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Want to Reduce Churn? Test Small Before You Scale Up


Aana Leech is VP of marketing and customer success at Popular Pays, a Chicago-based startup whose software streamlines influencer and content creation strategies at scale.

Aana shared how her team tested a major pivot through a time-bounded marketing strategy at our October 30, 2019 Here’s How Startup Marketing Conference.

If you’re looking for the quick takeaways, here are a few of our favorite insights from her presentation:

  • Time-bind your tests. Control your spend and your effort by enforcing strict time limits.
  • Don’t wait until the end of the test to look at the data. Monitor and assess your results during the test period to make sure you’re headed in the right direction.
  • Learn from failure. Don’t be afraid to articulate what isn’t working – the reason why may be the most valuable insight.

Did this list pique your interest? Read on for a complete transcript of her presentation.

Hi, I'm Aana Leech, VP of marketing and customer success at Pop Pays. Today we're going to talk about how I tested – everyone's been saying "we, this is a team effort" – how we tested a pivot with marketing at Popular Pays.

Popular Pays is a platform for collaborating with content creators and influencers. Brands in today's day and age need a ton of content.

You're not just on Instagram in feed, you're on Instagram stories. You're on TikTok. You're on YouTube. You're creating long-form and short-form video. You’re creating all types of different ways of connecting with your key targets.

In order to do that, a lot of companies don't have the marketing budgets that they had to be able to produce just one video a year. Now they're creating 4,000 videos and pieces of content a year. They're not able to sustain that and keep up with the pace that people are consuming content today.

Popular Pays is a way for brands to outsource that work. They're able to connect with content creators and influencers on different platforms to be able to engage them, put out briefs, or just work with them one-off to create content at scale.

We've actually been around for quite a while – we started here in Chicago in 2013. We have been here for a bit, but when we first started, we were not who we are today.

When we first started out, our founder, Corbett Drummey, was working at Leo Burnett. He really saw how influencer marketing and how social media were starting to become a much larger piece of the digital marketer's mindshare and how it was not just a secondary thought. It was going to start taking on more of a primary role in being able to shape the marketing that was going out there.

He had pitched a couple of ideas to clients, and they weren't buying it. So he decided that he was going to leave and start his own thing.

When we first started off, it was really localized. It was about using that social clout and that social influence that you had online in order to get something for free. You could go to Intelligentsia. If you had over 500 followers on Instagram – this was back when Instagram was just photos, if you can remember that far back. (It was only actually six years ago, which is kind of crazy.)

But at the time, you could just walk into an Intelligentsia if you had 500 followers, you could say, “Hey, look at this social influence. I have this app,” and you would be able to get something in exchange for a post on social. It was just a brand awareness play for marketers at the time.

What we realized there in the very beginning – we tried to work off of that platform and that concept for two years – is that brands weren't really interested in paying and the local brands weren't interested in paying for that type of exposure. We weren't making any money. What we had to do was actually make a quick evolution – a quick pivot – right in the beginning.

What we started to do was actually take that to larger brands and agencies who were starting to see that, as influence was growing on Instagram, they needed to be there. These were the modern billboards and they were able to take advantage of that and put their brands in the hands of their consumers and tell their brand stories through the voices of influencers.

When we released that new product, that's actually where kind of the first phase of our company started picking up. That's how we got into Y Combinator for the winter class of 2015. At the end of that class, that's when we started going to market with this new concept that was our first kind of pivot.

Our cofounder Corbett was named to the 30 Under 30 in Marketing and Advertising in 2018.

Our community is a two-sided marketplace. We have brands on one side. We have influencers and content creators on the other side. We have over 60,000 active influencers and content creators that we manage on one side. And then there's been over $25 million transacted on the platform. That's posts – that's content created.

We pay almost all of our campaigns, and the work that goes to the platform is paid. You're working with an individual. We've generated over 100,000 unique pieces of social content in the time that we've been here.

And just to give you a snippet about me, I am definitely not a trained marketer in any way. I was in school because I wanted to be a lawyer, which, if anyone here is a lawyer, bless you. That was not something I was able to do. So, I ditched the lawyer idea and decided to become a teacher.

After my school closed, after about three years of teaching, I moved into marketing and advertising at Leo Burnett, which is where I first bumped into Corbett. I joined Popular Pays four years ago.

Situation

I think there are a couple of really important things that I want to lay out in the very beginning here. I think that you know, if you're at a company for long enough, especially if you're at a startup, the company is going to change.

Especially if you're in the marketing department, you have an incredible opportunity to influence almost every single piece of the business. It's not just the marketing department, traditionally – your sphere of influence is huge. That goes for product, customer experience, and even traditional marketing or performance marketing: you have the opportunity to craft that and be able to make a really big difference.

The situation around how we actually tested the pivot was that we had this goal of wanting to be a software company, but in reality, we were a tech-enabled agency. That's something that's really hard to admit as the leader of a company, that you're actually not who you say you are. But we were not – we were a tech-enabled agency.

In Q4 of 2018, we raised a Series B which is when we really wanted to try and make this pivot happen. But because we had a really healthy agency business, trying to make that pivot with software was going to take quite a bit of work.

At that point, our product had caught up with our software mindset. You could come into the product, and you didn't have to have someone kind of take you through the process. You could use the product yourself in order to go from point A to point B all by yourself. That was huge, to be able to impact how we were servicing our clients.

Because we were an agency, we required a minimum. We had lots and lots of people coming in through inbound marketing, but we weren't able to service them. We actually had to turn them down because they couldn't support the minimum that we had in place that kept our business running.

The marketing investment for our top of funnel was really cost prohibitive. Because we're working with a lot of enterprise clients, we do not have a huge budget for marketing ourselves. We aren't able to go out into those paid events. We aren't able to make as big of an impact in the market as some of our competitors are.

We knew we couldn't compete there at the top of the funnel, so we asked ourselves, “Where can marketing make the biggest impact in the shortest amount of time?”

What we thought when we first came out in Q1 of last year was that marketing could make a really huge impact on those inbound leads that were coming in at the top of the funnel. That was money that we were leaving on the table.

We wanted to design that pilot test to see if marketing could convert those leads themselves and if the business could actually support that type of a customer.

Steps

1: Designed a pilot test

We decided to run this pilot in the beginning of the year. We outlined the objectives, the goals, the resources, and a very specific timeline. It was an experiment that was very time-bound.

2: Launched test, acting as inbound seller service & tech enablement

We launched the test. We actually only had two people on our team who were running the test. It was me and my teammate Tess. We weren't actually investing any time or any money. We were only investing a very limited amount of time. We were acting as inbound seller service and tech enablement.

Our product had caught up, certainly, but it wasn't actually able to do all of the little bits of work. We wanted to be able to test out how the product needed to change in order to be able to make those product investments a little bit further down the road.

3: Assessed results three months in

Three months after launching this in the first quarter, we were able to assess our results.

4: Introduced paid marketing and started to scale mid-market team

In Q2 of 2019, we actually took all of the results that we got from the Q1 test to introduce paid marketing and started to scale the mid-market team.

At that point, we actually brought individuals in who were sellers. We brought those people in and started to have dedicated videos and also sellers to that effort and siphoned off a bit of a smaller marketing budget to test it out.

I'll admit that I went on maternity leave in Q2, so a little bit of all of that is a blur. But in Q3, I was able to come back in. What we saw in Q3 was that we were making an impact in the second quarter test and the scaling of that in our mid-market team.

5: Introduced enterprise tier and saw more impactful results

But the place that was having the biggest impact on our business was actually when we were able to convert our enterprise clients over into this way of purchasing. We introduced an enterprise during Q3, and we were able to see more impactful results on our bottom line, which we'll be looking at in the results section.

In Q4, we socialized our SaaS transition to the entire company. This is something that started off as a pilot and in Q1 and is actually how we're going to be moving our business forward in the future. We launched our first standalone product last week on 10/21, Pop Pays Lite. That's our first product that came out of this experiment in the first quarter.

Results

Going back into Q1, we were just testing those inbound leads that were coming in. We had a very lean, mean team. We were able to convert at a pretty high rate for where we were at before. We weren't converting any of these leads before. That was zero.

We were able to make a conversion rate of 10 percent. Our time to convert was incredibly short: it was 11 days. We are an enterprise software typically. Our conversion time and time to convert can be up to six to nine months. Being able to convert customers in 11 days was huge. We knew that the opportunity was there.

The ROI on our initial trial was 446 percent. That's because we were really just dedicating time at that point, and we were measuring all of that very specifically to be able to report on.

What happened in Q2, after we were able to get all of those people in in Q1, was that we had a really high churn rate. Really high – like, not sustainably high. We did not have enough people come into the top of the funnel to be able to capture the people that were going out of the funnel.

There were a couple of things that we've talked a lot about: how experimentation and even the things that aren't going right will help you learn. I think this was really huge for us. This led us to understand what we needed to fix.

By being able to see that individuals were coming into the funnel but that they were really quickly churning out, we could tell our customer success team was going to become even more important for us in how we're dealing with our clients and what service means to our organization. Those were things that we needed to figure out.

When we were running our Q2 results, we had that paid marketing test – a very small, minimal test – we were actually able to see that we had a 3x return on investment. I think this is really big for us because we were not investing any money at all previously, and being able to have that type of conversion with those clients meant that we were out in the market. We were doing some of the right stuff.

The difference between our mid-market clients and enterprise clients is that they actually are impacted by paid media. For our enterprise clients, that's not a place that we're going to win, but for our mid-market clients, we can certainly win there with paid.

For Q3, we were starting to convert some of our enterprise clients over into SaaS customers. This increased our recurring revenue by almost two times, which is really big. That's only one or two clients.

If we're able to invest more time and effort into converting our enterprise clients and dedicate more resources there, imagine the impact that's going to have on our recurring revenue over time. And 25 percent of our Q3 revenue was now reallocated over into our SaaS business line. And this is all of our customers: this is mid-market and this is enterprise customers as well. That's a huge chunk in a very short amount of time.

The other thing that I think is really important about all of this is that strategy is super important. I'm a really strategic person. I need a deck for everything. I'm very logical. This is the process that we're going to go through.

Going through this process myself, while strategy I think is really important, I found that execution is even more important in the early days because you're able to put something out in market, you can test and see what's working, and then you can quickly change that.

If we had kept going with our early Q1 results, we were going to still have this huge churn. If we weren't able to identify what those problems were, we wouldn’t be able to impact our business overall.