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Behind the Scenes of a $729k Month in a SaaS Business

Background

Today’s case study is different from the usual. Instead of a publisher site, we’re going to show you what goes on behind the scenes in a SaaS business we bought.

We bought Video Remix in Jan 2017 and recently had a $729k month. Most publisher sites don’t even reach $700k in a year!

We thought this site would make for an interesting case study, so let’s go backstage with us now.

What is Video Remix?

Video Remix is a cloud-based video creation, editing and personalization SaaS business.

It enables mass market users to create and deploy personalized video campaigns to their audiences. Here’s how it works:

1. You import and edit a video on the platform.
2. You personalize the video with data (name, email, location, image, etc) grabbed from FaceBook/your email service provider.
3. You distribute the video by email/social media.

Try it out for yourself by clicking here!

The site was launched in June 2015 and started making its first dollar in Feb 2016. Because the platform is available in multiple languages, it has a global user base.

The majority of them are from the US and we also have customers in Canada, the UK, the EU, Australia, New Zealand and Asia.

Its revenues come from monthly/yearly member subscriptions, recurring white label partner subscriptions, and upgrades/add-on sales.

The site gets its traffic primary from launches and cross promotions with affiliates (people with lists in related video/lead gen niches).

Several factors that influenced us to buy the website were:

• High growth and margin SaaS business (with upgrades and add-on sales)
• Valuable video personalization technology as intellectual property (editor, fast rendering)
• Recurring revenue from subscriptions and (newly launched) white labelling services
• Comes with solid software development, support/testing and graphics design teams
• Know-how can spread to other SaaS sites we own (bonus)

The Risks

The site did come with some risks, however:

1. We were not the only video personalization platform in the market, we had competition. There were other well established players with high prices and a corporate target audience.
2. We were heavily reliant on affiliates for traffic. Our success was dependent on being able to find people who were willing to promote us.
3. Launches were seasonal. We’d burn up the goodwill with affiliates and their lists if we launched all the time.
4. The site had lumpy earnings which fluctuated based on how many promotions/webinars we did.

The Opportunities

We identified some low hanging initiatives we could implement fast to improve earnings within 1 year:

I. Up-Selling High Ticket Programs

The WhiteLabel Program
This program targeted small companies (owner-operators from the internet marketing space) and allowed users to resell our platform to others.

Such companies accounted for about 90% of our customers. They could onboard other companies under their account without our logo.

We offered templates and business/sales training in this program.

The BlackLabel/Enterprise Program
We planned to offer an enterprise solution targeting larger companies with internal video teams. Such companies accounted for less than 1% of our customers.

Our competitors played in this space.

Note: The remaining 9% percent were mostly people using our software within their own businesses rather than serving customers with it. For example, a real estate agent using our platform to generate leads for herself/himself rather than hiring an outside agency to do so.

II. Using Webinars as Sales Tools

Auto Webinars
We were not doing this—all our webinars were live. Our goal was to have a library of recorded webinars that were available and could be replayed any time.

Regular Live Webinars
We also planned to run webinars on a consistent schedule e.g. several live webinars every week, targeting either our own or our affiliates’ lists.

III. Improving Our Pricing Structure

Our pricing was messy prior to acquisition. We felt we could bring more structure to and optimize our pricing models.

IV. Doing CRO, SEO & Paid Ads

The previous owners did not do much in the areas of CRO, SEO and paid ads. We planned to test whether organic search rankings and paid traffic would help us.

What We Focused On

Based on our available resources and the previous owner’s experience, we decided to hone in on the following:

• Monetizing via the launch model
• Expanding our community of affiliates and incentivizing them
• Using webinars as sales tools
• Growing our WhiteLabel and BlackLabel/Enterprise programs
• Optimizing our pricing structure

We only started to work on the site in Jan 2017 so we’ll focus on Jan-Jun 2017 in all the charts below.

I. Monetizing via the Launch Model

Launch models are usually quite resource-intensive and associated with lumpy earnings. So you might be wondering why we chose to do that instead of evergreen campaigns.

So let’s hear it from VideoRemix’s CEO, Dan Cumberland:

Evergreen campaigns are an important source of revenue and the lifeblood of a SaaS, but they are also generally a slow and steady growth approach. Instead of taking the slow and steady approach, we wanted to see how much buzz we could generate by throwing all of our efforts into a launch. We felt a successful launch would create brand awareness and help us greatly expand our marketing reach as well as our user base.

Well Thought out Funnel with Upsells

We set up automated messages to go out to customers to upsell them depending on whether they purchased the main offer.

This resulted in significant additional revenue from upgrades/higher tier packages. Here’s our launch and upsell process:

Launch Period

Pre-Launch Webinar

We wanted to drum up excitement before the launch so we held pre-launch webinars before the actual launch.

These webinars were personalized and exclusive to the affiliates’ email lists—they showcased full demos, real life results and offered their customers a chance to buy before the rest.

Main Offer (Smart Video)

Our main/core offer was called Smart Video and it was offered at a special price of $197/yr, 47/mo or $297 as a one time payment during the launch.

After the launch, the price would increase to $97/mo. This was to incentivize customers to buy during the launch period.

To make it a no-brainer, we offered 3 days of free live online training, 6 ready-to-personalize video templates and a 150% money-back guarantee.

Cost to Acquire Customers and Customer Lifetime Value

We acquired 2121 SmartVideo customers from JVZoo. The affiliate commissions and management fees we paid out were $254,616.

Our cost to acquire customers was $254,616 / 2121 = $120.

This cost was relatively high as we decided to be aggressive with affiliate commissions, offering a 50-60% payout per new customer.

We could afford to do so as our customer lifetime value was much higher and we were confident of monetizing the customer base through upgrades and internal course sales.

What is Customer Lifetime Value (LTV)?
A customer’s LTV is a prediction of the net profit attributed to the entire future relationship with a customer. It’s often used as an indicator of how much can be spent to acquire each customer.

 

Our average customer lifetime value as of July 2017 was $645.

Upsell 2 Weeks Later

After purchasing the Main Offer, all users were then funneled to an upsell 2 weeks later.

The upsell was structured with three pitch free webinars followed by an annual offer that involved a series of educational webinars as well as access to additional features in our software.

This upsell was done after the initial launch period was over and the affiliate’s bonuses were decided.

This allowed us to create this upsell at a premium price, while the leads were still hot, without needing to share the profits with affiliates or our affiliate manager.

What We Did Differently in Our $729k Revenue Month vs Other Months

We went all in in our launch:

1. We cut our prices nearly in half.

2. We offered an extremely high bonus pool.

3. We brought on a dedicated affiliate manager on commission.

4. We created a “one-time” payment option for the first time only for this launch.

One-time or lifetime access can be problematic for software companies. Ongoing development costs make it very difficult to sustain.

In spite of the challenges, we decided to offer a one-time option because we knew users and affiliates would jump at the chance to be a part of it.

Plus, we knew that any new user we landed could be monetized through upsells of training, templates, and courses.

5. We registered to be the featured sponsor at one of the premiere affiliate conferences.

At the conference, everything had the SmartVideo branding on it—name tags, banners, screens, etc. Additionally, the conference organizer mentioned us throughout the conference.

We were also given a slot to pitch attendees on promoting us as affiliates.

We used this timeslot to demo our technology live by having everyone view a personalized campaign on their own devices that we had prepared specifically for that event.

This created buzz and excitement. The attendees wanted to be a part of what we were doing.

 

II. Expanding Our Community of Affiliates & Incentivizing Them

The success of the launch also hinged on how strong our affiliates were. We could have the most sophisticated funnel in the world but it would flop if we launched to the sound of crickets.

If a tree falls in a forest and nobody is around to hear it, does it make a sound?

How We Recruited Affiliates

We recruited affiliates in 3 ways:

1. Prior to acquisition, the site was already active on JVZoo and we found affiliates on this platform.

What is JVZoo?
JVZoo is a popular affiliate network for online sellers and affiliates in the “make money online” industry. Most of what’s sold here is info products. There’re many affiliates here looking for products to promote and they get commissions by promoting the sellers’ digital products.

 

2. A well-connected affiliate manager approached us and wanted to promote our software. He roped in other affiliates to promote us.

3. We ran banner and placement ads and JVZoo and other forums to attract potential affiliates.

How We Incentivized Affiliates

We organized a leads contest with cash prizes and a clear leaderboard showing who was ahead.

There was an attractive list of bonuses, e.g. whoever made the most sales got a $20k bonus. We gave away around $50k worth of bonuses in total.

We ran on a profit share system—Every sale an affiliate made got him an instant 60% (up to $178) commission on the front end/main offer and he got limitless recurring commissions on the one time offers.

All these helped to motivate our affiliates.

We also reduced possible friction/barriers affiliates might encounter by providing:

• Done for you email swipe campaigns
• Sales page copy and design
• 24h support for their customers
• Bonuses for their customers

III. Using Webinars as Sales Tools

Because of the site’s previous success with webinars, we decided to focus on this as our main sales tool. We classified webinars into 2 types—regular live webinars and auto webinars.

Regular Live Webinars

We made sure that live webinars went out on a frequent and regular schedule. These webinars were held several times a week.

We promoted these webinars to our own and our affiliates’ lists. And we also drove traffic to these webinars and replays through retargeting and paid FaceBook ads.

During these webinars, the goal was to up-sell to existing customers or to engage new customers.

Auto Webinars

Historically, all our webinars were live. Though our audience enjoyed the live aspect, this was not a scalable strategy if our plan were to cater to a much larger audience.

In the future, we’ll move towards building a library of recorded webinars, which can be replayed any time.

Our goal is to preserve the feeling of exclusivity and make it psuedo-live.

How?

By replaying the past live webinar recordings with live support from our support team.

Our Webinar Strategy

We ran webinars 3-5 days a week, based on offerings, courses and opportunities that we had for our customers.

If we found that customers were expressing a specific pain point, we tried to solve the pain point through a course or product. If the course/product resonated, we’d keep selling and scale it up.

For example, customers wanted help building sales funnels, so we created a niche specific kit called a Conversion Kit.

Customers loved the product, so we turned it into a club where they got a new kit every month.

With our frequent webinars, burnout could be a problem. We found that if we gave real value and training live on the webinars, we could keep viewers excited, thus reducing burnout.

Although we didn’t have a hard and fast rule, we did track our attendance numbers. If the numbers dropped from one webinar to the next, we knew we needed to sell less and give more.

Our registrant to attendee conversion rate wasn’t very consistent and fluctuated between approx 0.4% to 59%. And we averaged about $60 in revenue per webinar attendee.

IV. Growing Our WhiteLabel & BlackLabel/Enterprise Programs

In addition to our core offering, we offered opportunities to upgrade to our WhiteLabel and BlackLabel/Enterprise Programs.

The WhiteLabel Program

This program allowed small “one-man” businesses to sell video personalization and 360-videos to their local markets.

These owner-operators usually came from an internet marketing background and had limited business experience and marketing budgets.

They could deploy VideoRemix on their own domains with their own branding. To our knowledge, no other competitors allowed sub-account creation and rebranding.

The price included a $5000 setup fee and an ongoing monthly/yearly fee.

Because these partners had limited to no creative/video marketing background, they required coaching services. So we offered project/training upgrades to them too.

This program was launched in Sep 2016 to our own subscribers. We started with 6 WhiteLabel partners and as of the time of writing, we had 7.

What we had done so far:

• Increased the size of our sales team and systematized lead generation.
• Solidified our offering and created tiers that would appeal to different levels of businesses, while making sure there was no cannibalization.

Moving forward, we planned to push the WhiteLabel program in Sep 2017 and add 20 more partners.

The BlackLabel/Enterprise Program (Beta Mode)

This new program targeted digital marketing agencies with in-house creative and development teams who wanted to provide video personalization services to their customers.

We created specific funnels and advanced features for them because they required SaaS use cases and sophisticated monetization methods.

And we outreached them through direct sales, business opportunities listings (e.g. franchise directories) and affiliates (small percentage).

As this group was experienced in SaaS solutions and likely to be familiar with YouTube video marketing, we emphasized our points of differentiation vs other competitors:

1. FaceBook video personalization (we hadn’t seen other competitors do this)
2. Available in 97 languages (human translated). Our site could auto detect the user’s language and display it upon login.

Since we launched this program, we closed 6 BlackLabel clients, of which one churned so we still have 5 remaining. Moving forward, we’d like to scale this program because:

• We had our lead gen and sales funnels in place so it wouldn’t be that expensive and capital intensive to scale them up
• Every deal from these clients was high ticket, resulting in a high return on investment per deal

V. Optimizing Our Pricing Structure

We saw 2 issues with pricing:

1. Pricing was messy prior to acquisition i.e. the same product was offered at different prices depending on where the customer entered our funnel.
2. Our pricing structure could be further optimized for profits by switching to a monthly recurring revenue model.

Tackling Messy Pricing

Previously, we didn’t have pricing publicly available. At other times, we had a few prices listed but they didn’t match or make sense together.

We wanted to bring more structure to our pricing models so we implemented standardized pricings and templates for recurring upsells.

Here’s how our standardized pricing structure looked as of the time of writing:

Basic Main Offer

Starting at $49/mo, this included access to our personalized video editor, basic features, personalization and one project.

Upgrades

1. Template Club – 10 new templates every month, plus advanced features and personalization options
2. Advanced Consultant Kit – landing pages, email swipe files, training courses
3. Project Limit Upgrade – upgrade to 100 projects
4. 360° Virtual Reality – 360° video support and training

Training Programs & Other Add-ons

1. 6-Figure Program – a results-driven membership program to help customers build and grow their businesses
2. Conversion Kit – niche specific sales funnels, templates and landing pages
3. Courses – a variety of sales and business training programs
4. Template Sales – done-for-you niche-specific templates
5. WhiteLabel program – allowed users to become resellers of our platform, as well as offering advanced features for advanced users

Here’s a breakdown of our revenue in the last 12 months (Aug 2016 to Aug 2017) across our various products:

Switching to a Monthly Recurring Revenue Model

What is Monthly Recurring Revenue (MRR)?
MRR is a measure of a company’s expected monthly recurring revenue based on snapshots of its customer base. As customers sign up and upgrade, MRR goes up. As customers downgrade or leave, MRR goes down. For customers who pay monthly, the MRR is simply the amount paid each month for their subscriptions.

Before the acquisition, after buying the main offer priced between $197 and $497/year, customers were offered a template upgrade.

The template upgrade was originally priced between $57 and $67 one time. We switched to $47/mo for the template upgrade in Sep 2016 to optimize the lifetime value of customers.

(The templates were expanded to include sample video projects such as real estate and restaurant templates.)

After the acquisition in Jan 2017, we changed to a monthly recurring model for the main offer as well.

We created a few different front end packages to allow customers to get started with our platform. These packages started at $49/mo for one live video and scaled up from there.

The concept was to make the first step from prospect to customer as easy as possible.

Once we had someone as a customer, he’d quickly move through our plans as he used our product with more and more clients.

This gave us the chance to upsell courses and features to help customers grow their businesses.

Switching to a monthly recurring revenue model helped to smoothen our lumpy earnings.

The Results

Thanks to our launch strategy, we had an especially successful month in May.

Traffic

Here’s a Google Analytics screenshot of visitors to VideoRemix sales website:

And here’s a screenshot of the app usage by user base:

For both our sales website and app, there was a sharp increase in traffic numbers in May, our launch month.

Number of Customers

The number of customers increased from 612 before acquisition to 2000+ as of time of writing.

Our user churn rate was low at about 5% and we had 1100+ active users (those who logged into their accounts) in June 2017.

What is Churn Rate?
Churn rate refers to the proportion of subscribers who cancel during a given time period.

 

Revenue

The launch in May blew our revenue figures out of the water. In that month alone, we had $729k in revenue.

The sudden influx of new users meant that we had to quickly grow our support team to accommodate and onboard them.This was a problem we were happy to have.

Our monthly recurring revenue was $64,789 (we expected this to be at least $50k/mo moving forward) and we estimated our annual run rate to be $1,080,465.

 

What is Annual Run Rate?
Annual run rate is the annualized revenue of a company if you were to extrapolate the current revenue over a year. This is the annual recurring revenue for the coming 12 months if you don’t add or churn anything. It’s the yearly version of monthly recurring revenue.

 

Our average revenue per user was $57 in June 2017.

Customer Lifetime Value

Our average customer lifetime value as of July 2017 was $645.

Bottom Line

We bought the site in Jan 2017 and managed to achieve the following in 6 months:

• Record-breaking $729k revenue month
• Average customer lifetime value of $645 (our cost to acquire customers was only $120)
• $60 in revenue per webinar attendee
• 2000+ customers (1100+ active users), up from 612 before acquisition
• Average revenue per user of $57
• Low user churn rate of about 5%

The site is now earning $65k in monthly recurring revenue and has an annual run rate of $1.08m.

Here’s what we did:

• Monetizing via the launch model
• Expanding our community of affiliates and incentivizing them
• Using webinars as sales tools
• Growing our WhiteLabel and BlackLabel/Enterprise programs
• Optimizing our pricing structure

We haven’t done a whole lot of work on CRO, SEO and paid ads so moving forward, we’ll like to test out these strategies. We’re also gearing up for our next affiliate launch in March 2018.

Our short/mid-term goal is to double revenue in 6-12 months by scaling our Blacklabel Enterprise program.

 

We’re always on the lookout for good businesses that want to be great, and we’ve got the experience and infrastructure to create a custom team of fulltime and freelance experts to improve businesses. You’ve built it and brought it this far; if you want to grow, let us help you take it to the next level. If you think you have a great business and need a partner, contact us.

I Want to Grow My Business

If you’re looking to purchase high-end online businesses, filter out small deals and work with one of the best teams in the world, look no further. We specialize in high-end deals only to make sure that our time isn’t spent on smaller transactions, meaning that each of our deals is a lot more important to us than it would be to other brokers.

 

Author Bio

Karen Foo is a deal flow expert and digital marketer with experience in a wide range of industries from finance to education. She is a National University of Singapore Business School graduate and her corporate career spans Europe and Asia. You can tweet her here.

Success Story: How John Holling Sold His Site and Ended up Making Even More Than Before

John Holling is a serial entrepreneur and investor who co-founded several companies including BBQ Grill Cleaners, Foodealio and Social Mojo.

He was the cofounder and COO of 99 Dollar Social, a social media marketing company offering services to small businesses. This company was recently sold to Wired Investors.

His latest project is Startup to Stardom, a web show to be featured on Entrepreneur.com in the fall of 2017.

In the show, he and his co-hosts will demonstrate the process they go through for starting an actual business from concept to revenue.

In today’s interview, he spills the beans and shares his experience selling 99 Dollar Social, so you can gain an insight into how the process works. Here’s his story*.

*The interview has been lightly edited for clarity.

Name: John Holling
Website sold: 99dollarsocial.com

Q1. Tell us a bit about yourself. What were you working on before the sale and what are you doing now?

I was the co-founder and COO of 99 Dollar Social responsible for all operations as well as business development.

I also oversaw sales and marketing staff and worked daily on building partnerships and other strategic relationships.

Currently, I’m working on several projects, including a cryptocurrency website, a local service business and an online booking/service business that will start locally and expand nationally.

Q2. How much traffic and revenue was your site getting?

We were getting approximately 300 unique hits per day, with monthly revenue of about $65,000.

Editor’s note: If you want to know how much traffic and revenue the site is now getting, check out our case study.

Q3. Who’s your website for and how did you come up with the idea for it?

99 Dollar Social is a “humans as a service” business, offering social media content posting to small business owners worldwide.

The idea came from recognizing the need for small businesses to remain active on social media with quality, consistent and relevant content, without a large expense or time commitment.

Q4. After how long did you decide to sell the site? What made you decide to do so? Were you facing any challenges?

We were in business for about five years before selling the site.

Wired approached us with an offer, and the partners discussed all the options, advantages, disadvantages, etc, and decided that a sale, while retaining a share, made the most sense.

Our challenge at the point when we sold was in scaling to the next level. Growth was slow and steady, and we wanted to experience more rapid growth.

Q5. You could have sold the entire site. Why did you choose to retain partial ownership?

We recognized the great potential that 99 Dollar Social had and believed in Wired’s ability to capitalize on that potential.

Q6. How did it feel after you sold your site?

It felt great! We felt as though selling to Wired put the company in the hands of a very capable group, while freeing up our time to pursue other projects.

Q7. What’s your advice to someone who plans to sell his/her site?

This is a great option, depending on your individual situation.

If you are “married” to your business—you don’t want to see any changes made, etc—then an acquisition is probably not the best option.

If you are looking to cash out and pursue other endeavors, it’s a fantastic option.

Q8.What would you say to someone who’s interested in buying/selling a site with Wired Investors?

The process was smooth and moved much faster than I would have expected. Everyone we’ve dealt with at Wired has been professional, pleasant, and always straightforward and honest.

It was a very positive experience overall.

Q9. What’s next for you? Any final thoughts?

I’m working on many projects and looking forward to many more. The sale to Wired made a lot possible.

Had we not been introduced, all these would not have been possible for quite some time. For that, I am thankful.

Thanks for sharing your story, John! We love behind the scenes stories like this.

The key takeout is: Even if you feel your site’s growth has stalled, it’s still possible to grow your site with a new team.

We’re happy that John is now free to pursue other new projects while still benefiting from 99 Dollar Social’s growth. Hope you’ll be our next success story!

We’re always on the lookout for good businesses that want to be great, and we’ve got the experience and infrastructure to create a custom team of fulltime and freelance experts to improve businesses. You’ve built it and brought it this far; if you want to grow, let us help you take it to the next level. If you think you have a great business and need a partner, contact us.

http://wiredinvestors.com/sell/ I want to grow my business

How We Doubled Reseller Revenue, Keywords Ranked & Traffic on a Subscription Marketing Business

Background

We bought 99 Dollar Social in July 2016 and in this case study, we’ll show you what we did and the results thereof.

 

What is 99 Dollar Social?

Launched in 2014, 99 Dollar Social is a subscription marketing business that delivers fresh content for Facebook and Twitter pages for small businesses at $99/mo.

At the time of acquisition, the site had 512 active customers and 2 main sales channels—direct retail (57%) and resellers (38%). Affiliates accounted for only 5% of our sales.

1. Direct retail: The majority of our users came in directly to the site through organic rankings, publicity from media outlets/other sites or social media.
2. Resellers: Another major chunk of our users came in through reseller partners (e.g. SEO agencies) who sold our services to their own customer bases.

Here’s a look at the average monthly revenue per customer. 61% of them were in the $51-$99 range

Several factors that influenced us to buy the website were:

• Strong history of profits and growth. The site had a profitable core product with several upsells (LinkedIn/Pinterest add-ons had 100% profit margins)
• High gross margin of 78% thanks to scalable system and workforce and strong operating procedures
• Big marketplace for such services. The social media management market was a fragmented one with no clear leader and we saw an opportunity to build 99DS into the market leader
• Email list size of 10k
• Strategic fit with the rest of our website portfolio

The Risks

However, the site had its risks:

• High churn rate of approx 15%
• Many competitors (esp. offshore competitors who could undercut us in pricing)
• High copycat potential
• Reliance on social media APIs. If the various social media platforms changed their APIs, we’d have major work to do.
• Big team to manage. If team members left, we had to train and onboard new ones quickly.

Deal Structure

The site had grown profits steadily since it launched (see the chart below). It tripled its earnings in 1 year from $7k/mo in Apr 2015 to $24k/mo in Apr 2016.

The site averaged $20k/mo in earnings the last 6 months before purchase (i.e. between Jan – Jun 2016). The last 12 months earnings was $255k.

Our short term goal was to 2x earnings within 1 year and our long term goal was to 4x the earnings in 3 years and exit the business after realizing those gains.

The Opportunities

We saw the opportunities as follows:

Short Term

• Split test pricing and user checkout
• Shift focus from direct retailer customers to resellers
• Partner with experts who have SEO agency audiences
• Set up a more comprehensive affiliate program
• Reduce customer service costs
• Monetize our email list via webinars

Long Term

• Reduce churn
• Add higher value add-on services
• Use paid traffic via Facebook ads

What We Focused On

We decided to hone in on the following based on our available resources:

• Further monetizing our reseller program via webinars
• Maximizing our existing affiliates’ lists
• Upselling to higher tier plans
• Reducing churn
• Running paid ads on Facebook
• Experimenting with push notifications
• Creating content and link building

We only started to work on the site in July 2016 so we’ll focus on July/Aug 2016 to July/Aug 2017 in all the charts below.

I. Further Monetizing Our Reseller Program via Webinars

Our reseller program used to be free to join but that attracted looky-Lous. So we changed it to a structure where partners had to pay to join. This weeded out those who weren’t serious.

After joining, our reseller partners were allowed to white label our services i.e. our branding/logo would not be seen anywhere.

Resellers were free to set their own prices and use their own branding/logo with their own customers.

This program was great for those who were sales oriented and just wanted to manage client relationships without having to build/manage their own teams.

Because they didn’t have to do the the actual social media postings themselves, it saved them valuable time.

Resellers could pick from 3 different plans:

Resellers were roped in mostly through recorded webinars. We sent emails to our list asking subscribers to join our webinars every few days.

We also prepared a series of swipe emails which our affiliates could use to appeal to their subscribers to sign up for our webinars.

If they stayed till the end of the webinar, we offered them a lifetime $100 off coupon code to entice them to upgrade to the highest tier $399/mo plan.

Besides promotional webinars, we also ran training and education webinars every 2 weeks.

The Results

Since we took over, we increased the number of resellers by 1.7x, from 182 in Aug 2016 to 306 in mid Aug 2017.

Note: The word “subscriber” in the chart below refers to customers.

While revenue from direct retail customers hovered around $42k, revenue from resellers doubled from $19,743 in July 2016 to $40,092 in July 2017.

And the revenue from resellers increased from 34% to 51% of our total revenue.

Note: Affiliate revenue not shown because it was too insignificant.

II. Maximizing Our Existing Affiliates’ Lists

Our affiliates came in through sales people who had relationships with them. We also had affiliates who reached out to us proactively.

So here’s how we cross-promoted 99DS to our affiliates’ lists:

We prepared a series of swipe emails which our affiliates could copy and paste. It consisted of 3 emails sent over 5 days.

We sent 3 emails promoting 99DS to their lists and in return, they sent 3 emails promoting their products/services to ours. Our affiliates got paid 10% recurring revenue for each sale.

Moving forward, we might focus less on affiliates because they hadn’t proven to be highly profitable.

III. Upselling to Higher Tier Plans

Whenever possible, our customer service/live chat staff would recommend a mid/high tier plan. On our site, we also steered the choice towards the mid tier plan.

We also added more CTA options to upgrade plans in our email campaigns for new customers.

We followed up with a call 2 weeks after purchase to see how they liked the content and took that opportunity to see if we could upsell.

Besides higher tier plans, we also encouraged customers to buy add-ons. For example, on the checkout page, we recently replaced the Google+ add-on ($19) with Instagram ($49).

Here’s our signups from 1 July 2016 to 1 July 2017. Although the low tier plan accounted for the majority of our signups, we planned to focus on the mid/high tiers and add-ons moving forward.

IV. Reducing Churn

What is Churn Rate?
Churn rate refers to the proportion of subscribers who cancel during a given time period. The churn reports below display net churn or the overall loss of subscribers or members for the selected product(s).

 

Companies with high churn rates had to constantly look for new customers to replace those who cancelled. So reducing churn was a priority for us.

To reduce churn, we worked on improving our processes and systems and thus, the customer experience.

Ensuring All Posts Got Published on Time

We switched our posting platform from Sendible to Social Report in May 2017.

This was because the Sendible platform would go down every now and we had to issue refunds as a consequence.

Besides higher reliability, the new platform had the added advantage of better reporting.

Improving Our Onboarding Process

We gave everyone who signed up a welcome call within 24h to follow up on all the details needed for their social media postings and to address any potential questions.

During these calls, we gave our customers more information on the results to expect and the services we offered.

Since Jan 2017, we also implemented an onboarding email campaign. We expanded from the previous 3-4 emails sent in the first month to 7 emails.

Raising the Calibre of Our Team

We trained our content specialists to produce higher quality social media posts.

We also moved towards a consultant approach i.e. we talked to customers to find out their needs and sold them based on the problems they wanted to solve.

The Results

Unlike other metrics, the lower the churn rate, the better. Unfortunately, our churn rates for both direct retail customers and resellers didn’t see much improvement.

This was because we focused on aggressive growth strategies instead of maximizing/nurturing our existing clientele. We would need to work on this moving forward.

Below you’d find the charts of our churn rates. The churn rates were calculated by dividing the number of customers who churned by the number of customers at the start of each period.

Churn Rate of Direct Retail Customers

The churn rate of direct retail customers was 11.1% in Aug 2016 and 16.6% in Aug 2017.

Churn Rate of Resellers

The churn rate of resellers was 19.1% in Aug 2016 and 26.2% in Aug 2017.

V. Running Paid Ads on Facebook

We did tons of Facebook ad tests over the last 3-4 months and came up with a finely tuned machine. And we made use of Facebook’s lookalike audience and advertised to this segment.

Looking at the screenshot below, you might be thinking “isn’t your cost per purchase a tad high?” Yes, at an average cost of $185 per purchase, our cost was rather high…

…but this was still lower than our customer lifetime value. Which meant we still came up tops. For every customer we got via Facebook ads, we still made a profit.

Our Facebook ads led to various landing pages. For example, for the last 2-3 months, we experimented with a 14-day trial, which had a trial to conversion ratio around 20%.

From 1 May to 17 July 2017, we spent $10,656. But we only got 16 active customers from this landing page so we would consider this a fail in terms of ROI.

Moving on, another experiment we ran was offering the first month at 50% off (not enough data at time of writing to be conclusive).

Our Facebook funnel had 2 upsells built in, here’s how it worked:

Thanks to our paid Facebook ads, the composition of our top traffic channels changed. Social went from 1.4% of our traffic in July 2016 to 7.1% in July 2017.

VI. Experimenting with Push Notifications

Push notifications was something new we wanted to experiment with to complement our email marketing efforts.

For all visitors who went to our website, we added a push notification to ask them to join our webinars or offered them coupon codes for discounted purchases.

As a visitor, you’d see a Get Offers tab on the right:

If you clicked on that, you’d see this popup:

Here are some examples of the various notifications we tried and their click rates.

We started running push notifications in Jan 2017 and added 706 subscribers as of the time of writing.

Conclusion: We saw this a nice-to-have bonus but not a major game changer to our business.

VII. Creating Content and Link Building

Unlike the publisher sites in our portfolio, we focused less on content and link building.

Since we bought this site, we created approx 10 pieces of articles per month and guest posted between 5-10 articles per month.

This resulted in us ranking for about 2000 keywords as of the time of writing, up from about 1000 keywords when we just bought the site.

In other words, we doubled the number of keywords we ranked for.

We ranked in the top 2 positions for about 206 money keywords.

The Results

Thanks to the above efforts, here are our results in terms of traffic, number of customers, revenue and lifetime value.

Traffic

We increased traffic by 1.9x from 10,188 in July 2016 to 19,412 in July 2017.

Note: The traffic figure for Aug 2017 was lower because the month was incomplete when this case study was written.

Number of Customers

As of the time of writing, we had 349 direct retail customers and 306 resellers. The big win for us was resellers, with a 1.7x increase in their numbers in the last 12 months.

Note: The word “subscriber” in the charts below refers to customers.

Number of Customers: Direct Retail

The number of direct retail customers didn’t change significantly in the last 12 months. As of mid Aug 2017, we had 349 direct retail customers vs 346 in Aug 2016.

Number of Customers: Resellers

We experienced a 1.7x increase in the number of resellers, from 182 in Aug 2016 to 306 in mid Aug 2017.

Revenue

We increased our revenue by 1.34x from $58,868 in July 2016 to $78,894 in July 2017.

Breaking it down further, we could see that the increase was due to resellers.

While revenue from direct retail customers hovered around $42k, revenue from resellers doubled in the last 12 months from $19,743 to $40,092.

Note: Affiliate revenue not shown because it was too insignificant.

Next, let’s take a look at the monthly recurring revenues.

What is Monthly Recurring Revenue (MRR)?
MRR is a measure of a company’s expected monthly recurring revenue based on snapshots of its customer base. As customers sign up and upgrade, MRR goes up. As customers downgrade or churn, MRR goes down. For customers who pay monthly, the MRR is simply the amount paid each month for their subscriptions.

MRR for Direct Retail Customers

The MRR was $41,889 in mid Aug 2017, which was a 3.3% increase from $40,548 in Aug 2016.

MRR for Resellers

The MRR was $43,066 in mid Aug 2017, which was a 1.8x increase from $23,526 in Aug 2016.

Customer Lifetime Value

What is Lifetime Value (LTV)?
A customer’s LTV is a prediction of the net profit attributed to the entire future relationship with a customer. It’s often used as an indicator of how much can be spent to acquire each customer.

Prior to acquisition, the LTV of a customer was around $260-270. A reseller would stay with us for about 3.7 months and a direct retail customer about 3 months.

Post acquisition, the LTVs of both direct retail customers and resellers increased.

Lifetime Value of a Direct Retail Customer

The LTV of direct retail customers increased from $277 in Aug 2016 to $670 in July 2017.

Lifetime Value of a Reseller

The LTV of resellers increased from $267 in Aug 2016 to $582 in July 2017.

Bottom Line

We bought the site in July 2016 and managed to achieve the following in the last 12 months:

2x

the revenue from resellers

2x

the number of keywords we ranked for

1.9x

the monthly traffic 

1.7x

the number of resellers

The site is now earning $79k/mo.

Here’s what we did:

• Further monetizing our reseller program via webinars
• Maximizing our existing affiliates’ lists
• Upselling to higher tier plans
• Reducing churn

• Running paid ads on Facebook
• Experimenting with push notifications
• Creating content and link building

Moving forward, we’ll focus on the following:

• Do bigger joint ventures with resellers who have 50+ clients
• Hone our Facebook ad funnels for direct retail customers, then replicate for resellers
• Use webinars as a sales tool with other partners/affiliates
• Do more link building to increase our organic search traffic
• Reduce churn to <5% via better customer service and product improvement
• Split test pricing

Our long term goal is to 4x the earnings in 3 years and exit the business after realizing those gains.

If you want to know more about the seller’s story and his experience selling the site to us, here’s an interview we did with him.

We’re always on the lookout for good businesses that want to be great, and we’ve got the experience and infrastructure to create a custom team of fulltime and freelance experts to improve businesses. You’ve built it and brought it this far; if you want to grow, let us help you take it to the next level. If you think you have a great business and need a partner, contact us.

I Want to Grow My Business

If you’re looking to purchase high-end online businesses, filter out small deals and work with one of the best teams in the world, look no further. We specialize in high-end deals only to make sure that our time isn’t spent on smaller transactions, meaning that each of our deals is a lot more important to us than it would be to other brokers.

I Want a High Return Investment 

Author Bio

Karen Foo is a deal flow expert and digital marketer with experience in a wide range of industries from finance to education. She is a National University of Singapore Business School graduate and her corporate career spans Europe and Asia. You can tweet her here.

How We Doubled Traffic and Revenue, and Tripled Our List Size in 8 Months

Background

In Sept. 2016, Wired Investors purchased Start Blogging Online (SBO).

We built traffic and revenue for SBO, and in this article, we’ll show you what we did and the results thereof.

What is Start Blogging Online?

Start Blogging Online is a site founded in 2013 and it gives blogging newbies advice on how to start their own blogs.

Its main traffic source is organic search results from Google and it earns the majority of its revenue through being a Hostgator affiliate.

When we bought the site in Sept. 2016, it had a mailing list size of 8,914, but subscribers were not emailed often/regularly.

Several factors that influenced us to buy the website were:

• It had a clean backlink profile; no PBNs or black/grey hat techniques were used
• It was an aged domain
• It was already ranking for some competitive long tail keywords
• It had an existing relationship and a favorable custom payout rate with Hostgator, one of the biggest affiliates in the industry

The Risks

But, of course, it was not all roses. There were 2 major risks that came with this site.

First, nearly all of the site’s revenue came from one affiliate program. If the program changed its payout, terms and conditions, or shut down, our revenue would be decimated.

Second, approximately 82% of its traffic came from organic Google search. And the homepage drove 60% of this organic search traffic.

We relied heavily on keyword rankings for our traffic and were at the mercy of Google’s algorithm.

Deal Structure

Let’s take a look at SBO’s historical financials from Sept. 2013 to Aug. 2016.

As of May 2016 when initial negotiations started, the site generated about $800k in net income in the last 12 months.

But between then and when we concluded the negotiations in Sept. 2016, the net income started to decline to approx. $40k/mo.

Note: These figures are net income after deducting expenses.

Our short/mid-term goal was to implement a growth plan (details below) and generate over $1m in revenue per year, with half of the revenue coming from our own products.

We also wanted to focus on email marketing and diversifying our revenue sources to mitigate the risks of relying on Google and Hostgator.

Our long-term goal was to aim for a 5x multiple when we sell the site.

The Opportunities

We saw several opportunities with SBO while doing our due diligence:

1. Growing traffic
   • Increasing organic rankings for the highest potential terms through link building
   • Scaling the content production to increase the amount of traffic and potential ranking opportunities
   • Improving on-page SEO and click-through rates from Google search results so we get more clicks
2. Turning more visitors into customers via conversion rate optimization
   • Adding in-content call to actions
   • Rewriting copy on key pages
   • Testing new opt-ins and copy
3. Focusing on email marketing
   • Setting up an email funnel to promote our own products & affiliate programs.
4. Improving monetization methods
   • Negotiating a higher affiliate rate with Hostgator
   • Signing up to other affiliate programs to diversify our revenue source
   • Creating an info product for the audience

What We Did

Drilling down further, we decided to hone in on growing traffic as our first step, which matched our team’s expertise.

We also wanted to let our new links, new content, and on-page SEO changes boost the authority of our site before moving on to other improvements.

Note:

• Because we only started to work on the site in Oct. 2016, we’ll focus on Oct. 2016 to June 2017 in all the charts below.
• The baseline figures in the charts are based on the average of May-July 2016.

I. Building Backlinks via Flickr

Yup, you read that right. We built backlinks using Flickr. This was a newish method and we had lots of success with it on SBO.

If you’re a Flickr user, you can opt to offer your work under a Creative Commons (CC) license, and browse or search through content under each type of CC license.

What is a Creative Commons license?
A Creative Commons licence is a public copyright licence that enables the free distribution of an otherwise copyrighted work. It provides a standard way for content creators to grant someone else permission to use their work.

We created some images for Flickr and got them ranked on Flickr Creative Commons using SBO as the attribution.

Many big website editors ask their staff to find Creative Commons images on Flickr for their articles.

Our goal was for our images to be picked up by these big publications; thus, scoring us juicy attribution links.

Using this method, we scored a total of 190 backlinks from Oct. to Jun. Breaking it down, that was approx. 24 links/month from Flickr alone.

What was impressive was that the average DA of these 190 Flickr links was as high as 36.8!

II. Building Backlinks via Infographics

Infographics were another great white hat way to win backlinks for SBO. We created 11 infographics between Oct. and May. Are you thinking “What? Only 11?”

True, we only created 11 infographics. But read on to find out what we did with these 11 infographics.

We outreached like crazy with these 11 infographics! We identified relevant blogs/sites and sent out 78,904 emails to their owners. Yes, you read that right; nearly 79k emails! And that’s not all!

On top of the nearly 79k emails we sent out, we also submitted 78,998 contact forms to website and blog owners in our outreach efforts.

We created our own in-house automation tool to send out these emails and submission forms, but we did a thorough manual check first before firing off to these contacts.

We made a customized introduction paragraph to accompany the infographic for those who responded positively in our outreach efforts.

In total, we sent 372 different custom intros (that took some serious brain juice).

We scored a total of 336 links from infographics between Oct. and Jun. To put it into perspective, that was approx. 1.4 links/day, just from infographics alone!

The average DA of these 336 infographic links was 24.9, not too shabby either.

Results

With the combined efforts of building links through Flickr and infographics, we got a total of 526 links between Oct. 2016 and June 2017.

The average DA of these 526 links was 29.2.

III. Creating More Content

Besides link building, we also published content targeting keywords. Between Oct. and June, we published 131 new articles.

We published a total of 224,550 words, so each article was approx. 1,714 words long.

Google favored long form content and we wanted to try to rank for as many long tail keywords as possible with each article.

IV. Making On-Page SEO Improvements

We spotted some quick improvements we could make and added semantic keywords to the homepage and Frequently Asked Questions (FAQs) page.

This not only makes for a better user experience but also establishes topical relevancy in Google.

Clinching the Answer Box Position

We even managed to clinch the much sought-after answer box position in Google for one of our keywords by optimizing our content for it!

The best part is, you don’t have to be #1 in the ordinary results to get this spot at the top.

Updating Title & Meta Tags

In addition, we updated the title and meta tags to increase the click-through rate (CTR) from Google’s search results.

1. We updated the title tag, starting with the pages with the most clicks and skipping those which we were already ranking #1 for or those where we had high CTR. We tried to include an exact match keyword at the beginning of the title: a number, brackets, and a power phrase (e.g. tips, you, why).
2. Next, we updated the meta tag to answer the searcher’s question and tried to include 2 keywords where possible.
3. Lastly, we updated the date in WordPress to today’s date (i.e. the day we made the changes).

After the change, CTR and traffic increased dramatically in the space of a week. See our Google Analytics screenshot below.

Here’s a comparison of the CTR before and after we updated the title and meta tags.

Adding Schema

Adding review schema to relevant pages increased the click through rates and rankings. This helps you stand out in Google with special markup in your listing.

Our Keyword Rankings

Thanks to the combination of link building, new content, and on-page SEO, we had 85 keywords ranking on the first page of Google.

Many of these were money keywords, like “review”, “best”, and “how to” keywords; thus, explaining the high cost per click (CPC).

Also, many of these keywords moved up by 90-100 positions, which meant they were not ranking at all in Google a year ago.

Our Traffic Numbers

Here’s a screenshot of our Google Analytics dashboard.

Traffic had been on a steady upward trend since we bought the site in Oct. We increased the traffic by 2.2x, from a baseline of 59,181 to 130,693 in June.

V. Turning More Visitors into Customers via Conversion Rate Optimization

Getting more visitors was only half the equation. We were also able to turn more of the existing visitors into customers with Conversion Rate Optimization (CRO). Here’s what we did:

Added In-Content Call to Actions

We added in-content calls to actions after the second paragraph of each blog post, which increased the click through rate (CTR) to homepage by 30%.

Adding these internal links also had the added benefit of helping our ranking in Google.

Here are the results from adding CTAs for our “Click To Homepage” Goal:

Rewrote Copy on Key Pages

We rewrote the copy to thoroughly answer our user’s questions on key pages and added additional calls to actions.

To find potential issues, we ran heat maps, surveys, and competitor comparisons.

This increased our clicks to Hostgator by 3.6x on the blog platform comparison page:

Tested New Opt-Ins & Copy

We tested new pop-up designs and copy to increase signup rates for the email funnel. Here’s what we did:

Added a Content Upgrade

We created a checklist as a content upgrade on our most popular blog post and saw increasing list growth to that campaign.

Added a Pop-Up

Instead of the previously bland opt-in, we added a pop-up with a clear call to action to sign up for a blogging tutorial (which led to a multi-step email sequence).

Here’s the old opt-in, which was only shown in-line:

Here’s the new opt-in, which was shown as a pop-up:

Adding the pop-up didn’t hurt the click through rate to Hostgator and we got an additional $2,000 in sales per month.

Redesigned the Thank You Page

We also redesigned the email sign-up thank you page from this:

To this (so visitors could continue with the hosting tutorial after signing up to our email list):

The Results

Since we implemented the changes in Oct., the email sign-up rate and number of new email subscribers per month increased monthly (except Jan-Feb when we did some testing).

In March, we redesigned the pop-up, which was why the CTR increased.

Note: The email sign-up rate was calculated by dividing the number of new subscribers by the number of unique visitors per month.

We used to get only 94 new email subscribers per month (baseline number) and, in June alone, we got 4,353 new email subscribers.

As of June 2017, our total email list size is 25,883, 3x our baseline list size of 8,635.

VI. Focusing on Email Marketing

When we bought the site, the email funnel was rather basic. The autoresponder consisted of 9 emails sent over 43 days and it didn’t actively promote any offers.

So, we set up an email funnel to promote our own products and affiliate programs. Initially, we set up 3 separate funnels for subscribers where they could self-segment upon opting in.

But we soon realized that segmentation didn’t work well and was hurting our opt-in rate. So, we returned to having 1 funnel and removed the option of self-segmenting.

We lengthened the sequence to approx. 20 emails sent over 38 days. Besides educational emails, we made sure to promote our best affiliate offers in these emails.

To avoid email fatigue, those who bought Hostgator were fast forwarded 1 week ahead. They skipped emails talking about picking a platform/domain and comparing hosts…

…and went straight to actionable emails teaching them how to customize their blogs, create content, and get images.

VII. Improving Our Site’s Monetization

Negotiating a Higher Affiliate Payout Rate

Our lowest hanging fruit and quickest win was to negotiate a higher custom payout rate with Hostgator from $175 per sign up to $200 per sign up.

This meant a 14% revenue increase for every sign up we got, even if we did nothing else. This was as close to “free money” as it got.

Joining Other Affiliate Programs

We understood the risk of having only one major revenue source so we started exploring other complementary affiliates we could join such as Constant Contact.

There was a small trickle of revenue in Apr-May, but it didn’t move the needle much.

Creating Our Own Info Product

Many competitors in the blogging space have their own info products. As one of our goals was to diversify our revenue sources, creating our own info product was a logical next step.

Having our own product would also yield higher margins. So, we created our own online course for newbie bloggers and tested several price points. But results were dismal.

Our list didn’t seem to be ready to open their wallets. As of the time of writing, we’ve decided to make the course free and offer it to our email subscribers to generate goodwill.

The Results

Thanks to the increase in traffic and a higher affiliate payout rate, we surpassed our projections and increased our revenue by 1.9x from a baseline of $40,500 to $75,439 in June.

Note: As of the time of writing, the revenue was mainly driven by Hostgator, and other revenue sources were insignificant so we didn’t do a breakdown.

We closely monitored the number of clicks we got to Hostgator, a major affiliate and revenue source for us.

Just like our traffic figures, the number of clicks to Hostgator had been steadily increasing from 3,186 in Oct. to 7,994 in June. We increased the clicks by 1.9x from a baseline of 4,237 to 7,994 in June.

Between June and Sept. 2016, the average visitor value was approx. $0.723. After we started implementing changes in Oct. 2016, the average visitor value hovered around $0.844.

Note that in the publishing business, a visitor value of approx. $0.1 or less is common. So, a visitor value of approx $0.8 is considered high.

Bottom Line

We bought Start Blogging Online in Sept. 2016 and managed to

2.2x

the baseline traffic

1.9x

the baseline revenue

3x

the baseline list size

in 8 months. The site is now earning $75k/mo.

Here’s what we did:

Growing traffic

• Building more backlinks via Flickr and infographics
• Creating more content targeting keywords
• Making on-page SEO improvements

Turning more visitors into customers via conversion rate optimization

• Adding in-content call to actions
• Rewriting copy on key pages
• Testing new opt-ins and copy

Focusing on email marketing

• Setting up an email funnel to promote our own products & affiliate programs

Improving site monetization

• Negotiating a higher affiliate rate with Hostgator
• Joining other affiliate programs to diversify our revenue source
• Creating an info product for our audience

Moving forward, we’ll focus on diversifying our revenue sources and marketing our own course to the email list to mitigate the risks of over-reliance on Google and Hostgator.

Another challenge would be to find a long term persona as the “face” of our business. We’re still undecided whether to continue with our current moniker.

Our goal is to generate over $1m in revenue per year, with half of the revenue coming from our own products. Eventually, we aim to exit with a 5x multiple.

We’re always on the lookout for good businesses that want to be great, and we’ve got the experience and infrastructure to create a custom team of fulltime and freelance experts to improve businesses. You’ve built it and brought it this far; if you want to grow, let us help you take it to the next level. If you think you have a great business and need a partner, contact us.

I Want to Grow My Business

If you’re looking to purchase high-end online businesses, filter out small deals and work with one of the best teams in the world, look no further. We specialize in high-end deals only to make sure that our time isn’t spent on smaller transactions, meaning that each of our deals is a lot more important to us than it would be to other brokers.

I Want a High Return Investment 

Author Bio

Karen Foo is a deal flow expert and digital marketer with experience in a wide range of industries from finance to education. She is a National University of Singapore Business School graduate and her corporate career spans Europe and Asia.

The author would like to thank Ken Roberts for his input in parts of the SEO and CRO sections.