19 Proven Lessons for Scaling Revenue for Your Shopify App
I recently ended an amazing four years leading the revenue and growth strategy for a top Shopify App.
Over that time I was fortunate to hold a number of leadership roles, including CEO, and saw the business scale to reach over 100,000 stores, surpass $10M in revenue, and eventually go through a successful acquisition.
The Shopify ecosystem is a fun and dynamic place to build a SaaS business. It offers unique benefits that you won’t find in any other marketplace, and also presents challenges that you and your team will need to navigate as you scale.
Recently, I spent some time reflecting on the opportunities and challenges we were able to face during my time working in the Shopify ecosystem, and thought I would share some of my biggest learnings for app developers on this journey.
Here are some of my biggest takeaways:
1. If you have a reliable source of installs coming from outside the App Store, you’re probably going to win
The most successful Shopify Apps are able to find distribution to Shopify merchants outside of the Shopify App Store. This is extremely difficult to do and takes time, patience, and a commitment to building an audience that isn’t dependent on discoverability inside the App Store.
This doesn’t mean the App Store isn’t important (more on that later). But if you’re able to gain traction on your own channels, it will allow you to continue to build an audience and grow your business even as things change within the App Store.
2. Customer success is how you compete against the “big guys”
If you’re a growing Shopify App, looking to take marketshare away from an incumbent category leader, then you need to invest in offering amazing coaching, education, and support for your customers. That’s how you’ll be able to compete in your category, and that’s how you’ll generate the word-of-mouth you need to reach your next best customers.
The best way to differentiate your support offering is to simply make it easy and fast for users to connect with a real human. Start there and continue to evolve how you support customers through Support (email, phone, chat), Sales (inside sales and outbound sales), and Customer Success (onboarding, retention, account management).
3. Get customers activated by any means necessary
Be diligent about understanding where merchants are getting stuck during the onboarding process and do everything you can to help them get them activated. This is true for any SaaS product, but is especially true in an ecosystem like Shopify’s, where the barrier to install new apps is low and merchants may not have the urgency needed to get over friction in your product experience.
Set a definition for “activation” based on specific actions they need to take during onboarding and implement tracking to understand how many users are getting activated. Make this a key metric that your leadership team has visibility into and reviews on a regular basis.
4. Have a clear POV on your ICP
One of the great things of building on Shopify is you’ll have the chance to get in front of a wide range of businesses — from “mom and pop” small businesses to enterprise retail brands.
But if you’re not clear on which segment of the Shopify user base you want to go after, you will lose a lot of time and resources trying to convert customers that aren’t a good fit for your product. Having a clearly defined ICP (Ideal Customer Profile) will help focus your product vision and will be useful when evaluating where to place your bets to grow installs and revenue.
Keep in mind that your ICP can evolve over time. As your product matures and you start to solve new challenges for merchants, you can revisit your ICP and determine if you want to move up market or double down on smaller stores.
5. Just because you have an ICP, doesn’t mean that’s who you’ll attract
Setting an ICP is important. But reaching your ICP will take work.
The majority of your installs, regardless of the stage of your company, will come from new or smaller merchants. The goal isn’t to eliminate that flow of installs because many of those smaller stores will grow into your ICP over time. But instead, the focus of your Go To Market efforts should be to increase the percentage of good fit “ICP” merchants in your growing install base.
Once you define your ICP, come up with a list of trackable criteria that you can use to keep track of how many of your users and paid customers meet your ICP. Use that as a barometer for whether or not your Go To Market and Product investments are helping you reach and convert more of those ICP customers.
6. Do what you need to do to get ranked
Some people will tell you not to prioritize the app store because so many of the installs you get from there will be new or smaller stores.
But what they fail to realize is that mixed into the larger audience of smaller stores evaluating apps for the first time are larger merchants that are coming back to the App Store because they are unhappy with their existing tools. And even if 10-15% of your installs from the App Store end up being good fit customers, it’s likely to still be your best and most efficient channel for reaching the customers you need.
And so while I definitely believe building a source of installs outside the app store is important, like it or not, you also need focus on getting ranked in the categories and keywords you care about. The good news is Shopify is very clear on the factors that matters when getting ranked. They have evolved over time and so it’s important to stay up-to-date with the latest changes and prioritize accordingly.
7. Reviews matter, deal with it
It’s easy to complain about App Store Reviews. Often the negative reviews you get are totally unfair and are outside your control.
But the reality is, reviews matter more than almost any factor in getting your App ranked in the App Store.
And so while it’s normal to want to bang your head against the wall trying to push back against negative reviews, your best path to success is doing everything you can (within the Shopify Partner Guidelines) to get your best fit customers to share high quality positive reviews.
8. App Store Ads work, just make sure they’re incremental
If you’re a newer app that has struggled to get ranked for the relevant keywords and categories you care about, App Store Ads are a valuable investment. And at that stage almost any install you get from a paid App Store Ad will be incremental. But for Apps that already have some traction, investing in paid ads can often result in you paying for installs that would have happened organically.
I recommend setting aside a small budget to experiment with paid ads within the app store. Do your research to understand which keywords and categories are important to you, and iterate on your bidding strategy over time. At the end of each month, compare your organic and paid installs to ensure you’re driving incremental users.
9. PLG will bring you far…until it doesn’t
Product Led Growth (PLG) is the dominant business model for companies building in the Shopify ecosystem. And that’s for good reason.
Focusing on a product led strategy, where customers can easily try and activate in your product with minimal human intervention will force you to create a product experience that customers love and help you scale more efficiently.
But at some point in your journey, you will likely find that there is a segment of your customer base that is more likely to buy or will be willing to spend more if they had the chance to engage with a human during the evaluation process. And that’s where sales can add enormous value when growing a business in the Shopify ecosystem.
In my experience, the best sales strategy for converting Shopify merchants is one that leads with coaching and education. Early on you may have to be the person doing the selling. But as you gain traction, adding a direct sales motion could be the incremental growth opportunity you’ve been searching for.
10. Brand matters
In an ecosystem like Shopify, where merchants are often comparing solutions that offer similar features and functionality, it’s important to find your own way to differentiate your offering.
We’ve discussed how support and customer experience can help you do this. But another key to think about is how you can establish a brand that merchants know and remember.
There’s no simple answer for how to do this. But as a starting point, make sure you have a clear perspective on why your company exists and what problems you are solving for customers. Make sure you are telling the story through everything you do. It will take time, but making small investments everyday will pay off in helping you build a brand that merchants know and love.
11. Revisit pricing (at least) once per year
Updating pricing and packaging sucks. Especially if you’re raising prices for existing customers. But in a dynamic marketplace like Shopify, it’s important to continue to check in and ensure your pricing and packaging is keeping up with the market and with the evolution of your product.
This doesn’t mean you need to completely overhaul pricing every year. But there will always be opportunity to update your plans, introduce new tiers, or reposition your pricing to ensure you’re remaining competitive and driving the most value from your existing customer base.
12. “Land and expand” is a winning strategy for you and your customers
There are different schools of thoughts on when to add new products or introduced new tiers for advanced functionality in your product. My perspective on this is the right time to start thinking about your next product is when your existing customers are telling you (either directly or indirectly through their actions) that they want you to help solve more problems for them.
Moving to a multi-product offering has its own costs. But being able to sell new products to an existing customer base, that is likely paying for multiple apps to solve problems that you could be a good fit to address, is critical if you want to sustain long term growth.
13. Avoid the mirage of new ecosystems
When your installs plateau, you’ll be tempted to look beyond Shopify to other ecommerce platforms. This isn’t always a bad thing, especially if you have conviction that your ICP is building on these other platforms.
But if you’re doing it expecting it to be some kind of “silver bullet” to solve your top of funnel challenges, think again. This isn’t meant to be a knock on other ecosystems. But there aren’t any other ecosystems that will offer the level of distribution and engagement you’ll find within Shopify. And while you may find some wins when starting to build on other platforms, remember that there is a long term cost on supporting customers in those different ecosystems that can put a strain on your time and resources.
14. Use the data that’s available to you
Once the best parts of building on Shopify that isn’t discussed enough is the ridiculous amount of useful merchant data that you can leverage to run your business.
From the point of install, you’ll have access to a number of key data points that will help you understand if a new merchant is a good fit customer and how to best onboard and engage with them through their lifecycle with your product.
I recommend making sure the person who is responsible for growing installs and converting new customers is familiar with the type of business data that is available to app developers, and working closely with your engineering teams to prioritize how you want to integrate that data into your dashboard or CRM.
15. Identify and prioritize preventable churn
Churn can feel incredibly personal and can also be overwhelming if you try to tackle it all at once. That’s why it’s so critical to take steps to combat churn early, before it starts to outpace any potential revenue growth.
Try to create a breakdown of what’s actually driving churn today and prioritize the highest impact areas that you can address. You can do this through product analytics, churn surveys, or through one-on-one outreach.
Generally churn will follow into some combination of these buckets:
Pricing - App was viewed as too expensive compared to the value they received.
Competition - Customer found another app that met their needs.
Bad Fit - Customer was not in your ICP and shouldn’t have upgraded.
Failure to Activate - Customer upgraded but never reached activation in the product.
Feature Gap - Customer needed a feature that you didn’t offer.
Store Closed - Business closed or migrated off of Shopify.
Billing - Payments failed or customer was confused by billing.
Categorize your churn and focus your efforts on driving down the churn drivers that you believe are preventable as early as you can.
16. Challenge your assumptions for your free plan or trial experience
When it comes to your free plan or trial experience, it’s easy to get locked into one experience because you assume customers will respond negatively if you make any changes.
If you offer a free plan at the start, you may find yourself unwilling to ever remove it or replace it with a 14 or 30 day trial, because you come to expect that customers need a free version of your product. And that may end up being true. But it’s important to challenge your assumptions when it comes to how customers experience your product before upgrading.
On at least an annual basis, you should be asking yourself:
What is the goal of your free plan or existing trial experience?
Is my current experience actually delivering on that goal?
Is there a different version of my free plan or trial experience that would meaningfully improve my current conversion rates?
17. Entry price matters
We’ve discussed that you’ll be revisiting pricing on at least an annual basis. When you’re doing that, be mindful of the entry price for your platform.
Some of the biggest wins and fails I’ve seen on pricing has been related to entry price. That’s the first thing merchants will see when they look at pricing on your App Store listing and will be the thing that sticks in their heads when evaluating your product against competitors. This doesn’t mean you should only compete on price and chase after the lowest price, but be mindful that any changes you may there will be the thing that has the biggest impact on any changes you decide to make.
18. Be ready to compete against your friends
The Shopify ecosystem is a place where existing apps are constantly evolving and looking for new problems to solve for their existing customers. As discussed before, this is something you should be considering as well.
That means that if you’re integrating with other apps, at some point those partners will become competition. It’s also possible that Shopify itself will launch apps or add functionality that competes with your existing offering.
This isn’t always a bad thing and can be great validation of what you’re already building. But it’s a known risk that you should be prepared for and another reason to continue to invest to solve additional problems for merchants over time.
19. Build a great team
In the end, I think my takeaway from 4 years of growth in the Shopify ecosystem is to make sure you have a great team around you.
There will be highs and lows. But if you’re able to build a resilient team that’s focused on delivering for your customers then there is unlimited opportunity for what you can achieve.
Good luck.
