I spent $30,000 to get product-market fit
By: Justin Jackson
Tags: Marketing, Startup, Marketing Strategies, Product Management, Product Market Fit

Thousands of dollars were pouring into my account. And I was miserable.

It was 10pm on a Friday night. I was sitting at my kitchen table with my laptop open. I was watching hundreds of Stripe payment notifications come through.

A year previous, I’d launched a new subscription product called Tiny Marketing Wins.

People loved it. I’d received tons of good reviews.

But now it was renewal time. And I started getting emails:

Due to circumstances, I wasn’t able to take full advantage of TMW last year. This year, I have laid out plans to go from working “in” my business to actually changing things around and making progress. But I haven’t finished last year’s courses. Do I really need to pay again?

Also common:

Sorry, Justin, I had forgotten this was a yearly subscription. I’m happy with the current version, but I’m only 50% finished. Could you refund this second payment?

As more emails came in, I got a sinking feeling in my stomach: “this isn’t working.”

What went wrong?

Tiny Wins started as a free 14-day drip email sequence. Every day, I’d send you a new marketing tip.

It launched on Product Hunt on Oct 29, 2015. Nearly four thousand people signed up.

Wow.

After the 14 days was over, people asked me if I was going to keep doing it.

“The only way I’d be able to keep doing it is if it was a paid subscription,” I said.

“We’ll pay!” my subscribers said.

I sat on the idea for awhile but finally launched a paid subscription in February 2017.

True to form, hundreds of people paid $249 for a year’s subscription.

I started sending them weekly marketing tutorial (video + pdf), and they tracked their progress inside the app:

User feedback + iteration

In the first few months, I noticed that people were completing the tactics much slower than I’d anticipated:

I started talking to my users and doing surveys. The results proved my suspicion:

So, I tweaked the product to be focused on functional categories. I improved the dashboard as well:

The feedback from users was good:

People liked the new format. It also helped me (as the creator) think about specific outcomes my users needed, and respond to those directly.

But that still left a big question…

What about the business model?

The original idea with Tiny Wins is that I’d send users a new marketing tactic every seven days. That meant recording a new video tutorial and creating the handbook PDF, every week.

As 2017 came to an end, I took another look at individual completion rates:

In retrospect, this makes sense. What solopreneur has time to implement a new marketing tactic every week?

As I was pondering all of this, the annual renewals I was referring to earlier started coming through.

My stomach started to sink.

Once I started receiving refund requests, I knew: this wasn’t going to work as a subscription service.

I had to make a decision.

So, that Friday night, I manually refunded hundreds of payments. In total, I refunded about $30,000.

I emailed users to tell them I was canceling all annual renewals. They’d still be able to access the content, and I was going to think about my next steps.

Right product, wrong business model

Sending that email, and refunding all those charges, was one of the hardest things I had to do.

But, I started hearing from customers right away:

Customers liked the product; they didn’t like the business model.

I wrote about this threat back in 2016:

Many founders choose SaaS just because you want the recurring revenue. But just because you like the model as a founder, doesn’t mean it’s the right model for your customers, your product, your niche, or the current market conditions!

In this case, my customers were used to paying once for online courses. But here, they had to pay annually, and once their plan expired, they no longer had access.

Pivoting to lifetime access

After listening to customer feedback, I decided to try a new business model:

Tiny Marketing Wins is an awesome list of marketing tutorials. And now, you pay once for lifetime access.

I sent out the announcement email. Here’s what I heard back:

Already, 102 people have registered for lifetime access.

It cost me $30,000 in refunds, but I feel like I may have cracked product-market fit.

You can check out the new Tiny Marketing Wins here.

Get $50 off lifetime access with the code relaunch . (Expires Feb 28, 2018)

Cheers,

Justin Jackson

@mijustin