Step-by-Step Instructions

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Problems You'll Solve

1. What currencies do you need?

Out of all the potential forms of currency, which one is the optimal for you? Should you optimize for cash or users? Usage or referrals? Leads or data? This exercise will answer that question.

2. How many currency tests will you need to run?

For each currency that you think you need, you will have to run an experiment to validate that hypothesis. This exercise will help you understand what it'll take to do that.

3. Can you get your currency faster?

In this exercise you will learn how to get your Victory currency - the currency that is most valuable to you - as quickly as possible.

Recap

What is currency?

Currency is anything that will help you achieve your Victory.

• Cash
• Usage
• Attention
• Data
• Referral
• Evangelism
• Leads
• Approval

There may be more out there, but you get the gist.

Remember: if it doesn't help you achieve your Victory, it's not a currency.

The Currency Ladder

Grab your Currency Ladder worksheet.

The first thing you'll notice is that it feels a little upside down. This is because this exercise is designed to get you to think differently about the process customers go through to get to your solution.

Funnel vs Ladder

A funnel is a common way to think about acquiring customers.

Imagine a large group of potential customers entering the top of your funnel. As they progress through each stage of your buying process (e.g. visiting your landing page, requesting a demo, conducting a trial, purchasing, etc.) fewer and fewer customers make it to subsequent stages. This naturally creates a kind of "funnel" shape where there are lots of potential customers on the top and few paying customers at the bottom.

I want you to flip this thinking on its head.

Why? Because a funnel makes it sound easier to get customers than it really is.

Because a real-world funnel uses gravity to move objects, this "customer funnel" analogy can give the false sense that if you add enough potential customers to the top of your funnel, eventually paying customers will come out the bottom.

Unfortunately, getting paying customers isn't that easy.

Instead of a funnel, you want to think of a ladder.

Why? Because a ladder more accurately represents the role of "gravity", in that it's working against you...not for you.

Your potential customers start at the bottom of the ladder, and they only become paying customers when they reach the top of the ladder.

With this analogy, every step of your buying process that you ask customers to take, is work for them. The more work you ask of potential customers, the fewer will become paying customers.

The worksheet for this exercise is flipped to emphasize climbing the rungs of a ladder, and in doing so, will help you eliminate unnecessary steps.

The easier it is to become a paying customer, the more you'll have.

Step 1

Identify your Victory currency.

Out of all the types of currency we've identified, what is the currency that you need most to achieve your Victory?

For most people, it will be cash. You can call it "sales" or "revenue". If it's not cash, it's likely "# of customers", or "# of contacts."

Step 2

In the Step column, starting at the bottom, write down all of the steps that your customers need to take in order for you to achieve your Victory Currency.

The very first step will always be to interact with the Offer that you put in front of them.

In my case, I'm going to choose the Offer that worked the best: Click on Blog Ad. On my Blog, I put up an ad that said "Click here for Customer Development Workbook", which is where all my customers start.

Now, write in the steps your customer will have to go through from there.

For me, after clicking on the ad, my customers will have to read my landing page. Remember, you're writing down each step that requires work from your customers - reading counts as work.

Next, I'm thinking of giving my potential customers a free email course to whet their appetites. To do this, they will have to give me their email address.

Then, they will have to confirm their email address so that I know they have entered in a valid email address.

After that, my customer will have to read my email course over the course of 6 emails.

In one of the email course emails, I will add a sales email that will say "if you've liked what you're reading here, buy the book!"

At that point they will have to click the sales link. Remember every step is a form of work, and another step your customers might decide not to take up your ladder.

Once they click on the link, they will have to pick a product, as there are multiple options (e.g. electronic, hard copy, electronic + hard copy, etc.).

Then they need to enter in their personal information (e.g. name, address, etc.), plus their payment information.

Finally, they will have to click the Order button to confirm their purchase.

This is quite a list! But these are all of the steps a person will have to take in order for me to achieve my Victory Currency.

Step 3

In this step, you will write in the type of step the customer is taking. You have three options:

• Offer
• Intermediate
• Victory

The first step will always be the Offer. Everything in between is an Intermediate step. Your final step is your Victory step.

This step is helpful because it's a reminder that everything in-between the "Offer Currency" and "Victory Currency" is potentially wasted (i.e. "Intermediate") currency.

Intermediate currency is work you're asking from your customer that isn't directly leading to your Victory, and a potential opportunity for optimization.

Step 4

In this step, write in the type of currency you are asking for. Are you asking for your customer's time? Attention? Data?

In my case, the first thing I'm asking is that my customers click on a blog ad. This is asking for their Attention so that I can give them a message.

Next, I'm asking them to read a landing page. Again, I'm asking for their Attention.

Next, I'm asking for their email address, which is a different kind of currency: this is Personal Data.

For the rest of my Intermediate steps, I'm mostly asking for Attention or Personal Data. Until the very last step.

On my Victory step, I am asking for Cash as the currency.

This step drives home that during each phase of your buying process you are asking something of your customers, even if you're giving them something valuable along the way.

In the case of my email course, it can feel like I'm freely giving them value, but the truth is they still have to give my course their attention, which is valuable.

It turns out, there's no such thing as free.

Step 5

In this step, identify what metric you will measure to determine if you are achieving the currency you need.

In other words, how will you know enough customers are taking each step on the ladder to ensure that ultimately you'll have enough customers paying the Victory Currency to achieve your Victory?

In my case, to measure how many customers are "paying" by clicking on my blog, I can use the Click Through Rate (CTR). CTR is simply the % of people who click my ad, out of the total number of people who see it.

To measure how many customers are paying by reading the landing page, I can measure the Average % of the page read. There are some great, free tools, available that will actually measure how far down on your landing page people are reading.

From there, I can count what percentage of people give me their email address, which I'll measure as a classic Conversion Rate.

When I send out my e-course, I can count the Percentage of Emails Opened.

When it comes time for folks to order, I can count the Order Preference Percentage (% of people who start the order process and pick a specific product) and the Order Completion Percentage (% of people who make it through the various stages of order creation).

The last thing I will measure at the top of my ladder is Revenue per Visitor. This represents the average amount of cash I receive for each person who visits my blog (the bottom of the ladder).

At this point, I've completed my Currency Ladder. Once you do yours, you'll have a document that articulates the steps on your ladder, the type of step, the type of currency, and how you will measure each of these steps.

Step 6

What can you cut?

If these are all of the steps on your currency ladder, what can you do to take rungs out, so your customers can get to the top faster and more easily?

During each of these steps, you will lose more and more people: every step is work, and the more you make your customers work, the fewer people will be willing to give you the currency you are asking. The fewer steps you have, the more likely it is that customers will make it to the top.

So what happens if you ask for less currency earlier? What happens if you ask for less attention? Less personal data? Can you get our customers to the Victory Currency faster?

In my case, what happens if I cut the entire "Email Course" phase?

If I cut my Email Course, I'll get fewer customer email addresses, but that's okay - email addresses aren't my Victory Currency. Cash is my Victory Currency and I'll likely get more of it by asking for it sooner, rather than later.

Now you could argue that by eliminating the free email course, I am giving my customers less value. You could imagine someone saying, "Giving away my product for free is how I get people's attention."

This is a classic founder mistake.

By giving away something free in order to get to the paid product, the founder is combining two stages into one.

The idea of giving something away to create more exposure is a Scaling strategy, not a Currency test. Remember, the most critical aspect of the FOCUS Framework, is focus - concentrate on just one step at a time.

Before you spend time trying to attract a large audience of potential customers with a free offering, you need to make sure you can convert a sufficient number of them to paying customers.

Once you've proven you can convert potential customers into your Victory Currency, then you can focus on giving products away.

If you spend time on Scaling strategies too early, you'll lose your FOCUS. At this stage, you just want to know:

What is the least amount you can ask of your customers in order to get them to give you your Victory currency?

Examples

Below you will find some additional examples of Currency Ladders, depending on the type of business you end up building.

Paid Mobile App

In this graphic, you see the steps on the ladder for selling a paid app. It is very simple, with very few rungs. You place an offer, ask people to read about your app, and then they purchase it through their mobile App Store.

You can see the power of App Stores like iTunes and Google Play, where they have the customer's payment information on file. By eliminating all of the steps where the customer has to provide their personal and payment information, they remove rungs from the Currency Ladder, and help paid app developers get their Victory Currency faster.

Notice how "Download App" and "Use App" aren't even part of the Currency Ladder - it doesn't get easier than this, for you, or your customers.

Freemium App

Let's see what happens with a different app model. With a freemium app, people use your app for free, and then eventually you up-sell them something for your Victory Currency.

It starts out the same as the paid app, but notice how on the third rung of the ladder, you need customers to download the app and use it - not just once, but over and over and over again!

For freemium apps to work, they need to be "super sticky" (solving a recurring problem) so that when customers encounter the up-sell, they are more likely to purchase it.

Ugh.

All of these steps additional steps are called freemium bloat.  The difference is pretty dramatic.

Freemium isn't a business model. It is a Scaling strategy.

The idea of offering free stuff is very important to increasing exposure. However, you only want to offer "free-miums" once you know for sure that customers are willing to pay for your solution at the top of the ladder.

The best and fastest way to do this is not to use a freemium offer at the beginning of your experiments. Instead, figure out if people will pay your Victory Currency first, and then use freemium offering to Scale and get more people interested in doing what you already know your customers are likely to do.

The Currency Ladder for a paid app is much better.

If you're considering building a freemium service...don't.

...at least not in the beginning. Instead, create a paid service that operates at a small scale to prove your model can generate Victory Currency. Once you do, you can switch gears to freemium for your Scaling efforts.

Note: the same goes for giving early customers "Beta" discounts. If you have to discount your solution so that your Earliest Adopters, those most desperate to solve the problem, buy it - you're going to run into problems. Discounts, like Freemium offers are best used to Scale a strategy that you know already works; best to prove it without them.

B2B Offer

In an enterprise situation, you'll find you have many more rungs in your Currency Ladder.

Maybe your initial Offer comes in the form of a cold email. After that, you will notice a cycle that is typical with B2B interactions:

• Schedule a meeting
• Attend a meeting
• Make an introduction to the person representing the next step
• Schedule another meeting
• Attend another meeting
• Make an introduction to the next person
• and so on...

Along the way you will also have to get feedback on your proposals, achieve various levels of approval, perhaps design and implement a pilot - all before you finally get to the stage where the budget is approved and you receive your cash currency.

In addition, at any point along the way, someone may drop off the face of the earth. The company may change priorities; your contact may change jobs; funding sources could change.

This is precisely why B2B sales cycles are so long.

Especially in B2B scenarios, the more steps there are, the longer the time between the initial Offer and your Victory currency, the more likely that someone will fall off the ladder.

While some of these steps are inevitable, you still want to cut as many of them as you can. Here is a hint:

Don't start solving the problem for your customer, until they start solving your problem.

Do not start working on a solution to the problem - this goes for a freemium, it goes for an e-course, it goes for B2B scenarios - before you get your Victory Currency.

You can have lots and lots of meetings, but do not start solving the customer's problem until you have the thing that says: "YES, I can achieve my Victory by pursuing this path."

The whole point of Currency Testing is "If they come, you will build it."

Do not start building a solution for a customer hoping they'll keep climbing the Currency Ladder. The only leverage you have, and their primary motivation to climb the ladder, is that they have the problem. Don't be tempted to solve their problem without proof of your Victory Currency in hand.

So, for B2B scenarios, you will probably have to have many meetings, get tons of introductions, and go through many levels of approval. However, do not start training people, designing pilots, or implementing solutions until you have your Victory Currency in hand. Cut out these steps as "good faith" offers and only deliver them if your customer has proven they can get you where you need want to be.

In this example, you can cut 1/3rd of the steps on the Currency Ladder by requiring your Victory Currency before you start solving the problem.

As you move forward in this workbook, you will learn more about how to offer value without building a solution before you have your Victory Currency in your hand.

Recap

Now you have a sense of what currencies you need to achieve your Victory. Not only do you know your Victory Currency, but you know the currencies you will need to achieve in order to get it.

You also now have a sense of how many experiments you will have to run: each rung on your ladder is a potential hypothesis that you will have to validate as you move forward.

Finally, you have discovered how to get to your Victory Currency faster, by cutting out as many of the intermediate rungs as possible to make it easier for customers to climb your Currency Ladder.

What's Next

Next you are going to design your Currency Testing Path to Victory.

Similar to your Offer Testing Path to Victory in the previous workbook, you are now going to use a spreadsheet to draw a line between where you are now, and where your Victory is...this time taking your Currency Ladder into account.