Report: “Growth”
June 2018 Growth Report: A New High and our First Enterprise-Level Client
Synthesis:
My target in June was $40k in revenue. We fell just short of that but turned in our best month, collecting $35,600 in cash and signed contracts (up dramatically from $19,250 last month).
Previously we were rangebound between $20k-$25k/month since January. Thus, June looks to have been a breakout month for us that I’m looking to build on in July. My plan is to acquire an additional 30 clients in July and increase our revenue to $50k. To do so, I’m targeting a high rate of client growth (about 33%), and 1–2 enterprise level accounts.
In June we worked extremely hard to achieve these ambitious goals and I would be remiss if I didn’t call out the exceptional individual efforts that went in to this. I’m tremendously proud of the team. Partners consistently worked 70–90 hours/week to deliver these results. Agents in Operations pushed just as hard to deliver on the promises we made for a host of new, important clients. It was a true team effort.
Without this brutal single-mindedness, the month would have been ho-hum, instead of the strategic breakout that I think we landed. Jay, Corey, Bruno — thank you!
June’s High/Low Client Mix Strategy: In June we acquired 24 new clients. 5 of these clients purchased more than $1k from us, and all 5 of these clients came from one new primary sales channel. In fact, these clients accounted for ~$25k of our revenue, with our first enterprise-level client purchasing $15,600 for services to be rendered over the next 2 months.
This new channel delivers much larger users of the service (“Power Users”). In combination with our existing channels, we diversified the client base. This is excellent; a key part of my strategy to drive our product-market fit in June and July is to develop a mix of high/low clients to deepen our understanding of our client base’s needs. I have several goals in mind:
-Understand the division of clients in to “Novelty Users” (clients who use the service intermittently and don’t have real business needs driving their demand) and “Power Users” (clients who feel that the service is a lifeboat/rocket ship for their firm and will spend thousands of dollars without blinking an eyelash — and then buy more). I want to understand how their needs are different — products, pricing, perspective, etc.
-I also want to use this larger client as a means of testing better ways of onboarding, taking delegations, and distributing work. A large base derisks these improvement initiatives. The client experience needs to improve dramatically in order to allow us to acquire and maintain enterprise-level clients — the “Holy Grail” of our business.
Key Metrics:
June 2018 Revenue: $35,600
-84% increase from last month
-40% increase from our previous high (April)
-Our new sales channel brought in $27k (75%) of our revenue
Client Acquisition Breakdown:
-24 New Clients
-$31,470 in Revenue
-~35% increase in total # of Clients
-1st enterprise-level Client
-8 Upsells
-$4,130 in Revenue
Growth Plans:
In Q3, I’m targeting a monthly revenue growth rate of approximately 30% to get us to $100k/month and a $1.2M run rate by the end of the quarter.
Q3 Revenue Targets:
July 2018: $50k
August 2018: $80k
September 2018: $100k ($1.2M run rate)
In Q4, I’m targeting a monthly revenue growth rate that’s a little lower — 25% each month — to put us at $200k/month and a $2.4M run rate by the end of the year.
Q4 Revenue Targets:
October 2018: $135k
November 2018: $165k
December 2018: $200k ($2.4M run rate)
In 2019, the goal is to roughly 6x that for a run rate of $15M. Monthly revenue growth rates will be in the mid-teens.
In 2020, the goal is to roughly 3x that for a run rate of $50M. Monthly revenue growth rates will be around 5%-10%.
Level-Down Plans to achieve this growth: To achieve this, I need to achieve several sub-goals — key metrics listed below:
1. Low Churn Rate: I need to take this down to 10% from the approximately 30% it is now. To do this, I need to improve the client experience and continue to drive product-market fit.
2. ARPA: I need to drive current revenue per account of ~$600 to ~$1k. Once above $1k, to meet my numbers I don’t need to increase average monthly usage all that much through time (only 50% higher from a relatively low base by the end of 2020). It could be that we will achieve these numbers with a smaller number of clients with a much higher ARPA. It remains to be seen what our enterprise/standard client mix will be.
3. Customer Lifetime (Client Lock-In): Major improvement needs to occur in this space. Currently lifetime is about 3 months. My goal is to push it to 10 months. This, in combination with increasing ARPA and driving down CAC, results in a very strong CLTV:CAC value through time.
4. Enterprise-Level Clients: Every month I will need to add an increasing number of large accounts. In June, we secured our first large enterprise account (a contract worth $15.6k) and are in negotiations for our second one (size to be determined).
5. CAC: Is currently between $300 and $500 per client, depending on the channel. My long-term target is $250. I believe that this is very achievable based on where we are now.
As of now, I view these 5 drivers as the key to unlocking Invisible’s potential. While I’m sure that more will appear through time, these 5 form the foundation of my strategy to drive growth and profitability in the immediate and long term.
I look forward to reporting stellar July results in a few weeks.
-Marshall Sutherland
VP, Growth
Invisible Technologies Inc.
