What's New: Don't let growth kill your business

(from the latest issue of the Indie Hackers newsletter)

It may sound paradoxical, but growth can sometimes be a bad thing:

• Rapid growth can kill your company. Combat this by lowering your customer acquisition costs and slowing down growth intentionally to maintain control.
• Step outside the box and experiment with unconventional marketing strategies. Use these examples to help build your word-of-mouth referrals.
• $7K in five days from pre-launch sales. Jay used daily emails, social proof, and a pre-sale launch countdown timer to create urgency.

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Don't Let Growth Kill Your Company 💀

by Solar Flare

Growth can actually kill your company. This blew my mind when I first heard it in business school, but it's a concept that's especially relevant for startups, particularly in the SaaS space.

The heart of the issue

In the world of SaaS, cash flow is king. Rapid growth often leads to significant upfront expenses, like marketing, offering free trials, and expanding the team.

These costs hit your bank account before the increased revenue starts rolling in, setting the stage for potential cash flow problems.

The driver of negative cash flow

The biggest driver of negative cash flow in many SaaS startups is the customer acquisition cost (CAC).

Lifetime value (LTV) is realized over time, but you pay for CAC today. This mindset creates negative cash flow, and can burn your business to the ground.

If not managed carefully, this can lead to cash burn that might jeopardize the entire business.

For example, let's say your LTV is $1K ($100 over 10 months), and your CAC is $400. By the time you hit $10K MRR, your bank account could be in the negative by $24K.

That’s a recipe for disaster.

Strategies to counteract the growth paradox

1. Borrow from your customers: Encourage customers to pay upfront by offering yearly plans with discounts. Many startups offer substantial discounts for annual payments.

2. Seek VC funding: VCs can inject cash to support rapid growth, allowing startups to quickly gain market share and solidify their position. But this option has its downsides.

3. Slow down growth intentionally: For those in niche markets or running micro-SaaS businesses, slower growth can be a viable option. This approach may mean sacrificing some market share, but it helps with maintaining control and staying bootstrapped.

4. Lower your CAC: Lowering your CAC is the most efficient approach towards improving your cash flow. This can be achieved by improving your landing page, nurturing users with a drip campaign, optimizing your sales funnel, or hiring customer support.

Growth is undoubtedly exciting, but it’s a double-edged sword. These ideas came from my 2024 cashflow planning session for my startup, PressPulse AI.

Check out my 2024 cashflow template to project your 2024 cashflow!

Discuss this story.

In the News 📰

from the Growth Trends newsletter

💸 Adobe calls off its $20B acquisition of Figma.

🔎 2024 SEO and content trend predictions.

💲 Link to your product here. Our most affordable ad.

🤖 OpenAI gives the board veto power over risky AI.

🛠 Build your business with Meta.

👂 Best ways to collect customer feedback.

Check out Growth Trends for more curated news items focused on user acquisition and new product ideas.

Unconventional Word-of-Mouth Marketing Strategies 🗣

by Cameron Scully

These two unconventional word-of-mouth strategies saved their companies thousands in marketing. Use these insights to nail your own marketing strategy!

Painting the town pink

Uberflip, a well-known B2B marketing software, differentiates itself in the software space with a more relaxed and fun approach to its branding, compared to the typical seriousness of the industry.

It's fully embraced this with pink branding, which is just hard to ignore. Pink is quite uncommon in this sector, yet everything the company does has something pink:

• All the CTA buttons on the website are pink.
• The social media posts are pink.
• For events, they set up pink booths and wear pink shirts and blazers.

One of the company's most interesting items is its branded pink headband. The pink headband idea was an inexpensive, yet distinctive, promotional item that became one of its main word-of-mouth strategies.

Uberflip started giving them away at the South By Southwest festival to those who RSVP'ed, and people started sharing what they got all over X.

People who RSVP'ed, but missed the event, got an email including photos of the headbands, along with the subject line: "You forgot your headband at the party."

This was a creative twist on the usual "sorry you missed the event" email that other companies send. This innovative email strategy resulted in 150 responses from people interested in getting a headband.

By September 2019, Uberflip had distributed over 30K headbands. Randy Frisch, the company cofounder, says:

If something’s stupid and working, you should stick with it.

Call for a free shirt

A market crash left WindsorOne with a small marketing budget, and no choice but to come up with an innovative strategy.

The company put a sign saying "Call Kurt For A Free Shirt" on all of its planks. This initiative caught the attention of their builder customers, encouraging them to call in.

On the call, while organizing the shirt delivery, Kurt would take this opportunity to build a relationship with them and discuss their other products, give them a business card, and a "tell a friend" form.
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The shirts weren't boring, either. They displayed popular memes in the builder community.
This experience brought tons of new leads, as builders started telling all their builder friends to call this number for a shirt. They also got referrals from people recommending their products, based on what they learned from Kurt on the call.

WindsorOne also encouraged builders to photograph themselves in the shirts to be featured on the blog, which generates thousands of visits each week!

If you're interested in more B2B marketing examples, case studies, and interviews, subscribe here.

Discuss this story.

Harry's Growth Tip 🧠

from the Marketing Examples newsletter

Rhyming works!

Subscribe to Marketing Examples for more short, sweet, practical marketing tips.

A Strong Email List Brought in $7K in Five Days 📧

by Jay

I hit $7K in launch sales in five days. I was hoping to at least crack the five figure mark, but I made some mistakes that hampered my sales.

Where I launched

I have a small audience: 2K followers on X. No TikTok, no Instagram, no YouTube, nothing else.

What I did have was a list of 7K emails that I've amassed over the years from free trials, lead magnets, newsletter signups, etc. Unfortunately, those emails were stale, as I rarely emailed them at all. Regardless, I decided to leverage that list, and launch my new product to them.

‎‍What I did

My new product was Zylvie, a platform to sell digital products. I knew that, in order to jumpstart sales and have a successful launch, I needed to offer something unprecedented, something people couldn't refuse.

I decided to do a 0% commission lifetime deal. Most platforms take 5-10% in commissions or monthly fees.

In order to also validate the product itself, I used my own product to create a landing page and longform sales letter to sell this deal. I wanted to make sure I could create a high converting landing page myself using my own product before selling it to my customers.

In order to increase conversions, I decided to limit my launch deal to the first 100 buyers, run it for five days in total, and add a countdown timer.

You can see the landing page here.

Pre-launch

For about seven days leading up to the launch date itself, I sent out a few email broadcasts with valuable info. They're short, one minute reads, but I tried to make them as insightful as possible. Towards the end of the email, I dropped hints that I had an upcoming launch offer coming for my new product.

Here are the subject lines for my three pre-launch emails:

• "Just a few quick tips for Black Friday!"
• "Digital products are the key to escaping the rat race."
• "The formula for a successful product business."

A few of my email subscribers even replied with positive feedback!

Launch

I decided to launch on Cyber Monday, and for each day of the five day launch, I sent out one email promoting the deal.

These are purely promotional, but for each one I added something new: A testimonial, sales receipts for social proof, FAQs, etc.

On the last day, I sent out three emails: one for 12 hours, eight hours, and three hours before the deadline. You wouldn't believe the number of unsubscribes I got from doing that, but I'm still glad I did, since sales spiked towards the end of the deal.

Results

• Day zero: $2,114.78.
• Day one: $1,229.87.
• Day two: $134.95.
• Day three: $449.91.
• Day four: $1,629.82.
• Day five: $1,529.84.

Total: $7,089.17.

What surprised me was that, on average, each email subscriber was worth about $1.

What I did right

• Multiple plans ranging from $99.99 to $499.95.

• Promo codes for customers residing outside the US or EU (parity pricing).

• Emailing daily during the entire launch period.

• Updating my landing page and sales letter with social proof or FAQ answers throughout the launch.

• Honoring the end time of my deal.

What I did wrong

• Not setting up an affiliate program beforehand.

• Not launching simultaneously in LTD Facebook Groups, like Ken Moo and LTD Hunt.

• Ending the deal on a Saturday night. Most people aren't at their computers at this time.

• Launching on Cyber Monday, when most people already have buying fatigue from Black Friday.

Discuss this story.

The Tweetmaster's Pick 🐦

by Tweetmaster Flex

I post the tweets indie hackers share the most. Here's today's pick:

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Special thanks to Jay Avery for editing this issue, to Gabriella Federico for the illustrations, and to Solar Flare, Darko, Cameron Scully, Harry Dry, and Jay for contributing posts. —Channing