Our first reaction to the crisis was to cut the costs and throw all our team to client acquisition.
Our fixed monthly costs were about $60k, and our net profit was bouncing around 0. If we were to lose more clients than we brought in, we would have had to start letting people go.
Since March 2020 we’ve lost 20 contracts, about $85,000 in monthly payments.
However, we did 2 launches on Product Hunt in April and June, which did great. The weirdest thing, that other channels, like SEO, PPC outperformed during those launches too.
From all the channels we’ve received:
- March - 11 contracts
- April - 8 contracts
- May - 14 contracts
- June - 13 contracts
This equals $66,940 in first client payments. I would be able to recalculate this in monthly payments only in a couple of months, but this is a significant gain for us, as the first payments usually cover:
- the first week of work in case of part- or full-time project.
- the first part of the one-off project
You can see the payments in this chart rise.
Even though we dipped briefly in April and May, we've pulled our monthly revenue above where it was before.
Even though we were aggressively adding new clients, we could not predict how many of them will churn. As an example, one client had to let the developers go 6 weeks into the project.
So, we had to find other ways to save money.
Here's what we did
We cut $21,000 of monthly expenses
Our team is the main asset of the Lemon.io, and our main goal was not to let anyone go.
- We’ve fired a copywriting agency.
They were doing the conversion copywriting. They did a great job on a home page and one of the landing pages. But taking into account the projects in the pipeline and the cost of the retainer, it didn’t make sense anymore.
- Negotiated a 50% cut on a retainer with our design agency
We still work with a design team, because we don’t have an in-house designer and, well, they are awesome, and a lot of our projects depend on them.
- Optimized the workload with the SEO consultant.
We are investing a lot in content and had to downgrade the priority on some projects.
- Got rid of our office with a beautiful view of the city center of Kyiv.
We were never fully remote, but the office was rather a perk, that almost no one used. The maximum number of people that worked in the office at the same time was 5.
Now we’ve decided to work remotely for a year and see if we can be productive this way.
- We cut in half the founders’ salaries. We’ll keep it that way until we are net positive.
- Went through every little tool we use to check if we need every license.
I bet almost every company wastes money on saas licenses they don’t use—the bigger the company, the more significant the waste. We’ve saved like $500 by canceling tools and seats we don’t use.
We even sold out the furniture at half price. Mostly to the team and friends. The only thing we could not get rid of was a 17-foot table.
We also learned 2 BIG lessons.
As we went through this process, we realized that there were a couple of "deep" problems (beyond expenses). If I could go back in time, I would tell myself to work on 2 BIG things.
Lesson #1. We were not ready for the remote work, and it messed up our productivity.
We thought the biggest problem would be distractions at home. But in reality, the biggest destruction was coming from me. There was a lack of transparency and people were stressing out that they didn’t know what exactly was going on and where we were heading.
Now we have a weekly status call, weekly one-on-ones, and sometimes even dinners over zoom. We try to cover every little piece of news, results, and answer all the questions publicly to all the members of the team.
Lesson #2. Some of our processes were completely broken.
This sounds crazy, but before the pandemic, we didn’t have that many leads coming in. That’s why the sale process dependant on basically 1.5 people.
After the launch on Product Hunt, we had 4x more leads, and this completely broke our sales process. We were not able to process every request and return every call. Some of the leads were so pissed; they thought we were scammers.
To fix that, I’ve broken down the sales cycle into 4 stages and assign a team member to each one. It took us 4 weeks to optimize the workflow, and during the 2nd launch on PH, we were able to process every request and had a much better return.
Our next bottleneck is a freelancer acquisition.
I’ll go deep on the sales optimization topic in a separate update.
Inbound marketing rocks
The only reason we were able to get so many leads is inbound marketing: mainly Product hunt and SEO. We are much better at working with inbound leads rather than outbound cold sales.
But in reality, we’ve done a lot of experiments to bring in leads, and most of them failed. There is so much competition with other marketplaces, agencies, and every offshore software company in the world that it makes almost no sense to fight them in common channels.
Product huntHunt gave us a lot of attention that day, and there was no one else fighting for their attention at the same moment. But, of course, PH is not scalable.
Being referred is definitely a blue ocean where competition is irrelevant. We’ll be experimenting on how to be continuously referred, and our brand strategy is one of them.
P.S.: we are planning to launch 3 more products on Product Hunt within the next 2 months.
- 127 places to post your cool design. There is a similar successful campaign.
- Research about how companies use freelancers.
- The book about our rebranding experience.
In my next update, I’ll share our Product Hunt launch playbook and the results of the first 2 campaigns.
Also, I've shared all what happened in 2020 in the the post - 2020: year in review.
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