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Selling And Buying Back A $8000/month Productized Service

1. Hello! Who are you and what is your business?

I’m Praveen and I’m from India.

I run a live chat lead generation service called Live Chat Ninjas. I started the company in 2015 with 2 other co-founders. Even though I started it 4 years back, the company has been in my control for 2 solid years.

Let me explain what I mean by that. Live Chat Ninjas is my 2nd startup. I built an animation agency in 2013, and ran it for 2 years until it failed miserably. I was never able to automate that company, and, as with any other agency business, I was constantly running after new clients, and struggling to make ends meet.

In 2015, I wanted to change things, the agency model wasn’t helping me to grow, and I was almost burnt out, but I had no idea of what to do next. One evening I was thinking about what had worked in my agency business and found this little thing that had brought us leads and sales.

And that little thing was live chat. We used to have a live chat option on our agency website when someone landed on it, I used to initiate a chat with the clients and helped them to place their orders.

Note that these were people who would otherwise have left the website if they hadn’t chatted with me there.

Realizing this, I thought if live chat had helped me to generate highly qualified leads then it could help other businesses to do the same. From that idea, Live Chat Ninjas was born.

I quickly created a website for this new service, created a launch offer and was ready to take on new clients and then, oops…

I wasn’t sure how to get our first 10 customers.

(This was our initial pricing)

That’s when I decided to target niche businesses. I figured out eCommerce businesses would benefit the most from live chat, as they have a ton of people visiting their websites daily and these people have lots of questions.

So, we targeted eCommerce businesses; I didn’t want to do cold emailing because, honestly, I didn’t know how to do that.

My only source was Shopify theme authors, so I quickly reached out to some popular Shopify theme authors on Themeforest, offered them an affiliate deal whereby if they could promote our services to their customers, we would pay them a 12-month recurring commission.

And it worked! We got our first 7 customers in 2 weeks and the business started. I’ve explained the strategy here: https://livechatninjas.com/how-we-attracted-our-first-11-customers/

In March 2017, I sold the company. And that’s when it went downhill. The new owners had no idea on how to grow or maintain the company, they bought it as a part of their bigger strategy; buy 10 businesses and see which one grows, drop the rest and resell the successful one to cover the losses from the other 9.

I spoke about what happened after the company was acquired in this video: https://www.youtube.com/watch?v=Es7ba6EbGRs&t=9s

Then in 2018 December, those buyers contacted me to see if I’d be interested in buying back the company, and I accepted the offer.

8 months after buying back the company (which was in losses), I was able to grow it back to $8,000 MRR.

Currently, we’re at 30% monthly profit on the $8,000 MRR we make. We have 12 full-time staff who rely on us every month, and all of them are from the Philippines, except for me and my co-founder who are from India.

Previously, we used to have just a monthly subscription model, but now we’ve also introduced one-off packs for people who want live chat on landing pages and funnels for a short while, while still generating the maximum number of leads.

2. How do you attract and retain your customers?

One of the top problems with recurring businesses is retaining customers. The moment your service/product stops providing value to them, they’ll churn. It happened to us during our first year, but then we improved our service, and created processes and delivery models to increase our service value.

The lessons I’ve learned are that you have to create processes, train your staff on how to deliver quality service to your customers, and make sure you have a quality assurance team to constantly keep your quality up. If you’re trusting your staff to always deliver high quality, without quality assurance, you’re doomed.

We’re still reaching out to Shopify theme authors and offering them affiliate commissions, it worked well for us initially but I have seen a drop in the number of conversions recently.

Now, we’re attracting customers via content marketing and creating offers specifically for our target markets. We target eCommerce, SaaS, service businesses and people who run ads for landing pages/funnels.

3. What were your challenges and obstacles of growing your business?

Getting customers has never been a challenge for us, the value we provide compared to our competitors is high, but keeping the business growing as required has been my biggest issue.

Hiring staff locally was one of my biggest mistakes. Operating out of a 2nd tier city has its own limitations, one being a limited availability of qualified human resources. We hired people and trained them for months, only to see them fail at their actual jobs.

After months of trying to fix this, I finally gave up and started looking for different options. I then got to know about Onlinejobs.ph, where I can interview and hire qualified candidates on a full-time contract basis.

We tested it with 2 staff members in the beginning, and trained them. Fortunately, they offered a very reliable service and handled more customers than an in-house staff member could have handled.

I then decided to move the delivery unit entirely to the Philippines. Currently, we have 12 Filipino staff, covering 24/6 shifts remotely, while I and my co-founder are working out of our home town.

Another mistake was doing everything on my own and not delegating it.

Hiring and training new staff myself, realizing the mistake, and shifting from in-house staff to remote staff took me more than 1 year. During which time I lost the momentum and the affiliate relationships I had built.

I never hired managers or trainers, and that became one of my costliest mistakes.

4. What has been helpful to help you to grow your business?

“7 Day Startup” is a book by Dan Norris, founder of WPCurve, about how to create and build a productized service business. This book helped me a lot in understanding the business model and in shaping Live Chat Ninjas.

The book that Robin launched recently “Sales & Marketing for Productized Services” gave me a ton of ideas on how I can increase the reach of my company. These 2 books are must-reads for every aspiring productized service business owner.

All the good decisions I made during the last 4 years were based on my experiences, from reaching out to Shopify authors, to pivoting from in-house to remote. I learned that when I hit a roadblock was when I needed to look for advice, instead of waiting to try and know everything before I even started.

Here’s a list of decisions that helped me to be where I am today.

  1. Niching down to eCommerce and targeting Shopify authors to refer us.
  2. Being strictly 24/6 instead of 24/7, that one day break a week helps me and my team to rejuvenate and come back with more energy.
  3. Creating processes to execute certain tasks early on.
  4. Pivoting from in-house to remote staff.
  5. Recently, building our own software to show our clients the value we bring them every month, and also to automate most of our manual tasks.
  6. Recently, expanding our service (I’ll talk about this later in this interview)

But not everything is rosy, there are these 2 things that are out of my control.

#1 is we cannot 100% control the quality, because a chat happens first, reaches the client and then reaches our QC team. Compare it to Manypixels, where the QC team will first quality check every design before it reaches the customer.

The only way to solve this is to treat our team well and check their work for quality every single day, and this has proved to be working well for us.

#2 is we cannot control the clients’ needs for our service. Our clients only need us when their website has traffic, especially with seasonal businesses. They need us during their season and leave us once their season ends, this cycle affects our revenues.

We’ve recently started offering one-off packs to solve this problem, and we still need to find out how this pans out.

5. What is your advice for those are starting productized services?

There are two things I would mention. The first advice is to start early with content marketing and building relationships. Since our beginning, we’ve worked towards building relationships with theme authors and it has worked for us. Currently, we’re putting more efforts on our content marketing.

#2 is don’t try to do everything as a founder. You have to have good people in your team who complement your skills; if you’re in sales and marketing, find or hire someone good at operations and vice versa.

I’m a marketing and sales guy while my co-founder is great at operations.

6. What are your plans for the future?

I always have so much on my plate and I always wish I had someone to help me with multiple tasks; tasks like social media, content marketing, research, outreach, hiring, etc.

These are the tasks that don’t move the needle so much for the business owner to spend time working on them, but they do need be done.

I see that most small & medium business owners face the same issue, but there is no option currently that helps them with it.

They either have to do these on their own, which is not the best usage of their time, or hire freelancers (and waste time), or subscribe to multiple 3rd party services (not cost-effective).

For example, I don’t want someone to take care of my WordPress website 24/7, I only want a WordPress expert when my website goes down, or when I want a content piece published. These are not recurring tasks that keep coming, which would justify the cost of a full-timer or a 3rd party subscription service.

That’s why we’re upping our service 1 notch. We’re about to launch a new website where we offer multiple marketing services with one simple pricing.

People can just sign up to a plan, get, let’s say, 1000 credits and use these credits on the services they need.

For example, they can ask us to cold mail 100 contacts for 300 credits, go online on their live chat for a week for 500 credits, and use the remaining 200 credits to create and publish 1 week of social media content.

This way, they’re not wasting their time or money and can always use their credits based on their current requirements.

The services we want to include range from managed cold email outreach, LinkedIn outreach, social media management, helping with their hiring process, live chat, emails, lead generation, content marketing, SEO, etc.

It’s really hard to sign up to 3 different services, or hire 3 different freelancers, to do all these tasks, our new service is going to solve that for them, all at one simple price.

I’ll announce it when we launch it.

Live Chat Ninjas will become one of the services we offer under our new parent company.

7. Where can we learn more about you?

You can always reach out to me via Facebook, I’m most active there. Here’s my profile: https://www.facebook.com/praveenkumartelu

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