Hannah Dawson, Founder and CEO of Futrli, discusses her ambition to solve company failure rates through AI-driven, actionable insights to help secure the financial future for thousands of small busine
Hannah Dawson, Founder and CEO of Futrli, discusses her ambition to solve company failure rates through AI-driven, actionable insights to help secure the financial future for thousands of small businesses around the world and why she is leading the way with a freemium business model and product-led growth.
Pricing is the ultimate exchange rate for value and one of the most important levers companies have for driving growth, but we also know – from research led by Patrick Campbell - that on average software companies only update their pricing once every three years.
The aim is to understand how to establish that fair and reasonable ‘exchange rate for value’ and understand how to receive more value from our customers, as they receive more value from us – it’s a simple concept, but it’s far from easy. This is hard to do, especially in the early stages of a company’s life and in the absence of empirical feedback from customers and large volumes of data.
Hannah is a serial entrepreneur who bought a pub – her first business – at the age of 26 and learned first-hand the problems of cash management as a small business owner. She left the pub, moved into the software industry, and subsequently set up Futrli to help small businesses around the world. Futrli now has thousands of companies on their platform and helps them to manage their financial future.Their first product, Futrli Advisor, is used by thousands of accounting firms around the world, supporting tens of thousands of customers, but Futrli has recently launched Flow, Predict and Playground – the world’s first AI-driven cash flow management, prediction and planning tool for small businesses.
In the absence of data and feedback, how can a founder price a product solving an entirely new problem?
“It’s hard,” says Hannah. Futrli started by looking at who they competed with, but there were no direct comparables. So they started off looking at Xero and Quickbooks, but that in itself was a problem: “We were working closely with these companies, pulling in their data, so we couldn’t really couldn’t be much more than they were charging, which was tough as we didn’t have their resources or Intuits balance sheet!” So the question remains, how do you put a price on protecting your future? What is the value of knowing about “fires burning” that companies are simply not aware of? The proven value hasn’t happened yet and the company had no evidence, so the only anchor the company had was what had come before. “We realised that selling to individual customers at such a small price was going to be tough – we were a bootstrapped business – so we hypothesised about how we could make the deal size larger. Then we realised that the companies we were working with and through, such as Xero, had armies of accountants and advisors that worked with large numbers of their customers and that was suddenly the obvious route to drive a larger average deal size.” The one to many sell gave the company time to go to market, learn and work out what to do next.
“Finding a way to drive up ARPU (average revenue per user) was vital and helped us to get out of the problem of being anchored to such a low price point.”
How do you quantify value?
The research that Patrick Campbell and his team at Profitwell has established on willingness to pay is invaluable to founders and played an important role for Futrli and many others in the Notion Family.
Link to Profitwell resources and our podcasts
‘Futrli Advisor’ serves thousands of end-users through a global accounting channel, but with 50% of small businesses failing by year five, there is still a burning problem to be solved. “My passion is working with small businesses directly, and helping them succeed,” says Hannah, which is where Futrli Flow, Predict and Playground come in, products designed specifically for the end-user, the small business owner.
Futrli started surveying their existing customers in order to understand their willingness to pay and their relative preference for a new software solution that could help them secure their financial future. They deployed the max-diff technique – asking people to choose their most important and least important feature.
“What we found was that for anything less than $10 price, customers would think ‘it’s clearly a load of rubbish’ – so that gave us a floor on the pricing.” Futrli were able to establish a target price of between $20-$30 dollars per user per month – anything less and people questioned quality and anything too high would constrain demand. What the research also helped Futrli to establish was the large numbers of apps small businesses are already using, in the ten to twenty range, something the company was not expecting.
How can we use pricing as a lever for growth – to speed initial adoption and then grow with the customer as they receive more value?
Futrli wants to scale directly and break down barriers in small businesses.
“We decided to adopt a freemium pricing strategy and a product-led growth methodology as the foundation of our go-to market strategy.” This approach forces companies to challenge themselves, to understand their value drivers and the different needs their customers have, and uses products to solve those urgent pains.
“Our products are not vitamins, they are solving burning needs related to 1) better cash management today (Flow), 2) better cash flow prediction (Predict) and 3) and enhanced and predictive decision making and simulation (Playground). Bringing these three things together is important, but what matters in Freemium is driving the first impact fast, the time to value fast, and then repeating that impact and value over and over again. This approach moves your head to think about how you approach, acquire, convert and then serve your customers.”
Futrli is highly experimental and listening and learning to their customers.
Hannah explains their approach: “Reflecting on our first product – Advisor – we realised we were losing customers because they were using us for discrete activities, for example funding events, and the information they were getting was very numbers heavy and they needed a numbers person or analyst to help them.”
Futrli took a stance: “Our first product was not going to solve the 50% small business failure rate!”
Real words, not numbers were what mattered the most to their customers and they needed to empower the small business owner, without the need to rely on a specialist. “We took a stand on ‘real words’, as that’s what the Futrli products needed to provide, and then we used our solution to nudge them quickly in the direction of their first ‘big impact’.”
This change is profound, “Those ‘aha moments’ are now happening way faster!”
Understanding what your customers really care about and what they are willing to pay so important.
Often what tech companies think is important is diametrically important to what their customers care about. Often companies obsess over daily active users and measures of engagement, but this can be misleading.
“I want our customers to use Futrli as little as possible to get the maximum impact,” says Hannah. “They check the daily news feed, do what needs to be done, and then get back to work.”
There is another big lesson we all need to learn which is to treat our customers as consumers. “We are selling to people at the end of the day, not companies, and we need to treat them as such.”
Futrli has done a whole tonne of work on pricing, propositions, user experience and impact in order to drive their market.
What’s the difference between freemium and a free trial?
Solid data on Freemium to Paid is hard to come by, “but what we do know,” says Hannah, “is that if we can convert freemium to paid they stick around.”
So, if you can acquire a user on freemium and convert them it, what it means is that you’ve shown the value and you’ve made an impact. What it also means is that if they downgrade back to freemium, they’re not necessarily churning and so the opportunity to re-engage them is there. Freemium is incredibly insightful and drives faster learning.
Futrli experimented extensively with free trials, starting with 30 days, then 14 days and then dropped to seven days and with seven days activation was much faster. “The intensity of a short trial really works.”
Futrli is combining elements of freemium and free trials. “We provide a free entry-level product, and make some pro features available for short periods, maybe 24 hours. We are experimenting with different product-led strategies to drive activation. It’s all about rapid experimentation and learning.”
How is Futrli creating a network effect and virality?
Slack puts a massive emphasis on the customer experience and constantly achieving outcomes and then reporting back on that, so that we understand the benefits and encourage more users and more usage across an organisation. An obsession with experience and outcome is critical to creating the amplification of a network effect, where each customer begets another.
“We are focused on turning our customers into an army of advocates,” says Hannah. “We have taken a company-wide approach to this, developing an organisational structure that is completely aligned with the customer lifetime.”
Futrli has aligned its organisation around customer acquisition, customer activation, and customer advocacy. “We are delving into the ‘golden path’ for customers and exploring differences across customer segments.”
Referrals mechanics and gamification are also key.
“Another piece of the puzzle we are working on is our community. A community to break the silos of small businesses and stop people from feeling they are alone. I had that feeling when running my pub that I had no one to turn to and no one to ask simple but important questions, ‘What’s your wage percentage, what’s your gross profit on food?’. We want to bring that type of community to our users and for them to feel supported. We believe this community will be the biggest value driver in our business. If we nail this, then the flywheel will kick in.”
Futrli is not just focused on product usage, but also on the questions small business owners need to have answered and the behaviours they want to adopt.
The new Futrli platform is now live, and so Hannah will be learning about the success of her product-led growth and pricing strategies in earnest.