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Growth Manager

Pavlo Pedenko

<p>I joined <a href="https://setapp.com/" target="_blank" rel="noopener noreferrer">Setapp</a> as a product manager in January 2017, at the same time as the company was launching its main product. In this post, I&#8217;ll outline how we went in search of product/market fit by redefining our customer persona to better understand who we build products for.</p>
<p>Setapp provides Mac users with a way to use and discover new apps, and developers with a new way to reach customers and generate extra revenue. We liken Setapp to Netflix for Mac software: the user pays a monthly subscription and receives access to a suite of curated Mac apps. It’s a new style of distribution for Mac apps.</p>
<p>We’d already launched two successful Mac utilities, but this was the first time we’d launched a SaaS-style product &#8211; Setapp provides access to over 100 Mac apps in one suite. We didn’t know know if our sales predictions were good or bad. Five hours into day one of public release, after months and months of planning, private and public beta, we started to see some small signs of traction. Early numbers indicated that our growth predictions were very wrong. We were getting some traction, but it was 12 times lower than we expected.</p>
<p>So, while developers were fixing bugs, we started to challenge our critical product pillars by reviewing our answers to the main product questions:</p>
<ol>
<li><strong>Who is our customer?</strong> (Back then, it was almost every Mac user in the world)</li>
<li><strong>What problem are we trying to solve?</strong> (We thought that we were helping customers to get easy access to the highest quality Mac apps, by curating the software library available in the subscription)</li>
<li><strong>What is our positioning?</strong> (For Mac users, Setapp is the only service to offer a growing stable of the highest quality applications conveniently. Unlike similar services, Setapp provides a combination of seamless user experience with no advertising, in-app purchases, paid upgrades and curated selection).</li>
</ol>
<p>We could only conclude that we had launched the product with positioning that was too generic and that our goal &#8211; to convert all Mac users around the world, instantly &#8211; was too broad.</p>
<p>In marketing speak, from the very beginning of the project, we wanted customers from both the “early majority” and “late majority” groups, skipping the “innovators” and “early adopters”.</p>
<figure id="attachment_13096" aria-describedby="caption-attachment-13096" style="width: 1024px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" class="wp-image-13096 size-large" src="https://www.mindtheproduct.com/wp-content/uploads/2018/04/e835e511-34af-4dd4-b635-ac6ca570b074_Screen20Shot202018-04-1520at201.12.4020AM-1024x565.png" alt="Technology Adoption Cycle image" width="1024" height="565" srcset="https://www.mindtheproduct.com/wp-content/uploads/2018/04/e835e511-34af-4dd4-b635-ac6ca570b074_Screen20Shot202018-04-1520at201.12.4020AM-1024x565.png 1024w, https://www.mindtheproduct.com/wp-content/uploads/2018/04/e835e511-34af-4dd4-b635-ac6ca570b074_Screen20Shot202018-04-1520at201.12.4020AM-300x165.png 300w, https://www.mindtheproduct.com/wp-content/uploads/2018/04/e835e511-34af-4dd4-b635-ac6ca570b074_Screen20Shot202018-04-1520at201.12.4020AM-768x424.png 768w, https://www.mindtheproduct.com/wp-content/uploads/2018/04/e835e511-34af-4dd4-b635-ac6ca570b074_Screen20Shot202018-04-1520at201.12.4020AM.png 1182w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption id="caption-attachment-13096" class="wp-caption-text">The Technology Adoption Cycle from the book “Crossing The Chasm”, by Geoffrey A. Moore</figcaption></figure>
<p>Needless to say, it was a questionable idea.</p>
<h2>Problems with Customer Development</h2>
<p>With an ambition to reach millions of Mac users, and a strong belief that we were building something that people would want and need, our team had skimped on the customer development process. We thought that by building an app subscription service for Mac users (and for ourselves, of course) we didn’t need to invest heavily in customer development. We had some fantastic beta/influencer responses before the public launch, from thousands of tech enthusiasts, influential early adopters and Mac fans.</p>
<p>And of course, we conducted quantitative research and analysed the data we were lucky enough to have, but like many tech companies, we didn&#8217;t spend enough time speaking to our potential customers.</p>
<p>We were spending money targeting each and every Mac user in the entire universe. And our early customer acquisition funnel performance numbers were eloquent: it was not sustainable for us to pay up to $2,750 for each paying customer with a $9.99 monthly plan and predicted LTV of about 20 months.</p>
<figure style="width: 977px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" src="https://www.mindtheproduct.com/wp-content/uploads/2018/04/cb6580b9-a34d-46ae-9eae-b9fc5eb08d79_unnamed.jpg" alt="Yaroslav Stepanenko, Product Marketing Manager at Setapp.com" width="977" height="868" /><figcaption class="wp-caption-text">Yaroslav Stepanenko, Product Marketing Manager at Setapp.com in front of our early customer acquisition funnel performance stats</figcaption></figure>
<p>Imagine that you are building a product for everyone who regularly uses a Chrome browser. Who are your customers? How would you decide what to build next? Attempting to build something for everyone results in building something that no one actually wants.</p>
<p>We were burning cash in aggressive pay-per-click campaigns (PPC), and we had to figure out who our target customers were and why we were launching the product for them, and then, how to reach them without spending thousands to acquire one customer.</p>
<h2>Working on Customer Personas</h2>
<p>The idea was to start implementing the customer development process with a relatively easy and cheap exercise: interviewing real customers. It was my job to figure out the specifics, starting with customer interviews.</p>
<p>We realised that we needed to work out our customer persona(s) and re-identify the value we were providing to customers. So we decided to start talking to our active users. At first, we were worried that no one would want to be interviewed without an incentive. So we decided to raffle a few Apple TVs among anyone who would be interviewed. It turned out that incentivising users is not always a good idea. There were some users who came to the interview just because they wanted to get a freebie. Literally, they were sharing feedback on a product which they never used before. So, please, always compare users’ words with data of their app usage &#8211; what they say is not always what they do.</p>
<p>Then, we chose a service to schedule calls. We are two hours ahead of GMT, and almost 50% of our users were in the US, so this wasn’t easy. We sent emails to our active users and invited them to join the process.</p>
<p>Then we booked a meeting room for the whole day and stocked up on Red Bull and coffee.</p>
<h3>Customer Interview Learnings:</h3>
<ol>
<li>Figure out the goal of the interviews</li>
<li>Choose a segment/group of users to interview</li>
<li>Figure out where to reach them. We used our user base. But if you’re trying to find new/potential customers, reach out on social media</li>
<li>Take time zones into consideration.</li>
<li>Choose the tools you need to make it happen (we use a communications stack: Skype, QuickTime Player, Calendly and Invision).</li>
<li>Invite them to join the conversation (email, IMs, forums, whatever works).</li>
</ol>
<h5 style="text-align: center;">You might also like: <a href="https://www.mindtheproduct.com/find-right-customers-product-development-interviews/" target="_blank" rel="noopener noreferrer">How to Find the Right Customers for Your Product Development Interviews</a></h5>
<h2>What to ask Customers?</h2>
<p>It’s often said that &#8220;words create worlds”, and this is especially true when asking customers questions about a product or service. It isn’t just what is being asked, but how the questions are asked that makes a difference.</p>
<p>The script of every set of user interviews should be different; but here is a list of sample questions to inspire your own product development interviews. Please, don’t just copy and paste it. Be aware of the problem you are trying to solve and build your own thing.</p>
<h4>Intro questions:</h4>
<ol>
<li>Describe your typical daily routine?</li>
<li>Tell me a bit about your work/career?</li>
<li>Tell me about the company you work for.</li>
<li>What is your job title? What does that involve?</li>
<li>What do you enjoy to do when you are not working? Do you have any hobbies?</li>
<li>List some of the apps and websites you use on regular basis?</li>
</ol>
<h4>Empathy building questions:</h4>
<ol>
<li>Who is your favourite superhero? (The best thing about this question is that it is not about the product or problem, it is about the customers themselves. When they heard this question, which is fairly weird, they answered instantly &#8211; that’s how we figured out one more insight about our customer. By the way, Spiderman is our users’ favourite superhero)</li>
<li>Do you play video games? What is your favourite game? (Once I ended up talking half an hour about the latest version of a popular game we both loved)</li>
<li>What was the last movie you watched?</li>
<li>How many children do you have?</li>
<li>What are some of your favourite songs?</li>
</ol>
<h4>Product/market fit questions:</h4>
<ol>
<li>Remember a time you were trying to solve this problem with this product. How was the experience?</li>
<li>What are the most important considerations when picking a product/service to solve this issue, and if this product solving this problem?</li>
<li>What attracted you to this product? Why are you using it?</li>
<li>Imagine you are sitting in a bar; how would you describe the product to a friend?</li>
<li>How would you describe the product to your manager?</li>
<li>Who else do you know who might be interested in the product?</li>
<li>What’s missing in our product &#8211; what can we add or remove to improve the experience?</li>
<li>How often do you use the product? Is there anything from preventing you from using this product more often?</li>
<li>What other similar products do you use?</li>
<li>What products have you used prior to the product we are talking about now?</li>
<li>What can we improve in the product (is there anything about it you hate/strongly dislike)?</li>
<li>How much were you spending to solve the problem before started using a product?</li>
<li>NPS Question: On a scale of 1-10 how likely are you to recommend the product to someone else?</li>
</ol>
<h4>Market research:</h4>
<ol>
<li>Where do you use the product? At home or at the office?</li>
<li>What is the biggest challenge you currently face at your job? (Useful questions for B2B products)</li>
<li>What are you currently doing to make this problem easier?</li>
<li>What’s your biggest distraction at work?</li>
<li>What are the most stressful things for you at work and at home?</li>
<li>What could make you switch from one brand to another?</li>
</ol>
<h4>Online habits:</h4>
<ol>
<li>Where do you spend most of your time on the internet?</li>
<li>What social networks do you use often?</li>
<li>What are your main sources of news/media and opinions?</li>
<li>What email subscriptions do you have?</li>
<li>What blogs do you read?</li>
<li>Whom do you follow on YouTube?</li>
<li>Who do you consider influential thought/opinions leaders?</li>
<li>When you think about the problem that&#8217;s being solved with a product now, who is the first person that you would recommend it to online?</li>
</ol>
<p>There are hundreds of other questions companies can ask. Some of you will choose to work with a consumer or market research company; although if you do go that route, figuring it out and testing the process internally first will make a huge difference. And you don&#8217;t need to offer Apple TVs &#8211; in time, we found that working with an active community of fans and customers (once we got product/market fit right) is more effective than encouraging people to take part in exchange for a prize. But it’s a part of another story of how we managed to build a community around our product.</p>
<h2>Customer Interview Tips</h2>
<ol>
<li>If you have a long list of questions, don’t try to ask every question. Customer interviewing is qualitative research. Deep insights and genuine connections matter more.</li>
<li>Don’t fill the silence, let them do it for you. When you notice the call has gone quiet, give your customers a chance to provide insights they haven&#8217;t considered before, which is far more useful than rushing them onto the next question.</li>
<li>Don’t forget about “five whys” rule. Initial answers never provide much insight. Ask why someone gave their first answer. Then ask follow-up questions that get you closer to understanding user motivations and actions, which will give you the detail that will make a difference to your product-market fit research.</li>
<li>No matter what your career background, during the customer interview process, you are a researcher. Be curious and if you feel that you have to drop the script, just do that.</li>
<li>If possible, always double-check what users say they do and what the actually do. For example, we used MixPanel to verify user activity and whether people were signed-up and/or paying customers.</li>
<li>Don’t forget to ask your user&#8217;s whether they are okay with this conversation being recorded. Making detailed notes can prevent you from asking the right questions and actively listening. And if you don&#8217;t ask, then it could cause problems with data protection legislation and GDPR in Europe, due to come into force on 25 May 2018.</li>
<li>Don’t take every feature request to heart. If Henry Ford had asked what his customers wanted, they would have wanted a faster horse. Only when an overwhelming number of users ask for something, and their actions demonstrate the need should you put something in your product development roadmap.</li>
<li>Ask users for a testimonial. If you have already spent 30 minutes with them, why don’t you get some additional value from a conversation?</li>
<li>Take notes. A lot of notes, but don&#8217;t miss verbal cues when actively listening. Write these notes up and share with those in your team that can take the actions you need.</li>
<li>Make sure your internet connection is stable, and your mic and webcam are working.</li>
</ol>
<h2>The Interview Process</h2>
<p>We are lucky to have a very supportive community, but even taking all the love into account, sometimes it is just hard to talk with different people all day. Here is the list of our findings on how to make the process less painful.</p>
<ol>
<li>It is better to have two or even more people from your team involved in the process. If you are the only person conducting these interviews, limit them to 4 or 5 per day, to make the most of each and not overwork yourself.</li>
<li>Try inviting your team members who are not responsible for product decisions to interviews. It’s always cool, for instance, when developers interact with those they&#8217;re building for.</li>
<li>When scheduling interviews, don’t forget about lunch and dinner. It happened to us a thousand times. You need to keep focused, so staying fuelled is essential.</li>
<li>Discuss findings after each call. Different people approach the same issue in different ways, so it’s better to discuss everything right away.</li>
</ol>
<h2>Our Results</h2>
<p>We’ve conducted hundreds of customer interviews since we started. Our customers are involved in the product development. It took time, but we have completely redefined our user persona. Now we have a pretty clear idea of who we’re building for and how we’re solving their problems.</p>
<figure style="width: 1033px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" src="https://www.mindtheproduct.com/wp-content/uploads/2018/04/164f8ecb-e4da-4b6e-8b04-3f6559bf4389_unnamed.png" alt="A visual of the early version of the Value Map for Setapp.com" width="1033" height="542" /><figcaption class="wp-caption-text">The early version of the Value Map for Setapp.com</figcaption></figure>
<p>We know that our customers are not simply millions of Mac users all around the world. Thomas &#8211; an early adopter, tech enthusiast, business owner, with a young family and not enough time to search for apps (he hates bad ones) &#8211; and thousands like him are our customers.</p>
<p>Obviously, understanding the customer helps us to build our marketing campaigns, so we have dramatically reduced our ridiculous $2,750 price tag for a paying customer.</p>
<figure style="width: 484px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" src="https://www.mindtheproduct.com/wp-content/uploads/2018/04/82a02684-c138-4d58-abe8-b2b860e9a7b7_Screen20Shot202018-03-2220at202.29.2020PM.png" alt="A document describing Setapps's persona Thomas, the early adopter" width="484" height="720" /><figcaption class="wp-caption-text">Information about Setapps&#8217;s persona Thomas &#8211; the early adopter</figcaption></figure>
<p>We now ensure that customer interviews are a normal part of our monthly routine.</p>
<figure style="width: 600px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" src="https://www.mindtheproduct.com/wp-content/uploads/2018/04/6c20c841-28b3-4a55-93f5-7d3799241175_2201.png" alt="Setapp team interviewing a user during a Design Sprint session" width="600" height="450" /><figcaption class="wp-caption-text">Setapp team interviewing a user during a Design Sprint session</figcaption></figure>
<p>We have a reminder each month that it is a time to schedule a few calls and talk to customers. We communicate our customers’ stories to the team weekly. Engineers, marketers and stakeholders are invited to this calls. That helps us to keep the user-centric focus on everything the team does.</p>
<figure style="width: 1600px" class="wp-caption alignnone"><img loading="lazy" decoding="async" src="https://www.mindtheproduct.com/wp-content/uploads/2018/04/8f63d112-24ca-43b3-8c09-b0b2417f487f_20180416_125709.jpg" alt="Setapp shares stories about active users ever week" width="1600" height="1200" /><figcaption class="wp-caption-text">Every week we share a story about our active users with a team</figcaption></figure>
<p>And, what I believe is the most important, now we know that each story we ship makes Thomas’s life a little bit better.</p>

In Search of Product/Market fit: How Setapp Found its Customers

Pavlo Pedenko

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