Building a Customer Development Funnel
I'm a software engineer, and like many engineers, I like thinking in systems. One of the most interesting parts of running a side project has been the challenge of learning about marketing and how to turn the customer acquisition journey into a repeatable system.
In this blog post, I'll walk you through how I developed a customer development funnel for CFP Land, and some of the things I learned along the way. Keep in mind that I'm not an expert in marketing, and my funnel still has a lot of room for improvement, but I hope this walkthrough will be inspiring and educational as you start building your first customer journey.
What is a customer development funnel?
I recently read "The Startup Owner's Manual" by Steve Blank, and while much of its advice is geared towards venture-funded, high growth tech startups, most of the fundamental ideas work for bootstrapped side projects as well. One of my big takeaways was the "Get-Keep-Grow" funnel he introduces in the book:
The idea of this diagram is that customers go from Awareness (in the form of "Earned and Paid Media",) to Acquisition, to Activation, and then move into Retention ("Keep Customers",) before being gleaned for maximum value in the "Grow Customers" side of the funnel.
There's more here than I am currently doing, but the idea is that customers are groomed over time, not immediately created, captured, and discarded.
While my first customer development funnel is relatively simple, as CFP Land grows, I hope to have things to upsell and cross-sell customers on. In the rest of this blog post, I'll walk you through my funnel so you can modify it to work for your business.
Stages of customer development at CFP Land
I've tracked CFP Land's journey on Indie Hackers since the beginning if you want to read more, but the idea is simple: I started with a free email newsletter for tech conference speakers to help them find CFPs ("Calls for Proposals"). Then, after my list reached around 800 subscribers, I started developing a paid product (now called "CFP Land Pro"). I've also sold a couple sponsorships, but those were sort of one-off deals, and not really part of this blog post.
So my customer development funnel looks like this:
I know that's a lot to grok, so I'll walk through each step. At a high level, there are five steps in my customers' journey:
Awareness - At this point, they know that CFP Land exists, and they might know it as free email newsletter. Once they sign up and start getting emails, they move into Familiarity.
Familiarity - I'm introducing users to CFP Land, the blog, some of the free features of the web app, and finally some of the Pro features. Users in this step know that there is a Pro offering, and once they see a compelling reason to sign up, they move to the next step.
Consideration - When a user starts the Pro signup process, they are clearly considering it, but they haven't completed payment, so there's still work to move them to the next phase.
Active - Users who have paid for CFP Land Pro are now "Active" users, but the journey isn't really over. I want them to get value from the product, and in order to do that, they need to Activate.
Activation - Finally, when a user is paid and uses at least one Pro feature twice, I call them "Activated". It's not a sure thing that they'll renew, but at least I know they're getting some value out of the tools I built.
Every business uses different names for these steps, and I have a feeling I will change them up over time, but it's been really helpful to map these out. In the next few sections, I'll walk you through what each step looks like and what I've done to move users through the funnel so far.
When I started CFP Land, I acquired almost all my users via Twitter. I set up automated Tweets for CFPs that were about to close, then I would follow people who were conference speakers. When they saw that my account had something valuable for them, around 20% of them would follow back. When they did, I would DM them to let them know about the newsletter. About half of them signed up. This was an extremely successful way to raise awareness, and I still do it today.
I didn't want Twitter to be my only channel though. What if my account gets shut down or I exhaust all the conference speakers I know about? So, I started publishing a weekly interview with a tech conference speaker. I started with subscribers and recently have started targeting specific people with interesting stories. These interviews build new long-form content and inbound links, which has improved the site's visibility on search engines.
Finally, I've done some cold email campaigns. A lot of people are nervous about this as it seems spammy, but every startup I've worked for has done it, and it's never been a real problem (despite GDPR). I feel like this isn't a sustainable channel as Linkedin and Github both try to hide email addresses, but it has worked pretty well for me.
The goal of all of these marketing efforts is to gain free email newsletter subscribers. I know that CFP Land Pro is a niche tool that not every speaker needs, so my goal is to provide lots of value for free to build trust and help the community as much as possible. Once someone subscribes, they get a welcome email, and then I start getting them familiar with CFP Land Pro.
Most of my subscribers are in this phase - they have been told that CFP Land Pro exists, but they haven't seen a compelling enough reason to pursue signing up yet. When a new user subscribes, I put them into a drip campaign that tells them about all the Pro and free features they can get from CFP Land, and I ask them to submit their speaker story.
Users in this phase are also getting the free weekly email. This free email gets tremendous open rates (>50%) because it's something that subscribers look forward to every week. It's highly targeted, and highly relevant, plus there's a bit of mystery: "I wonder what new CFPs will be available this week?"
The other great thing about this email is that it's an opportunity to educate them on the benefits of CFP Land Pro, so I include a blog post and call to action to learn more in each weekly email. I just started doing this, so I can't tell you how successful it will be yet, but it seems like a very logical pairing.
Once a subscriber clicks through to the CFP Land Pro landing page and clicks "Sign Up", they get tagged in Mailchimp and they are directed to complete their profile. I've read that getting a little bit of momentum going before you make someone give up their payment info helps, so while I don't have data on that yet, I figured I would start that way.
The other benefit is that I know a little bit about the users who dropped off before paying. These people give their name, email, location and the #1 goal they have as a speaker, which helps me learn why people might be dropping out.
If a user doesn't complete the payment step, they will get a couple emails two and five days after they sign up. These are designed to get them to complete that payment step or to let me know why they didn't sign up. I'm seeing about half of new signups stuck in this phase - likely because they're wary of entering payment information before they try the product.
Finally, I consider a user "Active" when they enter their payment information, and "Activated" when they actually use a Pro feature. Initially, I figured 100% of people would Activate - it's a really simple product - so I didn't set up any kind of follow-up drip for this. It's close, but not quite 100%, so I might have to help people along or email them one-by-one to learn more about how they're using Pro.
This part of the funnel obviously has the fewest users, so I know the least about it right now. That said, it's also one of the most important for any SaaS application because renewals (and recurring revenue) are the lifeblood of a product like mine.
Hopefully the detailed outline above gives you some thoughts for how you can structure your own customer development funnel, but I also wanted to call out a few specific lessons I am learning as a part of this process:
1. It doesn't all have to be done at once
When I first started the free email list, I didn't know what the business model would be. I was focused on building an audience first, and figured I would try a couple different things once I had them. Every month or so I would draw out different maps based on different business model ideas, and even now, the funnel here is going to change.
Instead, focus on iterating based on what works and what you know about your users. Like all things in business, aim to improve over time, not get it perfect up front.
2. Measure what you can, but don't obsess
It's technically possible to measure just about anything on the internet these days, but is that really the best way to spend your time on Day 1?
The answer is, it depends.
I have a rough idea of the ROI of each of my marketing channels, but I still haven't figured out an easy way to track which users are clicking which links in my weekly emails. The truth is, it doesn't matter that much; by surveying just a few of them, I can learn most of the same things.
Pick a few key metrics that matter most, and watch them weekly. Don't obsess over insignificant daily numbers.
3. Develop a viral loop
The weakness in my funnel right now is that it doesn't build in a viral loop. The closest I have to that is the interactions I get on Twitter and the sharing of my weekly speaker interviews, but it's not really baked into the product yet. Hopefully, next time I post about CFP Land's growth, I'll have a better idea of how to do this.
4. Automate what you can, but don't forget to talk to users
I have learned a lot by surveying and directly emailing with a few committed users. While my price point is too low and my time is too limited to have personal time with each person who signs up, I try to make my automated emails personal and friendly - I want people to respond if they have questions or interest.
##Wrapping Up That's it for now. Hopefully my own funnel helps serve as a base you can use for your own. Plus, I hope the lessons I learned help you out of your own future problems. If you'd like to share your funnel or you're looking for help, feel free to find me on Twitter, or leave a comment down below.