Eating Our Own Dogfood to Grow a Productized Service to Profitability

Hello! What's your background, and what are you working on?

I am Jake Jorgovan, founder of Lead Cookie. For the past several years I have worked as a sales consultant for agencies and consulting companies, and I launched Lead Cookie a little over a year ago.

Lead Cookie is a done-for-you LinkedIn lead generation service. We manage your LinkedIn account and start warm conversations between you and your ideal customers. Most of our customers book 3-8 calls on average per month from the leads that we provide.

Lead Cookie is currently generating roughly $45k in monthly recurring revenue, and we are well on track to reach $50k MRR by the end of 2018.

What motivated you to get started with Lead Cookie?

I’ve been doing one-on-one consulting with agencies for years and was obsessed with figuring out repeatable systems to generate new clients. Eventually I stumbled on strategically using LinkedIn as a tactic. From there, I studied several lead generation thought leaders — like John Nemo and Josh Turner — to learn what was working for them, then used that knowledge to create a done-for-you service.

In order to get the ball rolling I used my existing network. In my consulting work I had held sales calls with almost 400 different agencies, so I started selling there and got a lot of early validation. I reached $5k MRR in the first week and $12k MRR within the second week.

At the time I had a terrible website and called the service “LinkedIn Panda”. Over the course of the next year, I slowly transitioned away from consulting into working full-time on Lead Cookie. Today I am full-time on Lead Cookie, though I still take occasional consulting projects on the side, and we have a team of 16 in the USA and abroad.

What went into building the initial product?

The initial product was rough and dirty since we are not a software product and don’t aim to be. We sell a service and focus mainly on that, so the virtual assistants and other team members essentially run our entire operation.

Building our service involved creating defined standard operating procedures and then developing a few internal software tools and integrations that helped us increase efficiency and productivity. Since we’re built on top of LinkedIn, we have a moving foundation. We are constantly working on restructuring and refining our service to keep up with LinkedIn, so I would never say it’s a finished product or we’ve reach a point where we can stop iterating.

This entire project was self-funded, with no external capital. In the early days when I was still full-time consulting, I hustled and worked my butt off on nights and weekends to create the needed time to build out the service while staying on top of the bills. I parsed out the things I hated doing most and tried to get those off my plate the fastest so that I could focus on my strengths and build a team of support around me.

Alex McClafferty, co-founder of WPCurve, was a significant influence and a huge source of support during the beginning stages of this whole process. He advised me for the first six months of the startup and was invaluable in helping me level me up as an entrepreneur. I would not be where I am today without his coaching.

How have you attracted users and grown Lead Cookie?

As I mentioned, I leveraged my existing client base in order to build initial sales, validation, and credibility. After that, we made a cornerstone piece of content where we pretty much laid out the whole lead generation process. The hook? We then offered a content upgrade to receive our actual scripts.

This one piece of content has been an amazing investment. It’s been spread all over the internet, posted on reddit and many other online communities, without us doing any pushing or marketing. This article is also now ranked as the first Google result for LinkedIn lead generation, underneath LinkedIn itself, and the SEO ranking has now started to generate significant leads. Overall, content has generated about 20% of our revenue.

We also ate our own dogfood and acquired customers through cold email and LinkedIn outreach, which accounts for approximately 25% of revenue. We used PersistIQ for cold email and I wrote a blog post detailing our process.

The last thing we did was to set up several referral partners, mostly built through my own existing network as I have been building myself up as an influencer in the consulting and agency space for many years. Many of these are in the marketing sphere and provide tangential services such as advertising or content. This referral system makes up about 50% of our revenue.

What's your business model, and how have you grown your revenue?

Our business model is simple. We charge a small setup fee plus a monthly fee for our service. We charged very little while beta testing, with our first customers signed on at $499 per month. We’ve been raising our prices since then to keep up with the value we believe we are offering, and eventually hit $2,000 a month. We got a lot of pushback around this number, so we eventually dropped back down to $1,500. In July of 2018, we decided to introduce a “lite” version of our offering for $750, which has been great and opened the door to a new tier of additional customers we can serve.

In terms of logistics, we use Invoiced.com paired with Stripe. I went through a ton of different recurring payment solutions, but Invoiced.com turned out to be the strongest contender for our business. First, it has great recurring billing features with a lot of flexibility and customization. Second, they only charge a monthly fee for their service and NOT a percentage of your transactions like so many of the other invoicing providers.

One thing I did not anticipate was the high level of churn. At first I thought it had something do do with our specific service, but I eventually learned that most lead generation companies have a high level of churn. Lead generation simply isn’t as critical or concretized as a service that helps with core processing or operations, so marketing directors and other powers-that-be will often shift around budgets in order to test out different lead generation strategies. We churn roughly 20% of our customer base each month. While that may seem high, you have to keep in mind that the churn is from both positive and negative factors. Some customers churn because they get too many leads!

What are your goals for the future?

Originally, my goal with this business was to scale to millions of dollars and hundreds of customers. As I learned more about the churn rate inherent in a lead generation service, I realized how hard that could get. Churning 20% of your customers every month means that you have to make all of those sales back just to break even.

At 50 customers per month, we will churn off 10 customers, which means we need to make 10 sales just to stay the same. That seems reasonable. At 500 customers, we churn off 100 customers per month. That means we have to make 100 new sales every month just to not go backwards. The thought of trying to build that amount of sales volume and operational infrastructure seems insane, which is why the vision for our company is 60 customers plus a wait list. That would put us at about a $1M per year. We would be churning roughly 12 customers per month, but can realistically have one account manager overseeing all of those accounts. I think we’ll be able to reach that goal in about a year and a half.

What are the biggest challenges you've faced and obstacles you've overcome? If you had to start over, what would you do differently?

Our biggest challenge has definitely been the churn implicit in lead generation as a service. It wasn’t something I took into consideration as part of the initial plan and it was hard to come to terms with. The plus side is that lead generation is always in demand, and there is an infinite number of prospective customers who need this service, so acquiring new customers is fairly easy.

There are a variety of reasons why customers might churn, such as too many leads, struggling to convert leads, we’ve saturated their market, etc. We are doing what we can to improve our customer success and retention, as well as providing our sales team with training and resources to keep new customers coming in.

Frankly, if I had to start over today, I wouldn’t do a lead generation business. I would do something that’s a little more stable and predictable. But I’m not complaining. This is my first real big success with a business and I’m learning a lot along the way!

Have you found anything particularly helpful or advantageous?

During the first six months working on Lead Cookie, I hired Alex McClafferty as a coach to help me grow the business. As I said before, his guidance was invaluable and prevented me from making so many mistakes along the way.

Traction by Gino Wickman is a great book on how to run meetings and build a vision for your company. We’ve incorporated many of the processes outlined in this book.

Russ Perry of Design Pickle has also been an inspiration to follow. Though I haven’t yet been able to hire him as a consultant, he introduced me to Wake Up Warrior, which has been life changing. The principle behind Wake Up Warrior is simple: your business will not rise if you do not rise as a person.

What's your advice for indie hackers who are just starting out?

Hire a coach or a mentor who has done exactly what you want to do. It is the fastest shortcut to success. You will learn more working with them than you will in months on your own.

Where can we go to learn more?

If you want to learn how to use LinkedIn to generate leads for your business, go to my personal blog and read this guide.

If you want a done-for-you LinkedIn lead generation service to do it all for you, then go to LeadCookie.com.

If you have any questions about how I grew the business, LinkedIn, or anything else, let me know below!