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Raising Prices is Hard

Post Syndicated from Yev original https://www.backblaze.com/blog/raising-prices-is-hard/

computer and a crossed out $5 replaced by 6

Raising prices should not be an 18-month project.

Everyone is faced with the decision to raise prices at some point. It sucks, but in some cases you have to do it. Most companies, especially SaaS businesses, will look at their revenue forecasts, see a dip, run a calculation predicting the difference between the revenue increase and how many customers might leave, and then raise prices if the math looks favorable. Backblaze is not most companies — here’s how we did it.

In February of 2019, we made the announcement that one month later, our prices for our Personal Backup and Business Backup services would be going up by $1: our first price increase for our Computer Backup service since launching the service over a decade ago. What was announced in February 2019 actually started in December 2016, more than two years before the actual price increase would take effect. Why the long wait? We wanted to make sure that we did it right, not just mechanically (there’s a lot of billing code that has to change), but also in how we communicated to our customers and and took them through the process. Oh, and a big reason for the delay was our main competitor leaving the consumer space, but more on that later.

In this post I’ll dive in to our process for how we wanted the price increase to go, why we decided to build the extension program for existing customers, what went in to our communication strategy, and what the reactions were to the price increase, including looking at churn numbers.

Is Raising Prices a Smart Move?

Raising prices, especially on a SaaS product where you’ve built a following, is never an easy decision. There are a ton of factors that come into play when considering what, if any, is the best course of action. Each factor needs to be considered individually and then as a whole to determine whether the price increase will actually benefit the business long term.

Why Raise Prices?

There are many reasons why companies raise prices. Typically it’s to either increase revenue or adjust to the market costs (the total cost associated with providing goods or services) in their sector. In our case it was the latter. In the price increase announcement, we discussed our reasoning in-depth, but it boiled down to two things: 1) adjusting to the market cost of storage (it was no longer decreasing at the rate it was when we first launched the product), and 2) we had spent years enhancing the service and making it easier for people to store more and more data with us, thereby increasing our costs.

Backblaze Average Cost per Drive Size
Cost Per Drive (2009-2017) — No Longer Decreasing Rapidly

One of the core values of Backblaze is to make backup astonishingly easy and affordable. Maintaining a service that is easy to use, has predictable pricing, and takes care of the heavy lifting for our customers was and is very important to us. When we started considering increasing prices we knew that we were going to be messing with the affordable part of that equation, but it was time for us to adjust to the market.

How to Raise Prices?

Most companies say that they love their customers, and many actually do. When we first started discussing exactly how we were going to raise prices we rejected the easiest path, which was to create a pricing table, update the website, and flip a switch. That was the easy way, but it was important for us to do something for the customers who have trusted us with their important files and memories throughout the years. We would still need to build out the pricing table (fun fact: from 2008 to 2017 our prices were hard-coded) but we started thinking about creating an extension program for our existing customers and fans.

The Extension Program

The extension program was a way for existing Backblaze users to prepay for one year of service, essentially delaying their price increase. They would buy 12 months of backup credits for $50 for each computer on their account, and after those credits were used up, the new prices would go into effect on their next renewal. It was a way to say thank you to our existing customers, but there was just one problem — it didn’t exist.

Building the extension program became a six month project in and of itself. First we needed to build a crediting system. Then, we needed to build the mechanism for our customers to actually buy that block of credits and have them applied to their account. Afterwards, we’d need FAQs, confirmation emails, and website changes to help explain the program to our customers. This became a full-time job for a handful of our most senior engineers, and resulted in a six month project before we were ready to put it through our QA testing. The long development time of the project was a large point of consideration, but there were also financial implications that we had to consider.

The extension program was great for customers, but good/bad for Backblaze. Why? By allowing folks to sign up for an extension we were essentially delaying their price increase, therefore delaying our ability to collect the additional revenue. While that was not ideal, the extension program brought in additional revenue from people purchasing those extensions, which was good. However, since those purchases were for credits, that additional revenue was deferred, and we still had to provide the service. So, while good from a cash flow perspective (we moved up about $2M in cash), we had to be very careful about how we accounted for and earmarked that money.

Continuing to Provide Value

Extensions were only part of the puzzle. We didn’t want customers to feel like we were simply raising prices to line our pockets. Our goal is to continue making backup easy and affordable, and we wanted to show our fans that we were still actively developing the service. The simplest way to show forward progress is to make…forward progress. We decided that before the announcement date we needed to have a product release that substantially improved the backup service, and that’s when we started to plan Backblaze Version 5.0, what we dubbed the Rapid Access Release.

Adding to the development time of creating extensions were the projects to speed up both the backup and restore functions of the Backblaze app (those changes were good for customers, but actually increased our cost of providing the service). In addition, customers could now preview, access, and share backed up files by leveraging our B2 Cloud Storage product. To top it off we strengthened our security by adding ToTP as a two-factor verification method. All those features were rolled up into the 5.0 release and were released a few weeks before we were set to announce our price increase, which was scheduled to be announced on August 22nd, 2017.

Oversharing

Another of our core values is open communication, which we equate to being as open as possible. If you have followed Backblaze over the years, you know that we’ve open sourced our storage pod design, shared our hard drive failure statistics, and have told entertaining stories about how we survived the Thailand drive crisis, and the time we were almost acquired. Most companies would never talk about topics like these, but we don’t shy away from hard conversations. In keeping with that tradition, we made the decision to be honest in our announcement about why we were raising prices (market costs and our own enhancements). We also made the decision to not mention one valid reason: inflation.

Our price back in 2008 was $5/month. With the inflation rate, in 2019 that would be around $5.96, so our price increase to $6 was right in-line with the inflation rate. So why not talk about it? We wanted the conversation to be about our business and the benefits that we’re providing for our customers in building a service that they feel is a good value. Bringing up global economics seemed like an odd tactic, considering that we weren’t even keeping up with inflation and ultimately customers got there on their own.

Disaster and Opportunity Strike

We started down the increase path in 2016. In 2017, we designed and released version 5.0, we built and tested our extension program, we lined up our blog post, we wrote up FAQs, and we created customer service emails to let people know what was happening. After all that, we were ready to announce the following month’s price increase at 10am Pacific Time on August 22nd, 2017.

On August 22nd, at 8am, we pulled the plug and cancelled the announcement.

What Happened?

Early that morning news broke that our main competitor, Crashplan, was leaving the consumer backup space. You may be saying: Wait a minute, a main competitor is leaving the market and you have a mechanism to increase your prices in place — that sounds like the perfect day to raise prices! Nope. Another one of our values, is to be fair and good. Raising prices on a day when consumers found out that there were fewer choices in the market felt predatory and ultimately gross. Once we saw the news, we got in a room, quickly decided that we couldn’t raise prices for at least 6 months, and instead we would write a quick blog post inviting orphaned customers to give us a try.

The year following Crashplan’s announcement we saw a huge increase in customers, which is simultaneously good and bad. It was good because of the increased revenue from our newfound customers, but less ideal from an operations perspective, as we were not anticipating an influx of customers. In fact, we were anticipating an increase in churn coinciding with our cancelled price increase announcement. That meant we had to scramble to deploy enough storage to house all of the new incoming data.

We wouldn’t revisit the price increase until a year after the Crashplan announcement.

That decision was not without financial repercussions. Put simply, we gave up $10 per customer per year. And, the decision affected not only our existing customers on August 22nd, but also all of those we would gain over the coming months and years. While this doesn’t factor in potential churn and other variables, when the size of our customer base is fully accounted for, the revenue left on the table was significant. In purely financial terms, raising prices on the day when the industry started having fewer options would have been the right financial decision, but not the right Backblaze decision.

Hindsight Is 20/20

Looking back, releasing version 5.0 earlier that month was a happy accident. What originally was intended to show forward progress to our existing customers was now being looked at by a lot of new customers and prospects as well. The speed increase that we built into the app as part of the release made it possible for people exiting Crashplan’s service to transition to us and get fully backed up more quickly. Because these were people who understood the importance of keeping a backup, having no downtime in their coverage was a huge benefit.

Picking Up Where We Left Off — The Price Increase

Around August of 2018, we decided that enough time had passed and we were comfortable dusting off our price increase playbook. The process proved harder than we thought as we uncovered edge-cases that we had missed the first time around — another happy accident.

The Problem With Long Development Gaps

The new plan was to announce the price increase in December and raise prices in January 2019. When we started unpacking our playbook and going over the plan, we realized that the simple decisions we had made over a year ago were either flawed or outdated. A good example of this was how we would treat two-year licenses. At one point in the original project spec, we decided that we were simply going to slide the renewal date by one year for anyone with a two-year license that purchased an extension, pushing their actual renewal date out a year. Upon thinking about it again, we realized this would cause a lot of customer issues and had to re-do the entire plan for two-year customers, a large part of our install base.

While we did have project sheets and spec documents, we also realized that we had lost a lot of the in the moment knowledge that comes in project development. We found ourselves constantly saying things like, “why did we make this choice,” and “are we sure that’s what we meant here?” The long gap between the original project start date and the day we picked it back up meant that the ramp-up time for the extension program was a lot longer than we expected. We realized that we wouldn’t be able to announce the price increase in December, with prices going up at the start of the year: we needed more time, both to QA the extension program and create version 6.0.

Version 6.0

Part of the original playbook was to provide value for customers by releasing version 5.0, and we wanted to stick to the original plan. We started thinking about what it would take to have another meaningful release and version 6.0, the Larger Longer Faster Better release was born.

First, we doubled the size of physical media restores, allowing people to get back more of their data more quickly and affordably (this was an oft-requested change, and one that is an example of a good-for-the-customer feature that incurs Backblaze extra costs). We leveraged B2 Cloud Storage again and built in functionality that would allow people to save their backed up data to B2, building off of the previous year’s preview and share capabilities. We made the service more efficient, increased backup speeds again, and also added network management tools. Looking past the Mac and PC apps, we also revamped our mobile offerings by refreshing our iOS and Android apps. All of that added development time again, and our new time table for the price increase was a February 2019 announcement, with the price increase going into effect in March.

Wait a Minute…

You might be saying, you released version 5.0 in a run-up to a price increase, then scrapped it, and then released version 6.0 in a run-up to a price increase. Does that mean that every new version number increase will be followed by a price increase? Absolutely not. The first five versions of Backblaze didn’t precipitate a price increase, and we’re already hard at work on version 7.0 with no planned price increases on the horizon.

Price Increase Announcement

We’ve all been subjected to price increases that were clandestine, then abruptly announced and put into effect the same day, or were not well explained. That never feels great and we really wanted to give customers one month of warning before the prices actually increased. That would give people time to buy the extensions that we worked so hard to build. Conversely, if people were on monthly licenses, or had a renewal date coming up after the price increase went into effect, it would give them an opportunity to cancel their service ahead of the increase. Of course we didn’t want anyone to leave, but realized that any change in our subscription plans would cause a stir and people who were more price-sensitive would likely have second thoughts about renewing.

Another goal was to be as communicative as possible. We wanted our customers to know exactly what we were doing, why we were doing it, and we didn’t want anyone to fall through the cracks of not knowing that this was happening. That meant writing a blog post, creating emails for all Personal Backup customers and Group administrators, and even briefing some members of the press and reviews sites who’d need to update their pricing tables. It might seem silly to pitch the press on a price increase (something that is usually a negative event), but we’ve had some wonderful relationships develop with journalists over the years and it felt like the right thing to do to let them know ahead of time.

Once all of those things were in back in place, it was time to press go, this time for real. The price increase was announced on February 12th and went into effect March 12th.

The Reaction & Churn Analysis

Customer Reaction — Plan for the Worst, Hope for the Best

We didn’t expect the response to be positive. Planning is great, but you never know exactly what’s going to happen until it’s actually happening. We were ready with support responses, FAQs, and a communications plan in case the response was overwhelmingly negative, but were lucky and that didn’t turn out to be the case.

Customers wrote to us and said, finally. Some people went out of their way to express how relieved they were that we were finally going to raise prices, concerned that we had been burning cash over the years. Other sentiments made it clear that we communicated the necessity for the increase and priced it correctly, saying that a $1 increase after 12 years is more than fair.

When the press picked up the story, they had similar sentiments. Yes, it was news that Backblaze was increasing prices, but the reports were positive and very fair. One of the press members that we sent the news to early responded with: “Seems reasonable…”

There were of course some people who were angry and annoyed, and while some of our customers did come to our defense, we did see an increase in churn.

Churn Rate Analysis

Over the next few months we monitored churn carefully to see the true impact on our existing customers from the price increase.

Every time a person leaves Backblaze we send one final email thanking them for their time with us, wishing them well, and asking if they have any feedback. Those emails go directly into our ticketing system where I read all of them every month to get a picture of why people are leaving Backblaze. Sometimes they are reasons we cannot address, but if we can, they go on our roadmap. After the price increase we’ve seen about a 30 percent increase in people saying that they are leaving for billing reasons. It makes sense that more people are citing the price increase as they leave Backblaze, but we’ve had a lot of positive feedback as well from the issues we addressed in versions 5.0 and 6.0.

What about the people who didn’t necessarily write back to our email? We dove deep into the analytics and found that our typical consumer backup service churn rate six months before announcing the price increase was about 5.38 percent. The six months after announcement saw a churn rate of 5.75 percent, which indicates an increase in churn of about 7 percent. In our estimates we anticipated that number being a bit higher for the first year and then coming back down to historical averages after the bulk of our customers had their first renewal at the new price.

Annualized churn rate
Increase in churn of about 7 percent from Jan 2018 to July 2019

New Customer Acquisition

People leaving the service after you increase prices is only half of the equation. The other half lies in your new customer acquisition. Due to the market having competition, raising prices can cause prospective customers to look elsewhere when comparing products. This number was a bit hard for us to calculate since the year prior our biggest competitor for our consumer service went out of business. The best comparable we had was to look at 2017 versus. 2019. We went back to 2017 to look at the historical data and found that even with the increase, and six months afterwards, two year growth rate of our Personal Backup service was a healthy 42 percent.

Lessons Learned From Raising Prices

We learned a lot during this whole process. One of the most important lessons is treating your customers well and not taking them for granted. At the outset we’d sometimes say things like, “it’s only a dollar, who is going to care,” and we’d quickly nip those remarks in the bud and take the process seriously. A dollar may not seem like much, but to a lot of people and our global customers, it was an increase that they felt and that was evidenced in the churn going up by 7 percent.

Some might think, well a 7 percent increase in churn isn’t so bad, you could have raised prices even more, but that’s the wrong lesson to take away. Any changes to the plan we had in place could have yielded very different results.

Extensions

The extension program was a hit for our existing customers and a welcome option for many. Taking the time to build it resulted in over 30,000 Backblaze Personal Backup accounts buying extensions, which resulted in about $1.8M in revenue. There is a flip-side to this. If those 30,000 accounts had simply renewed at the increased price, we would have made $2.2M, resulting in $366,000 of lost revenue. But that’s only if you assume that all of those customers would have renewed. Some may have churned, and by buying an extension they signaled to us that they were willing to stay with us, even after the price increase goes into effect for them.

Being Engaged Helps

Having a good foundation of community and an open dialog with your customers is helpful. When we made the announcement, we weren’t met with the anger that we were somewhat anticipating. In large part this was due to our customers trusting us, and knowing that this was not something we were doing because we simply wanted to make a few extra bucks.

When your community trusts you, they are willing to hear you out even when the news is not great. Build a good rapport with your customers and it will hopefully buy you the benefit of the doubt once or twice, but be careful not to abuse that privilege.

Over-Sharing Helps

Similar to having a good community relationship, explaining the why of what is happening helps educate customers and continues to strengthen your connection with them. When I was on reddit and in the blog post comments discussing the price increase, the people on reddit and on our blog who have grown accustomed to our answering questions were comfortable asking some pretty hard ones, and appreciated when we would respond with thoughtful and long-form answers. I cannot stress enough how much we enjoy the conversations we have on these platforms. We learn a lot about who is using Backblaze, what their pain points are, and if there’s something we can do to help them. These conversations really do affect how we create and consider our product roadmap.

Final Thoughts on Raising Prices

Rarely does anyone want to increase their prices — especially when it affects customers who have been with them for a decade. Many companies don’t want to discuss their decision making process or playbooks, but there are a lot of organizations that face the need to raise prices. Unfortunately, there are few resources to help them thread the needle between something they have to do, and something that their current and future customers will understand and accept.

I wanted to share our journey through our price increase process in hopes that people find it both informative and interesting. Thinking about your customers first may sound like a trope, but if you spend the time to really sit back and consider their reactions and what you can do as a way to thank your existing customers or clients, you can be successful, or at the very least mitigate some of the downside.

If you’ve ever raised prices at your company, or have examples of companies that have done a great job (or a bad job), we’d love to hear those examples in the comments below!

The post Raising Prices is Hard appeared first on Backblaze Blog | Cloud Storage & Cloud Backup.

Creating Great Content Marketing

Post Syndicated from Roderick Bauer original https://www.backblaze.com/blog/creating-great-content-marketing/

In Cinema | Coming Soon: Content Marketing

Once the hot new marketing strategy, content marketing has lost some of its luster. If you follow marketing newsletters and blogs, you’ve likely even seen the claim that content marketing is dead. Some say it’s no longer effective because consumers are oversaturated with content. Others feel that much of content marketing is too broad a strategy and it’s more effective to target those who can directly affect the behavior of others using influencer marketing. Still others think that the hoopla over content marketing is over and money is better spent on keyword purchases, social media, SEO, and other techniques to direct customers into the top of the marketing funnel.

Backblaze has had its own journey of discovery in figuring out which kind of marketing would help it grow from a small backup and cloud storage business to a serious competitor to Amazon, Google, and Microsoft and other storage and cloud companies. Backblaze’s story provides a useful example of how a company came to content marketing after rejecting or not finding success using a number of other marketing approaches. Content marketing worked for Backblaze in large part due to the culture of the company, which will reinforce our argument a little bit later that content marketing is a lot about your company culture. But first things first: what exactly is content marketing?

What is Content Marketing?

Content marketing is the practice of creating, publishing, and sharing content with the goal of building the reputation and visibility of your brand.

The goal of content marketing is to get customers to come to you by providing them with something they need or enjoy. Once you have their attention, you can promote (overtly or covertly) whatever it is you wish to sell to them.

Conceptually, content marketing is similar to running a movie theatre. The movie gets people into the theatre where they can be sold soft drinks, popcorn, Mike & Ikes and Raisinets, which is how theatre owners make most of their money, not from ticket sales. Now you know why movie theatre snacks and drinks are so expensive; they have to cover the cost of the loss leader, the movie itself, as well as give the owner some profit.

Movie theatre concession stand
The movie gets the audience in the theater, but the theater owner’s profit comes from the popcorn.
Movie theatre snack concession. Image from Wikipedia.

The Growth of Content Marketing

Marketing in recent years has increasingly become a game of metrics. Marketers today have access to a wealth of data about customer and marketing behavior and an ever growing number of apps and tools to quantify and interpret that data. We have all this data because marketing has become largely an online game and it’s fairly easy to collect behavioral data when users interact with websites, emails, webinars, videos, and podcasts. Metrics existed before for conventional mail campaigns and the like, and focus groups provided some confirmation of what marketers guessed was true, but it was generally a matter of manually counting heads, responses, and sales. Now that we’re online, just adding snippets of code to websites, apps, and emails can provide a wealth of information about consumers’ behavior. Conversion, funnel, nurturing, and keyword ranking are in the daily lexicon of marketers who look to numbers to demystify consumer behavior and justify the funding of their programs.

A trend contrary to marketing metrics grew in importance alongside the metrics binge and that trend is modern content marketing. While modern content marketing takes advantage of the immediacy and delivery vehicles of the internet, content marketing itself is as old as any marketing technique. It isn’t close to being the world’s oldest profession, but it does go back to the first attempts by humans to lure consumers to products and services with a better or more polished pitch than the next guy.

Benjamin Franklin used his annual Poor Richard’s Almanack as early as 1732 to promote his printing business and made sure readers knew where his printing shop was located. Farming equipment manufacturer John Deere put out the first issue of The Furrow in 1895. Today it has a circulation of 1.5 million in 40 countries and 12 different languages.

Benjamin Franklin’s Poor Richard’s Almanac from 1739
Benjamin Franklin’s Poor Richard’s Almanac from 1739
Ben’s conversion pitch -- The location of his printing office “near the Market”
Ben’s conversion pitch — The location of his printing office “near the Market”

John Deere's The Furrow, started in 1895
John Deere’s The Furrow, started in 1895

One might argue that long before these examples, stained glass windows in medieval cathedrals were another example of content marketing. They presented stories that entertained and educated and were an enticement to bring people to services.

Much later, the arrival of the internet and the web, and along with them, fast and easy content creation and easy consumer targeting, fueled the rapid growth of content marketing. We now have many more types of media beyond print suitable for content marketing, including social media, blogs, video, photos, podcasts and the like, which enabled content marketing to gain even more power and importance.

What’s the Problem With So Much Content Marketing?

If content marketing is so great, why are we hearing so many statements about content marketing being dead? My view is that content marketing isn’t any more dead now than in was in Benjamin Franklin’s time, and people aren’t going to stop buying popcorn at movie theaters. The problem is that there is so much content marketing that doesn’t reach its potential because it is empty and meaningless.

Unfortunately, too many people who are running content marketing programs have the same mindset as the people running poor metrics marketing programs. They look at what’s worked in the past for themselves or others and assume that repeating an earlier campaign will be as successful as the original. The approach that’s deadly for content marketing is to think that since a little is good, more must be better, and more of the very same thing.

When content marketing isn’t working, it’s usually not the marketing vehicle that’s to blame, it’s the content itself. Hollywood produces some great and creative content that gets people into theaters, but it also produces a lot of formulaic, repetitive garbage that falls flat. If a content marketing campaign is just following a formula and counting on repeating a past success, no amount of obscure performance metric optimization is going to make the content itself any better. That applies just as much to marketing technology products as it does to marketing Hollywood movies.

When content marketing isn’t working, it’s usually not the marketing vehicle that’s to blame, it’s the content itself.

The screenwriter William Goldman (Butch Cassidy and the Sundance Kid, All the President’s Men, Marathon Man, The Princess Bride) once famously said, “In Hollywood, no one knows anything.” He meant that no matter how much experience a producer or studio might have, it’s hard to predict what’s going to resonate with an audience because what always resonates is what is fresh and authentic, which are the hardest qualities to judge in any content and eludes simple formulas. Movie remakes sometimes work, but more often they fail to capture something that audiences responded to in the original: a fresh concept, great performances by engaged actors, an inspired director, and a great script. Just reproducing the elements in a previous success doesn’t guarantee success. The experience in the new version has to capture the magic in the original that appealed to the audience.

The Dissatisfaction With So Much Content

A lot of content just dangles an attractive hook to entice content consumers to click, and that’s all it does. Anyone can post a cute animal video or a suggestive or revealing photo, but it doesn’t do anything to help your audience understand who you are or help solve their problems.

Unfortunately for media consumers, clickbait works in simply getting users to click, which is the reason it hasn’t disappeared. As long as people click on the enticing image, celebrity reference, or promised secret revelation, we’ll have to suffer with clickbait. Even worse, clickbait is often used to tip the scales of value from the reader, where it belongs, to the publisher. Many viral tests, quizzes and celebrity slideshows plant advertising cookies that benefit the publisher by increasing the cost and perceived value of advertising on their site, leaving the consumer feeling that they’ve been used, which of course is exactly what has happened.

Another, and I think more important reason that content marketing isn’t succeeding for many is not that it’s not interesting or even useful, but that the content isn’t connected in a meaningful way with the content publisher. Just posting memes, how-tos, thought pieces, and stories unrelated to who you are as a business, or not reflecting who your employees are and the values you hold as a company, doesn’t do anything to connect your visitors to you. Empty content is like empty calories in junk food; it doesn’t nourish and strengthen the relationship you should be building with your audience.

Is SEO the Enemy?

SEO is not the enemy, but focusing on only some superficial SEO tactics above other approaches is not going to create a long term bond with your visitors. Keyword stuffing and optimization can damage the user experience if the user feels manipulated. Google might still bring people to your content as a result of these techniques, but it’s a hollow relationship that has no staying power. When you create quality content that your audience will like and will recommend to others, you produce backlinks and social signals what will improve your search rankings, which is the way to win in SEO.

Despite all the supposed secret formulas and tricks to get high search engine ranking, the real secret is that Google loves quality content and will reward it, so that’s the smart SEO strategy to follow.

What is Good Content Marketing?

Similar to coming up with an idea for the next movie blockbuster to get people into theaters, content marketing is about creating good and useful content that entertains, educates, creates interest, or is useful in some way. It works best when it is the kind of content that people want to share with others. The viral effect will compound the audience you earn. That’s why content marketing has really taken off in the age of social media. Word-of-mouth and good write-ups have always propelled good content, but they are nothing compared to the effect viral online sharing can have on a good blog post, video, photograph, meme or other content.

How do you create this great content? We’re going to cover three steps that will take you from ho-hum content marketing to good and possibly even great content marketing. If you follow these three steps, you’ll be ahead of 90 percent of the businesses out there that are trying to crack the how-to of content marketing.

First — Start with Why You Do What You Do

Simon Sinek in his book, Start with Why, and in his presentations, especially his TED Talk, How Great Leaders Inspire Action, argues that people don’t base their purchasing decisions primarily on what a company does, but on why they do it. This might be hard to envision for some products, like toothpaste or laundry detergent, but I think it does apply to every purchase we make, even if in some cases it’s to a small degree. For some things it’s much more apparent. People identify with iOS or Android, Ford or Chevy, Ducati or Suzuki, based on much more than practical considerations of price, effectiveness, and other qualities. People want to use products and services that bolster their image of who they are, or who they want to be. Some companies are great at using this desire (Apple, BMW, Nike, Sephora, Ikea, Whole Foods, REI) and have a distinct identity that is the foundation for every message they put out.

Golden Circle: Why? How? What?
From Simon Sinek, Start With Why

To communicate the why of your products and services, you can’t just put out generic content that works for anyone. You have to produce content that shows specifically who you are. The best content marketing is cultural. The content you deliver tells your audience what kind of company you are, what your values are, who are the people in the company, and why they work there and do the things they do. That means you must be authentic and transparent. That takes courage, and isn’t easy, which is why so few companies are good at it. It takes vision, leadership, and a constant reminder from company leaders of what you’re doing and why it matters.

Unfortunately, this is hard to maintain as companies grow. The organizations that have grown dramatically and yet successfully maintained the core company values have either had a charismatic leader who represented and reiterated the company’s values at every opportunity (Apple), or have built them into every communication, event, and presentation by the company, no matter who is delivering them (Salesforce).

If your company isn’t good at this, don’t despair. These skills can be learned, so if your company needs to get better at understanding and communicating the why of who they are, there’s still hope that with some effort, it can still happen.

Second — Put Yourself in Your Customers’ Shoes

You not only need to understand yourself and your company and present yourself authentically, you have to really understand your customer — really, really understand your customer. That takes time, research, and empathy to walk a mile in their shoes. You need to visit your customers, spend a day fielding support calls or working customer service, go places, do things, and ask questions that you’ve never asked. Are they well off with cash to burn, or do they count every penny? Do they live for themselves, their parents, their children, their community, their church, their livelihood? How could your company help them solve their problems or make their lives better?

The best marketers have imagination and empathy. They, like novelists, playwrights, and poets, are able to imagine what it would be like to live like someone else. Some marketing organizations formalize this function by having one person who is assigned to represent the customers and always advocate for their interests. This can help prevent falling into the mindset of thinking of the customer only as a source of revenue or problems that have to be solved.

One common marketing technique is to create a persona or personas that represent your ideal customer(s). What is their age, sex, occupation? What are their interests, fears, etc.? This can help make sure that the customer is never just an unknown face or potential revenue source, but instead is a real person whom you need to be close to and understand as deeply as possible.

Once you’ve made the commitment to understand your customers, you’re ready to help solve their problems.

Third — Focus on Solving Your Customers’ Problems

Once you have your authentic voice down and you really know who your customer is and how they think, the third thing you need to do is focus on providing useful content. Useful content for your customers is content that solves a real problem they have. What’s causing them pain or what’s impeding them doing what they need or want to do? The customer may or may not know they have this pain. You might be creating a new need or desire for them by telling a story about how their life will be if they only had this thing, service, or experience. Help them dream of being on a riverboat in Europe, enjoying the pool in their backyard on a summer’s day, or showing off a new mobile phone to their friends at work.

By speaking to the needs of your customers, you’re helping them solve problems, but also forging a bond of trust and usefulness that will go forward in your relationship with them.

Mastering Blogging for Content Marketing

There are many ways to create and deliver content that is authentic and serves a need. Podcasts, Vlogs, events, publications, words, pictures, music, and videos all can be effective delivery vehicles for quality content. Let’s focus on one vehicle that can return exceptional results when done right, and that is blogging, which has worked well for Backblaze.

Backblaze didn’t just create a blog that then turned into an overnight success. Backblaze tried a number of marketing approaches that didn’t perform as the company hoped. The company wrote about these efforts on its blog, which is a major reason why the blog became a marketing success — it showed that the company was willing to talk about both its successes and its failures. You can read about some of these marketing adventures at As Seen on Ellen and How to Save Marketing Money by Being Nice. Forbes wrote about Backblaze’s marketing history in an article in 2013, One Startup Tried Every Marketing Ploy From ‘Ellen’ To Twitter: Here’s What Worked.

Blendtec on the Ellen Show

Backblaze on the Ellen Show

Backblaze billboard on Highway 101 in Silicon Valley, 2011

Backblaze billboard on Highway 101 in Silicon Valley

Backblaze decided early on that it would be as transparent as possible in its business practices. That meant that if there were no good reason not to release information, the company should release it, and the blog became the place where the company made that information public. Backblaze’s CEO Gleb Budman wrote about this commitment to transparency, and the results from it, in a blog post in 2017, The Decision on Transparency. An early example of this transparency is a 2010 post in which Backblaze analyzed why a proposed acquisition of the company failed, Backblaze online backup almost acquired — Breaking down the breakup. Companies rarely write about acquisitions that fall through.

Backblaze’s blog really took off in 2015 when the company decided to publish the statistics it had collected on the failure rate of hard drives in its data centers, Reliability Data Set For 41,000 Hard Drives Now Open Source. While many cloud companies routinely collected this kind of data, including Amazon, Google, and Microsoft, none had ever made it public. It turned out that readers were tremendously hungry for data on how hard drives performed, and Backblaze’s blog readership subsequently increased by hundreds of thousands of readers. Readers analyzed the drive failure data and debated which drives were the best for their own purposes. This was despite Backblaze’s disclaimer that how Backblaze used hard drives in its data centers didn’t really reflect how the drives would perform in other applications, including homes and businesses. Customers didn’t care. They were starved for the information and waited anxiously for the release of each new Drive Stats post.

It Turns Out That Blogging with Authenticity and Transparency is Rewarded

As Gilmore and Pine wrote in their book, Authenticity, “People increasingly see the world in terms of real and fake, and want to buy something real from someone genuine, not a fake from some phony.” How do you convince your customers that you’re real and genuine? The simple answer is to communicate honestly about who you are, which means sometimes telling them about your failures and mistakes and owning up to less than stellar performances by yourself or your company. Consider lifting the veil occasionally to reveal who you are. If you put the customer first, that shouldn’t be too hard even when you fall short. If your intentions are good, being transparent will almost always be rewarded with forgiveness and greater trust and loyalty from your customers.

Many companies created blogs thinking they had to because everyone else was and they started posting articles by their executives and product marketers going on about how great their products were. Then they were surprised when they got little traffic. These people didn’t get the message about how content should be used to help customers with their problems and build a relationship with them through authenticity and transparency.

If you have a blog, you could use that as a place to write about how you do business, the lessons you’ve learned, and yes, even the mistakes you’ve made. Don’t assume that all your company information needs to be protected. If at all possible, write about the tough issues and why you made the decisions you did. Your customers will respond because they don’t see that kind of frankness elsewhere and because they appreciate understanding the kind of company they’re paying for the product or service.

Your Blog Isn’t One Audience of Thousands or Millions, But Many Audiences of One

Don’t be afraid to write to a specific audience or group on your blog. You might have multiple audiences, but you might have specialized ones, as well. When you’re writing to an audience with specialized vocabulary or acronyms, don’t be afraid to use them. Other readers will recognize that the post is not for them and skip over it, or they’ll use it as an entry to a new area that interests them. If you try to make all your posts suitable for a homogeneous reader, you’ll end up with many readers leaving because you’re not speaking directly to them using their language.

If the piece is aimed at a novice or general audience, definitely take the time to explain unfamiliar concepts and spell out abbreviations and acronyms that might not be familiar to the reader. However, if the piece is aimed at a professional audience, you should avoid doing that because the reader might think that the post isn’t aimed at professionals and they could dismiss the post and the blog thinking it’s not suitable for them.

Strive to match the content, vocabulary, graphics, technical argot, and level of reading to the intended market segment. The goal is to make each reader feel that the piece was written specifically for him or her.

Taking Just OK Content Marketing and Making It Great

Authenticity, honesty, frankness, and sincerity are all qualities that to some degree or other are present in the best content. Unfortunately, marketers have the reputation for producing content that’s at the opposite end of the spectrum. Comedian George Burns could have been parodying a modern marketing course when he wrote, “To be a fine actor, you’ve got to be honest. And if you can fake that, you’ve got it made.”

There’s a reason that the recommendation to be authentic sounds like advice you’d get from your mom or dad about how to behave on your first date. We all learn sooner or later that if someone doesn’t like you for who you are, there’s no amount of faking being someone else that will make them like you for more than just a little while.

Be yourself, say something that really means something to you, and tell a story that connects with your audience and gives them some value. Those intangibles are hard to measure in metrics, but, when done well, might earn you an honest response, some respect, and perhaps a repeat visit.

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