Patrick McKenzie on Using Funnels and A/B Testing To Grow a Business

Patrick McKenzie has made a name for himself as a respected thought leader in the SaaS marketing space. He has a popular blog called Kalzumeus and runs an appointment reminder service fittingly called Appointment Reminder. He’s also the creator of Bingo Card Creator.

As a well known member of the Hacker News community, he is frequently asked to give talks and share his advice. Today we’re featuring a talk he gave at the 2011 Business of Software conference, speaking on how to use funnels and A/B testing to improve a company’s marketing. We’ve highlighted some of the main points in the blog post.

Poor Funnels Kill Companies

You’ll find funnels in all the important areas of your business – email, free trials, sales cycle, core use of product, and checkout. If any of these funnels are suboptimal, your business will just not work as well as it could. McKenzie says:

“When you are trying to influence people’s behavior over multiple stages of steps, if you execute on this poorly, your company will not succeed.”

There are some tips McKenzie gave for optimizing your funnels:

  • Shorter is generally better – If there is a step in your funnel that doesn’t add value for your business or users, you should probably cut that step out.
  • Improvement in a funnel compound multiplicatively – If you boost conversions on step one and step two by 10%, you’ll end up improving your bottom line by about 21%. You get better results than expected the more and more you work on your funnels.
  • Try radically simplifying – Typically, reducing the number of fields within one step of the funnel will improve conversions.
  • A/B Test – Test your assumptions with actual data using an A/B test. Generally go for places early in the funnel. You’re on a knifes edge, a little push to the left and they bounce, a little to the right and they fall in.

Many designers and online marketers are at odds when it comes to website design. McKenzie says that designers believe it’s best to keep the design consistent throughout the website. Amazon, and many other people who test, believe that you can “break” from your website design and make it not like the other parts of your site. Just keep the funnel, simple giving people the option to either purchase or not. Eliminate links to your blog or documentation. Keep the design focused and clean.

What a Company Needs to Be Successful with Testing

Being successful with testing requires a couple values from your organization:

  • Eliminate all friction – Keep things seamless; if it takes an hour to change copy on your homepage you’ll rarely end up doing it. The change should be nearly instantaneous.
  • Incubate a culture of testing – Many companies resort to a culture of “let’s ask what the boss thinks”. Don’t leave it to the boss decide, let the data decide.

Nail Your First Impression With New Users

Everyone ran your software the first time. McKenzie recommends structuring the new user experience as a funnel. You need to expect a customer to do step one, two, three, etc. Track these steps with a funnel and then run A/B tests for improvements. McKenzie gives the example of Balsamiq mockups. They don’t start new users off with a blank screen, which you should never do. Instead, they onboard new users pointing out various features to show them how to use the product.

Patrick gives lots more examples and tips in the video. Invest an hour of your day today and give it a watch:

Patrick McKenzie – Engineering your marketing outcomes – Business of Software 2011 from The BLN & Business of Software on Vimeo.

Quotes

“It’s always dangerous to get into users’ heads. Look at their actual behavior rather than what you think or even what they say.”

“If you fail at execution of these things (funnels), your business just will not work.”


Source: KISSmetrics
Patrick McKenzie on Using Funnels and A/B Testing To Grow a Business

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