How Talking to Customers Grew My Business to $70K/Month

Hello! What's your background, and what are you working on?

Hi, my name is Josh Ho and I'm the founder and CEO of Referral Rock. I live in Silver Spring, Maryland, with my wife and two kids. I'm an engineer by trade but consider myself a full-stack entrepreneur (not sure if that's a thing). I lead product and marketing for Referral Rock but have also done my tours in sales and customer support.

Referral Rock is in the SaaS martech space and is 100% remote. We make referral marketing software for any type of business — not just e-commerce. Most of our customers are small- and medium-sized businesses across a range of business types from car dealerships and tax accountants to SaaS and, of course, e-commerce.

Today Referral Rock makes over $70K in revenue per month. It started out as the indie hacker dream of a recurring-revenue self-service SaaS business of just me, but I followed the opportunity to grow as it was presented to me. This led me to add services and inside sales to accelerate our growth and find our fit in the market.

Referral Rock Homepage

What motivated you to get started with Referral Rock?

The idea for Referral Rock was born while I was waiting for car service in a Honda dealership. A customer walked in and made a beeline to one of the salespeople. The customer mentioned they were referred by a friend and the salesperson had a blank look on their face for two long seconds before they snapped out of it and went into sales mode.

That's when I started wondering how car dealerships or any local service-based business ran referral programs. A quick Google search later and all I found was refer-a-friend software focused solely on e-commerce. Thinking I had identified a gap in the market, I started pursuing the idea of referral program software for non-e-commerce businesses.

I first validated the idea by reaching out to any and all small businesses I had contact with. That meant family, friends, and their friends, as well as any local business services I used, like my accountant, real estate agent, roofing contractors, and so on. I sent them a survey and did a drawing for a gift card for every 10 people.

I have to admit that the results of the business surveys weren't a "take my money" type of response; but the interesting results came from consumers that participated in referral programs and the pain they felt. In those days the most important requirement was that the business was a B2B SaaS business. In a past startup I created called UberNote, I suffered the pain of trying to get consumers to pay for online services and swore never to do that again.

What went into building the initial product?

Over the first six months, I worked about 10 hours a week on the alpha version, with several peaks and valleys depending on workload. At the time I was a software consultant working for myself so I had a good amount of flexibility in my schedule.

I tried to use as little code as possible. The first version was a super basic framework of ASPX pages and resource files that I had cobbled together from an old project. Each resource file was meant to represent the configurable elements of a given customer. This even allowed me to avoid using a database for the first version.

For the admin interface I used a survey tool that allowed customers to fill out their business name, upload a logo, their referral offer, some basic business description, and so on. Then I took the .CSV and converted it into one of my resource files.

My goal was to spend as little time as possible to validate the initial product to see if Referral Rock had legs.

Referral Rock Integrations

How have you attracted users and grown Referral Rock?

I launched the first version on Betalist in June of 2014, which did pretty well at the time. I tracked Betalist users with a promo code so I knew who signed up. I recall the launch attracted around 200 signups or so. Then I sent out the survey and got about 20-30 people to complete the setup survey.

From there I was also active on Twitter where I reached out to marketers or anyone that mentioned "referral programs." I would comment or favorite tweets from the Referral Rock Twitter account which listed a free referral program. Throughout the year-long beta I had over 500 individuals kicking the tires on the free referral program before I started charging.

While working on Referral Rock part time, I continued to refine the service and create an actual database and admin UI. I often reached out to users over chat/email to see what would make the product better. I can't say I thought the product provided enough value to charge, even though, slowly but surely, customers were gaining some real traction with their referral programs.

Finally on a dare from a friend I set up Stripe and a checkout service.

I started with content marketing and SEO to continue the flow of new users. Knowing how effective it was for previous businesses, I started blogging very early so we could be in the conversation for anyone looking for referral software. I even bought failed competitor domains on Flippa so I could point them back to Referral Rock.

Month Visitors
Jan. '16 3400
Jan. '17 6500
Jan. '18 14000
Jan. '19 22900

Over time and by producing lots of excellent content, we were ranking well for many referral marketing related terms. My goal was (and still is) to be in the conversation and put our differentiation front and center. The fact that supported businesses that weren't e-commerce helped us stand out in a crowded market so our ideal customers could find us. We also have a disciplined focus at the bottom of our marketing funnel and on the audience that is ready to buy.

What's your business model, and how have you grown your revenue?

Referral Rock is a SaaS business where we make money based on monthly subscriptions and one-time service fees. Today we are making over $70K a month in revenue after almost four years since we started charging in 2015.

Month Revenue
Jan. '16 5000
Jan. '17 17000
Jan. '18 38000
Jan. '19 50000
Apr. '19 70000

In the beginning Referral Rock was built to be a lower priced self-service business. I never envisioned I'd be charging more than $100 a month for the service or having more than a couple employees helping out with support. A turning point for us came about because of my frustrations with helping customers over chat.

I find helping people over chat excruciatingly painful as I get very impatient with the single-threaded nature of the conversation while waiting and watching them type responses. So I started asking people if they wanted to do screenshares/calls so I could help them faster. Low and behold, paid conversions started going up. Way up. We quadrupled trial-to-paid conversions. Talking to users directly helped me establish a connection and improve my understanding of what they were looking for. It also put a real person behind the business vs. someone just hiding behind a chat from who knows where.

Even though it started as a way to relieve my annoyance with talking to customers on chat, it ended with what I now know as "inside sales." I found that customers wanted to hear from me and about my expertise on why the software worked a certain way vs. how they wanted it to work. Many times I would be pleasantly surprised by suggestions and found myself saying, "You're right, the product should work that way. I can fix that by tomorrow."

I believe that the passion and insights you provide as a founder can go a long way in the early days when your product is not entirely proven. I emphasize this to any founder and to make use of this opportunity if they can.

After months of doing the screenshares and calls, I got a better feel for what customers were looking for, in addition to gaining an understanding of how much value they were getting out of the service. This prompted me to increase prices and start charging setup fees for the extra amount of work it took to help customers launch their programs. Because my time began to focus around these demos, the development and content marketing efforts slowed; I realized I was neglecting the other parts of the business that helped with growth. This was when I knew I needed help to grow the business, and thus began the long road of building a team around me.

The passion and insights you provide as a founder can go a long way when your product is not entirely proven.

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Little by little we've scaled the business by hiring for the jobs where I could be replaced. We are now a fully remote company of 12 with multiple managers and teams across marketing, sales, customer success, and product.

What are your goals for the future?

Our goal is to continue to be a profitable company and further our mission of helping businesses grow through word of mouth.

We believe there is fragmentation in the current referral space; the old guard of affiliate marketing is meeting the new guard of referral marketing, customer advocacy, and influencer marketing. At the end of the day we're all attributing a referral to the referrer. We see a strong future for all these segments and want to see awareness grow as word-of-mouth marketing all together. Collectively we can all help our customers grow and have fewer dependencies on digital advertising giants.

For Referral Rock, we want to continue to be a remote-first company where we can find the right talent no matter where they live in the U.S. It's been extremely rewarding building a business that can support people and their families while also giving them a space to advance themselves.

Talking to users directly helped me establish a connection and improve my understanding of what they were looking for.

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What are the biggest challenges you've faced and obstacles you've overcome? If you had to start over, what would you do differently?

It's all hard and painful, but the hardest part has been hiring and building a team. Mistakes in hiring are very expensive. As Referral Rock is self-funded, time and money are both critical resources to manage as there is not much room for error.

My biggest hiring mistakes were when I brought people on too early. (Just to clarify, I don't mean it was too early for the business because I definitely felt the pain and had the need.) The mistake I made was that it was too early for me as a leader and manager.

I've learned that hiring from a position of pain is not a good idea. It's a lot like going food shopping when you're hungry — there is a good chance of making a bad decision.

If I were to do it differently, I would tell myself to take pause and do more of the job myself first and make sure there are repeatable processes involved. I would take the time to get a better understanding of what a successful hire looks like from all angles —not just what they would achieve but how I'd work with them on a day-to-day basis, how they took direction, and the processes and cadences necessary to be effective. You should know the ins and outs before you can effectively hire and manage a role.

It's tough to figure that out with just a few calls and a project, but we have built a process to help us avoid mistakes and see red flags sooner. I still struggle to find the right fit for some particular roles but I have also been fortunate to find people I feel like I can build the company with.

Have you found anything particularly helpful or advantageous?

I listen to a ton of podcasts (like Indie Hackers) which fills a lot of in-between time at the gym, on car rides, and while waiting at pick up for kids. Mainly they are founder interviews and startup stories which help me learn how to avoid others' mistakes and hear about their successes.

A strong sense of empathy can accelerate learning and help you put yourself in others' shoes.

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Accelerate your learning by getting as much sampling as possible. Don't get hung up on the specific advice but have a better understanding of their decision-making process and look at it through your own lens. Use the advice to build your own decision-making model. Sometimes you get a gem of insight or idea but more often hearing other people's experiences reinforces your thesis and validates your own take on how the world works.

The skill that helps me the most is my sense of empathy. It's helped on many fronts such as in sales, marketing, hiring, managing, and product design. I also think a strong sense of empathy can accelerate learning and help you put yourself in others' shoes and see things as they would see it.

The other important skill is an engineering mindset. Obviously for building the technical product itself, but also because so much of a running a company involves building in general. People, process, company structure... not sure where'd I'd be without my inclination to systemize everything and have a repeatable process.

Recently I've started reading more books and networking with other founders. Being a solo founder is a lonely journey, but Twitter and communities like Indie Hackers help me connect with like minds, share experiences, and get support.

What's your advice for indie hackers who are just starting out?

Don't be concerned with labels or even your own pre-conceived notions of yourself. Be open-minded and you may surprise yourself with what you are capable of. Overall I've learned a lot about myself that I didn't know before. Before I started the journey of Referral Rock I never would have considered myself a salesperson — nor did I have any desire to be. I fell into it and honestly liked it and got to understand the thrill of the kill. I'm not sure where Referral Rock would be today if I'd never decided to start taking calls and giving demos.

I learned that you can be an excellent salesperson by being honest and helpful; you don't have to be pushy or aggressive. I do firmly believe entrepreneurs need to learn how to sell and that it shouldn't be outsourced or farmed out.

The other piece of advice I'd give is to leave slack on the line and room for things to not go as planned. Pack in everything too tight for you and your team and you won't see the nuances and little things that can make a big difference. The game changers for Referral Rock didn't come from a plan; they came from being able to step back and see trends and directions. Be willing to test and see how they go. Then when you have some success, drill in and make them repeatable.

Where can we go to learn more?

You go can to https://referralrock.com to see how we're making word of mouth a channel for growth or follow me on twitter.com/jlogic. I also post about my startup journey at https://mojoho.com.

To support our community and help spread word of mouth we've started a new site and email newsletter to share stories about businesses. It's called Word of Mouth Uncovered. We try to get to the root of how and why word of mouth works by examining interesting businesses. If you want to contribute or are interested in hearing these stories, please check it out.

I'm always happy to chat about bootstrapping, founder selling, building a remote team, or anything else you throw at me.

Josh Ho , Founder of Referral Rock

Want to build your own business like Referral Rock?

You should join the Indie Hackers community! 🤗

We're a few thousand founders helping each other build profitable businesses and side projects. Come share what you're working on and get feedback from your peers.

Not ready to get started on your product yet? No problem. The community is a great place to meet people, learn, and get your feet wet. Feel free to just browse!

Courtland Allen , Indie Hackers founder

  1. 3

    “I believe that the passion and insights you provide as a founder can go a long way in the early days when your product is not entirely proven. I emphasize this to any founder and to make use of this opportunity if they can.”

    GOLD!

    1. 1

      Thanks Steveo!

  2. 2

    I found this whole story super interesting. I love self-funded companies of any shape or size, but ones that scale by building good product and not being super pushy about have a special place in my heart.

    Generally I'm against sales as a function, so this really stuck out to me:

    "I learned that you can be an excellent salesperson by being honest and helpful; you don't have to be pushy or aggressive."

    Now that's something I can get behind. Clearly it's working for y'all because you're growing, haven't had to raise, and you've built a fabulous team around the product. Really impressed.

    1. 2

      I came here to comment that exact quote. It's so refreshing to see and backed by research. At my first startup I was told I'm not ruthless enough to be an entrepreneur. I really wish that sales myth would disappear. Seeing a post emphasizing empathy and relationship building is so awesome!

  3. 2

    Am I you three years ago? Your story sounds so similar to mine. Love all the insight, a lot of golden nuggets in there.

    I've been on a sales/demo kick recently with my project and I'm also starting to like it way more than than I thought I would. Would love to pick your brain more. I'm in DC, let me take you out to lunch soon?

    1. 1

      Sure love that!

  4. 2

    Awesome read. Congrats on all the success this far Josh!

  5. 2

    Congrats on the success and the revenue gains. That's awesome you decided to do screen-sharing support. I see many ads for chat bots and every ecommerce site seems to have some messenger but I find they are frustrating with delays. I believe screen-sharing support services are the next big thing.
    Is your business model B2B because $200 seems a bit high if for B2C?

    1. 1

      Thanks much!

      I agree with you on the frustration with chatbots IMHO some of them aren't that much better than filling out a form or reading a FAQ. Screen sharing and zoom calls made a huge difference to bridging the gap and aligning with our customer's needs, but the higher price point of ours does allow us to not lose shirts on the time and effort involved.

      You are correct that we are a B2B business model, selling to businesses. However, our customers sell to both businesses and consumers.

      1. 1

        Can you elaborate how you use screen sharing to boost conversion? Do you provide some guide to your customer support staff and they reach out to leads or do you have the lead schedule an online seminar at their convenience?

        1. 1

          We take demo requests on a form then route them to calendly links to schedule a 15 minute call.

          The demo is extremely consultative so it gives us an opportunity to have a discussion about the customer's needs and how that maps to our product/service.

          Without the human element, you'd be left to a static marketing page description without the understanding and insights of matching the customer.

  6. 2

    Thank you for the interview! Interesting read. I especially liked the insight on doing calls and screenshares to help customers, instead of chat. Chat has always seemed to me to be best for the company, rather than the customer.

    Oh, and: the link to wordofmouthuncovered forwards me to a spam site.

    1. 1

      Thanks! When I click on the wordofmouthuncovered.com it's fine for me. What's reporting it as spam?

      1. 1

        Interesting! Now it works. It briefly redirected me to a “you’ve won a free iphone” popup kind of site on a phishy domain where the back button doesn’t work anymore.

        1. 1

          Found it in my browser history: http:// best2769 .greenyourday80 .agency/3764750364/?utm_campaign=bKMuT7EMVXU5Z6UvvSHONGlfu-yV43iC8T8uYixAFxs1&t=main9_412a18052d5b11e075e742fd&f=1

          I added some spaces to not make it a link on this forum.

          1. 1

            huh.... very odd. Not sure how that happened. the link is pretty direct. I can check our site and make sure nothing is phishy on wordofmouthuncovered

            thanks

            1. 1

              Yeah, it’s weird. I wasn’t on a sketchy wifi either, and this is on my iPhone, so I don’t think it’s malware on my part. Let’s hope it was a one-time thing.

              And another thing: when I go to your site, scroll all the way down, add my email and press “uncover”, I just get “an error occured”. I also tried with my adblocker disabled, same result.

              1. 1

                AH ok. I gotta find where we added that to the wordpress site. Just added a pop up widget/slider. Try that! Thanks

                1. 1

                  Seems to be working now. 😊

  7. 1

    "full-stack entrepreneur" +1 for this term, lets start using it! I like to think of myself as full-stack entrepreneur with skills spanning multiple areas - product dev/mgmt, marketing, sales, support.

    Love your story, so relatable to me. Congrats on all the success.

    I have been exploring affiliate programs and it is such a crowded space with so many platforms - a time sync to just pick one. Checking out Referral rock now...

    1. 1

      Thank you for the +1.

      I wouldn't say we're a great match for affiliate programs, as we don't do recurring rewards. Not competing directly in the affiliate space is something we've been very intentional about.

  8. 1

    What an inspiring story! I love how you prototyped the early version of Referral Rock by hacking together ASPX.

    You mentioned that you “suffered the pain of trying to get consumers to pay for online services and swore never to do that again.” I’m curious, what did you mean by that, and what did you learn?

    1. 2

      That was with the last startup UberNote. In it's hayday we had maybe 100k registered users.

      We added a "premium" version of sorts with some more advanced features, but conversion rates were so low and painful. When talking to users we provided great value, but so did every other note app. A consumer's choice of note apps was so vast and at that time 2009-2010 it was hard to get consumers to take out their wallets.

      Did the "build it and they will come"... and well they didn't come and pay like we hoped.

      FWIW here are some more lessons from the UberNote saga: https://referralrock.com/blog/online-web-notes-ubernote-lessons-learned/

      1. 2

        Thank you Josh! 🙏 that kind of market definitely seems pretty tough. Looking forward to reading more about the additional lessons you learned.

        EDIT: I actually just remembered that I used to use UberNote a bunch! And 100k users is a lot! Still, sounds like you learned a lot from the experience and applied some of the lessons to ReferralRock for great benefit.

      2. 1

        This comment was deleted a year ago.

  9. 1

    @jlogic Hey Josh, can you give us more insight on how are you choosing your employees right now, after your bad experiences?

    We have examples from big companies like AirBnb who spent five months before hiring their first employee. Is that your case too, taking things slow and easy while hiring? I'm very curious, especially because you're managing everything remotely.

    1. 1

      This is our basic process

      • Job posting (usually angel.co)
      • Good candidates, we send to complete a form with some additional open-ended questions
      • Zoom/Video 15 minute screening
      • Deeper skills eval depending on the role. Code challenge, set up something with our software, writing project
      • Review of project video call
      • Final interview...

      The whole process for a candidate takes about 2-3 weeks of calendar time.

      At times we also do contractor projects before full time, but again depends on the role.

      As I cited in the interview, most of the pain was having me learn what was truly the right person for the roles we were looking for.

      1. 1

        We also leave postings up for positions we hope to have funds to hire for in the next few months.

        For the right candidate that fits us, we have been known to try to grab them up.

        Also, if we are on a hard push for a specific position to fill and aren't getting enough candidates through angel.co we'll post to a remote job board.

        Lastly, I look for long term hires vs contractors and freelancers. I want them all on-board for the awesome journey!

  10. 1

    This is fantastic. Thanks for sharing, Josh!

    Screen-sharing demos are huge for us as well. Training our customer success members on identifying customer goals has been a boon to retention.

    You said a mistake you made when hiring was not being ready as a leader and manager. What steps or actions did you take to ensure you were ready? And I'm curious, what role did your first hire fill?

    Thanks and cheers!

    1. 2

      No prob @rjb

      Mostly digging deep and acting in that role for much longer than I want to. Which led to me being able to know intimately what skills where required and that my expectations were reasonable.

      Funny enough sometimes this process led to not making a hire at all. Where I discovered ways I could automate and make a better process to get things done in that area.

      First hire for RR was in marketing and customer service. She's still with me today in marketing. But early on almost all of the roles were generalists that wore many hats as there are fires burning everywhere. ;)