OnStartups

Why This New Chatbot Is More Likely To Get You Promoted Than Fired

Posted by Dharmesh Shah on July 14, 2016 14 Comments

Confession: For the past several months I've been furiously coding away on a new project as part of HubSpot Labs. It's called GrowthBot. It's a chatbot for marketing and sales people -- and anyone looking to grow a company (like startup folks).

The launch has gone well, and my bot is currently happily handling thousands of messages. Things like "show me companies in california that use HubSpot" and "who are the top influencers about landing pages". GrowthBot can answer most of these, and thousands of others. So, overall, it's been a good day.

But, anytime bots come up in conversation (no pun intended), especially with media folks, people seem to frequently wander into the "are bots going to replace humans?" arena. Some wonder "will this bot cause people to lose their jobs?" I can't speak for all bots, but for GrowthBot, the short answer is no.

I'll explain with a visual:

HumanBot-8.jpg

 

The way I like to think about it is not, Human vs. Bot, but Human + Bot. The bot amplifies what you can do. The bot is an exponent.

It's not smart enough to write a blog post -- but it can tell you what posts about a particular topic people are sharing. You just ask: "what are the top posts this week on product marketing?"

It's not smart enough to automatically run a campaign to drive traffic to your website -- but it can answer questions about how your website traffic is doing. "How was organic traffic to the site last month?" And the bot also tells you how that compares to the prior month. You can compare results year-over-year (Yes, June is a slow month, but is this June slower than usual?)

It's not savvy enough to close a deal for you, but it can help you find potential customers by asking: "show me law firms in Boston that use Google Apps". (Assuming you're trying to sell SaaS software to law firms and are looking to find firms that are modern enough to use Google Apps).

So, you're still doing the creative, meaningful work.   GrowthBot is just making you better, stronger, faster. It gives you access to information you may not have had access to before. It can surface insights that you may not have come up with on your own.

By the way, it's completely free and easy-peasy to try out. Nothing to download. Nothing to install. No forms to fill out. No credit card required.

Just head over to http://growthbot.org and say hello. I'm not saying it is guaranteed to get you a promotion, but you never know. It may just put that small spring in your step and data in your head. 

 

 

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Insightful Study of 386 SaaS Startup Pricing Pages

Posted by Dharmesh Shah on March 21, 2016 in saas pricing 12 Comments

Late last year, I combed through the Montclare SaaS 250 — a directory of the biggest SaaS companies in the world — to find common trends in what I thought would be a significant dataset. As it turned out, 80% of the 250 biggest SaaS companies didn’t have a pricing page at all.

Expecting to find a set of data more representative of what I’m used to seeing around (essentially startups), I turned to a bigger sample, scraping information from the first 400 startups in AngelList’s ‘Trending’ category. Of the remaining 386 which hadn’t shut down, I found that startups are around twice as likely to show their pricing than their enterprise SaaS big brothers. In fact, 39% of the 389 startups I analysed had pricing clearly available.

As I looked at in that previous article, there’s often good reason behind hidden pricing, and, for the top 250 SaaS firms, that reasoning was mostly that they are selling to enterprise customers who thinking pricing is just a formality.

And, besides, enterprise SaaS is a more complex beast than self-service, or SaaS aimed at SMBs.

So, equipped with wider range of data to analyse, I set about to answer the question: How do the top 386 trending AngelList SaaS startups compare to the Montclare SaaS 250?

The study’s highlights

Here’s a quick overview of the main findings for my set of data from 386 AngelList trending startups:

  • 39% have pricing publicly available
  • The average number of packages is 3.5
  • 44% sell the benefits on-page
  • 84% organize prices low to high
  • 9% organize prices high to low
  • 59% list their enterprise package’s price as ‘Contact us’
  • 49% highlight a package with a contrasting CTA color
  • The most common CTA is ‘Start free trial’
  • 63% offer a free trial
  • 11% offer pricing on a sliding scale
  • 85% of packages are named (‘Growth’, ‘Pro’, etc.)
  • 6% offer a money-back guarantee
  • 30% operate on a freemium model

The average number of packages is 3.5

In both the Montclare 250 and AngelList Trending data sets, the results are exactly the same: most SaaS companies offer between 3 and 4 packages.

In a recent article from Price Intelligently’s Patrick Campbell, he says that over-complicating and over-simplifying pricing is an equally terrible mistake. This is because complicated pricing can give buyers analysis paralysis, yet simple sliding scale structure built on a single value metric can stunt the company’s growth and kill any opportunities for upsells.

3packages

Additionally, research shows that 7 ± 2 is the maximum amount of objects an average human can hold in working memory. Because of this, it makes sense to limit your price points to just 3 or 4 significant choices -- unless the buyer makes a choice right then and there, they could easily forget some key details later on down the line.

twitmusic

This said, package count on the extreme end of the scale (Twitmusic’s 9 packages, for example), is often linked to a single value metric like number of Twitter followers, not a complex array of features.

53% Highlighted a package

Highlighting a package as popular or best value or simply putting it in a different color to the others is a technique SaaS companies can use to make the buyer’s decision easier, promote their most profitable package, or even to draw attention first to a higher priced package to make the others look cheap (more on that later).

However, just over half of the 386 analyzed startups chose to use this tactic. Why is that?

On Episode 271 of Startups For The Rest Of Us, where the hosts talk through my original 250 pricing pages analysis, Mike Taber has an answer for that. He says it could be because by listing 3 packages (the mode of packages offered), the price is naturally anchored in a low/medium/high setting, and there’s no need to highlight anything and sway the potential buyer away from a potentially more profitable plan.

Here’s an example of a pricing page where a package is highlighted:

highlighted

44% Sell the benefits

One of the most striking things about looking at pricing pages in a vacuum (as in, without sometimes even knowing what the company does), is how disconnected from the rest of the site the page tends to be. While the landing page is often very benefit and social proof driven, it’s rare that the pricing page will list anything other than the features.

Surely it wouldn’t hurt to reiterate the reason the potential buyer is here in the first place. And, not to mention the fact that a common search query for SaaS companies is [company name] + [pricing]. Reiterating the benefits or employing any kind of copywriting tactics at all on the pricing page seems like an obvious, often-overlooked choice.

Here’s a great example from Rainforest, re-selling the benefits to reassure buyers once they find out the price is $10,000/month:

rainforest

84% Organised packages low to high

Heatmaps show that visitors spend twice as much time looking at the left side of the page as they do the right.

lowtohigh

With this in mind, 84% of SaaS pricing pages could be using one of these tactics:

  • The principle of least surprise: a UX axiom which says that the last thing a user wants to happen is for them to be confused. Since we’re used to reading left to right, and seeing a low-to-high structure, sticking to it can ease user discomfort.
  • Price anchoring: A deliberately feature-light package on the left side could make package 2 or 3 look like an amazing deal compared to the price difference. For a non-SaaS reference, this is like when The Economist offered its print subscription as a decoy package:

economistpricing-1

However…

9% Organised packages high to low

In Robert Cialdini’s book Influence, he recounts an eternally relevant A/B test from the retail world staged in 1975.

In the experiment, salespeople offered potential buyers of billiard tables two choices: a $329 model and a $3,000 model. The usual tactics are to offer the lower priced model in hope that the customer isn’t scared away by hearing big numbers, but one week, instead of starting with the low-priced table and try to sell up, the salespeople changed their tactics to offer the $3,000 model first. What happened? An 81% increase in revenue from billiard tables.

The idea that it’s easier to “sell down” than it is to “sell up” (meaning that it’s a more effective strategy to start high and the reduce), is a strategy employed by only 9% of the analyzed SaaS companies and is a tactic that comes with high recommendations from SaaS pricing expert Lincoln Murphy.

Going back to the previous point about low-high pricing, however, the tactic of offering something first which seems inadequate could be equally as powerful.

Here’s an example of a high-low pricing page layout from Unbounce, a company which knows a thing or two about conversion optimization:

hightolow

59% list one or more package’s price as ‘Contact Us’

By far the most common 4+ package layout is 3 priced packages and an enterprise package with the CTA of ‘Contact Us’.

For the minority of SaaS companies which show their pricing, the complexity of enterprise deals forces more than half of SaaS firms to leave their enterprise package pricing undisclosed.

contactus

As discussed in my previous article, there are plenty of good reasons to keep price hidden for enterprise deals, including:

  • Deals are too complex to price without fully understanding the needs of the customer
  • Rigid pricing could blow the deal for companies used to getting discounts
  • You don’t want to push $700k customers down the same track as $100k customers. By getting them on the phone, a suitably concierge approach can be taken
  • Enterprise customers don’t care about the price anyway, just about the solution.
  • Like how fancy restaurants don’t have pricing, hidden prices are an aesthetic that gives the aura of exclusivity. Enterprises are used to having to call for pricing, so the Principle of Least Surprise returns here again.

49% use a contrasting color for the CTA

You don’t want your CTA to be subtle. After all, it’s the only place you want visitors to click when they’re on your pricing page.

According to Unbounce, a rule of thumb for CTA color is to “look for the dominant hue of your page and pick its contrasting color for your call to action”.

There’s evidence to support this from the famous red/green A/B test carried out by Performable, which showed a 21% higher CTR on the red button which contrasted with the otherwise green page.

Here’s an example of a clear, contrasting CTA button on Nitro’s pricing page:

contrastingcta

As you can see, the orange CTA sticks out because it's the top-of-the-funnel package they expect to get leads from. While the Premium package is highlighted, the efforts in the copy above the buttons are focused on getting visitors to test the free package.

The most common CTA is ‘Start free trial’

Unlike the SaaS 250 where the most common CTA copy was ‘Buy Now’, AngelList trending startups made references to ‘buy’ in their CTA copy less than 2% of the time.

As you’ll see, unlike the enterprise-focused SaaS 250, startups seem to be pushing self-service free trials instead of demos with sales staff.

startfreetrial

Here is a rundown of the top 5 CTAs ordered by frequency:

  • Start free trial (25%)
  • Sign up (14%)
  • Try for free (14%)
  • Get started (13%)
  • Request a demo (6%)

And the top 5 words by frequency throughout the set:

  • Free (69)
  • Trial (47)
  • Start (39)
  • Try (25)
  • Get (23)

Another couple of data points about CTA copy: conforming to the true definition of a CTA, 95% of samples start with an imperative, like ‘try’, ‘start’ or ‘get’.

39% of samples are in title case, with the first letter of each word capitalized, while 38% are written in all caps.

While writing in all caps is frowned on (even amongst conversion-hungry copywriters), pricing pages are essentially a call-to-action in themselves, so drawing attention to where the visitor should go next is essential.

anygoodcta

63% Offer a free trial

63% of both Montclare’s SaaS 250 and the 383 AngelList trending startups offer a free trial on their pricing pages, many as the only option to ease into the product.

When looking at the psychology of free stuff and risk reduction, it’s obvious why SaaS companies use this powerful tool as a way to get customers. And, as I’ll look at later, a probable reason behind why only 6% of the sample companies offer a money back guarantee.

Here’s what Accountable’s free trial offering looks like on their pricing page:

accountable

11% Present pricing on a sliding scale

For SaaS companies with a single value metric, like OnFleet’s tasks (a task being a single delivery or pickup of goods), presenting pricing on a sliding scale can remove the confusion that comes with showing visitors a formula like:

0–100 tasks: $X/task

100–200 tasks: $Y/task

etc.

In fact, to reduce friction, OnFleet’s pricing page shows both the formula and the slider, as well as anchors the price by showing tasks reducing in price tenfold with just a comparatively small increase in monthly task allowance.

For comparison, almost 3 times as many AngelList trending startups offer pricing on a sliding scale than the Montclare 250.

Here’s sliding-scale pricing done masterfully:

onfleet

85% have named packages

While some SaaS companies choose to name their packages in relation to their price (with names like ‘Basic’, ‘Premium’, etc.), some grab the opportunity to target segments of their visitors and name the packages by who they’re for. Free packages are sometimes named ‘Hacker’, like in the case of Algolia. Enterprise packages are almost ALWAYS called Enterprise.

When looking at the brackets in between, however, it’s common to get packages targeted at businesses at specific stages of growth, for example, the pricing for AppView which includes plans for different office sizes:

appview

6% Offer a money back guarantee

Since most SaaS startups offer customers a free trial, there’s not much need for a money-back guarantee which explains why so few companies list it.

According to Kissmetrics:

“[Money back guarantees are] so overused and average that unless your product is extremely valuable (like a car) or easy to return (commodity products, such as retail goods), then you’re going to have an incredibly difficult time overcoming an objection with this guarantee alone.”

Among the rare few which use it is Close.io — a company that’s no stranger to sales techniques. They even use it in conjunction with a 30-day free trial:

close-io

30% have a free package alongside paid packages

That’s right, only 30% of the 386 AngelList trending startups analyzed operate on a freemium model, with the vast majority of the rest relying on free trials. That said, that means that at 93% of the sample pages have some kind of free element, whether it’s a free package or a free trial.

According to Weekly Growth, early stage SaaS startups are best off with a freemium model because it is more likely to attract early adopters. Later on, however, with a larger customer base, the huge amount of free-only users can put a massive strain on your support staff, and may end up negatively impacting your business overall.

Here’s an example of Envoy’s pricing page with a free package on offer:

Envoy

What are the differences, then, between enterprise and startup SaaS pricing pages?

The most striking difference is that a SaaS startup is almost twice as likely to show its pricing than an enterprise SaaS company.

For enterprise SaaS serving a larger amount of influential customers, it's probable that a lot of business comes from referrals and deals are done over the phone without a pricing page being necessary. This would explain why 80% of the SaaS 250 didn't have a pricing page.

As well as this, a comparison between the two data sets shows that enterprise SaaS reiterates the benefits on their pricing page 25% more often. Just like we saw Rainforest's pricing page earlier, it could be that enterprise SaaS's high-ticket products need to be justified to buyers because choosing one provider over another is a huge investment.

And finally, the last major difference is that startups are 19% more likely to have a mixture of priced and 'contact us' packages. Just because a SaaS company is a startup doesn't mean it can't serve enterprises and startups. So, by having both transparent pricing for smaller companies and a 'contact us' package, they appeal to both markets.

Well, it's been an eye-splitting three days spent inside spreadsheets and on pricing pages, so I hope you find this data interesting and it gives you an insight into the typical SaaS startup pricing pages.

This was a guest post from Benjamin Brandall. Ben is a content creator at Process Street. Find him on Twitter here.

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