leading product for those companies and we realized that we needed tools to help us do our own jobs.

Doing things like gathering the ideas and the insights from our customers and from experiments we’re running and from our teams and mapping that out and creating a roadmap that we can share with our board, with our investors, with our customers, with our team to make sure everyone knows where it is we are now and what we’re planning for in the longer term.

And so we built ProdPad as a tool to help us do that job, but nowadays it’s used by more than a thousand companies around the world, a thousand paying companies around the world and tens of thousands of product people amongst those companies.

We’re a team of 15 based in the UK and across Europe. We’re completely bootstrapped. We never raised funding and we’re profitable and growing.

Andrew:
Oh, somebody will. And when did you guys get started?

Janna:
So this started off as a little project that we started in 2010. Again, this is back when we were both product managers ourselves. We had no intentions of quitting our jobs. We were busy building products for these companies.

This, originally, was just a tool that we used internally only to help us do our own jobs, but it was in 2012 that we realized that what we had was actually worth getting out there so started sharing with some fellow product managers. We spent a few months re-writing parts of it and getting it ready a launch as commercially available asses product. So we launched it in February of 2013.

So coming up six years now and we actually made this aim of getting our first paying customer within the first month. We didn’t want to create a business that had to depend on external funding. We decided to make it customer funded, make something that people want to pay for that adds value that they will pay for and grow the business that way. And so we did end up having our first paying customer within that month and it’s just been growing since then.

Andrew:
That’s fantastic. So any plans for the future, next 12 months? Obviously it’s January now at the moment. Is there anything exciting, things that we should be looking to ProdPad for?

Janna:
Oh, absolutely. Within the product team, itself, we launch new code twice a week. Every Tuesday and every Thursday there’s new releases. Some are big, some are small. So the product is constantly evolving. We’re constantly figuring out how people are using it and how they’re collecting feedback and turning that into insights and features that they end up building into their own products.

We are working more and more with third party companies who are integrations with us and so with any luck we’re able to turn this into a nice marketplace for people to add on stuff to their ProdPad and a lot more. We’re looking at growing the team. We’re hiring PHP developers and marketeers, and potentially down the line this year sales people so we’re going to keep it going that way. Other major development that just came out was an option for an on-premise version of ProdPad so any of those companies who are highly security conscious.

We’ve ended up working with the likes of banks and government organizations and other companies like that. We’ve now got a version of ProdPad that caters to them as well.

Andrew:
Wow. So it sounds like you’ve definitely got a lot going on this year. You’ve also shared a lot with us today. I think there’s a lot for our readers to take away. And yeah, thanks so much for joining. It’s been a fantastic having you.

Janna:
Of course, yeah. It’s been great chatting with you.

Andrew:
Good luck with you, yeah.

Janna:
Thank you.

Andrew:
Yeah, thanks Janna.

Janna:
All right. Thank you everybody. Take care.

Andrew:
Ciao.