In this episode, Simon and Mark Thompson, the co-founder of PayKickstart, will discuss about affiliate marketing and Mark’s startup journey. As a professional SaS entrepreneur, Mark Thompson co-founded PayKickstart, a subscription billing and affiliate management platform, to help accelerate e-commerce vendors’ and digital publishers’ sales. Listen to learn how affiliate marketing can reduce risks and increase traction for online-focused companies and how to start your affiliate partnership.

3 valuable insights:

• Affiliate marketing is a growth lever that you pay for someone that has the audience to promote your products.
• Don’t be feature-happy. Remain only the feature that does better than anything else in the market and listen to what your customers’ feedback.
• Make it super easy for people to use your product or service.

(0:13) Simon: Welcome back everybody to the Strategy Springs podcast. I'm Simon Severino, your host, and today my guest is the co-founder of PayKickstart and 12 years SaS entrepreneur. Welcome, everybody, Mark Thompson.

(0:31) Mark: Thank you so much for having me. I appreciate it.

(0:32) Simon: Super excited to have you here because we are talking something really relevant right now in the pandemic for everybody to reduce risks and to increase traction. One way of doing it is Affiliate Partnership. And I am super excited to hear more about it. But first, Mark, what are you currently creating?

(0:56) Mark: Yeah, so for the past four years, I've just been, you know, head down on PayKickstart. So PayKickstart is a subscription billing and affiliate management solution. We work with mostly digital sellers, so we work with software companies, we work with online course creators, people running membership sites, as well as agencies selling services. And so what we do is we help you to accept payments, manage your recurring revenue, and manage affiliate partners all in one platform with really no technical knowledge. You don't need to have a bunch of developers and designers. We remove all of those technical hurdles that come with powering your online business.

(1:35) Simon: Super cool. And so for people not familiar with affiliate partnerships, what is it?

(1:41) Mark: Yeah, so I mean affiliates are really just sales people for you that you only pay when they refer somebody, which is really cool, right? So there's people that have an audience, right? Maybe they have an email list, maybe they have a podcast, or maybe they have a blog. And so they have this audience and they just tell their audience about your product or service, and then they earn a commission, a commission percentage of the sale, and you would set that commission percentage.

(2:08) Simon: I have to tell you, I found out about the power of affiliate partnerships quite late. So actually this year, I am going really serious into affiliate partnerships, and I've just started out and see how amazing it is. Because basically, you can start with your own network, and it's just the people who you like and you will promote anyway. But you can say, “Hey, what about formalizing this relationship that we have by that I promote you because I like what you do.” But this time let's set up an account, let's set up an official percentage, and we will do it vice versa. And so I will do this, 24 times this year. So twice a month, every second week I promote somebody and they promote me. And this is a beautiful and elegant way of growing your legs.

(3:02) Mark: Yeah, absolutely. I mean it's such a great growth lever that just so many people miss out on or they just don't prioritize it. I feel like any business should have it in their marketing Arsenal. It should just be another arm of your sales team, and so not only it’s a great to get affiliates to promote your product but I've built so many lifelong, you know, relationships and partners, and strategic alliances over the years that it's great to just build that network, and affiliate partners are just one piece of that.

(3:32) Simon: Exactly. Strategic alliances, and right now we see how important relationships are, right? We are more interdependent. We need each other. And in some years, in some bull years, we were maybe forgetting that, but right now we all feel it. It's all about relationships, it’s all about creating value, and starting with creating value, but then also creating the structures that can do this in a repeatable way. And that's when it becomes a business. So tell us, what if somebody has just 10 clients. How can they start?

(4:16) Mark: Yeah, so the first thing that you want to do is create an affiliate page, or we call it a JV page, so an affiliate is also a joint venture. So, what we do is we create almost a sales page for affiliate partners. So whenever you're talking to someone, you need to… it's almost like when you're telling your customers, “Hey, go to my sales page and buy my product,” and you're explaining why they should buy your product. You're doing the same thing with affiliate partners, so you need to explain the reason why an affiliate should partner with you and what they are going to get out of the relationship. Hopefully, there's obviously some sort of financial gain, but then there could also be some other fringe benefits like, “Hey, you know all my affiliate partners, I love to do cross promotions with them, and so I'll promote their offers as well,” or, “I'll, you know, sponsor them on my upcoming, you know, live event that I'm going to be doing.” So that sales page that you create for affiliates should not only explain why they should join your affiliate program, but then also provide them a clear way of registering and becoming an affiliate, and give them the marketing tools that they need to promote you. So obviously, they're going to get some sort of a unique affiliate tracking link that they can use, maybe marketing banners or email swipe copy, promotional tweets, or social updates that they can use, so they can copy those, they can edit them as they see fit, and they can go and promote it to their audience. It really just removes all the thinking out of it for the affiliates. Affiliates love making it super easy to promote your stuff.

(5:48) Simon: Absolutely, make it super easy creators wipe copy widow. I write two emails for my JV partners, and they end with one click. They install their affiliate account, so I make it as easy as possible. Still some of them, they want to rewrite the copy because, of course, it always should be natural in their voice. But, they should also have the option because some of them just don't have the time or they don't want to write so much copy every week, so make it for them really easy that they could just take it, and make it usable that way.

And some people right now listening say, “Well, this is great, but I'm not big enough, I am not there yet.” So do you have an example, maybe, of how you can start really small?

(6:37) Mark: Yeah, I mean, I'll use myself as an example. So 12 years ago when I first got started, I got fired from my last job--I was working for a marketing agency. And so I was just kind of learning this whole internet marketing thing: how to create a product around your knowledge, like how to create an information product. I was like, “What is this?” And there's a forum called the Warrior Forum. It's the largest forum for internet marketers and internet entrepreneurs. I saw people selling like $2,000 or 2,000 copies of this training program and I'm like, “Wow, this is crazy,” I mean, they're selling it for 100 bucks. I'm like, you know, you do the math. That's tens of thousands of dollars.

And so, you know, I really didn't have an audience, I didn't have a follower, and I didn't have any relationships, so there's a couple things I did. The first thing I did was I created my product and then I found someone to partner with. And that partner was very strategic because that partner had already had relationships with other affiliates, who liked promoting the types of products that I created. So I got introduced to hundreds of affiliates, virtually overnight through means of my partner, which was really nice. Another option that you can go is there's what are called JV brokers, or affiliate brokers, and all these brokers do is they just have a network of affiliates, and those affiliates are looking for products to promote, and so they just introduce you and they take a cut, usually it's like five or 10% it's, you know, low percentage but it's a great way to kind of get your foot in the door. And once you have those introductions, you can start to build those relationships, then you can kind of take it and run with it. So any new offers and new products, new funnels that you want your affiliates to promote, you have already built those connections, and you just need to leverage them and nurture them over time.

(8:23) Simon: And I think this is the most important step from zero to one. You said you found your first joint venture partner. What was your thinking process until you got to meet him. Did you have criteria like same target audience, different offer? What was your thought process?

(8:50) Mark: So, for this particular situation, I tried to find someone that had already a track record. So this partner that I brought on, he was not really an affiliate, he was more of like, I brought him in as a 50/50 partner. And so I had seen his track record, he had actually helped promote, or like partner with, a few other people in the industry, and they did really successful product launches. And so I was like, man, this guy knows what he's doing. And so when I was just getting started, I wasn't really in it for the money, I mean obviously, I would like to at least break even on the investment that I put into my product, but I was really more in line like, I want to build my email list, I want to generate new customers, I want to build relationships with affiliate partners, I want to just learn how to take the product that I created, and have a go to market strategy, and how to build a sales funnel, and how to maximize the revenue that each customer brings me. I didn't know about any of this stuff, and so it was really nice to, you know, really look over the shoulder from this person and say: “Okay, hey, this is what we're gonna do.” And so I got, you know, web design contacts, I got development context, I got support customer support contacts, I got affiliate contacts, I build a list of over 3000 people in a week just from doing this, the seven day product launch that I did. And so for me that set the foundation for my online business when, in fact, the alternative was to do it myself, or maybe try to run paid ads which I had never really done and, as you probably know paid ads are getting pretty costly, and if you don't know what you're doing, you could spend a lot of money. So this was one way for me to mitigate risk, not have to put in a ton of capital and really set the foundation for my business.

(10:38) Simon: Yeah. So let's talk a little bit about the alternative: paid ads. So if people are thinking right now: “Oh my god, how do I rebuild my business now after the pandemic? Should I go into pay that?” There are two things that you should consider. One is, it's high risk because people you get in there are absolutely cold, they know nothing about you, and also you get all type of fish. It’s like you are in the ocean but you get waves, you get sharks, and you get an octopus. It's really hard to target, to really target, even a good agency, it's really hard to target. And the second thing is, if you don't have a machine in the back end, that turns every interested person into a client, at least with a good conversion rate, all the leads of this world are worth nothing because you need the machine that converts them, and it takes a lot of time to build that. We build that with our clients but it takes us, at least, three months to build that machine. And that machine, more leads is not the answer.

(11:53) Mark: Yeah, I mean, you'd be so lucky to only have three months and build that machine because, I mean, at the end of the day, what do we want to do with paid ads, we want to invest $1 and get $2 back or $3 or $4, that's kind of the name of the game. And so, you know, the one question that I would say 95% of people doing paid advertising. When I say what, what's your what's your CAC payback period, they're like: “Huh?” So what that means is, what's your Customer Acquisition Cost payback period, so if it cost you $40 to acquire that customer, how long does it take you to make that money back? Sometimes you don't make that money back. So it's so important to know your numbers, and how much you can invest and spend to acquire that new customer, and then how long is it going to take you because what if it takes you years?

So you need to think about how do you maximize the value of that customer both on the initial transaction and then also, you know, during the lifetime of that transaction. And that's one of the reasons why I love SaS so much, it’s because of the recurring revenue model, it's so much more predictable, and it allows me to spend more money on paid ads because I know there's so much predictability, like I know the average person is going to stay with my platform for, at least, 10 to 12 months, they're going to spend, on average, $1200 a year. So I know my metrics, but you'd be amazed how many people go, and they just put up ads on Facebook, before they know it they spent 10 grand and they have no idea like how they converted, was that ROI positive or not.

(13:37) Simon: How many people do you know in business that they know their CAC number right now, they know the cost of acquisition?

(13:48) Mark: I mean, it's a lot of the people that I deal with like some in a bunch of mastermind groups. There's a lot of smart people, I mean, people much smarter than me, and they're running very successful software companies, and you don't become successful unless you know these metrics. Because I would say the majority of them are doing some form of paid ads, but they usually don't start out with paid ads. They either have like an internal email list, or they're doing affiliate marketing, or they're doing organic SEO, or they're doing some other form where there's not as high of a risk, but I will say once you start to invest that money into paid ads, believe me, they're creating hyper targeted landing pages. They know exactly who they're going after, and they have tracking in place to know, like, do these two ads performed better than those four ads. So let's shift some of the budget, I mean, it's a full time job to really dial in a campaign. But what's great about it is that is how you scale. When you know that when you put in $1 and you're going to get $2 out of it. Well, now my budget just went from $1,000 to $2,000 a month, or from $5,000 to $10,000. So that's truly like the holy grail of any online business. When you can just have really virtually endless amount of paid traffic, right? Whether it's on Facebook or Google, or there's so many different ways to do it. But when you know with certainty that when you put $1 in and you’re going to get $2, it's magic.

(15:04) Simon: And so I think it's really the maturity level of the business at the beginning. It's much easier to grow from your current network, to do the miles, to have lots of conversations, but also to amplify via leveraging your network. Basically what works just by telling it more around the person that you know and that can be affiliate marketing, and then maybe later on if you have built that machine and if you have found a targeted campaign that really makes more than $1 out of $1. Then you can go and scale the whole thing.

(16:04) Mark: Yeah, that's exactly the name of the game, really. It's unfortunate because you see a lot of people do it the other way around, and you don't know what you don't know. So people take their life savings and they're like, “Hey, I got $5,000 or $10,000, and I'm gonna put it into ads,” and, hopefully, it works, but you just have to be super careful and that's, again, that's one of the reasons that I started my business the way that I did was, at the end of the day, as an entrepreneur, as a business owner, you want to mitigate risk because if you don't, you're going to be out of business. I forgot what the number is, but you know it's like 90% of startups, they fail within the first couple of years, and I didn't want to be like that, and so I tried to mitigate risk I tried to diversify a little bit until I really understood what I was doing. And now that I've been doing it for 12 years, I've learned a lot of lessons, and I've made a lot of mistakes, more mistakes than wins. But, you know, hopefully you learned from.

(16:45) Simon: I would love to hear some of the mistakes that you did in the first year, and how you then approached the solution.

(17:10) Mark: Yeah, so I've made so many. Where do I start? So the first one I would say was just the product itself. I tried to in this, it was software, it was actually a WordPress plugin. And so I tried to have the software do too much. I was like, “Oh, it needs to have this feature and that feature.” We call it “feature happy.” And if you're in software or you're looking to build software, you know, I'm sure you've probably gone through this before. You're like, “Well, we can't release it until it has this feature and that feature,” and before you know it, your budget spirals out of control. You thought you're gonna spend X, and you just spent three or five times more. When you need to realize... what I always recommend is to have that one feature that does, it does better than anything else in the market, get it out there to customers, start making money, and more importantly, start listening to what your customers recommend and suggest, and then tweak the product and improve on the product based on their feedback. Because what ended up happening was I would add, you know, say there were 10 features in the product. Well, I just found out that after actually selling the product that only two of them are being used. The other eight were just things that I thought were cool and I thought that people would like. And there's no one better to give you feedback and suggestions -- your actual customers and your target audience. So build that kind of minimum viable product, get it out there into the marketplace, learn, and just be kind of a sponge, and let them dictate the direction of where the product should go, and don't be afraid to pivot, where PayKickstart is today is completely different than when I first started four years ago. It started off as an internal tool just to sell my own products, and what it is today is completely different. So that was one of the big mistakes that I made was, you know, don't be feature happy.

And then the other thing is to have a long term or have a sales funnel in place. So it's great to acquire a new customer, but it's so much easier to get that existing customer to spend more with you, both on the initial sales funnel as well long term, a month or a year down the road. It's 10 times harder to acquire new customers than it is to leverage your existing customers. So always be thinking about what additional problems and challenges can either my product or another complimentary product solve for your existing audience.

(19:35) Simon: I am so excited to hear who you nominate for this strategy award after one award from our sponsors.

Who do you nominated for the strategy award.

(19:54) Mark: Yeah, so, his name is Dave Navoit, he is the founder of hubstaff.com. So we use Hubstaff, it's a virtual employee tracking tool. We have a virtual company and we have about 25 employees from all over the world, and so it's not only a great tool for doing time tracking for your employees, but also we'll do screenshots to show make sure that they're actually working. We don't use it so much for that because our team is pretty established now, but it's really just to make sure we, we're being efficient with our time, and we're tracking time appropriately, and that we're allocating our time towards the right tasks and milestones that we're really trying to accomplish. So Dave has really kind of been outside the box, you know, he positioned his tool at the right time, right especially with this pandemic. So many businesses are moving online, and so they need ways to properly track their employees and their contractors that they work with. He kind of saw this vision years ago. So it is not only his product, just kind of prime for where we are in this world today, but just his strategy was great.

He really went long term with this, like all of his traffic and his customers come from organic growth. So he played that search engine optimization strategy router, if you will, and that's a long term game, right? You don't just create an article and have it show up on Google, and you have tons of customers coming in. You have to build authority and the build reputation. And so, I would highly recommend going to his blog and taking a look at his content, and you'll notice that 95% of his customers are coming from just search engines and just from organic growth. So he doesn't even have to spend a dime on paid advertising or even doing. He does have an affiliate program, but the majority of it comes from organic. And so his product, his marketing, and his messaging are all like they’re the spot on.

(21:55) Simon: Beautiful. The three books that inspired you the most.

(21:58) Mark: I got him right here. The first one, Zero to One by Peter Thiel. It's all about startups and I wish I had read this book sooner. For me, I'm a lean startup, we don't have VCs or funding, or anything like that, so I really had to figure out like what's the smart way to build my business. So the zero to one book by Peter Thiel is one of my favorites.

Another one Influence by Robert Cialdini. It's really just the psychology of why people buy. There's so many like subliminal messages and reasons why people buy, and it's actually we created a product around this book. And so what the product does is it just injects social proof on to any page that you want to, so like in the lower left-hand corner, it'll say, “Hey, John just bought your product and, you know, Sarah just bought it.” And so when people see this, it's like the fear of missing out. People don't like to miss out on something, and when they see other people buying it, they want to join in, right? And so there's all this psychology and persuasion behind selling, and so it's a really good book.

And then the third one is Don't make me think. It's by Steve Krug. This is a really good book and one thing that I've learned especially building a SaS company is you don't want to make people think, you want to make it super easy for people to use your product or service. And how do you do that, you know, I learned all about how to onboard a customer and get someone to first value. And so first value is different for everybody. For us, it was, they get their product into the system. They start there, they have a checkout link, and they can start accepting payment. So, we needed to figure out, early on, people were so confused like, “Where do I go? I log in for the first time, what am I supposed to do?” And so we had a built an in-app onboarding experience for the customer. So when they log in, they know it's painfully obvious what they need to do. Step one, click here. Step two, click here. And once they've kind of gotten over that learning curve, they have their aha-moment, and that's when things click, that's when we build customers for life. And so you need to make sure in anything that you're building, any type of product or service that you're offering. You don't want your customers to have to think, you want to make it super easy you want to get them to that aha-moment.

(24:18) Simon: Powerful. Also, who should be my next guest?

(24:22) Mark: I’m thinking about this. So I think Alex Becker. He is the creator of a few different software companies. The most notably is his newest product called Hyros. And so in this world of paid advertising, he's created a product that helps you to really drill down and really understand more about your paid advertising and, ultimately, get positive ROI. And so as I mentioned before, I think, you know, companies that are a little bit more seasoned and more mature in your marketplace. This is a great solution to really leverage and maximize all of your advertising dollars. So at the end of the day, we can scale, we can grow, we can thrive, build great products, and get it into the hands of more of our customers. So definitely check out Alex Becker.

(25:15) Simon: And where can people stick around, do you have a newsletter where should they go?

(25:20) Mark: Yeah, we do have a Facebook group. So if you go to Facebook and just search for PayKickstart. It's a private group but as long as you're a good fit for our community, we'd love to talk about everything related to subscription billing, recurring revenue, building sustainable online businesses, and affiliate marketing. So we have, like there's like 4,000 people in there. It's a pretty active bunch. And then also, a bunch of us from our team are in there. And of course you can go to PayKickstart.com, we have a free 14-day free trial. We have 24/7 customer live chat, so if you want to just talk to them and get some suggestions or ask more about PayKickstart, we're more than happy to help there.

(25:58) Simon: Thank you so much, Mark, for being on the show, sharing your journey with us. And come back soon!

(26:02) Mark: Thanks, and I appreciate it.