10 Lessons We Learned From Proof on Authenticity, Personalization, and More

Proof is a social proof tool that allows you to “display real-time customer activity notifications on your website and let your existing customers sell for you.” After launching in March, 2017, Proof has been growing rapidly, and raised a $120K seed in 2017 from Y Combinator. By the end of 2017, they had hit $1.2M ARR, and as of this writing, they are around $1.8M ARR and show no signs of stopping.

We recently interviewed Austin Distel, employee #1 and Director of Marketing at Proof, on the SaaS Breakthrough Podcast to learn how they grew from 0 to $1.8M ARR in under a year. The serial entrepreneur and former Mr. Atlanta 2016 discussed everything from launching the company to eventually getting into Y-Combinator and taking over market share with paid advertising.

Below are the main takeaway points for your convenience. If you would prefer to listen to the full podcast interview, you can click here to do so.

Enjoy!

1) Authenticity Matters

You can't connect the dots looking forward; you can only connect them looking backwards.

- Steve Jobs

Two years ago, Austin was running a marketing agency and took courses from a guy named Dave Rogenmoser on how to scale your marketing agency. Eventually, they started a community called The Entrepreneur Alliance. They were fed up and frustrated with the state of the internet where marketers would say anything to make a sale, and they wanted to do something about it.

The community was a push against that. “It was a push towards transparency, towards authenticity in online marketing,” said Austin. “We believe it begins with the people who teach it and the people who share that information in a community.”

And while teaching about making more sales through honest, transparent marketing, the idea for Proof was born.

2) Your Persona Evolves With Your Business

…Sometimes the customers you have today aren't the customers you want tomorrow.

- Austin Distel

As your product and team grow, your old pricing structure might not be cost effective and/or you may need to find a different kind of customer. When the Proof founders went to Silicon Valley seeking investment, they found investors usually want to go upmarket and change the pricing model to enterprise.

That’s a big change, and it affects almost every other aspect of your business as well. Your current customers are no longer your target customers, so what happens to them and the pricing plans they’re on? What features will enterprise customers need? Then you need to nail the right price points that represent value and what customers are willing to pay.

The bottom line? Your company and product are always evolving, and while you can’t plan for everything, you can understand that things will change and become adaptable.

3) Create A Product to Solve Your Own Problem

Is there a problem you have (or had) that others might have as well? Could you turn your solution into a product? That’s exactly what the Proof team did.

Austin and the team hated the fake scarcity way of promoting products — you know, the “only 10 top secret money-making PDFs left, and if you don’t act in 60 seconds, they’ll disappear forever!” kind of stuff.

So, they set out to build a product that would increase conversion rates on their landing pages, sales pages, checkout pages, etc., in an honest and transparent way.

They were looking at an AirBnB one day and saw that so many other people were looking at the same place for the same dates, and they realized the power of social proof, transparency, and authenticity.

After extensively searching for a little app that did the same thing for their website, they couldn’t find anything. They realized all these companies are making similar apps for themselves and so that’s what they did, too.

Then the results came. They tested the app on a lead page and saw conversions go from 19% to 42% after two weeks. Their checkout page, too, went from 8% to 16%. To put the app to the test, they let other members use it on their landing pages, and the results were just as incredible.

“...holy crap — maybe this is more than just a cool little hack we found, maybe we could build this into a company!”

4) Make Money While Getting Market Validation

After realizing it was more than just a cool little hack, they decided to build their little app into a full software company. They then did a prelaunch webinar to The Entrepreneur Alliance community and pre-sold the software at an annual price of $1,000. They sold about 25 of what they called The Founders Pack, which gave them a good development fund. Within a month, the Proof app was launched.

Takeaway: Proof utilized a prelaunch to get a feedback loop early while getting paid for the software before they even fully developed it. On top of that, having 25 people pay $1,000 before even getting access to the product was huge market validation.

5) Use the 80/20 Rule and Look for Your 20%

Proof started out with the 80/20 rule, asking which 20 percent of customers would be most valuable to them. The team understood the power of influencer voices in the market, so they began with their friends who were consultants and course creators with big lists, where they could take advantage of the trickle-down effect to gain market share quickly.

Are you using the 80/20 rule to find the 20% of your customers that is most valuable to you? Assuming you understand your industry well, this can be one of the most important things you do to accelerate your marketing.

6) Build Virality Into Your Product

Proof knockoffs came out here and there, but the team was only driven further because their product was being validated, and they were going to be the premium service, like Apple and Tesla — not allowing influencers and affiliate marketers to upload fake info to make themselves look better.

Proof started with a mission to make something real and honest, and they weren’t going to sway from that mission. In fact, as part of their premium service, they started putting a tag on their notification that states it is Verified by Proof. This is what Austin calls the “bread and butter” of the product. They’re sticking to their core beliefs, not only with their company, but with their product as well.

Can you build some form of virality into your product? In Proof’s case, they had the Verified by Proof badge on their notifications, which acted as free advertising for them that increased as they acquired more users.

7) Build Your Brand While Taking Market Share

Austin has a firm belief that “if you can structure your company in a way to be able to out-advertise your competition, you'll take over market share and then you'll win the brand.”

Proof used Facebook Ads and optimized for high conversions and low acquisition costs, and created a pricing structure that allowed for a little bit of padding. Austin said he also believes rocket ship growth comes by paying for it. Low-value products don’t have room for advertising and need to utilize free, organic traffic to grow slowly, while paid advertising on a premium-priced product allows you to take market share quickly.

8) Vanity Metrics vs. Clarity Metrics

...the number one metric I look at as a paid traffic manager would be EPL 45. Earnings per lead within 45 days. That's the metric you really want to focus on if you have a 14-day trial.

Austin said he used to focus on a lot of vanity metrics, such as likes, comments, and shares, which was a big mistake. “An audience might have really high likes, comments, and shares, but a really low conversion rate in a really high cost per acquisition; that's not what you want.”

At the end of the day, sometimes we make decisions based on vanity metrics when we should actually make decisions based on clarity metrics — things that actually matter, such as cost-per-acquisition (CPA) and conversion rate.

Are you focusing on the metrics that matter? Vanity metrics look nice, but are they really driving your growth?

9) Develop a Predictable Paid Acquisition Channel Using 3 Core Metrics

Proof focuses on their EPL 45 because, after a 14-day trial, they get the first payment, and then 30 days later, they get the second payment. If they can keep their acquisition cost below those two payments combined, they have a recipe for scale.

As far as acquisition channels go, they’re quite diverse, using Google AdWords and Display Network, audience networks such as Perfect Audience, Facebook Ads, and a little bit of affiliate marketing. Their 80/20 is still paid traffic.

Austin says most people are afraid of paid advertising because they simply don’t do the math. You need to know three core metrics:

• Cost per acquisition (CPA)
• Trial conversion rate
• Lifetime value (LTV)

Having them front and center on your dashboard will tell you if you spend x amount, you’ll get y customers, and you’ll make z profit in the long run. For those that want a simple formula, Austin says you should spend up to 1/4th of your LTV on acquisition.

10) Personalization Is the Future

Austin believes static websites will be completely obsolete in 20–30 years. They will be replaced by dynamic, personalized websites that change depending on who visits the website.

Proof plans on being at the forefront of personalization with the intent to increase conversion rates, because a better online experience (on a website) typically means a higher likelihood of using that service or product.

Think about the giants: no two Netflix or Amazon dashboards are completely the same. They’re both crafted from personal recommendations based on your history, preferences, and personality. Proof is constantly thinking of how to take that personalized technology and bring it down to mid-market websites.

With the grand vision of completely personalized websites in mind, Proof wants to help 100,000 websites humanize by 2020. It’s a big goal for sure, but they have big plans in place to make it a reality. They plan on growing their team by 30–45 people in 2018, taking on a series A funding round, and many other things to grow in that direction.

Austin says their product is going to change a lot, but at the end of the day, they have the same mission: create more humanized experiences for visitors while increasing conversion rates.

How do you feel about personalization and authenticity in the ever-evolving world of tech? I’d love to hear your thoughts!