Sometimes your customers think they want one thing, but they’ll actually pay for something else.
May 3, 2016
Will New Iteration of BoostSuite Be iContact Co-Founder’s 2nd Big Hit?
Aaron Houghton shares lessons in customer acquisition and conversion learned while building his second local startup.
That’s been the big a-ha at BoostSuite, the second act of Chapel Hill entrepreneur Aaron Houghton. The iContact co-founder has spent the last two years fine-tuning a platform to help small businesses affordably market themselves online, one that’s also capable of scaling to a $1 billion business.
After a series of assumptions proven wrong, the startup is on a growth trajectory as promising as the scale-up days at iContact. But Houghton and partner Daniel Smith haven’t raised millions in venture capital or hired dozens of employees like in the past. They’ve amassed a growing paying customer base on their own dime and with a team of three full-time employees and some contractors.
So what’s the secret? Traditional online advertising.
Might sound backwards considering what we know about the practice and advertising industry’s move to video, content and mobile. But BoostSuite makes it easy for tiny businesses like a bed and breakfast in Wilson, North Carolina to easily and cheaply advertise to the audiences of strategic content partners. For example, that B&B can target visitors to a nearby rafting company’s website. B&B ads then show up in various places around the web as those rafting visitors browse around.
“The results are absolutely stunning,” Houghton says. 85 percent of his customers find that ads perform better with their partners’ audiences than with their own.
“We’re seeing that across the board,” he adds. The service, which includes the ad’s design, distribution and targeting, is free for the first 500 impressions then starts at $19 per month and goes up to $299. Paid plans earn customers anywhere from 5,000 to 100,000 impressions per month. Custom pricing can get businesses up to five million.
Where a B&B in the past had only the option of buying ads on Google to target people interested in traveling, BoostSuite lets that targeting get so specific that it’s reaching people with intent to travel in the vicinity of the B&B.
BoostSuite has evolved a few times since launch. It started as a website optimization tool, helping the websites of small businesses perform better for SEO and marketing purposes. Then it moved to a content marketing platform, helping companies find relevant content partners and trade blog posts for each other’s website. Though 28,000 people signed up for the service—companies with a collective 85 million page views per month—too small a percentage upgraded to pay for the added features.
According to Houghton, a scalable site has to have a free-to-paid conversion rate between 3 to 5 percent. That never happened with content marketing, but happened in the first two months with the ad product. And now, more than 1,000 businesses are using the advertising feature. It’s the first time the startup has had traction with a paid model.
A comment from one of Houghton’s advisors led to the epiphany last fall: “When you make something really easy that people are not currently doing, nobody wants it. If you make something really easy that they’re already doing every day, they want it.”
“We were making content distribution, something no one actually does, easy enough they’d start doing it,” Houghton says. “But making something really easy that people aren’t already doing isn’t actually helpful.”
The concept of co-marketing certainly isn’t new. Using the travel example, consider the brochures for nearby activities in the lobby of a hotel. In iContact’s case, Houghton remembers talking with accountants, creative agencies and software companies like Sharefile about promoting each other’s services. Yet there hasn’t been a technology platform to make that process easy. BoostSuite makes it possible for a business to advertise to the sum of its partners’ website visitors, expanding the reach of an e-commerce site with 400 monthly visitors to an audience of 100,000 or more through advertising partnerships.
Here’s how it works: BoostSuite users pick several verticals that align with their industry, location or business operations. An algorithm identifies potential partners similar to the way a dating site finds potential matches. It’s based on lessons learned from the relationships formed on the content marketing side of the business over the last 18 months. Users then agree to share their audience with each other and they pay BoostSuite based on the number of impressions they hope to get.
Users so far range from custom saddle manufacturers to a women’s underwear retailer to political and fashion blogs. Most learn about BoostSuite through partners like Hubspot, Weebly, Shopify or Big Commerce. It sits as an app in most of those companies’ marketplaces. Customers using BoostSuite are averaging a .49 percent click through rate, which is eight times the industry average for display advertising, results Houghton says he’s thrilled with.
He’s also pleased with improvements made to BoostSuite’s free account setup funnel—an average of 30 percent of users fully complete the setup, with 68 percent completing setup from BoostSuite’s best marketing channel. Both numbers are significantly better than the self-service SaaS industry benchmark of 10 percent. These figures are important—the easier the setup and conversion, the easier it is for a SaaS company to grow without a huge sales team. Hence, the goal of making BoostSuite a $1 billion business.
To help achieve that scale-up, BoostSuite advertises itself using its own platform. 70 partners have agreed to let BoostSuite target ads to their audiences.
Houghton and Smith put $300,000 into the business in 2014, and Houghton plans to invest again this spring. He expects to consider more funding options later this year as revenue continues to grow.
It’s a good place to be after the couple years of trial and error.
“We’re either really close, or we’re there now,” Houghton says.