Zero To $500k Part I: Escaping The Hockey Stick of Death

By Daniel DiPiazza

My biggest wins (and lessons) of 2020 are about to pay off for your business in 2021.

Last year, my team and I successfully launched a new company called Strength of Seduction and sold 11,000 units of our flagship product a sexy workout program for couples designed to build intimacy and burn calories. 

Over the next few weeks, I’m going to be talking about what we got right on the path to over $500,000 in sales last year with a brand new company. And more importantly, I’m going to explore where we fucked up and why. 

(In fact, today I’m going to tell you about a massive strategic error that almost caused the company to go into a “death spiral” — and how we fixed the problem. Keep reading. Yikes.)

The Product: Strength of Seduction

Incredible branding and product design by our friends at Altus

Strength of Seduction is an idea that my business partner Micah and I came up with nearly 10 years ago, but only began working on in earnest October 2019. In January 2020, we officially launched the company. 

Our flagship product is similar to the P90X “at-home” workout, but for couples. Our marketing and creative is focused on the African-American audience. We sell our physical DVDs via ecommerce (Shopify) and digital subscriptions via our app. We have native apps on all smart phones (Apple + Google) and SmartTVs (Roku, Amazon FireTV, AppleTV). 

And yes, people still buy DVDs in 2020. Lots of them. I was as surprised as you are.

This video recaps our progress by April 2020. Strong start to a long journey last year!

Click to watch

2020 Progress In A Nutshell

It was a dope year, to say the least! Here’s an abbreviated list of what we were able to accomplish as a company after one year in business:

  • Grew Strength of Seduction from $0 to $500k+ Revenue in the first year of business
  • Shipped over 11,000 orders (digital and DVD)
  • Produced 4 new programs at very high quality level
  • Completed the Strength of Seduction book after 8 years (Feb 2021 release)
  • Launched the SOS apps on all mobile devices and smart TVs
  • Developed leadership IQ and ability to deal with difficult challenges
  • Developed financial IQ and decision-making ability 
  • Kept the company alive and profitable 
  • Great relationship between partners

We were able to take an idea from the graveyard of my creative imagination and bring it to life profitably. We ended the year with strong margins and some good momentum.

I think our success came down to a few key things:

  • Having a clear vision for the company and the products
  • Understanding our audience and marketing channels
  • Understanding our sales processes, systems and numbers

But I wouldn’t be writing this post if I wasn’t going to share some pain.

What about the fuck ups?

The Hockey Stick of Death

In the first half of 2020, we saw a meteoric rise in sales through July, peaking at $155,000. But by October we’d tumbled pretty dramatically. 

Q2 2020 Revenue Numbers:

  • July: $155,000
  • August: $103,000
  • September: $40,000

Q3 2020 Revenue Numbers:

  • October: $17,000
  • November: $31,000
  • December: $58,000

In October, we only brought in $17,000. Nearly down 90% from July. WTF happened?

Our numbers. The rise, fall and stabilization.

As you can see, we rose quickly, fell quickly, and then stabilized and began to grow again towards the end of the year. This is The Hockey Stick of Death in action!

One of the biggest contributing factors to our revenue dip in Q3 was removing the DVD products from the website.

We thought we were smarter than our customers. We thought that just having the streaming app was enough, and that since most people have smartphones and TVs, we wouldn’t be losing much revenue by killing the physical product and going all digital.

We thought this was going to improve sales by making it easier for people to buy the product. Plus, we figured it would be good for our margins. It was a big mistake. 

This was one of our most popular trailers

3 New Lessons. 1 Big Reminder.

Once we removed the option to purchase DVDs from the site, the declines were steady. When we added them back, sales started to pick back up. 

Here’s what we think that means:

1.) DVD customers accounted for more revenue than we previously realized. We thought we had a 70/30 split in streaming vs DVD purchasers. The real math showed we were closer to a 50/50 split. Whoops.

2.) Having the DVD on the site creates familiarity because people understand what it is, so just showing the DVD image helps to explain the product to the customer.

3.) DVDs are more expensive than streaming for the customer ($49 vs $69) , so the price differential actually pushes people to buy the cheaper streaming option.

From this experience, we were reminded that our job is to make what our customers want to buy, not just what’s easiest for our business model or margins.

This is a simple but powerful lesson worth remembering often. 

In order to get back on track, we had to revisit our marketing strategy and make some adjustments.

We dug back into our tried-and-true Marketing Toolbox to revamp and improve our positioning on the product. Works every time 🙂

The Marketing Toolbox

Great marketing connects your customers with your message so seamlessly they feel like it was tailor made for them.

Understanding your customers comes down to knowing who they are, what’s causing them problems and how you can help them.

In order to get a better understanding of our customers, my team and I used all the tools inside of The Marketing Toolbox

This is a new collection of digital tools for entrepreneurs we just released inside of The Alpha Mentorship Store.

If you’ve ever had trouble…

1.) Finding quality customers to buy your product/service consistently…

2.) Understanding what to say to target customers in your marketing that will make them want to buy from you (and tell their friends)…

 3.) Creating the perfect offer will make your target customers instantly “get it” and want to work with you…

 …then you need The Marketing Toolbox!

Part II: Life on The Margins

The Hockey Stick of Death wasn’t the only challenge we had to overcome last year. Not by a long shot. I have more confessions to make. 

Tomorrow, I’m going to share the biggest lessons we learned about improving our margins and becoming more profitable — including how changing the conversion rate of a single page by 1% doubled our revenue. 

>> UPDATE: Click here to read Part II

Free guide

21 Essential Questions For Entrepreneurs

 

21 Essential Questions On Sales, Marketing, Systems, Operations and Finance That Entrepreneurs Must Answer in 2021 + Daniel’s notes on how to improve each area in your business.

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