138. Signaling 📻
Why people buy software
I share a weekly update on ways to be a better marketer, brand-maker, team-builder, and person. If you enjoy this, you can share some love by hitting the Substack heart button above or below.
Hi there 👋
This week’s newsletter was inspired by an article I read (rediscovered? It was written March this year) on Julian Lehr’s blog, which by the way is one of the prettiest blogs I’ve come across in awhile. As you can see below, I’ve got some big questions on my mind as Q4 planning ramps up … questions like, “What is it that Buffer really sells?” 😅
Wishing you a great week ahead,
Kevan
~ Branch Rickey
Full quote:
“Things worthwhile generally don’t just happen. Luck is a fact, but should not be a factor. Good luck is what is left over after intelligence and effort have combined at their best. Negligence or indifference are usually reviewed from an unlucky seat. The law of cause and effect and causality both work the same with inexorable exactitudes. Luck is the residue of design.”
Here are 4 cool things I read this week
1 - 7 examples of what being an ally at work really looks like
2 - A startup guide to building your first marketing calendar
3 - How to put your app on the map
4 - Marketing is about making soulful bets ❤️
A soulful bet is work outside of the typical purview of marketing: Make a film. Commission an essay. Run a marathon. Sponsor a bake sale. Ride your bicycle from NY to British Columbia.
Are software customers “signaling” when they buy our products?
(inspired by the article “Signaling as a service” from Julian Lehr, Stripe)
—
I’ve been thinking a lot about why customers choose Buffer. What is it that we sell?
Social media tools, obviously.
But also …
Confidence. 💪
Peace of mind. 💤
Time. ⌚️
Better results. 💰
Career advancement. 👩🎓
(Those benefits vary based on use case, of course. You might need more time back if you’re a single-person marketing team. If you’re a social media manager at a 100-person company, you might desire confidence in your social posts going live on time (publishing) and your social posts being the best they can be (analytics).)
In thinking on this topic of “what do we sell,” I found myself returning to a very cool article written by Julian Lehr about signaling as a service.
The crux of signaling is well-summarized in the book The Elephant in the Brain by Robin Hanson and Kevin Simler. Signaling goes like this:
Most of our everyday actions can be traced back to some form of signaling or status seeking
Our brains deliberately hide this fact from us and others (self deception)
In the words of Julian:
So we think and say that we do something for a specific reason, but in reality, there’s a hidden, selfish motive: to show off and increase our social status.
One of the examples cited is education:
You would think that going to school is about learning and acquiring skills, but then why do students pay tens of thousands of dollars for Ivy League schools when all of the learning material is effectively available online for free? Why do we use grading systems when we know that students learn worse when being graded? The answer, again, is signaling: Education helps with credentialing and signaling to potential employers.
You also see this present in many of the products and brands that we purchase: Patagonia jackets (signal: I care about the environment), Louis Vuitton bags (signal: I have lots of money to spend on bags), Nike shoes (signal: I live an active and healthy lifestyle, and I care about looking good).
image from Julian Lehr’s article
—
(An aside: I tend to think of signaling as one of many reasons why we choose to make a purchase or take an action, not the primary or only reason. Or maybe that’s just my way of signaling that I want to be perceived as a non-cynical, warm-hearted person???) 😊
—
What might signaling look like for software products
There are three factors within signaling that make it work:
Signal Message: What it is that you’re signaling
Signal Distribution: How others can see you signaling it
Signal Amplification: How your signal can stand out and reach more people
image from Julian Lehr’s article
With tech products, things kind of fall apart around Signal Distribution.
It’s hard to signal to someone that you’re super smart or super savvy or super hip to the latest apps when the software itself only lives on your computer of phone.
The app that comes closest to a luxury service that I can think of is Superhuman, which charges its users $30 a month for an email client (which you could also get for free by just using Gmail).
But there’s a difference to other software products: Superhuman has signal distribution built in. Every time you send an email via Superhuman, your recipient will notice a little “Sent via Superhuman” in your signature.
The email signature (remember Hotmail’s famous signature? or “sent from my iPhone”?) is most often used as a viral growth component or a vehicle for social proof.
We have one of these at Buffer in the shortened URLs — buff.ly — that customers can choose to use through our platform. Here’s one from Sports Illustrated:
Does Sports Illustrated think it’s signaling something here?
Probably not. They may just be going for the shortest URL possible; perhaps we could point them to the Buffer FAQ articles for connecting a custom vanity URL. :P
However, I do think signaling may occur with SaaS products like ours.
The effect may be smaller — it is one of many, many reasons customers choose us.
But it’s there nonetheless, and worth reflecting on.
Examples of software signaling
To arrive here, I did my best to reflect on my identity as a software purchaser. In what ways might I be signaling when I purchase SaaS & tech products? I’m fortunate that I happen to be a marketer who markets a product for marketers, so I have some built-in, personal perspective on many of our shared customers.
Here are a few cases where I might have been signaling:
We switched our blog hosting from WordPress to Ghost. I may have been signaling that I care about open source, transparency, and companies that “do good.”
I run a Substack newsletter. I might be signaling that I am a cool, hip, elite thought leader. (??)
I use Trello for a ton of stuff. I may be signaling, “Look at how organized I am!”
I got an invite to mmhmm and immediately tried to share it with others. I was probably signaling that I am in the cool club and an early adopter.
I built a Squarespace website. It might be a signal that I am an outside-the-box thinker (I don’t know any bloggers who use Squarespace for their blog) … lol, or that I’m easily influenced by podcast advertising.
I take the Reforge growth courses, partially to signal how smart I am about growth stuff?
(TBH, this exercise was incredibly humbling. Am I really that vain? According to signaling theory, maybe yes.)
There are a few themes that pop up here.
Brand — Those of you who read this newsletter regularly know how much I love brand. But you can totally see the brand theme in these signals, right? The clearer a product’s brand purpose is, the more that customers can identify with it.
Scarcity — There’s a clear signal to give when you are part of the “in” crowd. This is accomplished with things like closed betas or invite-only communities.
Betterment — Improving one’s self through courses or certificates or awesome software is a ready-made reason to signal your skill to others.
Rather than signaling to the whole world with the products you choose (like shoes or Louis Vuitton), users of SaaS products typically end up signaling to two groups:
Their teammates / coworkers (We switched to Ghost! We love transparency!)
Their peers (I’m on Substack! All the cool kids are!)
So does signaling look the same for SaaS as it does for many other products?
Not at all.
But I’d argue that it’s there. When thinking of the reasons why people choose your product, there will undoubtedly be many, many users who choose you for the awesome benefits your product unlocks, the Jobs-to-be-done, and the outcomes you let them achieve.
It’s possible that signaling might just be one of those outcomes, too.
Thanks so much for reading. Have a great week!
— Kevan
P.S. If you liked this email and have a quick moment, could you click the heart button below? It’d mean a ton to me and might help surface this newsletter for others. Thank you!