21 July 2020

Why You Need A Better Ideal Customer Profile [w/ RightMessage Case Study]

Even with a great product and a big market with lots of potential customers you will be struggling without the right ideal customer profile. A case study.

Today, I am going to show you a product in a big market, with lots of potential customers, and seems to have a great value but is struggling.

This product is RightMessage, a solution to improve conversion with personalization. You add a script to your website, define surveys to segment visitors, and provide them with a personalized experience.

When I explore the website, I am impressed! I understand how it can be valuable, and I really want to use it. Testimonials like the one below reinforce the potential value:

”RightMessage is a game-changer. By personalizing our offer pages (using data RightMessage helped collect), we were able to add more than $100k in net new revenue to our last big promotion.” – Pat Flynn

RightMessage is over $25k MRR, which would seem to be a good indicator but a quick look at their Baremetrics dashboard should be enough to see what's wrong.

They have been stuck with more or less the same MRR since they started! And the churn is so high! Why is it so high? Let's look at the criteria I highlighted in "Potential Customer vs Ideal Customer" for potential and ideal customers.

  • Total potential customers: there isn't a clear target, but from testimonials, it seems to be for people responsible for marketing or growth in SaaS and paid content (courses, paid newsletters, etc.) businesses.

  • Reach: it's a pretty easy target to reach with many marketing and growth communities and a good presence on social media.

  • Demand: who doesn't want to improve conversion and are struggling with conversion rate optimization?

  • Ability to pay: it starts at 29$/m. Pretty low bar for the targeted companies.

  • Acquisition efficiency: they are easy to reach, and always trying new tools. It shouldn't be too expensive to acquire customers.

  • Upsell potential: the targeted companies have a lot of room to grow and make upselling somewhat easy.

  • Advocacy: there's an affiliation program, and potential customers are generally writing a lot of content. There shouldn't be an issue with getting them to become successful advocates.

We can see many criteria are being fulfilled. But it's clearly not enough! That's why we must be sure to dive into the 6 fits I briefly talked about last week.

  • Technical: it doesn't require anything special, just use a script on a website, and you're done.

  • Functional: I think all the necessary features are there, including a 2-way synchronization with multiple email marketing solutions.

  • Experience: the onboarding is pretty straightforward, there are templates to create surveys and workflows quickly, and there's even a paid course to master personalization. But it lacks long customer success stories and maybe some advanced resources.

  • Cultural: nothing to say here. It's professional and pretty classic.

  • Resource: to create a meaningful experience with RightMessage, one would need to create journeys with a few questions in order to give the right lead magnet to the potential customer. That means finding the right questions to ask and create one good lead magnet per path. It would require some trial and error before getting some results.

  • Competence: which in turn, would require some amount of skills to ever get results. Making good lead magnets is hard. A lot of companies might not have someone with the skills to do it internally and won't wait for weeks or months before seeing results.

I think it's clear here RightMessage has a lot of potential customers, but ideal customers are few. It requires a lot of resources and competence to get the value of this product. Many companies aren't ready for this kind of investment.

Now I can more easily answer why churn is so high.

In my opinion, they are trying to cater to all potential customers instead of focusing on just the ideal customers.

It's as if they were trying to sell their product on multiple segments at the same time with an experience that fits neither.

Bad-fit customers like the value proposition but fail to get results because of a lack of resources or competence.

On the contrary, right-fit customers get results, but the value proposition isn't meant for them. They already do surveys, understand the benefits of personalization, and use competitors. They have pains to solve, but it doesn't show on the website.

Baremetrics data tells a similar story. It shows more than 30% of active customers are on the cheapest plan, but the churn for those customers is almost 20%. For the biggest plans – representing most of the revenue – churn is nearly 0%.

Related Videos. If you want to know more about RightMessage's struggles, there are a few interesting videos: a conference talk from MicroConfan interview from Nathan Latka, and a recent Sharktank-style attempt to sell the company.

The product is great, the team is great, and they have loyal customers with great customer success stories – even though they are a bit buried in the feed of the blog. A little more focus could have a dramatic impact.

If I was in charge of the growth at RightMessage, I would update the strategic messaging based on a more specific ideal customer, and change the acquisition experience accordingly.

Retention for this ideal customer is good, but there might be some additional features needed to improve conversion.

Eventually, I would expand into another segment but it wouldn't be the priority.

What do you think? What would you do to grow RightMessage?

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