What am I doing wrong? Stuck at $300MRR for over a year...
Hey IH,
I'm at a loss and would love some fresh perspectives/ideas.
I run https://dailynclexchallenge.com (exam prep for nursing students).
I can't seem to break this $300/mo barrier even though every customer I speak with loves using our product. The issue seems to be traffic, I just cannot seem to move the needle here.
I'm currently trying to ramp up the blog with at least 10 new posts each month.
Started last month (not seeing any improvement yet).
The landing page converts pretty well.
Also, since I'm not a developer adding any new features is expensive and at this point not sure if it warrants dumping any more money here.
TD:DR; anyone have any insights to help me keep this thing going?
Hey Maciej,
Would love to dive deeper. Mind answering a few questions?
Are customers leaving, or no new customers coming in?
Where did the original customers come from?
How much new traffic is the site getting per day?
Besides blogging (long-term play), what are you doing to find bring traffic in?
Around 3 new customers each month. They stick around for 3-4 months so LTV of around $20. At the same time I'll have right around the same amount of folks churn.
Facebook groups.
Have about 60 visits/day (with 45 being returning traffic/existing users and then 15 new visits from google.)
Not sure, I was hoping for word of mouth traffic because of the prizes that we give away but that doesn't seem to be working. Posting on FB groups gives us a surge of traffic occasionally but those are kind of exhausted at this point. (Literally in 100+ nursing student groups).
Appreciate any insights!
Ah, this is interesting.
I'm sure you've realized by now that your niche is at odds with your pricing model. Once a student passes the exam, they no longer need your service. And they'll only want your service for a few months before the exam (as you mentioned).
Churn is something that only gets harder as you get bigger. For example, if you had $3k in MRR, we would expect to see 30 customers leave each month. You would need to find 30 new customers to replace the revenue.
So it looks like this is your main issue. Unfortunately, even if you grew the site and got 1500 new visits per day, which we would expect to get 300 new customers/month, you would quickly see churn rise up to match, and you would be losing 300 customers/month as well.
In other words, your revenue/month is directly linked to your incoming traffic/month.
I think this problem is why you don't see many online courses using a monthly subscription fee.
I think that, perhaps, you have a great tool here that establishes you as an authority in the space, which is a really useful thing. Have you considered leveraging that authority and offering something with a more favorable pricing model?
An online course, practice exams, and study guides are all common examples. These things can sell for over $100 (perhaps), and one-time purchases are often much easier to sell than an ongoing subscription.
EDIT: Also, I think you could consider split testing a one-time price for your premium accounts. People like the idea of "forever access", and may be willing to pay more than your current LTV.
Thanks! I have experimented with pricing a little bit.
I'm currently trying to position the tool as something to use 12+ months before their exam. Hopefully this helps. I'm not convinced that churn would be 1:1 if I increased traffic.
And I still think my main issue is traffic. Really have no idea how to grow this thing.
I'm at a point where I'm considering releasing this for free and possibly trying to up- sell our free users on study guides, etc like you mentioned. I just don't like the idea of inconsistent monthly numbers ha.
Yea, SaaS makes math all weird :)
Imagine a one-off sale of $20 (your customer's LTV). It's very simple. To get to 10k, you need 500 customers per month.
What if, instead, you sold a product that was a two-time payment of $10? In other words, month 1 you pay $10, and month 2 you pay $10. What changes?
At the end of the day, nothing changes. But it confuses all the metrics. It will look like this:
Month 1: 500 sold. Monthly profit: $5k
Month 2: 500 sold. Monthly profit: $10k
Month 3: 500 sold. Monthly profit: still $10k
Month infinity: 500 sold. Monthly profit: still $10k
So what happened? Basically, our monthly growth gets all confused. Between months 1 and 2, it looks like we were growing at $5k/month. But by month 3, we started factoring in churn, and reality hit: Our monthly profit is directly dependent on our amount sold one month ago.
The reason SaaS is cool is because you get these cumulative effects. If customers churn after 1 year, you get to factor that customer into your monthly profit for the entire year. But at some point, the other shoe will drop, and the customer will churn out, and you'll have to find a new customer to replace that customers just to break even.
So MRR is kinda a vanity metric, in the sense that it's hard to tell what's really going on behind the number. LTV, and by association customer churn and customer expansion, are by far the more important numbers.
So anyway, back to your case. It's not a one-off or two-off payment, but we could consider it as similar to a four-off payment. If the example above made sense as to why they got stuck, perhaps you can see how it would also explain how you are getting stuck.