How ConvertKit bootstrapped their way to 3M MRR 💸
20+ months into building ConvertKit, Nathan faced a pivotal choice due to declining revenue and shrinking funds: shut down or fully commit to turning it around.
ConvertKit is a bootstrapped creator platform. They offer creators a host of services, including making it easier to sell digital products, creating landing pages, email marketing, and newsletter management, to name a few. You might not have noticed, but your favorite creators are using ConvertKit. Huberman, Tim Ferriss, Pat Flynn, and the SEO overlord Neil Patel are some of ConvertKit’s famed customers. They currently achieve over $3 million in MRR.
ConvertKit was born out of the personal needs of its founder, Nathan, who needed Mailchimp and Infusionsoft (now Keap) in a single product with better UX. He hired a developer to get started with ConvertKit and a target of hitting $5k in MRR, but they missed it by 60%, facing a question of survival.
In today’s edition, we will dive into how Nathan managed to get ConvertKit back on track and hit $3 million in MRR
To shutdown or scale?
1.5 years into building ConvertKit, revenue began to decline, and Nathan sought feedback from Hiten Shah, founder of Kissmetrics. Hiten advised Nathan to shut it down, considering the dwindling revenue and time spent, or to give a serious attempt at scaling by investing whatever it requires in terms of time, money, and effort.
After receiving shrewd and pointed advice from Hiten, Nathan was determined to double down on ConvertKit. He invested his last $50,000 into ConvertKit.
The way forward
Nathan started doing direct sales with customers; previously, most of the customers they acquired were through word of mouth or content marketing. He also narrowed down his ICP from anyone who needs email marketing to niche bloggers. As a result, their MRR grew to $5k, and their customers also remained on the platform long-term. After this, they introduced an affiliate program for ConvertKit. Their ICPs, having huge reach, worked in their favor; that channel scaled well for them. Today, ConvertKit hands out about 10% of its monthly revenues to affiliate partners.
Webinar as a nurturing engine
Once ConvertKit realized that their affiliate partners were bringing in high-quality leads, they decided to help improve the conversion rate by hosting webinars. Instead of a typical webinar with a sales pitch, the ConvertKit team delivered a lot of value in the sessions. They didn’t ask participants to pay anything; instead, ConvertKit offered a free trial, courses, guides, books, and T-shirts to participants, aiming to get the leads into the sales funnel. This strategy worked very well for them. In the first year of this initiative, they hosted 150 webinars, resulting in a more than 600% increase in revenue.
Built in growth loop
ConvertKit benefited from a built-in growth loop, as the nature of the product is such that it is sent by creators with significant distribution. Every time an email or a resource was launched, ConvertKit gained branding and awareness via the "Built with ConvertKit" badge. This badge is present by default on all forms and can only be removed by paid users.
💡 Recently Nathan posted some interesting stats and insights about Convertkit, you can check them below
In 2021 ConvertKit's 6 month revenue retention was around 73-80%.
Today it is right around 100%.
Here's are the top 5 things we did:
Invested heavily in the product (we now ship a new feature or product improvement every week).
Built more tools to drive expansion revenue (Creator Network reduces churn and drives a ton of growth for creators).
Moved more customers to annual plans. We were at 3% on annual plans, now we are at 46%.
Focused heavily on customer support. In January we answered 24,000 support requests with a median response time of 4 minutes.
Targeted our marketing and product at professional creators. They are less likely to churn, more likely to grow, and send us so many great referrals to other creators.
It goes to show how having sharp focus on the user persona and tailoring products and your marketing can yield impressive results such as this.
Masterclass Alert
Next week we have invited Arpit Beniwal for a masterclass on cracking Product Management interviews. If you are currently the market on the look out for Product Management gigs, then do attend the masterclass to get some actionable tips.
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That’s all for today, folks! Hope you enjoyed this week’s newsletter. We’ll see you next week. 🤗
Until then, keep learning and growing! 👋