My name is Matthew Paulson. I’m a serial entrepreneur located in Sioux Falls, SD. I’ve built a number of online businesses including Analyst Ratings Network, GoGo Photo Contest and Lightning Releases. Together, my companies generate more than $1 million per year in annual revenue and more than $750,000 in net-profit. During the eight years that I’ve been running online businesses, I’ve learned a lot about what works and what doesn’t work when it comes to growing technology driven businesses.
Here are the five keys that I use to grow my online businesses:
Key #1: There are three ways to grow your company’s revenue. Use them all.
Many entrepreneurs believe that the only way to generate more revenue for their business is to get more customers. While acquiring new customers is one way to grow your business, there are two other factors that contribute to revenue growth that entrepreneurs often ignore. I call these these factors the three keys to revenue growth. Obviously, the first key is to get additional customers to your business. The second key is to sell more products to your existing customers or sell your products to your customers more often. The third key is to make sure that your existing customers stick around and keep buying from you.
Getting New Customers – If you’ve never had a marketing channel that’s worked very well for you, it’s easy to think that getting new customers is not something that you can force to happen. You might think that your ability to attract new customers is limited to doing some basic marketing and hoping that more customers will show up and buy your product or service. Unfortunately, hoping that new customers will show up isn’t an effective marketing strategy. Attracting new customers to your business must be an active pursuit. You should regularly try out new advertising strategies and marketing channels. You should regularly ask your customers for referrals, which can be simple as asking your customers whether or not they know anyone else that might benefit from your product or service. You should look at your existing marketing channels that are working well and see how you can maximize the amount of leads those channels send you. If your potential audience isn’t aware of your product or service, you could consider acquiring a list of people in your target market and doing a direct mail or email campaign. If you want to get new customers for your business, you need to go out and get them through strategic and systematic marketing work.
Selling More to Your Existing Customers – The second key to generating revenue growth is to sell more products to your existing customers or sell your products to your existing customers more often. If your product or service can be purchased by your customers multiple times, setup an email auto-responder series that encourages your customers to buy your product again. Companies that make physical products will try to make you use more of their products with recommended usage amounts and artificial expiration dates. For example, you’ll see on many supplement labels a call out that says something along the lines of “use twice per day for best results.” In the world of Internet business, you can apply these marketing techniques as well. For example, in my press release distribution business, I could tell my customers that they should publish a press release every two weeks in order to get the maximum benefit from their promotional efforts. You can also encourage your customers to re-order your product or service by selling it on a time-limited basis. For the web-based investment research software my company sells, called RatingsDB, customers don’t just buy the product once and get life-time access to the service. They buy a twelve-month license to access the service and have to renew after a year. Instead of just getting paid once to access the service, my customers will pay for the service every year as long as they continue to use the product.
The other way to sell more to your existing customers is to create new products or create add-on products and services to what you’re already selling them. With Analyst Ratings Network, we initially only had one product which was our premium daily newsletter. We had customers ask for information on how to use the information in the newsletter, so we created a $39.00 investment guide called The Trader’s Guide to Equities Research. With Lightning Releases, we had customers that wanted help writing their press release in addition to having us distribute it, so we created an add-on purchase where customers could have us write their release for them for an additional $99.00. The key creating additional products and services to sell your customers is to find something that solves a problem for your customers and is related to what you’re already selling them now.
Keeping Your Existing Customers Around – The third and final key to growing your company’s revenue is to make sure you’re keeping your customers around. The rate at which your customers cancel your service over a specific period of time is called your churn rate. This measure is especially important if you have a client base that buys from you on a regular basis or a product that generates recurring income. If you see a sudden spike in your churn rate, you know that there’s probably a problem with your business if customers are cancelling at a higher rate than they had previously. You shouldn’t take it personally when someone decides to stop being your customer, because no one is going to be your customer forever. However, you should take the time to understand why they’ve decided to stop doing business with you so that you can do a better job for your other customers. The best way to do this is to send them a personal email, thank them for being a customer and ask them why they’re canceling your service. If you have the ability to track your customers’ usage of your products, it’s a good idea to see which customers aren’t using your product and see if you can re-engage them before they cancel your service. If you are doing recurring billing, you’ll find that customers don’t always keep their payment methods up-to-date. If someone’s payment fails to process properly, send them a personal email and try to get them to provide you an up-to-date payment method.
If you want to maximize the amount of revenue your company makes, you really need to leverage all three keys of revenue growth together. You should regularly be attracting new customers by trying out new advertising strategies and marketing campaigns. You should try to maximize the life-time value of each of your customers by encouraging them to purchase products and services from your company more often. Finally, you should do what you can to make sure you’re keeping around your existing customers.
Key #2: Go Where the People Are
There are a number of people that offer courses on specific advertising platforms and marketing strategies. Perry Marshall will teach you how to grow your business with Google Adwords. Jon McIntyre will teach you how to talk to your target market using email marketing. Any number of entrepreneurs will teach you to advertise on Facebook and Twitter. John Lee Dumas will tell you to start a podcast and Pat Flynn will simply tell you to “be everywhere.” The problem with following the advice in courses that teach you how to follow a single marketing strategy is that the best way to acquire new customers varies substantially from business to business depending on who your target audience is. If you have a business-to-business product, chances are Facebook isn’t going to be your best marketing channel. If you have an older audience, podcasting might not be the right choice for you. If you’re audience is almost all men, Pinterest likely isn’t going to be the best strategy for you. The key to identifying which marketing strategies are going to work the best for your business is to identify your target market and find the places that they congregate on-line. Put simply, go where the people are.
Create an Avatar of Your Ideal Customer – In order to identify where your target audience congregates on-line, you must first identify who your ideal potential customer is. How old is your typical customer? What do they do for a living? What gender are they? Are they married? Where do they live? What are their interests? What problems do they face? A common recommendation is to create a fictional character, called an avatar, that epitomizes your typical customer. By creating an avatar, you’ll have a better idea of who you’re marketing to and in many ways, can get inside the mind of your target audience.
For Analyst Ratings Network (www.analystratings.net), my avatar is named Bill. He’s about fifty years old. He’s married, is a homeowner and has some money to invest in the stock market. He likes to pick his own stocks, but isn’t sure who’s advice he should listen to. He can live just about anywhere in the United States or Canada and loves to keep up with the day-to-day news in the stock market. For GoGo Photo Contest (www.gogophotocontest.com), our avatar is named Kristie. She’s about forty years old and can live anywhere in the United States. She volunteers or works at an animal shelter and will do anything for the welfare of animals. She is underpaid and has limited resources to help the animals she’s so passionate about.
Where does your audience congregate? Once you’ve identified your customer avatar, you’ll want to start talking to people that resemble your avatar and identify what they have in common. What websites do they visit? What magazines do they read? Do they use search engines? Are they members of any non-profit organizations? Are there any on-line communities that they’re apart of? Are there directories that contain listings of members of your target market? After talking to several people that are part of your target audience, you’ll start to identify certain common threads between them. Many of them might subscribe to the same magazine or visit the same websites on a regular basis. They might be on a common email list. If your target audience is a specific profession, there may be on-line directories that contain a list of potential target customers.
Once you’ve identified what ties members of your target market together, you simply need to find a way to get in front of them in the places that they congregate. If your target market is part of an on-line community, you simply need to join that community and participate in the conversation that’s already going on. If your target audience subscribes to a common publication or visits a website, you can probably buy an advertisement in that magazine or on that website to get in front of them. If your audience uses Google to get information about the product or service you offer, you could consider a Google Adwords campaign or some search engine optimization work.
For Analyst Ratings Network, my target audience frequently visits investment research websites like Benzinga.com, TheStreet.com and 247WallStreet.com. In order to get access to the audience on these websites, I’ve setup a co-registration advertising campaign so that whenever someone signs up for their email lists, they’ll see an advertisement to sign-up for my email list as well. They discuss stocks on social networks like StockTwits and Twitter. I’ve been able to participate in Social Media conversations by publishing stock ratings to those platforms. They search for things like “stock recommendations” and “stock ratings” using search engines. I’ve setup a small AdWords campaign to catch these email addresses.
It would be nice to be able to say that every new entrepreneur should promote their business with Facebook, email marketing or Google AdWords, but it’s just not that easy. While there are courses that will teach you to advertise using a specific platform, there probably isn’t a course that will teach you to target your specific audience. You’ll need to identify who your target audience is and where they congregate on-line. Then, you’ll need to find a way to get in front of them. Go where the people are.
Key #3: Always Be Testing
Think of the process of acquiring customers for your business as a long road with many exits, several roadblocks and a few billboards for your company along the way. At one end of the road, are the potential customers that don’t even know that your company exists yet. In order to become a satisfied customer of your business, they need to travel along the road, become aware of your business from a billboard or another advertisement, not get stuck by any of the roadblocks along the way and not take an exit off in some other direction. They also have to be won over by the advertisements on your billboard and decide that your company’s product or service should be the final destination on their journey
Given the large number of potential stumbling blocks, there’s a good chance that most people that start off on the road won’t make it to the destination to become your customers. Fortunately, you have total control over the journey that your potential customers take along the road. You can identify and eliminate road blocks. You can change the ads on the billboards that customers use to become aware of your business. You encourage them to stay on the path and avoid any exits. You can even give them special incentives to get to the finish line.
Identify Road Blocks with Split Tests – The challenge is to identify what’s causing your users to get distracted along the way that prevents them from becoming your customers. When doing the marketing for your business, it’s not always clear whether one component of your marketing material will do any better than a different variation of that same piece of marketing material. Should your button color be blue or orange? Should you charge $9.97 per month for your product or $10.00? Should you include a video tour of your product on the landing page? Should you accept credit cards, or just accept PayPal? Should you do one-time pricing, monthly pricing or annual pricing? The answer is almost never clear. You can make sure that you get the right answer to these questions by running a split-test (sometimes called an A/B test).
A split-test is the process of showing half of your users one thing and the other half of your users another thing for a specific period of time and determining which thing performs better. For example, let’s say we want to determine whether or not changing the button text on an email opt-in from “Subscribe Now” to “Sign-Up Now (Free)” will increase opt-in rates to an email list. You would alternate the button text between every other person that sees the opt-in form. After you get enough sign-ups for the result of the test to be statically significant (say, after 200 total signups), you could see which of the two versions of the button got higher opt-in rates. If you showed “Subscribe Now” to 2,500 visitors and got 90 sign-ups and “Sign-Up Now (Free)” to another set of 2,500 visitors and got 110 sign-ups, you would know that “Sign-Up Now (Free)” is a more optimal text to use on your opt-in form because it got opt-in rates that are 22% better than the original text.
After finishing that first test, you could test any number of other parts of your opt-in form, such as the positioning of the opt-in form, the heading, the copy, what information you collect, the font of the opt-in form, the colors you’re using, etc. Let’s imagine that we did a series of ten different tests. Seven of them showed no significant difference, but three of them improved opt-in rates by 15%. It would be easy to think that the cumulative benefit of those three successful tests would be 45% (15% + 15% + 15%), but the benefits of split-tests are multiplicative. By improving opt-in rates 15% three different times, your sign-up rate would have actually improved by 52% (1.15 * 1.15 * 1.15).
What To Test – Ideally, you’ll be running split tests at every step of the journey that your potential customers take. You’ll want to test out a variety of different traffic sources to drive potential customers toward your business. You’ll want to test the initial ad-copy that sends a user to your registration page. You’ll want to test the landing page where your users are giving you their email address. You’ll want to test out your auto-responder series or any other marketing emails you use to communicate with prospects. You’ll want spend a lot of time testing your sales page and your check-out pages as well.
You can test just about anything on your website to determine whether or not changing it will increase the rate at which your customers sign-up. You should certainly spend a lot of time testing your value proposition (What do my customers get for their money? What features and benefits will encourage them to buy?), the headline and marketing copy on your sales page, your call-to-action button (text? Size? Location? Color? number of buttons?), your pricing (one-time or recurring? Discounts? How much? Which payment methods will you accept?), your order form (what information do you need to collect?). You’ll start to see diminishing returns on your tests after a while and many tests simply won’t work as well as the copy you already have, but the few tests that do perform well will make a significant difference in your business. If you’re looking for an extensive list of different things you can split-test, Optimizely has published a list of 71 different things you can split test on your website (http://blog.optimizely.com/2013/04/30/71-things-to-ab-test/).
Tools for Split-Testing – You might say, well, that sounds great, but I have no idea how to run a split test. In the past, you might have had to hire a software developer to implement split tests on your website and track the results. Fortunately, there are now software tools like Optimizely (www.optimizely.com) and Visual Website Optimizer (visualwebsiteoptimizer.com) that make setting up split-tests on your website dead simple. Optimizely and Visual Website Optimizer provide point-and-click tools that will allow you to create variations of your website, automatically serve them to different users and track the results to see which variation most resulted in your desired outcome.
Don’t leave money on the table by not testing – If you don’t currently have a split testing strategy for your Internet business, you’re leaving money on the table. By running a series of split tests on every part of your prospective customer’s journey on the road to becoming your actual customer, it’s entirely feasibly to double or even triple the percentage of people that make it through your customer acquisition process. When I first started my investment newsletter business, I had a single opt-in box at the bottom of each article and was getting between 500 and 800 visitors per month depending on traffic. After running three years of tests on the various opt-in mechanisms I use to collect email addresses on my website, I’m now regularly getting 5,000 to 8,000 email sign-ups per month. Granted, the amount of web-traffic I’m getting has increased by 250%, but the opt-in rate to my newsletter has increased by more than 400% since I first started collecting email addresses. That means there’s four times as many people getting my free email newsletter, four times as many people getting marketing material for my company’s premium products, four times as many people ending up on one of my landing pages, four times as many people buying products and services from my company and four times as much revenue. That’s real money.
After you’ve built your Internet business and have been in business for a couple of years, there will be hidden and untapped revenue streams that your company could tap into if you were aware that they existed. Many business owners try to grow their company’s revenue by raising their prices or selling their products and services to new customers, but don’t often go hunting for new potential revenue streams. Don’t make the assumption that the ways that your company is making make now are the only potential income streams your business could have. By leveraging your existing audience or your products and services in a new way, you can create new income streams for your business. You might be able to package your business’s products and services differently and sell it to a new audience. You might find a related product or service that you can sell to your existing base of customers. You might find a new ad-network that will pay above average rates to market to your audience. You have to keep your eyes open and go looking to unlock hidden revenue streams. If you only focus on the day-to-day operations of your business, you won’t ever identify new sources of income. Finding hidden revenue streams requires creative thinking, competitive research and regularly trying out new ideas.
Key #4 – Own Your Customer List
During the last decade, there has been a trend for on-line entrepreneurs to build their businesses atop the various platforms offered by web companies, such as Apple (iTunes, AppStore), eBay, Facebook, Google (Search, YouTube, Google Play Store) and Twitter. Several years ago, many believed that the path to building a successful Internet business was to sell products on eBay. This worked until eBay changed its price structure and policies so that many small sellers couldn’t profitably sell in eBay’s ecosystems. Between 2008 and 2011, many entrepreneurs were working to build the next great Twitter client or Facebook application. These businesses had gained some traction until Twitter had decided that it wanted to own its client experience and Facebook clamped down on the ability of third party apps to post on behalf of users. The latest trend has been to create smartphone apps on Apple’s AppStore and Google’s Play Store. There have been dozens of cases where developers had their apps removed from the AppSTore for arbitrary and subjective reasons, such as AppGratis.
Don’t rely on someone else’s ecosystem to communicate with your customers – When you’re building a business inside of an established ecosystem such as iTunes, YouTube or Facebook, you can tap into an established based of users. You’re also placing your business at significant risk. By piggybacking off a major company’s platform, your business only continues to exist as long as it suits the needs of the company who’s platform you’re building off of. When the platform owner decides that they don’t need you anymore, you’re out of luck. When a large company you’re working with makes a change to their platform that hurts your business, you have no recourse or even the ability to appeal to the company’s sense of reason. You’re just one of thousands of minor partners that are easily replaceable and they simply don’t care if you’re not happy with a move that they made.
While it’s okay to work within the ecosystems of large companies, you shouldn’t be totally reliant on them for your business’s continued existence. Your future ability to generate income is based on the relationship you have with your customers and your ability to communicate with them. If you’re dependent upon another company’s platform to communicate with your customers, they’re not really your customers. If the platform suddenly decides to change the rules or kick you out for whatever reason, you’ve lost your ability to communicate with your customers and you’re basically out of business. A while back, many companies had invested in building large followings using Facebook Fan Pages. Facebook then changed the rules and decided that it would start charging page owners to communicate with all of their followers. The NBA’s Dallas Mavericks had to page as much as $5,000 to send a single message to their audience on Facebook (bit.ly/1mwOqpI). If you’ve built your audience on a Facebook Fan page and you suddenly have to pay a significant sum of money to reach your audience, your future ability to generate income is greatly hampered.
Build an email list of your customers. The key to avoid these ecosystem dependency issues is to get the email addresses of all your customers. Don’t rely on having a big following on a social media platform or having a bunch of users that have your app installed to communicate with your customers. By having an email list of all your customers, you have the ability to contact them in the future without regard to any specific ecosystems. While social networks can come and go, people’s email addresses rarely ever change. Nobody’s building an audience on MySpace anymore, but if you were able to get the email addresses of the people that liked your MySpace page ten years ago, there’s a good chance you could still communicate with them. If you have the email addresses of all of your customers, you will always be able to communicate with them in the future even if Apple, Facebook, Google or Twitter decides that they don’t need you anymore. You’ll be able to tell your customer list about the next project that you’re working on or find a related product or service that you can market to them. Your ongoing relationship with your customers should be between you and your customers, don’t let any big tech company get in the way of that relationship.
If you’re currently reliant on another company’s platform to communicate with your customers, I recommend creating opt-in pages where your users can get some sort of bonus content in exchange for them giving you their email address. If you have a large audience on Facebook or Twitter, you might create a free report or a special interview and require the user to provide their email address in exchange for access to that report or interview. If you’re publishing books on Amazon, liberally include links back to your website and create a bonus that requires an email opt-in to access. If you have users of an iPhone or Android app, consider providing additional features to users that provide you their email address.
Key #5 – Identify Hidden Revenue Streams
There have been several times during the history of American Consumer News, LLC that I’ve unlocked hidden revenue streams that have added several thousand dollars in net profit to the company’s bottom line. In 2010, I received an unsolicited email from a company that wanted to license the content from American Banking and Market News for use in research databases and various proprietary search tools. I receive a lot of pitches out of the blue for companies that want me to use their ad network, submit content to my websites or setup some other deal. It would be easy to dismiss most of these as spam, but I did a little bit of research and talked to some of the companies that partner with them and decided to give them a shot because there was no potential downside to my business. To this day, they pay my company approximately $3,000 per month in licensing fees to use our content. If I hadn’t been open to new opportunities and dismissed their initial email as another spam message, I would have never unlocked this revenue stream. When you’re presented an opportunity out of the blue, take a bit of time to give it a cursory evaluation before saying no reflexively.
A great way to identify hidden revenue streams is to keep an eye on what your competitors are doing. Regularly check out your competitor’s websites to see their company news, product announcements and marketing promotions. If they have an email list, sign-up for it. That way, you’ll know how they’re marketing to their customers and will be able to see if they’re doing something that you should be doing as well. You shouldn’t be paranoid about what your competitors are doing, but you should keep a healthy level of interest in their activities. If at all possible, become friends with entrepreneurs that are in your space. Internet businesses are rarely a zero-sum game where a new customer for your company means someone else loses a customer, so you’re not always in direct competition with other entrepreneurs in similar businesses.
Befriend Your Competitors – I’ve tried to maintain a healthy relationship with people that are at other companies that do financial reporting during the last several years and have received valuable suggestions and advice as a result. In early 2013, an acquaintance in my industry asked if I had thought about showing co-registration ads to people that sign-up for my email address, in which new email subscribers are offered the opportunity to sign-up for advertisers lists when they’re signing up for my list. New email subscribers on my list had previously just been sent to a thank you page telling them they would receive their first newsletter soon, so I decided to setup a co-registration advertising block below that thank you message to try it out. My company has earned more than $50,000 in co-registration commissions during the last twelve months by leveraging a thank you page that I previously thought had little to no advertising value. Because I maintained a healthy relationship with other people in my industry and have kept a keen eye on what my competitors are doing, I was unable to unlock this particular income stream that I was previously unaware of.
Maximize Your Existing Revenue Streams – Finally, look to make your existing streams of revenue and new customers flow faster. Look for ways to maximize existing sources of web traffic and revenue on a regular basis. A while back, I had noticed that some of my Analyst Ratings Network subscribers were sharing our content on StockTwits and Twitter on a regular basis and were receiving healthy traffic back to our website as a result. In order to maximize these web traffic sources, I placed prominent StockTwits and Twitter share buttons on my website and in my newsletter. I also created StockTwits and Twitter accounts for Analyst Ratings Network and started publishing on those platforms directly. By seeing the potential of those two particular web traffic streams and maximizing our use of them, we were able to get an additional 500 new newsletter subscribers per month and get more than 2,000 additional unique visitors to our website each day the stock market is open.