Mark Thompson is the co-founder of PayKickstart an industry-leading billing and affiliate management platform for subscription-based businesses. Mark loves the subscription-economy and helping startups and mature businesses maximize revenue. As a 10-year online Entrepreneur, he has created sold multiple 6 and 7 figure businesses, while generating over $20M dollars online.
When we first started out, our churn was super high. It was like 25, 30%. And we knew there was no sense in putting money into paid ads when we were churning at that rate. So for a year and a half, that was like our goal. Just try to make customers happy, figure out how to onboard them. I mean, when we first launched it, the platform had a lot of features, but it was super confusing to try to figure out how to navigate it, how to get your first product live and start accepting payment. So we've come a long way in terms of our user experience, our onboarding, and we have significantly lowered churn we're in the single digits now. And, um, and so we didn't really even think about paid ads until we got to that point.
Speaker 2 (00:56):
On this episode of the rich dad, poor add podcast, we have Mark Thompson co-founder of pay kickstart an industry, leading billing and affiliate management platform for subscription based businesses. On this episode, he dives into the early stages of PayKickstart and what their biggest pain points were in the beginning. How churn became a huge focus and how they were able to reduce it substantially with a new offer. And lastly, my favorite different ways to monetize your current customers to boost your LTV and your bottom line. This is going to be a great episode. You also sit back, relax and enjoy the show. But before we begin, if you are an agency owner or media buyer, head over to funneldash.com to learn how their tools can allow you to scale your ads and get cash back that's funneldash.com without further ado, here are your hosts, Dylan Carpenter and Zach Johnson welcomed to
Another episode of the rich head for ed podcast is your host sack Johnson. I'm with Mr. Dylan Carpenter. You were going to talk about some SAS today.
Awesome man. Well, today's guest is the co-founder of pay kickstart a, a online shopping cart and marketing software platform that has been around for about four and a half years. They've got over 3000 users, uh, just pass over a million ARR and a lot of the, uh, you know, big name, direct response, marketers are using this, uh, for their, for their checkout and payment flows. But mark is also an art marketing, OJI and legend. Um, I want to say, gosh, he'd been in this space for 10 plus years, maybe 15. I don't even
Know I'm a dinosaur, I guess, right. Come to the show, man. Thanks for being here. Absolutely. Thanks for having me. So
Tell everybody a little bit about your, your journey from going, you know, promoting launch after launch info product after info product, to really honing in for a pretty disciplined like four years here on, on pay kickstart and uh, what made you want to make, you know, jump into that
A long journey. So I've been an entrepreneur for about 10 years now. I think before I started my entrepreneurial journey, I was working at a marketing agency. So I was doing a lot of client work and I realized I just, I hated it. I was trading time for money and it was just not scalable even when I was working for someone else. I knew that I wanted to be my own boss, but I knew that I didn't want to run an ad agency and have a whole bunch of clients to speak to. So, um, I wanted to figure out how I could create my own products or programs and sell them 24 7. I just felt like that was a little bit easier to scale. And I found this place called the warrior forum. If you've ever heard of it, it's been around forever. It's the largest internet market. No, if
The warrior forum, man, like you just dominated that frame.
So I found it and I just kind of reverse engineered what other people were doing on it. And I just took it and ran with it. I saw these people launching products on it. And so, I mean, I don't want to give too much, you know, to make a long story short. I just figured it out. Like I, I figured out how to create a sales funnel. I figured out how to create a product and bring it to market that people wanted. And I started to make a whole bunch of friends in the affiliate space. I just, I had, you know, over a couple, a couple of thousand affiliates that were promoting our offers. And so there was really no risk because these were affiliates that had lists and they were just promoting the offer and I would only pay them when we made a sale.
And so I started to do this for my own products, but then other people started to contact me and be like, Hey, I have this really cool piece of software. Will you help me launch it? And so that's kind of what I was doing for three or four years. And I made a lot of money doing it, but I realized at the end of the day, you know, it wasn't really sustainable to continue to do that. And especially the way that the pricing was set up, a lot of them were, you know, one time, uh, prices, you know, lifetime type of deals. And it was just really hard to be able to scale that out. It's almost, it's impossible. And you know, it's, you know, I, I feel like you don't really have a real business until you have recurring revenue coming in. And so, you know, while, while I realized that I did it for a number of years and I still support the majority of the products that I launched back in the day, or I've at least sold those businesses, I haven't just kind of gotten rid of them.
Um, but I know a lot of people have, and it's why the quote unquote, internet marketer has gotten a bad rap because they, they try to get a quick cash grab and then they leave and they don't support the product. Um, but I realized that wasn't sustainable. And so, but it gave me the foundation for what I know today. And it gave me the capital that I needed to be able to invest into a mainstream SAS application where I could compete with other people, other businesses in the marketplace. I wouldn't have been able to do that unless I did what I did previously or unless I went and got a whole bunch of venture capital money, which I never did. We're all we've been bootstrapped from the ground up. So, you know, it was kind of like I learned, I don't know, I'm pushed back,
But was it bootstrapped or was it self-funded I feel like you've got to port in some cash into,
Well, I, I did, yeah, it was, it was funded and I mean, bootstrapped it, I mean, it was basically me and one other partner. Um, but yeah, so we, you know, we obviously put some money into it and it you'll pay kickstart started as an internal tool just to sell our own products just because we were so fed up with the archaic solutions that were out there for selling our products. We just realized that we were leaking so much potential revenue, um, as we started to grow. And so we said, screw it, we're a software company, you know, let's just build this thing ourselves. So it started off really kind of small just to be able to accept payment, manage recurring revenue, manage our affiliates. And then people were asking us, you know, like, Hey, what are you doing over there? And they started asking, Hey, can I use your platform to sell my own products? And we kind of realized, Hey, this w we're onto something here. And you know, about six, five or six years ago, we started to really shift our focus, our resources, our money, our energy towards this. And we realized, Hey, if we want to, you know, make this something special, we're going to have to kind of put our eggs in that basket and start to take some risk. And that's what
We, I wanna know how much you, you had to invest in a pancake start to get it to this point.
I mean, that's, that's a really good question. I mean, the good news is, you know, we've been very fortunate to find talented people overseas. Our whole team is virtual. So we have people in the Philippines, you know, Eastern Europe, South Africa, you know, if you name a country, we've probably have hired someone, either a developer or a designer. So we've been able to find some relatively inexpensive talent. Um, so it, it's not as much as you would think where, you know, some of these companies that, you know, they're getting 20 million in VC money and they're hiring everybody in the states and they have this massive office that they're trying to impress everybody. We didn't have that. So, you know, we were kind of bootstrapped in that sense where we all had our own home office, we're all working virtually. So it wasn't as much as you would think. And, you know, the fact that I had other streams of revenue coming in, it kind of mitigated that, that upfront cost.
So how do you go from selling, I'll say the bottom of the barrel, right? Lifetime deal software, um, low quality customers, low paying, low LTV. And it's a totally different marketing process, right? A lot of hype. And while a lot of people I'm sure that got paid kickstart started, but I'd imagine that pretty much all of those customers have turned out by now.
Yeah. I mean, obviously there's a small fraction of those customers. So we had that, we had that email list, you know, those are pretty big email lists. I mean, 80 a hundred thousand people were on that list from just the years of selling all these different products and, and partnering with other people that had products. And so that was definitely something that helped us to kind of get things going and get our initial client base. But yeah, a lot of those did turn out just because they're used to paying the one-time fee. And so the biggest thing for me was just getting in the mentality of focus, right. I was so kind of in that like perpetual launch sequence that I had to get away from it. And so it was hard for me to do in the beginning, but, you know, as time went on, I started to really see the potential.
And I started to see that snowball effect every single month we started getting more and more recurring revenue, more people talking about us and more people are like, oh cool. You guys fix that bug. You added this feature. And it started, you know, it was one of those, it was a slow process in the beginning, but it started to really pick up speed. And, you know, after a couple of years, that's really when it started to get exciting and people started to just organically talk about us with some of the other solutions that are similar to us that are more mainstream SAS that, you know, really have bigger budgets than we do. And so that's when it really started get exciting for us.
Cool, man. Well, let's get into it. I want to talk about a rich ed and I want to talk about rich ads specifically for your use case. So we don't have tons of PO folks on that are, you know, repping B2B software products. And like I said, it is a different marketing and sales function, right? It's like B2B SAS, you know, I think like the most I've seen folks scale in this space is like 300 grand, maybe 400 grand a month. It's definitely not your DTC consumer brands spending millions. And a lot of the time you're trying to manage this blend of LTV versus, you know, payback period and short-term row ads, which is a different, you know, it's a totally different ball game than an e-commerce where it's just, it's just, you're like you get that feedback so quickly. Right? Yep. Um, so yeah, man, Brett, lay it down for us. What, what's the rich ad that's working for you that's that's growing, sir. [inaudible]
Yeah. Well, let me first say, you know, we had, we had to solve our churn problem before we could even put a dollar into ads. So when we first started out, our churn was super high. It was like 25, 30%. And we knew there was no sense in putting money into paid ads when we were churning at that rate. So for a year and a half, that was like our goal. Just try to make customers happy, figure out how to onboard them. I mean, when we first launched it, the platform had a lot of features, but it was super confusing to try to figure out how to navigate it and how to get your first product live and start accepting payment. So we've come a long way in terms of our user experience, our onboarding. And we have significantly lowered churn we're in the single digits now.
And, um, and so we didn't really even think about paid ads until we got to that point. Now, once we've gotten to that point, we were trying to figure out, okay, what's, what's something where we can provide value to, you know, our target audience, which is, you know, any online business with recurring revenue. So we work with SAS companies, we work with membership site owners, course creators. We work with some ad agencies, you know, they're, they're managing clients. And so we're like, well, how can we give them some great values, some things that will help to increase conversions, lower churn, um, increase the LTV. Um, but at the same time, get them, uh, adopted to our product and make sure that they there's brand awareness and they hopefully will adopt our product, which will automate a lot of what we're teaching them. And so we created a 30 day challenge.
It was called the two X challenge. It was a 30 day intensive workshop and we walked people through after the 30 days, if you implemented what we teach you. Um, our goal is to try to get you to two X, your revenue, try to double your revenue in 30 days. And so, um, and so we show them each day we gave them a new strategy. Um, and we try to keep it bite. Like the strategies were very simple. We gave them a worksheet to fill out and then an implementation video on how to actually go and implement it. And so we did that for 30 days and their spent some other companies, um, most notably like ClickFunnels that did a challenge, they were super successful with it. So we kind of piggybacked off that, that strategy. And so what we did was we created the sales page.
It was a hundred dollars to get into it. So we try to keep it as low of a price point as possible to just low barrier to entry. But we wanted to make sure that there was some skin in the game. We didn't want to give it away for free because you know, we know what people do with free products. They say, I'll get back to it later. So we wanted to at least have some sort of incentive for them. And so what we were doing, we were running Facebook ads to this hundred dollar offer and it was, it was breaking even it was breaking even. So it cost us about a hundred dollars to get each, each person into the door. But what we found was about 30% of those people were sticking with PayKickstart. So included in the 30 day challenge was, was, uh, one month of, of PayKickstart access.
So we're teaching them these strategies and we're saying, Hey, you can go and implement this stuff manually. Or you can use PayKickstart, here's the tool. You have access to it for 30 days. And you can allow us to help you automate the majority of, of what we're teaching you. And so that was the end goal, right? Try to get them to use PayKickstart and hopefully be a lifetime customer. And so about 30% of them stuck. And what we noticed was, um, the majority of them, once they stuck and they're onboarded and they're using our system, they don't want to leave. Right. It's not fun switching billing platforms. Um, and so that was a strategy of funnel that worked extremely well. Um, I don't know if you have any, any questions about, well,
I think that for, for those listening to this episode, definitely reference back to the ClickFunnels episode because the numbers you're sharing, um, Dave Woodward, CEO of ClickFunnels shares very similar numbers on there. Um, I don't know if it was definitely either the challenge funnel or their book funnels of just like the relationship between selling info to software on the backend and you're right. Like you're going to get, um, you're going to get a more lead was when somebody is going to throw down selling subscription on, you know, free trials or subscription from paid advertising is, is a, is a death trap, right? Like it's gonna be high churn. You're gonna have to wait, you know, 60 days. And we've all kind of evolved, um, from that I think in the B2B software space. Um, and so courses and, and challenging info, you know, you, you only want 30% of those people buying courses into your software. You wouldn't want a hundred percent of them into it. So that's, uh, that's awesome. And I love that. How much were you able to scale this particular campaign with the, with the challenges?
Yeah, that's a really good question. So we did notice there was a threshold as we started to increase our budget as we started to kind of open up the ads a little bit more and I wish I could talk about it. So my, my co-founder, he actually manages our ads. So he could probably speak to it a little bit more, but I know we definitely reached a threshold. I think we were spending about about 20 or $25,000 a month. And then we started to notice that it was starting to dip. I don't know if it was just, the ads were being seen by the same people or if the, just the audience wasn't as targeted because we are, you know, we were targeting recurring based businesses while that may seem like a lot. I mean, you know, at some point you're going to kind of dilute your audience. And so we, we started to notice once we reached that threshold, it started to go down. And so we've actually been experimenting with some other advertising platform, you know, Google ads and even like Quora ads and some just kind of off the beaten path type of, of, um, traffic sources. And so that's something that we're actually working on right now is just doing some testing and other areas.
Yeah. I've actually seen that to be true, you know, 20,000 a month is definitely a really big mile marker for a lot in B2B SAS. Um, I see a lot of SAS companies that plateau there and they have to, um, kind of diversify their funnels. Right. They end up kind of with, let's say a challenge funnel, you know, a book funnel, free trial, and gosh, who even knows how many funnels like click funnels has for their, for them.
Yeah. I can't even keep track to come out with a new one every week.
Yeah. Yeah. And, and, and, you know, that was, um, so, you know, that may just be the playbook, right. Just accept that the, you know, the challenge is, is 20 K and then just move on to the next front end offer. And if you end up with five, 10 different funnels that are all just kind of hovering at 20 K, like you're still, you're still gonna have a better, um, I, you know, in the early days of FunnelDash, when we were repping software, I got like microscopically focused on like the one funnel. Um, and, uh, and really, if you kind of look back like it was our, you know, agency growth book and it was our lifetime deal promotions, and it was our rich ed Pura book and all those different funnels were what really contributed to the overall list building and lead gen efforts and, you know, th the MRR. So, um, no, it's cool, man. So let's talk about a portrait, what, uh, what's not working.
So before we did the 30 day challenge, we did a free plus shipping offer. So the shipping was 15 bucks and, um, it was called the marketer's vault. And so we gave them some, you know, some physical goods. It was, you know, some, um, we'll also, we gave some digital assets as well, but, uh, it was basically some workbooks, uh, some, you know, some, all different types of books, like just how to increase conversion. It was very similar to the 30 day challenge, but it was just formatted differently as a, as a physical package. We actually rolled in the digital version as well, which helped increase the initial cart value by about 30%. So we were, I think we were selling it for like eight bucks that they could add it to their cart. So that did help a little bit. The problem with the marketers vault.
It was, it wasn't, there was a disconnect between the training and our core product. It wasn't seamlessly integrated with PayKickstart. So it was like, we would teach them how to do something, and it wasn't really real. It didn't really naturally flow to, Hey, this is how you go and automate it with our, our PayKickstart solution. And so I think there was a disconnect there, and the fact that we were also paying for, um, you know, the physical goods to ship this, um, you know, I think the, the CPA was around 35 bucks. So we were, we were losing, you know, around, you know, it was like between 15 and $20, uh, a lead we were losing on. And we really, and the fact that I think we only got about five or 10% of the people to actually, uh, stay with PayKickstart after the first month, because we gave them 30 days of a free trial as well. Um, and then,
Hold on, let me, let me recap here. So you sell a book super low ticket and of those, those, those, those book buyers five to 10% took the offer or stuck around after
The fact. Yeah. They stayed after the offer to stay with PayKickstart. The problem was, and, and, and, and, you know, what's even worse about that is the fact that after that first month, the drop-off rate was astronomical. So maybe they kept it for, they let it, you know, rebuild by accident. And then the, so they just didn't stick. It just w there wasn't synergy between the training that we gave them and the product. And so we kind of learned from our mistakes, and that's why the 30 day challenge, I believe, was so much of, of a better funnel, just because everything was seamless and it was all integrated as kind of one product. And that can be evergreen as well. I imagine that challenge skin that can be reused reworded. So you gotta, yeah, we, we ran it a couple times live and it was, I mean, it was a lot of work. I mean, just, just the content alone took a while. Um, but now we just run it. Evergreen.
Speaker 5 (20:35):
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All right, man, let's talk about some financial principles. How are you investing in your marketing? It PayKickstart, how have you self-funded the business? You know, what, what are some guiding principles on how you're managing the business day to day?
Yeah. So in the very beginning, and I talked about this earlier was churned. We just realized churn was so high. And if we'd never got that under control, there would be no way for us to scale. So churn was by far our biggest metric that we were looking at, and we just became obsessed with figuring out why people were leaving. And so we actually added a whole bunch of churn features inside of PayKickstart that vendors can use to help automate the, the collection of feedback and understand why are people leaving your, your product? Why are people canceling? Um, what do they need? Is it a feature? Do they need better support? And that's what we did. So we added, um, 24 7 live chat, and I basically told all of our customer success team to just say like, how can we, how can we serve you better?
What do you need? What are we doing? Right? What are we doing wrong? So we were using NPS score as well to help measure churn. We were collect, we have a, what's called a cancellation saver sequence. So we find out whenever someone's going to cancel, we ask them why they want to cancel, or they going to another product, or are we missing a feature? Was the support not right. Was a confusing to use. Um, and, and of course we had live chat right there to help you overcome those challenges. We had better onboarding. So we just did all these, all these different things to just lower churn and, and, and it worked, and it took a while, but that was our main metric that we looked at. And then once, and we're always looking to improve churn, right? I mean, we want to minimize cancellations, but, um, once we got that under control, we really started to work on expansion revenue and the lifetime value of a customer.
So we're trying to come up with, how can, you know, now that someone's paying us $99 a month, how do we get them to pay us 200 or 300? And so part of that was repositioning our pricing. Uh, so it took a while. We, we actually didn't, we didn't change our pricing for, for the first four years. And that was a huge mistake that we made. So we cut adding to the product more features and we, and we're enhancing it, but we just totally forgot about changing our plans. And so immediately, once we did that, the customer lifetime value doubled
Patrick Campbell from ProfitWell would be just slapping you. Oh, he punched
Like, you should be doing that every 90 days. And
We are now, I mean, it's just like an evolution. And so, you know, it, Hey, you know, you learn, right. I mean, there's only so much you can do, and everybody makes mistakes. And that was one of our biggest mistakes was just, you know, totally not, not worrying about pricing. And so, yeah, so, you know, once we got our pricing fixed and we increased those prices and we noticed that the, uh, the lifetime value doubled now, we're like, okay, well, what are some ad-ons how, what other additional expansion revenue can we do? And so, you know, we're going to be our own payment processor coming up next week. We added some, uh, a couple other ad-ons, um, so they can add, you know, bolt on a couple of, you know, $20 a month, $30 a month add ons to their subscription. Kind of like what, you know, Intercom does and slack does before. You know, it, you know, you started off at 20 bucks a month and you're spending, you know, two or $300 a month. And so that's really what we've been focused on, I'd say over the last six to 12 months.
Yeah. That's awesome, man. Well, mark, man, you made it you're on the other side, man. You're like, uh, this is a big milestone for you with, with pay, kick start. And there's very few folks that have, you know, or would have stuck it out as long as you have. And, um, to build out the feature set that you've built is a, is a true commitment. And it's, it's kinda crazy. Cause like once you hit 1 million ARR, you're kinda just getting started.
Yeah, absolutely. Yeah. I mean, this is kind of where the fun begins. I think like it took us, you know, four years to really kind of get to this point, but now it's, it's, it's super fun and you know, it's not, we're not getting those questions like, Hey, I need this feature. Oh, sorry, we don't have it. So now we've tackled a whole bunch of them. And now the product is mature enough where we feel like we can kind of compete with everybody and, and we can kind of see it in the financials. Right. So it's, it's exciting.
That's awesome, man. Well, tell everybody how we can support you and how folks can get in touch.
Yeah. So, I mean, you can go to paykickstart.com. You can start a free trial, a 14 day free trial. We have live 24 7 chat. If you have questions about it, we also have a Facebook group where we just talk about subscription-based businesses. So how to increase your MRR, how to lower churn, how to just build online businesses. So if you just go to Facebook and type in PayKickstart, it's called subscription growth hacks, and you can join that. And I'm in there and we have thousands of other, um, online entrepreneurs in there. So feel free to join there.
Awesome, man. Well, thank you so much, mark. This has been amazing episode. Thank you for having me.
Speaker 5 (26:32):
Thanks so much for listening to another episode of the rich dad, poor at podcast. If you're like me and listen to podcasts on the go, go ahead and subscribe on apple podcasts, Spotify, YouTube, and rich dad, poor dad.com/podcast. And if you absolutely love the show, go ahead and leave a review and a comment share with a friend. If you do take a copy screenshot of it, email me [email protected] Show me you left a review. I'll give you a free copy of the rich add or add book to learn more about the book. Go to rich ed for a.com to leave a review that a rich ed or ed.com/review. Thanks again.
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Jason Hornung is the founder and Creative Director at JH Media LLC, the world’s #1 direct response advertising agency focusing exclusively on the Facebook ads platform. Jason’s proprietary methods for ad creation, audience selection and scaling are responsible for producing $20 million + of profitable sales for his clients EVERY YEAR