When a business increases it’s webinar attendance by 1000% & net $40,000 in the first 3 sessions, you should probably listen to what they’re doing right.
Over the course of the next 20 minutes Lars & I will dive deep into KISSmetrics processes so you can learn:
- The up-front investment that helps them generate a continuous stream of leads
- The real metrics that help you determine if you’ve achieved product/market fit
- Content strategies that help you know exactly who your customers are
- & a lot more
Also, because many ConversionXL readers have expressed an interest in an audio-only format, I’ve included the interview in Mp3 format below.
Not interested in audio or video? Below I’ll break down the interview’s core points in article format and link to relevant resources throughout.
What Are The Mechanics Of A Business Growth Engine?
As cliche as it sounds, before you focus on “growth” you have to nail the product.
“Honestly, if you’re really going to grow a product, the first thing you absolutely have to do is make sure you have an amazing product”
Step 1 – Find Your Baseline. Calculate Your Churn.
So how do you know if you have a “good product?” The easiest metric for subscription software products to check is churn rate.
“On SaaS, target churn rate should be around 2% monthly churn. If you get below that, you’ve got a good product”
For something like e-commerce, you’ll be looking at engagement, more specifically, what does engagement look like 90 days after the initial purchase?
Are customers using your product daily, multiple days out of the week, or generally forming habits around your product?
Engagement will obviously vary depending on the type of product you sell. So calculate the length of your product’s average usefulness & determine when you’d like your customer to return.
Please note: If you haven’t reached the point where around 40% of your customers are saying they couldn’t live without your company, shift your focus to achieve product/market fit. Without it, growth will always feel forced for you and your customers.
(Try survey.io for a good product/market fit survey)
Step 2 – Know Your Customer
Segment your customer data to determine who your best customers are and how to better fulfill their needs. This will be valuable when communicating features and benefits to future customers in that plan.
The way KISSmetrics does this is by calculating the churn-rate for each level of subscription plan.
KISSmetrics also segments their data to find their customer’s company size, industry, business model. They use their existing data to determine which kinds of customers are really the best fit for their company
“We’re kind of [looking] in that sweet spot in the middle [of companies that aren’t too small, but aren’t enterprise level either]”
What’s also interesting is that KISSmetrics looks at the data to find patterns like what industries churn faster or are there similarities in how different company sizes actually use the product.
Having this data helps on every level from customer on-boarding and client training to content marketing & lead generation.
Step 3 – Build A Plan To Increase Sales
Once you have calculated your churn you can build a plan to increase online sales by:
- Increasing the number of repeat purchases
- Increasing the average order size
- Increasing the number of customers
Notice how “Increasing the number of customers” comes last? It’s because it’s often the most expensive part of the process.
In regards to KISSmetrics, Lars says with a devilish grin, “Luckly, we had the foresight years ago to spend a lot of time building out a blog and it’s done very well for us these days. We have over like 500,000 visitors a month right now, it’s crazy[…] so we have a lot of traffic to play with, it’s great”
In a separate conversation, with Neil Patel, I learned that KISSmetrics also recommends investing roughly $5,000 into content production a month to hire some of the best writers in the space.
For many though, that level of investment up-front isn’t really an option.
So, assuming you already have a minimum viable customer base, let’s look at the ways you can grow your revenue in order to invest in content later.
1. Increase the average order size
For a software company this would mean either increasing your existing rates or “repackaging” your offer to make it available to different segment of the market.
My favorite recent example of this was when BufferApp opened Buffer For Business where plans range from $50 – $250/month. Before that, their only offers were the free & $10/month plans.
To demonstrate how powerful this is, Buffer reports that Buffer For Business was responsible for 24% of December’s revenue – or $56,208 in revenue.
Not bad for essentially repackaging a product and including a few extra features.
For an eCommerce company, increasing the order size is done by Up-selling (Think extended warrantees, enhanced service, or newer models) or Cross-selling (You got the TV, how about the DVD Player?).
The Crazyegg blog has rounded up some great examples of these techniques being integrated at various levels of the checkout experience.
2. Increase the number of repeat purchases
For eCommerce sites, increasing the amount of repeat purchases is most often done through savvy email campaigns. Here are just a handful of tactics:
Followup emails (Zappos automatically follows up at certain intervals after purchase)
Flash Sales (Case-Mate increased revenue by 236% by emailing a series of Flash Sales)
Email subscriber exclusives (Men’s Wearhouse is offering 40% off everything in the store right now)
VIP program – Men’s Wearhouse also offers Free Shipping for “Perfect Fit” Members. According to their investor’s documents filed on the SEC.gov website in October of 2013 the program is responsible for approx 88% of their sales transactions.
Practical eCommerce has a few more unique ideas you can use to drive people back to your eCommerce site.
While there’s no direct “repeat purchase” parallel for most subscription software companies, one problem I do see is getting your existing customer to repeatedly engage with the software.
According to Harvard Business School, increasing customer retention rates by 5% increases profits anywhere from 25-95%.
Maybe that’s why Tumblr emails you to notify you of activity on your profile?
Or why Weekdone makes me feel like a slacker every Friday.
Solidifying repeat engagement & repeat purchase processes are how businesses can invest in growth and minimize the associated risks.
Which brings us to…
3. Increase the number of customers
There’s no shortage of
crap content out there that talks about this on a tactical level, but let’s stick to what’s working for KISSmetrics and see what we can take away from it.
According to Lars, the way that KISSmetrics has best been able to increase their customer base is by “giving you a lot of content”
“Our funnel basically looks like this:
- Take traffic from the blog
- Turn it into emails
- Figure out who’s who (Are you ecommerce? Are you SaaS? Mobile? etc)
- As soon as you tell me who you are, I’m going to send you a loooot of free content around your business model”
That free content is then sent out to the email list as .Pdfs and Webinars targeted towards very specific buyer types.
On their webinar landing pages, they ask about business type, number of employees, etc. But they ask one very specific question that allows them to really focus on high quality leads. Want to know what it is?
This question, in addition to an optimized landing page & an extremely targeted webinar presentation helped them bring in over $40,000 in highly qualified sales in just 3 webinars.
Now consider that KISSmetrics hosts a webinar every week and publishes between 4-8 .Pdfs a month, and you can see why this is a very successful growth strategy.
If you’re an eCommerce founder, it would be easy to dismiss this strategy, but the steps are very similar:
- Take traffic from your site
- Turn traffic into emails
- Analyze individual customer behavior (KISSmetrics helps you here)
- Email followup offers/product guides/education materials
- Reinvest % of revenue into traffic building
Step 4 – Build Out A Quality Content Team
Creating a plan like the one we’ve talked about so far, and actually producing content that gets people hooked are two very different things.
“Building out a content team these days is pretty hard and finding good writers who know what they’re talking about is not easy.
We have a couple people on as contract writers and we have a couple employees whose sole job it is to crank out .PDFs and great blog posts week in and week out.”
KISSmetrics invests heavily into content because they know that blogs on average they provide sites 434% more indexed pages & 97% more indexed links increasing the site’s visibility far better than sites without blogs.
Also consider 70% of consumers prefer getting to know a company through articles instead of ads and 60% report feeling more positive with a company after reading custom content on their site.
To build your content team you can:
- Use targeted job boards like jobs.problogger.net or All Indie Writers.
- Search Linkedin for “content marketer” & similar terms. (just be sure to really vet their work)
- Contact guest bloggers contributing quality content on industry blogs.
Distilled has a very good article on creating a content team, you should check it out if you’re planning on improving your content strategy.
Step 5 – Know When To Let The Product Sell Itself
Lars told me that KISSmetrics struggled for a long time figuring out how to get content to convert.
He said their major problem was that he was going for the hard sell in the last 20 minutes of the webinar, just like everyone else. Even though he would receive a 10% response rate, ultimately, the hard sell was unnecessary for their product.
It wasn’t until they asked “Are you interested in a demo?” on the webinar registration form that everything clicked. They found that prospects attending the webinar were already “sold” on the idea of KISSmetrics, they just needed to see if the product was a fit for their business.
“Now, we’re not actually selling KISSmetrics [at any point during the webinar], we just want to see if you’re interested in KISSmetrics, then we want to put you in touch with someone who can go through it with you one-on-one.”
This change of approach was so successful that when Lars asked on the first webinar “So, raise your hand if you’re interested in a demo” over 1/3rd of the attendees moved on to speak with someone in the sales team.
Lars did tell me that things have since leveled out, but that it was eye-opening to realize “hey, I don’t have to sell so hard, because these people already want this thing”
At the end of the day, growing a business isn’t about tactics or hacks or tricks.
Its about using every piece of data you have available to make your core offer irresistible. Once you get the offer in the front of the right people, use what you learn about them to make everything about your product and communication strategy even more compelling.
Lather. Rinse. Repeat.
It doesn’t have to get more complicated than that.