Three months ago, we introduced a Free plan...and it nearly brought Baremetrics to its knees. Let’s take a look at what we did, how it affected our business and how it was ultimately a failure.

When I first built and launched Baremetrics over two years ago, I charged from day 1. No free plan and no trial. You signed up with a credit card and were charged real actual money. Not happy? No sweat, we had a 60 day money back guarantee.

We kept this setup for almost two years and grew the business from $0 to over $30k/mo in revenue using it. Then we decided to shake things up.

Our free plan setup

In August, we launched a totally free plan. No time limits and no limits on the number of customers (which was a major segmenting factor for the paid plans). The only limit was on the feature set.

Want full historical metrics? Upgrade, please. Want powerful tools to dig deeper in to your metrics? You’ll need to upgrade for that. Want to automatically collect on failed charges? You guessed it: upgrade.

We didn’t require a credit card until you were ready to upgrade. There was essentially zero commitment to actually doing anything other than signing up.

The results

We launched the Free plan on August 18 via a slightly atypical manner: Beardmetrics. The results of our Beardmetrics marketing experiment is content for another post, but ultimately we didn’t actually make a huge “BAREMETRICS NOW HAS A FREE PLAN!” announcement. We sent out an email to 7,000 people and tweeted to a few thousand more as a way to create some buzz around Baremetrics. We then attempted to convert as many people as possible by making it super easy/fast to sign up.

Over the course of 11 weeks, over 1,000 free accounts were created. To be clear, that wasn’t 1,000 “potential paying customers”. We’re still geared strongly towards “subscription” companies. That means a company needs to have subscription revenue and, more specifically, has to be using Stripe’s Subscription API.

So, of the 1,000 accounts, 461 were actually eligible to even think about becoming a paying customer.

Of the 461 eligible paying customers, 53 actually upgraded.

53 as a % of 461 = 11.5%

Our Free-to-Pay conversion rate over the course of almost 3 months was just over 11%, and with an ARPU of $90, that meant nearly $5000 in new MRR.

Honestly, that’s pretty amazing. The average B2B conversion rate is around 3-5%...so we were killing that. But as these things go, it wasn’t quite that simple.

When free started breaking down

We were adding over a dozen new accounts a day, but that’s about where the fun stopped.

Quickly, we started coming up against a lot of performance and database issues. Within a few weeks our “free” customers were outnumbering our “paying” customers and the amount of data were both storing and processing had doubled.

Because we have to pull down and store your entire data set from Stripe and then generate the metrics for every single day for every single plan on your account (and store that as well), there’s just simple a crap ton of data processing that happens.

We had over two years to slowly work our way up to the amount of data we were processing before the free plan. We then found ourselves needing to double the processable load in a matter of days. Needless to say, it didn’t work out in our favor.

We were dealing with day-after-day and week-after-week of progressively more complex server and performance issues as we just kept piling on the new free accounts.

In addition, the number of customers we were supporting tripled. We found ourselves spread really thin, unable to provide the same responsiveness as before. And on top of that, our regular support load was increased due to the aforementioned server issues.

Then, to make matters worse, we were so focused on putting out server fires, we found ourselves making zero progress on the product itself.

To say the issues were compounding would be an understatement.

Calling it what it was: failure

The net result of those compounded issues led to what was at the heart of our free plan failure: churn.

We started losing customers left and right because day after day they were experiencing down time, delayed data and inaccurate metrics, which is absolutely never okay. On top of that their support experience was less-than-ideal and the product itself was becoming stagnant and buggy.

We lost nearly 60 customers during the 11 weeks we had our free plan, doubling our revenue churn and resulting in a net loss of customers. Our free plan was causing our business to slowly implode.

When free doesn’t make sense

People talk a lot about how the support load for free customers is one of the main negative factors ...

While customer feedback is crucial to your startup, it’s also something most founders have a love/hate relationship with. How do you decide if feedback is valuable or not? How do you keep complaints from dragging you down? Where do you draw the line on letting feedback steer your company?

We’ll take a look at answers to those questions, along with a story and announcement about how customer feedback is directly changing a core part of Baremetrics.

Types of feedback

There are two types of feedback you should be collecting: solicited and unsolicited.

With “solicited” feedback, you’re actively going out and asking questions of your customers. You’re sending surveys, emails, and in-app messages. This type of feedback happens in more predictable intervals as you’re the one initiating it.

NPS surveys have been the most consistent way for us to get regular feedback. In addition to those, we send a series of lifecycle emails to onboard customers (and collect feedback about their experience) as well as product research messages via Intercom’s in-app messaging feature.

“Unsolicited” feedback is what you’ll receive most of the time. It’s the random emails, help desk tickets and tweets that come in at completely erratic times.

Both types of feedback are valuable, but how you collect and take action on the feedback is even more important.

How to organize feedback

If you just read feedback and never act on it, you’ve wasted everyone’s time. There isn’t one “right” or “best” way to organize it. The key is to just do it and do it consistently.

We have two places we organize the feedback we receive.

Asana

We use Asana for project management, but any list-making or project management tool (Trello, Basecamp, etc.) will do the trick here.

We have a Product Ideas project in Asana that we add items to as customers’ (or our team) suggest things. Then, we can add comments to those items as necessary and prioritize them based on the number of requests we receive or the business value they’ll add.

Intercom

Intercom is great for understanding the context in which feedback was given. Was it the result of a bug? Were they frustrated when they sent in the request? How did we leave the conversation with them?

When doing product research, we’ll tag messages that customers send in, so it’s easy to find them all later. We also will tag customers for beta features so we can automatically message the correct segment of users when we start beta testing something.

Many points of feedback in Asana end up linking back to conversations in Intercom, so there’s a decent amount of overlap.

How to decide what feedback is valuable

You’ve got all of this feedback, but how do you decide what to do with it? Between our “Product Ideas” board, thousands of Intercom messages and innumerable Twitter conversations, figuring out what’s actually important can be difficult.

“Value” is a relative term, especially when it comes to new businesses. Your metrics for success, or what you need to get to the next goal in your business is highly unique to your stage of business.

While the answer to what is “valuable” may be relative, the need for establishing what the next milestone or success metrics you need are not, as that’s how you determine what feedback is valuable. It’s easy to let the vocal minority pull you in the wrong direction, but happens much less frequently when you know what you’re shooting for.

Once you’ve solidified what the next steps are that your business needs to take, determining how to value feedback becomes very simple and takes very little time to decide if you should ignore or give weight to a customer’s feedback.

Maybe what you need more than anything is profitability, so doing anything that delays that is bad feedback. Maybe you need users more than money, so any feature that slows down signups is likely a bad move. You get the idea.

Let’s take a look at a real world example here...

How we changed Baremetrics based on feedback

When I built the first version of Baremetrics, my goals were simplistic. I just wanted simple revenue metrics for the business I was running at the time. It solved my problems, and then I came to find out it solved problems for quite a few other businesses as well.

The foundation of nearly all of our metrics came down to two things: Monthly Recurring Revenue (MRR) and Customers (namely if they were “active” or not).

For the past year and half of our existence, we based these metrics on “charges”. Internally ...

https://baremetrics.com/blog/reflection-business-updates

It’s easy to focus on forward momentum. Looking to the future naturally has an optimistic flair and so we spend more time thinking about it and planning it out. But if we don’t stop to reflect on the past, we’ll miss out on things we could learn. Mistakes that we could, inadvertently, be repeating and best practices that we might fail to adopt.

I don’t spend a lot of time reflecting on the past, but once a month I sit down and spend a morning writing out a business update that forces to me to look at what we accomplished, what goals we didn’t hit (and why), progress on important metrics and any other observations that come to mind.

Accountability

One thing I think that’s actually really important here is to send this report to people who are outside of your business. And do it consistently each month.

This could be investors, a business coach or just a couple of other founders who are committed to helping you grow your business.

You need outside perspective from someone who can ask hard questions and notice where you may be dropping the ball. You’re also less likely to slack off and skip writing the report altogether if there’s someone waiting for it.

Format

Now, for the format! There are five sections you should include in each monthly update. Having a consistent format forces you to cover the same areas of your business each month, making it really easy to spot trends and changes month-to-month.

Key Metrics

There are a near infinite number of metrics you could cover, but it’s important to narrow down on one to two that are your key metrics. That’s all you should include in this section, along with brief observations on why those numbers are what they are.

Right now we’re focused primarily on revenue growth, so for us MRR and MRR growth is what I usually include (along with some tangential numbers like trial-to-pay conversion rates).

Product

If you’re building software, you’re likely shipping lots of things every month (big and small) and it’s easy to forget how much progress your product has actually made.

List out the features and updates you’ve made along with any customer reactions or feedback to them. Then, list out what you plan on shipping next month to help set some goals.

Finances

Your books are one of the most boring aspects of business to keep up with. They’re also one of the most sobering sources of truth. It’s imperative you regularly keep up with things like cash balance, burn, expenses and runway.

Observations & Experiments

Building a business isn’t linear. It’s lots of hills and valleys. Lots of trial and error. Recording all the random observations and outcomes of the hunches you’ve had or the marketing experiments you’ve tried will help you see what’s working and what’s not and adjust accordingly.

Asks

This ties back to the accountability I mentioned earlier. The people who help keep you accountable also likely have some unique set of skills or experiences that you can and should tap into.

Wrap things up by including a single “ask”...some specific and tangible way they can help you. That might be feedback on a marketing idea, or maybe an intro to someone or perhaps some insight in to why you may be having trouble with growing one of your key metrics.

You won’t get what you don’t ask for.

https://baremetrics.com/blog/product-launch-sequence

Our 7 day launch sequence for announcing anything

If you launch something on the internet and no one is around to hear it, does it make a sound? I know. Deep. But seriously, how do you launch/release/announce/publish something and make sure people do in fact hear?

Here at Baremetrics we have a launch sequence that we use variations of for basically anything we put out: articles, products, features, news...anything. It’s a repeatable set of steps done over 7 days and one we’ve been optimizing over the past couple of years and one you can likely copy and use for your own company! Who doesn’t like copying?!?!

Not all of these items will be applicable to everything you put out (you wouldn’t do a press release for a new blog post).

Note: I’ll be using the words launch, release, publish and announce interchangeably here but ultimately I’m referring to “getting something out there”.

Setting a launch date

Whether you’re publishing a new article or releasing a major new feature, you need to give yourself a little lead time to get your ducks in a row.

Usually, one week out is sufficient. If it’s something just absolutely huge (initial product launch, for instance), then two or three weeks would be more appropriate.

Now, for the 7 day launch sequence!

Day 7

Write out the story you’re telling

When it comes to features and products, everything you do needs a story behind it. The mechanics of the thing you’re releasing aren’t the story...the problem you’re solving is where things get interesting.

What you write for this isn’t necessarily something you’ll publish directly, but it helps focus how you present things, the copy you use on landing pages, what you pitch to PR folks, etc.

Initial press outreach

Not all things you put out will warrant a PR push, but if you can put a compelling spin on what you’re doing, getting some press coverage can go a long way.

There’s not really any magic sauce for getting the press to cover you. So much of what does/doesn’t get covered boils down to the whims of the reporter and what else is in the current news cycle. Your best bet is to just cast the net wide and hope for some bites.

Some tips for doing press outreach:

• Email journalists who’ve covered similar topics to what you’re announcing before as that means they’ve got at least some interest in what you’re doing.
• Make the subject line informative and compelling. Being spammy or vague won’t get you anywhere.
• In your first line reference their writing on the topic that you think is tangentially related to what you’re doing so it’s clear you’re not just blanket-emailing everyone.
• Keep the email to 4-5 sentences and mention when you’re launching and if there’s an embargo on the announcement. People need deadlines and including a hard date/time helps them prioritize your email.

Partnership outreach

Some of the things you may launch likely involve another company in some form or fashion. Start coordinating announcements or guest posts now.

For example, when we launched Open Startups, I worked with our pals at Buffer to do a guest blog post for them, which gave Open Startups a huge boost and got it out in front of a much larger audience.

When we launched our Slack App, we worked with the fine folks at Slack to be a featured app in their directory.

If what you’re launching makes use of another company’s technology, they’ll likely want to help you promote it. Case Studies are a great format for this and something we did with Clearbit.

Day 6

Create launch video

Video is a great format to show off a new feature and give a bit of backstory on why you created it. We try to create short demo videos for both landing pages and general sharing for any major feature we release.

You can see some examples videos here...

• Baremetrics Home
• Dunning
• Plan Insights

These videos don’t need to be complex or overly polished...the more human they are, the better.

Day 5

Create a landing page

When you’re launching a new feature, having a direct landing page is crucial. It allows you to reference a feature from the perspective of “solution to a problem”.

It’s also the perfect segue to a call-to-action (such as st...

https://baremetrics.com/blog/new-features-will-not-save-your-business

As a founder, you ooze optimism. It’s a necessary coping mechanism to deal with the volatile up’s and down’s of creating something out of nothing. But that becomes problematic when you’re still finding product/market fit as it makes you believe that next feature will be the feature that solves all of your product’s problems. It won’t.

Andrew Chen calls this the Next Feature Fallacy.

Above is a chart of our Monthly Recurring Revenue since the beginning of Baremetrics’ existence nearly three years ago along with annotations of each feature release. I’ve overlaid vertical lines so you can see the exact points where those annotations correlate with the graph...which is almost meaningless because, as you see, those lines never directly correlate to a change in the graph.

Features don’t grow businesses. Solutions grow businesses.

If you throw a trend line over the graph, it’s just the most boring thing you’ve ever seen. Revenue continues to increase month-over-month, but there’s no single point where “everything changed”.

That’s not to say features don’t matter, but progress isn’t made by shipping features, it’s made by solving problems. Like I said, solutions grow businesses, and ultimately solutions are the sum of all parts: features, marketing, onboarding, customer support...the whole bag.

If you’re a designer or developer by trade, it’s easy to think that spending a couple of hours/days/weeks building something will be what turns your business around. It’s dangerous because it feels like progress. You’re doing something, right? But you’re likely ignoring the core issues if you’re just cranking out feature after feature while neglecting other parts of your business.

Business is a never-ending process of tweaking hundreds of knobs. Many of the “wins” you’ll see will come from a random combination of knob-tweaking that you just stumble upon. Don’t just tweak “product” knobs. Make adjustments across every facet of your business so the entire customer experience is improved. That’s when you’ll find long term, sustained growth.