How To Make 5 Million a Year – The DealRush Story
Despite having a HUGE competitor, development hurdles and a modest budget before launching, DealRush (founded by the owner of Marketing4Everyone) became one of Ireland’s biggest daily deal sites. So how did it scale to 5 million revenue in just 3 short years?
Tip One: You Don’t Need an Original Idea
Groupon had recently launched in Ireland and seemed to be getting a lot of traction, so we decided to copy them and start our own site. We had experience using Google Adwords and Facebook to get customers with 4 other small businesses we ran, so we figured we’d be good with getting subscribers.
Just because a business already exists, doesn’t mean yours will flop – if you do it right, you can be as successful as them, or even knock them out of the park. The rise of digital marketing and eCommerce is breaking the barriers to entry – take advantage!
Tip Two: Start Building a Following Pre-Launch
We searched and found there was an Indian company offering to build clone daily deal sites, so we hired them to build the site for us. It was a nightmare right from the start, with very little communication and awful work. We finally got them to build a landing page where we were offering 50 to 90% off restaurants, salons, gyms, hotels and holidays etc.
You had to put your email in to gain access to the site. After giving us their email address, users were directed to a thank you page where we said that the offers and deals were coming soon. We would then add them to our database with their location and name etc. Before we even had a website, we had a following! This secured our success once we were ready to launch.
Tip Three: Pilot Your Idea
We set up Google and Facebook ads to drive people to the landing page and quickly saw we were able to to get a cost per email or cost per acquisition of under 30 cents. This was very exciting, as we had heard that Groupon was paying a lot more to get each email address/subscriber, so we knew we were onto something and wanted to get the site built as soon as possible.
The hangover drink ‘Morning Recovery’ used a similar pilot scheme to test their idea before they’d even developed their product. They ran a crowdfunding campaign on Indiegogo which gained huge traction, and gave them an initial investment of $250,000 plus useful product feedback – it also helped them to gain future VC investment to become a multi-million dollar business.
The results from initial campaigns can make or break your chances of getting an investment. Run pilot ads to gauge how much interest there is in your business idea. You’ll be able to see your engagement, clicks and potential sales before you even launch.
Back to DealRush, the Indian developers continued to be a nightmare and we fired them a month later. At this stage, we had 6,000 email addresses and set about trying to find an experienced developer. We ended up emailing the entire Stanford computer science department offering an equity stake in return for helping us develop the site. This was not a good idea and we got some angry emails back about us spamming them etc. Finally, we found a very experienced developer and offered him a small sum plus a 5% equity stake in the business to develop the site asap.
Tip Four: Undercut the Competition
1 month later we had a slick, fully functional site and 10,000 subscribers. During that month we hired a sales guy as a contractor and had the founder and the sales contractor making 200 calls a day. We found out Groupon was charging 50% commission on every sale they generated for businesses, so we undercut them at 15% with tales of our 10,000 members. We had a brilliant line up of quality businesses to launch with for the first 2 weeks and we were super excited.
Around this time, there were a number of other sites launching and the competition was fierce. We launched and the first week was amazing with 11,000 euro in sales and many happy businesses. We did 15k the second week. We made good on our promises to these businesses to sell a decent amount of vouchers, and provide a low-cost alternative to Groupon. We were still not selling anywhere near the number of vouchers as Groupon, but at 15%, the businesses were actually making money from the deal and they trusted that we’d keep growing.
We did the same when we launched LoveWeddings.com, offering free listings in our wedding directory for suppliers, and free wedding planning tools for brides-to-be. We quickly scaled to a site offering hundreds of options to over 13,000 engaged couples signed up to our website within months.
When we launched Marketing4Everyone.com, we only charge €50 a month for our services. Once we’d proved our worth and were bringing in thousands in sales for our clients, they were accepting of our necessary fee increases to be able to become a profitable and successful marketing agency. We now look after marketing for over 500 businesses worldwide, with high retention and referral rates. If we’d launched with higher agency fees from day one, we would never have achieved this volume in less than 2 years.
Tip Five: Re-Invest Your Profits to Scale
As DealRush started to grow, we put every cent we made back into gaining more subscribers and our deals started selling in the hundreds, getting close to Groupon levels. Selling became a lot easier, as we were cheaper, selling volume, Irish-owned and had better quality deals on our platform. We continued with the same strategy of investing every cent back into the business for the first year, and by the end of it, we had over 150k subscribers and close to 1.5 million in revenue. The next year it was 3 million and the year after we hit 5 million in annual revenue.
Almost all of the other sites that launched around the same time as we did failed because they didn’t have subscribers when they started, and they couldn’t convince businesses to do repeat deals with them as they weren’t selling any vouchers. The ones that did get some traction also failed because they didn’t invest profits back into getting more subscribers.
In this sense, we got lucky, as we probably would have launched with no subscribers if the site was ready. The delay allowed us to launch with a decent subscriber base and gain traction quickly. We ended up becoming one of the top daily deal sites in Ireland, competing against multi-national companies like Living Social and Groupon, running thousands of deals and helping hundreds of different companies in different industries market their business.
We worked with businesses that were just starting out and helped them develop their brands and businesses into very successful online and offline products and services. This included hair and beauty salons, gyms, restaurants, hotels, and e-commerce. We have since sold the business to one of our Irish Competitors in 2017, but we still help many of these businesses achieve success via our digital agency Marketing4Everyone.