6 Actionable Takeaways from Lincoln Murphy's Growth Hacking AMA
This is the third in a running series which breaks down and analyzes the advice, speeches, AMAs, podcasts and webinars of growth hacking thought-leaders.
This article focuses on the Ask-me-Anything from Lincoln Murphy on GrowthHackers.com on July 14th, 2015. The AMA has more than 30 unique questions and 90-odd comments. Lincoln put an entire day into this AMA and some of his answers are more than 500 words long. If you have a few hours I highly recommend you check it out in its entirety.
If not, this article will break it down into bite-sized pieces.
Let's get rolling.
#1. We are not sure how to calculate the optimal price of our product or service - a number that is optimal in terms of not leaving money on the table and at the same time not pricing ourselves out of the market. Thoughts?
Know that pricing is never static. What you start with will change over time as you learn more about the market, as your market evolves, as your product and company evolve, etc.
I always suggest [...] starting out with very simple pricing that encourages deep use by your customers. We're looking for breadth and depth of use by our paying customers (even if what they're paying is leaving money on the table).
I want to do that for some specific period of time (6 months maybe) and then start looking for patterns. You'll probably find that the 80/20 rule applies - 80 percent of the customers will use 20% of your features - 20% will use the other 80%. There's a natural demarcation point for price segmentation. Then you can further segment the top 20% into another [segment] if it's right. Don't have 3 plans just to have three pricing plans.
Our Actionable Takeaway:
Questions of price are some of the most important, and difficult, to answer when it comes to growing your business because they're the final barrier (and often the only one that matters) to a paid conversion.
Because of the difficulty of the question, I'm really happy with Lincoln's concrete answer, and it's something Wishpond has taken to heart ourselves: Start low and then determine pricing segments based on how your customers are using your product or service.
- We set a label (talking CRM tools here) to be triggered when one of our users is taking full advantage of everything we offer - someone who has created at least 10 campaigns, has generated more than 1000 leads and several other characteristics.
Here's a screenshot of a Power User from our CRM platform (I've highlighted the label and actions of this user):
Lincoln's right, what we call Power Users make up between 15 and 20% of our user base.
As we have enough individual pieces of our platform (from landing pages and contests to email and CRM) we find it makes sense to have four price segments. For many businesses, the number of price segments you have is determined by the amount of difference between them that you can offer your customers.
- Check out an analytic platform like Woopra to get a better idea of the specific actions of your customer segments
- Be aware of "action paralysis" - avoid offering more than 3 or 4 pricing options or you'll confuse and de-motivate prospective customers.
- Consider adding a plan with a very high price point in order to drive prospective customers to a middle plan. Check out Helpscout's Pricing Strategies Guide for more on this.
#2. How would you balance between short term efforts such as SEM and online advertising and long term investment such as content and marketing infrastructure?
I prioritize distribution strategies around my Ideal Customers. [...] When I get specific on an Ideal Customer, the channels to leverage will appear.
Most people start with the channel or tactic - and that's why most companies struggle to gain traction.
When you find something that's working for your ICP [Ideal Customer Profile], after the time frame you were working with is up, you can either double down (if it worked), modify and keep going, or pivot away from that.
Our Actionable Takeaway:
Lincoln's answer is why every growth hacker you see is constantly talking about creating a customer profile before you do anything whatsoever (including, but not limited to, designing your product, building your website or starting your blog): Creating a complete ICP will inform your marketing strategy itself.
Note: Your ICP is different from your customer persona (which is more about creating content and design which appeals to a type of person). Customer profiles (particularly for B2B) are about target market more than tone, empathy or style.
5 Questions You Need to Answer to Build your ICP:
- Who has a problem solved by my basic product or service?
- Do they know they have the problem?
- Do they have the means (authority, money, etc) to solve the problem?
- Is their problem a legitimate pain point? (i.e. Is there urgency you can tap into?)
- Are they currently looking for solutions to their problem?
Once you know the answer to these questions you've not only identified your ICP, you've also identified the best ways to market to them.
- If your ICP is only vaguely aware (or doesn't completely understand) the problem they have your marketing strategy will rely heavily on education (inbound marketing, primarily)
- If your ICP's issue is an urgent or seasonal one (for instance, tax season is approaching), tap into this urgency. Read 5 Ways You Can Create Urgency on Your Landing Page for more on this.
- Identifying who has the problem associated with your product or service should also inform your marketing strategy: Are they active on social? Does the issue have a high search volume on Google? Is it a question best-answered with inbound or outbound marketing strategies? Etc.
For more on ICP development check out Lincoln's Ideal Customer Profile Framework.
#3. How would a company evaluate whether or not to implement a Free Trial?
Now, how to figure out if you should offer a Free Trial is simple - do you want more people to try your product? If yes, then offer a Free Trial.
Seriously. Remember Free Trials are for people that don't already know, like, and trust you. They need to see things before they commit. And yes, pulling out your credit card to enter it for a Free Trial is pretty much the same move you do to buy - so there's a lot riding on whether or not people will do that.
And if they don't already know, like, and trust you (or your company, brand, etc.) then they might not sign-up. Even with a money back guarantee.
Our Actionable Takeaway:
Lincoln is one of the leading "free-trial evangelists" (a term that I just invented) in the growth hacking world.
Lincoln recommends implementing a free trial of your tools (check out his explanation of the difference between free trials and freemium plans here) as an education tactic. Approximately 96% of your website visitors aren't ready to buy when they first arrive. A free trial (alongside an optimized lead nurturing strategy) is a great way to show your prospective customer what they stand to gain by choosing your business over competitors.
- Implement a free trial if your business' sales cycle requires education and you have similar competitors.
- Only require a credit card for your free trial if it's possible triallers could actually generate sales or leads from your service (as Wishpond does). Otherwise the barrier to convert isn't worth the added insurance.
- Implement a free trial element for each pricing segment in order to give people a chance to experience the capabilities they're most interested in.
#4.What advice would you have for building traction for a Wikipedia-like product (focused on Hollywood)
Get a bunch of Hollywood people to talk about it on the various social platforms and possibly invest in it (not just for their money, but to build buzz). And leverage all of that as hard a possible.
Brute force is often required to gain traction - then (hopefully) momentum takes over.
Our Actionable Takeaway:
I chose this question not because I think all that many of our readers have built a Wikipedia-like product focused on Hollywood, but rather because Lincoln's answer resonates far beyond his specific recommendation: Some of the best advice for growing your business (or blog, for that matter) is to get people talking about it.
Often this is a number's game...
- Identify the big names in your sector (feel free to read our guide on how to do this. Find between 50 and 100 depending on your ambition and time available.
- Segment big names (influencers) into relevant categories: loudspeakers (large followings), advisors (serious knowledge and experience), etc
- Split your list of influencers between yourself and your colleagues. It's impossible to maintain relationships with a list of 50-100 people. Share the load and you'll create better relationships and return.
- Follow them on social media and get active wherever they are (blogs, social platforms, communities, etc)
- Identify what you want to pitch to each influencer as well as the best medium to do so (social, email, face-to-face?)
- Approach slowly: ask for permission before sending links; acknowledge an influencer's valuable time; share their content twice as much as they share yours, etc.
#5. How can content marketing and customer success teams collaborate?
Customer Success and marketing should be collaborating to market to the existing customer base. Not just new products and features, but content that will help the customers achieve their Desired Outcome. Nurturing your existing customers to help them be successful will keep them around longer and get them to pay more over time - all while achieving their Desired Outcome. It's beautiful, man. Just beautiful.
Our Actionable Takeaway:
Lincoln's concept of content marketing collaborating with customer success is gaining serious ground within the most successful businesses - definitely ours.
It's easy to jump to the conclusion that content marketing is a subset of inbound marketing only. The thing is, this seriously reduces the return you can get from the content you create.
A few ideas of how content marketing can work with customer success teams to retain clients:
- Lead and client email nurturing campaigns should include educational content. How-to guides (not just about your tools, either), resources (such as lists of helpful apps), templates (such as the one I included above), etc.
- Individual content articles (based around a single theme) can be compiled into an ebook which can be email-gated for lead gen AND delivered for free to existing customers to provide value.
- Customer success teams can work with content creators to develop content which can be used both to nurture leads into clients and clients into loyal customers (often this is similar, how-to-focused content such as videos, screen-captures, case studies and buyer's guides).
- Re-use sections of blog content within your business' Knowledge Base or Customer Success Resources page.
An example of Wishpond's Knowledge Base utilizing blog content:
Bonus Question and Answer: What, in your opinion, is the best way go about gaining expertise in Growth Hacking?
You have to go out and do it - and if you don't have anyone to do it for, do it for yourself. I don't know any other way to gain expertise in anything (growth hacking or otherwise) than to just go out and do it.
Our Actionable Takeaway:
No, I think Lincoln nailed this one on the head. Nothing more need be said.
There's a lot to be learned from growth hacking thought leaders, and they've never been as accessible as they are today. Hopefully my recommendations give you an idea about how to take action on Lincoln's answers.
If you have any questions about anything I've said above, reach out in the comment section below and I'll get back to you.
Growth Hacking Resources Related to these Answers
- The Secret to Successful Customer Onboarding
- Creating Landing Pages that Convert: A Free Course from Wishpond Academy
- Understanding Your Customer's Desired Outcome
- Engaging at Scale: The Secret to Automating Personal Emails
- 10 Steps to Email Automation Success