A continued discussion on customer funding and obtaining it through memberships, payment cycles, and customer modelling.
Last week we welcomed best-selling author ofMastering the Rockefeller HabitsandScaling Up,Verne Harnish, to the stage to discuss ‘customer funding your startup’. This week, we handed the mic over to the audience who shared their tips and asked questions for funding a startup. We want to know– What would you do differently? What have you learned along the way? Also, the differences between customer funding and crowdfunding, the right time to seek funding, and what kind your startup needs.
Moderators: Colin C. Campbell, Michele Van Tilborg, Jeff Sass, and Rachael Lashbrook
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This week Coach Yu brought some helpful tips and tricks about Facebook and how to work its algorithm. Many of you are probably aware of the range of algorithms that exist on the internet whether it is on Netflix or popular social media applications like Facebook, Linkedin, and Pinterest
Facebook is the leading social media platform that relates to other algorithms in which it has a collaborative filter. When people communicate publicly, edges are created and connections are built between objects. Facebook is aware of who you are talking to and what that message entails.
However, edges are based more on posts than people, so it will focus on what you’re posting more than who you are talking to. People are persistently sharing their location or even a hot new item that they have recently purchased.
It’s essential to understand what people are doing to more efficiently advertise posts. When we understand their behavior we can create more accurate posts and messages for them to connect and engage with, and most importantly, target it correctly.
Relevant content drives engagement and that is the key component for better and bigger reach and therefore better chances for conversion. That’s why is very important to also create a variety of assets with slightly different visuals and messages, to test and analyze what does and does not work for your audience.
Once you’ve done some testing and start to understand what your audience wants and doesn’t want (based on your engagement rates), you can boost (promote) the ones with the best performance to go beyond what the organic algorithm has provided. Facebook will use its data and will reach similar audiences that have engaged with your content. That’s why you need to build a relevant organic audience if you want to make the most of the collaborative filter.
When you boost posts it helps extend what is already working organically, meaning when people are organically sharing your content Facebook will favor your algorithm. On the point-based system ‘shares’ are worth more than any like or comment, as ‘shares’ count as a new post and become an object to carry edges.
Top 3 key things to analyze:
Engagement rate: Is negative feedback good or bad? What matters the most?
What similar people are doing: How does the collaborative filter work?
Time decay: How powerful, and for how long, is an object?
To learn more about this topic listen to the audio file above!
Founder of EO, Verne Harnish is back to discuss often overlooked alternatives to VC fundraising models
(Recorded Live on Clubhouse May 10, 2021.)
Verne Harnish joined us for a follow-up show to talk about raising money for a startup using customer-funded models to scale. He shared insights into when it works, who should use it, and how to obtain customer funding.
For this week’s show, we are excited to have a returning guest, Verne Harnish. He is a bestselling business author of Mastering the Rockefeller Habits and Scaling Up.
This time he’s here to discuss customer funding for start-ups and how the various incarnations of those models can be used. Customer funding is one of the best ways to fund your company without giving up equity. It also shows value to your marketplace.
There are a number of hugely successful companies that use membership and subscriptions to fund their businesses. Costco memberships bring in $3 billion dollars of profitability and that money is used to fund their business growth. Amazon collected $25 billion dollars in 2020 from Prime and other membership fees. Tesla collected a $1,000 deposit from 450,000 customers when it launched the Model 3. That provided the company with $450 million dollars in working capital to deliver on the company’s model 3 promises.
Memberships can also help a company through hard times. When Harley Davidson motorcycles were faltering in the late 1970s/early 1980s, they turned to their loyal customers and officially launched the Harley Davidson Group (H.O.G.). This membership program brought in millions of dollars to help revitalize the company and continue the close bond with their loyal customers.
In addition, the old software model was sometimes based on the idea that a large customer would fund the development of some new software, and then the developer could spin that off into a new product release.
Also modifying payment cycles can be a way to have customers fund your growth or improve your cash flow situation. If you are charging your customers a monthly fee, offer to have them prepay for the year with a discount or other incentives. This gives the customer a better deal and provides capital to your company.
This week Coach Yu was all about assessing what is working and what can be improved by setting up your website for success with SEO and auditing.
As Coach Yu points out, people usually think websites are just something you need to put up, like web pages or brochures, but you should think of websites as applications. An application has input and output, meaning there are things that you tell it, then it stores it down in a database and gives something back: room for improvement. Your websites should always focus on their main transaction (or purpose), which will depend on your business goals.
Recently, Google said that 70% of traffic now comes through phones. When a website is built the right way then it is responsive to mobile. Google says the most important thing in ranking is mobile index which is now considered primary despite it having been secondary a couple of years ago.
What does mobile index mean? It means site speed and easy-to-find content. How do you increase site speed and easy-to-find content for a higher mobile index? By categorizing your content with title tags and links.
It starts by being clear about what you do because you can have a fast-loading website with lots of content, and have some links, but if you don’t convert then there’s no point in having a great website.
Now that your site is set up with speed, title tags, and links so that it can succeed and is closer to ranking well in mobile indexing, the next question is, how do we audit our website?
We first need to look at all the factors that may be affecting its ranking and performance, starting with the strategy. Let’s define strategy plainly: a unique combination of goals, content, and targeting.
It is so important to have a website strategy that aligns with your business goals. What are your business goals? Whether it’s to drive this much in sales, at a certain cost per lead, cost per sale, or ROIs, you still need to be very clear about what you need your website to accomplish.
You must be able to answer these questions:
Who is my ideal customer?
Who are my employees?
Who are my competitors?
Who are my competitors’ fans?
These goals combined with your target audience will set the rules for your content. Your audience will determine what content you should or should not use, where you should use it, such as in emails, social media, or websites, and when you should use it, depending on the stages of your marketing funnel.
Once you’ve got all of that figured out, then you can properly evaluate your website and start understanding where there might be particular issues in need of improvement.
Another way to audit your website is to check your title tags. Title tags are something that people don’t seem to know much about or how to use to their advantage.
Title tags are the title of a page, which needs to be the most accurate representation of the content contained in order to work. If someone does a search and that page title with the meta-description shows up in their search results, the content of the page must fulfill their request or they will click back to the search results, which will absolutely penalize you in ranking and indexing.
What’s more important than the title of the page? The content itself and whether you get people to that page. Ask yourself, does this page deserve to rank high? Is my content relevant? Are my title tags accurate?
There is such a thing as over-optimization. For example, you may try to overdo your SEO by adding some extra words just for the sake of easy-to-find content and ranking, but one, Google knows better and two, you may come to find that your ends do not justify your means and your ranking did not improve at all but on contrary, the opposite.
It is vital that you get your strategy right before you look at your tactics because it’s not a technical issue, it’s a strategy issue. You need the blueprint of the architecture before you start hammering. No matter how fast you are at hammering and laying roofs, you need to know the structure of what you are building.
If you want to hear more about this topic, listen to the full session above. You will also find great insights from Coach Yu reviewing and auditing a few websites on the spot!
Since its launch, Clubhouse has become a phenomenon with its users and entrepreneurs alike. And now we are starting to see those users ask the question…’ how can I make money on Clubhouse’. In this week’s show, we will talk to a number of entrepreneurs that can show you some of the possible ways to make money on Clubhouse.
Authentic Conversations and Connections
One important aspect of using Clubhouse is that it provides a contextual conversation. As people talk on the platform, they can give you a pretty good summary of who they are through their own words. Each time someone shares on Clubhouse, they’re sharing something about themselves, about their values, and about their life. This provides an opportunity to have a more in-depth and meaningful conversation with them. Be a collector of stories. People will discuss their wants, needs, and wishes through this platform. These insights might provide the connection that could lead to potential monetization. Document their story and make sure to weave that into the conversation in DMs with somebody because it shows that you were listening.
Each time someone shares on Clubhouse, they’re sharing something about themselves, about their values, and about their life.
But don’t pitch yourself. Have a 10 to 15-second clubhouse pitch that will intrigue listeners. Something that will have them checking out your profile and maybe contacting you because they think you might be able to help or solve a related issue.
If you would like to meet a speaker and possibly make a connection, be the first one to the room when things are just getting started. An opportunity might present itself as the speaker takes stock of the room.
Monetization
Since Clubhouse is still in its’ infancy, the monetization side of the platform is just getting started. But there look to be many possible ways to make money on Clubhouse. Here are some of the suggestions from our entrepreneur guests.
Professional moderators As Clubhouse grows and so do audiences, professional moderators should be in good demand. Just like the panel moderator at a convention, the ability to set up, market, and moderate a panel of experts to an audience could be an important position.
Production Creativity Just like a radio show or convention panel, Clubhouse chats can benefit from creative expertise and assistance. Whether it’s audio engineers, producers, sound effects, logo designers, recording for your podcast, or production assistance, there are opportunities that will emerge.
And just like traditional and other social media, there are a number of possible business models that can work on Clubhouse as well. Such as Subscription models, sponsorships, membership fees, coaching, tips, grants, and direct selling when appropriate.
Sharing stories, building a brand, and making an income on the new audio-only social app with Adrian Chenault, founder of Contact Mapping
(Recorded live on Clubhouse April 30, 2021.)
How can we make money on Clubhouse? Adrian Chenault, the Founder of Contact Mapping is aiming to help us humanize our ‘friend lists’ to grow and connect on the audio-only app in a meaningful way. We discuss methods to build authentic connections and networking opportunities that lead to money and profit via Clubhouse. It’s all new and we’ll start the ongoing discussion to figure out what works today.
Moderators: Colin C. Campbell, Jeff Sass, Michele Van Tilborg
Speaker: Adrian Chenault
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Recurring revenue is a dream for many entrepreneurs. A subscription-based business can provide a lifelong income. But is your business right for this model, how long can it take to reach that goal and how do you reach it? These are some of the questions we will be discussing on today’s show with some experienced subscription model entrepreneurs.
The Model
Subscription-based business models aren’t new in fact they started in the 17th century with book and periodical subscriptions and newspapers have used this model for more than a century. But recently there has been an explosion of new businesses with this model whether that’s a monthly box subscription, a web-based software subscription, or your daily delivered meals. Now to find the right business you’ll want to look at industries that are static but could really use retooling especially if they could better help small businesses or consumers. Timing is also very important. You might have a great idea that will one day make a lot of money, but if you are too early and there isn’t a marketplace the business won’t survive.
It’s a marathon, not a sprint…
Building a subscription business is a long-term objective. You’ll need to find investors that are patient enough to achieve that objective because it will take five to seven years to get to profitability. You will lose money until you find the right formula to attract, acquire and retain customers. You will also need to make sure that your burn rate is right because if it’s too low then you aren’t going after enough customers and it will take much longer to become profitable.
Timing is also very important. You might have a great idea that will one day make a lot of money, but if you are too early and there isn’t a marketplace the business won’t survive.
The Right Customers
For subscription-based businesses, it’s all about the customer. Do your homework to identify your customer and the way they want your product or service. Pricing is an educational guess, but customers also want transparency in pricing and they want to know what they will get for their money. You need a gross profit margin and then you need to know how much it costs to acquire and retain customers. This will help you find your Ideal Customer Profile (ICP).
Start earning a consistent income using recurring business models from subscriptions to memberships.
(Recorded live on Clubhouse April 26, 2021)
Joining us to discuss SaaS platform and subscription space is Lil Roberts, the founder and CEO of Xendoo a leading SMB bookkeeping SaaS. We touched on key pricing and renewal considerations, along with best-practices when launching and operating recurring income and SaaS businesses. She will talk about what to be prepared for as often these are capital intensive businesses that take time before blooming.
Moderators:Colin C. Campbell, Jeff Sass, Michele Van Tilborg
Speaker:Lil Roberts
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We welcomed long-time EO member and co-CEO of Herman ProAV, Jeffrey Wolf to the stage to talk about his experiences in exiting enterprise. We got down and dirty, talked through the “learnings” and failures, as well as the successes.
Below find the highlights of our session with Jeffrey Wolf. You can also listen to the full session above!
This week’s show concentrated on the dos and don’ts for exiting your business with insights from a number of successful entrepreneurs.
For an entrepreneur, exiting your business can be an exciting and potentially nerve-wracking experience. With that in mind, here are some top-level things to consider when embarking on the exiting process.
Experts
Surround yourself with experts in things that are outside your wheelhouse. Hiring a banker, lawyer, or facilitator with a successful track record in concluding company sales should help with a smoother transition for everyone involved. The transaction details of a company sale take a lot of time and attention and that can distract an entrepreneur from the important day-to-day operations of their company. If you are focusing on the sale, you are most likely not focusing on the business and that can derail a sale.
Emotional Impact
There’s also an emotional impact when selling the company that you’ve put your heart and soul into and having outside help from experts that aren’t emotionally involved can keep the sale moving in the right direction. Having outside help to focus on the important details of the deal can potentially ease some of the emotional impacts that an entrepreneur and the company’s employees feel during this period of transition. It’s also helpful to be as honest as legally possible with your employees during this potentially stressful time. You want your employees focused on their jobs and not on what might happen after the sale.
Right Buyer
Moreover, finding the right buyer is also important when selling your company. If your company systems, culture, and employees don’t fit with a potential buyer, this can lead to difficulties when negotiating a sale. If a potential buyer shares your same or similar core values and also shows that they value your employees, this can result in higher value exits.
Relationships
In addition, when another company buys your company, they are also buying your relationship with your partners, customers, suppliers, and employees. So having solid and positive relationships across the board can be key to concluding a sale.
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