Jason Cohen led off the conference with a talk about building a “money machine” that brings in $10,000/mo. Jason crushed it. Rob closed the first day and spoke about taking HitTail from $1500/mo to well beyond the “money machine” mark in 20 months. Rob burned it down. Multiple tweets showed people changing pricing strategies, making sweeping copy changes, and saying the conference had already paid for itself within minutes or hours. Welcome to my retro-diary for MicroConf 2013. As usual, I’m going to cover material that most closely resonated with me and where I am.
Immediate Actionable Takeaway
- Use CPC = MRR/25 to work backwards from the CPC I can achieve in available channels and arrive at a pricing scheme for Keepify.
- Use money back guarantees and incentivized annual pre-pay from day one.
- Meet weekly with the family to plan work and leisure time. We have informal understandings, but planning would be an improvement.
- Plan out a marketing component that doesn’t scale and execute.
The Money Machine
Jason’s talk was a great look at the math and constraints behind building a business. He explained how you could piece together a cash machine from first principles similar to his recent post on CPC for bootstrapped business. He left it as, “Predictable acquisition of recurring revenue with annual pre-pay in a good market creates a cash machine.”
Giving incentives to customers to purchase annual pre-pay plans allows WPEngine to advertise with a much higher CAC and CPC. You can spend $300 dollars to acquire a customer that is prepaying for 10 months @ $49 per month right now.
Free trials can be eliminated in favor of a 60 money back guarantee. Use multiple plans and raise prices.
You need 150 customers to pay $66 / month on average. You can get 50 by scratching and clawing (see things that don’t scale) and 25 more with guest posts and social media. The final 75 can come from basic marketing all over a period of months.
Rob’s talk emphasized that it took him a period of 5 months building and 6 months learning before he began to scale the business. All that time learning was improving conversion rates, retention, copy, adding features, and increasing customer understanding. He is planning for similar learning period in the future and it is instructive to hear. I’ve experienced similar (but smaller scale) things recently with PPC ads. You have to be willing to spend a little money and stick it out through many revisions to be successful.
Nathan Berry, Brennan Dunn, and Hiten Shah all reinforced the necessity of using educational marketing as part of the customer acquisition process. Somewhere, Chet Holmes is proud.
Joanna Weibe of Copyhackers gave a great talk about copywriting. She said to minimize the visibility of free offering, use email, long-form sales pages, and start testing.
One point she made seemed particularly relevant to the audience. “Stop treating marketing as an experiment” which I understood to mean that you need to view things in the long term. Don’t give up when an initial ‘experiment’ in marketing doesn’t work.
Rob touched on his Operation Retention where he improved conversion and retention throughout the funnel for HitTail. He only resumed his marketing activities when those numbers became healthy again. He gave healthy numbers as 8% or less churn and 40-60% Trial to paid conversion.
Things that don’t scale
Rob, Josh Ledgard, Erica Douglass, Hiten Shah, Jason Cohen, and Patrick all stressed the importance of talking to customers. Especially early or after cancellation.
Erica included some case studies of offering one-on-one consulting for early customers and emailing 1000 people in a few months as examples of doing things that don’t scale to learn and market. Those 1000 emails were from Leo Widrich of Buffer and converted into hundreds of guest blog posts and Buffer buttons on blogs.
Hiten talked about creating your own channels to reach customers because established channels get crowded quickly. He gave examples of Nathan Berry, Brennan Dunn, Ruben Gamez, and KISSInsights which used a ‘Powered By’ link on the surveys to connect with customers.
I was part of an interesting hallway conversation about how to go from a job and working on your side pursuit into working normally. Many of the attendees spent some many years working 60 hour weeks that they didn’t know how to stop and enjoy freedom they had earned. It’s a an interesting subject that needs more direct treatment.
Sherry Walling gave a good talk that detailed how she and Rob made it through rough times and built relational systems and communication that evens out the ups and downs of entrepreneurship in a relationship. Another subject that became a topic of conversation in the hallways. Kids are common among attendees and everyone is looking to build a better future for their family.
Reflection on some of the conversation at MicroConf and a talk with my friend Evan forced me to consider the how a growing income and a growing family have changed the equation for what my minimum “money machine” looks like. Sherry’s talk included a quote about how cleaning services were cheaper than therapy and therapy was cheaper than divorce. I agree. I spoke with others about paying others for cleaning services or lawn care, but where do those things trade-off with growing expenses and lifestyle that tighten those golden handcuffs? It’s something for me to ponder.
Thanks to Rob and Mike for another great conference. I barely scratched the surface of the value available from attending MicroConf. There is simply too much for a blog post. You’ll have to join us for the 2.5 days next time.