Startup Therapy: Ten questions to ask yourself every month

In the last post I beat you to death about ditching your business plan but failed to provide an alternative.

Okay okay, “Planning == Bad,” but the supposed benefits of planning are still important: designing for profitability, understanding your customers and competitors, focusing your attention, deciding what’s worth doing next, changing directions, and ensuring the founders agree on important issues.

To help you, I’m stealing a trick from therapists.



Cartoon by Andertoons


Therapists don’t tell you what to do. Rather, they ask probing questions that get you to discover for yourself what is true for you, your situation, and what you want.

You’re smart. You’ll make good decisions. But you also get bogged down in daily minutiae and putting out fires, meanwhile missing the big picture.

That’s where this article comes in: To splash cold water on your face, forcing you to face reality and continue to defend or change the important choices inside your business.

What follows is your startup therapy session. Having to think through and answer these questions forces you to identify what you need to do today to seek profits and growth.

  1. In one sentence, what does your product do and who buys it?
  2. In one sentence, why does someone buy your product?
    These are surprisingly difficult. The shorter and more precise your answers, the more you understand why you exist. If the answer is, “I honestly don’t really know why people give us money,” that’s something to remedy immediately.

    If you have an answer, is it because you have hard evidence that this is how your customers perceive you and why they give you money, or just because you believe it? “Evidence” means emails and Tweets and testimonials that use those words exactly; otherwise you’re likely interpreting their feedback to match your expectations. (I find myself constantly guilty of this disconnect.) If you don’t have evidence, it is OK to have a hypothesis but you should be concerned about collecting proof and disproof.

    If you do know the answer, these two sentences should drive your marketing efforts. If these sentences aren’t on your home page, why the hell aren’t they? Is there anything else more compelling to potential customers? At the least, these represent the themes that drive your marketing campaigns.

  3. What one thing is most responsible for preventing sales? (e.g. people not knowing you exist, pricing, not enough product features, unorganized sales strategy, look-and-feel of website, haven’t identified pain points, …)


    Cartoon by Andertoons


    Most little companies aren’t honest about this, yet it’s possibly the most important question you could ask. For example, I’m an engineer, so my first answer to “Why don’t you have more customers?” is almost always:  “Because we need this feature.” You hear some potential customer say “we will buy if you do XYZ” so you conclude that if you implemented XYZ people would start breaking your door down.

    But is that really the case? If you added one feature and maybe satisfied that one customer (assuming they wouldn’t ask for a second thing, and in my experience they usually do), would that get you 100 more sales? For those hundreds of people who downloaded your software and never bought — is the reason “not enough features?”

    For the hundreds of thousands of people who never came to your website in the first place, or hit the front page and left after three seconds, is the solution “more features?”

    When you honestly ask yourself this question, it will naturally lead into things you can do right away to get more people to the site, into a trial, and/or into a sale. Don’t just rest on what comes easiest.

  4. What’s one thing you could do to get more feedback from customers, potential customers, or sales you’ve lost?
    You already know that external feedback is the only way to empirically determine how to build products people want to buy. Maybe you can’t drop everything to solicit feedback (although folks like Eric Ries say you should), but surely it’s worth one day every month to go out of your way to collection information from the field.

    To get the ideas flowing, here are eleven ways to get more feedback, most of which take less than a day to implement.

  5. If you had zero revenue from now on, on what date would you run out of money?


    Cartoon by Andertoons


    The first thing this does is force you to nail down your monthly expenses and accounts payable. Second, you know the length of your fuse even in event of disaster (if you have revenue) or if you never manage to land a customer (if you’re just starting out).

    More than that, knowing your “padding” as I used to call it is helpful in making decisions like “Can I afford to try this Risky Expensive Thing,” such as making your first hire or trying a $20,000 media blitz. Whenever you’re contemplating a new expensive idea that could be awesome but could be setting money on fire, your fuse date helps you know how much time you’re risking — time to recover if your bet doesn’t pay off.

    Finally, knowing “The day my business could die” helps focus your attention on activities that bring in revenue.

  6. If someone handed you $100,000 today, how would you spend it to maximize future profits?
    This gets you to crystallize what cost-centric activities would most help your business. We get caught up in free-but-takes-tons-of-time marketing and development activities — and most of the time that’s a good way to think — but sometimes it’s still true that “you have to spend money to make money.”

    Sometimes the “thing you could do” is so compelling, it might mean you should raise a small angel round or consider debt. Typically it’s best to get by with minimal debt and investment, but if the “thing you could do” is transformative, you might reconsider.

  7. If you were forced to hire someone today, how would you define her job such that she would contribute enough revenue to cover her expense?
    I know, you can’t afford anyone right now, no one can do as good a job as you, and you don’t even know that you’ll ever hire someone. That’s OK, that’s not the point of this question. This gets you to ferret out what tasks are being dropped by the wayside because you’ve got higher-value things to work on, because you’re having to fight fires, or maybe because you’ve got your priorities wrong.

    If you honestly can’t imagine that there’s anything a full-time person could do that would generate enough revenue to cover their salary, that’s not a bad thing.

    But often this churns up one or two very-part-time tasks which really ought to be done but aren’t. No need for a new employee of course, but maybe you should re-prioritize those tasks next month.

    Sometimes you come up with a good answer, which means you should contemplate help. “Help” doesn’t necessarily mean a proper, 40 hours/week (OK, who are we kidding, 60 hours/week) employee. It could be a part-time consultant. It could be an intern.  It could be an outsourced office assistant. It could be a new partner willing to work for stock.

  8. Which of your business operations do you hate?
    Do you like creating new features but hate tech support? Enjoy product demos but hate cold-calls? Need to have your arms around company finances but hate bookkeeping? Love writing ads but hate dealing with ad sales agents? Get excited about your field of expertise but hate writing blog posts and Twittering?

    Part of why you’re in business for yourself is creating something from scratch and delighting customers, but the fact is that most business operations just suck. You can’t justify avoiding important tasks because they’re not fun. I know — I’m the worst procrastinator when it comes to those things!

    It’s useful to identify these undesirable-but-necessary tasks because you can do something about it:

    • If you shut off email, Twitter, chat, and the phone, and just buckle down, you might be able to get through some of these tasks in under 15 minutes. Bookkeeping is like that. Get it off your plate; you’ll feel better.
    • Mundane tasks might be outsourceable. I’ve found that “virtual assistance” services (like Four Star Service in Austin) are surprisingly affordable if you have a lot of little time-consuming tasks.
    • See if your existing vendors are willing to do some of your tasks for a small fee. For example accountants often provide bookkeeping services at a lower hourly rate.
    • Consider an intern or consultant. Before you argue that the cost is too great, factor in the lost revenue due to you working on those tasks.
    • Can you share the burden with your co-founder or employees? Maybe they don’t hate it as much as you do; you can trade hated activities. Or switch off.
    If you’re still stuck on not wanting to spend any money to save time, remember what Dharmesh says: Act as if someone is paying you $1000/hour for any activities that improve sales (making, selling, and your customer’s happiness), and for everything else they’re paying you $10/hour. It’s accurate.  (Before you argue, don’t forget about the cost of lost sales.)
  9. What initiatives could be done half-assed without significant impact?
    I know, this is a shitty question. If you’re like me, you are that aggravating combination of perfectionist and control-freak that on the one hand leads to stellar work but on the other hand means some things take too long. Some parts of your business are core to your success: Which features you implement, how you present yourself and interact with customers, discovering how and why people give you money.

    But the fact is your to-do list is infinitely long and you have to pick your battles. Your “Contact Me” page has to exist but it doesn’t matter what it looks like. Every blog post doesn’t have to be a work of art. Your Google Ads need variety (for testing), not hours of wordsmithing. It’s better to have an eBook about anything than to have no eBook at all.

    If it can be done half-assed, and it’s not going to impact revenue, maybe it should be half-assed. Allow yourself to delegate (because it’s OK if it’s not done exactly how you would do it). Push more out the door.

  10. If you could get one solid hour of advice from a guru you respect, what would you discuss and what would be the goal of the meeting?
    This is a fun way of asking: “What knowledge/feedback/direction is critical to your business right now, and which you’re uncertain about, and which you feel other people are expert in?”

    Phrasing the question this way also leads to solutions. For example, maybe you should set aside 4 hours to get your hands on that guru’s materials (blog, book, podcasts) and immerse yourself not just in advice but in their mindset. Or email them and see if you can get some advice! Or find other people that guru respects and who might be more accessible.

    Or hell, ask me! I publish my email address you know.

What tips do you have? Leave a comment!

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  • http://www.morphodesigns.com Mitchell Allen

    These ideas are worth bookmarking…for when my product is perfected. LOL

    Your therapist method really works! I feel the catharsis of introspection.
    But, I still lie to myself. I suppose I need a few more sessions with these tough questions.

    Cheers,

    Mitch

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  • http://www.petermichaud.com Pete Michaud

    Doing things half-assed has been my greatest boon. It was extremely difficult for me to come to terms with the notion that getting everything perfect, THEN launching just isn’t an option. Getting “something” out there is the only option.

    I have sites that I know don’t validate. I have books that are typeset in Word (Word! Arg!!). I have systems that require my daily intervention to keep going instead of the crystalline perfection of automation that I could achieve given the time.

    These half-assed things I’ve built support me. The perfect things in my mind never did.

    • http://blog.asmartbear.com Jason

      I can sooo relate! In fact my book was also in Word and every time I open it I see something I’d like to make better, but the truth is it doesn’t matter.

    • http://gigapromoters.com Abhimanyu Grover

      To add more to this, even if I built a perfect thing – it was ‘perfect’ for only a few weeks. So this method works for me very well – and to explain this to your team is a challenge sometimes.

  • http://www.wakeupcloud.com/ Henri @ Wake Up Cloud

    A bookmark-worthy post. The first thing that came to mind one the question “if someone gave you $100,000″ was to give it away, but I don’t think I’d do it. I might give some of it away. Build a buzz with contests and other creative things you could do.

    Since I’m a mere blogger without products (yet), I don’t have that much to spend it on, other than trying to build my list, audience and making people happy.
    .-= Henri @ Wake Up Cloud’s latest blog post: What Babies Can Teach You About Success =-.

  • http://www.mvpmodelingsolutions.com Masha

    An excellent exercise to go through every month with your business! I printed out the questions and put them up on my wall as a reminder.

    Thanks for a great post – just in time for starting out the New Year.

  • http://www.third-bit.com Greg Wilson

    What questions would you remove (or add, or change) for open source projects? Or student projects?
    .-= Greg Wilson’s latest blog post: (How Well) Does Modeling Work? =-.

    • http://blog.asmartbear.com Jason

      Questions 5 and 6 no longer apply because they’re specifically about managing your finances. I believe the rest still apply because they’re about focusing effort, prioritizing tasks, and understanding your own goals.

      Question 7 might become more important, because in both academia and open source your advantage is the power of cooperating with any number of other smart people. To what extent can you motivate others to work for your cause?

      If I were to add a question in those cases, it’s probably this: How could you maximize your learning? Personal growth is probably more important than trying to get money or fame. An open source or school project that few others use is still a raging success if you’ve learned about the problems of a growing codebase, the struggle of handling user input, the power of version control, having to work with other developers, etc..

  • http://www.bloggerden.com/ Blogger Den

    These questions have really helped me narrow down my business model. Not only am I trying to sell a product to my visitors, I’m trying to sell my websites to my visitors. Gaining more RSS subscribers or registered users is the goal of my site, so it’s only natural to want to do this in the easiest way possible that will exponentially grow over time.
    .-= Blogger Den’s latest blog post: List of Ways to Build Links & Promote Your Website =-.

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  • Clint

    No business plan? It is a hard concept to swallow in my line of work (I am a business strategist and consultant) as opposed to software entrepreneur; so for me the adage of failing to plan is planning to fail.

    However, this concept dovetails neatly into the survivor bias theory. Businesses do get far too bogged down in trying to copy the successes of others when in reality the most important aspect of sucess is having a great product package in the first place. A bit of smarts around marketing can be just as valuable as a unique product and a poor marketing straetgy around a good product can be just as erosive to success. You need both. Those who have made it have often started with a great (albeit often simple) product and developed the market access strategy later.

    Long story short – it’s the how and what to plan that are important. Your questions provide a great probing platform for your followers which will direct them to developing their products and market access strategies – this may lead to some soul searching adn reality checks. Answers are easy it’s having the right questions to ask that’s the hard part.

    I really enjoy your writing I have recently read the work of Sean at sevenredbags.com I think you would like his intuitive approach to how he thinks the brain works in decision making – check it out!

    Kia ora from New Zealand!

    • http://blog.asmartbear.com Jason

      As a business strategist, I would think not having a business plan is exactly the concept you’d want to espouse.

      After all, if it’s as easy as writing a plan and executing it, they can just use you for the plan and then say goodbye. Of course it’s not that simple — if we were that’s what everyone would do! — which means they need to retain your services continuously.

      I’m not sure I agree that “answers are easy,” but I do agree that asking the right questions is half the battle.

      I like what you said about the relative importance of different aspects of the business and how really none of it is 100% vital or 100% leads to success or failure.

  • http://tylers-blog.heroku.com Tyler Gillies

    wow, very to the point. thanks!

    • http://www.victusspiritus.com Mark Essel

      Yeah I’m trying to get it printed out in a nice readable format, and use that as a template for having them tattooed on the inside of my eyeballs.

      Seriously, it’s a great set of wake up calls for decision making, design theory, and startups.

      It jives with my internal compass
      .-= Mark Essel’s latest blog post: Attention Jiu-Jitsu =-.

  • http://www.victusspiritus.com Mark Essel

    Jason, my gut instinct is to rank these priorities driving questions up there with Joel Spolsky’s top 12 interview questions for developers.
    .-= Mark Essel’s latest blog post: Attention Jiu-Jitsu =-.

  • http://twitter.com/wonkeydonkey42 Dan Khan

    Wow, a great reality check – will build this into our regular KPI review.
    Many thanks.

  • http://www.johnstonsearch.com/about.php Brian Kevin Johnston

    Jason- Thank You..

    “What initiatives could be done half-assed without significant impact?”

    This is my favorite…. We ALL need to focus on Sales/Income generating activity, as well as innovation, and a TON of Marketing..

    What is most important to you Jason?

    Best, Brian-

    • http://blog.asmartbear.com Jason

      To me “most important” is to ask the question you don’t want to answer.

      That doesn’t mean you need to change core beliefs. But e.g. #3 is something that almost every person I meet has a problem with, just because you don’t want to hear the right answer. Me included, by the way!

      • Roopak

        Well said Jason!

  • http://beaconhillnw.com Jim

    i recently asked a new client why he chose me…some of the best intel i’ve had in while…i was told early to let your customers define who you are
    .-= Jim’s latest blog post: How To:The Year in Review =-.

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  • http://www.bluepop13.com Eric

    If I was given $100,000 dollars today I would simply use it to buy books on improving my business and my life. Knowledge is very important for any task in life. On the same note: knowledge is not power, the implementation of knowledge is power. I read that in one of Larry Winget’s books. My favourite author.

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  • http://www.cabchap.com Taxi Booking | CabChap

    Great post! Really applicable as opposed to “write a 240 pages business plan to make up your mind” advice! Totally agree, IF you have someone to discuss these questions with. I guess doing this alone is not going to work. Probably comparable to a therapy, where you have someone external asking the questions and maybe doing the rephrasing or more probing where needed.
    ‘Good enough’ is an important status I learned to define up ahead, before I even start a project. It is somehow comparable to the now famous “minimum workable product.” (or something). Big time saver!

    .-= Taxi Booking | CabChap’s latest blog post: Vivisecting Apples iPhone App Review Process – Insights from Inside =-.

    • http://blog.asmartbear.com Jason

      You make a good point about needing an actual human being to ask the questions and press you to make good answers.

      There will be a post in January that addresses this to some extent, but in the end nothing beats a smart, external devil’s advocate.

  • http://www.bluestsky.com Gene Underwood

    TOTALLY on target for the small business owner, like me.

    I made myself actually answer the questions as opposed to skating over them, and I had a few insights that will help me improve things as I grow. And what a greta problem to have: growing!

  • Oliver

    Very cool post that! Just the idea of the method is excellent. Never mind the application to the business plan. I’m a software test analyst and I will use this method to get constant reality-checks on what we’re doing to hone our product to the real needs of all stakeholders.

    THANKS!

  • http://ricardodsanchez.com Ricardo

    Great post, it reminded me of one of the best and simple ways of improving our business and ourselves… stop, think really hard and ask great and simple questions about what you are doing for your business, to improve it, etc… it makes you think, and when we actually stop to think for a minute… we discover that many things we are doing are really not helping us achieve our goals, and it give us a chance to change course to start going in the right direction… I’ll bookmark this one. Thanks!
    .-= Ricardo’s latest blog post: Using LinkedIn to improve your business =-.

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  • http://fazine.co.cc elias

    thanks for the information, very nice

  • http://thenextbigtechthing.com Charles

    Great post.

    A litmus test at regular intervals is a great idea. Creating additional self tests to be run on intervals such as weekly or yearly would also tell you a lot about the health of your business.

    Knowing where you stand today is one of keys to being prepared for the future.
    .-= Charles’s latest blog post: 3 Reasons That Site Owners Are Not Using A/B Testing =-.

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  • http://themerchgirl.net Tiara the Merch Girl

    yay! As a creative-minded person, things like formal business plans give me the shivers – questions like these are tons more workable. I’d been mulling answers for a little while now so I figured I’d give it a go on my blog. Thanks for the questions!

  • http://www.volpet.com Giammarco Schisani

    I found this very useful. Thanks for sharing!
    .-= Giammarco Schisani’s latest blog post: Hello World from Table Diff =-.

  • http://kgaskinsconsult.wordpress.com Kim Gaskins

    Jason,

    After reading both of your posts I must say I am impressed. You have taken the way people view business planning and elevated to being a living and breathing thing that needs to be nurtured.

    My expereince with some clients have been hand me the answers so I can do steps one two and three and be a success. They feel if they write (or I write) the perfect plan they will be set and have no worries. But it isn’t the case. It is the execution and evaluation of your ideas that make the business successful.

    The reasons you stated is why I approach my clients and seminar participants through a question/answer approach rather than here is the outline of a business plan lets createone. By asking questions of about your business, success and thoughts you gain more insight than writing the perfect mission statement. The answers to the questions lead to the parts needed to understand your business to discuss it with employees, potential funders and create the powerpoint for VC’s as well as know your goals for your business beyond to make a lot of money.

    Thanks for sharing your thoughts and backing it up with an alternative.

    Wishing your productivity and prosperity,

    Kimberly Gaskins
    http://kgaskinsconsult.wordpress.com
    http://www.kgaskinsconsulting.com
    .-= Kim Gaskins’s latest blog post: The Oprah Effect on My Business =-.

  • http://fauzan.dhezign.com Brian Arfi

    It’s one hell of a nice piece of post.

    Since i just wrote a blog post that encourage people not to get frustrated and consume too many hours (or even days) with their business plan. This article supplements it well.

    Thanks a lot

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  • http://www.architecture-student.com/ Jackbid

    You are a thinker mate… A real expert. I have never owned or started a business, but after reading your 10 questions, I know its one hell of a risk. You can never be sure of what goes wrong…

    This post is worth saving permanently… somewhere safe, where it can be accessed, maybe 10 years, or 100 years from now, and it would still retain its value as a real treasure to new entrepreneurs…
    .-= Jackbid’s latest blog post: Evolution of Persian Gardening Style | The Paradise Gardens =-.

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  • http://blog.morebusiness.com Raj Khera

    We often find that having a list of key goals, broken down by quarter if necessary, often helps focus our work. There are so many things that can take your eye off the ball. Looking at every opportunity through the lens of the main goals keeps you headed in the right direction. This is how we do it: http://bit.ly/4qFLtf

  • http://www.businessaccent.com Vic

    You’ve got me in no. 5. I’m just in my startup phase in doing business and I have not yet generated any revenue or net profit. But expecting this in the past helps me. This is the fact for business startup. What I can do is have a little sacrifice.
    .-= Vic’s latest blog post: 101 things successful businessman and entrepreneur have =-.

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  • http://chrisdillon.us Chris Dillon

    I feel like I’ve just been poked in the eyes Three Stooges style!

    I’ve been working on a startup business plan for the last two weeks. The whole time I’m thinking if I can’t explain this idea in one page then what’s the point? I’m ditching my attempt to color within the lines.

    Great posts Jason. Thanks!

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  • Rainier Wolfcastle

    Great list! But although it is weighted towards truly tiny operations, it is still missing one thing: the idea that you might need to fire a non-performer. I have been in several startups, and a continual problem was the abject non-performer who couldn’t be fired because, for example, s/he was the CEO’s best buddy, or because if you fired him/her then the invaluable person who brought them in would get angry and leave. Just one example:

    Your question #3 brings back nightmares for me re my last startup. We went through the following loop over and over and over again: (1) Sales says we could land a big [reference] customer and many more in the same vertical by adding a new feature or support for a new platform. (2) We in engineering KILL ourselves to get it done and done well in record time, working 7 days a week for weeks on end. (3) No sale. No good explanation of why no sale. Sales blocked access to customer (didn’t want engineering manager types talking to customer) so we couldn’t get good answers. (4) Go to (1).

    The problem was the VP of Sales was incompetent. 40 employees + no revenue = disaster (see your Question #5). He would forecast $1 million revenue for current quarter, $5 million for next 3 quarters, then bring in $80,000 (if we were lucky). Over and over. But he was the CEO’s good old friend, so the CEO wouldn’t fire him. We burned through all of our second round of funding and we were done. 40+ people out on the street.

    Meanwhile, I had a killer person I wanted to hire in engineering. I had no money to do so (see lack of revenue above), but I had inherited 2 incompetents who badly needed firing. I’m not talking worker bees; even small companies can put a very small number of worker bees to good use. I’m talking people who screwed up so badly they had a net negative effect, and did so continually. But I wasn’t allowed to fire them, because that would upset the friend-of-the-founders who brought them in and sheltered them. The founders/execs freely admitted they were incompetent and a drag on my organization, and still wouldn’t let me fire them.

    As I said, this was only one of many examples. Hence my suggestion that you include something along those lines in a future version of this excellent list of questions. The ability to be brutally honest about firing decisions — not vindictive or they’re-not-a-perfectionist-like-me, just honest — is a quality that I find many startup founders lack. They understandably begin to treat co-workers and subordinates as family members with all the messy unearned required loyalty that comes with family. And the last thing a startup needs is to be dragging a boat anchor or 3 around, especially when their salaries could be used to pay competent employees instead.

    • http://blog.asmartbear.com Jason

      Great point, great stories, and I 100% agree that should be on the list.

      In fact I have a few stories of making that error, but in my case it wasn’t cronyism (I never met them before they were employees) but rather just lack of psychological strength to do what needed to be done.

      I’ll write this up — great subject — but the summary: I knew it wasn’t working, so did everyone else, but it’s so hard to actually fire a person. So I procrastinated. Morale for the other guys diminished. And I was actually preventing them from finding a job where they could succeed — which they did! So I was actually hurting them.

      Great lessons, thanks for sharing.

  • http://www.tonywright.com Tony Wright

    Great freakin’ post!

    If you’re going to ask the “sales” question (“What’s preventing sales?”) you should certainly ask the “churn” question. Reducing attrition might be one of the highest-leverage things you can do as a startup. Illustration:

    If you take a cohort of 1000 users from a month an 80% monthly retention rate means that you’ll have 68 of them after 12 months. If you can get that to 90%, you’ll have 282 left. A 300% revenue boost for that single cohort (and every subsequent monthly cohort!).

    So to boil it down to a question… “What’s the single biggest reason that people stop using your software?”

    You could argue that this only applies to SaaS companies, but I’d disagree. In a world where word-of-mouth friction has been reduced to almost nothing, every active customer is an free ad.
    .-= Tony Wright’s latest blog post: How to Ask for an Introduction =-.

    • http://blog.asmartbear.com Jason

      Terrific point; I might adjust the post accordingly (with attribution to you of course!). I also agree that although it might most directly apply to SaaS in the sense that a change could be measured most swiftly, it’s absolutely relevant to all products.

      In fact I’ll increase your argument: People who are already customers are the easiest to get more money from, whether a continuing monthly check or maintenance revenue or buying the next new product you make.

      Therefore keep customers from leaving ought to be easier (cheaper?) than getting new customers, and therefore a better ROI for your time.

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