A picture of me standing at a lectern, working on a laptop computer, on the stage of the FWD50 digital government conference

Hi! I’m Alistair. I write surprisingly useful books, run unexpectedly interesting events, & build things humans need for the future.

Pitchers not buckets

One of the startups I work with uses a freemium SaaS model: visitors subscribe to their service, and some of those visitors create content. Some of those content creators become paying customers when they need a premium feature or hit a capacity limit.

Here’s the original thing I sketched up for the infographic I wanted:

Cascading buckets

Note that in this diagram, there’s a threshold for “engaged user.” That might be temporal (“has launched the app in the last five days”); or it might be a consumption metric (“has shared at least five files”); the point is that it’s a measurement of whether the prospect still cares about the thing you’re selling.

Google’s funnel flow

Even though I’d asked for this leaky bucket diagram, I still wanted something more, and I was having a hard time articulating it. I’d looked at Google Analytics’ funnel flow diagrams, which are promising—they show the various sources of traffic, and illustrate how many prospects you lose along the way—but they’re more about a visitor’s conversion than about the gradual movement, over time, towards paying customer:

Goal Flow - Google Analytics 2015-04-30 10-46-28

Three possibilities

Subscription-based businesses live or die by churn. The fundamental rule of SaaS is: acquire more customers than you lose. (A secondary one is: acquire them for significantly less than they give you over their lifetime.)

This is often referred to as a “leaky bucket” business model. But the bucket is a bad analogy, because each stage in a customer’s journey from initial awareness to conversion has three possibilities:

  • The customer abandons the process of becoming a subscriber (what we’d call churn, or leakage)
  • The customer moves forward to the next stage in the process (what we’d call conversion)
  • The customer lingers in the current state, and is an asset that may convert later.

For this reason, a leaky pitcher, rather than a leaky bucket, is a better analogy—because it incorporates the flow-through of a funnel; the leakage of a bucket; and the residual value of a backlog of prospects.

A leaky pitcher diagram

What I was after was a leaky pitcher. I wanted a way to express not only flow through the process and leakage during the process, but also the pent-up value acquired within the system. If a startup shows that free users become paying users over time—as Evernote or Dropbox do—then the amount of water in the pitchers is critical.

Here’s what I came up with:

Pitcher diagram 2015-04-30 10-42-57

This kind of diagram also shows a SaaS business where it needs to redouble its efforts, based on where the buckets are filling up:

Pitcher diagram 2015-04-29 12-06-05

If there’s a lot of leakage at the top of the chain of pitchers, then users need to stick around long enough to see the offering (rather than bounce) and the call to action convincing them to try something out must be simple. That means eliminating everything that can get between a first visit and whatever behaviour you consider “engaged.”:

  • If they’re going to create some content, ask yourself whether they really need to sign up first.
  • If they’re going to save some files, don’t let them proceed until they’ve done so.

Of course, you have to be sure you’ve chosen the right measure of engagement; if you haven’t, you probably need to rethink what, at its core, your product or service is for. You need to be sure that the behaviour you’re encouraging is a leading, causal indicator of something valuable to your business model.

As a sidenote, I wrote another post recently on the dangers of the funnel metaphor in a world where there is a wide range of possible goals, and sources. So while we’re redefining metaphors, if buckets should be pitchers then funnels should be waterslides.






2 responses to “Pitchers not buckets”

  1. Keith Reynold Jennings Avatar

    I love the metaphors of pitchers vs. buckets and waterslides vs. funnels (read that post too). What if we shift our targeting from people to jobs?

    Clay Christensen made this argument in his classic “Marketing Malpractice” article in HBR a few years back. Instead of focusing on demographics and psychographics, we should focus on the specific functional, emotional & social jobs people want to get done in their lives.

    In the beer example in your funnel piece, each person is hiring a beer to do a specific job. One’s hiring a beer to do a social job. One a functional job: thirst quenching. And the third is hiring a beer to do an emotional job: self-image.

    There’s a serendipitous side effect I’ve discovered in practicing this shift in focus from people targets to job targets: When you focus on the job, people groups that you never would have thought about show up.

    Thanks so much for this great piece. Looking forward to putting it into practice in my world.

  2. […] Of course things get much more complex than simple funnels. As Alistair Croll points out, real life often looks more like water-slides or pitchers. […]