Dealer Video Showroom

Collin Davis shares the tech and marketing details behind turning an idea inside his company into a business generating $25,000/mo.

Tell us about yourself and what you're working on.

I'm Collin, and I'm the CTO of an automotive video tech company called WheelsTV. Our core business is to test drive cars and make videos about them.

In the past 3 years I created a video platform (that's incubated within the company) called Dealer Video Showroom. It's for car dealers to better merchandise their vehicles by including video test drives on their websites, in their email marketing, and in their social media marketing.

How'd you get started with DVS?

WheelsTV had been producing vehicle video test drives since 2005 and licensing them to various car shopping websites and cable on-demand platforms. The licensing business was doing well for us, but we knew that wasn't going to last long given how the video landscape was changing.

By mid 2007 we were approached by an automotive data company who was looking to add video to their existing data and imagery licensing business. We agreed to a 50/50 distribution deal, and they became the first reseller of our video test drives. It was our first entry into the dealership website market, and we knew that was the bigger market opportunity compared to the handful of car shopping websites we'd been selling to.

Our licensing business and reseller relationship grew year over year, but by 2012 they were plateauing. The licensing business slowed down as more companies were moving towards ad-rev split models only, and our reseller's sales team was prioritizing selling their own products (better price point).

By early 2012 we decided we'd be better off selling our own product to dealers directly. Although the challenge was big, we'd be left behind if we didn't act sooner rather than later. Competitors had started popping up by this time. We knew we had to grow the business with a new offering, and we had started getting calls from dealers who wanted to add our videos to their website. The problem was we didn't have a scalable way to do it, so DVS was born.

What would you say your main goals were at this point?

We wanted to solve a problem our company and dealers were facing: easily being able to add video to dealership websites. We also wanted to create a strong recurring revenue model for the business and become more of a technology media company, not just a video production company.

What was your personal role in all of this?

Personally, I had gone from video editor/web developer to production manager between 2007-2009, but I always had the itch to build my own business and continue working on freelance projects. I wanted to do something new at work that I could own from start to finish. By 2010 I was promoted to CTO and given equity and a board seat. I had to scale back on my freelance work to focus on these new responsibilities.

By mid 2012 we began discussing v1 of the DVS. This was really the project I had been wanting to build since 2010. I was given a budget of $3,000 per quarter, so I hired a PHP dev shop in Florida to do all the back-end work while I focused on the design, product roadmap, dev scope, and testing. I had been following this particular dev shop for awhile, because they were building some great plug-ins/add-ons for the PHP framework we decided to use.

What does DVS' tech stack look like?

It's a LAMP stack. We use Rackspace cloud servers, AWS S3, and the Brightcove video platform.

I had a lot of experience with a web hosting and billing management system (having run my own web hosting business) and realized how similar our DVS product was operationally, so I customized it to be used for automating orders, billing, and support. The best part is it only cost $350 (one time fee) and it's super extendable. I can't imagine using any other system or paying a monthly fee for any other service.

For tracking we use Google Analytics. We tested some data collection with Mixpanel, but found it to be too mobile-focused. Tried Heap for a little while as well, but have stuck with GA. We also integrate partner tracking codes so they can track metrics specific to their reporting systems.

How much time did you spend building the initial product?

DVS was incubated within the company, so I worked on it half of the week, and then my other day-to-day duties the other half. (I'd spend about 20-30 hours a week on the DVS product, working a total of 50-60 hours a week on average.) It took us about 6 months to build the MVP and then another 12 months to test the beta before launch.

How did you end up growing DVS and acquiring customers?

By the end of 2012 we were ready to get the DVS into the hands of dealers for real world use. We approached five local dealerships and gave them the DVS for free (forever) in exchange for their feedback on the product. They happily agreed and were instrumental in the next 12 months of product iteration. One of our dealers is in the top 5 Toyota dealers in the country, so they really taught us a lot about the car sales business. Their feedback, along with the other dealerships, enabled us to build new features and improve existing features, create real-life case studies, and create some great testimonials and marketing collateral. This beta period lasted for a year.

Once 2014 started we had a solid year of beta testing, marketing materials, and real-life metrics under our belt. This year was super critical to developing the product, finding market fit, and additional validation. We were now ready for primetime. We decided on an official launch in May 2014 at a popular digital marketing conference called Digital Dealer. We had attended the show before, but never exhibited, so we figured this was the best first push to get the word out about our product.

The biggest challenge was figuring out our price point. We had a rough idea of what our competitors were doing, so we jumped between a $300/month and a $1500/month price point. Our plans were based on which types of videos you would get (new car vs used car, or both). We ended up going with a special introductory offer of $299/month, because we wanted to make sure we'd get some signups. A video solution for car dealers was still very new to them, so we wanted to make sure it wasn't too expensive. By the end of the 3 days at the show, we'd signed up 24 dealers for 90-day trials. Of those trials, only 2 did not convert to paying.

For the remainder of 2014 we focused on direct-to-dealer sales after a nice jumpstart from the trade show. The more dealers we talked to, the more we continued to learn and adapt our pricing, marketing, features, etc. Our initial sales were slow to start, because we had two guys literally driving to and walking into dealerships around the New England area and pitching them cold. Some confirmed appointments, and some kicked us out the second we walked in. It was a grind and a pain in the ass. We did this for about 6 months and then changed our approach after learning some things:

  1. Car dealers who we approached with a cold walk in were not qualified. By not qualifying them, they ended up signing up for a trial just to get us out of their hair, and then never converting. This type of customer segment had the highest churn.
  2. Car dealers don't answer cold emails or phone calls. We bought lists, sent some spammy email blasts, and made some calls, but our success rate was low. The same lesson was learned as #1: qualify the customer first.
  3. The most effective way to get new signups was by exhibiting at trade shows. Dealers are pre-qualified (because they are at the trade show), and they are at your booth to learn more.
  4. Hosting a speaking session/workshop at conference is another qualifier. I came up with a topic that wasn't too sales-y, but clearly promoted our product as an example of how to and how not to use video. The room was full, and we got several leads as a result. I speak at every show, and that adds credibility to our product.
  5. Pricing was too low. We heard "only $299?" a lot. So we bumped it to $499. And we changed our plans from new vs used car videos to always include both types... but we switched up which features were offered. We determined how to break out which features to offer based on which features were being requested and/or used the most. It also allowed us to price our product to meet the needs of all types of customer segments (small/medium/large dealerships).

By the end of 2014 we had about 40 clients. After some slow but continuous sales growth (but a drop in licensing revenue), we had to step on the gas and find a SUMO or investment. By SUMO I mean a partner who would add even more credibility to our product, and who would help us market it.

It just so happened the partner we went with is the largest automotive website provider in the industry. We had been speaking with them for almost 5 years, and finally the timing was right. They were launching a partner program for vendors like us, and they asked us to join their program. Within two months we inked the deal, and the relationship kicked off in January 2015. To date we have been able to market to their customer base and use their branding in our own marketing. Half of our leads thus far can be attributed to them.

By early 2016 we had reached 120 customers and $25,000 MRR. As a sign of this continued growth and a successful partnership with our SUMO, we were then approached by our SUMO's biggest competitor — another huge player in the automotive marketing space who provides websites to dealers — and now we've inked a distribution deal with them as well.

Today we're in the process of building functionality to integrate with their platform, and then they'll be rolling it out to 4,000 websites by early 2017. The difference with this partnership is that they will automatically include our product with their customers' websites, and then those customers will get to opt-out. Our metrics have shown that only 20% of trial users don't convert to paid, so we have a high chance of converting a majority of the 4,000 clients within the first 90 days. Once we hit around 1000-1500 dealer clients, we'll be in a strong position to raise investment for additional growth capital.

What are some other interesting metrics for DVS?

As I mentioned above, we use Google Analytics. Trends show high usage on mobile, high play rates (people want to watch video), and low attention spans. People are 12x more likely to respond to lead emails from dealers when our videos are included. We have 120 website customers, and we average 30,000 uniques per month across our network of clients.

How did your revenue and expenses change over time?

We started charging when we launched in May 2014. This was our official launch and we felt a discounted introductory offer was a great way to validate pricing and drum up interest. We needed to start making money to pay back R&D expenses for the past year of development as well, and we had to ensure people actually wanted the product (our research with beta dealers had shown that they did). We charged for the platform license which includes 4,000 new and used videos for use on the dealer's website, CRM, and marketing tools.

Expenses averaged ~$2000/mo when we launched. This paid for marketing, ongoing development, servers, etc. There were some financial challenges that came about a year after launch in 2014, because the loss of some licensing business caught up to us. We've been sticking through it and raising money in the process to stick it out. We had to lay off some staff and cut back expenses/pay in the process in order to keep the business going strong.

It took us 90 days to get to $7200 MRR. My initial goal was 50 dealers by end of 2014. We only made it to 30. Other team members were aiming for 200. We aimed for 100 dealers by the end of 2015 and missed it by 10. Our 2016 goal was 150, and we're almost there.

We're doing $300,000 ARR today, and we're growing that at about 5-10% per month. Once our latest partnership launches, we'll be seeing significant MoM growth (200%+ is expected). Our financial goals will be in the $4M ARR range within 2 years based on our projections with our partnerships.

What things helped you generate more revenue?

We ended up changing our pricing on two of our three plans (the lowest and the highest). We found that the lowest plan ($299/mo) was too low, since dealers were surprised how cheap it was compared to our competition. Sometimes pricing things too low can create a perception of less value/low quality. We also needed to adjust pricing to accommodate the margins we were going to be giving to our reseller partners.

We're always developing new features based on user feedback as a means to let the customer know we are listening to them. We try to hit those releases quarterly, and then we do an email newsletter to our customers announcing those new features. If there's anything we've learned, it's being as communicative as possible with our customers and really keeping them engaged with what we're doing internally with product development. Our customers love to be a part of that process, because it strengthens the relationship.

What's also been successful is not segmenting the jobs of sales, account management, support, etc. We have one person that can do it all through the entire process, so the users feel way more comfortable knowing they can get things done with whomever they are assigned for their account.

What about on the marketing/distribution front?

In order of most to least successful:

  1. Trade shows. These are the best, because the dealers are automatically qualified. It's great because they come to you wanting to learn more. They are there to try/buy and they are most likely to sign up for trial. From there we average an 80% conversion rate from trial to paid.
  2. Facebook ads. Everyone is on Facebook, especially car dealers who are bored during slow times at work, and we can target them very specifically.
  3. Email campaigns via partnership. Our partner has a highly qualified list of dealers, and they are the most credible company in our business. (They pioneered dealer websites in the late 90s.) They also do a good job of posting associated expert content (guest posts from me) and doing email sequences promoting our webinars or product demos.
  4. Word of mouth. Dealers love seeing what other dealers are doing. They are super competitive, so when dealers see a dealer who has something they don't, they get FOMO and want to have it too.

Having a brand name that's been recognized in the industry has certainly helped as well.

What are your plans for the future?

The biggest challenges that lie ahead for me are our customer success and support processes. Today's process is very bare bones and semi-automated. We always have a touchpoint with the client via phone whenever they sign up for a trial, and once their trial officially starts, we have a one-on-one kick off call to show them the product on their website or answer any questions. This gives them a comfort factor to know there's a human at the other end of the line.

Doing this for 120 customers today is hard enough as it is — everything has to be scheduled for certain allocated days and times, and response times for tickets are as much as a few days. Once we get to 4000 accounts it's going to be 400x harder to service all of our customers, so I'm working on more complex nurturing sequences, coming up with training materials for new hires, and anticipating when we'll have to hire them based on growth.

If you had to start over, what would you do differently?

I'd launch our MVP and start selling it right away. There was no reason to beta test for a year. We could have done that and charged for the product while getting more dealers in the process. The value was always there from day one.

We thought building certain features was the key before launch and selling the product. Not the case. We overcame obstacles with integrating into client websites early on, and that was a game-changer in terms of adding value to the customer in order to drive traffic to their websites (not an external landing page).

There are often conflicts between the executive team, but all for good reason. It shows trust, passion, and unity to create a better product and make sure the company succeeds. If you're not conflicting on something, you're not doing something right.

Some skills we've been missing and neglected early on were marketing and sales. While our partnerships are filling that void today, early on we should've hired one sales person and one marketing person to launch the product instead of doing it ourselves. Having someone who knows those skills is important to grow the brand and product.

What's your advice for other aspiring indie hackers?

Start and launch as soon as possible, and don't be afraid to charge. If someone will pay for your service right out of the gate, then you're already validating that there's value. And don't be afraid to communicate with your users often or seek their feedback. It will make you a better founder/hacker, and it will make a better product.

Where can we learn more about you?

I love solving problems with technology using software, automation, etc. And I'm a big believer in not reinventing the wheel when there are so many resources at our fingertips already. Feel free to reach out!

You can also leave a comment below, and I'll try to get back to you!

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