How We Split Tested Our Way To A 9-Figure Business
One trend I’m seeing when I talk with founders in my private mastermind group is that they have too many products. They offer too many services. None of them are getting their full attention and they wonder why their business isn’t growing.
The big thing to realize if you sell multiple products or services is that your competitors (who are only focusing on one product or service) are going to grow much, much faster than you will.
The reason for that is because singularity of focus breeds results.
All else being equal, the company who focuses its efforts on a single product will be more successful than the company who divides its resources amongst multiple products or services.
I’ve been on multiple calls this week with really smart founders who are all making the mistake of dividing up their resources across multiple products or services.
If they were running mature businesses then that would be fine, but these guys were small. Their businesses were each doing less than five million in sales, so my advice to them was singularity of focus.
One product or service. That’s it.
That’s all you sell. That’s all you create. That’s all you support. That’s all you market. That, more than anything, will grow their businesses exponentially over the next few years if they can execute.
Here’s how I learned about singularity of focus…
In 2004 we launched a company called Interspire. Between 2004 and 2008 we created multiple software products.
We started with a website builder and then we added a WYSIWYG editing tool that let you format text in the browser.
Soon after, we added an email marketing tool. And another website builder. Then we a search engine tool. Then an analytics tool.
We had six different products and we only had two break out “hits” generating more than $1,000,000 in sales.
As a result, our focus was all over the place. We were dividing our attention between six products, six support teams, six engineering teams, etc.
In 2007 we decided to really narrow our focus. We picked our two best performing products (email marketing and shopping cart software) and decided to split test them against each other.
“Whichever product does the best is the one we’re going to go all in on”, we said.
At the time SaaS wasn’t the standard way to deliver software and we were selling our products as installable scripts, so we decided to build SaaS versions for each of our two best selling products.
The email marketing product was launched as BigResponse. The shopping cart product as BigCommerce.
We put an equal marketing budget, equal support resources and equal product resources behind each product.
We also discontinued our four other products.
After one year, BigResponse had about 2,000 customers paying $50 a month. Not bad by any means.
But here’s where things got interesting — by the end of year one for BigCommerce, we had 9,800 customers paying us $25 a month.
So BigResponse was bringing in $100,000 a month while BigCommerce was bringing in $245,000 per month.
Same marketing budget, same resources.
Right around that time we decided to drop BigResponse and go all in on BigCommerce because we wanted singularity of focus.
BigCommerce did $100,000,000 in run-rate revenue last year.
And therein lies the key lesson.
If you’re scrambling to offer multiple products or services and you’re frustrated that competitors are getting ahead of you, it’s probably because they’ve employed singularity of focus in their business.
Either in their product line or in their marketing. Or both.
No amount of marketing, no amount of slick sales people, no amount of capital will grow your business faster than having singularity of focus.
I’m guessing if you look at your numbers the 80/20 rule will apply. 20% of your products or services are probably generating right around 80% of your revenue.
Imagine if you only sold your best-performing product or service. What do you think would happen to the growth of your business?
Definitely a question to consider, right?…
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