Category Archives: customers

Lessons from the Obama Campaign for the Software Business

Yesterday at the 15th Annual Stanford University Accel Symposium, I heard an energizing talk with Chris Hughes, Facebook, and Architect of Obama’s Digital Campaign Strategies, and Matthew Barzun, National Finance Team for Obama and Former Chief Strategy Officer, CNET Networks, Inc. on “Technology Priorities: Lessons from the Campaign”.

Three powerful lessons leapt from the stage that certainly any software company trying to do something different should understand. These apply to any company who cares about their customer community and focuses on growing a large business.

Scale and Focus

Traditional software counts on hunting down customers and finding those willing to pay the large price tag. Kind of like traditional political fund raising where fund raisers seek big-heeled donors for the $5,000/plate dinner.

The Obama campaign’s New School thinking concentrated on creating scale and community. Instead of only mining a list for the 1-in-5 donor with the big bucks, they started asking 25 people to go out and each find 25 more to pay $25 to show up at an event. The first time they tried this, they sold every ticket. So they tried it again, and next thing they knew: 1,800-person venue sold out.

Thinking how to scale from a smaller list of initial supporters (Obama challenge) was very different than thinking how to divide-and-conquer the large list of potential donors (Clinton early advantage). Matthew said it required concentrating on metrics that really matter – a mantra within the campaign, lowering the barriers to entry for donors and supporters, while having high expectations for the ultimate outcome. Aside from this concentration on large scale, they were relentlessly focused on immediate outcomes: they had to win Iowa; there was nothing after Iowa. Matthew represented this new thinking…
3-principles-obama-campaign

Farming vs. Hunting

The campaign compared their marketing strategy to Seth Goding’s Farming and Hunting analogy. The new school campaign focused on farming a community versus only game hunting (Yes, they did both: about half small donors; half large.). The idea was to spread word-of-mouth, build a bigger community using the existing base of early passionate supporters.

The trick was multiplying the base versus the traditional 1-in-5 division game of hunting. Build the community through networking. Get 25 supporters to rally another for a small entry fee. This is how Matthew illustrates some of the early results…

farming-vs-hunting

Once the Obama campaign got this farming working, the multiplier trumped any notion of relying on the traditional approach.

Values Matter

Communities thrive on trust and respect. If you are serious about building a community of supporters or customers, start with asking how to treat people. Here’s the Obama Campaign Code they handed out for the Iowa caucuses: three simple values:

    Respect
    Empower
    Include

At one caucus the Clinton people showed up with 13 supporters, which on a Cold Day in Hell in Iowa is a good showing. The Obama supporters on the other side of the room numbered 68. But the Clinton group was below the 15 count needed to participate. The doors to the caucus closed at a specific time, meaning no more participants. The Clinton team was potentially without a quorum.

Then after the rules allowed, in walk two more Clinton supporters, giving Clinton a quorum. This was against the rules. What did the Obama supporters say? Let them in. Include them. They deserve to be here. The spirit in the room was immediately more inclusive.

Software companies (all companies frankly) would do well to start by treating their customers with respect, treating them well, and concentrating on inclusion. A couple values we think apply to software companies is treating customers equally and fairly regardless of their company’s size or the size of their orders, and opening up information about your company (pricing, licensing, source code, bugs) so you build trust.

Applying new school marketing thinking and concentrating on scale, inclusion, and low barriers made a whopping 100% difference to what Obama raised. What would it do for your business, Mister Software Man?

The Goal: Our Most Important Metric?

word-of-mouth.jpg
We’re debating at Atlassian what’s the most important metric. Our Chief Metric God and CEO Scott Farquhar thinks Net Promoter score might be it. He has threatened to take a few months off to think about it. While we mere weak-minded mortals spend far less time on metrics, Serious Metric People such as Scotty devote lifetimes of thinking to what to measure and why.

Atlassian’s culture is fun, but it’s also about metrics. So, we decided to start measuring our Net Promoter score. Experts such as Fred Reichheld, a fellow with consultancy Bain & Company claim that companies with high Net Promoter scores far out-perform in growth and have far lower costs of sales. It’s seems intuitive given Net Promoter is all about word of mouth, a subject dear to my heart.

What is a Net Promoter score? Customers are asked “How likely would you be to recommend our product(s) to other people” on a scale of 0 [Never] to 10 [Definitely]? Then you divide the responses:

  • Scores of 9 or 10 are promoters; divide the total number by the total surveyed to get a percentage or score.
  • Scores of 7 or 8 are not promoters; ignore these responses.
  • Scores of 6 or less are detractors; divide the total number by the total surveyed to get a percentage or score.
  • Subtract your detractor score from your promoter score to get Net Promoter Score.

How We Stacked Up

We surveyed 500 customers, chosen at random, and our Net Promoter score was: 52%. Although this puts us in great company with the likes of…

nps-stars.jpg

… we’re now obsessed with the comments we got back on what we need to fix. Imagine the kind of customer loyalty Harley Davidson has! How does one achieve that?

How We Surveyed Customers

We learned something simply about how to survey. We made it clear we only required answering one question to participate in the survey. The other three questions were entirely optional:

  • “If you wish to elaborate on your response, do so here…”
  • “Is it OK for us to contact you?”
  • “If so, what’s your contact information?”

I felt it important that we reduce the survey to the smallest possible, even to the point of editing out superfluous words so each sentence was concise. I hate surveys that say “This will take 10 minutes” instead of “This survey has 10 questions”. I absolutely hate surveys where I never know when the end is coming. Always state how many questions!

Other Lessons from the Net Promoter Survey

The survey had a 40% response rate, and 20% of the customers said it was OK to contact them. Given how busy people are, we were pretty happy with these statistics, but while these stats compare well in marketing circles, that’s not our goal. Our goal now is understanding what we have to do to get better.

What Are We Doing About it?

First priority is personally calling every single detractor [who agreed to be contacted]. I am again obsessed on this process: one person needs to conduct these calls so the information is properly assimilated and understood. Passing support problems to support and product problems to development loses this vital analysis.

Second we are thanking everyone who participated and is willing to contacted.

Third, we are working out a process for contacting the promoters and the “middle” scores. As this is our first time, we have much to learn, and most important, apply what we hear.