Bootstrapping Using Services and Piggybacking from Australia: StoreConnect CEO Mikel Lindsaar (Part 4)

Sramana Mitra: Where did this idea come from?

Mikel Lindsaar: From the services business. reinteractive does a lot of customer applications connected to Salesforce.

Sramana Mitra: Are all your product ideas from your services business?

Mikel Lindsaar: MetaPulse was something that I always wanted to build. I created my services business so I can create MetaPulse. StoreConnect came out of reinteractive.

Sramana Mitra: It sounds like StoreConnect has the best customer validation out of all of your ideas.

Mikel Lindsaar: Yes. In terms of growth, StoreConnect is the fastest to grow. We split it out into its own business in June last year. In the last 11 months, we’ve had 36 Salesforce consulting partners sign up on our partner program.

We were talking to Stripe in Australia. He said, “How’s your partnership program doing?” We said, “It’s going good. We are quite on target for 50 partners by the end of June.” He said, “When did you start?” We started July last year and we’re at 36. He said, “What are you talking about? I have a team of five and we get one a month.”

It’s been a really explosive journey. To become certified in CommerceCloud takes millions of dollars. It’s just a big product. We’ve taken a lot of that complexity out. StoreConnect is exploding. StoreConnect is probably at the half-million mark, but the trajectory is ridiculous. We do two things really well. The first one is, when a customer signs up, it becomes really hard to leave.

Sramana Mitra: Right, this is high exit barrier integration.

Mikel Lindsaar: High barrier to entry but just as high to leave. It takes a lot of work to win a customer but once we win them, they’re very sticky.

Sramana Mitra: What’s the average deal size?

Mikel Lindsaar: We have three plans – small, medium, and large. $3,500 a year, $12,000 a year, and then $30,000 a year. On top of that, we have a shared success fee. Every sale they do, we take a clip of the ticket. We have a recurring revenue stream, but every client increases their spending with us because they’re growing as a business. We get paid if they grow.

Sramana Mitra: Why would the e-commerce merchants pay you transaction fees? What are you doing for them that justifies transaction fees?

Mikel Lindsaar: We’re doing the full integration and synchronization in Salesforce. We build their website. They do their e-commerce transactions and then we synchronize and get all that data into Salesforce. The more transactions they do, the more revenue to us in getting all that data into Salesforce.

Sramana Mitra: It’s a usage-based pricing.

Mikel Lindsaar: Pretty much. The other thing is that a client who’s doing a $10,000 per cart transaction is going to be way more annoyed if that transaction fails than someone who’s doing a $10 transaction. We charge the value of the cart for that reason and cap it. Those heavy B2B customers tend to be a different type of support beast than someone who’s doing a thousand transactions a day.

If you’re doing two transactions a day and they’re very expensive and when one fails, you’re all over the support lines. It’s a very important thing to think about when you’re building out your business. How are you going to support this thing? Everything fails for whatever reason. You need to know and understand that and adjust your pricing as you go. I’ve adjusted my pricing five or six times in the last four years trying to figure out where the sweet spot is.

Sramana Mitra: How are you aquiring customers?

Mikel Lindsaar: Salesforce is sending us prospects every day now. We spend a lot of time enabling Salesforce. I do a demo every day or two. In the last four years, I would have done a couple of thousand enablement sessions with partners and clients. We’ve demoed StoreConnect to more than 300 prospects in the last three years. Each one is an hour long. That’s 300-plus hours of demonstrations that I’ve done.

This segment is part 4 in the series : Bootstrapping Using Services and Piggybacking from Australia: StoreConnect CEO Mikel Lindsaar
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