Is Zapier the catalyst your business needs?

There are a lot of things out there that people would like to get done. But sometimes that initial burst of effort required is just a little overwhelming, making these things take a very long time.

In these kinds of situations, what you need is a catalyst to get things going. What Zapier has done is act as this catalyst for the connection of web apps. Founded out of a startup weekend in late 2011, Zapier uses an online web platform to integrate apps like Google Docs, Asana and Salesforce, to do whatever task or workflow you may want, saving time and energy

Zapier operates on a Freemium, business model. A limited version of the software is free, with the opportunity to upgrade to a variety of plans with monthly subscription fees. Freemium models usually have less than 10% paying customers, but a low additional cost per user allows paying users to subsidise free users, and a high-quality product often helps convert these free clients.

9V40V_38SCGS

So how does Zapier work as a catalyst? What does it have in common with chemical catalysts and how they work?

Uncatalysed reaction

Reactions with high activation energies are very, very slow. So slow in fact, that they might never happen. Catalysts are compounds which speed these reactions up and allow otherwise impossible reactions actually to occur. For example, there is a process in our body that would take 2.3 billion years without a catalyst. If we didn’t have that catalyst, we would be dead.

Now, I for one love all the nifty apps that are around, but my enthusiasm means the collection I use seems to be growing and growing. I’m forever thrusting a new one on our start-up team (sorry guys). You either have to access and update each one manually (boring and time-consuming), or pay a web developer to integrate your apps with code (expensive). Here Zapier comes in, automating the process and saving people masses of time.

To run successfully using the freemium model, users need to really like the product. Otherwise, they will never convert to paying customers or refer others. Did you know free users can be worth as much as 15-25% of a premium subscriber due to referrals alone?  That means you need to impress everyone.

 

Alternative pathway

A catalyst works by providing a different route for a reaction to take, giving the same result. Just like how you can take multiple routes as you drive to work.

What Zapier offers is an alternative pathway for data sharing. Their alternative path is a “zap”, which integrates whatever app you would like, creating a trigger for a new action. This could be automatically sending welcome emails using MailChimp after the completion of a Google Form, or using a new customer in Salesforce, to trigger the creation of the same new customer in Zendesk and Harvest.

zap

 

Reducing the activation energy

The energy needed for a reaction to occur is the activation energy. The lower this activation energy is, the less energy you need initially to kick the reaction off. A catalyst speeds up a reaction by forcing the alternative pathway with a lower activation energy.

In the same way, using Zapier to automate your app integration is easy, with a few simple steps. Users save themselves the overwhelming activation energy of mind-numbing manual labour or complex code development that would usually put them off, and require significant amounts of time and money.

Catalyst.png

Catalyst regeneration

What makes catalysts fantastic is that they aren’t used up. They can be reused again and again to make many reactions faster.

The Zapier software does the same, always being available to make that next new Zap, while linking seamlessly in the background. You can repeatedly connect anything. It is also easy to adjust the integration, add a new step to the Zap or pause it for a moment.

 

Turnover number and frequency

Unfortunately, catalysts cannot function optimally forever.  The turnover number of a catalyst is the number of reactions it can catalyse before it loses effectiveness. Similarly, the turnover frequency is how fast you can recycle a catalyst.

It is these properties that allow Zapier to make money. By essentially limiting this turnover number and frequency at different plan levels, from between 5 zaps and 3000 tasks per month (free) and 125 zaps and 50,000 tasks per month ($125 per month), users are encouraged to upgrade. The small price increases between plans, makes the investment appear good value. The increasingly high-quality product, catalytic efficiency, and the enormous potential Zapier could have on a business attracts potential customers. Take for example Green Socks, they launched a prototype app within 24 hours, without even using a single line of code!

 

A marker of a company that will be successful is one that solves a problem. Zapier does this, making web app integrations easy for everyone, and saving immense amounts of time in the process. It catalyses action for businesses and individuals, which in turn catalyses the conversion of free subscribers into paying customers, leaving the ultimate product of a business reaction, revenue.

Advertisements

Will Hello Fresh keep glowing?

Have you ever been to a UV party? When the UV lights are on, everything is cool and glowing. But the minute the lights are off, the fun ends. A bit like your standard sales business model. You have to put in energy (the light) for every single customer purchase (the glow). Otherwise, that one-off customer is gone, never to be seen again.

But do you remember those glow-in-the-dark stars you had as a kid? They kept on glowing long into the night and were so much more bang for your buck.

GLow in the dark stars

So what if you could take your UV-party business model, and turn it into a glow-in-the-dark stars business model? A model, where the sales keep rolling in? Like Hello Fresh and the subscription model perhaps?

Founded in 2011 by Germans Dominik Richter and Thomas Griesel, Hello Fresh has now expanded to seven countries and operates as a registered company in Australia.  They deliver food boxes weekly (over 1.5 million per week in fact), with everything you need to prepare dinner, from recipes to pre-measured ingredients. Basically, it makes dinner easy, convenient and decision free. It’s perfect for busy people.

The subscription model has a lot in common with those glow-in-the-dark stars and the process called phosphorescence (University chemistry coming in handy again). So how does Hello Fresh make their business model glow?

Exciting the electrons

Do you remember excitedly taking the stars out of the packet and into a dark wardrobe, only to find they didn’t glow? No charge… By putting the stars under the light, you excite their electrons, giving them the energy to jump up an energy level.  Meanwhile, Hello Fresh puts a lot of their energy into marketing and sales, with promotions to invite friends, media publicity, and data analytics. This gets their customers excited about their product and up into the buying state.
Phosphorescence one

Moving to the triplet state

Typically (like at a UV party), excited electrons quickly drop back down to the ground state, emitting no more light. But with glow-in-the-dark materials, these electrons can move across into a state called the triplet state. Here they can’t just drop back down instantaneously, and they stay excited for longer. By customers signing up to a Hello Fresh subscription, they are staying in this buying state for longer.  You can think of the triplet state like the triple+ money state.  The longer customers are subscribed, the more money earned.  All without repeatedly having to put in the energy to get the customers. Having projected customer numbers week on week also makes the uncertain logistics of food distribution much more manageable and efficient for Hello Fresh.

Subscription one.gif

 

The forbidden transition

So what keeps the electrons excited in the triplet state for so long? To move back to the ground state, the electrons have to go through a “forbidden transition”.  Sounds ominous doesn’t it? This movement is much slower, and so the stars continue to glow.  Now Hello Fresh does not lock people in for life (no there’s no sneaky fine print), but in the same way, once a customer is signed up to their box, the “forbidden transition” becomes the subscription cancellation.  For the lazy among us (Hello Fresh’s secret target market), it is harder to cancel that subscription than just to let the food come week on week.

Unfortunately, the subscription model is not all roses (or twinkling stars)

Reaching the triplet state

If getting to the triplet state was easy, everything would glow in the dark. But it doesn’t.  In the same way, it takes a particular kind of business to make the subscription model work.  It has to be something people want week on week.  And getting that commitment is hard.  I know I am drawn in by the offers of $1 food boxes, but the minute you tell me to put in my credit card for a recurring payment, I panic.  So Hello Fresh has to work hard for these first sign ups, more so, than for a one-off purchase.

 Return to the ground state

Just like electrons drop back to the ground state, and the stars stop glowing, customers quit their subscription, leaving the buying state.  These cancellations aren’t just from people like me who exploited the $1 first week deal (#typicalstudent). Even for those genuinely interested, it’s so easy for that one week break to turn into two weeks, then three weeks…  To stop those breaks from ever happening, it’s important that Hello Fresh’s recipes and products are varied, delicious and healthy week on week. When customers are paying a premium, they need to like what they are getting.

Quantum yield

The quantum yield of a material tells us how long it will keep glowing brightly.  Hello Fresh needs a high quantum yield. To be sustainable, they need a strong customer base, as the bigger they are, the cheaper they can get produce, the more efficient their deliveries are, and the more people try each meal box. Meaning more profits.

So just like a glow-in-the-dark material, Hello Fresh’s subscription model keeps revenue rolling in. But the work put in to get and hold onto customers is high, and only time will tell if this investment rewards them with glowing profits.