In September, we doubled paying customer base of the Send Later chrome extension to almost 100 and added 8200 new free users, 4x more than in August.
In last months income report I talked about why I acquired the Send Later chrome extension and discussed how I plan to build the tool from a free tool, that 30,000 business people use, to a paid tool which I plan to take public by 2020.
I publish these monthly income reports so you can get an inside view on SaaS company metrics, growth hacking, user backlash, revenue expansion and more, realtime.
This is the data I wish I had as I grew my first SaaS business, Heyo, to 10,000 monthly paying customers, $2.5m raised, and $5m in revenue before selling it publicly here. It turns out that the multiple we got was similar to the multiples of these 85+ private SaaS companies.
They each shared their revenue numbers recently on the fastest growing business podcast with 2.5m listeners.
We drove growth in September by introducing a paywall, launching an unpopular but effective growth hack, and by limiting expenses while we studied usage habits.
How to Introduce A Paywall Without Upsetting Free Users
In September, I introduced a pricing popup using psychology I detailed in last month’s income report.
Any user who hit 50 lifetime uses of Send Later would see this pricing pop-up. In total 446 users saw the paywall:
Conversion rates were way lower (17%) than what I was hoping for (90%).
In total, 446 saw the pricing pop-up, 64 converted into paying customers, 280 keep clicking “Use one more time for free”, and 106 stopped using the tool altogether.
In October, I’ll likely test showing the paywall at 25 credits instead of 50.
2x as many people have used 25 times versus 50 so more users will see option to pay. Ideally this drives significant revenue growth without turning users away.
While the pricing pop-up has caused a bit of backlash in the form of nasty emails and 4-5 bad reviews, it’s also lead to no-touch sales that come in like a steady stream of water.
Check back in October to see how these pan out:
- Run re-engagement campaigns to the 106 users who stopped using once they hit the paywall
- Showing paywall to users with lower usage rates (25 credits instead of 50)
This revenue is only from Send Later and does not include 6 other revenue streams I’ve set up ranging from real estate to podcast sponsorships, startup investments to dividend returns.
TopTal: $500 (I hire the worlds top 3% of developers using Toptal)
Cirrus Insights: $0 (Testing as CRM solution)
Drip: $1 (trialing new software)
Acuity Scheduling: Testing trial for scheduling user interview meetings
All Expenses ($5690.19):
Business Property Tax $(41.94)
Commissions & Fees $(410.90)
Contract Labor $(587.57)
Credit Card Interest $(81.50)
Gas & Fuel $(7.43)
Meals & Entertainment $(643.46)
Office Expenses $(320.88)
Other Business Expenses $97.00
Parking & Tolls $(112.25)
Software package/suite $(1,115.59)
Usage Metric Pricing Drives <1% Churn
The $5/mo plan saw <1% monthly churn (the 1 sub who churned had not hit 50 credits used), and the $50/mo plan saw 32% churn (of the 9 who churned 3 never installed the app and 5 never hit their activation metric of 50 credits used).
My aim is for the $5/mo plan to have <0.25% monthly churn.
I need to work on lifecycle emails to convert $50/mo users to activated users otherwise, they’ll keep churning at 30%+ monthly rates.
Of the 10 total customers we lost, 3 paid and never installed the app and 5 never hit 50 credits used (0,1,19,2,5 respectively).
Remember, I use credits as a way to determine if users are getting value or not. I do not worry about churn when usage is under 50 credits (1 credit = 1 send later, or 1 reminder, or 1 auto-followup).
I expect customers to churn if they haven’t hit 50 uses – they haven’t gotten value, why should they pay?
This is why I care most about “Latka monthly recurring revenue” (LMRR) churn – users who were activated, and still churned.
Remember, I bought the extension 3 months ago for less than $2k. It’s now producing $1500/mo in MRR and $486/mo in LMRR (Approximately $6k/year LMRR run rate).
Great returns so far – just getting started!
This is proof that you don’t have to invent a brand new idea to launch a successful business. It makes way more sense to copy something that already exists, and then add your touch.
If you keep reading these blogs, you’ll start to get a sense of “my touch” and how that adds real value to these companies I buy.
How I Got 10x As Many Daily Signups as Usual Using Unpopular Growth Hack
This was a total shit show emotionally. I heard from about 1% of the user base who were very upset. The uplift in growth was a beautiful thing from a business perspective.
The test I ran was a copy of “Sent with iPhone” except I added “Sent with SndLatr” to the bottom of all emails sent using the extension (free plans only).
I got absolutely destroyed in the Review section of the Chrome Store by users who were pissed that I added “Sent with Send Later”. Ratings on chrome store tanked to sub 3.6.
To be honest, I don’t blame the users. I gave no warning of the changes. I just did it.
The positive results were over 100,000 emails were sent with “Sent with Send Later” at the bottom, driving over 3245 clicks to the Chrome Extension and giving good lift to the daily new user numbers (over 1400 on 9/29 when test was launched, will watch to see if overall lift prevails over time):
If I had paid Facebook or Google for this same traffic, it would have been $800-900 at approximately $.0.25 a click. (3200 clicks for free w/ my growth hack).
This test falls into the “just take action, do it, and ask for forgiveness later”.
After I made the change and pissed off loads of users, I sent this email to the 22k+ user-base which 11k+ opened and many appreciated:
Subject line: Sent with Send Later
Many of you were upset yesterday when I added “Sent with Send Later” to the bottom of the emails you send – rightfully so.
I did a horrible job communicating updates and changes I made. Here they are:
“Sent with Send Later” is added to bottom of any of your emails only when you are using the Send Later extension on an email.
To REMOVE this branding, you can click here to pick a paid plan.
All other emails will not have “Sent with Send Later” added.
Remember that we help you do 4 things. If any of these are turned on, the “Sent with Send Later” signature is added:
1. Send later button
2. See if your emails get opened (eyeball icon)
3. Set reminders for yourself (bell icon)
4. Email people when they don’t respond automatically (double arrow icon)
If any of these 4 are turned on for an email, “Sent with Send Later” gets added.
Make sure all the icons are grey (that means its turned off) and your email will not have “Sent with Send Later”
the open tracking (blue eyeball) is on, this email will have “Sent with Send Later”
RIGHT: (No “Sent with Send Later” added)
all icons are grey, you’re not using our tool which means no “Sent with Send Later” will be added.
Labels added to each email have been adjusted.
Labels show up in the sidebar folder in your inbox under Tracked, Scheduled, Reminders, Followup.
Once a scheduled email has been sent, it is removed from the Scheduled folder (the “Scheduled” label is removed). This is also true for Reminders and Followups.
Happy to answer any questions you have. Just reply to this email or give me a call if thats easier at 7034312709.
I’m sitting a Starbucks all day today focused on making you guys happy.
Sorry for the poor communication on these updates.
PS: To remove “Sent with Send later” branding, you can click here to pick a paid plan. Otherwise, you can keep using for free!
PPS: I’ll keep using this email address to send you product updates in the future. Sorry again for lack of communication on these most recent changes.
Engagement on this email was average with about 12000 opens out of 22000 total users who received:
Moving forward, I’ll likely leave “Sent with Send Later” on free plans to drive free user growth. The app is now growing at an average of 250 new users per day (up from about 150 per day before I added the signature – significant lift!)
I got maybe 100 users posting very negative feedback out of a total userbase of 10,000+. I’ll continue to monitor if usage drops off or if lift from this growth hack drops off, if it does, I may remove.
Last thing I want to discuss are unit economics – the key to figuring out how your average user behaves and if you have a billion dollar business or not.
Unit Economics (Subscriber Behavior)
Keep in mind this data is based on just a 2 month data set. While not a ton of time, its still a big advantage – at least we have something to go on.
Too many SaaS companies focus on trials and payment gimmicks rather than focusing on the key usage metric each user has to hit to pay the price you want them to pay.
These companies are savvy SaaS companies that do a great job tracking unit economics like LTV, Churn, CAC, ARPU, MRR and other critical SaaS metrics.
My sole focus is on getting new users and getting those users to hit 50 uses as fast as possible. I’m betting 50 uses is enough to justify them paying a $5/mo price.
For the September new user cohort of 8220, 31 of them hit 50 uses in the first 30 days. From above, we assume that 17% of the 31 convert into paying customers (5) resulting in $25 in new MRR and $600 in LTV (assume 2 year stick rate, current churn less than 1% but sample size too small to be sure)
You’re thinking, $25 in MRR is nothing. You’re right… keep reading.
This means I’d happily spend $600 to get 8220 new users because I know based off historical cohort this should lead to $600 in new LTV. That being said….
… I won’t start paid acquisition until I figure out a few things:
- How do I get new users to use at least once? Of the 8220 September signups, 6000 didn’t use a single time. This is my highest leverage point in funnel to increase (currently a 73% dropoff!). I’ll test things like onboarding tutorials in October to increase this.
- After a user uses Send Later once, how do I get them to use it a second time? Of the 8820 September signups, 2224 used once and only 1269 used a second time (almost a 50% drop off!)
To illustrate how impactful this is if I improve to 50% of new signups using once and everything else remains unchanged, instead of 5 new paying customers from 8000 signups, I’d get 10 new paying customers from the same signups.
- 8000 (New Users)
- 4000 (Improve 73% dropoff to only 50% dropoff with October onboarding tests)
- 2000 (Unchanged at 50% dropoff)
- 48 use 50 times in first 30 days (Unchanged)
- 10 (20%) become paying customers ($50 in new MRR means $1200 in new LTV)
8000 signups leads to 10 new customers resulting in $50 in new MRR and $1200 if they stay active for 2 years.
Now, you’re thinking holy crap Nathan, you’ve got to sign up millions of users to get any kind of meaningful recurring revenue.
You’re right, but I have momentum and I’m learning from users, fast.
This is how the overall onboarding funnel is performing. Look for me to attack the 24% installed > used once cohort in October.
Levers I’ll pull to increase revenue over time:
- Charge more for teams using
- Add reporting feature to upsell
- My usage metric of 50 uses may be too high, may bring down to 25 which would introduce paywall to 5x as many users as previous test
- Almost no one (less than 10) is using the Auto-Followups feature (I personally use this feature the most). I need to do a better job introducing this in the onboarding flow.
The hardest thing to do is get a free user to take out a credit card and pay.
As I grow happy paid users, I’ll also start turning focus towards how I can give them more value and get them to pay more for that value.
Moving forward in October, I’ll hunt for new creative ways to drive new users but will more importantly focus on how to get a new user to become an active user (50 uses as fast as possible).
Will hang out in the comments for any questions Let me know if you want me to keep doing these income reports. Probably not a smart thing for me to do because it invites unnecessary competition.