SaaS Interviews with CEOs, Startups, Founders
EP 620: ConversionXL Doing $200k+/Mo With 3 Products, Live Masterclass, Agency, and Self-Serve with CEO Peep Leja
05 Apr 2017
Chapter 1: What is ConversionXL and how does it operate?
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Chapter 2: What is the revenue model for ConversionXL's agency services?
This is episode 620. And coming up tomorrow morning, you'll learn from Nevin Shetty, the 32-year-old CEO of Blueprint Registry, which has raised $1.7 million and has passed 2,500 postings and $10 million in transaction volume for wedding registries. Good morning, everybody. My guest today is Pep Lea. He is the founder of CXL.
He was voted as the most influential conversion rate optimization expert in the world. He helps fast growing companies grow even faster through services, coaching, and CXL Institute certification programs, along with his world favorite optimization blog. Pep, are you ready to take us to the top? Yeah, good to be here. I am. I'm glad you're back.
You know, we had you on, what was it, back late last year, and the episode did very, very well. So looking forward to diving in again today. Tell me first, just for people that may not know you in the audience, what is ConversionXL and what's your business model? How do you generate revenues?
Chapter 3: How does ConversionXL's self-serve model work?
We are an optimization company. So we either work with fast-growing companies and help them grow even faster by doing conversion optimization for them so they could convert more of their existing traffic into buyers. And the other arm is a training arm.
So we're teaching companies, growth people, how to do conversion optimization, how to do digital analytics, everything one needs to grow a company super fast.
And when you look at website ranked via Alexa, your website ranking is about 46,000 in the world, which is obviously a great ranking. What other, which of these kinds of different things that you do generate is kind of your main business model? Is it the live courses? Is it you speaking? Is it your conference? Is it professional consulting? What is it?
for the longest time time we were just an agency model so uh flat monthly fee we charge a monthly retainer for our services so for the first four years uh or five years which did just that and now last year so middle of 2016 we launched Conversion XL Institute, CXL Institute, which is now live courses and also a monthly subscription service for, you know, get access to training programs.
So that's a new source of revenue now.
If you take me back to the agency model real quick.
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Chapter 4: What challenges does self-paced learning face?
So on average, what were you kind of charging retainer per month?
We start from a minimum of 10,000 a month up to 20,000 a month. So, cause we work with, you know, a larger company, let's say 10 million plus size companies. Conversion optimization is not cheap.
So, you know, one thing I've learned running agencies is like, it doesn't make sense to work with small businesses because the amount of work you put in, in terms of hours and effort, there's no real difference if you're working with a B client or a small client, but The value that the client gets out of it is much bigger when they're a big client, when they have a lot of traffic.
So if I increase your sales by 1% and your revenue is $1 billion, that 1% is a lot of Ferraris.
Yeah, if you have 10 website visitors and it goes up by 1% versus 100,000 website visitors and it goes up 1%, that's a much bigger difference on the upside.
Exactly. So if the 1% is worth more to them, they can also afford to pay me more. Yep.
That's great. Okay. So 10 to 20 grand. And did you typically do like an average contract size of six months or 12 months?
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Chapter 5: How do live courses improve student engagement?
Did you do that or no?
We have a minimum engagement of three months. So that's what you have to do. And after that, it's month to month. And frankly, the size of the client determines the length of the client relationship. So we have many that are two, three years with us.
How many customers are you currently working with just in this agency model? In the agency, I think we're doing like 15 concurrently. And what is the team size you have to support the 15 customers? 10. 10. Okay. And where are you guys based?
The agency people are predominantly in Estonia, so Northern Europe. Plus I'm in Austin, Texas, so I'm
Chapter 6: What is the pricing structure for ConversionXL's courses?
I'm mostly working on the institute side. So if needed, I help out. And of course, I own the business.
Okay, good. So the Estonia folks really are running the agency almost without you touching it at all. Is that accurate?
Exactly right. So I only step in sometimes for sales or... If, you know, let's say I'm needed for some reason, but typically they're running the penalty. The lead generation happens through the conversion Excel blog. So the blog funnels traffic to the agency landing page where the leads are being generated. And are you spending a lot of time writing for that blog or no?
I used to, I used to write every single blog post, but now I have two full-time writers. Got it. Are they included in the, in those 10 employees you told me?
Chapter 7: How does ConversionXL utilize marketing strategies?
uh no they're not so they're uh one is here in austin one is in canada okay got it um okay so i want to move on from the agency model let me just real quick do the math though so people can get a sense of size here so you have 15 customers your minimum is 10k per month so is it fair to say you're doing definitely north of 150 grand per month just in the agency Yeah. Okay.
So take us now into the other aspects of your business. So you've got the course and then obviously the conferences. Now, you said you're focused. Do you spend a lot of time weekly on the course or no?
No. well i i spend a lot of time building the business of uh you know because we have various courses that are putting out all the time so i'm working on the scaling aspect and you know just driving the business uh so i'm i'm in it every day and we're figuring stuff out so we we started with just a monthly subscription service that gets you access to a bunch of content which was all self-paced
And then what we realized that self-paced is not a good model for learning because people are inherently undisciplined. They don't make time for learning. So if you look at Coursera, Udacity, you know, all these big course platforms, they're all struggling with churn, massive churn. And why is that? It's because learning is never a priority.
So course completion rates in Coursera are less than 15%.
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Chapter 8: What insights does Peep Laja share about entrepreneurship?
Same for Udacity, Udemy, all those guys.
So we discovered that... By the way, Pep, the same is true for really any of these experts you see online selling info product courses.
For... Completion rates. Yeah, I guess it doesn't make a difference. If it's self-paced, people are just dropping out.
Yep.
But once we switched to live, we didn't switch, we added on live courses. So live courses are happening in real time. So it's a search-specific day and time. There's a live class with live screen sharing, live Q&A with an instructor. So the participation rates for those courses is insanely high compared to self-paced. And frankly, I think it's A, because people actually put it on their calendar.
The class is Tuesday, 9 o'clock. and b it's it's closer to real life learning experience because you have live q a with a teacher so uh that's a much better model and now um i mean i have to say it's it's really working out really really really well for us so what do you charge per month for this So for the self-paced stuff, we charge $99 a month. For live courses, it's one-time fee per course.
So we're putting out two courses per month. Okay. And the prices range from $299 to $499 per course.
$299 to $499? Okay. And then those live courses then go into the recording, which people pay $99 a month for, right?
Yes.
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