Twice as happy customers means half the marketing spend
candyjapan.com
candyjapan.com
What I love, that other's here seem to grumble about, is that he's not using any specific terminolgy. He doesn't mention 'churn', he doesn't mention 'geometric' series, he only has one '=' in the whole text.
You can print out this article (ignoring the python bit) take this down to your local baker/cafe/<insert non-tech business owner> that's full of stupid marketing billboards but sucks at customer service and show it to them. There's a good chance they'll understand.
Frankly I liked it because I could easily follow his logic without slowing my reading. There was parity between my understanding speed vs my reading speed.
Plus no-one here seems to be grumbling that he's wrong, just that they can say it in a different way.
It's fairly trivial to find out where I work during the day but we are representative of the recruitment industry and so much effort is put into attracting and sourcing candidates (generally via expensive job boards). Because the cost tends to be less visible on the ground, there is no realisation around the cost/benefit ratio when compared to keeping existing candidates happy and using them.
$250/mo on Yelp ads gets a few dozen eyeballs on the business.
$250 in free product every month to regular customers creates Fanatics who tell ever, and could possibly get just as many of their peers eyeballs with a FB/IG post about their experience.
A lot of people forget the basics because it's not being sold.
Marketing should be just as much about retention as it is about acquiring new customers (neither of which is advertising mind)
LTV = prospects * (conversion rate to paying) * (average price point) / churn
This makes a 5% increase in prospects, conversion rate, or price cause a 5% increase to LTV (and, eventually, to the enterprise value of the company). A 5% decrease in churn (measured against one's current churn rate, e.g., 5% -> 4.75%) has a slightly more than 5% impact to LTV / enterprise value.
So many decisions about running a SaaS company fall directly out of this equation. Competent SaaS operators memorize it or, for less mathematically oriented operators, can at least summarize the relationships implied.
The challenge is measuring duration (retention length) -- especially early on when campaigns are typically run single threaded and have an outsized impact on LTV of individual cohorts. I.e. My company is 18 months old - what's my LTV?
One approach is factoring in the period-churn-rate (if measuring MRR then considering monthly churn). But again, modeling isn't always super defensible.
Source: Run a data science company and we work on a lot of customer lifecycle modeling projects with companies much younger than yours.
I'm interesting in how you've used this to model churn. Is there a blog post or resource you recommend to learn more about this?
Given a constant influx of potential customers at a known conversion rate, along with a known churn rate of existing customers, you can find an exact dollar figure that you will eventually plateau at.
It sucks. Especially when you're starting out because the "In" side of the equation is small and there's not much you can do about it.
Fortunately, as the article points out, there are a few knobs you can tweak. Churn is a nice one, since all it takes is a good product. Conversion is harder, because it involves dark magic like sales and psychology and web design skills.
Once you get it figured out, though, there's another formula you can use to determine how much you're allowed to spend to pour one new user into the top of your Trial funnel. If you can get that up to a level that justifies advertising, you can open the valve as far as your budget allows and start moving that plateau point upwards.
EDIT: I've been writing about this stuff lately, if anybody else likes geeking out on it:
http://www.expatsoftware.com/Articles/things-worth-knowing-a...
The reason I cancelled with Candy Japan was that I found it a lot of money for candy. Not so much a lot of money for the service. Also, candy is just unhealthy, so I am probably better of spending that amount on fruit and vegetables.
Overall the candy selection is what would make me choose Candy Japan over a competitor if I would ever choose a candy service again or recommend one to friends.
"Want to send this months shipment as a gift to someone else? Click here to change this months delivery address."
https://econsultancy.com/blog/6784-graze-a-model-for-network...
[1]: https://fman.io
I'm curious too - I noticed that the Linux version is 20MB, seems relatively heavy, and I'm wondering why so much larger than the Win version?
Most of the enhancement requests seem to be things [my preferred twin-pane fm] Krusader does (nix only I think, though you can put KDE over Windows it's not straightforward [or wasn't last I tried]). On Windows in the past I've used Total Commander.
FWIW on the download page I think I'd ditch the link to "don't be a free user" and just put something like "please purchase a license or donate to allow us to make fman even better for you.". The linked page is messy and doesn't give a clear message to those not familiar with the issues at hand IMO.
In the onboarding you stress to use the keyboard but the dialogs have to be next/close with the mouse; I hit enter assuming they were defaulted and it instead changed directory.
Also, why ctrl+p and not something like <spacebar> or just p? or D and C for directory and command? Is that following a pattern from somewhere else, isn't ctrl+p usually print. Ctrl+l which is browser default for entering URL would make more sense to me.
Last thing, ctrl+shift+p dialog puts too much space between command and shortcut making it a bit hard to track; if you want to keep the same width as the directory pop-up I'd recommend centre aligning (right align left column, and vice-versa).
Installing plugins one at a time gets slow quickly, especially as almost all functions appear to be plugins. On restarting it says "press A button" it means "click A button on screen", I pressed <A> and nothing happened.
HTH. For me it's too minimal at install and I don't like dark backgrounds. Good job though: it's fast and minimal in line with your "zen".
I don't think 20 MB is heavy and don't think it makes sense to spend time on reducing this size. It's much more important for the project to focus on eg. better onboarding and/or still missing basic features.
The Win version is an online installer. That's why it's 1 MB.
> What in particular do you see as most innovative in fman
Integration of features from Sublime Text, like Ctrl+P for quickly jumping to directories or the Command Palette (Ctrl+Shift+P) for quickly discovering and invoking all features.
> I hit enter assuming they were defaulted and it instead changed directory.
That's very good feedback. You're right I should change this. Thanks!
> Also, why ctrl+p
That's the shortcut which Sublime Text uses.
> Installing plugins one at a time gets slow quickly
Sure but you don't have to do it very often. You're right it would be useful to be able to install several plugins at once; But there are bigger fish to fry atm.
> On restarting it says "press A button" [...] I pressed <A> and nothing happened.
It purposely requires you to use the mouse to make the nag screen a little more annoying, so you will get a license [1]
Thanks for the feedback, M
[1]: https://fman.io/buy
As an example, one new customer wanted a general "notes" page for each employee. Not hard to build, other customers might find it useful and they now have c. 250 employees on their account. Moving them to a different service is not simple.
Interestingly, my longest-serving customer is also one of my first. They've been with me nearly six years. My LTV averages around £550 because of that stickiness.
You're right I should focus on retention.
Your existing users can provide you with great insight on what value you're bringing to them. You're getting requests for 1000s of features but which ones are the ones that really matter? Which one can make the most impact at the current moment? It might be a case of just prioritizing the top 20 and validate their words before building.
Also an interesting point. You're right. Maybe they are just curious. But even then, I might still try to convert them.
My users can vote on features [1]. I know what the top 20 are. The problem is, the highest ones are difficult to implement. But as I said, I believe I first need to (still) improve onboarding.
This makes a huge difference in driving them to actively use it and upgrade later.
Sequence:
1. Welcome email.
2 Educate them about the value of one major feature with screenshot(s) (what makes it better/easier than similar products).
3. Educate them about the value of another major feature with screenshot(s).
4. (Specific to your product since tons of existing users request features): Send an email listing the top 3 most frequently requested features and ask them to vote for (click on) one. This email increases user investment in your product and subtly reminds them about it.
5. Ask them to upgrade (buy a licence in your case).
You can find templates of these emails here: http://www.artofemails.com/onboarding
Tools you can use to send this sequence: ActiveCampaign, ConvertKit, MailerLite
Don't worry about possibly annoying some users with the onboarding sequence. The increase in number of users you'll convert will greatly outweigh the number you may potentially annoy (and they can 1-click unsubscribe anyway).
Thanks!
Steady state implies Leavers = Joiners.
If 100 people join each month then you'll have steady state when there are 100 leavers, i.e. when 50% of N is 100. N * 50% = 100 solves to N = 200.
In general with X% attrition and Y people joining you'll have a steady number of subscribers N using the formula
N * (1 - X) + Y = N
Which can be rearranged to N * X = Y.
Serious question: Is it simply a strong math phobia, or have people neglected the skill for so long that they've actually forgotten middle school level maths?
Sometimes half-assed is ok, if it's the the right half of the ass.[1] The wrong half becomes yet another type of technical debt to be refactored "someday".
(this is not an excuse to ignore algebra or blindly assume the easiest/most-fun method is correct/useful/sane)
[1] https://twitter.com/jimweirich/status/29662011323326464 via https://www.youtube.com/watch?v=sCZJblyT_XM
Of course there are a lot of softer tricks (like checking limiting cases) which would boost people's confidence, but for some reason this is only really taught in college level physics.
In (good) excel, most formulas you write have a clear input => output relationship. Solving a system of equations (no matter how simple) breaks this relationship down. I suspect a similar thing happens when programming.
In Ancient Egypt for example when they needed to explain things like the Pythagorean theorem they would give examples, because there was no concept of abstract variables yet. I think this is similar.
In the same way, many people are comfortable working with vectors, transforming them with matrices etc but they have never been taught to think of transforms in an abstract way. So if they want to check if a certain matrix actually performs the transformation they want, they apply it to a bunch of random vectors to see if it's reasonable instead of just checking what it does to the base vectors, because they have no real concept of linear transforms, and only vague ideas about dimensionality and degrees of freedom.
To some extent it IS phobia, because if you just want to rotate a vector 90 degrees you don't really need concepts of orthonormal transformations so you might be reluctant to look at it that way, but if on the other hand abstract algebra is very natural then the abstraction is trivial to do, it just makes things easier.
http://eu.wiley.com/WileyCDA/WileyTitle/productCd-0471433349...
It's explicitly about shifting your thinking to a more abstract level. It's great if already have a working knowledge of matrices.
If you're ready to get very serious with mathematics, I like Algebra by Mac Lane and Birkhoff. (Note that this is a different book from A Survey of Modern Algebra by the same authors, which I'm sure is okay, but... a different book.)
If you're not ready to get very serious with mathematics... well, then why do you want to learn algebra?
PS I agree about Mac Lane, he's great
Well, I agree, but life is short. Why learn algebra rather than complex analysis or probability theory or functional analysis or differential geometry or mathematical logic or general relativity or quantum mechanics or any one of dozens of other topics from physics or mathematics that will almost surely seem more interesting and fun to a non-mathematician? (Not to mention non-mathematical topics...)
I agree there are tons of other things that people should study, like basic linguistics, relativity, quantum physics, optics etc. Geometry should be on top of the list, for as Plato said “let no one ignorant of geometry enter”.
But I don’t think time is an issue really, if you just spend an hour or so each evening reading you csn quickly get a basic understanding of lots of topics in not thst many years.
aka I found out that 500 is half of 1000.
I think it is tunnel-vision & familiarity: algebra requires different techniques than coding (API docs? REPL?)
I knew my code would give me the right answer and I lacked the confidence in math, where even if I did do it by hand, I would have written the code to check it. The less time-risk way won.
One bit of anecdata - I started using computers because I was terrible with maths and they did the numbers thing for me.
One could assume that "well if I keep on going my customer count will keep on going up... right?" This is showing that it won't.
Bonus pedantry: your proof just showed that _if_ there's a steady state, then that's the steady state. Turns out that you'll always get the steady state because of "maths" but if you replace 50% with 0% there's no fixed point.
I guess it's perhaps also worth pointing out then that the same equilibrium is reach from either side. If you start with a much higher volume of subscribers you'll reach the same equilibrium through attrition down to that number also.
You're summing a series of:
0.5^n * x
Y * X^(M - 1) < 1
so once
M > 1 - (ln Y / ln X)
Before my study of statistical distributions I once re-invented the Poisson distribution. It took one look of my physicist colleague to give everyone a good laugh. That was the moment I decided an economists needs more than linear models, the normal distribution and some non-parametric tests.
> Because of this fall-off, even if you run a subscription business forever, you will not have infinite customers. Instead you reach a steady-state number.
You should also factor in returning business as well as new business. eg I'm a very happy customer but since this is a luxury it is often the first thing I cancel whenever money gets tighter. For example when moving house or, most recently, when my wife gives birth to our new baby girl. However when finances stabilize again Candy Japan is often one of the first luxuries I re-subscribe to again.
I'd also like to take this opportunity to say thank you for providing such a great service. The extra effort you put in with regards to the emailed descriptions of the candy as well as the mixture of normal and alternative snacks make it an absolute delight receiving the box.
I develop a subscription service which launched in January and now has ~9,000 MAUs. This above metric accounts for ~10% of "new" subscribers each month, despite not yet making an effort (such as by sending reminder or "sorry" emails) to re-capture them.
The post does make a good point about retaining existing users, though.
I would like to add that we saw MAUs spike when redesigning the cancellation process to be more thankful and apologetic than spiteful. (Being a service for Japanese users, we included a little "thank you bow" animated character at the end of the process.)
One more point – our cancellations for the first days of the month often come close to outnumbering new users. We have concluded that the reason for this is that users 1. perform their financial housekeeping around this time, and 2. find a low-numbered charge date easier to remember.
Definitely. That's my monthly budget day. If I see some subscription I don't really need it'll get cancelled on budget day.
Even if you run the business for a million years,
you will still only have 200 members.
In other words: The past does not equal the future. If you look back on your business and see a churn rate of X%, you can expect a lower churn rate in the future. Because the "survivors" will have a lower churn rate then new customers.
In e-commerce, this effect often is pretty significant. I know multiple online-shops that make the majority of their business with long time customers. Even though over 50% of new customers drop out after the first month.
Stop forcing things down peoples throats. If you are making a great feature or product, it wil sell itself without a heavy hand. I've determined this is a way to tell who is struggling with innovation and who is leading the way.
You also have a transition from 'general population' to 'month 1' to represent new sign-ups.
That has the advantage that you can still find the stationary distribution (steady-state) of the chain without simulation and it doesn't treat churn as being the same for each subscriber age. (It still has it time-homogeneous for a given age of course).
So how does all this differ if you're looking at renewal from year before and renewals from all time ?
I often forget my pills and thus rely on lactose free products, e.g. Lactose free cappuccino... which by the way is much easier to get in Germany than in the states (for whatever reason)
I also think this is quite different since it's an order process, where the candy naturally stays at home except when you bring it somewhere, and then it's not too hard to remember to also bring some enzymes, versus randomly discovering an appealing lactose product when you're out.