This post is by Faith Storey from SaaStr
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Lucidchart has been recognized as one of the most mature Product Lead Growth business models in the market, driving over 700,000 registrations per month, combined with a hyper-efficient B2B business model. It didn’t happen by accident. It happened through experimentation: from extensive A/B testing (with over 500 marketing tests completed in 2018), to testing crazy brand videos (which have garnered over 200 million views and was named the only ad campaign that truly mattered in 2018 by Adweek), to constant iteration and expansion of the business model. Experimental marketing brings together the science and art of marketing, allowing for creativity that drives results. It’s an essential skill in the toolkit of the modern marketer, and one that’s easy to get started with, no matter your company scale. Want to see more content like this? Join us at SaaStr Annual 2020. Karl Sun | Co-Founder and CEO @ Lucidchart FULL TRANSCRIPT
My name is Karl Sun. I’m the CEO and one of the co founders at Lucid Software. Our core product Lucidchart lets you express your ideas visually. The systems you work with, the processes you’re working on, they’re all getting more and more complex with more inter related parts. When you lay something out and you can see it visually, it really helps you understand. It helps you convey that information to others. People will come to realize, oh that’s the kind of problem I can solve by mapping out in a visual way. Just like people say, oh yeah I can do that by putting this into a spreadsheet. I was going to introduce myself. I didn’t realize I was going to get an introduction. I’m Karl. I’m super happy to be here talking about some of our marketing experiments, and the lessons that we’ve learned through this culture of experimentation that we’ve fostered. As I was putting this together, I realized that a lot of the experiments I’m going to talk about mostly from the marketing side, have actually mirrored our evolution as a company. Hopefully what I’m saying today will be interesting, and will be at least a little bit useful for you. Before I start, I guess I should introduce a little bit more about Lucidchart. Lucidchart is a visual work space that combines diagramming with data visualization and collaboration, so that we can accelerate understanding and drive innovation. Our idea is we want to help you visualize anything, so that you can understand it. Because once you understand it, we think you can figure out where to take action to improve it. Ultimately, what we want to do is help you see more so that you can then know more and do more. A little bit more about us, I think Loyd mentioned a little bit here. We are based in Salt Lake City, Utah. We have over 500 employees now. Over 15 million users spread across over 180 countries. We’re represented in 99% of the fortune 500 companies and adding about 700 thousand users every month. This is a photo of actually a wall in our office where we’ve got painted on the walls some words that come from our core values. Two of our core values are actually innovation in everything that we do. Also, this idea of individual empowerment, initiative, and ownership. Really for our employees to truly embody and live those values, we have to give them room to fail and to even encourage that. We have to empower them to be innovative, even when that means sometimes or oftentimes things will go wrong. As I mentioned, we have this culture of experimentation throughout the company. Today, I’d like to talk about how our marketing department has really embodied this culture, and has done some pretty amazing things. Some things that Loyd referred to as well. There’s two parts to my talk. I mention they mirror our growth and evolution as a company. The first part I’m going to talk in the things that we did early on. Were pretty tactical experiments. They were around driving traffic to the site, and increasing registration, and conversion rates, and the payment flow, and things like that. Then the second part talk more about branding and the vision as we start to tell more of the story about who we are and what Lucidchart is out to do as a company, and as a product. The first part starts with our growth team that we started probably five plus years ago now. They were created as an experiment in order to and with a mandate to run experiments. The reason we created this as a dedicated team is because we understood that success would not be immediate. Instead, it would come through lots of trial and error, and iteration. We thought that without a dedicated team, everyone would be working on borrowed time. They’d be running experiments on the side. It’s hard to do that when you’ve got your real job and real goals that you’re trying to shoot towards. It’s especially hard to take risks, and try things that may seem like bad ideas and will probably fail if you’re doing it on borrowed time. What we’ve actually learned ultimately is that sometimes the bad ideas turn out to be the best ones. When we started the growth team, we had this goal that our target was, if they can be successful, that would mean they would contribute a million dollars in incremental revenue, ARR, over the course of that first year. That was what we were shooting for. It turns out, they hit that within the first quarter. We figured out pretty quickly that this was something that could be a huge win for us. We think about as I mentioned, experiments come in all sort of different shapes and flavors. I’d like to talk about some of the experiments that the growth team ran in three different categories. The first is what worked that we didn’t actually think would work. Here is our original payment page. Early on, we really emphasized getting traffic, getting as many people to our website, and then as many people to sign up and register for the product as possible. You can see that under that start free trial, we talk about no credit card required. We wanted to, as much as possible, reduce the friction that it would take to get people into the project. What we realized over time, the implication for this approach however, was that while we certainly would get some people and they would like it, and they would pay us within that free trial period. The ones who didn’t pay us would become free users. We had a really hard time converting those free users ultimately to paid. We get people who would pay us initially and then the long tail didn’t necessarily come very well. People would stay free forever. As we thought about this, we had this hypothesis that the reason was because we were trying to get those people to go from a commitment level of zero, where they were free, all the way to a commitment level of 100%, where they were paying us. That was just a huge span and gap to bridge. We had this idea of well, what if we could get some of that commitment level early on? Those of you who maybe in sales are familiar with this approach. I don’t come from that background. This idea of you’re not just giving things to customers or users. You’re asking for something in return. We wanted to raise their commitment level a little bit, call it. Take them from zero to 40 first. Then later on if we were going to ask them to pay, then taking them from 40 to 100 would be an easier gap then trying to take them from here all the way. To do this, there was this hypothesis that maybe we should require a credit card to start a trial. To be clear, there was obviously a trade off here. When you ask for people to enter a credit card, a lot of people will get there and say no I’m not going to do that. I myself do that when I get to a lot of places. There’s that level of, well am I going to forget to cancel or all that kind of stuff. There a definite trade off and we realized that. We would lose people who had low or no commitment. At the same time, what we would get is we would get people who were hire quality level. To do that, this was the next iteration of the page. We ran this experiment where we required a credit card in trials, but we did it in stages. First we only ran it with our basic and pro subscriptions, which are basically our lower risk individual subscriptions. Then when we saw that had some success, we then shifted it over to the team subscription level as well. We also originally started only on this pricing page and this flow. There are all sorts of different flows on their website where you can get into the product and pay us. Ultimately, we ended up rolling it out across the entire site. From there, we even continued to iterate on the exact wording of how we phrase things. Even the number of days they offer as part of the free trial, there was the seven day trial or the 15 day trial, or the 14 day trial. These changes ultimately on the pricing page ended up back in the day for us, contributing about 500 thousand dollars of incremental revenue in just 12 months, which was a huge win for us back at the time. Overall, they increased payments by 25%, which is obviously great. It came with a lot of original skepticism. A lot of people thought that by requiring their credit card, it would turn people off. I was actually one of those people. I was against this approach. I said, let’s try it, but I don’t like it. By doing it, we realized that this was actually a huge win, not only from a revenue perspective, but I think actually from a user experience perspective as well. Because we could figure out which customers were actually really interested in our product and then we could tailor our efforts to serve them a little bit better. Next category. I want to talk about some things that we expected to work, but actually didn’t work. I’ll go back to the pricing example here. I mentioned that we had started the company with this idea of just getting people in. Getting as many people to the site, and then getting as many people registering. After they registered, we’d work on getting them to convert over time. We had this big emphasis on free. You’ll see what’s circled here. A start of free trial. Even where we talk about payment, the amount they would pay us is in really small font. We were trying to de emphasize that so people don’t think they have to pay us a lot of money. Our thought obviously was that free would lower the barrier for people to enter. It’s true that it increased a lot of registrations. But what happened is we brought in a lot of interest, but because they were anchored on free, it really decreased the conversions. Again, here’s another shot of a pricing page that we ended up with. As you can see, now we’re emphasizing more this idea that hey, this is a valuable product and we hope that you’ll pay us for it. You’ll want to pay us for it and you’ll get value out of it. Even the pricing is much more prominent. We’re not trying to hide the pricing. We’re being very up front with you. Instead of saying start a free trial, we’ve now saying try or buy. That’s an actually meaningful difference. Just de emphasizing that idea of free. What we found is obviously we’ve lost some traffic, lost some registrations. The quality of the people that we’re getting has more than made up for it. This has been a really successful approach for us. Then finally, I wanted to talk about some experiments we ran of things that failed initially, but with repeated effort, they ultimately ended up working. This is a shot of our original home page. It was our home page for the longest time. We actually didn’t really like it for all sorts of reasons. Every time we tried to change something on the page, things would break. The experiment we ran would fail. Traffic would go down, registrations would go down. Every time we made a change, we’d hurry up and change it back to this. For example, that orange navigation bar we didn’t really like that color, but we tried to change it to blue and that failed, so we changed it back. You’ll notice that on this page, the messaging is very tactical. In fact, there’s this term flow chart maker that occurs multiple times. When we first hired our director of content marketing, she almost threw up over this because she hated flow chart maker. She’s like, who wrote this page? It turns out flow chart maker is actually a really important word for us in terms of driving traffic from an SEO perspective. This tactical messaging, the problem we ran into was as we continued to grow and evolve as a company, and started to sell more into businesses and enterprise, this message was not resonating. This message was more about what you could do as an individual, but really didn’t help talk to companies about how we could help solve their problems. In order to, as I mentioned. Every time we ran the experiment, it failed. The team got pretty frustrated and dejected because even though we hated the home page, I really didn’t like it. There was not a lot it seemed that we could do without jeopardizing major parts of the business. We decided to get the marketing team together and we thought about how we could think about this not as piece mail experiments on different parts of the page, but more holistically. To do that, we realized we had to do three things. First, we had to de risk this experiment. We did that by moving the SEO value of this page to a separate page. Remember, this was our home page. We got a massive amount of traffic here. We move that SEO value so we wouldn’t lose the traffic. It would still come in. Then once we did that, we could start to experiment and understand what different parts of the page contributed to the user experience, and why people were looking at different parts of the page. Then finally, once we did that, we could then test and iterate on the messaging. This is an example of our home page today. Here’s some things that we learned from that iteration and experimentation level. First, we learned that above the fold, we still knew we needed to focus on registrations. If we don’t do that, we’ll get a massive drop in registrations. If we do that, then below the fold, we have a lot more freedom to experiment with our messaging. Then to have a message that really resonates with more our B to B crowd. We can talk about what we’re offering for the enterprise and what kinds of additional value we’re providing. Back to that navigation bar I mentioned, we had changed it from orange to blue. That didn’t work. When we thought about the whole page and context, it turns out that changing it to white would work. Maybe just because it was the contrast between the different parts of the page. These are some things. Actually, that diagram that you see that’s on the home page above the fold, we experimented with all sorts of different kinds of diagrams given we have a good clue on who our users are. It turns out that this org chart was the most effective. Not only was the org chart more effective, but we realized that when you put people’s faces and pictures, it resonated more with people. Even furthermore, it worked best when these faces were grayed out or de saturated, as opposed to being full color. Those are things that we never would have gotten a change to figure out unless we thought about this whole experiment in a more wholistic way. That was talking about the first part, where it was talking about some of the more tactical things that we did. As I mentioned, I wanted to talk a little bit more on the creative side of what the marketing has done. We have a product that we believe can benefit everyone. Not a lot of people would consider themselves diagram-ers. Our challenge is to get our product in front of those users who are looking for a diagramming application. But also get it in front of those who don’t even know yet what it is we do for them, or why they need us. Our creative team first started experimenting with ways that they could appeal to a broader set of people. Out of a summer hackathon, there was this idea for what we call the song-tacular flow down. Where we would take popular songs and use it to display the ease of use, and functionality of our product. Here’s an example of one of those. Hopefully we … All right. Thanks. That was one example, but we actually also did Hey Jude by the Beatles, and Beat It from Michael Jackson, and Taylor Swift Shake It Off, and things like that. It inspired us to think about, hey every summer we should kick off a creative campaign and try to do something big. The next summer we decided to take pop culture topics and try to turn them into flow charts like this one. We actually did a bunch of these. Actually, you saw a lot of great traction. It got over three million views. This one you see is Star Wars focused. Let’s see what else we got. We did one coinciding with the American football season about how your team could make sure that they have a winning season. We did one about leadership style based on the characters from Hamilton the musical. We did one about, would you get expelled from Hogwarts depending on your personality characteristics, things like that. These were great. Like I said, they were fun and they got picked up a lot. People wrote about them. We realized it actually didn’t do a great job of introducing you to the product. Even less so than the song ones. Telling you how to use our product or what it would be useful for. The next summer, we decided we’re going to go big. We wanted to go all in and try to create something viral. We were going to try to create the largest diagram ever created and go for a Guinness World Record. This was our plan for how to do that. Walter goes for a walk and you decide what happens next. Maybe Walter strolls across Mars. Maybe he runs into Albert Einstein. Add your sentence to Walter’s story and help set a world record. The world’s largest crowd source diagram. A giant choose your own adventure story written by the internet. You can even win a thousand dollars. Click to add your sentence to Walter’s story. All right. We wanted to create the world’s largest crowd sourced flow chart. Basically, we were turning over to the internet what adventures Walter could go on. What could possibly go wrong with this approach? I should mention that we weren’t totally naïve. We realize that Walter would probably get himself in some trouble. We had some automatic filters in place. We had several people on hand to manually curate and filter. What we learned is that the internet is a nasty, dark place. It did not take us long that we had to pull this. That was really painful because of all the effort. The team had spent a lot of effort. We had to do some things in the product to make sure that you could have as many people collaborating as possible. They could be published, and everyone could see it and contribute. There was technical work that went into it. They had reached out to the Guinness Book of World Records to see if they would certify this. I think was up for maybe a day or two before it was pulled. Actually, out of morbid curiosity, I’ve asked several times what it was that Walter did that got him into trouble. To this day, our CMO and everyone who worked on this would not tell me. The only thing they will assure me that Walter is serving several consecutive life sentences for what he has done. Around this time, an engineer who was really into internet memes came to our creative team with a different idea. He wanted to use diagrams and our product to help explain different internet memes. In particular, all the different names for dogs, or doggos. His idea was to use our product to create a video that could help explain this. He went to a couple of people on the creative team. They sketched out ideas. They realized that they needed to do something low fidelity to stay true to this community. Then they spent a couple days pulling it together. After they created the video, they stopped our CMO in the hallway who was still recovering from Walter’s episode. Said, hey we have this thing. We want to try it out. What do you think? We think it could be fun. This is what they played for him. This is a doggo. A small doggo is a pupper. Here’s a sad pupper. But a big old pupper that’s actually a doggo, not to be confused with a big old doggo, because that’s a woofer. But if it’s just a small woofer, then it’s actually a doggo. Do not pet a snip snap doggo. Sometimes a pupper is a real small pupper. That’s a yapper. But then it grows up to be a big old yapper and that’s a pupper. Now a big old woofer is no longer woofer. It’s a floofer. If it eats a human, then it’s a grizlord. Stay away. A floofer won’t eat a human. A small floofer is just a woofer. Duh. There are many, many doggo species like common doggo, also known as doge. Special doggo is rare and very special. Other doggos could be a wrinkler or a corgo, or a shoob, or a long doggo, or a puggo, or a party puggo. Doggos do things. A doggo in the water is an aqua doggo. A woofer in the water is a sub woofer. Lots of bark, bark, snaw makes for a heckin angry woofer. A doggo in a costume is bamboozled. Sometimes they’re doing me a frighten. This is trash boy. This is doggos making puppers. This is a very fast doggo running at incredible high speed. Diagram your doggos and anything else with Lucidchart. All right. Thanks. This was a random idea. We decided to put it out there. We were like, okay. If it gets 50 thousand views, that would be a huge success. Within a couple of days it got 33 million views and we had not done a single thing to push it. We were flabbergasted. Of course we thought, wow how can we recreate this? What can we do? We continued down the animal vein and saw quite a bit of success. Not quite to the doggo level, but really, really well. We did birds and snakes, and honestly I’m not an internet meme guy. Anyways, they performed really well. Then we branched a wave beyond animals as well. We did one on Fortnite, which worked really well. It was really popular. We did one on Star Wars, which actually didn’t work. We continued to iterate on this. This campaign is called Lucidchart explains the internet. It now has over 280 million views. Actually it was recognized by Ad Week last year as quote, the only ad campaign that truly matters in 2018. The team is really proud of that. We know this campaign obviously isn’t going to last forever. We’re continually iterating on it and looking for new ideas. None of this would’ve happened if our CMO hadn’t had an open mind and said, sure. Why not? Go for it. That’s basically a summary. What are the take aways from here? I think for me and for us, there were four. The first is obviously encouraging trial and error. This idea that if you’re experimenting, then you know that some or maybe even most things that you try are going to fail. But that’s okay. We like to say 100% of our experiments are successful. That doesn’t mean they actually move the business in the right direction. If they failed from a results perspective, we learned and hopefully learned a little bit about why things are working and why things weren’t working. The second one is don’t blindly trust the data or trust your gut for that matter. My gut was telling me that that credit card trial required thing we shouldn’t do. But I was wrong about that. If we had trusted just purely trusted the data on all of those home page experiments, we would still be stuck with that really crappy home page. As opposed to something that I think resonates more as we evolve as a company. Third, try to fail fast and fail often, but learn along the way. With Walter, I think our problem there was maybe we should’ve anticipated that that was a bad idea. At least we should’ve tried something a little bit earlier on. That one hurt because we put so much effort into that campaign. Ultimately, had to pull it within two days. That was a case where we didn’t fail fast enough. Then finally, this one about good ideas can come from anyone. Here I think about James our engineer who is into the internet memes. It was great to see him actually at the award ceremony when we got awarded one of these awards for the marketing campaign. Just seeing him, along with the creative team, and the rest of the marketing team accepting that award. Because it really wouldn’t have happened without him. I think that’s been true in our company, and as you build your companies. Think about that idea. That great ideas for experiments can come from anywhere. Thank you very much for your time. The post “Top lessons learned from our best and worst marketing experiments” Lucidchart Co-Founder and CEO Karl Sun (Video + Transcript) appeared first on SaaStr.