Anders Fink: Growing within the long tail

Our goal is to reach a billion dollars in turnover. And to do that, we need to grow by 100% per year. The good thing is that we are in 2015 and we are on track. We definitely believe it’s possible. But what we realize is that we need to add new ways to grow. The primary growth of Billetto has come from local sales teams. So the management decided to implement growth hacking tactics. I’ll be talking about the first three months of implementing growth hack tactics to a business that so far has been driven by local sales. I am pretty sure you all know the long tail theory. Amazon showed that the potential in the niche market is the same as in the popular market. We think the same goes for events. My job with growth hacking at Billetto is to show that this market is the same as the popular markets. Coming back to our local sales teams. We are not focusing on the biggest events. Our platform is not optimal for the biggest events. So our local sales teams are focusing on medium-sized events and we have local sales teams in London, Stockholm, Copenhagen, and Oslo. I’ll talk a little about growing within the long-term.

We have been doing this for three months. What did we need to focus on?

First thing—we need to establish a growth hack team. It’s one thing to find the right people with the right competencies to do growth hacking in a good way. The big issue for us was that we needed to find the resources. It was by gut feeling that we used to do this, but our board of investors needed to see some proof that we could do this. Then, we needed to define our growth model to truly understand when we are growing. Data—I am a firm believer that if you need to beat your competitors, you need to understand the data better to outperform them. And lastly, I’ll just comment on third-party tools. Our challenge to grow within the long tail is to find potential organizers. We need to find potential organizers in a way so that we can scale internationally and we need to create enough volume to reach our targets. Of course, the acquisition costs need to be lower than the lifetime value. The issue is about finding these small organizers because the local sales team can call the big organizers. Small organizers are really hard to find, especially because they are only marketing their event after they’ve decided where to sell the tickets. We need to find them before they market the events and make sure they use Billetto.

I went to the Board and said that I really believe we need to do this. They asked for some proof. They only understand Excel spreadsheets, whether we can make any money out of this. If you focus away from sales, you will lose growth. What we did is that we started a few campaigns on a small scale to show that it was possible for us to do paid marketing and acquire new organizers. We could do it in a scalable way and still have a good calculation between the acquisition cost and lifetime value. This took about three months to convince the Board that we have a case where we could focus our energy on growth hacking tactics instead of sales. Another thing that’s really important about this is that you can’t do this just 10% here and there. You need to have a team that’s 100% focused. Otherwise, you won’t succeed. It’s a really hard job to succeed in building digital acquisition in this way.

I believe that you need to have a model where you understand your growth. The nature of tickets is that every time I get a new event on the platform, it takes between three to six months until I know what the value of this organizer is in gross profit for Billetto. I can’t wait three to six months until I know exactly how much is this organizer worth. I need to know if it’s a good organizer that I am paying the price for, on the same day I acquire the organizer. For that, we made a term, called ‘Bookings.’ It’s just a forecast of future business. That is the ticket price times the number of tickets. That values the organizer in our system. Then we add a probability to how many of these tickets will be sold. The good thing about this is that when the event is created, we know exactly how much is this worth in the long run.

This is based on historical data; so per source, or per salesperson. We know exactly what’s the probability that these tickets will sell. As I said, we need to grow 100% a year. ‘Actuals’ is the tickets revenue this week and ‘Bookings,’ that’s new business regenerated this week which will sell in the future. For me to be able to grow 100%, I needed to make sure that my bookings are double the number of my actuals. I needed to trust this probability. So I needed to have enough data to do this. The good thing is that I can do this per channel. I can look into our sales generating more bookings than actuals this week, or if my Facebook marketing generates more bookings than my sales. What we did in practice is that we took a CRM system and mirrored our database. Every time a new event is created in the Billetto system, we push that to our CRM system. Then we can work with that data. That gave us opportunities to look into within this month how much new business did we create, or what is the pipeline looking for this specific channel, or when will this pipeline revenue go into business. This is really powerful. Now I have a mathematical model to understand when am I growing as a company and when I am not growing.

The next thing that was a huge issue was tracking and understanding the data. When we started this on the 1st of January, we could see if we look at how many signups we got, the conversion through these ending up selling tickets was only 7%. The rest was just one black box. We weren’t sure whether if it was just bad traffic, is it the product performing badly, is it the communication? Why are we not converting any better? Of course, I could make this into more steps to look into it, but this is a really difficult task, especially because this is data from many different sources and we need to look at it as a complete funnel. What we found out was that it wasn’t our product. It was just that, unfortunately, we got a lot of ticket buyers who were in this funnel. A lot of our traffic was confused ticket buyers, signing up as organizers who were never interested in creating events. It wasn’t actually our product, it was just bad tracking. This took a month to understand.

What we have at the moment is that we use Google Docs as a data warehouse. We also use Google docs to share this data as a Dashboard. We get traffic data from Analytics. We get Account data from our database. And we get the progress in different stages from Salesforce or our CRM system. And we get all our costs from for example [inaudible 00:09:34]. The good thing about this is that we collect the raw data in different sheets in Google Docs automatically. Then we can transform that into our dashboard. Here we can look from what country, from what source, in what time period, how much traffic we are generating, how many are converting into potential organizers, how many are creating events, how many are publishing events, and how many of these events are selling tickets. Lastly, I can look into the number of bookings; how many new bookings—new business that we generate from this source. Then I can look into how much we paid to get this potential new business. This is a way to look into whether we are growing. I can also look at where I need to optimize my bottleneck. For example, is it within the landing page for signup? I can monitor a group of people over time. We just finished this and now we are ready to run a lot of marketing campaigns in a really structured way. Now we have the dashboard to make sure every time we do something that works, we can replicate it. If it doesn’t work we can close it down.

We have been doing this for three months. I will always suggest using third-party tools. In the beginning, you need to get some data to validate your assumption to see if this is the right way you are going. Don’t spend your time on unnecessary developments. Use third-party tools if you can. We use Unbounce for creating landing pages. That made it really simple for us to start on paid marketing. We can do a lot of different AdWords campaigns with really cool and different landing pages to see if we could buy traffic that’s relevant and will grow into our business. With minimum tech, we could test our hypothesis about buying relevant keywords and converting this into business for Billetto. Just a note, don’t use Unbounce for SEO, it’s on a sub-domain. But for paid marketing, it’s really powerful.

We chose to use Salesforce as our CRM system. And that was a game-changer for us. It had a pretty strong API so we could mirror our database so that we can get it in a scalable way. It’s really expensive, so I think you need to have a sales team for it to make sense, compared to how much it costs. We have a local sales team, for which it is a very powerful tool. We use Flowdock. It’s a really strong tool for internal communication. It’s a chat client, but you can create different groups. It’s really good. Instead of having ‘Reply all emails’ to the entire organization. When it comes to retention, we use Vero as our email provider for automation. “Send this email if this person has any specific behavior.” We use Mailchimp for newsletters and we use Mandrill for transactional emails. We managed to showcase our business without having a tech guy on the team, because of third-party tools. And that was really powerful. The good thing is that now we have two tech guys, and a really strong SEO guy, a really strong paid marketing dude, and we are creating a really strong team. It’s only because we were able to get a small amount of data and then adding more resources.

Lastly, Billetto is always looking for talent. If you think you have something special to contribute to Billetto’s journey to the one billion dollar mark, feel free to contact me.