Information Technology Dark Side

Struggles of a Self-Taught Coder

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Puzzling About Conversion Rates

December 1st, 2011 · No Comments

From Anecdotal to Evidential
I’ve been telling myself a story about TroopTrack for the past year or so – that the conversion rate is getting better. I wasn’t really sure that was the case, but that’s how it seemed based on my general sense of signups and conversions to paying customers. I don’t like telling myself stories without checking on myself, so I did. I wrote some queries, pulled some numbers, made a spreadsheet and started making charts.

Am I Totally Clueless?
The story I was telling myself revolved around how I perceived the quality of the code base. At launch in 2009 TroopTrack was buggy. It crashed all the time, and I didn’t even know about it because I didn’t have exceptional set up yet. Late in the year I added exceptional, discovered how crappy TroopTrack was (most days I would get 30+ emails from exceptional), and went on a bug hunt that lasted through most of 2010. I wasn’t just fixing 500’s, I was also fixing functional issues reported by users. In 2011, I started feeling more confident in the application’s stability and wanted to start getting the word out somehow. I also added some new features that were requested by users throughout the year and focused my efforts on responding to support tickets. In my mind, I thought conversion rates were getting better as a result of these efforts.

My first chart was no help at validating this story. At all.

TroopTrack Conversion Rate

Quarterly Conversion Rate

I saw this chart and my heart sunk. I couldn’t see any evidence that, aside from a couple of awesome quarters, conversion rates were going up overall. Sure, my conversion rate since the dawn of time had improved quite a bit, but I couldn’t see any trend by quarter.

What about the hockey stick?
Every entrepreneur wants to see a hockey stick in their growth chart. So I plotted out the number of paying customers over time, just to see how things were going. I fully expected to see a curve.

That's a straight line!


A different view
Clearly there was a lot of variability in my conversion rate at the quarterly level. What about year over year? That was my next chart.

Conversion Rate by Year

Okay, that’s better. At least on an annual basis, the conversion rate seems to be getting better.

Correlation or causation?
I think that last chart supports the story I was telling myself, that overall the conversion rate was getting better, but it made me think about the impact of good support on the conversion rate. The peaks in 2011 coincided with periods of high interaction between me and the user base. During those times, I was dutifully closing support tickets or rolling out new features accompanied with an email announcement. Were those activities impacting conversion rates? I think they were, and I’ve added some things to my how-to-turn-shoppers-into-customers list.

  • Customers who have a good experience with a support ticket during their trial have a higher likelihood of purchasing a subscription
  • Customers who see an improvement made during their trial period have a higher likelihood of purchasing a subscription

I think this means I need to roll out a new feature every month. Or at least tell my users about the progress I’ve made fixing bugs, etc. But there is a bigger lesson here, one that is reinforced by something else I’ve been doing in the fourth quarter of this year.

Customers who feel like they know me are most likely to purchase a subscription
Many of my customers start support tickets with my first name. They speak to me in familiar ways. Some of them call me on my cell phone. When I hurt my back early this year and fell behind on TroopTrack, several of them called to make sure I was okay. They feel like they know me, and I feel like I know them. These customers are very loyal and they are good advocates for my product.

In Q4 I’ve been calling every trial troop to see how things are going and to offer help. It can be hard to reach people – I leave a lot of messages. I don’t have numbers to prove this yet, but the conversion rate of the customers I am able to personally interact with feels much, much higher. So I’m going to keep calling them, and maybe I will hire someone to help me with this.

All charts lead to fantasies
You can’t collect numbers and make charts without thinking about the future. I’m kind of obsessed with 20,000 subscribers. That’s the million dollar mark. In terms of making the most impact on my lifestyle, 5000 subscribers is probably a more significant number. That’s the freedom mark.

So, assuming that I add 60% more troops than I did the year before then freedom comes in 2018 and $1,000,000 in revenue comes in 2021.
I came up with 60% fairly non-scientifically. I added 60-something new subscriptions in 2011. I feel comfortable that I can add at least 100 in 2012. That’s about a 60% acceleration.

Even though this is very, very speculative, it reinforces some very important things about this business of mine:

  • The lifetime value of a subscriber is high. My subscribers are ORGANIZATIONS. Once they pick a product, they tend to stick around. Personal efforts required to obtain a subscriber are worth it
  • Persistence and consistent improvement is critical
  • Building my business in a way that I can sustain my efforts for a decade is the key to making it

When you are looking at projected revenue growth and the hockey stick is 6 years away, you have to think about your commitment. For me, it’s easy. I accepted the long road two years ago. To me, six years is nothing. It’s the light at the end of a tunnel, except the tunnel isn’t dark, wet, or spooky. It’s fun, educational, and kind of inspiring. This makes six more years of working hard pretty easy to swallow. Like chocolate ice cream. With hot fudge. Whip cream. A cherry. And banana slices. I’m just sayin’.

I love being a bootstrap entrepreneur.

That said, I’m not against doing things to make it go faster. For instance, I’m considering raising money to finance TroopTrack mobile and other development efforts. I’m also working on ways of accelerating TroopTrack’s viral growth, like welcome kits for new subscribers that include pass-along cards they can give to other scouters, in-store displays, and a direct mailing. I tried a print ad, but it had unimpressive results. I might try that again someday, but for now I’m going with things that feel more personal.

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