Learn from experts, then acquire newbies
Transitioning from private beta to public launch requires a change in acquisition tactics
Most SaaS and FinTech companies nowadays go through a private beta. Private betas limit the number of early adopters testing out a new product and help to ensure you build the right product to solve your user’s problems, reach a sustainable level of product quality, and start to build some chatter about what you’re cooking up.
Private betas are the beginning of your user acquisition strategy; you’ve gotta get real people into your product, and going from zero users to 10 to 100 to 1000 is pretty darn difficult.
Today, I’m going to outline how your user acquisition strategy should shift through your product lifecycle – starting with experts in your private beta and moving onto newbies in your public launch and beyond.
In advance, I want to highlight three companies I’ll use as examples throughout this piece; all of them are in either private beta or early into their public release:
Vowel: Video collaboration tool. Competitors include Zoom, Google Meet, and Microsoft Teams.
Wethos: Helping creative independents run their business. Competitors include Honeybook, Dubsado, and Bonsai.
Note: I work as a Strategic Advisor at Wethos.
Hank: Helping seniors age independently in the comfort of their home. Competitors are nursing homes, assisted living facilities, and isolated applications such as Uber, Meals on Wheels, or Handy.
^^^ For clarity, I’ll refer to them as “The Mighty Three” moving forward ^^^
And with that, let’s dive into it.
Experts are best for your private beta
When building your initial MVP, bringing experts into your private beta is the best way to go.
What is an expert? Someone who – if your product was developed 5-10 years ago – would’ve been using it then. They’re currently using competitors’ tools or they have (even better) duct-taped their own solution together.
For The Mighty Three, here are some potential experts:
Vowel’s Expert: Has been using video tools as a primary source of collaboration for 3-5 years. Think fully-remote organizations (pre-pandemic), journalists, and tutors.
Wethos's Expert: Has been running an independent creative studio for 5+ years. Think people who freelanced right out of high school / college, transitioned from full-time employment to running their own business, or are working solo but want to start hiring teammates.
Hank’s Expert: Has been relying on multiple forms of senior care. Think of seniors who are in assisted-living facilities, have at-home care, or the caregivers themselves.
With each of these examples, experts have already evaluated and/or used competitive tools for years – that’s very important, as they’ll be able to speak to the shortcomings of existing solutions. Which brings me to my first point…
[1] Experts have gone through the full customer lifecycle
The best thing about experts is they’ve experienced the full customer lifecycle, and thus know all the problems that will pop up over time. User needs, stresses, and successes change over time – you need to know how these shift throughout the entire user journey.
During your private beta, here are the main ideas you should learn from experts – both when they initially started looking for solutions and now that they’re 3-5 years in. This list comes from Matt Lerner, who talks about how to use this info in marketing segmentation; I’d argue that the same information should inform product development:
Stresses & pain points they’ve experienced
Where did they look for solutions
How have current solutions come up short
How do they describe success
What are they nervous about
[2] Experts have peers to recommend, helping with initial recruitment and word-of-mouth
Recruitment for private betas is tough; in the early stages of your product adoption lifecycle, you need to fill your product with innovators and early adopters that are tech enthusiasts. This only makes up between 10-15% of the total market.
As a result, you need external voices out there recruiting for you; that’s where the existing experts in your private beta come to the rescue. Users who have been in their field for 5+ years have a community around them of like-minded people that they can invite.
Plus, the best thing about early recruitment is that private beta members are setting expectations with new users coming in. New beta members will know the product is still in its infancy, they understand that there are bugs being ironed out, and they are committed to being a trusted partner that makes recommendations to help build out the full feature set.
The lifecycle of your private beta
I just wanted to drop a quick note about when to end your private beta and what comes next.
The end of your private beta should mark a transition from minimum viable product (MVP) to minimum lovable product (MLP). A typical company lifecycle up to and including your private beta looks like this:
Identify a problem worth solving
Validate problem by conducting user research
Build a minimum viable product (MVP)
Recruit beta members (experts)
Analyze user behavior
Conduct user research again (should be continuous and on-going by now)
Finalize MVP
Start building minimum lovable product (MLP) ← time to move out of private beta!
Acquire newbies
For more on minimum lovable products, take a look at this article by Lauren McCahill. If you’re post-private beta and struggling to gain traction, read about Crossing the Chasm.
Post-beta life: newbies are your sole user acquisition target
Alright, we’ve moved from private beta to building out your MLP. This means you’ve torn down your waitlist and you’re actively trying to get as many users on the platform as possible. How do we get there?
Well, you target newbies!
What is a newbie? Someone who recently identified they have a problem and they’re actively searching for a solution. They’re in a need state.
For the companies I listed previously, here’s how I would define a newbie:
Vowel’s Newbie: Needs to start collaborating with people in other locations.
Wethos's Newbie: Needs guidance on how to start freelancing or how to scale into a multi-person creative studio.
Hank’s Newbie: Needs their first form of senior care.
I’m going to argue that ALL of your user acquisition strategies post-beta should prioritize newbies. Here’s why…
[1] Path of Least Resistance
In my opinion, newbies have the lowest amount of friction when it comes to acquisition:
They’re in the evaluation process and actively seeking a solution.
You’re less likely to face cognitive dissonance, as they haven’t chosen a solution yet (and thus you don’t need to convince them that yours is better than their existing choice).
When it comes to product adoption, I’m always looking to reduce friction – and going after newbies in user acquisition is the best option.
[2] Competitors build a defensive moat
When it comes to companies playing defense, there are four ways they prevent you from stealing their customers: embed, brand, scale, and network effects. NFX’s James Currier does a great job laying out all these defensive tactics here.
I’m going to highlight two of these specifically: network effects and embedding.
Network effects: The more someone uses your product – or the more total people on a product – the more valuable it becomes. Examples include: inviting teammates into Slack, more drivers on Waze, or building connections on LinkedIn.
Embedding: A product has become integral to a customer’s operations, and switching from the product would be incredibly disruptive. Examples include workday, salesforce, or products incorporate a lot of integrations.
We can just avoid these moats altogether by… well… just not encountering them at all. I’m all for taking the easy way out.
[3] Transitioning customers from your competitors impacts your product development roadmap
For many SaaS and FinTech products, having customers transition from your competitors means building out a whole slew of product solutions.
With The Mighty Three, here’s how trying to get users to transition from an existing solution might impact your product roadmap:
Vowel would have customers request the ability to transfer existing video recordings.
Wethos would have customers request transferring in their existing business transactions, CRM data, or proposals.
Hank would have customers request existing caretakers have account access or partnering up with existing providers.
All of this impacts your product development roadmap, extending an already-way-too-long to-do list.
[4] Huge opportunity for user acquisition and LTV
Pretty much any company has a huge acquisition opportunity when it comes to newbies.
If I had to choose just one newbie segment for each of the companies I referenced, here’s the opportunity in the United States alone:
Vowel: Every day, 1,700 people start a small business.
Wethos: Every day, 5,000 people start freelancing.
Hank: Every day, 10,000 people become senior citizens (age 65).
And by embedding yourself early into a customer’s lifecycle you have massive potential to grow customer lifetime value. Trying to win business from your competitors has the opposite impact on metrics – it has a higher CAC (resulting in less acquisition as a whole, since you only have so much $$$ to spend on marketing) and a lower long-term LTV.
Don’t forget: newbies are still part of your user research and drive your marketing efforts
User research should be happening constantly; by prioritizing experts in the Private Beta, you’ve disregarded the newbies’ opinions up until this point. Your storytelling and marketing messaging needs to resonate with them if they’re going to be your sole focus in user acquisition.
Matt Lerner points out that you should interview new users after acquisition to understand:
What they were hoping to do
Why that is important to them
Where they looked for solutions
What else did they try
This, in conjunction with your previous research, allows you to:
Play up stresses and pain-points in ads
Focus user acquisition efforts on where they’re searching for solutions
Position against short-comings of your competitors
Write great website copy
Address objections
You’ve still got plenty to learn from the newbies; don’t ignore them. They’re just not your starting point.
Putting it all together
Now that we’ve outlined how to go from private beta to public launch, let’s summarize how The Mighty Three can undertake this journey:
Vowel:
Private beta consists of experts who have been using video tools as a primary source of collaboration for 3-5 years (fully-remote organizations, journalists, tutors).
Public launch targets newbies who need to start collaborating with people in other locations.
Wethos:
Private beta consists of experts who have been running an independent creative studio for 5+ years (always freelanced, transitioned from full-time employment, want to team up).
Public launch targets newbies who need guidance on how to start freelancing or how to scale into a multi-person creative studio.
Hank:
Private beta consists of experts who have been relying on multiple forms of senior care (assisted living, at-home care, caregivers themselves).
Public launch targets newbies who need their first form of senior care
By utilizing experts in your private beta, you ensure you’ve built the right MVP and understand an entire customer lifecycle.
By targeting newbies in your public launch onwards, you avoid acquisition friction, you keep your product roadmap lean, and you have a huge opportunity to grow customer LTV.
-Zac
PS. Let’s talk about The Mighty Three
I fully endorse Vowel and Wethos; they’re two products I’ve had extensive experience with (and a company I work for directly). I’ve also heard fantastic reviews above Hank, but I have not yet been a customer.