It’s one year to the day since I pushed a very, very early version of my startup web application to the public.
It’s called LoyaltySpace and is a tool which allows small businesses to setup and manage a customer loyalty card program.
I wanted to share a little bit about the lessons learnt and the experience so far, and will also share some numbers about conversions and profitability at the end of this post.
First, the lessons I’ve learnt along the way. These are undoubtedly all a function of my own website (which is by no means perfect), my own approach, and my specific small business market. However, I share them here as they have genuinely surprised me along the way, and are all relatively ‘actionable’.
Web is much less important than I expected as a sales channel
Despite plenty of visitors to my website, at least 90% of my customers have come through other routes other than the web. Direct sales, a leaflet campaign, word of mouth marketing, and resellers are my main channels, in that order. As a techy I obviously focus on web as it’s where my strengths lie, but once you start selling, you realise how important offline is.
No success with Adwords
Related to the above, I don’t think I have ever had a single conversion attributable to Adwords, despite spending a few thousand pounds on there for very niche and related terms. Adwords was crushingly bad and expensive for a small business as a means of customer acquisition. It just seems to attract surfers and researchers rather than those actively looking to buy.
Nobody reads your website in detail
I get frequent questions where the answer is clearly explained on the website. I don’t really mind this as it’s good to make contact with the prospect, but it’s surprising how few people go straight from ‘landing page’ to ‘contact us’ after looking like my product might be of interest. Lesson learnt – scale back the website content so as not to dilute key sales messages.
People like to talk on the phone
Potential customers like to call and talk through the process and product even if they have understood it perfectly and just want to say hi. It’s clear that customers take a lot of confidence in knowing a human is available and contactable – more so than I expected. Though this is possibly the nature of the beast in selling to small businesses, selling pure SAAS to business without phone contact would be very tricky.
Customers come in extremes with regards to price
My customers either seem to be ‘very price sensitive’ or ‘not price sensitive in the least’. The latter just have a problem and want it solving so they can concentrate on their own businesses. These customers are infinetly better and more fun to work with – not just for financial reasons. I personally have always wanted to sell to lots of customers for an amazingly low price, but I’m just not sure how scalable that is.
Resellers are worth their weight in gold
LoyaltySpace is a very generic product, applicable to all kinds of industries. I’ve found a lot of value in linking up with industry specialists who are looking for a white labelled solution to resell. Though I am only now getting to work with these guys and deliver white labelled systems, I think this route to market could dwarf anything I could achieve and lead to higher value customers. Next time, I would even consider a reseller only model.
No SEO magic required
Having found how important offline sales are, I have let the website drift a little. I haven’t followed any of the conventional wisdom about social media, SEO, but have still watched my website drift to the top of Google for my two key search terms. These are now doing the business, more than Adsense ever was. SEO just takes time and relevancy. A little effort can go a long way here.
Looking back on the above, they all tell the same story. Sales is hard work, requiring lots of hand holding, lots of customer contact, lots of real work to convince, educate, and close the deal. Hence my love for resellers.
I had this vision of producing a beautiful website, A/B testing it into a lean, mean, converting machine, and then throwing Adwords traffic at it until retirement. How wrong I was!
Let me say it again, building a web application is easy, selling it is a hard, hard slog. I would estimate that building is less than 1% of the effort.
I also wanted to share some numbers about how the business has been doing this past year.
Let me be clear, LoyaltySpace has been a very small part of my life this year. With full time consulting projects and being involved in another 2 startup projects, sales activity has amounted to maybe 2 hours per week. I plan to pick this up in the new year, and work more closely with resellers rather than selling direct.
The numbers below are estimates as I’ve moved analytics a few times and also collect payments by various routes. They are as close as possible to today – some have risen over the year as I have climbed Google for my key phrases.
- Website visitors: ~25 per day, ~9000 visitors in total not including big social media spikes.
- Conversions per day to free trial: ~2
- Conversions per week to paid customer: ~3
- All time free trial customers: ~300
- All time paying customers: ~59
- Current subscribed paying customers: ~46
- Monthly revenue: ~£1000
- All time revenue: ~ £8000 + equity stake in a new venture
- Marketing costs: ~ £3000 (mainly PPC, now scrapped)
- Freelancer costs: ~ £1000
- Net profitability: ~ £4000
So I won’t be retiring any time soon, but I’m fairly happy with the results and outlook so far given time invested. I can see a route to turning this into a salary or a viable small business within the next year. As that was my goal from day one, that would be a real result.