How to use customer feedback to drive your business

07/08/15 • 12 min

Founder’s Journey: Building a Startup from the Ground Up

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 ...

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.

“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.

Intercom

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

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

How we changed Baremetrics based on feedback

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 ...

Previous Episode

Maker to Manager: What a startup founder does

I’ve long considered myself a “maker”. Heck, it’s the first word in my Twitter profile, so you know it’s official. I’ve been making things for the web since the late 90’s. When I was splitting my time between building my own products and doing consulting, I’d tout myself as the guy who could do everything. I took pride in my ability to do design, frontend, and backend, selling myself as the quintessential “maker of things”.

Then, Baremetrics started taking off. I quickly realized that being the only “maker” wasn’t going to cut it, and started hiring. As I hired out all of the things I had been doing, I found myself transitioning from “maker” to “manager”. I started the transition a year ago and, while I’m certainly no expert, I thought it might be useful to other entrepreneurs making the transition to get some insight into what it has been like for me and how to apply to your business.

How a manager is different than a maker

I’ve struggled with what exactly it is that I do here, which is a good thing. We’re a small team, but everyone here has very specific, clear-cut jobs to do and have each filled very specific needs. I’ve hired people who are each exponentially better at their craft than I ever could hope to be.

So where does that leave me? I rarely “make” things anymore, at least in the “honed craft” sense. Instead, I’m a manager...an enabler of sorts. Instead of making things, I enable my team to be makers, with as much efficiency as possible.

The job of a manager

At the end of a lot of days, my wife will ask what I did that day and half the time I have a hard time answering. “All the things?” It can be hard to actually feel productive since, to some degree, my job is to make others productive.

Pinpointing the things that you, as a manager, need to do on a daily or weekly basis can go a long way towards you actually being productive.

If I’m honest, there are lots of days where I think, “what is it that a CEO/Founder even does? This post is part me helping other CEO/Founders out and part verification of my sanity and worth. :)

Here are some of the things I do and the roles I fill in a typical day or week and how they can apply to you and your business.

Product management

A big chunk of my time is writing project briefs and figuring out our product roadmap...essentially a “Product Manager” role.

What comes next? What problems need solving? How do we solve those problems? What bugs need to be fixed and when? Who needs to be working on this? What’s an appropriate deadline? What customers should I talk to about that potential feature?

My day is packed to the brim with answering these types of questions. To the best of my ability, I’m decisive and borderline dogmatic about these answers. You have to be. Otherwise, you’ll be buried in half-answers that get you half-results with no real progress on anything.

Apply it

The more clearly you define projects and work to be done, the less time product management will take you in the long run.

Define the problem and what the success metrics are (increased signups, decreased churn, etc.) and then work with your team to figure out the solutions.

Writing

Our blog is a significant source of traffic and customer referrals for us. Thus far, minus a couple of great articles on customer support, I’ve written all of the content.

It takes up a large chunk of my time (roughly 20% of my week), but we’ve tried really hard to avoid the typical generic content you think about when you hear the phrase “content marketing”. Our market is founders & entrepreneurs, so the best way we know to reach founders & entrepreneurs is for our local founder & entrepreneur (me!) to write about the up’s and down’s and what we’re learning as a company. Things that are harder for others to write without having been there and done that.

Apply it

Not everyone has a target market of “founders” so this game plan won’t necessarily work for you, but I do think it’s crucial to actually produce genuinely helpful stuff if you want to use content as a marketing channel. Find your content niche and own it.

Customer support

I don’t do nearly as much typical customer support these days since Kaegan came on board last year, but I try to schedule a phone call with all of our ...

Next Episode

How freemium nearly caused our business to implode

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.