Parts of the Pay Off Stage

We’d say that the payoff stage is probably the least focused on for most brands or rather most unsuccessful or “fly by night” brands. The reason being is that it takes a customer-focused, “eliminate the ego”, type of attitude to navigate how to improve and get better. The brands that do this create a lot of loyalty and advocates (like Apple and Tesla and even Costco).

The tension in this stage revolves around what’s important to your customers and what’s important for your company. At times, the “customer is always right” mantra will lure you into a false sense of getting this part right. For example, a high score on an NPS (Net Promoter Score) survey might be a signal that you’re doing well but the follow-through to getting your customers to do more than fill out a survey might fall flat. In some cases, this lack of or unwillingness to take things to the next level might not reveal itself until a competitor comes along that does what you do better, faster, and/or cheaper.

The future health of your brand and your follow on products and services you provide heavily depends on this stage because your fans and advocates are the ones that will tell their friends and family about your brand and are the most likely folks to buy from you again.

That’s why we have to ensure that we’re respecting their time as well as communicating to them in a way that’s simple to understand and take action on. Which leads us to our next heuristic that’s all about clear, concise, and compelling communications.

Explain it to Grandma

A lot (frankly all if you push us) technology brands do a horrible job explaining what they do. We think this stems from the “curse of knowledge” where you’re so entrenched in a technology or product or service that you think it should be easy to figure out.

While the complexity problem is not as bad for other types of brands, it’s still present and makes it harder for prospects to understand what the brand is all about. That’s why we like to focus on how to explain what you do to your grandmother.

Why Your Grandma?

Grandmothers are the keeper of all wisdom and knowledge. They are the glue that holds society together. It’s beholden on the grandmothers to bring along the next generation. They are also the arbiters of common sense and tribal knowledge that makes them both open to exploring new ideas and kind enough to not crush your spirits. If you can explain your new-fangled big idea to your grandma, then you’re off on the right track.

Part of explaining it to your grandma is to use simple language that lacks buzzwords. The use of simple language is a hard discipline to follow since most folks think that the more 25 cent words they use, the smarter they appear.

The goal is not to appear smart. The goal is to communicate what you do so others can easily understand it. Anything else is a waste of time and frankly an ego stroke that will make you wonder why no one is buying your fancy-dancy 25 cent word gizmo.

Law of Big-Small

This idea relates to an audience or list that you’re trying to bring along the funnel. As you move down the Story Funnel, you lose people. If you start out with say 1,000 prospects, you’ll probably get 100 to look at your offer and 10 to buy as a baseline (1% or a Factor of 10 reductions at each stage). Further still, maybe 1 would be considered an advocate, or more realistically, none would. This can lead to a bias based on these small numbers of results since our gut is telling us to pursue the idea.

While the initial number is biggish (1,000), the remaining numbers are smaller and it would be hard to gather any meaningful insights. Startups have this problem when they are trying to find Produce Market Fit (PMF). The general rule of thumb is to talk to 100 prospects to get information about your Minimal Viable Product (MVP). To talk to 100 prospects takes a lot of time and effort and thus is a relatively big number but the results may not be representative of the buying population. So how many would you expect to be customers?

Back to Factor of 10 and 2

The Story Funnel heuristic Factor of 10 and 2 would say that 10 would consider your offer and 1 would buy -- a small number. So what happens if more than one buys? Say 10 buy. That’s clearly a stellar result (10% conversion. A big number) but on a small sample size of prospects (100. A small number). Should you pursue this idea or kill it?

That’s tricky since it all depends on the distribution within your sample size. In statistics, the central limit theorem is used to determine what’s big enough. For those of you who are not math geeks like us, the central limit theorem states that you can use the normal distribution to describe the behavior of a sample mean. This applies even if the sample means is not normal. This is only possible if the sample size is “large enough”, which is where the dilemma is.

Most statistics books will say that a sample size of 30 (or n=30) should be large enough to get a good representation of the sample population but this assumes that the population has a normal distribution, which is shaped like a bell curve. Yeah, I know, lots of math but hang in there.

The reason why a normal distribution is so important for the sample size is that, if you take a random sample, you’ll have a good chance of taking samples along the normal distribution since it’s a smooth, continuous curve. If the distribution is not normal, say it’s “lumpy” or there are two different distributions with the data set, you’ll probably miss some of them. The best way to show this is with a graph.

From the graph, you can see that depending on where you pick your samples, you’ll get different distributions. That’s why sample size matters so much -- you want to get the best representation of your population (for us, prospects) as you can. The above shows the ideal cases. In reality, the height and width of the distributions can be all over the map.

Should we Kill the Project?

Getting back to our question about pursuing an idea that we asked 100 prospects about and 10 bought. Let’s make it even harder. Let’s say 25 people put down their hard-earned money for your idea. Is that enough to continue on with the idea? To recap, from a numbers perspective, the conversation is high (big number), the sample size is small (small number) but the one thing we did not account for is the population itself.

With small sets of prospects, the number will skew since, in general, the population that you are prospecting is cherry-picked to be the best unless you somehow randomly selected 100 prospects somehow. That is possible but for our purposes, let’s say you did not. So, now what do you do?

Based on the Factor of 10 and 2, you can speculate that as your prospect populations scales (given they are the same type of prospects) that your conversation rate will settle down to between a factor 2 (half) or a factor of 10 (1/10) of this initial rate. This would mean that you should see a 12.5% to 2.5% conversion rate as you prospect more populations, all things being equal. The lower end, 2.5% is above the 1% baseline we talked about before. Based on this, it’s worth continuing on with the project.

This is an excellent way to benchmark how you are doing and plan more experiments to improve your numbers as well as a gauge as to when you should stop.

The Long Hard Road

This part of the story funnel will be the longest to get through. In some cases, years depending on the offering. The ultimate goal of the payoff part of the Story Funnel is to produce advocates that will tell others about your brand. This word of mouth is the most valuable type of promotional material there is. It’s by far the most effective and if done right, the one with the highest ROI.

Stage 7 -- Productive or Payoff ToFu

Productivity may seem like a subjective measure but it’s the first indication of a customer using your offering to its fullest extent. We want our customers to not be able to live without what we sold them. It’s vital that your offering be so good at what it does, that your customers use it regularly.

Productivity metrics should span at least a month or more. Preferably, the duration should be well past any trial period. For our purposes, the minimum should double the trail period, preferably triple, to get a true signal on this. For a 30 day free trial, that would be 60 days or 90 days.

Metrics to Track

Productive metrics will be product and services specific. You’ll have to think long and hard as to what constitutes productivity for your brand. A few things to consider along those lines include metrics such as:

• Days of usage streak.
• Positive Review(s) on Review sites.
• Asking for feature requests
• Responding to surveys
• High NPS Score
• Quickly resolved customer service requests
• Responds to email requests
• Usage points (like credit cards, etc).

Stage 8 -- Fans or Payoff MoFu

There will be some debate among your team as to what constitutes a Fan. Some will say Fandom has to do with repeated purchases others will point to the number of social media shares or consistent NPS scores. Whatever your metrics might be, it’s imperative that fans be identified and nurtured to one day become advocates.

The reason being that the jump from fan to advocate can be a long journey that has a lot of fits and starts so some while for others, the jump will be so quick if you blink, you’ll miss it. One other thing to consider is influencers that may appear to be fans. This can happen or even be part of your plan to foster. This must be considered carefully and additional metrics (which are beyond our scope here) should be devised.

In terms of time to figure this out, that will vary but expect another double or triple the productive time. This will also depend on the nature of your offering and its usage model. If it’s something that a customer will use every day, then the duration may be shorter. If it’s a seasonal offering or an intermittent product or service, you might need to spend more time figuring it out.

Metrics to Track

Fan metrics revolve around the first signs of being an advocate or rather unpromoted promotion or multiple positive feels about your band. Some metrics to consider include:

• Social Media comments or shares with positive comments
• Forward on email deals
• Testimonials on their blog or YouTube Channel or other independent sites.
• Testimonials on your site
• Asking to help with new offerings
• Multiple high NPS scores (over months)
• Upgrades to Premium

Stage 9 -- Advocates or Payoff BoFu

Advocates are the ultimate goal of the Story Funnel process since advocates will buy more products and services from you and tell their friends and family how much they love your brand. This is the way brands go viral and it’s the whole goal of a clear, concise, and compelling communications strategy.

Advocates are a tricky lot since all the signs of an advocate can be present but they won’t do the active promotion that is the hallmark of a good advocate. At this stage, your programs and processes for advocates need to reward those that sell your product. The best example of this is either points programs (like the airlines) or affiliate programs that reward folks for selling products for you. The trick is getting the incentives right and making it easy to participate. That’s why a lot of brands use affiliate marketing programs to manage it for them.

Metrics to Track

These metrics are all about actively promoting your brand and getting rewarded for it. Metrics to track include:

• Affiliates signed up
• Affiliates active
• Sales through Affiliates
• Rewards program sign-ups
• Promotion participation
• Long Term Value

Exiting the Payoff Stage

Customers exit the payoff stage if they stop doing business with you. Customers can float around in this stage forever and go back and forth between Advocate, Fan, and Productive. If they downgrade or move to a free tier, then they should be put back in build. Those customers that make it to Payoff and then either cancel or revert to free should be looked at closely to see what within your messaging has changed.

Implementing the Payoff Stage

The payoff stage needs a robust system to handle the incentives to be an advocate. This would include affiliate and rewards programs. Ideally, these will be integrated into a CRM system and process that will make it easy to see the metrics. It’s important that what you want to measure be set up before your offering starts to get traction since those early customers are a prime target for being advocates.

Congratulations, you have made it all the way through the Story Funnel framework. High fives and half a warm beer for everyone (as Shawn Coyne likes to say). Now, let’s pull together a Brand Story Guide and a Story Funnel for your brand.

Are you ready to now apply what you learned?