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I have created a minimum viable product that I'd like to turn into a business. I have used pay per click advertising to get:

  1. 10ish free subscribers
  2. Then 2 paid subscribers

It is a monthly subscription and I spent 6 months of subscription costs to get each of my 2 paid subscribers. So I will need to retain them for at least 6 months to break even on advertising costs. I feel this number is pretty high and that my conversion costs could come down a lot.

Also, my product is quite minimum so I feel my retention on these subscribers may suck. Frankly, I am almost a little embarrassed of where the product stands right now (Sounds like this is common for MVP though).

I feel I have a number of assumption I need to test. But I'm not sure it what order to tackle them.

Assumptions:

  1. I can profitably get new customers
  2. I can build a product that customers would find a valuable service
  3. I am building the right product for my customers

Possible next actions:

  1. Try to drive conversion costs down into an acceptable range
  2. Build out feature set of product
  3. Try to get potential customers to fill out survey and/or answer questions 'Customer Development' style so I can see if my product is on target.

What should I be focusing on?

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3 Answers

up vote 0 down vote

I also agree with asking open ended questions in a non-email/form way. In addition to the site analytics, try to capture the usage data such as how many times a feature was checked within the site/application and understand the user interactions. These metrics would also help you when the subscription rate grows and you can calculate signups/churn rate etc better.

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up vote 4 down vote

Claus Schwarm has already given a good answer. In addition to this, I'd like to comment on a few sentiments from OP's post.

need to retain them for at least 6 months to break even on advertising costs

I'm speaking outside of what I have hands-on experience with here, but I wouldn't worry too much about this. Based on the cases I have read continuous improvement of your site and ad campaign will in the long run give significant conversion rate improvements.

What should I be focusing on?

Learning more about your customers' needs. But you mention using a web survey. IMHO these have their issues, and on a small group of 12'ish people websurveys flat out don't work. If at all possible, I would say get the phone numbers of your customers, and call them, and ask open-ended questions. Phone or face to face works so much better for conversations where the conversation topic isn't well known beforehand.

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Wish I could up-vote this more! For more specific ways to solicit customer feedback more directly: tinyurl.com/yc5pvxm – Jason Nov 28 '09 at 13:58
I have used email to ask my free subscribers open-ended questions. Most didn't get back to me, but a couple did. I have written an ebook I was going to give away for getting on my newsletter. The plan was to use the newsletter to sell the product, but I could try to just try to contact the people who grab it and ask them questions – DogOn Nov 28 '09 at 16:32
Also I get nervous about talking to potential customers but I need to get over that. Email is definitely less nerve racking than phone. – DogOn Nov 28 '09 at 16:34
The phone call is a great idea. @DogOn - if you let customers talk about their needs and hopefully your application, you'll feel more comfortable. Don't think of it as you're making a sale. – JeffO Dec 6 '09 at 3:12
up vote 2 down vote

This is rather hard to answer. There are so many variables that influence success.

However, you should try to base your decision on data if possible. Therefore, your next action should be gathering more data (and better data) before you determine other actions.

Also, use a better metric -- for example, conversion rate. Your metric of acquisition costs to subscription costs has too many potential causes. What if your monthly subscription price is simply too low?

Concerning assumptions: The three you mentioned are typical for any startup. It's not rational to start a company if one wouldn't believe in them. They are also rather general and therefore hard to test. Figure out specific assumptions, you're currently using. For example:

  • Your ad copy was optimal.
  • You picked good keywords.
  • Pay per click ads is the best way to reach your target audience.
  • You picked the optimal target audience.
  • You talk about benefits on your landing page.
  • You address potential objections on your landing page.
  • Your design supports your sales pitch.
  • Your subscription price is optimal.
  • Your sign-up form is easy to use and doesn't ask for unnecessary data.

Note that features, in general, are the least influential cause for a bad conversion rate. In most cases, customers worry about other things. They seldom note the lack of something.

A list of specific assumptions is easier to test them. It's also easier to find alternative ideas to test. For example, you could sumbit your site to HackerNews or Business of Software for a review. Sometimes, major flaws on your homepage can easily spotted by outsiders.

Hope this helps.

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Thanks for the detailed response! I definitely have lots more assumptions than the 3 I mentioned. Those are just the big ones. – DogOn Nov 28 '09 at 16:14
When you say features aren't that influential, I take that to mean that I should focus on improving my conversion process for now. However, I am worried about converting people and having them not like the product. – DogOn Nov 28 '09 at 16:18
@DogOn: Glad I could help. Concerning your worries: It's hard to say something concrete without any information what your product does and how many competitors exists. In general, people like products for many reasons, and features are just one of them. In general, people love and endorse products that make them look and feel exceptional (see Kathy Sierra's blog for details). There are some cheap means to get that although I wouldn't call them features: AJAX gadjets, classy design, good usability, regular data updates, exclusivity, etc. It really depends on your product and target audience. – Claus Schwarm Nov 28 '09 at 20:32

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