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Ask HN: Should I focus on getting API customers or direct customers?
I started SnailPad (www.snailpad.com) sort of as a joke about 3 months ago. Now I've got a decent number of direct customers and a few API customers using the service. The volume has helped me justify (and pay for) some pretty badass hardware that I've hacked together to automate most of the process.
I've learned that API customers tend to give me more volume with less margins but require a pretty long sales cycle (it takes time to convince them, have them try the API, receive a few samples, bite the bullet, etc).
I've learned that direct customers are lower volume with (much, much) higher margins and, generally speaking, are pretty quick to get onboarded.
At this point, it's still just me doing the coding, bizdev, mailing, etc (read: everything) and I'm having a hard time trying to figure which of those customer types is "better" way for me to continue organically growing the business.
What would you do?
- bensummers 17y agoHave you done the sums? Factoring in sales volume, your time (dev + support), marketing costs, growth curve, etc? Numbers always beat guesses. See anything patio11 writes. :-)
- paulsingh 17y agoYep, I spent an hour or two creating a nice little spreadsheet that helped me justify the additional hardware expenses, etc. I make it a point to revisit it at the beginning of every month to make sure I know how I'm doing.
- wakeupthedawn 17y agoYou're charging $3 per stamp w/o a plan and at best $1 per stamp with the intro plan?! Wow! It's cool that you're able to attract customers at those margins. I'm a bit confused as to why your API customers are given better rates (I assume this is why you have lower margins with them). Why not use the regular rates and give an API key to every customer who wants one?
- paulsingh 17y agoWell, everyone does actually get the API key and is able to use it anytime they like -- I really need to do a better job of explaining the product, features, etc on the site. :) For the API customers, I've ended up haggling deals with them to get them on board. In general, I give those guys the ability to prepay in larger amounts to get a better per-piece rate or postpay for "higher" rates (believe it or not, most of the higher volume API-only users prefer to postpay because it improves their cash flow situation).
- patio11 17y agoYou have far, far more intestinal fortitude than I do to go into that business. (It involves marginal work and low margins. Yikes -- software sounds so much better.) I'd say "both". My reasoning is that you can use the B2C customers as the kindling to light the B2B fire -- they're cheap, easy to service, and numerous. Get them to do your marketing for you. (You can use your existing technology to quickly roll out linkbait mini-projects: web form + visual design + PDFification + a letter physically delivered to grandma = instant remarkable content. You can launch one of these a week: Send A Solider A Valentine, for example. That is probably a little late but you get the general tenor of the sort of emotional buttons I'd suggest you push.) This gives you something to do while waiting for the phone to ring on the B2B deals, and will help you with SEO. Why focus on B2B over the long term? Well, it allows you to have much more predictable revenue, and having a lifetime customer value which could buy a pizza is very helpful once you start think of incremental-cost marketing options like, say, AdWords. Mind if I give you the same advice I gave cperciva? Thirty minutes on that home page will double your sales. Heck, if you're in a hurry, you can do it in two: put a BIG OBVIOUS BUTTON on it. I don't know, 10 kilopixels of big. Maybe bigger. If you have graphical talent, something I lack, I'd collapse the entire sales pitch into an illustrated: 1) Put in address 2) Type letter (We take PDFs, too!) 3) Pay money and it gets mailed I'd put the API & login links in the top corner and the bottom of your textual description, or somewhere similarly discrete. (The audience for those is very different than the audience who you want converting within 90 seconds of landing on your site.)
- paulsingh 17y agoAwesome, awesome advice -- I'll start messing around with the external pages and see what I can do. I've been meaning to do this for a while and have always found excuses to work on other stuff. :) I should also mention that my target market is no longer the person that wants to send a letter to grandma every few months -- I haven't found a real demand for that service. That being said, I have found that my ideal direct customer is a real estate agent, car salesman, insurance salesman or anyone else that does face-to-face selling to their local geographic market. These guys already mail out ~1K pieces of mail every month and they have to manually do it all because the bigger print shops really can't afford to help them unless they were doing tens of thousands each month. I think that's where the sweet spot is for SnailPad -- we're making direct mail painless for small businesses, freelancers and "high touch" sales people. The margins are so "good" on this side of the business because these customers want good paper and nice envelopes -- they can't get that anywhere else unless they go to large print houses, commit to yearly contracts and prepay tens of thousands of dollars each month. On the API side, the "ideal" customer is primarily some company that sends a ton of invoices or other automated documents to their user base (or to their user's user base). These guys still want the high quality that I described earlier but they also can't justify the expenses associated with talking to the bigger mail shops. In general, I'm really excited about the space I've stumbled into. There really hasn't been any innovation in a decade or more -- there could be a reason why people stay away from it but I'm taking a more naive approach to see what I can do. So far, so good. :)