Ask HN: How do you ensure that your customers are profitable? | Hacker News Reader

Ask HN: How do you ensure that your customers are profitable?

6 pointsfezzl7 comments

I offer a daily deal platform for anyone to start a hosted daily deal website, kind of like Shopify/BigCommerce for Groupon clones. Revenue is growing, and we are seeing some traction, but since most of our customers are first-time online business owners, they naturally have a harder time trying to make a profit. They have little clue about, say, SEO, email marketing, social media, etc. and are generally more easily disillusioned and dispirited (because of certain preconceived notions about how easy it is to make money online).

The problem with my business model is that I can't be profitable unless my customers are profitable (and rightfully so). A lot of times I feel that I can offer some help (e.g. by reminding them that selling something people want is more important than a perfect web design or that building an opt-in email list is usually more important than building Twitter followers), but we are a platform provider, not an advisor/consultant. A landlord can only do so much to ensure that his tenants are making money and thus able to pay rent every month.

I think it was Paul Graham that said that startups shouldn't sell to startups and, if they do, bad things happen. My question is how do companies like Shopify, Volusion, and other ecommerce platforms out there tackle this problem? How do they make sure that their customers do well -- apart from improving their platform, which they have already been doing all the time?

1) Charge more.

2) If you are hypothetically doing $0 + X% of Y pricing right now, change that to $MONTHLY + Z% of Y. You'll qualify away the worst possible "customers" and get money to keep the lights on.

You'll note that virtually everyone who sells to businesses is forced to do this, because otherwise the wanna-run-a-business-to-make-moneys crowd will suck all your time.

Hi Patrick, thanks for your suggestions. I am already charging more than before, and I'm not sure that charging even more will help me get the feedback that my product sorely needs (even when we're at >40% "very disappointed" using Sean Ellis' product/market-fit survey) or even increase revenue. Most of my customers are, in fact, bona fide business people who want to build something long-term; they just have no clue w.r.t. most aspects of business.

Also, with my current pricing structure ($MONTHLY + 0%), it is actually already incentivizing them to make more revenue to at least cover the monthly fees. The other thing is that -- I suppose this is a peculiarity to myself -- my morale is directly proportional to the number (and not necessarily the dollar amount) of PayPal "new subscription profile created" emails I receive each day.

But I suppose I also need help in charging more: what is the best way? Just do it + grandfathering, or grandfathering + add massive perceived value and then hike the price? I went with the latter, but it again seems that people are wanting premium features for standard price, which may mean that I'm pricing a little too high and leaving money on the table again.

"my morale is directly proportional to the number (and not necessarily the dollar amount) of PayPal 'new subscription profile created' emails I receive each day."

Have you considered insulating yourself from these emails entirely? If your morale is so deeply affected by something that doesn't directly affect your bottom line, it will probably cause you to optimize for the emotional boost rather than the bottom line.

Perhaps you could instead set a daily email with projected revenue or some other number that does impact your bottom line so that optimizing for the emotional boost and optimizing for the bottom line are the same thing.

What about adding extra features at extra price? DLC add-ons if you will. Someone suggested Freshbooks integration, offer that or whatever other premium feature at an extra $X a month.

Alternatively, I might think blogging might help. High quality posts that relate to your customers and then you can always send it to them in newsletters or something. That way tangential topics like basic accounting or social network marketing can find their way into their hands. No money in this route, but it might help them in some way.

How about a video resource library? If you've got the cash, you can work with people who are experts on particular topics (email marketing, etc...) to prove you the tutorials. Alternatively, you can block out a weekend to put some videos together. It's acts as a marketing tool, ("Learn Everything You Need to Succeed With Daily Deals!") and a retention tool. In fact, having a big link to the video library on the cancel page would probably distract people away from cancelling.

If you have already found that your customers are first timers, i can tell you one thing

Guide them step by step

With the problems. For example, for marketing, outline the process for Facebook marketing and ease it in their accounts. If you see they have problems with lets say accounting, integrate Freshbooks.

Your customers will be profitable when they put effort, and for that to happen, they need to know what they are doing and connect actions to results.

My 2c

Sign up for a Light CMS account and learn from the nurture marketing email campaign they run which tells you how to be a profitable web designer, it's a fantastic example.

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