📕 Avoiding measurability bias; The Shape-Up method; The power of Pre-Suasion...
Happy Friday folks. This is our last Playbook before Christmas, so we’ll wish you an early happy holidays now! It’s been an eventful year to say the least, here’s to hoping 2021 brings brighter days (we’re optimistic). Cheers!
💰 Customer LTV shouldn’t be a big focus in the early days of your startup – you’re still figuring out PMF and the best channels to attract and convert leads. But soon enough it will become one of the most important metrics you track. The simple LTV calculation is ARPA multiplied by gross margin, divided by churn. Christopher Janz suggests a few ways to tighten up that calculation and make sure you aren’t over-reporting LTV. For example, lots of companies use logo churn as their denominator, but switching to revenue churn will incorporate expansions and contractions (and be more accurate). This SaaS LTV Calculator includes all of his suggested amendments to the calculation – have at it.
🚙 You can’t define marketing success without measurement, which is why we all track simple metrics like engagements, clickthroughs, conversion rates, etc. We tend to give those easily trackable metrics a disproportionate amount of attention because simply put, we are too lazy to explore new and more challenging ones. That’s called the measurability bias, and it occurs in a wide range of areas that extend far beyond marketing and SaaS. So what can you do about it? Try to have an open mind towards less familiar metrics. They could end up being key to unlocking a new level of effectiveness in your marketing.
⛴ The Shape Up method is a product development technique created by the masters of “work smarter not harder,” Basecamp. Following an eight-week cycle, the Shape Up allows engineering teams to quickly and autonomously develop new products/features. Yes, you read that right, autonomously – if you truly adhere to the process, your engineering teams should work in complete solitude for eight weeks. It’s a big commitment, so the creative folks at SearchSpring found a way to incorporate the Shape Up method's best parts without neglecting daily ops. They found the result was still the same – by cutting down on distractions, they could dive deeper into their problems and create more valuable solutions.
⏰ When we get bored of Friends reruns, we like to flip on legendary founder and investor Bill T. Gross’ TedTalk on why startups fail. He points to timing as the most critical piece of your strategy because you’re really trying to shoot the gap – you need to get in early enough to where the space isn’t oversaturated, but not so early to where you’re spending too much time educating your audience about why they need you. Our current environment changes at what feels like lightspeed, so you need to be realistic about how your product fits into the market and (as always) be able to anticipate how your customer needs will evolve.
🤯 Of course, marketers and sales leaders want to be persuasive, but maybe it’s time to think about being pre-suasive? In Robert Cialdini’s Pre-suasion: a revolutionary way to influence and persuade, he pushes that in order to be able to change minds, we need to be able to change mindsets. Building off the thesis that the most valuable commodity of the 21st century is attention, Cialdini focuses on using two main ideas: anchoring and priming (see below). Our big takeaway – making ideas stick means aiming to change what people think about, not how they think.
Anchoring - attentional bias, rooted in the idea people use the first piece of information offered when making decisions.
Priming - our responses are systematically biased to the most recent stimuli.