Lee Egstrom of Passinglane has this question for Clate and Scott: How do I know when to introduce a particular product or technology? It’s about making small bets, making them often, and looking for a 10x return. Listen to this hot seat as Clate and Scott help Lee figure out how to do it and use automation without seeming like Big Brother.
Transcript
Scott Martineau: Welcome to this episode of the Small Business Success Podcast. I'm Scott Martineau.
Clate Mask: I'm Clate Mask. We're co-founders of Infusion Soft, and today we got Lee Egstrom with us. Lee how you doin'?
Lee Egstrom: I'm doing phenomenal. Thanks for having me.
Scott Martineau: Great. Well Lee, we're going to get started. Maybe for those who didn't listen to your last episode, why don't you just give a quick overview of your business, maybe 30 [00:00:30] seconds, and then we'll jump into the hot seat.
Lee Egstrom: Great. So my company is Passing Lane. We're founded in the mid 90s. We do web development, and the marketing initiatives that support the projects that we develop.
Clate Mask: Very good. All right, well we're ... The hot seats are really fun because we take a real issue that you ... That a successful business owner is dealing with right now and we kinda tear it apart, and a lot of times we call out the business owner a little bit and say, "Hey, [00:01:00] here's some things you could be doing." But hopefully, the idea is for our listeners to really hear some things that they can be doing in applying in their business. So with that, why don't you jump in and tell us what's the issue you want to talk about today.
Lee Egstrom: Well, so, I can tell you what it's not. So it's not having a great product or service that can help our clients. We've gotten to that point. So now the challenge becomes with some of the newer initiatives, and I know you guys have experienced this [00:01:30] with Infusion Soft and pioneering marketing automation, and one of the things that I struggle with in my business is knowing when the right time is to start pushing a product or service, or a new piece of technology. Obviously being in web development from the mid 90s, we did a lot of education, and we spent a lot of resources convincing business owners and companies, why they needed to come online. You know working [00:02:00] with everything from small businesses to fortune 500, fortune 50 companies. You know really looking at the fact that pioneers end up with arrows in their back, and they're the ones that get the cholera, and those things. It's the settlers that really come in and flourish.
I found myself over the years being stuck in the pioneer mode, and a challenge that I face as new technology arises, or new features can be added on, or the market starts to shift, [00:02:30] right? How do you know when the time is right to get involved or to start really implementing a new piece of technology possibly, or really pushing a new product into the market without being too early, and then obviously you don't want to be too late either because then it's a ... Everybody's doing marketing automation or internet marketing or whatever the service may be, right?
Clate Mask: Yup. Okay, [00:03:00] so the specific question for you is, when do I know ... How do I know when to introduce a new product or technology? And for our listeners, it could be more generally applied to, how do I know when to add a new revenue stream, add a new opportunity whether it's a particular technology. It might be a service, it might be a subscription, it might be a totally new business line, or a totally new business, or a new product line. [00:03:30] But I think your question generally is, how do I know, your question specifically for you is how do I know when to introduce a particular product or technology?
Lee Egstrom: Right.
Clate Mask: Is that right? So-
Lee Egstrom: What indicators can there be?
Scott Martineau: Yeah, so I was raised by an attorney and he taught me very well to ... You don't have to answer the question that was asked, you gotta answer the question that you want to answer. But all ... I will get around to the point, but I think maybe one comment first on [00:04:00] before we get to when to introduce, maybe I'll just talk a little about how to introduce and what the process, you know, just recommendation on the process, so ...
As Infusion Soft has grown, we made some observations that early in the growth of the business, we were like all instinct and we would fire what has been described as uncalibrated cannonballs. In other words, we'd say, "Hey there's a new opportunity there," we're going to go align all of our resources, spend [00:04:30] three months building something and sort of pray that it's going to work. And contrast that with the idea of small iterative cycles of learning where ... And this is really kind of a lean startup based thinking. And so, that might be one approach, like let's say that the next, maybe the next digital marketing technology comes out on the horizon. I think it would be a mistake regardless of whether the timing is right to go jump in by saying, " [00:05:00] Hey, we're going to assume we know everything about ..." Like we're just going to go plan this massive project, go implement this and then hope that it really works well for the business, our business, as well as for our client.
So part of the uneasiness about when do I go launch or begin to sell or help customers with the new technology is that you don't have confidence because it's all unknowns, and so that's just one little piece [00:05:30] of advice.
So what do you do then? Well, I think you begin to take very small ... So first of all you look at the technology and say get clear. Is the technology going to really benefit my customers. I think that would be a guiding principle that would be really important. And then you say, well how could we go about testing this technology with the least amount of effort to gain the maximum amount of learning? And you start that process, and I think in my observation, what happens is, you very [00:06:00] quickly start to gain confidence in things that you probably should, and you start to lose confidence in the things that maybe you're a little bit too early on. It's our one thought, I'll pause for Clate if you want to inject anything there.
Clate Mask: I think I'll just reiterate the point about, you called it uncalibrated cannonballs, maybe our listeners will think of it as Hail Marys. You're not trying to do something that's gonna save the business or you're going to do this thing, or you're going to do something that's going to make us a billion dollars, no. It's actually much more just putting one foot in front of the [00:06:30] other and consistently iterating to improve on the solution that the customer has today. With that said, you have to do it. Might ... So the thing I would like to add, Scott, is don't go into it unless you believe that you can create a 10 times improvement to the customers current reality.
So when Scott says, "Well the customers wanted what they paid for," you've got to have a view even though you're not going to do this in the first iteration, but can you see a way that you're going to make a dramatic improvement for the customer because when [00:07:00] it comes right down to it, you're only successful in doing this new thing if you can ... If there's demand for it, customers are buying it, they're reaching for what you've got. So that 10 times improvement rule is a good one, because if you're making ... If you're creating a solution that's better than ... That's 10 times better than the current situation that your target customer has, there's going to be good margins in it.
Now, the next thing you have to decide is there a significant, [00:07:30] a sufficient number of customers who have this problem that you're solving? So, if you don't have ... If you've got something that's 10 times better and there are four people on the planet who need it, well that's probably not going to be worthwhile, so I think those two things, the quality of what you're providing, how much better, and the quantity of people that need it. Those help you decide real quickly if this is something you get really excited about that justifies putting all, well not all of your eggs in that basket, but putting some suffici ... Some significant [00:08:00] resources into the opportunity.
Lee Egstrom: Got it. So basically what I'm hearing is, make small bets, make them often, and then look at 10x return, right? That's actually, we have that on the wall in our offices, is this 10x thinking. So I like that. Make small bets, make them often, and incrementally, and then look at market size, market fit obviously to ensure that you're not serving a market of four or five. Yeah, that's great advice. Thank you.
Clate Mask: [00:08:30] Yeah, you bet. You want to say something, Scott?
Scott Martineau: No.
Clate Mask: So, the other thing is, I wanted to ask ... You know, Scott said hey, his attorney father asked him, coached him to answer the question that he wants to answer. I actually want to ask some questions that are behind what you're thinking. So you've asked a question how do I know when to do this. Why are you asking the question? What's the situation?
Lee Egstrom: So, I see shifts taking place in some of the verticals that we operate [00:09:00] in. We are in the automotive vertical, we're also in the higher education vertical, and it's the idea that when we are too forward thinking with some of these institutions that we meet with and even some of the institutions that we serve. I try to be careful, as I've learned over the years to not sort of prevent ideas ... Present ideas that are too far out on the horizon because that could [00:09:30] be a non-starter.
Clate Mask: Got it. Okay, so it-
Scott Martineau: Why? You said too far out into the future. What are you describing? Like it requires the business owners to do something that they're not prepared to do, or ... What are some examples of-
Lee Egstrom: Yeah, or not comfortable with. So ... Gosh, okay on the marketing automation side. Here's a real world example on the marketing automation side. The idea of that someone has filled out a form on a website [00:10:00] and upon repeat visits to the website, we would notify sales or in this case admissions, and they would reach out either via email or via phone call and touch that customer based on the repeat visit to the website.
Clate Mask: Yeah.
Lee Egstrom: Now I feel like that's a no brainer. You should take action, right? They're raising their hand. Some of our clients feel that that's too big brother-esque or that their potential customers will be turned off by that.
Scott Martineau: [00:10:30] So, if you like ... So okay, so let's say I'm your client, and I've got 30,000 visitors on my website each month and you're proposing this idea, so I might be having concerns about well how's it going to feel to my people if I call them. That's a little freaky, and two, who's going to actually make the calls, so I got all these concerns about it.
Well, my point earlier was, if you're trying to sell me on buying this entire package of, let me do this entire ... [00:11:00] Let's ship the entire business to that model, it's a lot different than if you said, "Hey what if we could, you know, we've seen a lot of results that have been successful other businesses, are you open to us testing this approach?" But maybe what we do is we only open up ... We want to do it with 100 of our leads, and we'll just look at the results because I think then what it becomes is that you and the client can be sitting down and looking at the results together to say, "Well look at that." If you take the average, you know, what do we typically get, what's the [00:11:30] output of a sales person following up if they do it maybe on a different schedule, and how do we compare that with another 100 leads that we're going to test by calling right when they're on the site.
Now, you're looking at the results together and you can decide, and the pressure maybe goes off of you to the customer. And anyway, that's kinda the spirit. Maybe trying to take the concept I was talking about earlier in a practical setting.
Clate Mask: Yeah, and so what I'm hearing you say is I'm glad that we had this further conversation [00:12:00] because in your business with a client, you're really talking about will ... Is the offer that I'm making, the pitch that I'm making to my client, one that they're ready to receive and that they'll go for, and hire us to execute for them. That's a little different than doing a bunch of RND work and creating a product, and building out a whole technology for it, unless there's a ton of work you've got [00:12:30] to do to make that happen. But if you've got the capability to do it, and you can test or maybe a part of the capability. There's a small piece of that functionality, and you can test it with a client that wants to do it. That's the best approach.
It's not a big uncalibrated cannonball as Jim Collins puts it. It's a bunch of little lead bullets that help you determine whether or not you have a viable offering that many customers would go for. So like Scott said, "Test it small." [00:13:00] Test it small with a client, do a piece of the engagement where you say, "Well you know, we think this could be a really powerful for you." And maybe 9 out of 10 of your clients would say, "No, I don't want to do that." But if you got a sense of where the industry's going and what you want to, what you want to be able to offer down the road, then testing your way into it with a forward thinking client that will do it as a small piece of the project or something, is a great way for you to get a bunch of learnings.
'Cause what you really want to do is have a hypothesis, you know, your hypothesis is hey, there's a ... [00:13:30] There will be a growing demand for this kind of technology that can really drive business results for my clients. Kay? You gotta test. What's the test you want to run to test against that hypothesis. You got a forward thinking client willing to take a little piece of it. You're going to learn as much as you can from that small test, and then you're going to iterate on it. So, okay, here's what we learned about that.
As you go through that cycle a few times, you're going to get to a place where [00:14:00] you've got an offering that's very exciting to a client and that offering can now be expanded into other forward thinking clients.
Lee Egstrom: Yeah, love that. That's great advice. I'm definitely going to test the waters with that and I'll let you guys know how that works out. I think that that is a ... It's a much smaller commitment and when we look at obviously onboarding a client or convincing someone to try a big idea it's a series [00:14:30] of small commitments, so that is a great small commitment. How about we test this on 10% of the leads or a 100 of the leads over the next 30 days and see what the results bring. I love that.
Scott Martineau: Yeah, I have one more little ... This is, this became relevant in my mind when you shared the specific example. But I'd say, I'm understanding over the past few months, the power of getting alignment and how I've tended to jump past alignment, [00:15:00] and I'll share a specific example with your client here. So, it might serve you and this client situation to sit down and say, "Hey, let's be really clear and make sure we're solving for the same things." 'Cause it sounded like as you were talking about it, that what you're looking for is to increase conversion rate, and then maybe there's something else that feels more important to the client. They might not even be thinking about it that clearly, but it sounds like what they care about is, well we want to reduce the risk that our clients would maybe look at us as [00:15:30] sleazy marketer, I don't know what the-
Clate Mask: Big brother-
Scott Martineau: Yeah as big brother as you described it. And I think just sitting, it's just like therapy when you sit down and you actually articulate that together and see what are we working on. Because we're going to design the program. Our goal is to have designed the program that meets the things that you're reaching for, and so, if what you're saying is ... You might have even asked them in that setting, not in a condescending way, but if you had to choose, what's more important in these, you know, and allow them to really start saying, oh [00:16:00] yeah, we are kinda solving for, maybe not conversion rate and-
Clate Mask: We're going to look a certain way or you know.
Scott Martineau: Yeah. It forces conversations that maybe would not had. It creates this resistance in the process.
Clate Mask: Yeah, and you ... It's an important part of this scientific method that you're applying. You've got a big hypothesis that's big picture thinking, a 10x improvement. But now, you've gotta take that into a small test, and that test has to be set up to really [00:16:30] hone in on a piece of what you're big hypothesis is. So it might be that it's conversion rates and we want to be able con ... You know the test is we're going to run this experiment and see if we can improve conversion rates on these 100 leads, and if we could do it by this much, that would be great success and it would help us validate the bigger hypothesis we have. And you work with a client on that basis. So, the thinking is big picture thinking. Big thinking of a 10x improvement [00:17:00] from the current reality, but you're not going to jump there in one step. So, we say think big, test small, fail fast, learn always.
That's the approach you want to take, and as our listeners are out there saying, should I start this new thing? Well maybe it's a new product, maybe it's a new business, but think big, test small. Get down to a very small risk.
When people talk all the time about entrepreneurs are big risk takers, it's actually not so true. We take a lot of risks but in small doses. That's [00:17:30] what successful entrepreneurs do. So you want to think big, test small, fail fast, and learn always. Learn from the success, learn from the failures.
Lee Egstrom: That's great advice. That is great advice.
Clate Mask: Well thanks for bringing the specific to the hot seat. We appreciate it, Lee.
Lee Egstrom: Well I appreciate the opportunity and I will, as the listeners will, listen to this back when it gets broadcast, and put some of these things into place. So I will reach out to you and let you know how [00:18:00] it works out.
Scott Martineau: Fantastic. Well thanks for taking the time together, Lee. And thanks to all the listeners. We're going to call this a wrap for this episode of the Small Business Success Podcast.
Clate Mask: And if you're looking for more ways to grow your business, check out our knowledge center at Learn.InfusionSoft.com. That's Learn.InfusionSoft.com.