December 3, 2015
Fixing Heroku’s Pricing
In this Speaker Series presentation, Peter van Hardenberg offers a strategic overview on pricing, looks at some of the tactics used to imple...
I'm Tiffany Spencer, and I'm the head of marketing for Bessemer Venture Partners. In that role I work on the firm's marketing needs, and then I also serve as an on-demand consultant to our portfolio companies.
Over the course of my career I've worked at a lot of well-known, or worked with a lot of well-known, consumer technology companies. And then I also had a consultancy where I worked with early-stage companies on their launch strategy.
In the course of my career I've probably launched hundreds of products. I have launched dozens of companies, and I also architected one of the highest-funded Kickstarter projects of all time.
So behind me you could see the messaging map. This is a common template. I think the key thing to know is that while your company is unique and special, marketing fundamentals are universal. And so this is a standard tool that most companies use to collect and articulate their messaging.
As Dana said, it's the foundation of all the messaging for your organization. So it should inform your website, your press releases, your investor pitches, your media interviews. Anything that you want to say about your company should be captured in your message map.
The single most important thing you need to understand is your messaging isn't about you. So good messaging is always about your target audience. And when they look at your messaging, they should see their image reflected back.
A failure to understand that your messaging isn't about you results in failed messaging. The cost of that is high, so you basically lose sales because you're not connecting with your customers.
You lose media interest, so you're not going to get the coverage that you want, and ultimately you can also lose investment interest. So you want to make sure that you really understand your messaging, it's well articulated, and it's captured in your messaging doc.
The good news is that it's not rocket science. This is a seven-step process. It's pretty universal for articulating your messaging. And before we dive into a step-by-step process, I want to tell you that it's really important that your messaging isn't all about you, that you don't develop your messaging in a vacuum.
So this should not be one founder sitting in front of his computer articulating what his company is. You want to have the right people in the room. And for that conversation, it's probably your founders. It's your PR and your marketing person, if you have somebody, or maybe with Heavybit companies, you're talking to Marie.
You want your product person who really understands where the product's going and what the product roadmap is. And then you also probably want to have your biz dev or your sales team, because those are the people that are interacting with your customers on the frontline.
They can represent your customer needs as you go through the process. So the first step is to identify your target audience. And I would take that one step further and really get inside their heads.You need to understand it's not just that you're trying to target a developer, or you're trying to target enterprises. But you need to understand what their situation is when they go to work each day.
So is it somebody on a small team who's got aggressive goals in a short timeline, they're feeling really crunched? Is it an IT procurement person who also needs to convey to the organization that he's saving money, that he is tasking people appropriately with their assignments?
By understanding what their needs are, you can better articulate how your company is going to solve their problems.
Many of you probably have more than one audience, and so throughout this talk, one of the companies I'm going to refer back to is Twilio, which is a BVP-funded company. Twilio, like most of you, I think, is targeting both developers and enterprises. So they have articulated specific messages to reach both of those audiences.
In the case of the Kickstarter campaign that I worked on, we were launching a game console. So we were speaking to game consumers who were going to buy the console. We were talking to the developers who were going to make the content for the console. We were speaking to potential strategic partners like Amazon and Comcast. And then we were also speaking to future investors.
So when we put ourselves in the heads of the gamers, it wasn't just, "Hey, we've got this awesome new console to sell you." We knew, for them, that they were really frustrated that the last time consoles had come out had been a long time. They hadn't heard anything from Microsoft and Sony about what the next Xbox was going to be like or the next Playstation.
The last generation of consoles had been really revolutionary. It had introduced online gameplay, voice chat, all sorts of things. And they were feeling like the next generation might not be so interesting, and it might not be enough to justify the spend.
So in understanding how they felt about where they were in the ecosystem and what their needs were, we were able to speak to them a little bit more directly.
Step two, and this is where a lot of startups fall flat: your solution is not my problem. Most companies or most groups that are working on messaging will go into a messaging process with the best of intent.
They'll really nail down who their target audience is, and then they get to this step and they start describing their product. They start describing their product as the solution to save everybody.
So you need to, again, go back and remind yourself that your messaging isn't about you, and put yourself in the shoes of your customers. One of the good things about this is it's easier than you think, and you have a really great resource at your fingertips;that's your existing customer base.
You can go to them with surveys. You can read the reviews that they're writing. You can look at the endorsements that they've given you if you have customer statements. You can also talk to your biz dev and salespeople, as I said earlier. What you're trying to get at is, "What are the common pain points that they're feeling?"
The next step here is, once you've articulated that common problem, you need to come up with key messages that speak to how you're solving those problems. And a failure to connect is going to be a messaging fail.
One of the things that I want to go back to, because a lot of the times people see the message map, they feel like it's really kind of marketing fluff and another BS exercise.
The messaging map is actually pulled from cognitive science studies in terms of how people learn and retain information. They're commonly used for crisis communications, and that's what they were developed for.
The three-three-30 rule is actually, when you look at a message map, is how it's laid out. It's three main ideas supported by three sentences that are 30 words or less. And that's how people are best communicated to.
So if you think about Rudy Giuliani communicating after 9/11, or the CDC, this is how they communicate about virus outbreaks like Ebola. They have it down to a science, and this is how you retain information.
Your customers probably aren't concerned about the next terrorist attack. But they are stressed out. They're super busy. They're not necessarily looking to hear from you, and so this is a way to speak to them so that they can hear you.
The other kind of hacks to this are the rules of primacy and recency.
People tend to remember the first thing that they hear, and they tend to remember the last thing that they hear. You can stack your messages appropriately.
And then the messaging that best connectsconnects to us on a personal level. So that's emotion. That's our shared values.
Sometimes this all sounds very lofty. But if you started thinking about being a developer, developers are oftentimes trying to reduce the hours that it takes to deliver a project. So that could be a shared value, is that you're going to speed up dev time.
And then don't forget to focus on benefits. Features are not benefits. What I'm saying here is if you have a certain product feature, talk about how that benefits your customer. Don't talk about the feature as the final message.
Now we get to the supporting statements. The thing to understand here is that, not only is your target looking for a solution to their problem, they want to know that their solution is possible. And they want you to prove that is it possible, that a solution is possible.
So with supporting statements, you want to unpack all of your data.
It's an important place to establish credibility, and the best way to do that, often for a startup, because people don't know who you are, because they might not know your founders, because they haven't touched your technology, is through third parties.
It's a great place to bring out existing customers, to name-drop your investors, to talk about what analysts are saying about the state of the industry, if you have data points there, and then also reference any product reviews you might have. Some of this stuff can even come from beta testing or closed testing.
The key thing that I always think about when I'm launching a new tech product is that most of the people I'm talking to are never, ever, no matter how hard I try, they are never going to touch what I'm talking about. And so you have to make them want to touch it, and you have to do that by painting a picture of what that experience is going to feel like for them.
And so some of that is videos. Instead of, you know, if you can't get somebody to touch your demo, a video is obviously really compelling. That kind of walks them through it. Sometimes it's an infographic or a visual.
Storytelling can be really helpful. Storytelling specifically for your audience might be that products are faster executed with your technology, or that this customer saved this much money by using your product, and the cost of the licensing fee was only X percentage of what it cost to pay an engineer for the year.
So when you put up these stories, wrap your facts in these stories. What it does is it makes it a little bit more accessible for the people that you're trying to reach.
They can relate to what you're doing, and importantly, if you see the bottom, each of these little tricks will help people remember what you're saying by 50%.
Here's an example of how Twilio addresses that. And I think this is a good example, and Dana helped me source this. This is a good example because one of the things that Twilio does is they name-drop their customers.
When you look at the bottom list, they've got, what's that? Home Depot, Box, Uber, and eHarmony. And when you look at the list of customers that they usually include, one of the things that they've done is, by choosing customers that are really from all different types of businesses, they paint a picture that Twilio has all different types of applications.
When they name-drop Walmart and Airbnb, you're assuming that they're probably doing something pretty different. And then this is also a great example, because you can see that they're using video to tell the story.
So you've seen, and I have the Twilio messaging doc in there somewhere, but as you see this, you can see how, just like we said in the beginning, the messaging is the foundation for everything, and it's bubbling up in different forms.
Now we get to testing your messaging. This is often a step that people want to skip. So, again, you have to remind yourself the messaging isn't about you. You need to go out into the market to test and validate your messaging.
Let's dive into the testing and validating. This is hugely important because you don't want to be, sort of, just talking to yourself.
When you're thinking about who to test your messaging with, one of the first groups that I would recommend going to is your advisers and your investors.
I say that because they're on your side, and they want to see you succeed. So it's not bad to expose a little vulnerability and to say, "Hey, this is something. It's a work in progress. We want your feedback." They're much more likely to judge you if you go out into the market with bad messaging than if you come to them and sit down at their desk and walk through it.
Existing customers, as I said, is a great place to go. You can understand what your existing customers are saying through the reviews that they're writing, through the product endorsements that they're giving you, through conversations that they're having online.
So if there're communities around your product sector, those would be a good place to go. As I said, for new customers, asking them a one-question survey or giving them a one-question survey is important.
Then there's also ways to test messaging pull-through. So if you're saying my product will save you X percentage of developer hours, or something like that, is that message being surfaced in the media coverage? Is that message being surfaced when customers are talking about you?
The idea when you're building really good messaging is that you want it to be portable. So not only do I need to be able to convey my messaging, I want to give my customers my messaging so that they take it with them, and they're selling it through to an organization.
Especially with developer-facing businesses, where you're sort of infecting an organization through one developer, making them an evangelist and thinking about, "How is it that they're going to sell my product through the broader organization?" and get their friends onboard is really important.
If you're designing, thinking about "How can I pack this up so that they can go repeat it as they move through the world?" that's really important. The next step is distributing your message.
Founders often think that they are the best or the only spokesperson for their organization, and that's just simply not true.
Anybody who works for your company is a messenger. And every interaction is a messaging opportunity.
It's important to make sure that once you've captured all the messaging, and you've tested it, and you know that it's rock solid, you want to share it across your organization.
This is a real messaging doc from Twilio. And when I was getting ready to give this presentation, I talked to Kay, who's our PR person, and said, "Do you have anything you can send over?"
So she sent me the messaging doc, which you can see is a little bit more intense than the messaging map. They went into, "Here's a 25-word description. Here's a 50-word description."
And in her note she said something like, "I hope this is useful for you. This was really about getting us aligned internally, because for the messaging to succeed, we all need to be aligned and hitting the same drum.
What you should take away from this is, one: this is something that successful companies are taking seriously. They sat down with all their execs. They worked through it, and then, importantly, they shared it.
Everybody in the organization from the admins on up is saying the same thing. And that's important, because repetition is how people remember messaging. It's not enough to say something once. You have to say it over and over and over again. And when it's succeeding, you will hear it repeated back within the market.
When I was consulting, and I would think about putting together a launch campaign, I would always describe it as "You need to create a Zeitgeist." And so what you're trying to do is, you know, the day that the OUYA Kickstarter went live, if you were in our target market, there was no way you weren't going to hear about it.
You were going to see it on your Twitter feed. You were going to see it when you read the gamer pubs. You were going to see it in TechCrunch. You were going to see it on Kickstarter. You were going to hear about it from people within the industry who were connected to the game ecosystem that you looked up to.
The reason that you want that Zeitgeist is because people need to have several touch points when they're taking in your messaging.
There's a few more cognitive tips I've got here. One is the rule of seven, and that's sort of an oft-used marketing phrase which means, essentially, that people need to hear something seven times before they take action.
I probably would say it's a lot more than that. I know for me, I'm really busy, I need maybe 100 times to hear something before I start moving on it. And you can see Microsoft actually says six to 20. So people need to hear the same thing over and over again.
While you can adjust your messaging slightly, if you have really good messaging, it should be consistent. And it should be repeated without a lot of adjustment. So once you do this once, you're not writing new messages every week. You're sticking to it and refining down the road as either the market evolves or your product evolves or your company evolves.
The reason, obviously, that you want to do this is because people are taking in a lot of information these days. And they need, you want them, to hear your information. They're not receptive, and then remember it, and then act on your product.
Now we're back at the seven-step messaging process. Like I said, it's not rocket science. But it is based in cognitive science. So it's important to just work through it and do it well.
Messaging works best when, like I said, your target audience sees themselves in the message. So it's almost a mirror reflecting their problem back. And you've got the magic solution that speaks directly to them.
I want to end on this quote which is from the The Story Wars. It talks about putting your target into the story, and he's the hero of the story. That's a really powerful experience for somebody who's interacting with a product.
The way to think about it is, rather than you positioning your product and talking about everything that your company does for this person, you want this person to take the hero's journey.
You want them to discover your product. You want them to enjoy using it. You want them to then tell their friends and be a hero for introducing it to their friends. You want them to sell it into the organization where they now have solved problems for their organization.
And, ultimately, your target is now the central character in his own story. That's really when you win with your messaging.
If you think about how you're hearing about information, we all rank our sources, right? So you might hear about something on Twitter, but it means more if you hear it, if you read it in TechCrunch or The Wall Street Journal.
It means even more if it's somebody who you work with whose opinion you respect, and you relate to their circumstances. So it's just thinking about, and I should have dove into that a little bit more, one of the things that you can do if you're trying to create the Zeitgeist is to think about, here's all my touches and map them out.
It's sort of like when you're building a PR plan and you say, okay, I'm going to hit social media. I'm going to post something here. This ad campaign is going to go live. We're going to be doing the press this way. It's thinking about all the different touch points you're going to have with every individual that you're trying to reach.
No, I think it's a personal ranking, right? So it's different people valuing different sources differently. But I think what you want is a variety of touch points, and you want them when you're launching a company or launching a new product. You want it all to turn on at once.
Suddenly, everywhere they go, they're hearing about you. It's like the lights go on at Times Square or something. But generally, you need to also have this constant drumbeat where people are hearing about you as they move about the world.
I think everything, you know, when I think about a product launch, I usually think, or a corporate launch too, I think you're kind of putting together a symphony. And so there's all sorts of different places. There's the crescendo of the music, which is the launch, or there's the drumbeat, which is keeping things steady. There's the melody which is kind of picking up and, you know, capturing their attention. And so you just wanna construct it very carefully.
I think, fundamentally, you just need to start with the basics. And it's not necessarily fun. But it's not rocket science. And so that's what I was trying to share with everybody here. You can be looking at a blank piece of paper, but there's a way to get through this that's pretty straightforward. And you'll know when you get there.
One of the ways that you'll know, like I said, is the audience will start repeating your messages back to you. So you'll create evangelists who then also share your messages.
You should do it regularly. I mean, you don't need to have a reminder on your calendar to do it every month.
I will tell you right now that Bessemer is 104 years old. Carnegie Steel money started this firm. And so we're in the process of doing, I'm drinking my own tea, I guess, we're in the process of doing a big brand audit where I talked to all of the internal stakeholders, everybody from analysts on up through partners, to understand how they're talking about the firm when they're doing pitch meetings and things like that.
Now we're in phase two where we're talking to the entrepreneurs that we funded. And what we're hoping to get out of that is sort of, "Here's how we're talking about ourselves." But it's probably our messaging isn't about us. And I know that we're doing a lot of "This is how many exits we've had, and this is the companies we're in."
If you don't connect to the logo, if you don't see, if you don't know that Pinterest is Pinterest, if you see Pinterest on our website, it doesn't mean much to you. So I want to build in that storyline that really connects people to us.
We're now talking to the founders that we work with. And the goal is essentially to expose the disconnections. So if we are saying we're one thing, and the founders are saying that we're something else, then we are missing our mark, right?
So we need to figure out, we need to get closer to them. And for us, it's a different type of product. Our product is probably the relationship in the board advisee. But it's just as real.
I think I would revisit messaging for major product launches. I'd probably revisit it once a year. You're going to be using your messaging all the time, so you also will start to notice when it's not landing the way it should.
Sometimes that's when other competitors are running away from you. And you see that they're getting traction that you're not. You'll know that you're hitting your messaging when the competitors are starting to adjust their messaging to speak like you are or to tackle the same sorts of things that you're addressing.
If people have bought into your messaging, and that's why you want to do it with a group, then it should be easier to push everything through, because you've come to an agreement about "This is the baseline of all our communications."
If people aren't comfortable with the messaging, and I think that, frankly, that's the case with my firm right now, is that some people describe it one way because they're more comfortable. And other pieces of information, if I try to push them on it, just don't feel like they fit right.
I think when the messaging is crystallized, and people have bought in, there shouldn't be a lot of discussion. And it makes everything a million times easier.
One of the things that, when we were launching the OUYA Kickstarter campaign, that CEO was a brand new CEO. She'd done biz dev before. She hadn't done a lot of press. And so it was really important to me that we understood the messaging and it was really clear.
So that messaging was in the video. It was on the website. But we would go through it. Every single press interview, she had it printed out in front of her. And when we did phone interviews, sometimes I would be on IM and I would say, "Now you hit this message."
So I think part of it is you need to personally buy into your own messaging, right? Because you need to be able to repeat it, and then you need to share it through your organization if you're a founder.
One of the things that they talk about as a problem is that developers and enterprises are uncomfortable with the old-fashioned modes of communication. And then they talk about, "Here's all the places that those old fashioned solutions aren't working."
Basically, Twilio uses that then as an opportunity to attack those one by one and say, "If this doesn't fit, here's where Twilio solves it." And then they go a step further with their supporting statement to say, "Here's all of our customers, and here's how they're using it."
So a key message might be, again, it's going back to what that problem statement is. So it might be that your product saves time. It might be that it saves money. It might be that it allows your customers to produce something differently or better.
Ken and I were talking before the presentation, and he was saying, one problem is that sometimes messaging is too broad, and it's everything for everybody. And then sometimes it's so narrow that you're leaving customers and evangelists by the wayside.
Often with startups, it tends to be too broad. You're trying to be everything for everyone. And that's why we really encourage you to think about who your customer is and think about it specifically.
But one of the things that you can do is you can look at your competitor's message and say, "OK, here's what they're saying that they solve. Do you solve it better? Do you solve it more narrowly?"
Maybe they have the best X for Y, but you have the best X for Y for people who only work part-time, or whatever it is, and then making sure that you're really connecting through and connecting directly to that target.
I think a lot of the people do take competitive messaging and competitive intelligence into their messaging structure. But I think that can be really dangerous in that that leads to a lot of "me too," because you don't define what you're doing specifically.
You say, "Oh, but we can't say we don't do this because they're saying that." And I think that's why I didn't include that sort of information here.
I think maybe the right place to bring it inwould be more in the testing. I wouldn't sit down and start the conversation with, "Here's what our number one rival's doing," because I think that's going to lead you down the wrong path.
I think, rather, once you have your messaging, then compare it and see if it's fitting. One of the things that I've had success with in the past, specific to competitive messaging is sometimes you have to change the metrics by which you're being measured.
So if a competitor is blowing you out of the water, rather than continuing to use the same metrics where you're not going to stack up as well, you really need to find a new way to position yourself with new numbers.
And so maybe if the other, if the competition has more users, you have users that are using you in a more engaged fashion, so they're spending more time with your product or they've got better output. There's gotta be some sort of differentiator there rather than sort of trying to follow the leader. I think that anytime you end up in that in that sort of "me too" situation, it doesn't end well.
You've gotta go out and define what you guys are doing specific to your customers and almost kind of have that be a one-to-one relationship as you're building it.
I don't think you involve everybody in the conversation. But I do think you have to pick your key stakeholders.
So you said that you feel like you'd need to have the engineers and the product people there. You can have probably one engineer that you feel like speaks for the group. Also, you want somebody who's probably well respected within that group and can go back and be on your side and help you sell this process through.
Especially in a startup, where time is one of the things that you're most challenged for, I think what you need people to understand is, "We've gone through this work with people that you trust. This is a group decision. We had all the key stakeholders there. And this is what we've come up with."
But it goes back to the testing. If you take the message to the org and the org isn't believing it, then something is still not quite right, and you need to tweak it.
That's where maybe that feedback of, "This isn't landing right," is actually instructive. It's worth spending time on. You really want your messaging to connect. And, like I said, if it doesn't connect, you're leaving sales on the table. You're losing the interest of the media. And you might be risking potential future investment.
I think that's a personality thing. I can tell you I've been with Bessemer for almost three years now, and it took me about a year to get them to agree to doing the audit. And we're halfway through the audit.
We had to put it on pause because people started feeling uncomfortable. It's not always an easy process. I think if you have a really slick idea that is so different, it might be easy. But if you're where I sit right now, we have a lot of competition.
Sometimes I think about when I'm doing the marketing for the firm, it's almost like we're marketing a law firm. Things are different, but they're sort of the same. How do you articulate what makes the relationship with the board partner or the firm different? So I feel your pain.
I think there's no one-size-fits-all solution. And you probably would have a better feel for how the process is going to roll out once you go through that first meeting, and you understand where are people in agreement and where is it falling apart and causing argument.