SaaS Interviews with CEOs, Startups, Founders
EP 528: ConvertKit Hits $480k MRR, Helping 10,000 Professional Bloggers Grow Email Lists with CEO Nathan Barry
03 Jan 2017
Chapter 1: What is ConvertKit and how does it benefit professional bloggers?
This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per top. Five and six million. He is hell-bent on global domination. We just broke our 100,000-unit soul mark.
And I'm your host, Nathan Latka. Okay, Top Tribe, this week's winner of the 100 bucks that I give away every Monday is Kim Dust.
Chapter 2: How does ConvertKit generate revenue from its users?
She's in the entertainment industry and is currently working a full-time day job and doing her side hustle on the side. Kim, congrats. For you guys' chance to win 100 bucks every Monday, simply subscribe to the podcast on iTunes now and then text the word Nathan to 33444 to officially enter. Again, text the word Nathan to 33444 after you subscribe.
Many people ask me how I used email to sell my first company, Heyo, and it's simple. You want to do things like open tracking so that you know when a potential buyer actually opens your email or potential new customer. You also want to set reminders so you can quickly know when to follow up with somebody if they haven't replied to you or use things like auto follow-up sequences.
You can do all of this with a company called thetopinbox.com. In fact, I liked it so much, I bought the whole business. Go try it for free at thetopinbox.com right now This is episode 528. I'm Nathan Latka, and coming up tomorrow morning, you're going to learn from Guy Suter.
Chapter 3: What strategies does ConvertKit use to grow its email list?
They've raised $10 million, and they're pre-revenue with their company, Notion.ai. How do they raise so much money and be pre-revenue? Good morning, folks. Nathan Latka here. You're going to enjoy our guest today. His name is Nathan Berry. Many of you may know him from ConvertKit, which he is the CEO of and which he founded fairly recently, I guess, relatively speaking.
The company is an email marketing company for professional bloggers. So let's get into it. Nathan, are you ready to take us to the top? Absolutely. All right. Tell us real quick, before we get into your story and background, what does ConvertKit do and how do you generate revenue?
Yeah, so ConvertKit's a SaaS company. We have about 10,000 bloggers as customers.
Chapter 4: How does ConvertKit handle customer churn and retention?
So we send their email, you know, stay in touch with their subscribers. And you can think of it as like the power of Infusionsoft, but easier to use than MailChimp.
Got it. Very good. You've practiced that. That just slipped right off your tongue.
Yeah, exactly.
It's just a tagline.
That's good. That's very good. So what did you... You said you're serving 10,000 customers right now. Tell us about your financial model. I mean, how do you generate revenue?
Yeah, so our pricing range is based on how many subscribers you have. So our smallest account would be $29 for up to 1,000 subscribers.
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Chapter 5: What is the impact of annual plans on ConvertKit's business model?
And then a large account for us would be up to about a million subscribers for about 3,500 a month.
Okay, great. And what would you say your kind of average revenue per user is per month?
You know, we're actually public with all of this. And so I know you're fans.
I've got the barometric stuff up in front of me and I'll link to it in the show notes, but it's always just helpful to kind of hear it in context from you.
Totally. So we're at about $48 in average revenue per user. So about 65% of our customers are on that $29 a month plan.
Yep.
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Chapter 6: How does ConvertKit leverage webinars for marketing?
You said 48 or 28? 48. 48. Yep. So it's fair to say I can take them as 10,000 customers times a $48 ARPU and get to about 480 grand in MRR, which is pretty consistent with what you guys have up on Barometrics.
Yeah, exactly. And we just did a huge annual plan push the last couple days. So MRR dropped a little bit, but hey, we did.
Gaspo's looking good, right? Gaspo's looking great. Walk us through. I want to get into that. It's fortunate we have you on because you're so transparent with numbers. People are always battling between, do I do the annual plan for... a 10% discount and collect cash now?
Chapter 7: What challenges does ConvertKit face with customer acquisition costs?
Or do I just let them keep paying per month? And how does that affect churn, et cetera? Walk through the thought process. Why did you decide to do the annual push in the last few days?
Yeah. So it has a big, the annual push has a big impact on churn. And especially when you're going after kind of a prosumer audience, you know, the lower end of the spectrum at that thousand subscribers or less, they might be trying out blogging. They might not be super well established. And so the churn is higher on those plans.
So whatever we can do to decrease churn there, like an annual plan and get that commitment makes a big difference. I think I'd feel weird going all annual plan only just because I like the consistent cashflow. but it's nice to do an annual plan push. And we ran a cyber Monday deal. And that was a good time to do an annual plan push.
So we did basically three months free, you know, so 12 months for the price of nine.
Chapter 8: What advice does Nathan Barry give to aspiring entrepreneurs?
Okay. So what was that total price? Yeah. So it ranges on the plan size, but basically like $261 would be the, you know, if you were on the base plan and some quick numbers on that, we did almost 300,000 in annual plan revenue and, in two days just from that. So we're pretty excited to get that profit in before the end of the year.
Yeah, I was going to ask you that. So you did about 300 grand between Monday and Tuesday on that annual plan revenue. Were all those people that were already paying monthly that upgraded or some of those new people that just went directly into an annual plan?
There was a few new people. But for the new people, we did a different promo where we did like a first month free, which because we normally don't have a free trial, you know, you pay right away up front, credit card up front. And so we did that first month free promo for our email list. And we got a thousand new customers on that. So overall, it was a very, very successful promotion.
Got it. And how big is your email list? About 40,000. And walk us through how you built that. Was it just content marketing or...
Yeah. Content marketing is probably half of it. And then the other half is doing webinars. So content or partnerships and affiliates with people like Pat Flynn and Chris Guillebeau and a lot of other influencers around the web is a big way that we've grown our customer base. So we just say, Hey, we'll come to your audience.
We'll teach them how to grow an email list, you know, marketing automation, et cetera, and pay out a 30% affiliate commission to anyone who ends up signing up for a convert account. So we've probably added 25,000 subscribers to our list this year, just purely through joint venture webinars.
And are you holding, you're setting up the landing page for your hosting and go to webinar and they're just emailing their list, driving the traffic to the signups. Is that how it works?
Yeah, almost exactly. And when we use the, you know, a Google hangout hybrid instead of go to webinar, but, but yeah.
What is the hybrid? So is it, is it just a pure Google hangout where you're screen sharing up PowerPoint?
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