For the last six years or so, I’ve blogged, participated in online watering holes like Hacker News and the Business of Software boards, tweeted, spoken at conferences, and been very public about what I’ve learned about making and marketing software. Folks tell me that my advice has made their lives and businesses better, which is enormously motivational to me. Also, all this online participation has a variety of helpful side-effects for my business: more consulting leads, link juice to help my SEO out for the product businesses, reputation/credibility enhancement, yadda yadda.

One medium I’ve never made much use of personally is email. This is objectively suboptimal, because email is the best broadcast channel ever invented for business purposes. There’s no time to fix that like the present, so a) I created a mailing list, you should probably sign up and b) I would like to explain why your business should probably send more email than it is right now.

The Thirty Second Sales Pitch

Give me your email address and I’ll send you things that you’ll enjoy. For example, immediately after you confirm your email address, I’ll send you a link to watch a free 45 minute training video on improving the first run experience of your software. Why would you care about that? Because you’ll learn stuff like:

  • how two hours of work lets me sell $10,000 extra of Bingo Card Creator a year
  • how I more-than-doubled customer lifetime value on Appointment Reminder by implementing a product tour
  • why some software companies that you’ve heard of pay a fair bit of money for similar advice
  • tactics that two folks have already reported made their businesses more successful after implementation

In addition to that video, I’ll periodically send you other stuff you might be interested in. For example, last Friday I sent the mailing list a very well-received, in-depth look at how to price SaaS plans. Twenty people wrote me back and said they found it useful and would implement at least one recommendation in their own business. (Didn’t see it? If you’re on the list, send me an email.  If you’re not, sign up, you’ll get it automatically tomorrow.)  That’s a specific example, in generalities you’ll get:

  • exclusive looks at software/marketing topics which for whatever reason aren’t right for this blog
  • announcements when I produce something of particular interest to you (like e.g. my Business of Software presentation, which is the smartest/funniest I’ve ever been in 7.5 minutes)
  • announcements of new product offerings, should I ever decide to make anything that I think you’ll find interesting

Email: Geeks Ignore The Best Marketing Channel Ever

A long time ago, I used to be an anti-spam researcher. I was very, passionately committed to getting 95% less email in people’s inboxes. This lead me to have an enormous psychological block against collecting and sending emails for my businesses. My perceptions were that:

  • users bucket email into “tolerably annoying” and “hated with passion unmatched by a thousand burning suns”
  • email marketing is universally kind of seedy
  • asking for email addresses would damage customer confidence
  • other methods of communication made email obsolete
  • ethical use of email is economically marginal for the business

These perceptions were catastrophically wrong. If you are currently where I was six years ago, let’s have an intervention.  You should start collecting emails from people interested in your topic of expertise and periodically dusting off their inboxes, too.  Here’s why:

Presentation Of Content Influences Perception of Value

I try to avoid the word “content” because I think that “content” auto-commoditizes the value of whatever it is you are offering. Shakespearean plays would sound like terrible wastes of time if they were described as “content.” Regardless, I’m going to use “content” illustratively for the next few paragraphs.

Have you ever heard the phrase “You can’t judge a book by its cover”? It’s the worst kind of horsepuckey. In addition to the fact that it is trivially possible to judge a book by its cover, it is an empirically observable fact that most people, when presented with a book, will judge it by its cover.

Content gets judged by it’s cover.

  • Visual presentation is treated as a proxy for content quality and is provably dominated by first impressions formed in 3 seconds or less (see “Blink”).
  • Content which bears social proof (including e.g. visual elements suggesting endorsement by news media, tastemakers, or one’s peer group) will, in A/B tests, often ROFLstomp absolutely equivalent content lacking social proof.
  • Content appearing next to things which suggest high value will tend to inherit that high value. (This is the entire justification for the NYT’s rate card.) Content appearing next to things which suggest low value will tend to inherit that value.
  • Content has perceived value accutely dependent on what you describe it as. Novels are valuable, text files are not, even text files which are bitwise equivalent to novels. Reports are valuable, white papers are less valuable, PDFs are virtually valueless. (Seriously — A/B test this on a lead capture form.)

Here’s a concrete example for you: 37signals recently offered to give away free copies of their best-selling book Getting Real in return for mailing list signups. The positioning for it was, unfortunately, as a “free PDF.” Some members of HN proceeded to question the value of the give-away, including by interpreting the positioning for it as “a PDF file full of content that was published years ago to the Internet.” That’s painful. For what it’s worth, Getting Real is a great book with good advice in it, some of which is very actionable.

Given that reading Getting Real is a win for the reader and a win for 37signals, as a marketer, you want to convince people that reading it is in their interest. This begins with positioning it in such a way that people perceive value out of it. For example, rather than calling it a “PDF file”, which is begging to get valued based on the price of bits by people who think all bits deserve to be free, you can call it a best-selling business manifesto written by beloved industry experts. (That’s certainly marketing but, crucially, not a word is false. If you believe that cynical Internet-types would be less likely to download it if it were phrased that way, you could hypothetically A/B test that, and you would hypothetically lose.)

What Does That Have To Do With Email?

Consider this blog post (we’ll walk it back to email in a second). How are you reading it right now? Statistically speaking, you’re probably reading it either through a feedreader or on an aggregator like Hacker News. It is sandwiched somewhere in the middle of 30 other posts, all presented with the same visual weight. You will spend, statistically, an average of under three minutes on it. You will, statistically, not read all of it. This is a shame, because this post is orders-of-magnitude more important than a lot of the dross it is located next to.  However, because humans are humans, you (statistically) are going to associate it with dross because that is where you found it.

I’m not immune to this: my feedreader has over 1,000 items which I’ll never get to. Here’s what I see on those rare occasions when I open it:

Don’t look at this from my perspective.  Look at it from Aaron Wall’s perspective.  He’s one of the savviest SEOs alive and has a SEO training business which he would like to promote to people.  (Disclosure: I used to pay him $300 a month for it.  I spent waaaay too much time on his forums and answered so many questions that he made me a moderator and comped my subscription, demonstrating further that given the opportunity and a text input field I pretty much can’t help myself.)

Anyhow, Aaron is competing with thousands of unread items which are all presented as being approximately equivalent in value to his offering.  They’re not!  Egads, they’re not!  As much as I love with keeping up with the news coming from commentators about World of Warcraft, SEOBook is a bazillion times more valuable to me.  But I’m still probably not going to read that article!

Now let’s compare this to my inbox:

See those twelve unread messages?  How many of them do you think I’m going to read today?

That’s right, I’m going to read all messages in my inbox, because like most white collar professionals reading and responding to email is my effing job.  If Aaron Wall had hypothetically sent me his actionable tactics on how to market my business online, then that would get a halo effect from being in my inbox.  It wouldn’t be competing with the news about the Diablo 3 launch, it be in my workflow right between answering a question about the software I sell and re-sending a five figure invoice to a client.  I read and pay attention to my email, whereas blog posts get skimmed or dismissed outright.

Emails Get Opened And Change Behavior

Having done this for six years, I have good horse-sense with regards to the anatomy of blog posts and where links go on a page.  For example, if I put a link like “If you do nothing else to improve your copywriting go take a look at CopyHackers” I can tell you that, at this point in the post, maaaaaybe 1% of readers are going to actually click on that.  (The rest of y’all are missing out, seriously.  I could practically justify my consulting rates just doing dramatic readings of that for the web teams at my clients.  Application of the advice therein has made tens of thousands of dollars.  This personal recommendation may get that click through rate up to 3%.)

Now, if you’re an email-skeptic, you’re going to say “Well sure, but that’s got to be better than email, right?”   Wrong!

I soft-launched my training email list a few weeks ago, and have some seven hundred odd subscribers on it.  When I sent them an email last Friday about SaaS pricing, fully sixty percent of them read it.  (Sidenote: Folks thought I was going to get an email list full of or throwaway email addresses, since I was giving an incentive for signing up to the mail list.  cough  Not so much, no.  Folks scamming you for the incentive are a — cheap — cost of doing business.)

Roughly 25% of folks who read the first email (or a full 15% of the mail list) clicked on a link with approximately similar prominence to that one.  (It was to Ruben Gamez’s writeup on how and why he changed pricing for BidSketch.  Seriously worth a read.)

Changing behavior can be substantially more lucrative than just getting a link clicked on.  For example, if you’re not just publishing anonymous “content” but rather trying to reactivate users of an application (lifecycle emails) or educate-them-to-the-point-where-they-want-to-buy-something (drip marketing), a little nudge in behavior could result in adding thousands of dollars of customer LTV.  One of my consulting clients could trivially afford to include a ten dollar bill with every email.  (You’re already thinking of mails hitting spam filters, mails not getting read, and mails not getting acted on.  Yep.  You’re overestimating all of those numbers, but yep.  A few percent survive all those hurdles and result in thousands of dollars of sales at the margin.  Email is a numbers game and the numbers are very motivational indeed.)

Blog posts are very poor at changing actual behavior.  Here’s a “conversion” I’d like to get out of everyone in our space: I want you to start A/B testing, because it will make you a substantial amount of money.  I’ve beaten that drum so many times that folks identify A/B testing with me and ask me for my opinions about it.  I have probably told a hundred anecdotes like “I just did an A/B test and increased software sales by 70% with 99% statistical confidence.  The change was a two-character configuration tweak that I dismissed on a hunch six years ago.”  (That totally happened this May.  Ask me for details later.)  My consulting clients frequently tell me they’ve read my things on A/B testing for years, been very intrigued, and yet no amount of saying “This is worth millions of dollars” has ever convinced them to have one of their twenty employees spend 15 minutes implementing an A/B test.  It was downright surreal for me the first half-dozen (!) times this happened: folks who have followed me for years and could, in many cases, literally quote from my writing on this subject had never acted on it.

(Speaking of presentation changing perceived value: If you pay nothing for expert advise you will value it at epsilon more than nothing, if you pay five figures for it you will clear your schedule and implement recommendations within the day.  In addition to this being one of consulting’s worst-kept secrets, it suggests persuasive reasons why you should probably extract a commitment out of software customers prior to giving them access for the software.  Doing this will automatically make people value your software more.)

People — Including Geeks — Actually Like Getting Email!

I always thought I really hated getting email.  It turns out that I was not a good reporter of my own actual behavior, which is something you’ll hear quite a bit if you follow psychological research.  (For example, something like 75% of Americans will report they voted for President Obama, which disagrees quite a bit with the ballot box.  They do this partially because they misremember their own behavior and partially because they like to been seen as the type of person who voted for the winner.  99% of geeks will report never having bought anything as a result of an email.  They do this because they misremember their own behavior and partially because they believe that buying stuff from “spam” is something that people with AOL email addresses do, and hence admitting that they, too, can be marketed to will cause them to lose status.  The AppSumo sumo would be a good deal skinnier if that were actually the case, but geeks were all people before they were geeks, and people are statistically speaking terrible at introspection.)

For example, when I started going back through my inbox and memory to find emails that had really struck a chord with me, I remembered that two onboarding emails from Twilio had been particularly good.  I mean, sure, “I hate email”, but when Jeff Lawson sent me a note asking how Twilio was doing I read it.  (Subject line: “RE: Welcome to Twilio”  This is the point where geeks point out that they hate when evil marketers hack their brains and make them click on the message to open it and discover that Jeff Lawson didn’t write it to me personally.  Trust me on this one: I not only was not pissed off at that — I didn’t remember it until I opened it again just now — I went on to build an entire business on top of Twilio, with the first step largely being prodded by a well-executed series of email which kept bringing them back to mind over a few weeks.)

I assume you can probably see a similar mail sequence if you sign up for Twilio right now, so go do that.

My first business, Bingo Card Creator, makes extraordinarily light use of email.  I send out a newsletter on every month with a major holiday, telling people to make $HOLIDAY bingo cards with Bingo Card Creator.  The newsletters practically write themselves off the usual template, with slightly different graphics and a find/replace for the name of the holiday and tracking codes.  If I forget to send one of these newsletters real customers actually find my email and complain.  That blew my mind the first three times it happened — probably because part of me thought the newsletters were not really delivering value.  In hindsight, that was stupid.  People pay money for Thanksgiving bingo cards.  Of course they want to hear about them when go out of their way to check “I’d like to get a newsletter about new bingo activities, about once a month.”

Permission And Trust Are Worth Money

I had the Rails request log opened with tail -f e it when I launched my email list.  (Geek-to-English translation: I was watching who signed up in real time.)  Sixty seconds later, a particular email address caught my eye when it was confirmed.  Let’s call it Totally Not Mark Zuckerberg (TNMZ) since it wasn’t Mark Zuckerberg but was a person who I wanted to make the acquaintance of.

TNMZ has apparently been reading my blog for years.  I never knew that (d’oh!) and would have never presumed to contact TNMZ because I assumed that TNMZ would have better things to do than read email from me.  Explicitly asking for email from me makes that worry seem sort of silly.  The ability to reach out to TNMZ and know that contact would be welcomed is worth meaningful amounts of money to my business, even if nothing ever came from the mails sent by the actual mailing list.

Similarly, if you sell SaaS, and get say a hundred prospects to give you their email addresses, you can do motivational things for your business just by sending out 10 “Hey I saw you signed up.  I’m the CEO.  What questions can I answer for you?” mails to the people who look like the most promising prospects.

This is an ability that you don’t get with blog posts and largely won’t get with other broadcast methods like e.g. Twitter.

There are, of course, other companies which make scads of money from carefully curated email lists.  DailyCandy sold for nine figures.  Groupon is an email marketing company, growing to billions of dollars of sales on exploiting an arbitrage between “It’s comparatively cheap to get young, professional women to sign up for an email list” and “After they’re on the email list, they spend motivational amounts of money at its direction, and we get half of gross.”  (P.S. That arbitrage opportunity is now fished to heck and gone.)

Almost every first-class e-commerce company treats their house email campaigns like they are the goose that lays the golden eggs, chiefly because they are.  For companies which have repeat-purchase models, direct response to emails can represent half or more of customer lifetime value.

One of the largely-unsung secrets to Facebook having such an insanely high user retention rate is that they use activity from your friends to give you highly personalized emails designed to bring you back to the site and post stuff.  (A detail I really like: you can reply to email and then post things on Facebook without even visiting it.  Facebook will then, predictably, hit your friend with an email and use social pressure from you to bring them back in.)  Many social startups are extraordinarily aggressive with this early in their lifecycle (I’m looking at you, Quora) and gradually back it off over time.

Some folks might think I’m saying Build Trust With X, Monetize Trust With Email Sales Pitches, but it can work in exactly the opposite fashion, too.  For example, I wrote a drip marketing campaign (a series of emails scripted to go out at particular intervals) for WPEngine.  They sell high-end WordPress hosting, and every sale requires a strong commitment to change on the part of the customer — migrating your blog is not easy or fun for most people.  They also charge multiples of what the typical WordPress host charges, because they’re not the typical WordPress host, so it is imperative to educate the customer on the difference.  Many customers will not sit down and read 10,000 words of your marketing copy just because your face is pretty, but if you pitch them something like e.g. a course on how to improve their own WordPress installation, they’ll happily sign up for email from you.  (Really.)  You can then spend, e.g., eight emails over the course of a month educating them on what happens to WordPress under load and how to improve that, what WordPress’ security record is like and how to lock it down, and how browsers fetch and display content with reference to how to optimize one’s site to take advantage of it.  As you gradually build up trust as a respected provider of optimization advice that your customers (if they are diligent) can see working for themselves week in and week out, you can get more aggressive with “So we talked about X and Y and Z, and you’ve implemented some of it and not implemented some of the rest yet.  We could talk your ears off about this, but tell you what, if you switch to our service you’ll get it all because we breathe this stuff.”)

This type of approach demonstrably works well at selling software, even software which you might expect would require high-touch consultative sales processes.  Indeed, this is a way to scale the initial parts of the high-touch sales funnel while simultaneously passively collecting information about customers to help you do lead qualification for the really intensive portions, like say webinars or live sales presentations.  It also scales down beautifully to low-touch self-service sales approaches, too.

Email Keeps Your Audience Warmed Up

You might have heard the old advertising saw that someone needs to hear about your brand seven times before they buy.  I personally think that one is poorly sourced industry lore.  In place of it, let me cite something which is verifiably true: the probable value of a prospect goes down over time, the provable value of a customer goes up over time.  (The predicted future value of a customer is an odd duck for many SaaS companies.  I’ll sketch out the shape of the curve some time.  It’s a weird snake that requires a bit of explanation.)

You can break out the numbers in your own CRM to see this: your likelihood of getting an order from a prospect goes down sharply the longer they’ve been in the CRM, largely because the “lead gets cold.”  (Indeed, in a lot of fields you can lose up to 90% of the predicted value of the lead within the hour.  Crikey.)  Software businesses will see a similar effect in their own sales: for example, Bingo Card Creator trials (which are not time-limited) will lose 90% of their expected value after the first day (i.e. 90% of purchases happen in the first day), another 90% in the first week, and another 90% in the first month.  (i.e. Only one out of about a thousand sales happens more than one month after the trial starts.  That’s actually an old stat — it went waaaay up when I started emailing folks who opted-in on approximately a monthly basis.  Every time I blast out an email I get a few hundred bucks.)

Regularly getting in contact with customers or otherwise getting on their radar keeps leads warm.  Some of my more successful clients and confidants successfully get orders from people who’ve been in their company “ecosystem” (fan of the blog, trialed a product four years ago, signed up for email list, etc etc) for literally years.  And not “An order here and and order there” either, no, this is a repeatable process that they put in place because it works.  They plan out email campaigns with more sophistication than many of us would plan out actual product launches.

Email Helps Get Marginal Revenue Out Of Existing Customers For Almost Nothing

This worked on me, recently: I signed up for the Blue Nile mailing list back in October when I ordered my engagement ring, and they have sent me approximately 45 newsletters (I counted) since then.  I think I opened maybe two of them…  but sure enough, when I remembered I needed wedding rings too, they were sitting at the top of my inbox.  Guess who got the order?

You can do so, so much more with emails than the typical SaaS company does.  Here’s two stupidly simple things you can do to celebrate a customer’s first year anniversary with your service:

  • offer them a month free if they pay for a year of their current plan in advance
  • offer them a substantial discount (say, 25%) if they upgrade to the next higher plan level  (optionally, if they do it for a year in advance)
For the right companies and the right offers, that can mean $100 per email sent in extra customer LTV.  Plus, if you ask them for money in advance, you get the opportunity to spend it immediately.  (This is enormously motivational for SaaS businesses because they typically have godawful terrible cash-flow issues with customer acquisition costs front-loaded and revenue dripped out at a mostly steady pace for years.  That is typically the reason that SaaS companies attempt to seek investment: despite the cost of producing SaaS cratering over the last years, scalable customer acquisition channels are, if anything, getting more expensive over time.)
Paul Stamatiou wrote up how Picplum used this to their advantage.  I plan on covering the topic in substantially more depth, later.

Does This Email List Mean You Going To Stop Blogging?

One might reasonably ask where I’m going with this private email list.  Good question!  I’m not entirely sure — I have a feeling that I’ll write a mix of free material for it and, eventually, produce something which will add a lot of value for software companies.  That offering will be priced commensurate with value.

The amount of effort I put into my blog waxes and wanes with where I am in life at any given time. Some folks have recently noticed that I haven’t been posting as much as I used to. I plead “upcoming wedding” with the extenuating circumstance of “business is on fire (in a good way).”  Going forward, if I have something which makes a good fit for the blog, I intend to write it up as life permits.

Have a topic which you’d like to hear about?  Drop me a comment or email.

P.S. To save you a scroll-back-to-the-top, if you’re looking for the signup link for emails from me, it is here.