Customer Development and Inbound Marketing in Practice: The Story of Snapshot

Posted on December 8, 2011
Filed Under Business |

I don’t blog a lot about the inner workings of Backupify but our recent launch of Snapshot for Google Apps has been very successful, and it seemed like a good time to use this example to correct some misperceptions people have about common terms bandied around in startup circles. In particular, I talk to many people who think “inbound marketing” means any online marketing, and people who think “customer development” means asking customers what they think of your product. I didn’t coin either term, so I am not the final authority on what they do mean, but I think both of those definitions fall dramatically short of what the originators intended. This is my attempt to explain what I think they do mean, in the context of work we have done over the past year.

To start you have to roll back the clock to March 2010. At that time Backupify was primarily a consumer social media backup tool, and we had recently realized that all our paying consumer customers were really businesses. We were considering a Google Apps backup product and were talking to I.T. managers we knew through our network who had moved to Google Apps, or were considering it. Sim Simeonov was teaching me customer development by walking me through these initial calls (note to entrepreneurs: surround yourself with great advisors) and we were talking about Microsoft Exchange.

Let’s stop for a minute. This is where most startups I talk to are failing in their “customer development.” Notice that we were not even talking about our product or the perceived need for our product, because when you do that people tend to just tell you “yes, they will buy it.” Customer development is really about much more than asking questions about your product. It’s about getting into the head of the person you believe to be the target user, and understanding the issues they really have. So, when I first saw Sim’s 3 page template of questions we were going to ask, I didn’t understand why half of them were there. But once we starting talking about Exchange, it began to make sense.

A couple of interesting things came out of these early conversations, and one of the most interesting points was that there was no clear employee deprovisioning process for Google Apps. In a Microsoft Exchange world, everyone knows what to do when an employee leaves, but in a Google Apps deployment, most I.T. managers were continuing to pay $50/year to Google for that seat. I made a note about this, but was more focused on the Google Apps backup idea, so it was a while before we took another step.

The second step came in March of 2011. We began analyzing a new metric that showed what percentage of the users on a domain were being backed up, to see if there was an opportunity to upsell existing customers who may not be backing up all their Google Apps users. But when the first graph went up, over half of our users had more than 100% of their domain backing up. It was puzzling. It took a few minutes for us to realize that these companies were storing data for old departed employees on Backupify. A company with 100 seats might be backing up 109 domains - the 100 active employees plus the 9 who had left. So we called these companies and found out that they were storing the data on Backupify and canceling the Google Apps accounts because Backupify was cheaper. We also learned that they would love to download this data locally and get rid of their Backupify costs too. They just wanted an archive somewhere of this old user data.

It became clear that, while not every company had a need for Backupify, every company did have a need for this Google Apps employee download tool. We started thinking about this tool as a separate product. The problem we encountered was, as a SaaS company we are pretty geared up around recurring revenue, and this didn’t fit our model. It was also much easier to build than the core Backupify system, so the barrier to entry was lower. And, we knew that the Google Data Liberation team would eventually build there own version of this, so there was a limited window for the tool anyway. So it didn’t make sense as a product, but it might make sense as a lead generation tool.

Now, most startups, when they talk about inbound marketing, seem to focus heavily on blogging. And yes, blogging is a piece of it. But remember the analogy that Hubspot used to kick off the term? It was that if you want to attract bees, set out a honeypot Inbound marketing is anything that can be a honeypot. Content works, but so do unique tools that have broad appeal, are cheap to build, and can generate qualified leads by exposing some small piece of functionality of your product. This fit Snapshot, so we built it. But, since this was a marketing product, we pulled it out of the normal product department and set up a separate set of goals for it.

The purpose of Snapshot, was to perform one simple task but do it extremely well. It had to create a positive experience with Backupify, so it had to be fast and easy to use. And the goal was promotion, not revenue.

Fast forward a couple of months and we were ready to launch. We decided to allow 5 free downloads for any Google Apps account. Users who signed up were then sent a message encouraging them to try Backupify. A significant percentage of them do, but those that don’t sometimes request more snapshots, which we then sell to them. So Snapshot is interesting because it serves as a lead generation tool and as a revenue source for Backupify.

Was it successful? So far, yes. Three months after launch, Snapshot generates about 10% of our revenue month to month (although it’s new revenue, non-recurring) and about 20% of our total leads. At current pace, it will be our highest source of leads by the end of Q1.

So in summary, the main lessons are:
1. Inbound marketing can be more than content. Don’t be afraid to use partial product functionality as an inbound marketing tool.
2. Customer development is about more than just asking people what they think about your product. It’s about understanding workflows and attitudes, needs and desires, and so much more. When we do customer development interviews, maybe 20% of the focus is on what we offer. The rest of the time is spent on understanding the target customer and their overall needs relative to this space.

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