Montly update - month 7
7 months in for https://fairmeadow.app. MRR now nearly $11k. Trailing 30 days, shown by IH, is fairly detached from our subscription revenue at this point, and I'll explain why below.
- We still have not had a single conversion from advertising. Google gets us traffic but so far 0 conversions. Facebook ads are not up yet.
- The vast, vast majority of our subscriptions are from our referral program, which gives a bonus to the new customer as well as the referring customer. While this has resulted in tremendous growth, it has meant that our actual revenue growth has lagged significantly behind our subscription numbers.
- In addition to the referral program, our application has a "skip" feature that allows customers to skip a week if they need to (e.g. when they are travelling). When that happens, we don't charge them for that week. The holidays meant that a ton of our customers were skipping their service, and our revenue dropped like a stone during that period.
- While the referral program's success is great, we need to build out our ability to get new leads, and as a result get into new clusters of customers. Our focus over the next month will be to improve our advertising effectiveness.
- We had our bi-weekly founder meeting to go over metrics, goals and challenges. Since this was our first meeting of the quarter, and the year, we laid out both a quarterly and yearly revenue goal, then figured out what the company would "look like" at those stages (number of employees in each role, revenue, margins, etc. etc). Our goal for this quarter is to get to $20k in MRR. Our goal for the year is 85k.
That's about all for now, cheers!
Great job Javier!
Have you ever raised your prices? Your tiers are so close together, and even $25 seems like a bargain. For example, I'd be willing to pay $150/month for this service, but your current setup would only charge me $60.
Also, what types of neighborhoods did you use door hangers in?
We have had several conversations around price increases, and have decided not to do anything to disrupt the current growth trajectory. Many of our customers are families with two working parents, and I can tell from our dunning reports that we get a decent number of transactions that return insufficient funds before finally going through after pay day. Our average customer right now pays us $108/mo. Remember that the service is per bin, and many customers choose to have multiple bins.
That said, a price increase is going to happen. It's just a question of when is the right time, and we don't feel that it is right now.
Door hangers were focused on neighborhoods we already serve. We essentially used them as a tool to improve route density, and focused on areas that our drivers were already driving by or very near to so that customers we got would be as profitable as possible.
We measured the conversion rate by including a coupon code on the hanger and measuring how many people used the coupon.
I asked about the neighborhoods because a friend of mine grew a similar (not identical) service business from $0 to $100k+ in about 8 months.
He mainly marketed with door hangers and referrals, but noticed that mid-to-high-end neighborhoods booked less jobs when the prices were low and more jobs when the prices were high. He also had a lot of luck with high prices + limited time discounts.
You're right – I wouldn't change prices for your existing neighborhoods, but it might be an interesting experiment when you expand into other areas. Good luck! :)
That's super interesting. We have been successful primarily in better neighborhoods (household income 140k and higher). We played around with discounts in the beginning, but since it's a subscription business we found that churn was super high once the discount expired. People loved getting a deal, but then felt like they were being ripped off once it expired.
A lot of psychology goes into consumer businesses. It's been a rough learning curve for me, having come from the B2B world :)
Great job!
Referrals are your main driver of new customers, huh? That can be a two edge knife. On one hand, you are not attracting new leads on your own and you seem to recognize the problem with this. On the other hand, you do seem to have a customer base who is really in love with the product, yeah even if a deal is attached, they are willing to share it with people.
How is your program set up? Assuming you are not on a 1 for 1 then there is a bit of upside to the major part of your new customers coming from the program, it shows they love the service!
The way our referral program is setup today, if you refer a friend you get 2 weeks of service for free, and your friend gets a month at 50% off. We have a roughly 4% churn rate, but are closely monitoring churn out of the referral program as it could be a bad situation if that ticks up.
There is definitely upside, and our team is also focused making sure the program continues to grow. We have an outreach program once customers have been around for 3 months to make sure they are aware of it and we give them tips on how to promote well so that they can get the rewards. The idea is that if we want to continue growth we have to light up other acquisition channels but also make sure that our referral program continues to act as a multiplier on those channels.
This is a service business, and you have multiple founders. Is 85k ambitious enough?
You're a local business so remember you can do stuff that doesn't work for normal tech companies. Direct mail, flyers, even radio stations might be profitable.
Well, we're also completely bootstrapped. Right now our marketing budget is super small. We've done things like door hangers, which did not convert very well and also turned us off of direct mail as a result. Radio is something we are interested in, but at the moment we only operate in a handful of zip codes in the Denver area, so a large amount of the reach afforded by radio would be wasted on areas we don't serve.
Towards the later part of the year we are looking to invest in radio and other advertising channels.
If you have experience with this, I would absolutely love to chat.
No experience, but with google and facebook their ads keep increasing in price, I have heard that radio can make sense in certain situations, and yours sound perfect.
I have the same question Zeph had " what types of neighbourhoods did you use door hangers in?". How do you know they didn't provide an ROI?
See answer to Zeph's questions. :)
Congrats, I like the website as well. Keep up the good work!