If only I could go back in time and start over again, knowing what I know now.
I bet you’ve had similar thoughts. If you’re like most people, you probably felt a mixture of frustration and amusement at how quickly your younger self could have achieved success.
Flashback to 2015, I had been running a digital marketing agency when I stumbled across the idea for my new company, almost by accident.
We had a client, Dr Tami, who wanted to grow her email list so she could promote her new soon-to-be-released book and expand her impact beyond her local Seattle practice. After putting together a hormone quiz and advertising it on Facebook, we generated nearly 35,000 leads for her in just six months.
Through this experience I realized the power of quizzes to generate leads and sales and discovered there was a big gap in the market. There wasn’t a service to make easy-to-use quizzes that effectively captured leads.
We decided to launch a SaaS app called LeadQuizzes.
In six short months, we grew our revenue to $100,000/month.
Don’t get me wrong though, we made a ton of mistakes. And if I could travel back and teach my younger self to do everything all over again, these are the strategies I would tell him to use.
1. Focus on achieving a strong product/market fit
“Product/market fit” is the extent to which your product or service precisely meets the demands of your market. You should already have established a basic demand for what you’re offering, perhaps through a minimum-viable-product (MVP). The goal now is to develop something that is ready for scaling.
Two processes should ideally work hand-in-hand here. As you scale, you should be collecting feedback and fine-tuning your product. Christoph Auer-Welsbach, a partner at IBM Ventures, says:
Product/market fit is achieved if the startup has found a repeatable, scalable model that drives demand.
The sad truth is that market research is one of the most overlooked aspects of building a business, particularly after the initial startup phase, which is evident in the fact that more than 70% of new product launches fail.
This is the step where you need to think about how to find your target audience by defining who they are, where they’re hanging out and what you can give them in the widest sense.
Ask the following questions to move towards a strong product/market fit:
- What feedback are you getting? Developing a product/market fit is dependent on the presence of effective feedback from leads and customers. The information gathered from them will form the basis of your approach to fine-tuning your product. Questionnaires and customer suggestions are great for this.
- What are your product’s unique selling points (USPs)? Beyond your product or service’s key feature, what else are you offering and how do these additions solve secondary problems in your market? Is it possible to solve issues that you’re not currently addressing? Take smartphones as an example. Manufacturers were constantly trying to add value, which led to the camera/computer/calendar/GPS (the list could go on) you now carry about in your pocket.
- What’s your angle? What differentiates you from your competition? This is as much about style as it is substance. Consider Apple as an example. Their simple, easy to use and closed platform, along with the way they package them in a sleek design, clearly differentiates them from the majority of other computer manufacturers like Microsoft and Hewlett Packard.
2. Sales should be your first focus
One of the best pieces of advice I got when starting LeadQuizzes was from a mentor Loren Howard, with multiple seven and eight figure businesses under his belt.
He told me to spend 70% of my time on sales. This advice runs counter to the way most people go about starting a business. And I believe that’s why the majority fail. 96% of businesses never hit the one million mark and eight out of ten fail within the first 18 months.
The more revenue you have early on, the more quickly you can scale. You can hire employees, outsource and generally ramp up output in every area. Neil Patel, writing in Forbes, says:
If your startup can grow fast, you can effectively bypass some of the biggest startup killers — losing to the competition, losing customers, losing personnel, and losing passion.
There are two aspects to this approach: outsourcing and reinvesting. One thing I always tell new entrepreneurs is to get over their fear of outsourcing early on. There’s an understandable tendency to believe that other people won’t be able to do a job as well as you. Invariably, this isn’t the case.
While a lot of people try to straddle sales and operations, your focus should be mainly on sales.
Develop standard operating procedures for all but your most important tasks and pay somebody to do them. This will allow you to get even better at selling and scale your business if not for any other reason than you’re just spending more time doing it and less time in operations.
The second important consideration is reinvestment. The bulk of your profits at this stage should be turned back into your lead-gen and sales machine. By feeding the cycle of growth and reinvestment, outsourcing menial jobs in the process, you will find that you’re able to scale much more rapidly.
3. Find a scalable source of leads
It’s fundamental that you find a profitable and scalable source of leads as early as possible. Usually, this means paying for them. Frank Kern, widely regarded as one of the best direct response marketers in the world, said:
The most dependable and consistent way to generate wealth is to turn advertising into profit.
65% of marketers say generating traffic and leads is their top challenge. Many people I talk to brag about the fact that they get most of their business from referrals.
However the people that say that usually have pretty small businesses. And the reason why is because you have very little control over facilitating those referrals and it’s not a very scalable lead source.
Referrals are a great way to get some initial customers and feedback but your focus on referrals early on should end there.
By focusing on a strategy that is under your control, such as pay-per-click advertising or cold contacting, you can overcome many of the problems associated with generating new customers.
At LeadQuizzes, we used Facebook ads to consistently generate leads as we scaled to $100,000/month in revenue.
4. Develop a tight sales funnel
Once you get leads coming in, you need to convert them into customers. I mentioned that we put a lot of focus into Facebook and I’ll be honest, it took us a couple months to test and adjust our campaign and our sales message before we made those campaigns profitable.
Now while the amateur business owner would give up and say that lead source doesn’t work just a couple days or weeks into their campaign, we stuck with it and were rewarded by a profitable and scalable campaign.
Once you have people flowing in, you should approach your whole sales funnel, from awareness to purchase with optimization in mind. Regardless of the unique shape of your conversion funnel, I tend to find startups struggling with two key areas.
1. The first is failure to provide a compelling lead magnet.
Providing a unique and tailored first offer, in a sea of stale lead magnets, is one of the easiest ways to improve your visitor-to-lead conversions. This first offer should differentiate itself from what’s offered by competitors.
One of the reasons that quizzes work so well is because they are intrinsically engaging and they can be used to provide personalized highly-relevant results, that then lead to a specific product offering.
2. The second is the absence of a compelling main offer.
The first thing you can do to make your offer more compelling is by including an initial low-friction tripwire.
This means offering a lower priced product that makes it easy for someone to test you out and see what kind of results they can get. Adding in risk reversal by offering things like money-back guarantees and free-shipping or bonuses can also sweeten the deal and increase your conversions.
For example, one of our clients, Annmarie Gianni Skin Care, was able to generate an additional 10,000 leads and $200,000 in sales in only two months by implementing this advice.
Rather than just advertise a discount for first time purchasers on their website, they advertised a skin score quiz that led to a compelling $10 skin care sample kit with some additional bonuses, free shipping, and a money back guarantee.
The early startup phase is a prime opportunity for testing everything – from the copy of your ads to the pictures you include in your sales copy. Marginal gains all add up and a leaky ship can quickly become a glittering schooner in a very short time.
5. Become a stickler for metrics
Running a business is about coordinating lots of different interlocking parts. During the startup phase it’s very important to maintain a sense of overview.
Research conducted by CBI Insights found a number of reasons for the failure of startups. While lack of demand was the primary one, a majority of others, from running out of cash to poor customer service, could likely have been avoided if the owners had monitored their metrics and data.
By tracking metrics as though your life depended on it, you can ensure the overall health of your company in this delicate stage of growth. You can also pinpoint low-performing areas for improvement.
Here are four metrics I think are absolutely vital to keep an eye on:
- Cost-per-lead: Cost per lead is a leading indicator of your cost per acquisition and whether you will be profitable or not.
- Lead magnet conversion: How many people are handing over their contact details and becoming leads?
- Close rate: Your “close rate” refers to the number of leads that turn into paying customers. It’s one of the best overall ways of measuring the effectiveness of your sales funnel.
- Average sale: By the time you’ve got your leads to the point where they’re willing to pay, 90% of the work is done. Maximizing your average sale price is one of the surest ways to increase overall revenue and allow you to stay profitable even if advertising costs increase.
Successfully scaling a startup is about prioritizing. There are a million and one different tasks vying for your attention, all of which will take you away from the things you should actually be spending time on.
By overcoming the common desire to do everything yourself and by focusing on generating leads and selling to them, you can achieve results very quickly.
My own business is a perfect example. Find that source of leads and don’t look back. Except when you’re analysing your stats, of course.