Building a 7-Figure Email Marketing Tool That Solves the Right Problem
Hello! What's your background, and what are you working on?
I'm Constantine Rozenshtraus, co-founder and CEO of SendPulse. I've been working in the IT business since 2006. I live between New York, where our head office is located, and the Ukraine, our R&D office, where most of our team is based.
SendPulse is a service for email/web push and SMS marketing. Our competitive edge is our AI system, which, in comparison with hundreds of other services, maximizes open rates automatically. It analyzes lots of subscriber data and predicts the best time and channel to send new messages for each subscriber. On average, it increases open rates by up to 50%. (This figure is based on the data of hundreds of relatively large customers.)
Our customers are mostly e-commerce companies, and the open rate is crucial for their businesses. The greater the number of people who open their newsletters, the greater the number of people who'll visit their websites and make purchases.
We've been in business for 2 years. We're self-funded and have 15% monthly growth.
What motivated you to get started with SendPulse?
We've been in the internet-marketing business before, and it was obvious to us that space still existed for new players in certain niches, despite the email-marketing industry's maturity and competitiveness. We discovered that most email service providers focus on deliverability, when "openability" is more important for e-commerce. And so the idea of SendPulse was born.
We created technology which analyzes lots of data about subscribers' past behavior and predicts how and when to deliver the next messages to them. We ran some tests, and the results were incredible. We managed to increase the open rate by 45% for 34 million test email messages.
After these results, we decided to scale the business and launched SendPulse AI on Product Hunt. We got 1,100 upvotes (far more than average), followed by investor emails and writeups in a number of publications.
We started with a tiny budget, so we used a lot of guerilla marketing, such as posting at Quora, contacting the customers of our competitors, visiting events as volunteers, etc. That helped to get our first customers.
Now we use AdWords and Facebook, SEO, and many other paid customer-acquisition channels.
My partner and I have worked together for about 10 years, so we are a solid team — we are "the tech guy" and "the biz dev guy". We just had to hire some developers. In addition, because our R&D team is located in the Ukraine, our initial expenses were low, so we built the product for less than $100k in under 6 months.
What's your business model, and how have you grown your revenue?
Our business model is a simple monthly subscription. The cost depends on the number of subscribers on the list. No other hidden fees like some other services have (e.g. fees for sending over a certain limit, for exceeding a certain bandwidth, etc).
We started charging customers from day one. We believe this is the best way, because only people who are ready to pay right now are your true customers, and you have to listen to their feedback, not to that of free users. Also, getting revenue helps you to stay independent and not rely on outside investors.
We haven't played with the prices a lot. We have very similar pricing to our first day of work, because we are in an established, mature market, and customers have their sense of how much the service should cost.
In the US, we accept credit cards and PayPal through Braintree. For emerging countries, we have local providers who help us to convert customers better. It's important from a cultural point of view. For example, in Brazil, people cannot pay in USD without a tax, and customers in Russia prefer paying in rubles via the bank, and they may have serious obstacles paying you in USD.
One change we have made to the business model has been to implement a free plan. Like the other plans, it is based on the number of subscribers: if a customer has fewer than 2,500 subscribers, they can send up to 15,000 emails per month for free. After introducing this plan, our conversion rates dropped, but over the long term, we started earning more.
What are your goals for the future? And what are your biggest obstacles to reaching them?
We want to be a recognizable player in the omnichannel-email-marketing space in the USA, and be in the top 3 in emerging countries such as Brazil, Russia, Turkey, Ukraine, China etc. We already work actively in Brazil, Russia, and Turkey, where we have fully localized service, local customers' support, and accept local types of payments.
The biggest challenge is to explain to customers why they should switch from their existing providers to us. It's tough, because they are used to using that service. They have all their mailing lists set up, templates uploaded, and some of them use API integration, so the switching cost is relatively high.
We already have an understanding of how to solve it, but it's still a work in progress.
What were your biggest advantages? Was anything particularly helpful?
Our R&D team is located in the Ukraine, which keeps our development costs low. That's why we are developing the product with tiny budgets.
My advice is to run as many tests as you can, collect feedback, and talk to each of your customers. Without feedback, you have zero chance of understanding whether they're really willing to use your product and pay for it.
Another piece of advice is to start charging customers early. It makes you more independent from investors, and you can spend more money making your product even better, rather than wasting months on fundraising.
For inspiration, I regularly read lots of blogs about marketing and business development. (I prefer not to name these blogs because they are likely to change. Blogs that are good today may become irrelevant in a year, and vice versa.)
I try to meet a great number of people, and I really prefer face-to-face meetings over Skype and Google Hangouts calls — they're always more effective.
Where can we go to learn more?
I would be happy to provide any comments on our product, our technology etc. Also, feel free to create a free account, where you can send up to 15k emails a month.
every time a high load(for e.g. Black Friday) your server is frozen for an indefinite time and I lose money on the newsletter...
would still love a tip for goot blogs to read :)