Every startup, enterprise and business in between has recognized the value of web analytics by now. It has become a standard part of the modern day organization’s online toolkit. It has been a hot technology topic for years. And it has formed a multi-billion dollar industry.

But is web analytics doing its job?

Continue reading this article at Woopra’s Customer Analytics Blog.

When we first launched Woopra, it revolutionized the web analytics space with its real-time capabilities and the power to drill reports down to the individual level, giving sales, support, marketing and product management teams tools that they could have never imagined, for free!

Our product was simple and elegant which made it very appealing to consumers and they started referring to it as “analytics on steroids” or “the Chuck Norris of web analytics”. We wanted the world to see it, use it and help them reach their goals. Around 200,000 websites are using Woopra for free today. With so much volume, we needed to think about our business and how we were going to sustain it.

We launched some extremely affordable packages starting at $4.95/mo (Bronze) up to $179.95/mo (Kryptonite). Of course, the Bronze package was very popular and among the highest selling packages. We sold thousands and thousands of them. At one point, we were selling more than 20 Bronze subscriptions per hour.

The truth is, it was one of the biggest mistakes we’ve made.

Yes, <h4> in bold. Here’s why:

1. Research and development By that time, we had spent over 30,000 man hours to develop this service, which is equivalent to $1.5 million dollars if you were able to hire great engineers who charge only an average of $50/hour.
2. Customer Service Support was a disaster. Although we have always been committed to delivering an unparalleled level of customer service, it was extremely costly for our small team to keep up with the needs of so many customers. WebTrends, a large and profitable enterprise web analytics service, charges thousands of dollars for support and if you don’t pay, you’re on your own. We, on the other hand, provide support to all our users, including those with free accounts.
3. Infrastructure This was one of the biggest drawbacks. We had a very long list of great features we wanted to build, but we were constrained by very limited resources. Yet, we pulled it off! We managed to host and optimize one of the most advanced analytics systems of all time while keeping up with the tremendous needs at relatively affordable costs.
4. Transaction fees We were automatically losing about 20% of our revenue in transaction fees on the Bronze package. That’s around $1 for every $5.

We were sabotaged by our own customers. With all due respect to all our early adopters, some of them were making it nearly impossible for us to maintain the service. Between asking for extra discounts on a $5/mo package and inundating us with elaborate requests, this segment of customers was essentially draining our resources and preventing us from investing them in improving the product and growing our team.

Although our slightly higher packages were doing fine and were helping us break even, it became very clear to us that we were serving the wrong market.

Moving Upmarket

We knew what we had to do, but we obviously couldn’t move upmarket overnight. Rather, we began by taking several steps needed to reach our ultimate goal:

1. We raised a small round of funding to invest in our infrastructure and hire more people.
2. We increased our infrastructure by 10 times. That allowed us to prioritize the experience over resource optimization, which led to more innovation and faster product cycles.
3. We got rid of the Bronze package since we were losing money on it. As a courtesy, we decided to grandfather all the existing accounts and allow them to keep their current subscriptions.
4. We optimized the application to better suit business needs. To shift away from consumers and build an appealing solution for businesses, we had to focus our products on specific problems. A generic web analytics solution had become a commodity and we saw that this space required better focus on the needs of different industries. We found our product was best suited for SaaS and E-Commerce and decided to let go of Media outlets (e.g. blogs).
5. We made a slight pivot from web analytics towards Customer Analytics and rebuilt our messaging to market our new and better focused value proposition. Today, Woopra is addressing a huge business problem that couldn’t be solved with just web analytics.
6. We updated the product to fit and integrate better with the other products businesses use, like Salesforce.
7. Bonus: We moved to San Francisco and grew an amazing team of talented people!

2012 has been the most successful year for us. We grew our revenue, attracted bigger clients, and the company is cash flow positive again, despite a huge increase in costs. But we’re not stopping there. Our priority today is to keep building the best Customer Analytics platform on the market and offer it for a fair price that will suit every size of business.

The idea of our new pricing is to charge a business relative to its usage. Why pay the full price if it’s only being used by one or two people? Here’s a breakdown:

• For a startup in stealth mode with 5 or less employees, we’re only charging $79.95/mo, plus $19.95 per agent. That’s less than the amount a startup spends on coffee every month.
• For a small business from 5 to 15 employees, we’re only charging $200/mo, plus $35.95 per agent.
• For medium size businesses and enterprises, our plans start at $500/mo, plus $55/agent.
• We also offer additional services and customizations for clients, which we charge for separately.

I’d like to take this opportunity to thank our early adopters who evangelized our product. We’ve had a $0 marketing budget, yet you helped us grow to where where we are today purely through word of mouth. In return, we’re offering you the option to stay on your current packages forever. I also personally promise you that you can expect more product innovation than ever before.

This is my second attempt to run a blog. I killed my previous blog about 2 months ago since it hadn’t been updated for almost 18 months. But today, I’m excited about this opportunity to write about my entrepreneurial experience from bootstrapping, fund raising, pricing, business models to customer experience.

I’m going to share with you some Woopra numbers I’ve never shared before, some mistakes I’ve made, what I’ve learned from them and some goals.

Inspired by mail, I designed this blog to ensure a pleasant reading experience taking advantage of HTML5 features like pushState. A big thanks to WordPress (best open source blogging platform) and Twitter’s Bootstrap (fastest growing CSS3 & Javascript front-end framework).

If you like to reach out to me for any reason, find the “Contact” button on the top of this page and drop me a line.