How does an entrepreneur launch a company in the front room of his home and sell it 3 years later?
Today I’m interviewing Julian Hearn from the same front room that he launched his company Promotional Codes, a site that offers discounts which online buyers can use at checkout.
He gave himself just six months to either succeed or fail. Now, three years later, Julian has sold Promotional Codes to Internetbrands.com for millions.
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Hi everyone. My name is Andrew Warner, I’m the founder of Mixergy.com. Home of the ambitious up-start, where you come to listen to entrepreneurs tell the story behind their successful businesses, and they do it so that you can take as much of this information back to your company, go out there, build it strong and then come back and do what today’s guest is doing, tell us the story and teach to other people.
So, how does an entrepreneur launch a company in the front room of his home, and sell it three years later? Julian Hearn launched Promotional Codes, a site that offers promotional codes that online buyers can use to get discounts at checkout. Julian, welcome.
Julian: Hi, Andrew, thanks for having me.
Andrew: And thank you for being here. It looks like your video just froze up on us, let’s wait for it to come, there it is. Where are we talking to you, by the way?
Julian: I’m in England. And currently sitting in my front room.
Andrew: Is this the front room where the company actually started?
Andrew: What did you sell the company for?
Julian: In terms of the amount of money we sold the company for?
Julian: I’m sorry, I’m not allowed to disclose that figure. But I have listened to many of these interviews and I understand it’s really important for your listeners to learn what sort of scale is the business. So, what I can say is that the business was in operation for only about three years, when we sold. The first year we made 145 thousand pound profit, the second year was 1 million pound profit, approximately, and the third year was 2 million pound profit, approximately. So that was the scale of the business.
And there are some industry norms out there, for multiples of profits, so your listeners can probably make assumptions about the value of the business when we sold.
Andrew: I see. Yeah, they absolutely can. And even if they can’t just knowing the gross of this business is spectacular, and it gives us a sense of what you were able to build, in this area of the house that you’re in right now talking to us.
Julian: That’s right.
Andrew: So, I gave a quick description of what your business Promotional Codes did. Can you give us a scenario; tell us a story, of how an online user would interact with your site? Just to make sure that the audience knows what the business is.
Julian: OK. So there’s probably two main ways. If people are sort of wanting to buy an electrical grid, for example, then they may have come to Promotional Codes, browsed around electrical retailers, to see who’s got a particular discount for them. Or the second way is that they’re actually shopping on a particular site, and they get to the checkout page, and they may see a box that says “enter promotional code”, and they may then pop back to Google and search, and then come to the site. If there’s a code there, they may proceed with it, purchase. Or if there’s no codes live, they may switch to a different retailer.
Andrew: You know what? I do this all the time, I actually just bought a Salad wrap, from the local store here and had it delivered, and one of the things I do before I check out is I search for the name of the store or restaurant, which is Chopped Salad, and then the word discount code, they get a discount that works, it’s worth the second discount. If not, fine, and I live with it. Now, I would order regardless of whether these sites existed. Why do companies like Chopped Salad, like Banana Republic, why do they allow you to give their customers a discount, right at the time when they’re trying to but it?
Julian: Well, obviously on check out pages, it’s difficult to sort of know if you’re going to buy it or not. So, the original reason for promotional codes in my understanding is, that it’s used as a marketing tool to get new customers through the door, or maybe to persuade existing customers to spend a little bit more. So originally these codes may have been sent out via email, then in the promotional email it goes from the merchants trying to incentivize people to buy, and they need obviously a box on the checkout page.
And a few years ago, people starting spotting this, and started building off bigger businesses, and so now they’re sort of a self fulfilling prophecy, in a sense that some of these sites are so massive, in terms of traffic, that customers come here first for more and more retailers now need to start providing voucher codes because if they don’t, their competitor does. Then therefore they may lose out on the business in the first place.
Andrew: I see. So, if Chopped Salad didn’t have one, but Sweet Green Salad did, I might just go and use Sweet Green Salad for the discount.
Andrew: I talked to another founder of a series of Ecommerce sites, and he said “you know, we want to vary pricing based on what people are essentially willing to pay, having those discounts out there, enables us to give a lower price to people who aren’t willing to pay full price, but also it enables us on our website to say, this is the full price, we’re not discounting it, this is what’s available to everyone.” So you’re helping out their ecosystem is what he was saying.
Julian: Yeah, I think that’s a fair comment. I think there’s definitely some retailers who are not too keen about codes. They see it as giving away money to people that are already going to purchase. But, during the time I’ve worked in this sector, I’ve seen some merchants come and go, in a sense that they decide to stop issuing voucher codes, to see whether their revenue goes down, and quite often a few weeks or months later, they do come back into the sector. So, usually the tests do prove the voucher codes are beneficial in the long term for business.
Andrew: All right, so you’re making a case for the value for the e-commerce site, I’m explaining the value for me, as a consumer. What about for your business, where does the revenue come from?
Julian: So, a very simple affiliate model, most companies in the U.K. have an affiliate scheme, online retailers that is. They either pay a bounty one lump payment, where they possibly will pay essentially during the sale. That is all run for affiliate network, we get payment from them on a monthly basis.
Andrew: Got you. So, if I go to Banana Republic and buy a pair of pants, and I used the discount code that you just gave me, or the link that you used to send me there, you get paid as an affiliate, I get the discount, and the store gets to have your customer. That’s the market we’re talking about, and this is that market that you did 145 pounds in revenue from, a million the second year, and two million the third year.
Andrew: And how much money did you spend to start the business?
Julian: The original site, cost about 1500 pounds, I think. I did all the work, apart from the actual site build, so I did all this sort of SEO, the marketing sides, was all down to me. So it was basically just two of us who started it, and the web developer, was not full time, he was just on a contract basis, I was just using him on a project basis, to build this site, and these small fixes. So money wise, maybe a few thousand pounds.
Andrew: Now bad at all. All right, let’s go back in time to figure out how you launched this business, and see how much we can learn along the way. Why don’t we start with what you did, just before then? What were you doing in 2005, just before you launched this business?
Julian: I was working for a mobile phone retailer, doing their online marketing for them. And that was one of the key places where I was doing that market, that I came in contact with affiliates. I did know about affiliate market before that, but I wasn’t fully aware of it. And what really prompted me to think I could do that, is I started meeting these guys, and they’re nice guys and obviously intelligent of what they do, but they’re not rocket scientists.
So I started thinking, I could do this. I was currently trying to work in London, which is about an hour and a half each way, so it was three hours commute per day, and I just thought, well there must be another way. So the plan was, to give up work, I put six months of money to one side, and just decided to go into this affiliate space. And the game was up in six months, if I didn’t start making my salary I was making in my full time job, I would go back and get a full time job, that was agreed with the wife.
Andrew: What were you seeing affiliates do specifically? Do you have a few specific examples of what you saw that made you think, boy, that’s really easy money. I should be getting into this base?
Julian: I think an example I could probably give was review sites. There were quite a few mobile phone review sites, which were, you know, basic content, so if you take an example of a blog you’d have a single page for a particular model of phone. You could describe it. You could then allow users to add comments and you’d get quite a comprehensive page together. And there were who were focused in this space. I knew them, and I knew they were working from home. And I knew they were making thousands, sometimes tens of thousands of pounds just from one retailer. So, it made me think, well that is more money than a full-time job. They work from home, and they seem quite chilled out about it. That convinced me that there was definitely mileage in this space.
Andrew: There really is, and there still is to this day, isn’t there?
Julian: I think it’s growing over time. I think it’s getting bigger–in the U.K. I’m not too aware of America, but in the UK the vast majority of big retailers do have an affiliate program. But there are still a few out there who don’t, and there are more coming online nearly all the time. So, I think it’s big, and I think it’s probably bigger than it’s ever been. And they’ve still got some to grow, as well.
Andrew: And the affiliates then, their job was to create these simple sites. We’re not talking about intensely developed sites–very basic stuff, often WordPress, as you say with a nice theme on it. Their job then was to find the right affiliate programs and then shovel as much traffic that converts to orders or leads for those affiliates programs as possible.
Andrew: And where were you seeing them get the traffic? Were you able to figure out the model that far back?
Julian: Well in general, there are two forms of traffic online, I mean, PPC is one, paid-for traffic, or there’s free traffic by natural search. And some had specialties in PPC, and some guys focused on SEO.
Andrew: Got it. OK. All right, so you saw these. You decided I’m going to stay at home for six months and figure this out, and you agreed with your wife that if you didn’t you were going to go back to work. Day one, what’s the first thing that you do?
Julian: Well, even prior to day one what I did in the evenings and weekends, when I was in the full-time job, was I did set up a few little WordPress sites, just to test the water, to prove to myself I could rank the searching keywords. They weren’t competitive, but the principal remained the same. So, probably for three or four, or five months, prior to resigning from my job I had several little sites up and running, and they started to generate money. They started to get rankings, and that’s what sort of convinced me that was the right time to leave the company and go full-time into it.
Andrew: What were some of the things that you did in the early days that worked for you, as far as search engine optimization and getting traffic?
Julian: I think using WordPress was one of the first things. I’d used WordPress in the full-time job, and it is a very simple program to use. I’m not technical at all, and it’s very easy for me to use, and [??] seemed to like it at the time. You know, if you put a blog up and you put content on it, it would get indexed. It would rank for specific keywords, and simply the job after that was to do some more SEO, just to go for the bigger keywords.
Andrew: I see. So it’s just picking WordPress as a platform that essentially has built-in Google friendliness?
Julian: Yeah, I think so. Obviously, you know, there’s a lot of talk in the SEO community about what works and what doesn’t. So I did immerse myself in that area–I did learn as much as I could about what would work in terms of SEO in general. It’s pretty simple stuff, but to be very good at it there is, to get reasonable was quite quick, but to get very good I think is much longer, in terms of SEOs. So I did spend quite a lot of time researching that area, and also researching the affiliate space to see where the opportunities were.
Andrew: I want to know about the low-hanging fruit, and I know that this is very basic stuff, but I’m curious about the low-hanging fruit, because that’s what often encourages people to continue, and to look for the tougher and bigger opportunities. So, you used WordPress. What else did you do that worked out? Was it the URL structure that you picked for WordPress? Was it the topic that you picked that happened to work out? Because I know that there are going to be some people listening to us now who’ll say, I’m going to go test the waters, too. I’ll create a WordPress site, also. And their WordPress site is going to go nowhere. But yours gave you enough hope and optimism to know that you needed to go forward. I’m curious, what else did you do to get that result?
Julian: I think the starting point should be Google AdWords keyword [talk]. So actually, delving into the keywords which are available and trying to find little gaps in the market. Obviously, if you’re trying to talk at words such as, poker, you know, it’s gonna take you years to compete for that word. Whereas, if you run your eye down the list you can quite quickly come to search terms, which may be related to poker, for example, that’s, I’ve only got 10, 20 searches per month, which usually means the big guys are not focusing on those key words. Then what you do is go to Google, run those searches and start looking at whose ranking, what the sites are. If you handle a site that hasn’t got much page rank, or is not put together very well, or is out of date and you think you can do better, then it’s worth building something to compete for that particular keyword.
Andrew: When you say, ‘build something,’ we’re going to assume that we’re playing now with the poker space just because you happened to use it as an example, but it could work for anything.
Julian: Yeah, anything.
Andrew: When you find a keyword, when you say, ‘build something,’ do you mean build a whole site based on the keyword that’s available or just launch a blog post about it?
Julian: I think in the early days you’re best off just doing a blog post because you don’t want to build too many sites. I think maybe you just want to start with one and start to see how to get pages rank. Another big part, or low hanging fruit would be to start building some links into the pages as well. Rather than just producing the content on a WordPress site, you need to make Google’s job easier to find the content by getting some links in and obviously links is what pretty much Google uses to determine your position.
Julian: If you can get some quality links to a particular page, which I’ve got the correct anchor text and the keyword is not particularly competitive you can start ranking very quickly within weeks, if not days.
Andrew: OK. How did you get a few links? Talk about just the early days when you’re testing the water and seeing if there is an opportunity here.
Julian: This is going back quite a few years, [??] might be one of the easy way to get some basic links. All you got to do is produce some quite basic content. You can then link from an article site into your own site and that would be quite easy to do. My favorite way probably, is to look at your competitors, look at their back-links and start working your way from top to bottom. Basically, if you go to say Yahoo’s site store and do a back-link query for a competitor it should sort of bring the strongest links to the top.
Andrew: I see.
Julian: If you just work your way down that list, chances are the first few links you probably can’t get because they may be owned sites, or it could be their hosting company, or it could be one of their contacts. So, you can’t get those, but if you work your way down the list you’ll find links that you could go and get and that’s probably the low hanging fruit. The chances are if it’s shown up as a strong link for your competitor and you think you can go and get that link, then it should work really so, you don’t have to search the whole Internet you just cut your target list out very small.
Andrew: I see. All right. I get it Julian. Now I understand. Here’s what I got, you said first, use WordPress and Matt Cuts, the guy who does spam detection at Google, has said the same thing that WordPress is essentially built for ranking with Google. Second thing you did was, where I or other people might of just thought, ‘What does the world need to learn about? What do I feel like writing blog posts about?’ You said, ‘I’m going to start smart and I’m going to go with a keyword search tool and let it tell me what articles need to be written’ and you described that. The third thing you said was, I’m not going to just let it sit here. I’m going to find reasons for people to link to me and that will signal to Google that this is a site that’s worth linking to and ranking high in search results.
Those three things are all you did at you first, essentially I know your memory’s not going to be perfect here and you might of done a little bit less or a little bit more in the early days, but this is what made you say, ‘Aha, I’ve got enough of an opportunity here, I got to jump on it,’ true?
Julian: Yeah. Exactly.
Andrew: OK. I understand now how you got interested and how you were encouraged to continue. Once it was time to start with the business that became Promotional Codes, what did you do? How did you get that started?
Julian: I had already worked with the web developer over a number of small, little projects . . .
Andrew: Interesting, what kind of projects?
Julian: Well, these little WordPress sites here, put the skin together here for me, for those. We’ve built up a level of trust. It was one of those things we were the online relationship is a little bit tricky to do, but we built up some trust in small projects and I explained to him sort of roughly the site I needed and the reason. I did a lot of extra research and to see what’s the best practice, in terms of vouch code sites and then put together a very basic spec in Power Point, in screen grabs and the sort of things I wanted. He then produced some designs and came back to me and we went ahead. He got it built in a few weeks and we were live. So, almost around the day that I gave up work and then got straight into it.
Andrew: Was the first version of the site WordPress?
Julian: Yeah. It still is WordPress today.
Andrew: It is?
Andrew: Oh wow, it looks great. Sometimes I just can’t tell the site is WordPress. I thought it was all custom.
Julian: Well, it’s no longer a blog obviously, it does have blog component, but that’s one of the things that over a period of time we sort of kept with Word Press ’cause it seemed to work. We did talk about moving to different content management systems but it didn’t seem to have big enough reason to do. WordPress can be pretty much used to do anything you want it to do. So we continue to use it today.
Andrew: It’s amazing, you know what? I think we in this space underestimate how mistrustful of Word Press other entrepreneurs are. I’m working on a floor space here in Washington D.C. A few entrepreneurs are building businesses that need websites and they refuse to use Word Press because they think Word Press is a blogging platform and they’re not doing anything as sophisticated as you’re doing.
Julian: It’s a content management system.
Julian: You can literally do whatever you like. There are so many plug-ins available. There’s so much being built by other people that you can pick up for next to nothing or for free and so many developers are used to it that, I think, it’s ideal.
Andrew: Word Press, though, is pretty easy to use. Why did you need a developer?
Julian: I can’t do anything in terms of technical stuff.
Andrew: Really? So you can’t change theme? You can’t adjust the placement of the titles or any of that?
Julian: I think as soon as you start going custom, anything basic I could do. So if there’s a button that says change theme I could press that button. If there’s change in title tags or some of the rules within Word Press, I can do that. As soon as you make it custom, even having some such plug-ins, for me, it’s just not my area of strength. So I just use someone else to do that.
Andrew: This is encouraging. People in my audience want bootstrappers and you’re a bootstrapper, right?
Andrew: And not only are you a bootstrapper, you’re not a software developer. You’re not very technical yourself and you’re using Word Press to build up a business and you’re not just talking chump change here. When you said two million, you said pounds not dollars, and you said profit not sales.
Andrew: All right. Was it much like a WordPress site at first? Like the standard look which is reverse chronological order?
Julian: No, it’s not a million miles away from how it looks today. Basically, the way it was structured was each merchant on the site, for example Tescos [sp?], that is classed as a category page and then each vouch that we add to the site is classed as a blog post. That’s the basic structure of the site, which still remains today. The home page, I can’t remember exactly what it was but I think it was the latest vouchers, i.e. the latest posts, in chronological order. Yeah, I think it was.
Andrew: OK. And where did you get the vouchers and the affiliate programs that they hooked up into?
Julian: Well, you get the vouchers sent to you by the affiliate networks themselves. As soon as you join affiliate networks, you can sign up to either the vouch code feed and you can get them all sent to you. But in the early days, when we first started, I was receiving everything via email and then I was rekeying it all back in myself, which was quite a laborious job.
Andrew: You signed up for an affiliate network. They’d email you here’s the latest code, and of course, here’s your URL with your new tracking code. Go to town and maybe even some marketing material and that would be your job to take it and plug each one of them into its own blog post.
Julian: Yes, exactly.
Andrew: What affiliate networks did you join to get this?
Julian: In the UK, the biggest one is Affiliate Window.
Julian: There’s another one called Buy At, Trade Doubler. The ones that get below that level, it’s gets a bit smaller but we do have Commission Junction, which I know is massive in America. But in this country, it’s relatively small so the big sort of three players are Buy At, Affiliate Window, and Trade Doubler?
Andrew: And it’s “Buy A-T, Buy At?
Julian: That’s right, yeah.
Julian: But that’s now owned by Affiliate Window. They bought them maybe a year or two ago. And now they’re merging the two together so I think, eventually, it will just be Affiliate Window.
Andrew: All right. So you just signed up for them and you needed to pick the offers. Was there any intelligence required in picking the offers or any experience that had to go into picking which offers to run or did you just run as many as possible?
Julian: Well, what I did, in particular, was when I did the keyword research it told me which merchants were being searched for the most.
Andrew: I see.
Julian: So, we started, or I started, with a relatively small number. I think we started maybe 60 merchants on the site so all I had to do was wait for emails to say there was a new code for one of those 60 and then I would add them. All the rest of the emails are being sent. I couldn’t do anything with them because I didn’t have the merchant pages live. The original aim was to literally just get 100 pages, to target 100 merchants, and hopefully replace my salary with the money coming from those merchants.
Andrew: And so you take the merchant name, you go into the Google Ad Words, Google Keyword Tool. You type it in; you get to see if there’s a lot of search results or not or a lot of search action or not. If there wasn’t a lot of search action, you’d say I’m going to save my time and not create a category page for that merchant. If there was a lot of action, you said I’m going for it.
Andrew: Why did you pick that way instead of doing what you did at first with your earlier test which is seeing what doesn’t have much traffic on it. What are the big guys probably leaving behind?
Julian: I had bigger objectives to go for, so I had to replace my salary, so I had to go for the higher volume keywords.
Andrew: I see.
Julian: But, their still, relatively they are not as big a key word as going off a credit cards or poker. They are still much smaller keywords with much smaller traffic, so they are still achievable. I saw proof myself that I could rank the certain keywords. I looked in my competitors to see their backlinks to see if they were just so far ahead of me. My conclusion was that they weren’t massively ahead.
Andrew: By backlinks you mean just the number of backlinks. Can you get as many backlinks for a category page or a company name as they can?
Julian: Yes. What you tend to find, my advice first is for your listeners, is that if you look at the backlinks for the whole site. Let’s say you look at the backlinks for promotional codes for the whole site, it’s quite comprehensive, there’s a lot of activity. That would take you a long time to replace those links, but, if you’re going after a smaller keyword, if you start looking at let’s say the merchant page on promotional codes or even the bigger players, they don’t necessarily have links into their individual pages. You could still compete if you just focused on one of those merchants and built links into that single merchant.
Julian: And that’s applicable to an industry that quite often the sites, when you initially look at their backlinks, you just think their phenomenal and you’re never going to be able to catch them up. As soon as you go a couple of steps deeper into the site, then you look at the backlinks for that individual page, quite often you’ll find that they may have zero links to that individual page. If it’s still ranking for keywords, which could earn money. Therefore, if you could build a page similar to that, build specific links into single page, you should in theory then overtake them.
Andrew: OK. I see where you found your offers, how you figured out which offers to actually run, how you built the pages for them. The next step then, is getting traffic, which for you meant first getting backlinks. How did you get backlinks to pages that you were targeting?
Julian: We mentioned earlier article marking, that was one way. The second way was looking at competitor’s backlinks. There are two ways to look at this, Firstly, when you run a query on say an open site explorer, Yahoo site explorer, you get the list, starting the bigger links and going down to the smaller links. What I used to do is go down that list one by one. I would take a link that I thought I could go and get because it was on a reference site or it was a sponsorship link, or some other natural link, which there was no reason why I couldn’t attempt to get it.
Once you found one, so say for example, one of my competitors ran a competition on a fashion blog. There is no reason why you couldn’t run the same type of competition on hundreds of fashion blogs. Not only do you want to go down the list, once you find a suitable link, then you want to go sideways to see if you can find as many similar sites to that, that you could get the same link from.
Andrew: I see. Alright, that makes a lot of sense. So if I were for example, were seeing that another interview site got a lot of traffic, was doing pretty well for WordPress interviews, I could see how they were getting links. Well, maybe they are doing a contest by giving away one of their interviews. We’ll do a contest for multiple sites, where we give away our interviews in exchange for getting a link. Beautiful, I see it. OK.
Andrew: So you were just sitting there and e-mailing, one at a time, to the publishers?
Julian: Yes, it was all manual, yes.
Andrew: Got it. He’s linking, I’m going to link. He’s doing a contest, I’m going to do multiple contests.
Julian: Yes, exactly.
Andrew: How did that do for you, just the ingredients that we’re looking at so far
Julian: The site took off straight away. We started getting traffic almost immediately. In the first few weeks we started getting traffic. Literally from that point, probably until the Google Panda update came in, traffic was consistently growing. Obviously, taking into account seasonal affects, like Christmas or the New Year. Generally the traffic just went constantly up. We were adding more and more merchants to the site. We were adding more and more content to our blog. We were adding more and more links all of the time. The site just got bigger and bigger.
Andrew: Alright, this is the portion of the interview where I can tell my listener is thinking two things. First of all, they are thinking good for Julian, but what about me? Second, they’re saying, how much of this can be applied today? To either a similar business or to a different business that also wants to use SCO the way that you did.
Julian: Yes. I think it’s totally applicable today. I mean, Panda has thrown spammer in the works because nobody has really cracked exactly what Google has tried to do.
Andrew: Panda is the Google algorithm update that helped them, that they are using to get rid of spam and duplicate sites, and so on.
Julian: Yes, exactly but it’s … I’ve looked at it a lot and I can’t see the reasons, look I know what Google has said, they’re trying to remove spam, they’re trying to produce good content but since [inaudible] came in, in the UK, it’s actually meant quiet crummy sites have floated to the top on some key words so I’m actually seeing sometimes poorer results and specially sites which are buy a lot of links which is against Google guide lines and they’re very strict on it, or supposedly.
A lot of sites now without floating to the top have got some, very obviously, paid for links so it has changed a bit so I can’t guarantee this is going to work but basically Google still uses links as a key way to rank sites. So the suggestion I said then is to use word pro-stats still applicable today, produce good content is still applicable today, and links still applicable today so all of those things apply.
Andrew: What about the coupon discount code business? Can they still get into this space the way that, maybe not as big as you got but can they still get into this space and grow their own company?
Julian: It’s definitely more competitive but it’s still new players coming in all the time and I’m seeing younger sites ranking quite well for some key words so it’s this age old argument that they may go after a smaller key word but if they spend more time and effort on that smaller key word then I could afford to do or the bigger players can afford to do they can produce better concepts for that single merchant. They can produce better links for that single merchant so they may be able to compete for that particular merchant.
Andrew: And then they go onto another two and another four…
Andrew: And they just keep growing and growing, I see.
Andrew: What about when you started? The fact that there were already discount codes that merchants were handing out to affiliate meant that they were encouraging this space, that there were enough competitors who understood what those discount codes were and how to build discount code based businesses and that there was a lot of completion, how did you deal with that competition, why did you stand out when so many of them just sat around, did nothing?
Julian: OK. So probably that the key thing for me was when I did my key word research, I realized that in the UK there’s three different main terms that people use. There’s voucher codes, discount codes, and promotional codes and everybody in the space talks about voucher codes, so all of the big guys and most of the affiliates were targeting voucher codes, terms.
There were some people targeting discount codes but there was no one side that was targeting promotional codes. It’s just different key words meaning exactly the same thing…
Andrew: I see.
Julian: But from Google’s prospect, if it’s the different key word phrase and they will rank sites differently than if they’re targeting voucher codes so at the time that’s what I found and so I bought the domain name that contained those key words and produced content which contain those key words, so basically targeted those promotional codes rather than voucher codes.
Andrew: I see.
Julian: So that’s why I thought I could compete in the space. I’ve obviously looked at the competitors back links to see what was available, what was impossible to get and sort of had a feeling that over a period of time I could get a fair share of those so it convinced me that the right thing to do.
Andrew: I see, this shows the value of looking into the right key words before you even launch a business I think. I know even for myself I didn’t think of it until much after I launched the business and most people think that I’m going to get a great key word, I mean, a great domain name that’s catchy, that feels right, that communicates my message and I’m going to start building out the site and then once that’s up I’ll think about SCO and maybe going out and buying some traffic and all those other things.
For you it was critical to it up front. Your domain name as you say is Promotionalcodes.org.uk, its right there in the domain.
Julian: Exactly, yes.
Andrew: All right, so now you’re building this stuff up, how long does it take you to match the salary that you had?
Julian: I think I probably got there in three months.
Andrew: Three months?
Julian: Maybe just a little bit longer.
Julian: So it was, it was a nice feeling to actually match your salary, to be working from home. You know no boss to speak to and freedom to take time off when I wanted, it was idea and I think it was maybe three months. In the first year I made probably double. In the first six months the business was alive, I made more than my salary so, for the whole year, so the first six months made more than salary for a year.
Andrew: I know this next questions going to tick off a bunch of my listeners but I think it’s useful to know. How did you and your wife celebrate one of the early milestones? What was one of the early big celebrations?
Julian: The biggest one I can remember was once we, we left most of the money in the business, was the money started coming through we paid ourselves a small salary but we left money in the business and there came a point probably nine months into the sites where we’ve saved up enough money to pay our mortgage off on our house so that’s what we did, we paid the mortgage off and that’s probably the biggest milestone I can remember.
Julian: Yes got, yes…
Andrew: Do you remember that day?
Julian: Yes I do, yes.
Andrew: You do? That must have been quite…
Julian: It was…
Andrew: … a celebration?
Julian: Yes, exactly, once you’ve paid your house off then to [inaudible] expenses, we don’t live extravagantly so to have no threat of losing your house ever was a very nice feeling.
Andrew: You mentioned earlier that you were working with a developer who, who’s working with you remotely? Tell me about some of the challenges and how you guys overcame them and were productive with such a big distance between the two of you?
Julian: The developer I used is called [inaudible], he’s based in [Seripo], which is in Europe but not near to where I’m based in the UK, so I initially started with small projects with him and what we used to do is we had a chat on instant messenger about what I wanted. Then I would draw up a spec document in power point which literally is just a list of objectives and a few screen grams of what I wanted and maybe a couple of more [inaudible] I produced and in general that works quite well for small projects.
Once you become, once you do [inaudible] stage it did get quite difficult sometimes via email because you may have a list of ten bugs for example in one email. If the developer does nine of them but forgets one it’s difficult for me to know which one he’s forgotten and so I dig back through my emails.
So the biggest help that we had was once we switched over to base camp we kept all of the projects in one place and I could tick off jobs and they would still appear on that home page of base camp until I ticked the job off so that made a big difference. That was a very good…
Andrew: I can see that.
Julian: … step forward.
Andrew: You know I’ve done that on certain projects and it really does help. Instead of going back and forth and saying, ‘I need this, do this, do that.’, and then hoping you’ll remember what you did or keeping your own list to have that unified check list where everyone knows which each person is suppose to do and they can tick off the boxes as they’ve done them and see what’s unchecked, I could see how that’s big.
What other tools have you used to stay connected and be productive?
Julian: Well with [inaudible] the developer I think the three main ways, I like emails still, still use email. Instant messenger is really important and base camp. That’s the three main tools we used.
Andrew: OK and we talked about the great aspects of word press and how simple it is and how you’re able to build such a great company with it but before the interview started you and I talked about some of the tech issues that you had?
Andrew: What were they?
Julian: When we first started, didn’t really know how big it was going to be so we just started with basic shared hosting. We started getting problems and sometimes I think we hit the home page of big with a link by an article that we produced so we got a flood of traffic. It took the site down and at that point we realized that we just couldn’t handle those particular bursts of traffic. I mean at the time it could send, I don’t know, 20, 000 visitors in an hour and the hosting just couldn’t handle it so that was the first problem we had.
We then up scaled onto a shared server, a private VPS, but we could handle the traffic but occasionally we got security problems which we’d normally Goggle and I think we had three instances where there was something happened on the server and Google took offense to what happened, where they thought we were trying to distribute spyware or something and they actually almost delisted us from the index for a period of two weeks until the site became stable again.
So in those two weeks we could lose a lot of money so eventually we had to bite the bullet and get a dedicated server and since then we’ve had a few nickels but in general it’s been very good so my suggestion would to be if you’re making good money from the site get onto decent servers.
Andrew: Why didn’t you, why didn’t you spend a little bit more to get a better server?
Julian: Well I’m not technical and when a sites live, its working and I, you would browse my site then you go and browse something on a dedicated server. I couldn’t, from a users prospective, I couldn’t feel any difference so and it was more difficult in my mind to justify spending, I think, 4,000 pounds on a dedicated server when I couldn’t feel any performance increases but it’s just that reliability factor that you really need because if you have basis hosting you can have problems with it. You won’t get the support that you need and if you get into the black books of Google it’s going to take you a few weeks to get back out of it again so I would strongly suggest when you need it upscale to a decent server.
Andrew: You also mentioned that you had some kind of link date that got you a lot of traffic? What was that link?
Julian: The one that went well on big was, I think it was called Thirty Creative Ideas for a Date, I think it was and I employed a blog writer because I’m not great at writing at either. I’m not good at technical. I’m not good at writing, so I employed a blog writer. He wrote about three posts for us per week. I also employed another guy who was pretty good at then promoting on places like Digg and Stumble. Then he would then take that concept, use his contacts to spread that content around. Then if it was good it would float to the top, and then you would get a lot of traffic from it. They aim was of getting that traffic was hopefully somebody would be reading the blog, and then they would then eventually link to the blog; that’s what the aim was.
Andrew: I see, it was just about getting people to link to you blog because the more back links you had, the stronger it was and the more Goggle juice it had.
Andrew: I see. What about this? Did a lot of people who were listening would say, ‘How to find a date has nothing to do with discount sites?’ They’re trying to pick up on your lessons and bring it back to their company, and they must be thinking, ‘Does that mean then in order to succeed and get traffic and get revenue, I have to do link baby articles about how to get dates, or ten ways to punch [SP] a dolphin in the face; whatever it is?
Julian: Right. I think the article was around money. The theme of the blog is money savings, same as the site, you save money, so you save the blog writer quite a wide brief on what they could write, if you think about ways to save money, so I think I 30 creative ideas were free. You know, there were ideas like go for a walk in the park or I don’t know? You know what I mean? They were very cheap ideas, so it was applicable for the blog. It’s not that we did complete link bay [SP]. It was relevant content which was link worthy.
Andrew: That’s what I’ve been seeing that you stretch your focus just a little bit so that it includes something that’s worthy of getting links or discussion or being news and topical.
Andrew: Got it. Okay. What about traffic? What else did you do to get traffic as you built up because I know from our conversation before this interview that that’s one of the big challenges and one of the key levers to success in this business.
Julian: Yeah. I think I’d tried [inaudible] to get traffic, so I’ve done some work on Twitter. I did some work on Facebook. We did some PPC advertising, but none of them really made much of a difference when you compare to what natural search can deliver. I thought I had to have a presence on those platforms, but eventually I came back and still spent 90 percent of my time on natural search because that’s where 90 percent of the traffic was coming from.
Andrew: I see, so just emphasize what’s working, instead of forcing something that doesn’t work to work.
Julian: Yeah. I know people do talk about Twitter and Facebook as getting huge traffic, and that’s one of the reasons I looked at it, but for vouch code it just didn’t seem to be applicable, or I didn’t do it correctly. I think certain sites like celebrity sites would do very well on Facebook and Twitter, but I’m not sure commercial sites do.
Andrew: What about user design, the placement of the discount code or the way that you link to the site? What did you do there to increase your conversions.
Julian: We did use Google web optimizer to do A B testing, and that was around colored buttons, layout pages, the words which were used on the button, and those were the basic tests, so we did use that. We also, obviously, kept a close on competitors when they launched new features we considered what we thought those features were worth adding, if we added those. That was pretty much it.
Andrew: I know that with the Google website optimizer, you might discover that a big blue button works better than a big red button.
Andrew: On some systems you could just make one switch, and the whole site changes to the color that works.
Andrew: On WordPress it’s harder. Don’t you have to, unless you specifically said about the head of time, you have to go back into every blog post and change the color of the button, no?
Andrew: How did you do it?
Julian: I don’t know how it was done? I didn’t do the development work, but when it was set up, obviously, there is a blog element to the site, but the rest of the site is usually Word Press, but it isn’t necessarily like a blog. In terms of universal buttons, we did have a universal button, so if we wanted to change it, we could change it very quickly.
Andrew: I see. Actually, we added that recently to the site. You don’t know how you did it, and I, frankly, don’t know how we did it either, but it’s not that tough to do, but you do have to think ahead of time. We didn’t, and that means that all the old posts that we have with buttons that link to courses have to go and be changed manually to this new system, and then once they’re changed, if we want to change the color throughout, we can do it.
Andrew: How would you test? Would you take one store, one discount code, throw traffic at it, make some adjustments; and then if it worked there, if you discovered a new button color, a new button shape that worked there, then you roll it out to everything else?
Julian: Sort of, I’d never do it on just one test. It would have to be multiple tests because over the years I’ve worked at various different companies where it has done A – B testing and nearly always you implement an A – B test you get results of sometimes 40% increase. You roll out to the whole sites and it never makes a difference. You never get that 40% increase.
Some precise is quite important, but if you just got 20 people looking at a page it’s just not big enough. You need to have your biggest pages, you need to have 1,000′s really to get results and even then sometimes when you roll out to the rest of the site, it doesn’t actually come through.
My suggestion would be to look for high traffic pages on the site, do the testing there because you got bigger sample size to work with. Sometimes run a test for longer periods of time and run it on multiple pages just to make sure before you make a dramatic change because you could be effecting the conversion the wrong way if you launch to early.
Andrew: What are some of the things that you learned through doing all these A – B testing that are shocking or especially powerful that we can learn from you without having to do all those tests?
Julian: If you look at a site today, if you go to a merchant page today, it’s not the design that I wanted or we originally designed. The buttons are much bigger than you think, basically what we tended to find out was bigger, brighter, simpler tended to work. The site that is [??] was actually designed by a third party agency who did a really nice job on it. The merchant pages they were stylish, but a lot of our traffic is only on the page a really short bit of time. We needed to have a higher impact, I believe. What we did is we started testing. We see competitors getting bigger and bolder so, we started testing bigger and bolder text and it did seem to come through better conversion rates.
Andrew: Bigger text on the store. Bigger text on a discount. I’ve seen something else that works in the space, and it’s kind of annoying at times, you can’t see the discount code you have to click a button . . .
Julian: Yeah, that’s right.
Andrew: . . . copy the discount code into your clipboard and then link you to the page.
Andrew: How does that work?
Julian: Yeah. That definitely does work. If you restrict users from seeing the code the only way they can see the code is by clicking the link then your conversion rate will go up there’s no doubt.
Julian: The reason, this is quite a controversial issue because some people feel that that what there used to be, there used to be quite a lot of people didn’t have a code, they would say click here to get the code. You’d click here and there will be no code behind it. The rules have been tightened up in the UK so you can’t do that. We never did that type of thing but some people did. I think that’s why it’s become annoying. The counter argument is if all vouch codes displayed the code then their revenue would go down. They’re generating traffic, people you just click on the code, don’t click on the link, they don’t get paid so the whole [??] space would have less income and therefore wouldn’t necessarily build up the sites we’ve got today.
Andrew: I see. That’s the issue. If I’m now on the last page, ready to check out of the Banana Republic site with all my stuff in my shopping cart, I go and get the discount code from your site and don’t click from your site, I don’t do anything but copy and paste or remember it and type it into the box, you don’t get credit for it. I get the discount, the store gets the customer, the customer is happy, you don’t get credit because I haven’t linked, I haven’t clicked as soon as I click you get the credit.
Julian: That’s correct.
Andrew: Got it. So, did you do that? Does that work?
Andrew: So, now it’s part of your system?
Julian: That’s right yeah.
Andrew: The challenge for a user is you’re already on the shopping cart, you’re done. When you click those links you’re taking to the home page of the site, back to the BananaRepublic.com or whatever the site is so, you have to remember then to go and copy or hit the past button in the box.
Julian: Yeah. It’s difficult for — I know there’s been a lot of research done in this area, usually by the affiliate networks, to see what percentage of traffic for vouch code sites come from people who are currently on a checkout page because see, if they’re only coming from a checkout page the counter argument from the merchant is I’ve already got that customer. Why should I give you commission on top to get a customer I’ve already got?
I don’t know where customers come from when they come to the sites. I can see the main they come from, but try to get accurate results is quite difficult. Whereas the affiliate networks, they can get hold of that data. They get it themselves. They get it from the merchants. I think the analysis is being done. It is definitely a proportion and sometimes a large proportion that do that. They’re on the check out page and go to a search engine and then go to a commercial code site, but it’s still a large proportion who come, who don’t know where they want to buy from and they are looking for the best discounts in that particular category.
Andrew: I see. They go in and they say, where can I get a discount on T-shirts? They see that Banana Republic has it, but I don’t know, some other one doesn’t and they go to Banana Republic.
Andrew: All right what about email? Has email worked? I’m looking for other tactics like that click in order to see the discount code. What other techniques worked?
Julian: E-mails a little bit of a strange one. We have emails set up on the sites, so we’ve never bought any data at all. And when it was my business, we had about 35,000 email addresses that had just been naturally collected on the site at the time. We didn’t put a lot of effort into collecting email addresses, because it wasn’t necessarily my area of expertise. I’ve done it in previous jobs, and sometimes it produced phenomenal results. But over the last five years, the results have gone down and down and down, because spam checkers make it harder to get deliverability.
So, it wasn’t an area that I really went into, but looking back maybe it was an area I should have gone into. It makes the company a lot more valuable if you’ve got a big email database. And a couple of the biggest players in the UK, I think, one claims to have over three million email addresses in this space, and one is supposed to have over five million email addresses. And I think the one that’s got three million, or four email addresses, they recently got sold for $40 million to an American company. So, their company was a lot more valuable than what mine was. I mean, they did a lot of other things, which were better. But that must have been one of the factors in evaluation of the company–the size of their email database.
Andrew: So, how do you grow an email database, then?
Julian: Well, the way I grew it was just pure and natural, just to have signup forms across the site in logical places. I think the guys that got massive databases, what they did was . . . how do I explain this . . . they used PPC to advertise on Google for printable vouchers they couldn’t make money from. Now a voucher, you might us it at Pizza Hut, come to their site, and then they would give you a code. You’d print it off, take it to Pizza Hut, and you’d get a discount. There’s no money to be made there, because a printable voucher won’t get tied back to an affiliate. But what you can do is at the point somebody’s searches on Google for Pizza Hut voucher code, you can then have a page which exists there, and the first thing that they do when they arrive on the page is, ‘Give us your email address, and we’ll send you an email every time there’s a Pizza Hut voucher code.’ And so, you’re paying indirectly to get an email address.
Andrew: I see. OK. So basically, essentially, really that’s what they’re doing. They’re not getting money from the affiliate program, they’re just paying money to get the person on the mailing list, but they know once he’s on the list they have the ability to keep marketing and making money over time.
Andrew: Got it. What else? Any other tactics? Anything else? I have one other area that I want to cover, but are there any other tactics for people who are trying to either use search engine optimization to build a business the way you did, or maybe, get into the affiliate or discount code business? What should they know?
Julian: For me, basically, it’s SER, SEO, or something which provide you long-term traffic for free–well, virtually free. Whereas PPC, where you’ve got to constantly spend money on the area. But having said that, if you’re new to a particular space, it may take you a few weeks or months to start ranking the keywords. So in the short-term, to learn quicker, PPC is possibly a good short-term tactic. But you can get through quite a lot of money quite quickly. So, be careful.
Andrew: All right. The other area that I want to talk to you about is, how you knew to sell? First of all, why did you decide to sell, and then I’d like to know how you went through the process of selling. Because I see there are few people in my audience who actually have offers on their companies, and they don’t know where to go next, and they’ve been talking to me and I’ve been trying to figure out who else they should be talking to, frankly.
Julian: Yeah, this is an interesting area, because what happened when I started, I went to see the accountant. We were earning good money. And we left a lot of the money in the business. But every time you take money out of the business, it’s taxable, so you’ve got to pay income tax on it. In the UK, it’s anything above about 40,000 pounds is 40% tax, and above 150,000 pounds it’s 50% tax. So, I spoke to the accountant and asked, how can we reduce our tax bill? And various ideas came up. One of the ideas was, if you sell your company in the UK, you get what I call entrepreneurial relief. And so, for the first million, at the time it was the first million pounds you sell your first company for, you just pay 10% tax.
At that point we talked it through and we said, well with the business is up to the size we want it to be, and then at some point in the future, if we sell, so leave all the money in the company, and at that point sell. The company will be valuable, and you could take all the money out of the company when you sell it for just 10% tax, which is a lot better than 50% tax. The key thing we did at that point was to start looking around to say, how do you built up a company to sell it? I found a specialist consultant in London who worked with me on a monthly basis to put the company in a position where is would be saleable. We made sure all the paperwork was together and all the accounts were together. We put a plan in place to make the site as big as we can and as profitable as we can, in a window of twelve to twenty-four months.
Julian: We sort of groomed the business for a sale over a period of time so that we could just pay 10% tax.
Andrew: Then it was time to figure out who to sell to. I understand the logic behind selling, as it makes financial sense. I understand grooming the company and I’m sure you wanted to push yourself away from the day-to-day responsibilities of running the company so that the company would run on its own. Is that true?
Andrew: OK. I get that. Now that you are trying to figure out who to sell to, how do you go about finding a buyer?
Julian: There were two main ways that we did it basically. The business consultant that I employed, he has access to a lot of people that have sold or bought companies before, so he has a large mailing list of one more than one thousand potential buyers. That was one thing he did. The second thing we did was literally just trawl the internet for people who had vouched code sites in the past or who had bought internet companies in the past. Once you’ve built up a “hit list” to get that, you produce a one page document to explain what the company does, some of its financial information, what the potential is for the business and asking for people if they’re interested, to get back in touch with us.
Andrew: That was it? You’re saying essentially were cold calling people to sell your business?
Andrew: You said, “I saw you were buying companies, here is a one-sheeter on my company, if you’re interested, contact me.”?
Julian: Yes. I didn’t do that personally, that was done by the business consultant I employed. He did all the cold calling and such.
Andrew: I see. The business consultant, does he sell companies on a regular basis?
Julian: Yes, that’s pretty much what he does.
Andrew: How did you find him?
Julian: Google, same as most things.
Andrew: You Googled for him.
Andrew: What was the word you were looking for?
Julian: I think it was something like “grooming companies for sale”. There was a video that was produced by an accountant speaking about this issue and, you have to think years ahead sometimes when you sell a company. It’s a quite simple business. If you’ve got a complex business, you need to put a lot of things in order before you’re in a position to sell. You’re taken through all those issues and basically it raised the issue that you need to do it a long time in advance. I actually got into contact with him and said, “This sounds like the sort of thing I’m looking for”. He invited me up for a meeting, and then introduced me to the business consultant. At that point, we talked about what could be done, how we were going to go about doing it, and then we started working together.
Andrew: That’d be great. What would be great is to have him on, if you’re having a conversation with him on. If you’re having a conversation with him, see if he would be interested in coming on to do a Mixergy interview.
Julian: OK. Yes, sure, I’ll ask him.
Andrew: You SCO to get people to come to your site and get discount codes? He essentially SCO’d to get people to come in and do business with him to sell their companies.
Andrew: Well, cool. Actually, what I’ve been doing is saying, “I’ll give you all the information that I know, but really you should be talking to a lawyer. I recommend Scott Edward Walker”. Not just because he is a sponsor, but because he is the guy that I’ve been talking to for years and that is basically what he does.
Andrew: He helps companies raise money and sell their companies. Everything else that lawyers like him do, is basically help you set up with the idea that basically one day, when it’s time for you to tell, you’ll go back and say, “Whose the guy who helped me get started, whose the guy who helped me do my rough situations? Alright, I’m going to go back to him when it’s time for sale”.
Andrew: OK. I know we’ve gone a little bit over. First, let me say this, if you’re a premium member, we recently did a course with Ilya Lichtenstein, the founder of MixRank. He used to do essentially what Julian does. He bought traffic, Julian, and then he would send that traffic to affiliate programs and he would make money off of it. He did a course where he showed people how to buy traffic cheaply. He couldn’t afford going to Google ads, he couldn’t afford going to the big sites, but he found a way to buy from the smaller sites. Go, if you’re a premium member, go to mixergy.com/premium and look for the ad buying course.
Also, if you want to know how to do SCO for WordPress, I am looking right now at a course by Ryan Kelly of Pear Analytics. He now only tells you which plug-ins you need to install, he walks you through, on his computer, how he installs each one of the plug-ins for search engine optimization. He tells you why he is picking the one’s that he’s picking. He gives you links to those and he shows you hot to configure them. You don’t have to do anything but just follow his directions and learn along the way. That of course, too, is SCO for WordPress. That of course, too, is in mixergy.com/premium. If you’re not a premium member, I hope you go there and sign up, and join our community here at Mixergy. Julian, the question I wanted to ask you is this, why are you doing this interview? I mean here you are, you’re revealing revenues, you’re revealing how you got your traffic, you’re revealing so much and you’re not selling anything. Why are you doing this interview?
Julian: Yes. I sold my company. When I first started, I used to listen to Mixergy all of the time. I’ve got two dogs, I’ve got to take the dogs for a walk, it takes one hour and I listen to the whole interview, while I’m walking the dogs, on the iPod. I’ve done this for years, and you always pick up a few little tidbits here and there. There is no direct way really to thank all the guys who come on here, but, I felt that I’d learned a lot and it was my duty, I suppose, to come back on here and give something back. It’s worked for me, these taxes have worked, made me a lot of money. I just wanted to tell your guys that it is possible, you just need to put hard work in, plan ahead, and it can work.
Andrew: I’m really honored that you did this interview. I appreciate everything that you’ve told us. I hope people that use this come back and do what you did. I hope, actually, before then that they thank you. Guys, if you’re watching this interview, listening to it while walking the dog or going for a run, find a way, if you’ve benefited from it, to find a way, not to come back and thank me, but to do right now, send Julian a thank you. Julian, is there a way for them to connect with you?
Julian: Yes. I am on Twitter @ JulianHearn. That’s J U L I A N H E A R N.
Andrew: All right. Find a way to say thank you to him. I’m going to say thank you to you right now. Thanks for doing this interview.
Julian: Thank you, Andrew.
Andrew: Thank you all for watching.