This is a guest article by Karl Falconer. Karl is a software engineer with more than 10 years of experience who specializes in agile web development and web services integrations. He authors a software development blog at http://www.falconerdevelopment.com/.
There comes a time in a software developer’s career where they reach a crossroads and ask themselves, “What next? What should I do next to keep my edge?”
When I arrived at this crossroads, I did not feel challenged by the software projects I was working on and began seeking something new. After much internal debate, I made the decision to step out of my comfort zone and shift my from the hard skills of software development to include more soft skills like marketing, and business development, with the ultimate goal of starting a software company.
Throughout 2010, I studied the ins and outs of launching a product by reading books and blogs and talking with friends and colleagues. I paid particular attention to articles about failure, so I would not make the same mistakes with my own product. In midsummer of 2010, I began work on my first product, which would later become MicroMaximus.
MicroMaximus was born out of my own frustrations with my business checking accounts and the minimum number of monthly debit card transactions. After searching the web, I found there was no existing software product I could use to automate these transactions. I quickly realized there was a larger potential market with a different type of banking product called a Reward Checking Account (RCA).
RCA’s are special checking accounts that offer high-interest yields on a maximum balance if you are able to meet a set of monthly requirements. One such requirement was to use the RCA’s attached debit card a minimum number of times, typically 10-15 transactions. They were typically offered by community banks as a way to compete with larger national banks.
The business model was to offer consumers with RCA’s an alternative to meeting their monthly transaction requirements that could be scheduled for a small amount of money, $1. If MicroMaximus was able to generate revenue of $1,000/mo it would be a huge success in my eyes.
Since I already had an interest in Personal Finance, I was very familiar with many of the blogs around the topic, which is where I first learned of RCA’s years earlier. These blogs provided me a starting point in researching my product idea.
I set up a Google Alerts for terms relating to my product. The frequency of alerts showed me how “hot” this topic was, and allowed me to reach out to both bloggers and commenters about the product, most of whom provided very positive feedback.
I also found that the company, BancVue, which markets Reward Checking Accounts to banks was on the 2010 Inc 500 list with an impressive 2170% 3-year growth. Armed with what I believed was product validation, I set out to do what I do best, build software.
Lesson #1: Marketing Is More Than Just Making Customer Aware of Your Product
Like most of the advice I’ve read, building the product was the easy part. Marketing was the real challenge. Although I did set up a landing page to collect e-mails, in my rush to actually launch MicroMaximus the pre-launch landing page was only available for a few weeks prior to the launch.
After launching, I reached out to personal finance bloggers with the following message:
I am reaching out today because I think you and your readers would be interested in finding out about a service I’ve recently launched called MicroMaximus. It is specifically designed for reward checking account holders, or those who are interested in finding about reward checking accounts and maximizing their savings. I created it out of my interest and passion in personal finance and my experience and skill in programming and development. The website is www.micromaximus.com.
Here is a short blurb about MicroMaximus and its benefits:
MicroMaximus is the only online scheduling system that puts the power back in your hands. You can schedule your 10 debit card transactions for the month – eliminating the #1 account holder complaint – and ensure you get the highest return month after month. No long-term plan, no high fees, no hassle.
If your readers have reward checking accounts or are interested in personal finance, I think they will benefit from this. If you agree and would like more information, here are some ways we could work together:
- Review: I can send you whatever information you need to write a product review
- Guest blogging; I can provide you with a guest blog post
- Interview: I can provide you with an interview on MicroMaxiums and why it was created
If you are interested in these options or have any other ideas, please don’t hesitate to reach out. Thank you for your time and consideration in helping me spread the word about MicroMaximus. Please let me know what questions or comments you have and I look forward to hearing back from you.
I was optimistic this approach would provide MicroMaximus with exposure to its target market, however, the solicitations yielded no positive feedback. [Editor’s note: Approaching bloggers cold these days is not a viable marketing strategy.]
Next, I started with banner ads on six different sites, all with respectable amount of traffic and site rankings. The ad campaign ran for several months with only a few click-throughs, and even fewer sign ups.
Despite the poorly performing banner ads, I decided to continue my marketing efforts with afew sponsored blog posts. I made arrangements with several bloggers to use the software and write a review of MicroMaximus. Here are some of the reviews:
- Review from Buy Like Buffet
- Review from My Personal Finance Journey
- Review from My Journey to Millions
- Review from MoneyCone
The reviews were well received on their respective blogs and while this approach did help present the product to many targeted customers, and continues to have a positive impact on my SEO, this strategy did not result in many new customers. Simply put, MicroMaximus didn’t solve a problem many people were looking to have solved.
Lesson #2: Reduce External Dependencies
The business case of MicroMaximus has a few flaws that I was never able to overcome.
Although I never specifically targeted people without Reward Checking Accounts, I could see a demand from people who would like to use these accounts but were put off by the monthly transaction requirements. Even though I had people in this target market tell me that a service like MicroMaximus would be very useful, no one ever signed up. Opening a new checking account and transferring funds is not a simple task and could take several days to accomplish, so many people would never get past this part.
Even today, RCA accounts offer great interest rates when compared with alternative investments. RCA interest rates have been steadily declining over the past 3 years, however, driving some people to close their accounts. The business model of MicroMaximus depended on high interest rates that would entice consumers to opt for RCA’s over other types of liquid investments.
I pictured my market as moderate net-worth individuals who turned to RCA’s as an alternative to previous high-yield accounts like CD’s and online savings. It seems as though most of these people stayed away from RCA’s — most likely because of the monthly requirements.
Lesson #3: Create a Painfully Simple Value Proposition
I did my best to craft the value proposition in a clear, concise manner, however I think many people still struggled to see the connection of how using MicroMaximus (spending money) actually earned them more money.
It seems that no matter how the copy was written, most customers saw the value proposition as “I spend a dollar with you, and get nothing in return.” In reality, customers had no reason to trust that MicroMaximus was offering a legitimate service that would put money in their pocket.
I also made the mistake of assuming my customers would understand the service and see the value of MicroMaximus if only they were made aware of the product. What I didn’t consider was how difficult it would be to market a product that disrupts a customer’s current behavior of reaching their monthly requirements. It didn’t matter than MicroMaximus offered a more cost effective solution.
While the financial goals of MicroMaximus were not realized, the launch did succeed in providing me valuable experience, lessons that I believe will allow me to succeed in the future. I learned the importance of building strong relationships: personal, professional, online/offline, and customer relationships.
With this network in place, there are resources for mentorship, product feedback and motivation, all of which will keep you focused and on a better track to success. Even as a solo-founder I depend on other people to help me create a successful product.
Launching a startup is risky — being the first to create a niche product is a huge risk. In the future I intend to focus on mitigating that risk by allowing other businesses with capital to validate that a market exists for my software. Knowing who your competitors are will enable me to build off their success and further reduce my risk.
It is rare to hit a home run with your first product, and the greatest lesson I’ve taken away from MicroMaximus is to learn from the mistakes I made, and make another attempt at launching a startup.