Constant Contact is one of the biggest players in the email marketing space, and Gail Goodman has been with them since the beginning. She’s scaled the company from its early startup days to where they are now, a public company worth over $1 billion.
She gave a presentation at the 2012 Business of Software conference, sharing how they optimized their marketing funnel. They went through a number of experiments, but eventually found the few tactics that moved the business.
We’ll first start out discussing what she refers to as the long, slow, SaaS ramp of death.
The Long, Slow, SaaS Ramp of Death
Constant Contact started out with plans around $30 per month. This low price point made it absolutely necessary that Constant Contact get a significant amount of customers. Enter the long, slow ramp of death. As Goodman explains:
“The long, slow SaaS ramp of death is that it just takes a long time to get to minimum critical mass.”
There are no silver bullets. It takes time and a lot of work. Along the way, Goodman shares some tips as you build your SaaS business:
These are things you’re betting will make a difference but never actually move the needle in a critical way. This can be product changes, vitality, free, etc.
“There is just not going to be that one thing that flips you from the long slow ramp of death to the hockey stick inflection point. It’s going to be lots and lots of little things. And I would argue that most of those little things will happen if you continue to view your business from your customer or user inward, rather than from the metrics you want to change outward.“
For most businesses, it’s the little things that add up to growth.
How People Drove Constant Contact’s Funnel Growth
Top of the Funnel (Awareness)
In the beginning, Constant Contact tried many tactics to drive awareness. Nearly all of it involved online marketing. They struck a chord and began gaining traction when they went offline. Direct mail, feet on the street, and software on a shelf (placing a Constant Contact product in a box at a Staples shelf) didn’t work. Instead, they gained traction through radio ads and free seminars. The radio ads had to be tested for each region and channel. The process for testing their ads was called test, scale, tune.
They also learned that small businesses don’t understand email marketing. Webinars worked, but they couldn’t get enough traffic. This is where seminars came in. They hired people regionally (they’re known as regional development directors) to teach small businesses the ins and outs of email marketing. Today, these directors run about two to four seminars a week, they get about forty to eighty people, and they last about two and half hours. They’ve had over 125,000 small businesses attend.
Middle of the Funnel (Education and Quick to Wow)
They optimized the middle of their funnel with people. After people signed up for a trial, Constant Contact calls them (known as a “coach”) and engages with them about their business and how they can use email marketing. These coaches don’t teach them how to use the product (if they need help, it’s a UI issue), but to give them ideas for what their first campaign email should be. They also help give them confidence to hit the send button. Goodman:
“the biggest thing helping them do is to have confidence into hit the send button. Because it turns out, hitting send button, maybe you’ve all been there, it’s an e-mail to your whole customer base, is not a casual thing. And these guys are not text savvy or marketing savvy, right? This is the chef who opened the restaurant, who does marketing part time and it’s not text savvy at all.”
The biggest barrier to usage for Constant Contact is content. Small businesses don’t know what to say. It’s a hard problem for Constant Contact to solve for them. Marketers are better at this, but small businesses aren’t so adept. One of the ways Constant Contact overcame this was with default content. When a customer went to write an email, there would be content already written. They would see this, erase it because they didn’t like it, and then begin writing their own email. “Your subject line here” isn’t useful in overcoming that barrier to usage. Default content is what inspires them.
Goodman explains the biggest things they learned was quick to wow. Attention spans are short, so you need to get customers to a measurable result quickly. They won’t give you much time.
It’s all about optimizing the quick to wow. And once you get the convert to being a customer, you have to get them to stay. This is the bottom of the funnel, where driving retention and referrals are key.
Bottom of the Funnel (Retention and Referrals)
Goodman says that number one way to get customers to stay around is to get them successful early. She says:
“That first success is also probably your best retention lever.”
Goodman says the top of the funnel is test, scale, tune. The middle and bottom of the funnel is measure, test, repeat. You need to iterate until you get the math to work.
Goodman says it’s important to instrument your experience (with an analytics tool) so you can see everything. While you’re tuning at every step of the funnel, you always need to be looking at the whole funnel. She says to always be measuring individually but thinking holistically about your whole funnel.
Goodman believes the key to changing
How Gail Goodman Built the SaaS Empire, Constant Contact
You have to hear the whole story on this one. Watch below as Goodman explains how she built Constant Contact from a small startup to what is now a $1 billion company. You’ll learn about the early days of Constant Contact, the experiments they ran, how they gained traction, and some tips for you to use in your business.
Click here to view a complete transcript of the video.
“The key to changing those internal metrics is by starting with the view from your customer looking at your business and your experience, not, by looking at your metrics and trying to change your customer behavior. We’ll see if it makes sense as I go.”
“Turns out the number one way to get them (customers) to stay is to get them successful early.”
“If the top of the funnel is test, scale, tune, [and] the middle of the funnel and the bottom of the funnel is measure, test, repeat. Measure, test, repeat. Iterate until you get the math to work.”
“Innovation needs to happen everywhere, and it needs to be guided by customer experience. Looking at your business from the customer in. How will they learn about these kinds of things, when will they make these decisions, [etc].”
“It’s just really important as you’re trying to get…along that long slow ramp of SaaS death to know your economics. Because it starts to tell you which things are okay and which things are not okay. And, when you try and test things, sometimes when you’re not doing them at scale, they’re good enough and then you can scale the economics to work.”
“If your customers are telling you you got something and your metrics and your metrics are continuously improving, stay on the long, slow ramp of death. But if either of those aren’t true, it is probably time to parachute off.”
“The best gas pedal on word of mouth referrals is just a great experience.”