Ian Landsman is Starting From Scratch, March 29, 2007:

ValiantHost Acquired

The hosting partner we use for HelpSpot, http://www.valianthost.com/ has just been acquired. While the partnership was informal, it was overall a very good experience and I’m a bit sad to see ValiantHost get absorbed into a larger entity. It sounds like Giorgio, the found of ValiantHost, will be moving on to other opportunities so this leaves the HelpSpot hosting service a bit up in the air. I’m currently trying to get in touch with Server Intellect about the future of that service.

If they choose not to continue it I’ll be on the search for a new partner. I’m also kicking the idea around of offering a solution ourselves. Not normal hosting, not really enough money in that for me, but rather a leased license option. Perhaps a flat $20 per user per month option that includes the hosting. I’m not sure though, even if I partner up with a big hosting provider I’m still worried about sleepless nights tracking down hackers and general badness. I don’t know if any amount of money can properly offset the added stress of offering the hosted solution.

Trials by Time of Day

I was charting some numbers and thought this was interesting because it was unremarkable. The chart shows the times of day when people sign up for trials. These numbers are all time. Seems pretty much like you’d expect. Mostly done during US business hours with a few overnight and I suspect that’s mostly non-US companies during their business hours.

Hosted Trials Come Highly Recommended

If you have a web app that’s not SaaS I have to say that I highly recommend setting up a hosted trial environment. It’s a bit of a pain and has some costs since a dedicated server is probably required, but so far it’s been well worth it for us.

I have the entire thing setup so I can convert a regular trial to a hosted trial in a click. I’ve thought of making it totally automated and I probably will at some point, but I wanted to make sure the system I put in place could handle the load before making it wide open.

It’s only been an option for a few months, but the numbers are great. The average HelpSpot sale is $721.46, but the average sale from a customer who did a hosted trial is $1,727.61. It’s a bit early to know if these numbers will hold up, but I think they will. The main reason I wanted the hosted trial option was for larger companies where dealing with IT can be a pain. They want to know the solution is for them before bothering with IT to setup a test environment, etc. So far it’s worked like a charm and we’re reaching the audience we wanted to reach with it.

So if you’re building a downloadable web app you should definitely keep this in mind for some point in your development. I think it’s also worth noting that a hosted trial is not the same as an online demo. Online demo’s are OK for less expensive applications, but in general customers can’t really get a good idea how it’s going to work for them in a demo. A hosted trial lets the customer really customize the entire system to get a feel for it. In HelpSpot’s case we even setup an email account for them so they can see the email integration without having to setup a test account.

The hosted trial option has really helped remove at least one big barrier to purchase from the process. Hopefully I can find a few more to remove which work this well!

Nice Post on the Death of an ISV

Phil has a nice wrap up article on his decision to call it quites with his app. Definitely worth a read.

Contact Break Down for HelpSpot

Scott breaks down his 4 main contact methods for his lead management app. Here’s the breakdown for HelpSpot customer support. <plug>This was ridiculously easy to pull together using HelpSpots reports.</plug>

Email: 68%
Web form: 29%
Phone: 2%
Other: 1%

Other is things like a forum post that was promoted to a full request, etc.

Tiny Sneak Peak at HelpSpot v2

Part of the new website design will be a HelpSpot blog where I’ll run the beta from, offer sneak peaks, tips, etc. However, I thought it would be fun to show off a version 2 feature which has always been one of our most requested.

UserScape.com V2 Complete

A few months backed I posted on the initial sketches of the next version of the UserScape.com website. I’m happy to say that the process is now complete and we’re moving forward with HTMLizing the design and should be implementing it in the next few weeks. I’m really happy with the job MIke did as always. I think this is his best work yet. The design is modern and I really like the use of black which plays nicely with the colors. The final designs are below (note that not all text is accurate). Also the top and bottom black bars extend the full width of the screen which is not really shown in these graphics.

The big differences between this and the current site are much clearer calls to action (especially the home page which is right in the banner), a more designed interface with rounded edges, a clearer navigation scheme with primary top navigation and secondary side navigation, and the large homepage screenshot which should help leverage HelpSpots nicer appearance compared to the competition.

Homepage

Inner Pages

Free Bingo Cards

If you’re looking for free bingo cards you should check out the nice app created by Patrick called Bingo Card Creator.

Patrick is trying to build up a little Google juice for some of his main keywords so I thought I’d help him out. If you have a blog you should too, Patrick is a great guy.

Don’t be Cheap, Don’t be Cheap, Don’t be Cheap

Please excuse the title, this is a note to myself as much as a post. Every time I try and go cheap on something it comes back to bite me. Even if I’m not actually trying to go cheap, but if I just don’t buy the best then I end up being sorry. My current frustration is with the dhtml menu system I use on the HelpSpot request page. I’m redoing it for version 2 and this will now be the 3rd menu system I’ve used there.

The first was my own creation, what a mistake that was. A dhtml menu requires a full time programmer just to track down every oddball bug in even just the limited browsers HelpSpot formally supports (IE/FF/Safari). At some point I switched over to the Dynarch menu. Not a bad menu for a few hundred dollars, but some serious problems in Safari which some customers run into. Especially with forcing tabs to be called to the front when using multiple tabs (you know who you are out there ). I’ve also been concerned that there doesn’t appear to be much development on the menu.

So for version 2 I’ve bit the bullet and spent the $1,200 for the Milonic dhtml menu. Wow, what a difference. I’ve used Milonic before, a long time ago though not such an intensive usage as this. So far this sucker is rock solid. Even better is that there’s really active support and some nifty extension libraries for editing menus on the fly which I really need to do (they’re a bit hidden, which is a shame. You can find it here). It loads instantly and without any browser issues. Building a menu dynamically is also very easily done, which has made integrating it into HelpSpot a snap.

Yet again I’ve had to learn that being cheap is only a path to heartache and support requests.

Any openings in your fantasy baseball league?

My regular fantasy baseball league may be breaking up. If anyone out there is part of a good league and in need of another player let me know. I’d prefer it to be a money league (keeps the excitement up), but I’d also be interested in a glory league.

What They Never Told You About Handling B2B Transactions

When I started UserScape I had no idea how to handle transactions in a B2B software company. For all that’s written about starting a software company and how to run a software company, there’s very little on what types of transactions you’ll need to support and how you should go about doing them. If you think you’re just going to put up a PayPal button and call it a day you are very very wrong!

Your customers have a variety of methods they like to pay with and so you’ll need to support those methods of payment. It’s also important to understand billing options and how they relate to payment options.

We currently have 3 billing options for HelpSpot. Credit Card (instant billing essentially), Purchase Orders with invoicing, and Invoices. Acceptable payment for these billing options are credit card (with some exceptions we’ll see below), check, bank transfer and sometimes PayPal.

The most common form of billing and payment is of course to use a credit card. Obviously you need to accept credit cards and you likely already knew that, but here’s something to keep in mind. There’s no reason you have to allow all purchases to use a credit card. Specifically, we currently only allow charges up to $2,000. This is high enough to cover the very popular 10 pack license option ($1,699), but low enough to keep our costs down. Credit card transactions can be very expensive at these higher price points. For example, most charges cost 3-4% of the transaction if you’re directly using a gateway like Authorize.net. Of course if you’re going through a third party processor like esellerate and the ilk, then it can be 10-15%. Even at 3-4% though this really ads up. A $2,000 charge costs me $80 or so. Compare that to the cost of processing a check which is $0 or doing a bank transfer which is generally $15. That’s a significant savings and can really add up.

At first I was concerned that the limit would be a negative. In fact the limit was actually impossed upon me by my merchant account bank. As a new company they capped any single transaction to $2,000. I tried to fight this because I was worried that customers wouldn’t buy if they needed to charge more, but they wouldn’t budge since I had no history. In practice it turns out that this is really a non-issue. Most companies spending more than $2,000 will want to use your invoicing options or at least have no problem using invoicing since it’s common practice. In fact I’ve never even bothered going back to my merchant bank to get the limit upped. In the one and a half years of selling HelpSpot only once has a customers wanted to pay by credit card for an amount over $2,000 and I went ahead and processed it as two transactions manually.

Now our other two billing options are somewhat intermingled. Purchase orders and invoices. Boy I wish I knew more about purchase orders before I started UserScape. Here’s the skinny on them. A purchase order is basically a contract, once you accept a purchase order from an organization there’s a contract formed that basically says they agree to pay you X and you agree to deliver Y immediately pursuant to the payment terms outlined in the purchase order. So when you receive a purchase order you’re are obligated to immediately ship the product (generally speaking) or in this case ship the license file. You then invoice the company for payment. The terms we use are Net 30 which means they must pay the full amount within 30 days. It’s common in many industries to actual provide discounts for early payments, but I haven’t had any collection issues so there’s been no need for this incentive.

Since there’s almost nothing out there on this, here’s the exact details of how the process usually works.

• The customer decides to purchase HelpSpot and goes to their manager to receive approval for the purchase order
• Once they have a purchase order they go to the UserScape store
• In the store they select the invoice option and fill in the optional PO number off their PO
• After completing the store form they also fax us the physical PO so we have a copy
• Once we receive the PO fax the purchase is OK’d in our system and it’s marked as being a PO purchase
• The order moves to a receivables queue and the license key file is sent since we’ve accepted the PO and are obligated to ship it
• We send out the invoice, usually via a PDF attached to an email though we’ll also physically mail it if asked
• Receive payment via check or bank transfer

It seems like a lot of steps, but it’s really not bad. Now it’s also possible for customers to be invoiced without a PO. Since there’s not the same contractual obligation there and in my eyes not the same level of commitment no license is shipped until payment is received. I will often extend trials as needed though so that the customer doesn’t have to do without HelpSpot while waiting for us to receive payment. In this case the process goes as follows.

• The customer completes the UserScape store forms indicating the invoice option
• We receive the order and send out the invoice, moving the order to the receivables queue, but no shipping the license
• Receive payment via check or bank transfer
• Send license once payment clears

That’s pretty much billing. It sounds a bit intimidating, but it’s really very straight forward. One big tip is to make sure your back end systems are expecting these type of transactions. If your CRM and license systems are setup to expect instant payments via credit card and you start doing invoices you’ll be in a mess trying to figure out what’s still outstanding and where everyone is at in the payment process.

For payment types, we’ve already covered credit cards so let’s jump into checks. I love checks! When I started UserScape I never thought I’d say that, I despised the idea of dealing with checks. I wanted to be completely virtual. Checks though have a unique quality that no other payment type has. They generally cost nothing to process. No middle men, nobody taking a cut, pure profit. When you’re looking at transaction fees potentially in the hundreds of dollars a trip to the bank now and then doesn’t seem so bad.

Another thing I knew nothing about when I started was bank transfers. Accepting bank transfers is really critical, especially if you’re selling to international customers and of course if you’re selling online you will be. Most international customers (outside the US) don’t like to pay with checks, it’s problematic. So they prefer to pay via bank transfers. In fact every international sale of HelpSpot, currently 25-30% of our business, has been paid by either credit card or bank transfer. 

To do bank transfers you’ll need to have an account at a bank (duh). But make sure it’s an actual bank and not a credit union. The main UserScape account is at a credit union where I’ve done business for years. Unfortunately, my credit union (and I think most credit unions) didn’t have a SWIFT code. This code is often required for international transfers so if your bank doesn’t have one then a transfer can’t be done. To get around this I ended up setting up an account just for transfers at HSBC and that’s worked out very well. To do a transfer all you’ll need to send your customers is this basic information:

Bank: HSBC

Bank Address:
1 LaGrange Avenue
Poughkeepsie, NY 12603
United States of America

SWIFT: MRMDUS33
Routing: XXXXXXXX
Account: XXXXXXXX
Account Name: UserScape

That’s it and in a few days bingo bango money is in your account. The fee is usually $15 which isn’t too bad and will generally be less expensive than credit card fees.

The final way we accept payment is via PayPal. This actually isn’t a published option, but there have been 2 customers who have wanted to pay via PayPal so we have the account. Again I believe both were international and it was just easier to do it via PayPal for them.

This setup has worked out really well for the past year and a half. Customers have the flexibility to send payments in the way that works best for them and providing all the options doesn’t really add much to the work load for us. In fact the cost savings and increased sales more than makes up for the extra work.

Hopefully this post has cleared up a few things for aspiring ISV’s out there looking to enter the B2B space. I unfortunately had to figure out most of this through trial and error, so maybe it can save some of you a bit of time and money. If you’re an established ISV and have other tips and tricks please post them in the comments, there’s always more to learn.

BitRock Installer Video

The nice folks over at BitRock put together a really well done testimonial/case study page on HelpSpot and the installer they developed for me. If you’re wondering how BitRock might work for your application take a look at the page and check out the video they have on the HelpSpot installer, it’s very nicely done.

http://bitrock.com/customers_custom_stacks_userscape.html