Shoeboxed’s CEO on how to grow your web app even if it isn’t “viral”

In this interview with Taylor Mingos, CEO of Shoeboxed, we hear about their successful referral program. We talk about the importance of optimizing your referral program and how your viral co-efficient (the number of new users that are referred per customer) is a multiplier on your other efforts in marketing your SaaS app.

Logan: For those readers that don’t know about Shoeboxed, can you give us a brief explanation of what you do and what makes you awesome?

Taylor: We help small businesses track any paper records they need to keep to run their business. A few examples: Receipts from office supplies (anything from a computer to pens and paper) that are purchased, traveling that needs to be expensed, and meals that can be written off as a tax deduction. We even help people track charity donations. Basically, we provide an easy way to get all your business documents in one place so that come tax time you can maximize the deductions you are entitled to. This process also saves you a lot of time when you’re working with your accountant or bookkeeper. By giving them access to your Shoeboxed account, where everything is already scanned and organized for you, you can maximize your time with them and spend it talking about more important things, like planning for the future of your business. We’re also on the verge of releasing some great new expensing tools, like a mileage tracking feature for our mobile app. So we’re definitely looking to move beyond the small business bookkeeping space in places where we can provide value to our users.

Logan: So would you say that your customers are mostly small businesses?

Taylor: It’s a mixture of prosumers and small businesses. There’s consumer software, professional software, and prosumer software. We’re kind of in that middle space. So we’re used by a lot of small business owners, freelancers and contractors of all kinds. We’ve found that people in the small business space are individuals that like to have a great deal of customization options with the tools they use and also value the ability to be able pick up the phone and talk to a real person. People who take pride in their work don’t want to deal with corporate entities that don’t understand or care about their needs or wants, and we really take pride in going the extra mile for all of our users.

Logan: So, Shoeboxed seems to be doing quite well. Can you tell us a bit about why you’ve done so well, what tricks do you use to grow your customer base?

Taylor: There’s been a lot of stories over the last couple of years about companies like Dropbox that have great referral programs and we believe in this a lot. One of the most important things that we’ve been able to build is a great referral program that produces tons of qualified leads for us. Our referral program is something we’ve been optimizing for years and it’s served us well.

We’re constantly doing split-tests to determine the best way to incentivize people to tell their friends and family about Shoeboxed. Receipt and document scanning isn’t a topic that comes up very often in casual conversation, so we’re always asking ourselves how and where we can prompt our users to share the service with others.

We don’t necessarily have a social-media based invitation system, and we’ve moved away from gamification as well. The system we’ve settled on currently has seen a pretty big deal of success after a lot of time spent and a lot of optimizations made. Of course our end goal is to make sure that any time we bring on one new customer, they then bring, on average, a percentage of a new customer. So working on the pirate metrics of referrals - Maybe not making a totally viral product, but using the viral coefficient to make it so that you can spend more money to acquire customers, and that customers who you acquire also bring at least some of their friends/colleagues or their accountants and bookkeepers with them.

Logan: How important has the referral program been in your growth? Compared to for example, paid advertising or content marketing?

Taylor: Well, we are a startup. All I can say is that we don’t go nitty gritty into our numbers, but I can say higher level that the referral program is something we definitely are continuing to focus time on. It has a great ROI.

I think the only downside for a referral program is just the time we’ve had to spend trying a lot of things, experimenting with different calls to action, experimenting with different incentives, experimenting with different types of prompts, contact book imports versus people using Facebook widgets to invite friends and different things like that. For us a referral program is a no-brainer, the only concern is developer and marketing time for all of the optimizations.

I think if a company could come along and just allow you to skip that process and leapfrog all the experiments you have to run yourself, and start with much better defaults as a result of working with other similar products, then that would have made our referral program better, faster. I also think mobile presents some unique, different, needs for referral programs, and approaches that I think could be tried.

A referral program for us is something that enhances all of our marketing channels and allows us to spend more on an Adwords Ad because instead of bringing one person we are bringing let’s say 1.3 or 1.4 or 1.2. So our CPA cost is effectively a lot lower and we can spend more to get a click. It just enhances everything and I think if you do it in a great way, then the person that is inviting people feels like they are sharing something really cool with their friends. There’s something in it for them, and you’re doing it in a way and at a time that makes sense to them. People like getting a relevant and contextual motivation for something they might be interested in, and we have seen this in our results. For example, on average the conversion rate from one paid user to another one is about 16%, which I is pretty high for a business/utility app.

Logan: Right, So can you give me a bit of history of your referral program? When did Shoeboxed launch?

Taylor: We launched in early 2008 — that was the first site — and we probably started a referral program in 2009. We’ve tried a lot of different things. We’ve tried incentivizing people with credits, with Amazon gift cards, with T-shirts. We’ve also tried different calls to action and used a number of different products for contact book integrations. We’re just always looking for an appropriate and relevant way to reward users for inviting people that also ensures the new users find immediate value in the invite, and the service, as well. I’m sorry I can’t go into exact specifics, but we’ve found that there’s a lot of things you want to try as you discover what works best for your customer group.

One thing I can tell you is that giving people T-shirts is a really great incentive. It is perceived as a much better incentive than giving people cash or even giving people credit towards something. I think offering people a credit or cash or something like that just seems like you’re selling something to your friends, and you really want it to be kind of framed as you’re sharing something that you find really helpful with them to make their lives better too. This is something you both should be using.

Even though the monetary value might be a lot lower for something like a T-shirt, it’s also good for the brand’s marketing. We’ve found it’s a really good incentive and at one point  reached the point where we were sending out thousands of T-shirts a month. But in the end it was making sense for us, so that was cool. And we try a lot of things like that. We’re constantly trying different email subject lines, experimenting with where we ask for the referral, when we give the prompt for the referral – seemingly little things make a big difference, it just takes a lot of time to figure them out.

Logan: So what made you guys decide to launch a referral program? Did you guys just see Dropbox and then start thinking about it? Could you walk me through the thought process of why you invested time in trying a referral program?

Taylor: I think for many people acquiring users is one of the most difficult parts of getting a business off the ground. I think when you’ve acquired one user — and gone through something, whether it’s marketing effort or not, or you’ve bought a lot of clicks, or whatever to get a user — you’ve done a lot of work to get that user. It’s typically a lot easier for a full new customer to get an existing customer to refer them.

There’s a fixed cost for acquiring a customer and then if they can also spread the word then it’s a multiplier. If you look at viral loops and viral coefficients and study how often someone refers a friend, but also what the time is between someone signing up and someone referring a friend, there’s a monumental growth opportunity. Maybe a product can’t go totally viral, but you can definitely have it enhance everything else you are doing from a marketing perspective, and we decided to do this early on.

Logan: So basically the theory is that it could be huge for you, or it could be small for you, but chances are it’s going to boost your other marketing efforts.

Taylor: Well I think it’s a no-brainer. It’s like a lot of other online marketing options, you can cut it off if it’s not working for you at anytime and I think it’s pretty easy to measure. I’m not saying a referral program is for everybody.

The interesting thing is that we thought it probably shouldn’t be something we focus on as much because we aren’t really a mainstream consumer app. We weren’t something that, more traditionally, goes viral, but we were surprised. We’re a very data-driven company and we were surprised to see some promising numbers there at the beginning that were worth investing more time in.

I would encourage people that are thinking about doing a referral program to try using some of the great tools out there to track metrics, figure out if it’s working, figure out if it moves the needle for you and then, if it does, try and eliminate the number of testing loops before you get something where you really want it to be.

Logan: So it sounds like a referral program has been really good for you guys. I think we should wrap up here. Can you just tell me a little bit about where you guys are going next? What’s new? What’s coming up for Shoeboxed?

Taylor: Well, actually a number of things; We currently have a new version of our mobile app (iPhone & Android) that we’re releasing this week. The new app more than doubles the functionality of our current mobile app and we’re thrilled about it. And we’ll be continuing to roll out more mobile features in the near future as well.

We’re also releasing more collaboration features, which are going to be great. From a referral standpoint, this will just people one more reason to want to share, invite, and use Shoeboxed with friends. There’s going to be a lot more collaboration, and we’re excited to begin experimenting with it.

Another big priority on the horizon is finding a referral program for our mobile app and that’s something we’re evaluating versus other priorities. We would really like to find some existing solutions on the market just because we know how long we spent trying things out in the web app. Anything that can help us move this process forward faster would be great!