How I Lost Half My Customers and Still Grew Revenue 100% in August

In early July I woke up in a tent, stepped outside, and breathed in Big Sur’s salty air. I was 100 miles away from an office I should have been sitting in. But that office was behind me — for good. After all, I was making $5,000 per month on the side which was enough to cover my rent and Instacart groceries.

The passive income dream was alive and well on this beautiful morning. However, an unfortunate reality of dream-state is that we all must wake up. 

After a lazy morning, I started driving back to San Francisco. Along the way, I stopped in Carmel to get a coffee. I checked my email and opened two threads that made my stomach drop. 

Michael,
We’d like to put things on pause for a while.
Sincerely,
 — Two customers paying a combined $2,000 / mo

Two emails informed me that 40% of my revenue had evaporated. 

Shit. 

Those of you who are well-versed in Software-as-a-Service (SaaS) economics will recognize this as a churn problem. Churn is the metric that tells a business how many customers they are losing. If revenue is a hose filling up your bucket, churn is a leak in the bottom of that bucket. 

I didn’t have a leak though. I had a hole. 

In order to double my revenue in August I would need to find $5,000 in revenue plus the additional $2,000 that I lost. And that was assuming no more customers churned. 

This left me with two options: 

  1. Fix the leak in my bucket
  2. Fill the bucket with more water

I decided on the latter and searched desperately for a hose to fill my bucket. 

 

Behavioral Data Was Our Silver Bullet To Growth in August

In order to grow quickly I knew I'd need to find a quick-to-convert channel. I needed a growth channel that would get me pitching prospects immediately. I did as all great founders do and ate my own dogfood. I used SimpleData. 

I’ve always had mixed feelings about outbound email. On the one hand it’s how sales is done today, and a cold email is much less abrasive than a cold call. But on the other hand, it’s resemblance to spam is scary close. No one — including me — likes spam. 

The difference between good outbound sales and spam is simple though. 

Good sales strategy: Using a combination of demographic and behavioral data to send emails to prospects who want to hear from you. 
Spam: Spraying and praying thousands of people hoping that a tiny fraction will respond.

Let me explain.

If you are desperately in need of something and I email you with an opportunity to buy that thing, you are likely to be happy. But if you are a 60 years old overweight male and I try selling you women’s yoga pants, you’ll probably flag my email as spam. That’s the difference. 

I used my ideal customer profile to find myself in the “good outbound sales” category. As a refresher from a previous blog post here’s that profile: 

Startup founders that don’t have time to prospect but want to find new customers.
Sales teams that need to hit a high quota and need a way to accelerate lead flow, pipeline, and revenue.

This ideal customer profile gave me demographic information (tech industry, small company, B2B, etc.), but it didn’t give me the behavioral element that is so important. I needed to find a trigger that indicated a company’s need for prospect lists. 

Then it hit me! A company hiring a sales development rep (SDR) would likely need prospects for that SDR to email and call. And all of those companies list open positions on sites like LinkedIn, Craigslist and Indeed.com. Suddenly, I had a combination of demographic and behavioral data to run a targeted email campaign. 

The results were staggering:

22% reply rate over 3 emails
$78,000 in pipeline
$4,800 / mo in net new monthly revenue

Here’s the strategy I used to do this (including email templates):

Going through the tedious task of prospecting this list of companies and prospects would have taken me an entire day. I’ll save you the self-indulgent SimpleData plug, and say there was no way I was doing this. 

I gave the following instructions to the SimpleData team:

Step 1 — Go to Linkedin jobs section

Screenshot 2015-09-18 09.58.50.png

Step 2 — Go to “Advanced Search”

Then enter the following:
Job title = “Sales Development Representative”
Country= “United States”

You should see 559 results and the following

Screenshot 2015-09-18 10.00.18.png

Please prospect the following job titles at all companies that are hiring an SDR:

  • VP of Sales
  • Director of Sales Development
  • Sales Development Manager

I sent emails to about 150 prospects in my first campaign. Here were the three templates that I used:

Subject line: Your SDR position on LinkedIn
Hi {{first_name}},
I noticed your open SDR position on LinkedIn and wanted to reach out.
For the last year I was an SDR at Highfive. I learned everything I know from Aaron Ross and Max Altschuler. And during that time I realized how many hours I was spending building lists.
I decided to leave Highfive and start a company that enables companies to outsource their prospecting. As you grow your SDR team does that seem like something that would be useful?
Would love to get your feedback, and get you started on a free trial if it makes sense!

Results:
57% open rate
10.7% response rate

Subject line: Persistent founder
Hi {{first_name}},
“Energy and persistence conquer all things”
Quotes like that always get me fired up! Read that one this morning on GoodQuotes and thought I’d reach out to you again.
Do you have 7 minutes this week to touch base and see if there is a mutual fit between SimpleData and {{company}} regarding lead generation?
I also feel like a great sales email should have puppies in it so…
(image of cute puppies that is being difficult to upload to this post..)

Results:
48.1% open rate
2.7% response rate (ouch!)

Subject line: Should I call for help?
Hi {{first_name}},
I’ve reached out a couple times and have not heard back which tells me one of three things:
1. Everyone at {{company}} is all set on the prospecting front.
2. You’re interested in SimpleData, but haven’t had the time to respond.
3. You are being chased by a hippo and need me to call for help.
(image of hippo chasing man that is also being difficult to upload to this post..)
Please let me know, as I am beginning to worry…

Results:
46% open rate
8.9% response rate

As I mentioned, the entire campaign led to about 10 conversations, $78,000 in pipeline and $4,800 / mo in net new monthly revenue. Most importantly though, this is now a repeatable outbound strategy that we’ll use for the next 6 months (every day dozens of sales job are posted on sites like LinkedIn, Craigslist, Indeed.com and others).

How you can use this to grow your business

There’s nothing about this strategy that is unique to my company. In principle there are 4 steps to developing a similar strategy for your business:

Build a narrow ideal customer profile
There's an old saying that goes something like, "Pick a niche and get rich." This is so important to consider when you develop an ideal customer profile. At it's core this means finding the lowest hanging fruit, the early adopters, the people that will buy quickly and give feedback. 

Build an account/prospect list
Use a combination of demographic data and behavioral data to actually find a list of your ideal customers. This may take some creativity. Ask questions like "Where are my customers hanging out online?" LinkedIn can be a great source of demographic data. But finding behavioral data usually requires going a step further. If your ideal customer uses a certain technology try checking out BuiltWith. We'll go into more detail on this concept in later posts!

Write targeted messaging
Get creative in the way you reach out to prospects. Don't write them an essay. Keep it short, sweet, and personal. Tell them why you are reaching out to them. Then tell them what you offer (in two sentences or less). And finally, make a direct ask (e.g. "Do you have time for a phone call on Tuesday?") More to come on this as well!

Test, test, test (this wasn’t our first rodeo)
Email 250-500 prospects and then review the data. Use a tool like Outreach, PersistIQ, or Cadence to track positive response rate and optimize for that. Change your subject line if the open rate is low. Change your ask if the response rate is low. And be religious about tracking the data. Email me if you want advice on how to use data to inform strategy. It's the thing I'm most passionate about!


At the end of the month I took a look at my dashboard and realized that I had successfully doubled revenue despite my churn problem. I added $7,000 in booked revenue and lost $2,000, which netted $5,000 and a 100% month over month growth rate. 

Many of you are probably thinking, "Sure, you doubled revenue this month, but 40% churn is going #$@! you again next month!" And you're right, churn is a pain. But I have some thoughts on this problem that I'll share next week! Stay tuned.

 

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