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36 - Software As A Service 2 - Pain Of Disconnect

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Software As A Service 2

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Episode Recap:

Russell is driving home a 2 AM in the morning and sharing some of the insights they got building out their new SAAS products. Russell also shares with you what it’s like being a super hot girl!

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Best Quote:

Think about what’s your average stick rate, and right before that average stick rate, give people the ability to buy out a membership at a discount....  Or people who cancel give them the ability to buy out the membership at a discount.  Same kind of thing that, you know, they’re probably just tired of seeing the monthly payments.  They probably still like what you have, so you said: “Hey, you know, you may not like paying $97 a month.  But for how about $200, we’ll give you lifetime access.  You never have to pay again.”

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Transcripts:

Hey everyone! This is Russell Brunson. I want to welcome you to an exciting edition of the Marketing In Your Car podcast. It is actually 2:00 in the morning. I just dropped off Todd at the hotel. Todd is our developer.

You guys heard about him in the last episode, and I’m in the Ferrari driving home at 2:00 in the morning. It is freezing cold! And the top’s down, and I just passed a cop. But the top will remain down because we’re driving a Ferrari. You don’t put a top up. I don’t care if it’s two in the morning, if it’s freezing cold, that’s how we roll and run the Ferrari.

So in the last episode, I was talking about developing software is a service type product, and what’s been fun is basically the last two weeks Todd has been here in town. We’ve been developing a brand new product, and I’m super fired up about it because I think it’s going to change the way that people do marketing.

I know it’s going to change the way I do things. It’s going to make it where, basically, I can do all the marketing by myself without any webmasters, developers or anything, which is exciting. So anyway, I’m excited for it. But I’m more excited just to talk more about you guys, about software as a service.

And we talked about it last time, just some of the benefits of it. But the reality is like it’s been interesting is we’ve developed this product. You know, in the past when we developed products, we tried to give it so many features and so many things that it’s just overwhelming to customers and to us to support it, and to create. And we’ve really been following this model just like making a strip-down, bare bones, as simple and as easy as possible, and as we’ve done that it’s just making a tool that I think people will use and stick with long-term.

One of the cool concepts we talked a lot about tonight, that I think I want to kind of focus this on with you guys is, when you’re creating, if you decide to create your own software -- if and when you’re creating your own software. One of the biggest keys in the long-term success of your program, whatever you’re creating, is if you can create something that has pain and disconnect. And it makes me laugh… I’ve been doing membership sites now for, man, seven or eight years.

We’ve made millions of dollars off membership sites. But one of the constant dilemmas we have is there’s always this constant churn and burn. We’re always just adding people into the funnel. I just passed another cop, so I might go onto the side street here. Anyway, it’s a constant burn and churn when you have a typical membership site because content is good, but it’s not essential.

Like when somebody -- you know, their credit card comes up, and they’re looking at their bills -- like when they look at like “Oh, it’s a membership site. I enjoy it. But, hey, you know, it’s… I don’t have to have it.” So it’s creating something that if somebody wanted to cancel, there’s huge pain and disconnect. And that’s really what -- you know, not that we’re trying to develop things that cause pain, that would hurt our client’s business.

But is something that is so valuable and so useful that if they ever canceled it, would be very painful. So, you know, if for some reason their credit card failed, they’re just going to think, “Oh my credit card failed, no big deal.” If their credit card failed, within two minutes they would call you because they’re using your service so much that they have to have it to function.

And that’s the kind of product that you’ve really got to create, and I think that’s really the big secret. I really think that next year, with this product rolling out, I think we could do $10-million pretty easily next year. And it’s just because we’ve created something that’s so powerful and so useful that the pain and disconnect is just so much, and so I really want you guys thinking about that.

Like if you do decide to develop a software program, like what kind of product or service can we create that ties our customers in so deeply that they just love it so much that they can't cancel? It’s kind of like our supplement. Our supplement has been interesting because I think it’s kind of the case with any supplement you have. There is a percentage of people who it doesn’t work for, and there’s a percentage of people who it works great for.

And that’s how it is right now. If we have people, we have clients who are literally calling us saying: “My bottle is empty, and my new next shipment hasn’t come in! I will pay you whatever it costs to overnight this thing. And make sure that I have that bottle here tomorrow because I don’t want to go through a single day without this in my system.” We get those kinds of calls all the time, which is awesome and exciting. And so, again, it’s pain and disconnect.

If those clients stop having our supplement, they’re in so much pain that they can't function, and so they don’t want to go without it. And I think that, you know, in the past in the Internet marketing world, what people have taught and talked about it is just, you know, “create something that’s good and people will stick on it.” But I think you’ve really got to create something that has such a big pain and disconnect that they can't leave you.

They won’t leave you because it’s so important. And that’s the kind of businesses we’re really trying to focus on, and I think you actually should be focusing on as well, and so, I just want to kind of throw that out there because that’s what we’re talking about right now, and it’s been a lot of fun. The other thing that we are kind of playing with that I think is interesting that I want to throw out just an idea for you guys is: If you do have a membership site or something that doesn’t have that big, huge pain and disconnect, you know, one thing that we’ve been looking at a lot recently is like, what’s our average customer value?

You know, and we did this before on our membership sites. You know, the average customer stays for one month or three months or six months or whatever it is. When you find that number out, it’s very important to kind of just start focusing on that. Say, “okay, our average customer is staying for just three months at a time, you know, or six months at a time, whatever that is, if you know what that dollar amount is.

We’re going to be instituting one of our membership sites coming up next month, and I’m really excited for is… We’re going to give people the ability to buy out their membership site. So if we know the average person stays for three months, that means that month number two or two and a half, we’re going to start a campaign basically saying: “Hey, you’ve been a member for two months. So far, I hope you’re really enjoying the site. What we want to do is, we want to offer you the ability to buy out your contract.

“So basically, for an extra $100 or $200 or whatever it is, you can get a lifetime access to the site. So longer do you have to pay us $97 a month, just pay $200 and boom! You get lifetime access.” And suddenly for anyone who takes that, we just basically increased, you know, we took that person from the average two to three months, to six or eight or twelve months of revenue. Anyway, it’s a cool concept I’m really excited for, and I can share stats and results, as we get deeper into it and kind of see what happens.

But just think that. Think about what’s your average stick rate, and right before that average stick rate, give people the ability to buy out a membership at a discount. Or people who cancel give them the ability to buy out the membership at a discount. Same kind of thing that, you know, they’re probably just tired of seeing the monthly payments. They probably still like what you have, so you said: “Hey, you know, you may not like paying $97 a month. But for how about $200, we’ll give you lifetime access. You never have to pay again.”

And just some fun things to start looking at, just different ways to look at your numbers when you’re doing reoccurring revenue, continuity, and things like that. So anyway, I hope these are just a couple fun ideas. Again, you know, I am so tired right now. We’ve been going like, literally the last two weeks that Todd has been here, we been going late nights like this almost every single night. I’m pretty sure my wife is ready to kill me, but sometimes that’s what you do as an entrepreneur. You burn the midnight oil to create something really cool that will pay you for the rest of your life.

And so that’s what we’ve been doing and just having that kind of fun, so my brain is kind of all over the place. I just wanted to share with you guys some interesting ideas while I’m driving home, so it’s been a lot of fun. I’ve also had a lot of people email me, asking what it’s like driving the Ferrari, now that I’ve been in Boise driving it for the last week or so. It’s been interesting.

Like the first day we had it and parked at the office, we probably had four or five different sets of people who came to the office, parked, came to the door and asked like, “Who’s Ferrari is that? Who’s Ferrari is that?” Like it wasn’t just someone driving by, like they actually came into our office, and asked to see and ask me questions about it. This one kid that drove by, and the guy got so excited he called all his friends.

We had this group of like all these teenaged boys outside our office just checking out the car, and they literally sat outside for over an hour, taking pictures and just looking at it. I thought it was the funniest thing! And then, the other thing that’s been interesting is I kind of know what it feels like now to be a really super hot girl. Like, literally, when I’m driving down the street, I have guys driving -- be honking their horns, waving, yelling catcalls at me.

I had people like, pulling into parking lots and asking me questions, like I’ve never felt that. I’ve never had the opportunity to be a super, smoking hot girl, but I could imagine that’s probably what it’s like for them. Like they get approached, they have people yelling at them; here people are just like staring. Literally, I can watch as I drive down the road and almost every guy has this like really weird like whiplash, you know, where they’re following the car.

And so, I can kind of empathize now with super hot girls, and I feel bad for them sometimes because that would be really, really hard and annoying. At first it’s kind of cool and flattering, but after a while it would be annoying. So anyway, I’m still in the stage where I like being the super hot girl, and I’m enjoying everyone yelling at me in my car. But I’m sure it will go away, and we keep talking about, you know, what are we going to do with it?

Obviously, I don’t think I want to drive a Ferrari the rest of my life. I would like to, but… You know, winning a Ferrari is cool, but I think we told you guys in one of the other episodes, it’s just the tax liability is like… Basically, Joel, he won. You know, he gave me the car so he wrote it off on his taxes as a $130,000 loss. We basically incurred a $130,000 gift, and so I had to pay taxes on $130-grand.

Which in my tax bracket is like $60-grand or something crazy like that, so by winning the car I’ve got to pay $60-grand, plus I’ve got to pay sales tax. I’ve got pay like another eight or nine grand as soon as I register it, which I’m doing tomorrow. It’s kind of just an expensive machine, so I think after like the thrill of driving, it wears off. We’re going to do a contest and give it away.

We talked about selling it, but selling it… Let’s say I sold it for $130- $150-grand, you know, after paying taxes I still would make $70- $80-grand. Whereas, if I did a contest, and if I execute it correctly, we could make a lot more than that. So we’re actually going to, using the Ferrari in a contest, to give away our new software we’re launching. So who knows! We’ll see. Time will tell. It’ll be a lot of fun.

Anyway I just got home, you guys. I’m ready to crash and go to bed. I hope you guys are having a great day, having a fun time being an entrepreneur. Think about some of these cool things I’m sharing with you. Hopefully, you guys implement it in whatever your business you’re in, and I will talk to y’all again soon. Thanks so much, you guys!

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