And How We Plan to Grow Our Business 10-20% Month Over Month This Year
TextUs™ is the #1 provider of business-class text messaging, designed to help inside sales and staffing and recruiting teams close more deals.
We launched our initial TextUs product in June of 2013. And, as is common with new startup product sales, our first two years were relatively flat. But in 2015, our sales grew by 700%, and in 2016, we anticipate 10 to 20% month-over-month growth. How did we do it and what can I offer about our experience?
In this post, I’ll share the five things that transformed TextUs into the leading business text messaging platform for the staffing industry and inside sales teams. Plus, I’ll offer a few lessons for startups about how to succeed in today’s competitive tech space.
I’m sharing all of this because I believe this could potentially help other startups become successful, and that’s a win for all of us! I wish I’d read this three years ago, but sometimes you have to experience it for yourself.
5 Secrets to Our Growth
1. Rethinking our product/market fit
After our first two years, we still hadn’t found our true product/market fit, so we grew very slowly and organically, taking on any customer we could find. But in 2015, we found “the fit,” and we have grown exponentially -- 700% -- in just eight months.
The problem was that we initially developed the TextUs platform based on who we thought our customers were -- small businesses, mom-and-pops, or basically any business that wanted to engage its customers in two-way text conversations. The problem was the huge cost associated with finding, educating, and onboarding a small business, which was typically a single-user account, paying only $24 to $49/month. The acquisition cost was simply far too high, even at the most optimistic customer lifetime value.
In 2015, we started thinking about our target market differently. Rather than focusing on an assumption of who our customers were, we looked at who our best customers actually were. In particular, we looked at our largest customer at the time, an enterprise-sized company that had over 100 accounts using TextUs for their inside sales team. They had discovered, on their own, that their prospects, leads, and even customers didn’t have time for phone calls or emails but would, more often than not, respond to text messages.
For us, it was a lightbulb moment. We realized that we needed to shift our model away from the single-account small business model and focus on larger companies that would purchase multiple accounts. That way, we could boost our average annual recurring revenue per company from about $600 to over $12,000. Now, that’s a model we could succeed with!
2. Focusing on our core business
We started our company initially with two products: our TextUs text messaging platform and The iPad Receptionist, an iPad-based visitor management system. We didn’t do this intentionally. It just worked out that way when demand for the visitor management product turned out to be far greater than for the texting product. And we needed the revenue.
In 2013 and 2014, The iPad Receptionist actually outproduced TextUs revenue by about 5 to 1. So we continued to develop, manage, and sell two completely different products at the same time. This was contrary to the commonly recognized rule of thumb for any startup -- that focus is the key to success. We were, in fact, becoming more and more distracted from our core focus.
However, as luck (and timing) would have it, in early 2015 I ran into Andy Alsop, a Denver entrepreneur looking for his next venture. The iPad Receptionist product was growing well organically. It just needed its own team and focus, so it was a great opportunity for both Andy and TextUs. As a result, Andy purchased The iPad Receptionist, giving us a cash injection that allowed us to focus on our core text messaging business. The takeaway is that sometimes breaking the rules can be a win-win, even though you know it’s not sustainable in the long run.
3. Hiring the right salesperson
In January of 2015, we hired Erich Hugunin as our first salesperson (prior to that, I was doing most of the sales myself).
Our candidate search was rigorous. We had to get this one right. Our core team was hard-working and passionate, and we needed someone who fit our company culture and would also be an ambassador for our brand and bring in business.
Erich was high-energy and highly qualified, plus a great cultural fit, as he wanted a win as much as the co-founders did. He also turned out to be very well connected in the healthcare staffing and recruiting industry. It wasn’t an area that we had been actively pursuing, or even considering. But after my first dinner with Erich, we realized how powerful our texting platform would be for the industry that he knew so well.
Aside from Erich being a great salesperson, it was really kismet that we were able to find a person with connections that opened up a whole new target market. Erich reached out to his network, and we saw results immediately. The product/market fit was finally revealing itself very clearly to us as we closed deal after deal.
4. Going all-in on growth marketing
We knew that content and inbound marketing was the way to go, but we hadn’t had a concentrated effort in this area. In 2015, we launched an inbound marketing initiative with Denver marketing firm The Growth Co. Now we blog regularly, are growing our social media community, publish case studies and press releases with our clients, and do a lot of inbound marketing. It’s been extremely effective in establishing a name for ourselves and becoming recognized as a business-class text messaging platform.
“Our 700% growth rate was driven by a combination of my direct sales strategy with existing relationships and our inbound marketing campaign developed by The Growth Co. While I reach out directly to high-value targets, they set up advanced drip email campaigns that automatically deliver demos." ~Erich Hugunin
We also saw the huge impact of our inbound marketing efforts at our first two staffing and recruiting trade shows. I’ve exhibited at trade shows many times with other companies and always found it difficult to get noticed, especially if you just show up with a booth. This time it was different. We presented case studies, set up pre-show email campaigns, and scheduled prospect dinners in advance. Going in, we had a list of clients with recognizable names and a lot of momentum.
As a result, we were not only recognized but actually anticipated by the attendees. They’d heard of us and seen our case studies. Through the combination of a product/market fit, a well-connected salesperson, and inbound marketing, our ROI on trade shows was off the charts.
5. Listening to our customers
Everything we’ve done, from identifying our product/market fit to inbound marketing, has brought us closer to our customers. Now, we’re listening to our customers' ideas and pain points to determine our product roadmap and drive our growth into the future.
Recruiting and inside sales teams are increasingly remote and mobile, so we released TextUs mobile apps for both iPhone and Android. We also built an amazingly powerful new Chrome extension that can instantly identify cell numbers on most webpages, customer relationship management systems (CRMs), and applicant tracking systems (ATSs) and add those individuals into our customer’s TextUs database.
We’re also expanding our integrations to include several CRM platforms, staffing applications, and ATSs. These will allow our customers to stay within the context of their existing software but still get the full benefit of the TextUs platform.
Lessons We Learned Along the Way
We focused on our core product, listened to our best customers, and hired the right people. And it worked. In less than one year, we grew our revenue by 700%, and this year looks even better.
We learned a lot along the way. Here are a few lessons that might help you on your path to growth.
You can’t develop (engineer) your way to success.
I often see startups with talented developers who believe they can code their way to success. A great product, more features -- these things are within your control. But there are also many things you can’t control, like timing, what your competitors are doing, and finding the right product/market fit.
Because of all of the things outside of your control, there is a natural instinct to keep adding features and keep developing your product with the expectation that your market will come to you. They usually don’t.
You can’t buy your way to success.
In those first two years, we could have spent a lot more money ramping up, buying advertising, doing PR, and trying to “buy” customers. But we wouldn’t have attained more customers, because we didn’t have a product/market fit yet.
To succeed, you need to know who your customers are and how to reach them.
Before you spend all of your time and resources on development and sales and marketing, find your product/market fit. Be clear about who your customers are and how to find them. For two years, we didn’t actually know who our customers were. Now we’ve found them, and our growth rate reflects that.
Determine who you’re selling to and what problem you’re solving. Articulate the ROI to your customers, then focus on improving your product and solving their pain points.