In today's episode of the Go Far Fast Show, product design expert James Keal shares his advice on how to create a brilliant customer buying experience, what we should be doing with our websites to meet customers behaviour needs, and how to get customers to do what you want through on your website!
In today's episode of the Go Far Fast Show, product design expert James Keal shares his advice on how to create a brilliant customer buying experience, what we should be doing with our websites to meet customers behaviour needs, and how to get customers to do what you want through on your website!
Merlie: Hello and welcome we have episode 3 of season 2 of the go far fast show. Episode 3 season 2 already Aaron? My goodness! Well, this is of course our talk show for you our small business audience and it's designed to get you the answers to the burning questions of today, as always. We have a wonderful guest to introduce you to this morning, someone who's been on the Farillio journey since we started and I would trust our guest and his team with all the issues that Aaron and myself and you guys are going to be putting to him later this morning! Don't forget as always to like comment and subscribe as you go through, and of course if you want to get all of the extended questions and the extra bits that we'll be talking to today's guest about then pop over to the extended podcast, particularly if we don't get to the question that you want us to be asking here on the show. So, Aaron this one's going to be a doozy isn't it?
Aaron: It certainly is Merlie, I can't wait for this one. So as always, the name of the show is go far fast and that's exactly what we've got for you today! Today we have James Keal in ready for our questions and he's going to talk to us all about how to ensure our website meets your customers behaviour and needs. So, we've got some really juicy questions lined up. We're going to ask him all about his company Inktrap, and how that's all set up, before me and Merlie finally get the chance to understand some acronyms that we've never understood before, so we're looking forward to that one! Then as always, we're going to let James face our legendary community questions and you guys have come and given us some brilliant questions as always, so we can't wait for that. Merlie, can you let the wonderful audience know how the rest of format works?
Merlie: Yeah well, you've pretty much covered it Aaron thank you! So, Aaron and I will get James warmed up for you with some great questions and we're going to dig into a lot of the detail that comes from what James is expert on, which is how essentially to create a brilliant customer buying experience, what we should be doing with our websites, how we can really get customers to do what we want them to be doing on those websites. And then of course we'll look at your very specific scenarios and some great questions, some really common questions, that Aaron, I think you and I both see from our audience all the time, and James is going to give us the real answers! So again, like, comment and subscribe as you go through folks and I think we should really get James onto the show.
Aaron: James welcome to the show is so great to have you on board. We’re going to start with a quite straight forward question for you but we want to know all about Inktrap itself. So can you tell us all about Inktrap and how you came to cofound it with Sam Leicester. Cheers, James.
James: Hello Merlie and Aaron thank you so much for having me on the show. I'll talk to you a bit about Inktrap so Sam and I (Sam is my Co-founder) started in trap eight years ago when we were just finishing university we thought we'd like to eventually have our own agency one day, so what better time to do it when we literally had nothing to lose no other commitments, so we took a bit of a leap and ultimately it's worked out.
In the early days we were working on any graphic design work that we could get our hands on that was website builds, logos, visual identity's anything like that and after about six months we got our first app design job which was an app for free and cheap events in London - an app called Frugal - you might have used it I think a few hundred thousand people did. That was featured on the App Store which led onto lots of referrals and got us into the wonderful world of digital product design which is now what we specialise on. So, we're now a team of eight people who've got a couple of front-end developers, 6 designers, and then myself and Sam who do everything else - and as you can imagine this quite a lot to do. We are currently hiring a project manager who's joining us in a couple of weeks and some other non-production roles to finally take the burden of the admin which we've been weighed down with over the last few years so we can focus on growth and improving processes
Merlie: That’s absolutely brilliant and I think some of those demands definitely come to James from Farillio so anyone out there looking for a UX design agency - Inktrap couldn't recommend them more highly.
James, I think one of the things that it's really important to start off with particularly if you're new to the area of web design or web optimization i.e. really getting people to do what you want them to be doing with your website or indeed any app or technology product that you're building is to get to grips with the acronyms and the concepts that your industry use an awful lot. I mean we've got CX UX, UI and then you've got the sort of the concept phrases the ‘minimum lovable product’ that we're hearing more and more about the ‘minimum viable product’ the MVP and then of course you've got user research user testing there's a whole bank of them isn't there can you just pause a moment for us and explain what these actually mean and also why they're so relevant to any business that really does want customers to do the right things when they land on their website, landing pages or get involved with their app?
James: Yeah, it's really useful to have a solid understanding of the terms. If anything's help, you communicate with other people in the industry with other designers or developers, your marketing people. So, I guess the best thing to do is to plunge in with a few of them. I think for me, the biggest one. Is the customer experience known as CX.
So these are my definitions now I'm going to give it depends on which blog you really think you'll get something different definitions, but my understanding based on the last eight years of experience are these and that is that CX is your overall customer experience from their kind of initial interaction with your brand when they first see an advert of your company, through using your product and signing up, all the way through to off boarding, which is something that's not often talked about, but that's when a customer kind of leaves your products. So, you want to make that a graceful experience as well as hopefully they continue to recommend you even end when they no longer need your product. So that's kind of the customer experience. The end two end interaction with your brand and can include things like calling up your support team or interacting with your marketing materials. Basically, anything that is a brand touchpoint they interact with.
And then underneath that we've got user experience design known as UX design. So, this is the customer interactions with your product specifically. Within that we kind of look at: what is the core user flow through your products and what features do we put in and introduce each step and as part of that we define what is the most important features and where they should be surfaced through your customer journey.
And then kind of another sort of sub-sector within UX is user interface design, which for me is very much part of the user experience design. So, by user interface, design or UI, we mean kind of what the interface looks like, the adding of the colours, the fonts, the typography - is it kind of quite a busy space? Is it very clean? What does it graphically look like? So that's kind of user interface design. Um, so yeah, that's kind of the pyramids at I see it in my mind of CX, UX and UI.
And then there's other terms like minimum viable products, MVP. So, this one you probably have heard quite a lot about, especially if you've got anything to do with digital products. So, this is the minimum feasible product that allows you to fulfil your initial objective. For instance. It's normally based on a hypothesis, might be that people want to chat with each other using their Apple Watch, for instance, and there might be a hypothesis and in order to test that, you need to create a prototype of that experience that works to make sure that people actually did use that to give it to people to use trial, and if they use it, then the prototype is done what you intended it to do which is proved that there is a need for this product and that people would actually use it with that particular implementation.
The idea with prototypes is that their ultimately disposable, so once they proved what you need them to prove, then you move on and you build another version. Although it doesn't always work like that often make evolve overtime.
Then there is another term which is minimum, lovable product. Now this term was introduced to encourage people to create products that form an emotional connection with their customers, as opposed to just being functional and technically working, often a product needs to do more than that. Because it might work well, but if people don't want to use it or not motivated or they don't understand why they should use it, they're not going to - and you're not going to get many people on your platform. So, the term was coined, ‘minimum lovable products’ to encourage people and remind them that their minimum viable product often has to, not only functionally work, but kind of look good and feel nice to use as well because if people aren't using it, it's not viable.
And then there's other term, ‘user research’, and so that's when you investigate who your users are, what their problem is primarily and start to think about solutions to solve those problems.
And then another term is ‘user testing’, so that's when you test potential solutions to those problems and spend as much time with your customers as possible to make sure that what you're working on is actually suitable for them and ultimately works and that they can use it too. So yeah, those are kind of a few terms. Is there any others that you'd like me to cover?
Merlie: I think there’s a whole Bank of them, but Aaron won't forgive me if I don't get to his questions too, but thank you James I mean it is really important that that we all understand what those acronyms and concepts are when we're building products, when we're thinking about the experience that we want our customers to have, indeed, we should be thinking very much about that from the get go so thank you, Aaron. I'll pass the baton to you.
Aaron: Thanks again James I mean finally I think when I'm in those meetings I can actually understand what they’re going on about now because I've just sat there before going ‘yeah, that must be right’.
So, thank you very much for putting that through. And as Merlie said, it's about our science, isn't it? So now we can understand what the terms mean, we can understand the science behind it.
So, I think this comes nicely into next question, because there is a lot of confusion of what the terms mean and what it is that we're trying to overall achieve and one of the other confusing aspects is written on design thinking, so can you explain what this means too and how we can apply it to our own business planning?
James: Yeah, sure, so design thinking is all about putting the customer at the heart of the decisions that you make and ultimately thinking what is best for them. And these could be decisions from company financial decisions all the way through to product decisions about what features to include and what they should look like. But yeah, always making sure that there is someone in the room championing what your customer needs and the problems that they're having to represent them. So yeah, the kind of term - it's been around for a while now - but yeah, it kind of builds on the back of making sure that you are delivering something that people ultimately want and constantly thinking about what problems are we actually setting out to solve and bringing your potential solutions back to that so that kind of is basically what design thinking is.
I think it's being banded around quite a lot recently, and if you Google it, you'll find a bit about people saying things like, ‘oh, it's just basically common sense’ but there was a need to give it a particular name and to kind of champion designers on teams and put them into leadership positions as well because a lot of bigger companies became so detached from the actual customers that they're serving and they needed some representation in the room when they're making the big decisions, so kind of champion the needs of the users. So that's where the whole idea of design thinking came from. But ultimately it is just considering what is best for my customer because generally if you got happy customers that are well served, then you're going to make more money.
Merlie: Fantastic, and never a truer word spoken. And now we're going to move on. I think Aaron to your favourite part of the show folks. We do have additional questions that we will be asking James on the extended podcast if you're interested in understanding pirate metrics.
I'm going to be asking James to channel his best Jack Sparrow impression so we can do the aargh metrics forgive me, can't help myself, but the double A, the treble R metrics which are really crucial to measuring customer success and the success of your customer experience efforts as well as a couple of other questions about what you do when you get a new website, projects and what James does to help his clients on new web projects. They will now fall into our extended podcast. So, Aaron, do you want to kick us off with the community questions? James, are you ready?
Aaron: Thanks Merlie yeah again as I said beginning our community of have come and bought some brilliant question so this first one is exactly that. This particular member of our community has got an idea for a business and now needs to do some testing with customers can you give me some advice on the best way to do research on customer testing?
James: Yeah, sure. So, what we do is a validation phase with a lot of our clients. Something we've been doing in recent years that has worked out really well. And within that, basically what you want to do is to cheque that you're heading in the right direction with your idea as efficiently as possible and as quickly as possible. So, if it isn't the right approach then you can. Change your approach or stop altogether an if it is the right approach, then you know as quickly as possible, which is great.
So probably what I would advise is to set up a smoke test to test to see if people actually want to use what you've got in mind. So, first thing you do to do that is to understand where your customers are. This is quite easy with digital products, because yeah, you kind of find the often the social network where they congregate or the Reddit groups, or subreddits, or like Facebook groups or things like that or even the kind of Twitterverse that they exist in. And so you kind of find out where they are and then what you can do is put small budget aside for ads to promote your new idea and then you can kind of see how many people interact with those ads, click through to a simple landing page that you created and then have a sign up field to kind of, ‘Product coming soon, sign up for more information’ and then you can see from the number of sign-ups that you get and the type of people that sign up whether you're going to have to have any customers basically. So, you don't need to build the first version of the product straight away, but you can create a smoke test to kind of pretend that it's on the way and nearly there to get people interested and enthusiastic about it, and then you can gauge how popular it's going to be, and then you can also work out how many customers you'll need to make it kind of viable. If you've got some rough kind of overall costings in mind for the build. And then yeah, based on the number of people sign up, if it's just one or two, then maybe you got your marketing approach wrong with the smoke test or maybe there's just not the volume that's going to make it a viable business, but if you get hundreds of people really keen, then you know you're probably onto something there. And you can also use the contact details of the people that signed up, you can contact them and say look, we would love to get you involved in helping shape this product so then you can form user interviews with them and do some user tests as well with some initial prototypes. So, it's a really great way of very quickly validating whether you're going to have any traction with your idea and then also generating some power users at the start who could fall in the formation of your community to promote your product going forward.
Merlie: That's brilliant advice, it’s very much what we did at the beginning of Farillio and what we still do together, right? James today, even now when we've sort of got new iterations, new ideas, new features, new channels to be done, that processes is cyclical, isn't it? You keep you keep going once you started.
James: Yeah, absolutely. So last thing I want to do is spend all your money building a product which isn't quite right. You want to establish the product market fit as quickly as possible and then commit to kind of building the first version – ‘the mvp’ making sure that is actually solving people’s problems and that they are likely to want to pay for as well.
Merlie: Absolutely. Right well, I've got the next question for you James I really like this question actually because I hear this a lot and I know this is a real pain point. The question goes like this: I've had a website for a while and it's okay, I get decent clickthrough rates from other places where I'm promoting my business, but when people land on my website they don't stay long. What can I do to change this and get them to see all the things that I want them to see?
James: So yeah, that's quite scenario I think. It's common most websites that you get a high what's called a bounce rate where people come onto the site and then pretty quickly leave within a few seconds? That's not always necessarily a bad thing because not every single person visiting the site is going to be a relevant prospect or customer for you. So yeah, it's often not a bad thing for lots of people to be just leaving straight away because you're just basically filtering them out.
But let's assume that you are missing out on some potential customers there. So, my advice would be to be as succinct and concise as possible on the site about the benefits that you're providing, and then what that service is. So, kind of putting the ‘why’ - why people should buy this product or use this service. At the forefront and at the very top of the site. And make it very clear.
And often the best way to be very succinct is to make. Make a short video and put it into the top of your website. People can just play and then get a very quick understanding of what your product is and the benefits that it provides them and why they should use it and then often on the homepage I find it's best to order the content based on what you want to communicate. So put the most important things at the top and then kind of lead that into the next parts, people Scroll down and then as they read through their building up more information about your product and the benefits that it offers and then hopefully by the end you’ll have a call to action at the bottom, and then that's when they'll sort go into the signup flow or the more information flow. So, I guess to summarise and be succinct as possible and think about really what it is that your product or service does, which is really good and why people should have it and the benefits that it provides, and then put that front and centre at the very top.
Aaron: Yeah thanks I think kind of pushing on a little bit from that as well I think what we've certainly finding out the way we created our website and how we got to where we are now is having someone like yourself as an outside looking in can sometimes be a huge difference can’t it.
I mean for us we thought we had the best website in the world because we were passionate about what we were doing and everything else, but when someone looked at it from outside looking in, they were going ‘yeah, it's great, but this doesn't quite work and that doesn't quite work.’ And I think you need that. Don't need experts to be able to go in and just look at it in that sort format. So really appreciate you kind of bringing that into play there.
I think this follows on nicely as well to the next question, and again, there's something we fell into the trap of and we're still fighting ourselves, but this particular community question is all about how should how much should I say should I pay for a good website? I tried building my own which some of us have all been there, done that, and it's become a massive nightmare and I'm getting really stressed at the time is taken. I don't know if I'm focusing on the right things. Have you got any advice and help for them for what they can do in that situation?
James: Yeah so how much should a website cost – that’s sort of the age old question. And it all depends on the context, what products or service that you're selling and who to. And also, you’ve got to think about it in terms of return of investment because if you're making a particular product and selling it on your website and you're generating hundreds of thousands of pounds worth of revenue through it, spending 10s of thousands on the site itself is sort of a bit of a nobrainer. That's a really good investment, especially if you think that you could potentially increase your sales by 10s of thousands as well, it will pay for itself quite quickly. But if you're just starting out, then yeah, you are not going to have the money to invest 10s of thousands of pounds in a website, and you might not need to either. In fact, you probably don't, especially at the start.
So, there's lots of online website builders. Things like square space -really good for ecommerce sites if you just setting out and you're kind of selling physical products or even service. Using something like that is really good. Because there’s a low monthly fee and it's really easy to maintain and populate the site and manage all your kind of sales metrics. And yeah, it's got CRM as part of it to help manage your customers as well. So, something like that is really good. But yeah, ultimately it does depend on the context and what you're doing. And it’s best to think about it as a return on investment. And if you are spending a lot of time maintaining and trying to make sure that your website works, then you’ve got to think about, well, what would you do with the time if you weren't spending it doing that and how much more money would you make if you're spending that time on marketing activities are working on your process or servicing your customers. Unfortunately, there's no value which I can say how much exactly good website should costs. But yeah, thinking about it in terms of return on investment as probably the best way to go.
Merlie: Brilliant advice, really brilliant advice. So next question James, if I may? Which websites do you think have the best customer journeys? Our site needs updating but I'm really stuck for ideas. Who inspires you and where do you go to get new ideas? Love this question.
James: Yes, it's a good one. I really love Air Bnb as a as a user experience is just such fun even though it has never been so much fun to spend hundreds of pounds and it's so easy to do as well. So, it's a great place to kind of buy your holidays basically so there really fun. He's experienced, I think that comes from the fact that you are buying a holiday and that is quite a fun activity -thinking about what you're going to be doing and where you're going to be going, but also how simple that they've made it feel.
Simplicity in a user interface is really difficult to achieve and that comes from being really customer centric and talking to their customers and understanding exactly what they want. Delivering that and then testing it back with them to optimise the user experience and find out what works best and where. And then being very disciplined about including, not every suggestion that someone has, but what is going to be most effective and then sticking with that. So yeah, that's why I really like Air Bnb.
Another goods customer experience -bit controversial- probably Amazon. Even though when you first go on the site and looking at the listings and thinking Oh my God, there's so much information here, this is way too much and it's not something that you want to print out and put on your wall, but it's been really well optimised because you know everything there has been thought about and tested and validated and works. So even though it feels very cluttered, a lot of the time and they figured out that it's better to have those features in all the information in than to exclude it because yeah, they make more money in the long run. So even though it doesn't look great. It's so easy to buy things on that, and I think that's really important. To make it very easy and clear for customers to do what they want to do. So not thinking about how do I do this, but I want to do this, I just get on and do it. So, that's the ultimate goal.
Regarding places for inspiration for visual design inspiration. Looking at sites like Dribbble, DRI, BBB, LE.com is a sort of a design Instagram basically where people put up their design concepts. And things that they're working on and then get feedback from rest of the design community. So, looking on there you can see some really, kind of, adventurous user interface designs - things that probably wouldn't be possible in a lot of cases to build, but people have kind of just gone for it with redesigning existing products and things like that.
So, then you can take some inspiration from that and go actually with the way that they treated the form fields or the buttons in that particular instance or the background that was really nice. What if we can use that in a current product that we're working on? Kind of cherry pick different parts of it and implement into your work, so that's a good place to look for inspiration.
Where else do I find inspiration? I think from the user experience perspective looking at kind of how real worlds processes work because. We can learn a lot from existing processes that have been around for a long time, especially with sort of manufacturing and things like that where things have been made really efficient and with really efficient flows and working processes. So, looking at those and understanding well how they got really, really slick operation and how can we take lessons from that and apply it to user flows on the web? so yeah that's always quite interesting as well
Merlie: Some real echoes there of Louis advice Aaron as well about where you take inspiration from looking in real in real life at other scenarios too. Thank you, James.
Aaron, I know is busting to ask another question.
Aaron: Thanks, Merlie. James, you've been brilliant and some really good questions and we can't let you go without answering a couple of these next ones. So, the next one is I'm a designer and I'd love to do what you've done and create an agency because you've done it so well. How did you create your agency and is there anything you do differently looking back?
James: Ooh yes, there are so many things I would have done differently. But yeah, to answer the first part, how did we start off? Sam and I started at university. This is eight years ago and I think what helped us initially was we had some initial work to immediately crack on with which came from the university itself. So, in the months leading up to when we started, we were telling other people that we were going to start around design agency and one of Sam's lecturers, I think he mentioned it to him that we were doing this, and he said, oh great, we've got a new site that we need to have designed and built an to promote the digital courses at the university. So yeah, that was a great lead basically that we had already when we started so we could immediately begin work on the 1st project within the first month of us starting Inktrap, so that was really useful. So to plant the seeds I think before you officially start to let people know what you're doing, maybe start it off as a bit of a side hustle as it's known in the trade, alongside your current job or current studies just to build up some initial traction and to get the foundations in place for when you officially start with it, because what you don't want to do is go right I’m going to start agency now, go into it full time because it's going to take weeks at least before you start getting your first projects signed off, starting getting deposit, paid and stop working on your first websites and things. So yeah, definitely do some homework and do some work in the lead up to it.
Things that I wish I'd done probably had some agency experience before starting Inkrap. So basically, we've been doing this now for eight years and I think that had do I worked for a couple of years at another agency I think we'd be where we are now, after fewer than eight years, but had to learn a lot of it on the job. So there's good things about just going for it and starting out with any experience in a particular sector, which are you're not sort of using bad practises from other agencies are not going to leak in because you're doing things on your own based on what you think and what you know works best based on your experience which is kind of the equivalent of user testing products - taking lessons from user tests - but yeah, applying that to an agency. So learning from what works well and implementing that so you know everything that you're doing works because it's worked before, so you're not picking up bad habits from existing agencies. But you are going to miss out on some of the basic business fundamentals that only now that I'm learning things like how to structure and agency, what the sales pipeline looks like, how to structure that, how to set up a marketing campaign, how to manage the flow of Leeds, how to kind of delegate tasks, things like that, which you will learn. Some tips and tricks from working at another agency underneath the founder. So yeah, I wish I had done that. But then again went on a bad position now, so maybe it's best just to dive in.
Merlie: It’s a real juggle isn’t it you know, how much do you go 2 feet in and be prepared to learn on the job versus get some experience first up. I don't think there is a wrong or right answer to be honest, I think you could go to burning yen and you want to do it now, just be prepared if you are going to do it now with less experience of having done this sort of thing before that there is going to be a certain amount of learning on the job and that comes with the territory.
I really like that answer James. I relate to it an awful lot. There were times where I wish I had a little bit more training on how to be a founder of the business because it is a very, very different skills set.
That here's another question for you. The last one of our community questions and then we've got a couple of wonderful scoop up sessions for you. James, what's your advice when you've got a prototype but your customers don't buy it? So, the user here says we did all this research. And we were confident that we'd nailed it. But even though our research group gave great feedback, we haven't been able to get customers to buy it.
James: It’d be interesting to know what user research was conducted and the format of the research group. If it was something like a focus group and then you show people different concepts or talk to them about different ideas, generally they're very sort of very enthusiastic about it: ‘yeah, that sounds great. Oh yeah, I definitely do that.’ But it's a very different experience in the wild when your product out there. So perhaps looking at what sort of marketing have you done for your product as it's not enough just to build it and then say right now people are going to find it and it's going to be great you’re get loads of people on it, because with digital products you can build the best product in the world and it could be sitting there on the App Store. It might even be right now but we don't know about it because they might not be in any marketing activity done around it because so much about the suggested product is driven by the marketing and putting it in front of people and you’ve got to put it in front of people to give them the opportunity to say that we don't want to use it by either ignoring it or actively saying I'm not interested. But until you do that by marketing it, you're not going to get that feedback. So yeah, I think looking at what marketing approaches you've taken and trying to figure out if they work well in, are any particular channels you followed shown some glimmer of hope, in which case, double down on those and kind of try and push it out through there because you’re more likely to get more success. And then with the product itself, probably conduct some more tests, get some direct user feedback from people about like candid responses about what they think about the overall product and the overall experience.
Looking at the analytics as well and seeing where people are dropping off so it sounds like you've got some traction already, so you've got some people coming in. So, seeing where they drop off, is it at the very start? As soon as I get to your website, is it later on in the onboarding process? Are they signing up but not actually paying any money for the product? So, you are figuring that out and then you can sort of address the areas where you're getting the biggest drop off as well. But yeah, it could be a whole host of reasons.
Merlie: Yeah, and you're right, James is about breaking it down and understanding where in the process things seem to be creating friction and then looking at, you know, is it a price issue? Is it because your landing page isn't clear enough? It is just because your signup journey is too complex or the message is too confusing. Hopefully it's not because there's something wrong with the idea in the 1st place where it's just not urgent or vital or desirable in the minds of your customers, and those are the things really that we're sort of getting for every time, aren’t we, as sort of producers of products or services? You want something that is desirable or it's an urgent or a vital need because then you know there's an impetus behind it, and you're going to work a little less hard to convince people to buy it once they know about it.
But thank you, that's a great list of checklist of things that I think our viewers can go and look and compare what's happening with their products and services against that, and hopefully this particular community Member will have some great guidance from that to take forward.
That's great, we've got some final questions that we didn't get to you in the warm up session with you for the main show. So, if we could start again with those just a few of them, but some really nice ones. The first one is what I teased earlier, which is those pirate metrics so. The double A treble R acronym that really is that sort of classic measure of customer success. How well are you doing? How much are your customers loving it? Can you explain that acronym the AARRR acronym for us James and put it into context for us so that we can start checking out on websites and products against these all important metrics.
James: Yeah sure. So, the AARRR metric, which is why they called pirate metrics because of the AARRR framework. So, they've been around for 14 years now. And it is a way of basically measuring the health of your startup, especially with digital products. So, they are acquisition, activation, retention, referral and revenue are and you don't have to wear an eye patch when you are setting them up. So, they measure the health of your start up and basically tell you where your customers are dropping off and which channels for growth are the most efficient to follow.
So, we start off with acquisition, so this is all to do with before your customers sign up - what is the process in place for them before they become customer? And so, this takes into account kind of lots of micro conversions as well. What we mean by that is when someone say sees an advert for your product, maybe clicks on that, that would be 1 micro interaction goes on your website, sign up to mailing list, that might be another micro interaction. They might have nothing to do with you for a week. And then you might send an email out. They'll sign up for a webinar, say that you promoted in that email and then after that will convert as a customer once they build up the confidence that your service is definitely the one they want. So, you've got to think about it holistically and not just look at the act of them signing up. It's more than just that, it's all the steps before then. So that's what we mean by an acquisition.
And so, what you want to look for in the most kind of efficient use of your money for acquisition is. Find out which channels the most number of signups are coming from. It could be a particular social channel like LinkedIn ads or Google Ads or SCO? And then also think about where you get the best return on investment because it might be very expensive to particular platform, but you get a lot of people through, but there might be another platform where you get fewer people signing up from it, but it might be a lot cheaper. So, in which case, that would be a better return on investment. Spending money on that one.
Then the second step activation. So that's the moment that a customer gets the sort of ‘ah ha’ moment and understands the real benefit that your product provides. And so, this directly leads into design of onboarding flows. Because if you understand what it takes to get people to understand the real benefits of your products and really love to use it, then you can bake that into the onboarding flow. A famous case of this is what Facebook do. I think they still do it. It's been a while since I signed up, but they used to get people to add seven friends as part of the on boarding process, because they knew that if people added several friends within the 1st 10 days signing up, they’re far more likely to come back to the platform, so yet they've hard wired that into the onboarding process. The same with Twitter getting you to follow 30 people if they can get you to do that, they know you're very likely to become a long-term user of the platform. So, then they encourage you to follow people at the start when you're signing up. So yeah, that's kind of activation and why it's important.
And then the next step is retention, so this is all about how frequently people are revisiting your products. And yeah, basically it really. It's one of the most important metrics because if you've got lots of people coming back your product, you know you're onto something. You got a good product market fit. People are coming back for more. They like it. So yeah, that's really important to measure that it's equally as important to measure what's called your churn rates as part of retention for those people that don't come back because often you learn more from them than you will from the people that you keep coming back. So, you want to talk to them and understand why aren't they coming back? And yeah, why are they part of the churn? And if your retention is higher than your churn rate then you're growing, and that's really good. So that's kind of in a nutshell that whole section about retention.
At the next step are referrals. So, if you've got people championing your product and actively referring your product to other people, then you know you're really doing well, and you can encourage this behaviour by having insert of intrinsic referral programme space into your product. A famous example of this is what drop box do. Where if you recommend drop box to a friend and they sign up, you both get free space and get 16GB worth of free space. And that's a great way of massively increasing your user base without having to spend too much money because they've already got loads of space. They can just give it away for free. So that's a really good referral scheme.
Other platforms have free credit that you can get towards your account. Things like bulb and notion, the project management software, where if you refer someone, you both get credit and you get like a month free. Which is another great way of a very cheap way of growing user base. So, one thing to look out for with that, one key metric to do is referrals, is your viral coefficient, which I'm sure we're all now very familiar with because of Coronavirus is basically the R number for your products, and that's how quickly it's spreading. So, if you have a viral coefficient of one, it means every kind of long-term customer is referring one other customer. So basically, overtime you're doubling a kind of linear rates. But if your viral coefficient is 1.1, so just 10% more, you'll get a much higher number of customers in very short space of time is basically the line goes like this instead of like that. So yeah, you end up with a lot more in a very short space of time. Something to look at and measure as well, and then you can tweak different things. Do with your marketing and on your product and also with your referral programme to see if you can get a lot of our coefficient higher and higher and then yeah, the more people that referring you the less kind of effort you have to put in and money you have to put into direct marketing - if you want to or you can scale both up.
And then the final step is revenue, which is ultimately the whole point of having the business you want to generate money to, reinvest them, grow, and also to kind of pay for your all your effort that you put in. So that's really important things to measure. And so, with that you want to measure the cost of customer acquisition. And also, the customers lifetime value. So that's the amount they spend not just when they first sign up, but when they are a user on your products could be for months, could be a monthly subscription. Could be for years of in app purchases and things like that. So, you want to find out what your average customer lifetime value is and also what your costs per acquisition is for each new customer. And a really good ratio to have is 3 to 1. So, for every pound you spend our customers acquisition, you want to have £3.00 back in customer lifetime value. If you've got that at three to one, then you're doing really well. And that kind of should be a target. So yeah, that's the pirate metrics. Acquisition, activation, retention, referral, and of course revenue, which is what it's all about.
Aaron: Thanks for that James. It’s really impressive that you can put it down into just that one, acronym. I’m a little bit disappointed that you don’t have to wear the eye patch, but you know that just goes with the territory, doesn’t it?
But it is important to see that because I think a lot of people of businesses are aware of their customer journey but they’ve just not put it into that precise metrics are there. They’re not looking at it in those elements that they can actually then have action points, and they can actually do something about, the kind of see their customer journey, and they may have put it on a piece of paper in my draw on a whiteboard. But they don’t really go into the depth of it like you’ve just done that, and I think that’s really going to be key for people to understand you know exactly how to grow their business and get their project off the ground. So really thank you for that. That’s a great bit of insight there. I think a lot of people are going to take that on board and on board to improve their journey.
Moving onto the next question though, if you don’t mind. This one is all about when you get a new web project what are the first step you take with that new client and why? What was so important about understanding. And I suppose nowadays you getting to see even more kind of out there web projects, aren’t you? So, there must be kind of different approaches you must have take now, so can you give us an insight into that please?
James: Yeah, sure. So, the first thing to establish is what problem is this solving whether it's a marketing website or whether you're designing the digital software product itself to understand what problem are we solving and then who it's for? Who are these people that we are going to be targeting this app? What is the problem with having? And also what is the overall solution that we are either producing the marketing site for or actually designing. And also the last thing I guess would be the overall vision, what we're looking to achieve here in the long term, because we can bear that in mind and get off to the right start so we're going in the right direction.
So, what we produce is a problem statement which very succinctly says: what the problem is? Who experiences it? And how we going to solve it. So, it could be an app that allows people to communicate just using audio messages because they are visually impaired and unable to use a phone keyboard. Something like that. That would be, very simply, provide us with good intel about what the problem is, who is for and what we go looking to achieve with it, so that's normally the first thing we do.
And yeah, we can work with clients to help them produce that as well. It's not something that we ask and go ‘you cannot speak to until you've got your problem statement’. We work with you to make that. And then we’ll move into these sort of figuring out or conduct user interviews first. That’s something we do with all our projects now at the very start is talk to the people who are experiencing this problem to really understand what it is they’re experiencing and the context of use of the solution as well. For instance, it might be that with this app that people are going to be using it on their iPads, so we should focus more on larger screen sizes as opposed to just mobile. And until you speak to people you won't understand what the context of use is. Often you only establish it from seeing how they use a prototype or actually sitting with them and seeing how they interact things day to day. So yeah, that's kind of a brief summary of our starting point within a new web project.
Merlie: I think that's great, it takes me back to where we started as well. So great memories there. But super important to understand what problem it is that you are you are fixing to be crystal clear on that, and I think the support that you do give to businesses to make sure that they really are crystal clear on that and it has been validated gives them far greater prospects as well as yourselves, of building something really successful that customers will love.
And I guess that's the final question for you today, James. What really does make for a brilliant customer buying experience? Cause that's why we're doing it. As you said earlier on with the pirate metrics, you know it's about the revenue at the end of the day, it's about making a sustainable business that you know you can really enjoy creating and being a part of, because it's bringing in the money and it's giving you that all important return on investment and profit. So how do we get there? How do we make this a brilliant customer buying experience?
James: I think that's a really good final question because it touches on so many previous points that we've spoken about. I basically the crux of the issue is to understand have a really good understanding of the problem that you're solving and who, the people buying the solution are because no two websites or digital products are the same. They are moulded around a particular set of problems and a particular user group. So really understanding who your customers are, the context in which they're going to use your product and also the problem that they're having as well. That will guide exactly what format your solution should take. Because there's all sorts of different sales websites from like car websites where it's more about how to marketing, and often it feels like you're in of scrolling perfume adverts. It's all sort of about evoking the feeling of the product and how you're the person you're going to be when you, when you buy it, all the way through to buying socks where you go on, you see the size of the socks. You select the size you want, you see the type you want added to the basket, that's it. Two very different buying experiences and user experiences, but ultimately, they’re kind of following the same steps of trying to tell you something.
Really understanding who your audience is, what the problem is that you're solving and then trying stuff out as well. You can kind of only get so far by copying what other people have done, but eventually if your product or service is unique and you've got a USP or unique selling point, then you're going to have to deviate at some point. And not just have a copy of Amazon or any other website.
So yeah, it's a difficult one to answer because it depends on the context of use. As ever, you probably hear that in every single one of my answers are probably said that. But yeah, as long as you like dive into understanding the problem and learning to love the problem and finding a solution for it, then you'll figure out exactly what to do and what route to take very easily.
Merlie: Yeah, it's that vital groundwork at the start isn't Aaron. You learn by default a lot of the time, but if there's one recommendation I would make to anyone starting your business right now is go do that groundwork. It is so critical and it really will assure success. It will probably minimise the level of stress and anxiety you may also encounter along the journey if you put that vital groundwork in at the beginning.
James that was superb. Thank you for staying on with us for those extra questions, especially the pirate metrics as I know they're really intense those ones but super guidance for all of our viewers today, right, Aaron?
Aaron: Certainly is, thanks James. Has been absolutely brilliant insight. Thank you very much.
James: Thank you, it’s been great being on the show.
Merlie: Well, thanks guys again, that's all for the extended podcast and we will see you again for episode 4 next time.