Capital Efficient Entrepreneurship from Utah: Ben Dilts, Founder and CTO of Lucid Software (Part 4)

Sramana Mitra: What did he figure out in terms of how you acquire customers? What is the business model? What is the pricing model for your product?

Ben Dilts: One piece of real concrete skill that Dave brought to the table was that he had a history in SEO. He had a good handle on how it worked and how to win. He did a tremendous job on making our website attractive to search engines and the self-serve funnel to flow well. That was a great decision early on because we didn’t have the manpower or the money to hire the manpower to hit the pavement and find customers for this.

We really needed people to come in and pay us. We needed a lot of those. We focused hard on the fundamentals of a self-serve business. The conversion rate from a visitor to a paying customer is around 8 times than it was. It’s just the accumulation of years of 10% improvements as we’ve adjusted and improved the process. All the way through 2014, the core engine involved just self-serve customers. It wasn’t until the beginning of last year in 2015 that we actually hired our first full-time sales reps.

Sramana Mitra: Interesting. That’s a very difficult thing to do but it sounds like you have done it very well and methodically.

Ben Dilts: A big part of our culture here is that we are data-driven. People say they are data-driven but we are really driven by data here. There’s this culture of asking the next question and the next question against the hard data. That has driven us to where we are on the self-serve front.

Sramana Mitra: Let’s talk a little bit about metrics – whatever you feel comfortable sharing. Given that this highly data-driven process and optimization drive to make the self-serve sales work, what kind of metrics were you delivering against that agenda?

Ben Dilts: There is a different level of drop off from someone landing on our website, to them registering for a free account, to them starting a paid account. We’ve adjusted which of those steps we consider carefully over time. There is one area, for example, from registration to creating your first document. I would expect that if you signed up for the product, you would at least hit the new document button once. There’s a surprising percentage of people who don’t and we lose them somewhere in there. They get lost and never make it through to the product. There is some small percentage of our people who get lost there.

We look at this process and say, “Where are the key proof points that we want to see get people past?” We run a randomized test. At any given time, there are a couple of dozen active tests at this point. We’ve gotten to this point where that’s become part of our culture and we do it very regularly. Right now, we require credit card details to start your free trial. We’ve always allowed a free trial without providing credit card information. Now, we’re experimenting with requiring that.

The metrics that you watch very closely are the drop offs at each one of those steps. If you say credit card required on the payment page, what percentage of people bounce that didn’t bounce before? The very end of the line is, “What is the total registration to payment rate?” The one metric that you cannot mess up is what is the percentage chance of a person who registers paying for the product? That’s a number that has quadrupled over the last four years. If a random person shows up and registers for a free account, what is the probability of that person paying us? That number is the one that everyone watches on every test. There’s hundreds of metrics that we track for runtime and load time performance. There’s a lot of things that we do measure.

This segment is part 4 in the series : Capital Efficient Entrepreneurship from Utah: Ben Dilts, Founder and CTO of Lucid Software
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