This is a product validation case study for Encharge. After 12 months of struggle, we finally validated a software product idea and currently building it – a case study of how we made $3,950 in pre-launch revenue.
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Back in 2016, I launched my first ever micro SaaS. Long story short – Google deprecated one of their APIs, and I was forced to close the tool.
Last year I sold its customer base to one of our competitors and made a tiny amount of money (nothing close to retiring as a “successful entrepreneur”). I shared the story on Reddit.
What happened to me after that?
Well… I’ve been busting my ass trying to come up with a viable software idea so my technical co-founder and I can start something new.
It was a long year of misery.
We tried validating at least 5 different ideas – some of them didn’t move past the landing page design but others we developed for months.
If you go through our weekly updates on IndieHackers, you will see a lot of confusion and frustration as we fail time and time again to build cool products that solve problems in new, innovative ways.
Not knowing what to build can make you feel ill. It’s like a pressure in your stomach. You badly want to move forward and run, but you don’t know which direction to take. You’re lost.
After many months of wandering, we decided to scratch our ambition to come up with something new.
We decided we’re going to build a tool in the marketing automation space.
Yes, marketing automation – one of the most competitive SaaS fields.
That’s How We Started Validating Encharge
Why marketing automation?
We had criteria for our next startup:
- Big, horizontal category
- A lot of existing competitors (saturated market)
- Something that excites both of us
- Something that we have experience with
- B2B
- Self-serve mode – Something that we can sell from a website
We based these points on our previous reference experience. For example, if you’re a good salesman and have corporate relationships, there’s no reason why you should not pursue a high-touch sales model instead.
We shortlisted a few different product categories and decided we’re going to work on a marketing automation software.
Marketing. Not Product Validation
Before Encharge we did more than 100 calls with people from different industries and product categories.
We were obsessed with customer development and talking to people. We badly wanted to do this the right way. And we knew the right way to do product validation was by talking to people first.
But we failed.
Yes, people were sharing their problems, and we were extracting some ideas, but we never managed to notice a pattern.
We were doing outbound – approaching people with unsolicited emails or very thin referrals. Moreover, we didn’t have anything to show, and people usually don’t sit around patiently waiting to talk to strangers from the internet.
Because of this approach, it was extremely hard to get access to a large enough segment of people that share the same characteristics.
Let’s say we were validating an idea in the Product Management space:
We talked to 5 friends; we had 5 more chats with PMs in tiny, unprofitable startups, 3 calls with PMs in B2C companies, 2 calls with B2B companies, 2 calls with enterprise PMs, and so on. You get the idea.
We were overwhelmed by the mixed feedback and too many options and didn’t know where to start
We were talking a lot but not going anywhere.
Generally, if you talk to more than 10 people and you don’t notice a pattern, your customer development group is too vague.
With Encharge we decided to take a different approach:
Forget customer development calls for a while and do marketing instead.
Call it “customer development through marketing” if you will.
In a nutshell, this is was our product validation plan for Encharge:
- We used the momentum from my previous startup and wrote a big ass guide on “How I launched, marketed and sold my first SaaS – HeadReach”. (HeadReach was my previous startup).
- We promoted that post heavily to SaaS people, entrepreneurs, and marketers – a potential audience for a marketing automation tool.
- We created a number of lead magnets in the post asking people to leave their email.
- We collected about 500 emails from that post. Most of them startup guys and SaaS entrepreneurs/marketers.
- We did a lot of customer development. We talked to people from the list. Slav (my co-founder) also attended SaaStock where he spoke to dozens of SaaS companies.
- We came up with a hypothesis for a “Marketing automation software built for SaaS companies.”
- We put together a landing page with a few screens and offered a crazy-good Pre-order lifetime deal for a non-existent software.
- We sent an email blast to our email list of 500 people.
The results:
- 42 people ordered
- 50 orders in total (yes, some people made more than 1 order)
- $3950 in pre-order revenue
So let’s break down each stage.
Creating the Post
As mentioned, we decided to do marketing first, then customer development.
The goal was to attract some eyeballs and generate 1000 potential leads that we can later pre-sell our new tool to.
Since I’m good at content marketing, it was just natural that we generate the leads through inbound content marketing.
I decided that writing a case study about my previous startup is a good way to attract SaaS entrepreneurs and marketers.
Also, it was the easiest and fastest thing to do. Case studies are much easier to write since you don’t have to do any research.
I wrote: “From an Idea to Exit: How I Launched, Marketed and Sold My First SaaS”.
Yes, I know – validating my new startup idea by talking about my previous startup. Call it Meta if you will, I call it an efficient and effective way to validate software when you don’t have time and money 🙂
At the time, we only knew we wanted to do something in the marketing automation space, and we had an old domain name from one of our previous ideas.
So we basically had 2 things on our site:
A dead simple landing page and a blog with 1 post.
We wanted to give some context on what we’re working and that it’s going to be in the marketing automation space without giving up too much – simply because we had no clue what the hell we’re going to build.
Also, the landing page served as another form of lead collection.
I’ve done that exercise before, so I knew that long-form case studies are a great way to collect emails and targeted leads.
Including Content Upgrades
There’s no point of writing content if you’re not going to collect an email list.
The whole purpose of the case study was to collect emails that we can later outreach to do customer dev. and pre-sell our tool.
I made sure we have some pretty solid content upgrades in place.
1. Free eBook “From an Idea to Exit”. 70 pages of actionable advice
People don’t have time to read 7000+ word posts, but they’re totally ok saving them for later.
Below the actual lead magnet we used:
2. Swap file – Customer development repository
An Airtable template that we use to collect feedback for our ideas.
3. Free resource page
Mid-way through the content promotion stage, I also put together a page with a few different marketing resources. Which came out to be our most successful lead generation form.
Later on, I added a couple more lead magnets.
Unfortunately, MailChimp doesn’t show the number of tagged contacts.
But the 3 big lead magnets are:
- Idea to Exit eBook – 190 subscribers
- Pre-launch landing page – 165 subscribers
- Resources page – 165 subscribers
Promoting the Post
A post is no good if nobody reads it.
I made sure to put a lot of efforts into promoting the post.
Here’s my content promotion to-do list for this post:
And here’s the generated traffic:
And the breakdown by channels:
This was primarily from Facebook groups like LondonStartups and other marketing, SaaS-related groups.
I also re-published the post in the Bad Ass Marketers and Co-founders Group.
By sharing an update with a link to the post and later re-publishing the whole post on LI.
GrowthHackers.com
Great place if you’re in the marketing space (as we are)
We also got some pretty decent traffic coming to the home page.
A big part of the traffic came from IndieHackers since I republished the post there, as well.
And Direct which is email marketing, I’d assume. Since the post got featured in a couple of newsletters for bootstrappers and SaaS entrepreneurs like https://bootstrappers.io
Doing Customer Development
Now with an email list of a few hundred subscribers (about 500 to be precise), we decided that we could do some customer development.
First, we put together a brief survey to filter out the leads.
Then we started talking to them.
Luckily for us, SaaStock Europe coincided with our validation and Slav got a free ticket.
With SaaStock, our email list and cold leads, we conducted 50 interviews in total – 34 of them being SaaS companies.
We asked a lot of questions about marketing, email marketing, and marketing automation. We tried to keep our focus only on those topics and avoid doing the broader “fishing for ideas” approach where you ask people if they have any problems at all.
By being laser-focused on marketing automation, conversations were much easier, and we managed to extract more valuable insights.
By getting specific, we were able to cut through the noise, stop drowning and start making progress with customer development.
We collected recordings of all interviews in an AirTable.
At the end of our customer dev. campaign, I went through all of the interviews, listening to every single one of them and did a brief grounded analysis.
Grounded Theory is a research method in which the theory is developed from the data. It’s an inductive approach, meaning that it moves from the specific to the more general.
In other words, I marked specific parts of each conversation with tags/keywords related to broader topics and then grouped conversations based on these tags.
With each conversation tagged it was easy to spot patterns.
This helped us identify recurring problems and shape a hypothesis for the product.
Shaping the Hypothesis
A common problem occurred among SaaS companies:
It’s hard for SaaS companies to make their marketing apps speak to each other.
That’s how we came up with an idea for a marketing automation tool built for SaaS companies. The main USP of the tool: a vast selection of native integrations.
Writing the Copy for the Pre-order Campaign
With an email list and some conclusions from our customer dev. sessions, we had to decide what to do next.
My suggestion was to design a prototype for a product based on our learnings and try to pre-sell it to our email list.
Slav was absolutely against it – “People don’t pre-order products that don’t exist.”
After some fierce debates, I managed to convince Slav to go with that approach.
We started by writing the copy and launch email for our new product.
I always start by writing the copy first.
Designing the Prototype
We wanted to be convincing, so the copy was not enough to sell our vision.
It took me 2 weeks to put together a few prototype screens:
We also spend a week creating a prototype video.
And to be completely honest with you, I have zero experience with moving images, so this was a pain in the ass. I “hacked” the video by animating slides in Adobe XD. Basically, I was using the prototype animations in Adobe XD (a UI design software) to create a video. Don’t ask me how I did that…
After 3 weeks of production work, we had this landing page up and running.
Now there’s an email subscription form, but when we first launched it, it was a “Pre-order now” button that was leading to an order page.
The Lifetime Deal
To reward the risk of buying a product at such early stage, we decided to make the pre-order a lifetime deal and pack it with a few more nice bonuses.
2,000 contacts for $79
Note on lifetime deals: if you decide to go that route make sure to do some back of the napkin calculations. If you have scalability costs, you can offer a lifetime discount instead or X months for free, etc. You get the idea. But it has to be a pretty darn good offer for people to pre-order at this stage of your software’s life.
Also, make sure to offer a no-frills refund policy.
Sending the Launch Email
That day came. We had the landing page ready, and Braintree set up.
We were ready to push the button.
Grounded by Slav’s pessimism for the pre-order, our goal was very humble – 4-5 pre-orders from our email list and hopefully a few more once we started promoting the deal elsewhere.
Tense but excited we clicked Send.
This was the email we sent to our list:
Subject line:
Pre-order a lifetime access to Encharge
Body copy:
Hey |Name| –
Kalo here, co-founder of Encharge.
I’m excited to show you what we’ve been working on!
Encharge is a marketing automation software built for SaaS startups.
We’re looking for a small number of SaaS companies to work with and evolve the product around their feedback.
Now you can lock in a founding status and pre-order a lifetime access to Encharge. Click here to find out more about the product and the details of the pre-order.
But before that…
Let me tell you why we decided to work on a marketing automation tool for SaaS and what is our vision for the product.
The 4 stages of marketing automation in SaaS
There is a clear evolution that SaaS companies follow in terms of evolving their marketing from not having any customer messaging, through sending one-off emails blasts to having a complete lifecycle marketing system:
Stage 0:
We don’t know how to do marketing, so we don’t send any emails
Stage 1:
We use MailChimp to send untargeted one-off blasts to our whole customer base
Stage 2:
We send basic transactional emails, and we’ve created an onboarding sequence in Drip, Intercom or ActiveCampaign.
Stage 3: Complete lifecycle marketing.
Lifecycle marketing is about:
- The right messages
- At the right time
- To the right people
- On the right channels – email, in-app messages, push and social media
At this stage, marketing automation is no longer considered marketing; it’s an extension of your core product.
I’m pretty sure if you’re on this email list you can chart your company against Stage 1 or 2.
I’m also certain you already know that your SaaS needs to be at Stage 3.
Like you I have a SaaS business, and I’ve always been looking to convert more users, engage more customers and reduce churn.
But we all know that the process of graduating to Stage 3 can be a pain in the butt.
The problems
1 . Too many marketing tools
Technology innovation leads to greater customer understanding. More tools mean better-empowered marketers.
Or does it?
Here’s the thing…
There’s a big inconsistency in what promotional materials say and what the reality is.
In the last 3 months, we spoke to over 60 SaaS companies.
We were baffled to hear that a lot of these companies don’t do anything beyond sending untargeted one-off emails to their whole customer base. And the rest are struggling to connect their marketing stack.
Having more tools doesn’t mean you’re better empowered at marketing.
It means it’s getting more difficult to do “all the things” well.
Especially, if you’re small and customers are comparing you to the big guys in your field.
2. Significant investment and development resources required
Let’s face it.
Stealing time from your developer’s busy schedule so he can connect your database with ActiveCampaign is not the highlight of your day.
But…
Without it, you’re stuck.
You can’t send essential customer communication at the right time to the right people.
Truth is you don’t care about APIs, documentation, and webhooks. And neither should you.
You get paid to convert more users and bring in more revenue.
3. Most apps don’t work well together
Native integrations with the tools you use are not the standard. They’re an exception.
Yes, Zapier is a workaround but it requires additional setup, and it comes at a price.
4. Bringing in data from different tools is impossible without your developer
Setting up segments with data from your whole marketing stack is a tedious task that can be solved by your developer only.
5. High prices
Do you have to regularly delete inactive users in order to stay in your current billing plan?
Marketing automation tools get expensive very quickly as you grow. Especially if you need premium integrations like Salesforce and Segment..
6. No solutions focused on SaaS companies
Every marketing automation tool tries to serve the whole world – eCommerce, brick and mortar businesses, info product marketers…
We know that SaaS companies have specific requirements and toolset.
For all these reasons, most SaaS companies stay at stage 1 or 2 until they reach millions in ARR. Only then they could justify investing in better marketing systems and lifecycle marketing.
When I sold my last company, I decided it’s time to change that reality for smaller SaaS companies finally.
What if all you had to do was orchestrate your marketing campaigns and supply great content?
Encharge is a marketing automation software built for you, the SaaS marketer.
The future we envision is that marketers like you don’t need to wait until the next development sprint is over, to start executing what you should’ve been doing yesterday:
Complete lifecycle marketing campaigns.
Encharge will take care of the dirty work of connecting your marketing stack with native, one-click integrations.
We want you to focus on driving better results for your business by creating personalized, targeted lifecycle campaigns that drive more conversions, retention, and revenue.
Is this relevant to you?
Learn more about our solution by watching our presentation video. Click here or the image below to watch the video.
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We sent the email at 9 PM local time. Nothing happened in the next couple of hours.
“Well, I guess Slav was right, it’s not going to work” .. I went to bed.
Making $3,950 from the Pre-order
Next morning I woke up early and anxiously checked our Braintree account.
There were 3 orders.
I wasn’t very familiar with the Braintree interface so I couldn’t figure out who the orders came from. I just saw ID number to the orders.
I thought it must have been Slav testing the Braintree checkout in sandbox mode.
An hour later a Telegram message from Slav popped-up:
“SHIT! We have 3 orders.”
Slav
Someone from our email list has purchased our deal. We were ecstatic.
A few more hours passed by and a new order came in.
Then another one.
And another one.
We didn’t recognize all of the buyers from our email list, so we started asking how did they hear about Encharge.
One of our email subscribers has shared Encharge in a group for lifetime marketing deals on Facebook. And people were raving about our tool.
With 173 comments we were definitely a hot topic in the group.
To spice things up, we offered a special deal for the Martech group – 5k contacts for the same price instead of the promised 2k.
All in all, we made about 40 orders in the first 2 weeks and another 10 in the following weeks to come.
Here’s a break down of the sources of the pre-orders:
- 5 pre-orders directly from our list
- 4 from BetaList (yes, we later launched on BetaList)
- 1 word of mouth
- 40 from the Martech group
When we hit 50 orders, we closed the checkout and switched the Pre-order button with a subscription form.
Product Validation Case Study: Conclusion
Considering our initial goal for this product validation was 5 pre-orders and we made 50, I’d call this validation a success.
Is Encharge going to be a success?
I can’t tell.
But I know that if we fail, we can’t blame the idea for it, as certainly there is a market for what we’re doing.
P.s. I recently started writing a guide for SaaS marketers that will cover everything from Idea validation to Growth.
The first chapter is all about idea validation. I’ve expanded a lot on this topic so if you’re interested feel free to check it out. I’ve included a lot more case studies and resources.
Also, if you have a validation story to share, I’d love to include it in the guide – drop me a message at [email protected]
