Who's In Your Customer Base? 3 Lessons from Paperless Post
Today I got to pretend I was a student again by going to Harvard Business School for the 18th annual Cyberposium conference. I got to hear from the founders of LinkedIn, Dropbox, and Paperless Post, plus many other executives in the tech industry. The event kicked off with Alexa Hirschfeld, the co-founder of Paperless Post, an online invitation company based in New York. Alexa shared a few things she's learned over the years of running this startup with her brother - things she was surprised by as she ventured out into the startup world.
There are 3 reasons why I was glad to hear from Alexa:
- She's a woman founder - they're unfortunately rare so it's great to have one keynoting the event.
- She doesn't have an MBA - While this was an MBA conference, it wasn't limited to MBAs for attending or speaking. She has made up for her lack of formal education with a lot of reading and the experience itself of running a business, and shared some meaty lessons and data from that experience in her talk.
- She's from the B2C world - As a marketer in a B2B software company, you might think I just want to hear B2B examples all day. But the truth is that the B2B world is slow. If you're at a company that's trying to experiment, innovate, and push the envelope, B2C companies are more likely to have experimented with new technology and techniques.
Alexa shared some great experiments she ran and the metrics associated with them, showing some of the things that have contributed to the growth of their user base. Among them were some great lessons around understanding who's in their customer base and how they responded.
Lesson #1: 90% of Your Users Are Lurkers.
While this tip originally comes from Nielsen, Alexa shared an interesting response. First, to explain this phenomenon: the 90-9-1 rule explains that, in an online community, 90% of the users are lurkers: people who simply consume information but don't interact or create content. Another 9% are intermittent contributors: those who contribute periodically but not frequently. The remaining 1% are the heavy contributors. This 1% accounts for 90% of all postings to the community, and the other 10% of postings come from the intermittent contributors, while the lurkers - the overwhelming majority of the community - contribute 0 postings.
It's often easy to get too focused on the heavy contributors, because they're the loudest and seemingly most active users in a customer base. But, in doing so, you are ignoring the huge majority of your users. You might also think that your goal is to get more of your lurkers or intermittent contributors to be like your heavy contributors, but that may not be the best approach. In the case of Paperless Post, the heavy contributors are the hosts sending invitations through their service. The others may never end up sending invitations, but there are other ways in which they can interact in the community. Alexa started adding more social features with a low barrier - commenting, messaging, etc. - that allowed the recipients of invitations to interact without becoming hosts themselves. This was a nice lesson in not orienting around your heavy contributors - either in terms of your focus or your goal for all users - but rather thinking about each segment of your user base and tailoring their experience to what they would like - and be more likely - to do.
Lesson #2: Your Customers' Customers Are Your Users, Too.
Continuing on the previous thread, Alexa explained how your user is anyone who consumes your product. That includes your customers as well as your customers' customers who interact with your product. In the case of Paperless Post, the recipients of invitations sent through their site account for the large majority of their user base. Perhaps this is what drove Alexa to look more carefully at their user base and drive activity among all types of users. While these recipients aren't the ones creating content or spending money with the company, they are important users because the paying customers (hosts) are using their service to interact with those users. Make the experience better for the recipients, and the hosts will want to continue using the service. In other words, improving the experience for your customers' customers makes your customers want to stick around longer.
Lesson #3: Mini Customer Communities Make You Appear Larger Than You Are.
There's a funny thing that happens to Paperless Post recipients. The first time they get an invitation, they say, Hmm, this is new and interesting. The second time they get a Paperless Post invitation, they say, Hey! That's the same thing Joe & Laura used for their event. The third time they get such an invitation, they think, Alright, I guess this is what we're doing now. After that third invitation, the recipient thinks this new service is ubiquitous, that everyone is using it now to send event invitations. But, in reality, what's happened is that this site has permeated a particular social circle. This is an interesting effect that can help with the viral spread of your product, especially if you're at a point where you want to reach the laggards in a market (who want a safe product that everyone uses) rather than the early adopters. Mini customer communities can make it look like you are THE #1 solution in your industry, helping you acquire even more customers even faster.
With these tips in hand, go and take a look at your customer base. Who are your heavy contributors and who are the lurkers? Who are the indirect users you've been ignoring because they're not paying customers? Then you can plan how to engage them further and grow your user base.