Rob Walling – How to Validate Your Idea and Launch to $7k in Recurring Revenue – MicroConf Europe 2014

The MicroConf Europe 2014 Hub Page has notes on all the talks and additional information.

Website: GetDrip.com / HitTail.com / SoftwareByRob.com
Twitter: @robwalling
Slides: here

What Is In It For You?

  • Benefits of the “Slow Launch”
  • How onboarding will make or break your business
  • The optimal path to recurring sales
  • Knowing when to move on

Part #1: The Slow Launch

  • Build your email marketing list –> notes from last year
  • Keys to the Slow Launch
    • Pick the right early customers
      • the 1st one didn’t work for Rob’s vision of Drip
      • Spent a month and built
        • Popup widget
        • Mailchimp integration
        • Email designer
        • Broadcast emails
      • Customer asked for a MAJOR feature –> “fired” the customer
      • choose new customers, repeat
      • Features for customer #1 & #2 have to work for #3, #4 and #5 as well!

    • Become a developer for hire (really custom onboarding)
    • When you have “Problem-Solution-Fit” for at least 1 customer, ask additional customers to join your beta
      • “Don’t worry about billing right now. We’ll do that when Drip provides you value and we are sure this is a long-term fit for you”
      • But manage expectation: “You will eventually be billed. ” (implied)
    • Go high touch
    • Name your price up front
    • … but don’t charge until a customer receives ample value
    • unlimited trial length

Part #2: Onboarding

  • MPA = Minimum Path to Awesome
    • Proposal software: first time someone gets a proposal accepted
  • MPA for Drip was 2 steps
    • Including the Javascript
    • Setting up the campaign
    • Big progress bar during onboarding
  • Do anything to make them complete the MPA
    • Concierge onboarding service (e.g. create drip email campaign for them – at no cost)
    • Add drip email campaign during onboarding
  • Lessons:
    • Determine your app’s MPA – take a guess at first & refine
    • Guide new users through the MPA
    • Do it again via email
    • Offer to do it for them (“concierge”)
    • All this increases trial activation from 5% to 60%
  • The Slow Launch Part #2
    • Wait until onboarding is working
    • Divide list into cohorts (10-20% each)
    • Send a launch email sequence with a time-limited discount
    • Wait [trial_lengths] days
    • Repeat
    • ==> $7,000 MRR

Part #3: Stair-Stepping

  • Step 1: Build one-time sale, single channel app
    • e.g. WordPress plugin, mobile app, Magento add-on
    • NO SaaS app
    • Traffic: SEO, WP.org, Amazon, Youtube, etc.
  • Step 2: Repeat step 1 until you own your time
    • e.g. 3 more WP plugins
    • Brings income diversification & experience
  • Step 3: Recurring sale
    • e.g. Baremetrics, Drip, Planscope, DistressedPro

Part #4: Lifetime Value (When to move on)

  • LTV = total profit you receive from a customer over his lifetime
  • LTV for HitTail when Rob bought it: $90
  • LTV for HitTail now: $140
  • LTV for JustBeachTowels.com: $30 revenue, $7 profit
  • Simple way to calculate LTV: 
    • Average order size – cost of goods sold
    • OR
    • lowest plan * 10
  • Better way: 
    • One-time: ARPU – COGS
    • OR
    • Recurring: AMRPU / monthly churn
  • Sample Customer Acquisition Costs (CACs):
    • Content Marketing: $50 – $200
    • Facebook Ads: $50 – $300
    • Adwords: $100 – $1,500
    • Cold Calls/Emails: $250 – $2,000
  • LTV >= 2x CAC
  • You should quit if you can’t make those numbers work
  • “Free” marketing channels
    • Google / SEO
    • iOS app store
    • Android app store
    • WordPress.org plugin repo
    • Amazon.com
    • Youtube
    • iTunes podcast directory
    • etc

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About Christoph

Christoph lives in Munich, Germany and is bootstrapping his own SaaS application as a part-time entrepreneur.

He likes to write on this blog about anything of relevance to single-founder bootstrapped software startups.

Trackbacks

  1. […] Rob Walling: “How to Validate Your Idea and Launch to $7k in Recurring Revenue“ […]

  2. […] Many of the savviest tech entrepreneurs of our time have continually advocated for creating quick, small wins to help you gain momentum in your development career.  This was echoed recently again by Rob Walling at his Microconf Europe. […]

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