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June 24, 2010 Lean Startup Circle Meeting

Lean Startup Circle

On June 24, 2010, I attended a Lean Startup Circle meeting held by Matthew Mamet and Matt Wiseley of EditMe. John Prendergast of BlueLeaf was the co-host.

The meeting began with John talking about what was essentially Lean 101. Lean Startup goes by the lean manufacturing principles of Toyota, whereby they attempt to minimize waste. Customer development is a sophisticated process whereby a product is developed but many companies don’t test what the people actually want.

The lean principle is: try to replace guesses with facts, so make decisions based upon metrics.

Pivoting and the Lean Startup Circle

Lean Startup Circle 2010Then the discussion turned to what pivoting is. In basketball, pivoting consists of the planting of one foot and turning the other one, so that one’s direction is slightly changed. The idea is similar for startups, e. g. you move to something new, by taking what you have and adjusting the direction ever so slightly. This is not a radical overhaul; it’s more like a small course correction.

Lean is not the same as bootstrapping (e. g. self-funding) but the two concepts tend to mesh together well.

Metrics and How They Tell the Tale

Then the program turned to EditMe’s experiences. EditMe started off small but eventually turned into (almost) all things to (almost) all people. Matt Wiseley became a Micro ISV, essentially a kind of one-man shop for developing the product. Feature after feature was released, and EditMe’s mission continued to become more and muddied.

The Gartner Hype Cycle was explained, so what happened was, EditMe more or less rode a wave of interest but was harmed when that crested wave fell into a trough. What to do?

They surveyed their customers. They were looking for size and for usage of their product. This is customer discovery. After all, who knows what customers want better than … customers?

A/B Testing

Next they went to A/B testing. The idea was to use Google Website Optimizer in order to determine which version(s) of their website would create the most conversion. A conversion happened when a visitor signed up for a free trial of their software. John noted that, in a future meetup of the Lean Startup Circle, David Cancel of Performable will be talking about why his company performs A/B testing.

Testing informed EditMe that certain website changes were winners. For example, adding customer logos to their home page added an air of validation from third parties. They also addressed some support questions by rewording their instructions, and headed some signup inquiries off at the pass by making their signup process considerably shorter (only four screens!).

Details

Title copy, bolding copy and perfecting calls to action all produced big results. One tool they used was to check the Google Overlay to see where their users were clicking (or not). Big changes are preferable to small ones as results are clearer and emerge far more quickly. They did one week of testing, and then a follow up test for the purposes of confirming results. There was a 95% confidence interval.

There was an abundance of data from the testing. It needed to be understood. They created a database to check the following steps.

Acquisition

Are people coming to the site? Google Analytics measured this.

Activation

Are people converting to trial users? This was another area where Google Analytics was the measuring stick.

Retention

EditMe used their own data. So, it was to show whether trial users became paid users after the expiration of a 30-day trial period.

Referral

Were customers telling their friends? EditMe used its own data for this. And,

Revenue

This information came from EditMe’s own financials.

Proof

EditMe was able to prove that conversions were rising. One idea that came out of testing was to see a marked difference between people who converted to paying customers and those who didn’t, in terms of their use of the product. Therefore, EditMe started to send out little reminders using Mail Chimp.

They used autoresponders, custom events and drip campaigns, and were able to tie their information directly into mailings. Hence users who had not yet converted to paying customers now get a reminder email every week. So this tells them how complete their account is.

This directly attaches to the differentials between converting users and nonconverters. E. g. if converting users have 12 users on site, and prospect only has eight users, the prospect’s customized email reminder tells them they need four more users on site to make their profile more “complete”.

Lean Startup Circle Methodologies FTW

EditMe’s experience with lean methodologies and (pardon the pun) leaning more on analytics to drive decision-making, showed that it was a possible to, in a somewhat scientific manner, get a better understanding of –

  • Who would like their product;
  • Where to find them;
  • How to encourage them to try the product, and;
  • How to help them understand how to use the product.

Lean Startup Circle Takeaways

And isn’t a fuller and richer understanding of customers a huge component of what social media marketing is all about? This was a very thoughtful discussion and there are two recommended readings: Four Steps to the Epiphany and E-Myth. They have gone onto my Amazon Wish List.

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