Five years ago, our platform went live. A silent launch, nothing extraordinary, just a two-man army ready to conquer the online market for experiences and activities.
Since then, we have sold 50,000 experiences. In 2018 we expect to sell the next 50,000...
In this post, I want to share with you the most important learnings from the last five years.
Let me try to set the scene as a start. What is TrueStory?
Our mission is to build the place where people meet to find, share and create experiences. As a customer, we want to give you the opportunity to show appreciation for the people you love, to challenge life (and challenge it often), and to create stories and memories through shared experiences.
… and for context, here you have five years in 9 bullets:
- We have accumulated a revenue in excess of $6 million, 80% of which has been earned during the period from 01/01/2016 to this day
- We have sold over 600 different experiences
- In 2015, we had three full-time employees (all Danish); today, we have 20 employees (of six different nationalities)
- We started with $100,000 in cash and we’ve never had any funding
- We failed to generate substantial profits until this year (2017) and have a projected EBITDA of $250,000
- We built and launched a “social gifting” app that quickly acquired 15,000+ users, after which we sold it without any profit (we made a difficult yet important decision to focus on our core business)
- We have replied to 12,000+ tickets submitted by customers and partners, and we have an average satisfaction score of 96%
- We started in Denmark as DuGlemmerDetAldrig (translated as “You’ll never forget”). We then created an “international” brand called TrueStory, which we launched in Norway, with Sweden is soon to follow
- We have built our own booking system from scratch, tailored to experiences: easebooking. Easebooking is now sold as licensed software as well (for now only in Denmark).
When we started the company, we weren’t thinking long term. Lars (our CTO) and I were both 22 years old and just wanted to build something cool, learn a lot and hopefully make some money. Honestly.
As the years passed and our team became better and better, we began to adopt a more long-term strategy and vision. And in order to meet our own ambitious expectations and goals for the future, we need to know on what to focus.
What are the principles that will help us succeed?
The learnings from the last five years will help us establish those principles. It is learnings than be found relevant for most types of businesses.
Consider this post as a test. If you find it interesting, I can (and will) do more specific posts, where I will dive into the more experience-related factors of building this type of business.
Let’s get into it.
Always start with product selection and price
As a young online marketer, I was obsessed with tech, traffic and conversion rates. That made me forget (or at least fail to acknowledge) the importance of offering the right selection of experiences at the right price.
One of the main lessons I’ve learned from building a consumer-oriented business is to have a sharp focus on the product and the price. When running an experience portal, that means constantly seeking out the market for the best experiences that already have a demand. It also means spotting the market trends and making sure that you develop new experiences that match those trends and that you know at what price points those experiences will perform at their best (more on that further down).
During a fireside chat, Jeff Bezos was asked: “how will Amazon look in 5–10 years?” In his answer, he refers to values (or “Big Ideas”) that he is certain his customers greatly appreciates.
The “Big Ideas” are 1) low prices, 2) fast delivery and 3) a wide selection.
“I know for a fact that in 10 years from now, customers will still like low prices.”
Needless to say… Jeff Bezos is right!
You can build the greatest tech in the world and do the most innovative and segmented marketing, but if your selection of products is not good enough and/or if your prices are not competitive, it will all fall apart. I learned the hard way.
The data. Now, I’m not a statistician (my greatest educational accomplishment is high school), but, as I see it, the correlation between our revenue and the development of our selection of experiences (in Denmark) is… let’s say, relevant food for thought.
Spot the demand and go deliver
I once tried creating a business around a product with no demand. That didn’t go too well. Therefore, I can’t share learnings about creating a demand from scratch and moving people towards new habits and products.
However, what I’ve succeeded in on several occasions is building a business on top of an existing demand, on top of an existing market.
If I were better educated, I would probably say that I prefer markets (or should I say oceans?) that are somewhere in between blue and red.
TrueStory is no exception. People would still be booking experiences — for billions of dollars actually — if we didn’t exist. The market is there. The key learning for me is that I prefer to take an existing market and see what can be done better within that market.
In most markets, there are endless opportunities to grow and win market shares, and you don’t really need to worry about the competition as long as you concentrate on improving the customer journey.
In terms of selling experiences, we started asking: “How can we offer a better online service for customers buying experience gifts?”
Later this evolved into “How can we be the best at helping people to find, share and create experiences?” with a constant focus on improving the browsing and booking experience. It also includes a constant focus on creating the best selection of experiences — the experiences that people are already asking for (evergreen experiences) combined with new, eye-opening experiences that the customer didn’t even know existed (lab experiences).
So basically, we position ourselves in an existing market with a lot of customers and competitors, and then we get up every morning and try to create the best customer journey that we possibly can within the limits of our investing power and, more importantly, our imagination.
The data. This graph shows the revenue development of two types of experiences. The experiences that are well known, the “evergreens” with existing demand, and the new, unique experiences that we created and launched in cooperation with our partners, the “lab” experiences.
The graph clearly shows how we started off by “just” chipping into the existing market and then evolved into the platform we are today, where we’re not only offering well-known experiences, but also inspiring customers with new ones.
Does it add value to the customer? If not, don’t do it
This is such a simple approach, but nonetheless a very important one. If you want to build a great, sustainable company, you need to focus on adding value to your customers. And that needs to be the anchor in all your decisions and debates.
What does it mean in relation to creating and selling experiences?
- In our case, it means never selling our experiences at a higher price than if the customer would purchase them directly through a partner. We aim for the opposite. That can be seen as obvious, but it’s not. We have competitors whose commission is so high that they need to add it to the regular price of the experience. To me, that is customer value dilution.
- It means that if a customer has had a “less-than-what-they-expected” experience, we compensate for this even if our partner does not agree, which means it comes out of our pockets.
- It means that even though more profit is gained when a gift card expires, if a customer asks for an extension, we oblige without a fee.
And the list goes on. I guess you know what I mean by now.
If you’re about to do something that does not add value to your customer, consider it carefully. If you’re about to do something that decreases value for the customer, you should refrain at all costs.
The data. If you add value, your customers will return and buy more experiences, and they will also recommend you to others. When that happens, your brand is growing organically and you are creating a thriving business.
Define your mission to metrics
Knowing your sales numbers, margins and marketing metrics should be enough, right? It isn’t.
“What gets measured gets improved” is a quote by Peter Drucker. And it is key.
But the tough part isn’t measuring. It’s knowing what to measure in a business whose goal is to create customer experiences.
When we defined our mission — what it is we wanted to build — we needed to identify the levers that would get us there.
So the key learning is knowing what to measure and making sure to measure it; the goal is to execute your business based on your selected metrics. I love data. So the next part is a bit “technical”. I apologize for that…
Some metrics, no matter the company or mission, will be the same, but some will be unique to us and the experience industry.
We aim to navigate around 7 key metrics, with a list of support metrics for each. If a key metric is underperforming, you should be able to find the answer (and the solution) in one of its supporting metrics.
Business overview: EBITDA
Supporting metrics: Revenue group overview, average commision, customer, variable costs etc.
Vision: Created memories through experiences and experience reviews
Supporting metrics: How many people are having experiences through our platform, how are they reviewing their experience, and how are they sharing their experience afterwards? And how is our brand traffic developing?
Marketing: Traffic source performance vs. Traffic growth budget
Traffic source growth budget includes: Sessions, transactions, conversion rate, average order size.
Other metrics: SoMe reach, profit margin on paid search, sessions and revenue from emails, active affiliate partners, organic search growth, and session quality on non-converting sessions.
Tech: Sprint completion rate
Supporting metrics: Estimate vs. time spent ratio, unit test code coverage, reviews, downtime, load time etc.
Sales: Number of partners and experiences on site
Supporting metrics: Potential partners added to Podio, efforts made and conversion rate from initial contact to agreement, regional coverage, price points, price competitiveness etc.
Customer service: Customer Satisfaction rate
Supporting metrics: First response times, ticket subject categories, chat performance etc.
Product performance: Product click-through-rate and conversion rate
Supporting metrics: Product impressions on marketplace, product wait list demand etc.
These are our mission-critical metrics that we must track, report and optimize on a continual basis! It is a constant work-in-progress and we are still far from being where we want to be, but we keep improving our data, our reporting structure, and the way we present the data.
Keep improving the customer experience
When running a more or less bootstrapped company, there is a natural limit to how innovative you can be — but you always need to try within the obvious limits.
When I look back, there’s one example of us trying to redefine and improve the customer experience/journey that has proved to be crucial in relation to our growth.
Booking — aka fixing the user experience
When we started our company, we did what our competitors were doing. In other words, pushing gift cards. So, not really selling experiences, but gift cards “wrapped” as experiences.
In order for the customer to really buy an experience — or use a gift card — they would need to contact the experience host directly. I regard that as a completely broken user experience because:
1. Buying a gift card in the “traditional” way means passing a task on to the recipient of the gift card. You don’t know what experience awaits the recipient when booking a date for the experience.
2. When the customer needs to contact the partner/host directly, it means that as the experience portal, you offer no real value to the customer and act as a useless, for-profit middleman with a shiny gift card.
So how could we break away from the way the market worked and add actual value to the customer (and host) in order to justify our existence?
The problem / pain: The problem for the customer is that the market for experiences is extremely unstructured and hard to navigate because it consists of lots of passionate hosts who don’t care about creating a great browsing and booking experience. They care about creating great, unforgettable experiences.
The solution: So, in terms of adding value, we saw the part of the customer journey that lies before the experience — and after — as the opportunity!
In other words, providing a great place to find and book experiences without any friction (and without any unanswered phone calls or emails).
It also meant removing the customer service role and booking hassle from the host/partner so that they could concentrate on what they are best at: the actual experience.
From there, we started building a booking system, tailor-made for experiences, and incorporating hundreds of hosts into the system. Let’s put it this way: it wasn’t an easy task.
Here we are, 2–3 years later: an actual experience portal with no real competition except from the big international players like TripAdvisor, Viator and AirBnB (we need to move fast). We’re still working on incorporating all available experiences into our booking system… and we’ll probably never finish.
I’m really glad that we dared to invest 4000+ hours into development and all the energy and risks that went with it, not to mention the focus required to keep on track.
To sum it all up
… my key learnings and from now on, our key principles, are:
#1 Always start with product selection and price
#2 Spot the demand and go deliver
#3 Does it add value to the customer? If not, don’t do it
#4 Mission to metrics
#5 Keep improving the customer experience
… And the main key to all of this is: focus. Focus on what works and what you have already set out to do. Learn to say no.
It took a while to create this post. Not to actually write it, but to explore what has actually worked. If you have read this far, I really hope that you have discovered something new and maybe even been inspired by my learnings.
What now? I’m going to take many of the above learnings and implement them into our company as key principles. They’ll become the main guidelines on how we navigate as a team, and eventually they’ll become firmly wired into every employee’s mindset. This is because I believe that these principles will be the most valuable ones in 2, 4 and even 10 years time.
The goal? To continue learning, building a great company, and having fun. I believe that in 2018 we have the capacity to sell another 50,000 experiences. If you want to follow how we get on and receive notifications when we post more, sign up here.
Do you want to get a transparent look into our business, financial numbers and much more, once a month? Then sign up to my monthly newsletter, True Insights, here.
Thanks for reading. I would love to get your inputs.
Other resources. Most of the principles have been born out of talking very little and doing very much. That is very important to understand. Other than that, I would recommend the following: reading Jeff Bezos’ annual letter to shareholders and also the customer journey and metrics that matter at Avinash Kaushik’s blog, listening to this talk between David Heinemeier Hansson (Basecamp) and Tim Ferriss and this podcast by Masters of Scale with Reed Hastings (Netflix). If you want to learn more about the experience space, you should also check out Skift (and all their reports). Also regarding Skift: I hope to attend the Skift Forum in New York in september — maybe an event for you to consider as well? A crazy lineup of interesting people very passionated about the above: creating experiences.
This post was has been re-published at lassekjaer.com.