The things that we can do with technology to be able to support our businesses, make the customer experience a little bit better, and differentiate ourselves is amazing. In this episode, PayKickstart Co-founder Mark Thompson joins host Ben Baker as they talk about automating your online business. Mark explains how their software was an internal tool they built out of necessity to sell their own products. PayKickstart is a powerful shopping cart and affiliate management software. Mark gets down on the built-in automation tools in their platform. He also touches on affiliate marketing, how to best allocate your marketing budget, the importance of knowing who you’re targeting, and more.
We've got Mark Thompson. He is the Cofounder of PayKickstart.com. We're going to get right into it because the technology business and the technology corridor is becoming more and more sophisticated. The amazing things that we can do with technology to be able to support our businesses, to make that customer experience a little bit better and differentiate ourselves is an amazing thing. Mark, welcome to the show.
Thank you so much for having me, Ben. I appreciate it.
It’s my pleasure. I can't remember who first showed me PayKickstart. This is an interesting technology because people sit there and go, "It's like a Kickstarter. It’s, ‘How do you raise money on the internet?’" That's far from that. Where did the name and PayKickstart come from? Where did you come from? Where are you going?
Way back several years ago, I was working for a few different marketing agencies helping small to medium-sized businesses with their marketing. I realized I didn't want to trade time for money. It was very hard to scale the services business. I went and created my own agency. I found that it wasn't right for me. I figured if I could drive traffic and create an offer that people wanted, I could do this on my own. I wouldn't have to go and teach other businesses how to do it. I started to create information products and I also created software. I learned on my own and made a lot of mistakes along the way, but practice makes perfect. I had all these products and I needed a brand to store all of these different products that I've created over several years. I thought Digital Kickstart was a good name for it. That's how PayKickstart came to be is because we already had Digital Kickstart. It was already established for a number of years. We already had an existing customer base. We thought it'd be a natural progression. PayKickstart is a shopping cart and affiliate solutions. We're dealing with billing. We thought that it was an easy thing to do and brand to pick Kickstart.
What led you to that realization to sit there and say, "There are a thousand different shopping carts out there. I'm going to create another one?" What led you to the thing that says, "All of these things I'm currently using are driving me crazy. These are the things I'm looking for. I'm going to create a better mousetrap?" What led you to that realization?
It was a long road. What happened was we had tried lots of different shopping carts. I'm sure anyone that's selling a product out there has tried at least 2, 3, 4, maybe a dozen different shopping carts to see if it meets your needs. One thing that you notice is that you always have to duct tape certain things. You always have to buy an add-on or get custom coding and it never works how you want it to. When I first started out, it was fine. I wasn't making a ton of money and the shopping cart did what I needed it to do, accepted the payment. I'd bring on a few affiliates and they would track their commissions. It was pretty basic. As we started to grow and started to make a lot of money online, all of these conversion tools and ways to retain customers and maximize customer lifetime value, all of these things started to be a very big difference in our bottom line. These carts that we started to use were prohibiting our growth in so many different ways, crazy fees and functionality that we didn't have. We said, "Screw it. We're a software company. Let's build it ourselves."
PayKickstart was an internal tool that we built out of necessity to sell our own products. That's how it came to be. We used it for two years internally. We had affiliates and other entrepreneurs that we know in our circle that were like, “That's a cool checkout page. How did you do that one-click upsell? How did you add that order bumper?" All these types of things that we've built in, they were interested in using it. My business partner, he's been an entrepreneur for longer than I have. We decided, “Let's go after this. Let's release this to the public.” We revamped it from the ground up and we released it as a limited beta, especially when we're dealing with people's money. We need to make sure that it works right. The good news was that we were the guinea pigs. We tested it on our own products to make sure that it was working right. We brought on about 25 vendors, mostly digital sellers.
People that were running a membership site or selling software, they're a SaaS company similar to what we were selling. They tried it out and a lot of them loved it. They gave us feedback and recommendations. They helped us find bugs and fine-tune the platform. We kept moving forward. We kept adding new features to it. We kept improving the user experience. I would say after about a year and a half of releasing to the general public, the product had matured to a point where people were starting to talk about it naturally. It was getting good word of mouth. That's what got us excited. We started to help vendors with driving more revenue through lots of conversion tools that were built-in and retain more customers, anyone who is leveraging recurring billing or subscription in their business.
I can't tell you how much revenue we lost before with other carts because we didn't have a proper dunning sequence or a way to say to your customer, "Your credit card expired. Would you mind to go and update your billing?" We've lost almost $1 million between 2013 and 2015 because we didn't have a simple dunning sequence in place. We've added all these tools and functionality where us and business owners can focus on their product and not focus on the technical parts of accepting payments and managing the subscriptions and all these things that go along with running an online business.
Online business is a completely different animal. For people that are used to brick and mortar sales, the mentality shift is huge. To be able to sit there and figure out, "Who am I signed to? How do I get in touch with these people? There's my real value proposition. Why do they care about me?" How do I bring them through a position of sitting there going, "Know, like and trust. You like this product. You like this thing. Maybe you’ll like this as well?" Amazon is the king of this. It's amazing how many stuff shows up in my cart that says, "If you like this, you’re going to like this too." You're going, "Fine, I will buy that too." When you're building the software and it's intuitive to you as a technology company and it's intuitive to people that are in the technology industry, people that are trying to move to that thing is sitting there going, "Where do we start? I have 1 or 2 products and I'd like to get more products. I'd like to be able to move people from one or the other.” It seems daunting. It seems overwhelming to the average person. How do you help them succeed when it's an alien concept to them?
One of the great things about our platform is the built-in automation tools that we have. You don't have to be a developer or designer. Everything comes out of the box. However, for those people who do need customizations, especially for SaaS companies, they need more of a custom checkout experience. We do offer an API so they can do something custom. There is flexibility. Out of the box, it's very easy. You connect your PayPal account or your Stripe account and you can start accepting payments immediately. We have checkout page templates that you can utilize. We have things like one-click upsells. You talk about buying stuff on Amazon, they're the kings of one-click functionality where you go and buy the product. We've added that type of functionality and everything that you need to power your billing. Coupon codes, tax management, all the checkout page functionality. Also, bringing in the affiliate partners. One thing that differentiates us from other shopping carts is the ability to have the shopping cart and the affiliate platform all meshed as one. Whereas normally you have a shopping cart and then you have to get an affiliate solution separate. Everything's right there at their fingertips for an online business to start selling their product. We want them to focus on what they do best, which is deliver value with whatever product or service that they're providing.
Is there a wizard type of situation where you say, "Welcome to screen number one. If you're doing this, do this. What is your tax code? We need your tax code. Do you do business in the United States? We need you to do this. If you do business in Canada, we need you to do this. Do you have other products? Do you sell? Where do you sell them in a line? Where do we go from A to B to C to D to E or do we go to A to F to B to C to R?” Does your software intuitively speak in the language of the techno-present? Somebody that wants to get involved but doesn't have the language or the thought process of understanding where to go next. The problem is most people are intimidated of where to start the process.
That was a big hurdle that we had to overcome, especially when we first started the platform. People were like, "Where do I go next?" We didn't have that in the beginning. We release an onboarding wizard. The first time you go in there, we show that there are five steps that you need to take. The first step is to create your campaign. Once you've created your campaigns, there are some basic settings. You toggle on and off what you want. You add your products or multiple products if you have into the platform. From there, you build out your sales funnel. Once someone buys product A, where do you want to take them next? Do you want them to be able to download or access the product? Do you want to take them to an upsell? You build out your sales funnel.
The fourth step is adding your payment gateway. How do you want to accept payment? What forms of payment do you want to take? Do you want to take credit card? Do you want to take PayPal, bank transfer? The fifth one is we give you your checkout links and you add those to your buy button. We're not a landing page builder. We handle everything from the checkout and billing management. That's our sweet spot. We work with a lot of entrepreneurs that use WordPress, ClickFunnels or Leadpages that build out their sales and marketing pages. Those are great tools. We love them. We found that they lack in terms of functionality and flexibility when it comes to checkout and billing.Focus on what you do best and deliver value with whatever product or service that you’re providing. Click To Tweet
It allows you to build the system in one piece of software from end-to-end. Is there an ability to take that code and then embed it into your WordPress site? Does it have to be a stand-alone on your system?
One cool thing is we allow you so many different checkout options. We do have checkout pages that are hosted on our servers and you can use those. We also have what's called a foreman bed. You could build out your own page and you just embed our checkout form onto the page. A lot of people will do that. They'll create a ClickFunnel page and they'll embed our checkout form and process the order. We also have a pop-up widget. When someone clicks the buy button, they don't go off the page. A little modal or a little pop-up shows up and it allows them to fill out the checkout. There are lots of different options you have. The API, if you want to do something custom for people more advanced.
The key thing is the longer you can keep somebody on your page, the more opportunity you have to sell them. One thing that I find and it's a real challenge is cart abandonment. You get people that sit there and say, "I went to go grab a cup of coffee. I came back, the screen died on me. The phone rang and I had to deal with somebody else.” Is your software intuitive enough to send somebody an email that says, "It looked like you were halfway through the checkout process. We must have messed up on our side. Here's a link to get back in?" Are you guys that sophisticated enough that you can give that trigger to people? Somebody told me that 60% of people when given that opportunity to get back into the current system will buy it at that point in time where they might not have bought the first.
92% of carts go abandoned. They go to the checkout page, got their credit card in hand, and for whatever reason, they don't buy it. There are a bunch of different things that we do. As long as they provided the email address as they’re going to check out, we will send them an email saying, "It looks like you were about to buy this product. Go buy it." That's one thing we do. Another thing that we do offer is an exit intent pop-up. If their mouse looks like they're going to click off the browser. We can have a little pop up that says, "Are you sure you wanted to do this?" Some people will be like, "Here's a 10% off coupon for your order. Use this coupon code." The other thing that you're able to do is you're able to drop a pixel on their browse and then you can send that to Facebook and create a custom audience. You can start to market to those people on Facebook. If they do leave, you can come back and do some remarketing to them and try to get them to come back.
Is it only through Facebook?
It can be any third-party tracking pixel that you want to drop on the page.
Do you give the opportunity of whatever pixel you want?
My biggest thing, and this is my pet peeve with pixels, is pixels that don't go away. I get it. If you want to pixel me and follow me for a week or two, that's fair, "I clicked on your stuff. I'm going to get the Ferrari ad for the next two weeks." I get it. I'm not buying one, but at least I get the Ferrari ad for the next two weeks. Some of these guys just pixel you forever. It is annoying. It's a matter of sitting and getting to the point where you're somewhere in between letting people know, “Don't forget about me,” and point where he says, "I'm still here. Don't abandon me."
It's bad marketing. After certain exposures have been proven that more people are willing to buy. Not everybody is going to buy on the first time. There is the threshold where when you see the ad over and over, it is counterproductive. It is annoying and you're like, "Get it away from me." What happens is a lot of these marketers, they're paying for impressions. They're wasting their marketing budget where it can be allocated towards people who are interested. It's more of a marketing thing. People waste budget all the time on that stuff.
Your software not only does the cart area. Is the funnel built-in or do people have to have a ClickFunnel or a Mailchimp or whatever to be able to keep them in the sequence or is it all-in-one software?
You build out the funnel inside of PayKickstart. It shows a visual funnel builder, what your front end or main offer is, where do you want to take them. Some people have multiple upsells, down-sells, all that fun stuff. You would build it inside of PayKickstart. You're telling PayKickstart, "After this person buys, where do you want them to go? Take them to this page. After they buy this product, take them to what page." We give you the checkout links and then you put them on each of the pages in your funnel. We know where to take them throughout the funnel.
Let's talk about marketing on this. It’s not, “I will build it and they will come.” There are 100 million pieces of software out there. Because you have a webpage on the internet, it doesn't mean people are going to bang on your door and say, "Here's my credit card, take my money." You've talked about affiliate marketing. That is relationship marketing, influencer marketing. It's know, like and trust. Are you finding that that's the best way to get people to come to your door? Do you find you guys are getting better with LinkedIn ads, with Facebook ads, a combination thereof? Does it depend on what the offer is whether it's a $495 product versus a $29.95 product? Give me some examples of why somebody would land on one of your landing pages. What's the best way that you've found that people are being driven to these pages?
There's no right or wrong response. Here's the way I look at affiliate marketing. Affiliate marketing can be a great source of traffic, especially when we first started out. It was fantastic because you only pay someone when they refer someone that buys your product. You're mitigating risk there. The people that are spending $1,000, $10,000 or $20,000 on ads and they don't know their conversion rates in their return and all these metrics that you need to know. You can get into real trouble. Whereas with affiliate marketing, a lot of it is building relationships with other like-minded people that have a list or have some way to drive traffic.There is the threshold where seeing an ad over and over again is counter-productive. Click To Tweet
You need to make sure that the traffic is relevant to your offer. It doesn't make sense if you're working with affiliates in the health space and you have an internet marketing offer. It doesn't work. There are affiliates in all different niches. It's important to find the right ones and you mitigate risk. You only pay when someone sends you a lead. When we were early on, it was great. There's always a con to all different types of traffic. The con with affiliate marketing is affiliates are typically very needy. They need email swipes, banners. They want a commission. They want to customize it. Sometimes they can be very needy, whereas with a paid ad, I don't have to worry about that. I can pay for as much traffic as I want to and I can turn it off when I want to. There are pros and cons to every type of traffic source.
One thing that I've noticed on your website, and maybe I didn't go to the right place, there's not a lot of how-to videos. There's a how-it-works video. There’s, “Here’s how the thing works.” There's not a lot of videos that sit there and say, "Here's one affiliate marketer and this is how to utilize them." A lot of customers are sitting there going, “There's so much language out there.” There's so much jargon out there that we all use. We're all guilty of using our own language. SaaS for example. SaaS is software as a service. If you did not know that SaaS is software as a service, people are going to start rolling their eyes. The question is, how much do you invest? Is it worth it for you to invest to be able to create these online videos? Do you sit there and say, "The people that buy from me are people that are already in the digital space. They already get it. They're already doing this. The people that don't get it or are not there yet, they're not my customer." It comes down to, do you understand who your customer is, what they want? How quickly do you stay in your lane? Do you go for that shiny object syndrome?
Since launching PayKickstart, we've gotten to understand who our target market is. One thing that we realize is that we're not working with brand new businesses that are just trying to figure it out. Our pricing model speaks to that. A lot of shopping carts, their pricing structure is, “We don't charge you any monthly fee. You only pay us a percentage when you make a sale.” Those types of shopping carts or solutions, they seem to target the beginner. We chose not to go that direction. The fact that we're charging a monthly fee, it wipes out the brand new people. We do have some content on the website that is basic stuff. How do you market a product online? How do you create a product? How do you work with affiliates?
Our sweet spot is people that are doing at least, $10,000 a month in revenue focused on recurring billing. We're working with membership sites, with software companies. Ideally at least five employees or more. These are the more sophisticated buyer who understands the value of subscription management, affiliates, tracking, all that stuff. We provide the technology for them. With that said, we don't want to necessarily say, “Brand new entrepreneur or a new startup, we don't want you.” That's not our sweet spot.
We all need to sit there and say, "Who can we service and who can't we?" I'm sure you don't service the $1 billion companies either. They reach a point where they will create a totally custom solution for themselves.
I was talking to someone and he wanted us to customize things for him. I was like, “Where we're at, we're not an enterprise solution.” We don't have the infrastructure to be able to do that. We're mainly self-service. We have 24/7 live chat. We do have great customer support, but we don't have dedicated account managers who are there to hold your hand and say, “We're going to need $50,000 upfront,” or “That's not the business model.” At least the way that we're created, that's not where we went. We know we're working with small to medium-size businesses and you're right, it's so important to know who you're targeting. When someone contacts us and they're like, "I'm looking for an alternative to Shopify," that's not what we do. We don't target physical sellers who have hundreds or thousands of products and they need colors and sizes. That's not who we serve. It's better for us to tell them up-front, “That's not who we are,” and waste our time trying to sell them something that they don't need. That's why it's so important to know exactly who you're targeting.
Where would you fit in? It would be somebody who has 10, 20, 50 products at an outset? You’ve got to have enough products out there to make it worth your while within the system, but you can't have so many. You get into small, medium, large, extra-large, blue, pink, green, brown, orange and all the skews that go with it. That's a completely different animal.
It is. You're dealing with all sorts of fulfillment problems. We do simple fulfillment. If you have one box and you want to ship it to someone, we do have integrations with ShipStation and ShipOffers. They buy the product, sends details over to the fulfillment company and they ship the box. We're not add-to-cart functionality like Magento or Shopify. The direction that we chose is not to go that way. We wanted to work with digital sellers. It made sense because that's who we are, that's in our DNA. We understand those problems. We've been doing it for a decade. It was a natural fit for us.
When you're out there looking for new clients for yourself, what works best for you as a marketing tactic? What is the best way for you to get people to sit there going, "I get where Mark does. He fills a pain point. That's a reasonable amount of money for me to spend for the quality of the product that it is. Yes, I'm on board?"
We've tried all different types of tactics. What we did, in the beginning, was completely different than what we do now. When we first started, we had to think about it. We didn't have trust in the industry. Nobody knew who we were. We didn't have brand recognition. Luckily, we had a large internal email list of people that have bought our products in the past. It’s five years' worth. It was like 100,000 people. We figured if we can get a fraction of those people to get on board, then that'd be great. That's what we did in the beginning. We told our email list about it and those people already knew us. We already had a relationship with them. That was the natural fit in the very beginning. We would sell PayKickstart on webinars. We would send them to certain landing pages and do an email sequence. That was a great way to get our foot in the door and get people using the product and start getting feedback.
What's the direction that we need to take the product? Fast forward, we're much more into content marketing. We've been writing blog content for a few years. The blog content has been our number one growth channel. Not only do we write content on our own blog, but we also write guest content on industry sites. We do guest podcasts to get exposure. We've tried everything. We've done Cora ads. We still work with affiliate partners. We have a list of 10,000 affiliates that have promoted our products in the past. We'll work with them, we'll do webinars for their audience and promote their product that way. We've tried a little bit of everything, but the direction that we've gone has been more of the content marketing. It's also not even worrying about traffic. It's more about worrying how do we keep the customers that we have.
How do we minimize churn? How do I say, “If this person is paying me $100 a month, how do I get them to pay me $200 or $5,000 or $1,000?” It's all building an expansion revenue for each customer that we do have. There's a misconception that people think you need more and more traffic. You can drive more traffic. If you have a low conversion rate or your churn is really high and you're churning customers 10%, 20%, 30% month after month, you're wasting money on traffic. We've gone a different approach where it's like, "Let's get our churn as low as we possibly can. Try to get the lifetime value of every customer up as high as we can, then we could start doing paid ads and all this other type of traffic generation."
That's insightful because there are so many companies out there that forget about the back end. They forget about the bleed coming out in the back end. They're always looking for new customers. They forget about that 15%, 20% or 30% that is bleeding out the back end. They still go, "That's the cost of attrition." It is so much cheaper to keep a customer than it is to get a new customer. If we can sit there and build a customer experience as companies that maintain customers, keeps them loyal, get them to understand the value, get them to be champions of our brand, it is a far better marketing thing than having to sit there and do paid ads, hoping to God that you're going to hit the right people. I'm with you 100% that more people I can keep as clients for 5, 10, 15, 20 years, the better off it is. I've got 25 or 30 clients, half of them have been with me for over a decade. That's a big thing for me is to be able to sit there and say, "That's what's important is the people that stay with me year after year and they're the ones that refer me to the new clients." The question before the last question is where are you going?
One thing we're working on is we're trying to enhance the user's experience. We added the brand new in-app onboarding to walk people through how they get to first value. The first value for us is they have their first product and it's ready to start selling. We released that. That's off of our dock and we're still going to fine-tune it. We're looking for ways to build expansion revenue. The product is mature. We think of it as it's in line with Chargebee, Recurly and Chargify, but we also have the affiliate management side of things. We have that as our competitive advantage. We're trying to figure out how we can maximize the value of every customer. We're doing a couple of things. One thing we are doing is we're going to be our own payment processor. We integrate it with Stripe, Braintree, Authorize.Net and all these different gateways. They typically charge 2.9% plus $0.30 per transaction. We're going to be our own processor.Affiliate marketing can be a great source of traffic. Click To Tweet
People can start processing with us and they can receive lower fees, say 2.7% and $0.20 per transaction. We could still make that a revenue driver for us. We still make a profit off of that and still offer great value to our vendors. That's one thing that we're working on. Since the product has matured, we focus so much on creating more products, more functionality and more features. It's got to do this, it's got to do that. We finally took a step back and we're like, “It's starting to get a little confusing and there are things slapped around here and there.” One thing we're excited about is our new user interface that we're working on. It's going to take a little while. It's grown, it's such a beast. We're excited about that.
We took a step back and we were trying to rework it from the ground up to make it super easy as possible for people to navigate around. We're also increasing our pricing. Our pricing is going to double. We're also adding some limitations as to how much you can process in revenue. The reason for the increase in pricing is the way we looked at it was this way. If you're only selling $1,000 a year, you're not going to be in business very long. That's not who we're targeting. If you're selling $50,000, $100,000, $1 million, the more that you start to make, you don't mind if you're paying a little bit more and we can add additional value. Each of our new plans that are going to be rolled out, they take you through each stage of growth and they give you more value. That's what we're trying to do. It's like you're paying more, but you're also making way more than what happened when you started.
When you're first starting, you don't need all the bells, whistles and added stuff. You need to make sure it's a good product and you have the basics. That's what we feel our new plans are going to speak to and we're excited about it. Everyone that we've talked to and a whole bunch of different masterminds, they say, "Increasing the pricing never changes. It doesn't lower your churn and more people stay. They take you more seriously." You'd be amazed at the people that are saying, “I want to be priced very low. I want to be the lowest." That can hurt. We feel that we're at a stage where the platform is mature enough where it's hurting us. People that are legitimate businesses doing millions of dollars, they look at us and they're like, "$99 a month, that's it?" Something must be wrong.
It says, "Something is wrong mentality." When I took my lead at a level course, the two-day workshop that's live and I bumped it up to $25,000, I had more people buy it because more people realized, "There's real value in this." They take you seriously and they go, “It's not only 25,000. We've got to fly them down there. We’ve got to have a room. There's no food involved. It's going to be a $35,000 or $40,000 bill." Our people are going to be so much better because of it. When you increase your price, people take you more seriously.
I'll give you another good example. We're in a bunch of masterminds. There's one paid mastermind that I'm in. It's all SaaS companies similar to us. We pay $2,500 each month to be part of this mastermind. I got asked to be part of a Slack group. It's a much smaller mastermind. He was like, “It's $149 per year.” Nothing against that. I get it. He's starting out and he's got 30 or 40 people in there and there's nothing wrong with that. If I'm paying $2,500 a month to be part of this one mastermind, they have live events. I'm sure if I'm going to go to these live events, I'm going to participate more. I'm going to ask more questions because you're financially invested into it as well.
$149 a year, you'll blow stuff off a lot easier.
That's why you should never say, “Let's start a free Slack group or a free Facebook group." When things are free, you don't take it as seriously because it's free. Even if you're starting out, even if you're selling something for $1, it changes the relationship from a freebie seeker to someone that has been willingly taken out their card and paying you. It's important to work up the ladder and try to get them to keep paying you more.
I have a friend of mine who if you want to go for coffee with him, It's $2,000. It's worth every penny. Mark, this has been amazing. Here's the last question. People can find you at PayKickstart.com. When you leave a meeting, you walk out the door, you get in your car and you drive away, what's the one thing you want people to think about you and PayKickstart when you're not in the room?
One of my biggest mentors that I never met is Warren Buffett. I love that guy. I want to give him a big hug. His values are so in line with mine. He's genuine and transparent. I believe everything he’s going to say. He follows through and he's the type of guy that I would want to hang out and go grab a beer with. He's that type of guy. That's what I want people to feel for me. I'm helping them grow their business in some form. Even if I'm a small part of it, I'm helping them out. I love to work with like-minded people like you. We're talking shoppers. I could talk about this stuff for hours. I want people to say, “This guy was transparent.” I'm not a sales guy. I hate sales. I like to tell it how it is. Sometimes it backfires and sometimes it doesn't. This one guy that I talked to, he's like, "The price you gave me was a little too high. Can you come down?" He wanted to discount it by 50%. I'm like, "I know what our value is. If we're not a good fit, we're not a good fit. Respectfully, I’m sorry." I want to be transparent. I want to be authentic. I want people to believe what I'm saying and I want to overdeliver on what we provide. At the end of the day, we feel that we do that and we can sleep well at night.
Mark, thanks for being such a wonderful guest. I can't wait to share this with everybody. You have provided some great content. People are going to have to go back and get their pen and paper out and take down some nuggets because there's some real value there.
Thank you so much for having me.