Pear Analytics

Dear Beta Testers,

We released an update to the Settings page this week that should make the process much easier.  Here is what the changes are:

1.  Now you simply add a page to your account, and we break it out into the domain/page hierarchy for you.  No more having to create the domain, and then the pages under it.

2.  It will be easier to see what reports are currently running.  You’ll see the last report ran for each domain, as well as what’s currently running in the queue.  An email will still be sent when the analysis is complete.

3.  Now you can edit and delete domains, pages and competitors.  When you delete a page, that page and all of its history will be deleted.  When you edit a page, the old version will be deleted, and we will start tracking the new version since we assume that it was primarily a typo.

4.  There is now the ability to archive domains and the pages and competitors associated with them.  For SEO consultants, this might be useful if you work with several clients and you want to move one into an inactive status.  Analysis on those domains, pages and competitors will stop until they are unarchived.  Once unarchived, the analysis will resume and all of the previous data will be available.

Thanks for all your feedback, keep it coming, and we’ll keep making Sitejuice better for you.

Not using SiteJuice yet?  Sign up here.

1 Comment »Tags: SiteJuice Updates

This morning I attended the SATAI (San Antonio Technology Accelerator Initiative) STARs 2009 Technology Innovation Conference and listened to Rackspace CEO Lanham Napier and Founder Pat Condon talk about some of the interesting things about the growth of Rackspace, how they dealt with venture capital, and more importantly, how culture played a huge role in their current success. Some of the cool takeaways you would be interested in were the following:

1. Culture Matters. Even after the IPO last summer, the culture within Rackspace remained the same. It was crucial that nobody changed their screensaver from “The Matrix” to the Rackspace stock price (NYSE: RAX). This would create a very short-term outlook and take the focus off of the customer, and on to dollar value. Everyone is able to express themselves in just about any way they want to as a “Racker”, which to this day, companies still have difficulty with.  At Pear, we believe in the “no cubicle rule” – everyone including myself all sit in the open, and we have amazing collaboration with office mates Brandstack.

2. Hire Attitude, Not Skills. For the first two years, Rackspace hired people with a lot of technical aptitude to manage the support team. It turned out they needed a major shift in ensuring that he people who were talking to the customers truly loved their work.  Lanham says “how many times have you been to a ticket counter at an airline where you can just tell these people really don’t want to be here (with the exception of maybe Southwest and JetBlue)”?  Put the right people in the right place.  Pat Condon refered to the book “Strengths Finder 2.0″ by Tom Rath – a book they regularly use at Rackspace to make sure everyone is playing to their strengths.

3. Focus on Your Customers. Believe it or not, Rackspace didn’t always have Fanatical Support. In the early days when they were all jammed together in a small office, a customer called in one day asking for his backup. Well, they didn’t have the backup and this was the second time they screwed it up for this particular customer. After the phone call, David Bryce stood up and said “guys, we have to do this better for our customers. We can’t keep letting them down. We need to be more fanatical.” – and hence, Fanatical Support was born. This wasn’t something that came from the marketing department – this came from a real customer experience.

4. Do More With Less. In the early stage Rackspace had no problem raising capital. Interestingly enough, the pool dried up. Their first try at going public in 2000 failed and VC’s were not writing checks anymore, and if they did they wanted a 3x preference. They were down to about 2 months worth of cash and had to focus on focus on their customers to get through.  I talked with Pat Condon specifically about this and he says that there is a tendency to want to raise more money than what you really need, but at the end of the day, raise what you need to build your product and get customers.  This way you’re not on a spending spree running up your burn rate.  When you bootstrap, you really have to come up with creative ways to make the cash stretch – and that’s what they did.  They cut their $1m per month burn rate way down to stretch the cash, and ultimately got some local VC’s to offer a better deal, which forced the larger institutonal ones to fall in line.

5. Want Money? Have a Product Ready. You’re not going to be attracting any angels or VC’s unless you have an actual product.  PowerPoints are not going to sell you anymore.  If your product has customers, is in beta, or even generating revenue, even better.  Show that you can put something together with ingenuity, creativity and financial stewardship.

Hope this helps you.  What is your company culture like?   Do you have the right people in the right place?

No Comments »Tags: culture, rackspace, venture capital

Hubspot successfully analyzed over 1 million websites, 1 million Twitter accounts, raised another $16 million, and yet they only have 1750 customers.

Did anyone else notice this?

I’ve always been impressed with Hubspot, and I have much admiration for Dharmesh Shah and the other founders.  I’ve read just about all of their stuff on inbound marketing, permission marketing, conversion tracking and other juicy stuff.  But I was shocked to read the news about their $16 million in additional funding with less than 1750 total customers.  Boy, with all of the inbound marketing webinars and conversion improvement whitepapers, it seems as though Hubspot may need to eat more of their own dog food.  Don’t get me wrong – their customer growth rate looks like the “hockey stick” we would all love to have, and a 350% growth rate in revenue is not too shabby – but I expected more than 1,700 customers.  And it looks like it takes 2-3 months to acquire 250 new customers, some of which will churn I would imagine.

After the first two rounds of funding, they’ve essentially spent $10,000 to acquire each new customer, but as you will see further below, their average annual sale is only about $6,000. As good as their product might be, I’m sure they are not counting on customers sticking around for 20 months so they can break even, so they will need to sign up more customers faster than ever to decrease their cost per acquisition and get this thing profitable – and fast.  This is the risk by taking on so much funding – how much runway do I need to get our cost per acquisition down and our lifetime value up?  They spent the first $17 mil on engineering the product, perfecting it, building brand awareness, positioning themselves as experts with endless whitepapers, webinars, videos and more, and understanding the model to where they could go and raise more money.  Surely they know for every dollar they put into inbound marketing efforts, how much revenue and profit they will get on the backend.

Now, since this is their third round of funding, their gong to have to sell for about 10X their current value so the first two VC’s get their money out of the deal, at least so I am told.  Wow!  An “SEO Company” for $335 million?  I suppose they could always go public.  Remember when Rackspace (NYSE: RAX) did that last year?  I’m sure being in a niche space where comparisons are hard to come by makes it difficult for analysts to evaluate the company, and even harder for investors to invest in.

So if a customer today is costing them around $10,000, but they are only getting $6,000 per year per customer on average, how long will this model last?  Let’s take a look at their pricing model that is directly from their website:

If you segment customers across this type of pricing model, or a “freemium” pricing model, you will find that most of them  are in the low to mid tiers, with a handful at the top tier.  You spend most of your time trying to figure out how to upsell and convert your lower-tiered customers up into your higher profit top tiers.  Let’s assume Hubspot has a 60-20-20 split here from low to high.  So of their roughly 1,750 customers, that would put 1,050 at the low tier, 350 at the mid tier, and another 350 at the top tier.  If you do the math, that’s a little over $10.5 million in annual revenue, or $6,000 per customer per year, on average.

Hubspot claims an annual revenue growth rate of 350%, which to get to the $300 million mark is going to take about 2-3 years, assuming the growth is constant and they can get to about 50-60,000 customers.  So as you can see, the 250 new customers every 2-3 months isn’t going to cut it – they will likely need to get to around 750-1,000 new customers every month.

The guys at Hubspot are surely savvy enough and have enough brain power (and resources now) to pull this off, but it seems it will be a helluva feat.  Is Hubspot the next SalesForce?  Will they have to go public?  It seems like Hubspot is in the right position for extreme growth – a refined product, brand recognition, a seasoned team, cash in the bank – how could they go wrong?

Best of luck to ya, Hubspot.

Update 10/26/09: I just found this great blog post by Ben Yoskovitz: Raising Startup Capital is an Achievement, But Not the Most Important One.  He explains that Dharmesh is more of a “bootstrap guy” versus a venture capital guy, where he states “Closing a funding round is not value creation.  It’s the opportunity to create value.” – I happen to agree with Dharmesh on that 110%.  After you get your funding – whatever round or stage it is in – that’s when the real work begins.

2 Comments »Tags: cost per acquisition, hubspot, inbound marketing, rackspace

Before spending thousands on a tradeshow, know the metrics needed to calculate your tradehsow ROI; and get a few tips on how to maximize your success.

We just returned from the Search Marketing Expo in New York City last week where we launched our new SiteJuice™ product. We brought a big team of 9 people to help manage the expected crowd of 2,000-3,000 people.

To calculate your tradeshow ROI, you first need to define your goals, and that has to coincide with what your spending and what you are currently paying to acquire a new customer.  That means if you are currently spending $100 to acquire a new customer, and you plan to spend $20,000 on the tradeshow, you need to get 200 new customers out of the show, which is 2,000 leads at a 10% conversion rate.  If that sounds too high, you need to spend less.

OK, so now that you have a rough outline of some goals based on expenses, what is your strategy?  Our strategy was people. The more people we had, the more people we could talk to about our product and sell its benefits.  We maintained folks in the booth, and other consistently roamed around not only talking to people and driving them to our booth, but also scoping out the competition.  This seemed better than blowing a few thousand bucks on some lame bag stuffers that everyone throws away, or an over-priced sponsorship for lanyards or Wi-Fi access.  Brand awareness is fine, but it doesn’t sell your product, particularly if nobody knows who you are.

So here are a few tips that I hope you will find valuable the next time you search out the next tradeshow:

Tip #1 – Make it uber-simple to sign up for your product. We created special landing page for folks to sign up for our product that had only 4 fields.  Also, we did not require an email verification, and once they entered their info, they were logged straight into their account and we showed them how to set it up.  Normal sign up processes won’t work for a tradeshow.  Even with this simple process and 3 laptops ready for signups, we still had lines forming.

Tip #2 – Simplify your giveaway prize. This was tough for us in the sense that we had all kinds of cool ideas from scavenger hunts, to awarding people for participation and more.  The key is to make it as simple as possible.  We gave away a MacBook Pro as the grand prize, and 5 SEO Makeovers as other prizes.  In retrospect, we would have been fine with just the MacBook Pro giveaway.  Even though the makeover was easy to get in (all you had to do was follow us on Twitter), it was difficult to talk about too many things.  You really have 1-2 minutes to talk with folks and you want to spend those precious minutes trying to sell them on why they should use your product instead of all the various prizes you’re giving away.

Tip #3 – Refine your selling points and messaging based on the audience. We spent a lot of time researching who the audience was and we broke it out into “pros”(people who were experts in search marketing) and “joes” (not experts), and we developed messaging and talking points based on whether they were an ad agency, SEO consultant, or someone just getting into the industry.  We made 11×17 laminated sheets that broke down the benefits depending who they were, and we had a 100% conversion rate for everyone we walked through the “cheat sheet”.  Most importantly, our team met internally several times before the show to discuss what to say, what not to say, and more.  I think this helped immensely in getting over 200 signups in 14 hours of floor time.

Tip #4 – You don’t need a $4,000 booth set up. We made a 10′ x 8′ vinyl backdrop with very large text (only 3 bullets) and a white box where we could run a projector against.  The best thing was that this fit in a suitcase so we didn’t have to pay shipping at all.  The backdrop was about $400, and we purchased 3 yoga balls for $21 each and $60 of Jelly Belly’s for folks to grab.  I even went to Best Buy before the first day of the show and purchased 3 HP Mini’s, and then returned them with no re-stocking fee after the show was over.  We had a $240 floor piece that we couldn’t dismantle and take back, so we gave it to someone at the convention center to avoid fees.

Tip #5 – Huddle. Our team (as large as it was) huddled before the show and after the show each day.  We shared interesting things that we heard from people, we talked about process improvements, and we talked about numbers and if we were on target with our goals.  On day two, we made some significant changes that I believe helped grow our sign up rate by over 30%.  People wanted to see screenshots, so we swapped out the 60 second video with 7 static screenshots that rotated every 15 seconds on the projector.  This way you could actually have a conversation with someone and show them the screens as they rotated by.

All of these tips should help you increase your tradeshow ROI by reducing costs and maximizing conversion rates on your end goals.  Let me know how you made out!

No Comments »Tags: tradeshow roi