Conversational messaging isn’t new.

Intercom and Drift, two of the fastest growing SaaS companies, focus primarily on conversational messaging. In fact, it’s over a billion-dollar industry just on the support and customer onboarding side.

What’s new is how it’s being used.

No longer is conversational messaging just relegated to after a prospects converts, it’s now a key part of the acquisition process. Aaron Christopher, CEO and co-founder of Drips, saw this opportunity.

While everyone was playing follow the leader in building new bots to help with support, he went all in on helping companies lower their cost of acquisition. And he’s not increasing conversion percentages by a percent here and there with Drips, he’s – in some cases – quadrupling it.

This isn’t a Silicon Valley unicorn success story either

This is happening in the heart of Akron, Ohio.

In this post, we’re diving into how Aaron created a SaaS company in one of the unlikely locations doing 10 million ARR by putting conversational acquisition at the forefront of company growth.

How did you get started in entrepreneurship?

Aaron is a true growth hacker. Having used many of his earlier sites from college humor to South Park avatar creation, it’s intriguing to see one of the top pioneers of wild, entertainment on the web turn to software.

As he explained it, “I’ve been an entrepreneur since nineteen starting in the days when online spamming got created. We built a lot of big humor sites. We even built a custom South Park avatar site. You could build these avatars almost like bitmojis. You could change the shirt, hair, face, and skin tone. 

We weren’t authorized by South Park, but because we weren’t selling anything we got away with it. Growth hacking back then – there was only Myspace so there was no way to go viral right? 

There was no way to share content unless you went one by one to people’s walls you knew and pasted some HTML. So that’s exactly what we did. We built a way where we would capture people’s emails and passwords, then we would go through a PHP cURL. We’d log into their Myspace and take their custom South Park and post it on every single one of their friends’ walls.

It went super viral – 10,000 registrants a day.”

What attitude makes you different?

Aaron isn’t a Silicon Valley entrepreneur. He’s bootstrapped in the heart of Akron, Ohio. This makes what he does extra special because he’s bringing tech to a more traditional city not known for its software presence. It’s not easy – to say the least. That’s why he adopts the mindset of sell before you build while constantly iterating on MVPs.

“We always sell before we build – even in our video. We had a Drips video of what we do on the homepage, and there are features in there that we didn’t have for the first six months, but we knew we would we would build them. We still talk about things that we know are in our pipeline, but we also know that we have enough leeway that if somebody pressed it, we’d have enough time to create it.

One of the things that make my CTO, Tony, and I different is we come from a bootstrapped background. We always built tools and products to make money, not to raise money. So we had to come up with minimum viable products often very quickly.

Our motto is if it’s broke, it’s okay. Done is better than perfect. Just kind of getting some proof of concepts out. That’s ultimately what allowed us to get to profitability fast.

We built the first version of drips in 2015. We broke profitability in 2016 and we’ve grown three hundred sixty percent year-over-year revenue wise since 2015. It’s all based on iterative minimum viable products. If we have a new feature, often Tony would build the MVP to prove its validity first before it goes to the to the dev team to build out.”

How did Drips get started?

Like many huge companies today, Drips was born from a small project that kept on growing. It grew to the point where there was no other option, but to turn it into a company.

“We were doing lead gen for one of our partners, Tom. He was working with student loan consolidation leads and buying them on Facebook for two dollars. He converted 10% of them through his SMS platform into calls for $25.

Then one day Tom’s SMS system broke. He came to us, ‘I can’t keep buying leads from you guys. You need to help me fix it.’

I stayed up all night, then twelve hours later had an MVP coded in PHP.

He asked, ‘What does your system do?’

‘It takes the last seven days of leads from your database, then sends them a text message at noon.’

‘Hi, this is Student Debt Freedom. Call us back at 180…’

I recoded it to give it a more personalized message. I changed it to pass the user’s first name and gave it more context of where the user came from.

‘Hey {first name}, thanks for your submission on Facebook. This is the student loan consolidation company you inquired about. I’m here and happy to help you. I’m here till 5:00. Call me anytime.’

He started converting 15% versus 10% of his leads.

That’s a 50% lift on his conversion.

At this point, he’s super happy.

Then he asked, ‘What else can we do?’

So I added in phone calls because he also had a call center dialing on the leads.

Now, we had an omnichannel approach. We had a text that said ‘I’m going to call you in an hour’, then it called them in an hour and if they didn’t pick it up, it would send a text saying,

‘Hey {first name}, I just tried to call you. Can you call me back?…’

That got him up to a 20% conversion rate.

Now, he’s at double his conversion rate from where he started.

At this time, I brought in my CTO, Tony, to fix the code for the product.

It was the most ghetto thing ever.

Tony asked, ‘how do you turn it off?’

‘You just shut it.’

Tony recoded it.

He noted,’ You guys are getting thousands of errors a day.’

‘What errors?’

‘Every time somebody texts back, it’s hitting the API and it’s looking for a way to handle that response.’

‘What are these people saying?’

And that’s when we had the aha moment.

‘Look what these people are saying. They’re saying,

‘Call me now.’

‘I’m busy, call me at 5 p.m.’

‘Call me tomorrow.’

‘Uh, no thank you.’

We were doing nothing with these responses.

To handle the responses, we built a chat room. That was the next minimum viable product. We didn’t build a machine learning artificial intelligence like we have now. We just built a chat room and we staffed a few people to operate it. That got them up to 42 percent conversion where he was at 10% previously with the same data.

At that time, we were only doing about a thousand leads a day. Today, we’re doing a few hundred thousand leads a day. It’s almost all entirely automated. We still have a human for if the system doesn’t know what the person is saying. It’ll get kicked to an operator. That operator will review it, read it, respond appropriately, and that will train the system.”

What problem are you solving?

When talking to Aaron, it’s clear he understands there’s a divide in old-school marketing and new-school marketing.

“The whole hypothesis about why texting and message robots do so well is nobody wants to take phone calls anymore. On the flipside, businesses don’t want leads because they have to get a hold of the lead. So we built a tool that would send text messages to these leads to get them on the phone for our clients like T-Mobile.

Up to this point, most people weren’t doing any SMS, especially conversationally. They’re just using SMS as a push mechanism – same as most people use email. So what we did was build a bot to digest the responses to turn it into a conversational messaging tool and that’s what we do now.”

Why is marketing different today?

There’s a reason people no longer want to take phone calls.

It comes down to one word: convenience.

As Aaron explains it,

“Your phone rings. It’s not a number that’s in your phone book. Even if it is, I can call my mom right now and she’ll probably red button me and say, ‘What’s up? I’m busy.’ The reason everybody is busy now is we all have everything we could ever want on-demand.

We have Uber, Postmates, can pause live TV, download books, and even same-day delivery from Amazon. As consumers, it has conditioned us to expect what we want when we want it. So when somebody dials you, it comes off as disrespectful of your time. 

But texting or messaging is much more passive. I’m texting you and you can get back to me whenever it’s convenient for you because, again, we live in a world where we can get anything we want whenever we want.

Even if I want a date tonight, I can just download an app and swipe right a few times. People aren’t taking phone calls anymore and all the companies that we work with are stuck outbound dialing their leads. At the same time, they’re expecting a different result, but they’re doing the same thing.”

What makes your product stand out in the space?

Aaron has a huge advantage over his competitors. Besides the product, it’s Drips’ first-mover advantage and less competition because they focus on acquisition.

“We’ve had 120 million conversations now and doing almost a half million new ones each day. So I always say we’re kind of like the Tesla of conversational bots. We’ve been doing it for so long and have so much data, I’d be surprised if anybody catches up with us. That’s on the acquisition side.

There’s a ton of companies that are trying to crack it from the support side. I’m not interested in that. I like coming up with ideas on the acquisition side because if we can increase that conversion rate, it’s really meaningful and impactful to our clients’ bottom line.”

Who makes up your customer base?

Aaron knows his company stands out in the customer acquisition space because they’re not replacing what companies do, they’re simply making it better in an area with zero competitors. So rather than going after smaller companies, they’re frying bigger fish.

“There’s an onboarding cycle because we’re bringing on companies like Thomson Reuters. They’re not going to just add a credit card and start using us. It took us nine months to onboard them.

We’re still onboarding T-Mobile after almost a year. Some of these companies have hard-core due diligence requirements. We have to do security audits and third-party penetration tests. It pushes us to keep leveling up our game to get it right. Everything from the right firewalls to certifications. 

Focusing on a few key markets will be big for us this year and just trying to go deep into certain segments. The reason is it’s hard to define your brand if you have so many different customers. It also makes it harder to do account-based marketing.”

What’s a primary channel you’ve used to get traction?

The surprise here is Drips hasn’t had to do a ton of marketing. The reason is they have excellent product/market fit, referrals, and one traction channel working exceptionally well.

“We’ll try to get the attendee list from relevant conferences, then append their emails using tools like SellHack. Then I’ll segment and message all the CEOs and say,

‘Hey Josh, I didn’t end up getting to make it to {conference name}…’

It’ll be something like that just to spin up conversations.”

What’s the next move to acquire more customers?

Aaron knows that marketing directly to prospects has its pluses and minuses. Instead, of turning a cold lead into a warm one, he’s found a way to leverage companies and brands that already have those connections.

Agencies have been a real success for us. For example, if an agency is doing lead gen for a company, they often have to hit a certain customer acquisition cost or cost per lead.

The problem is the agency may do a great job at generating these leads, but then you’re giving those leads to the clients. The clients may not have the best lead follow-up software or methodologies in place.

They’re coming back to you saying ‘Hey guys, I can’t get a hold of these leads.’

You ask, ‘What are you doing?’

‘We give them to our call center and they call them within two days.’

The agency is stuck in a position where they can generate the leads, but they can’t generate the customers because the client ultimately is doing a poor job of following up.

As a result, we’ve had a lot of luck working through agencies because they want to refer Drips to the client. This way the clients will follow-up using conversational drip campaigns that convert.

In the end, we help the agency hit their target CPA, which means everybody wins. Plus, we get the direct relationship with the end client.

How do you go about hiring?

Hiring will either make or break your startup.

Aaron recommends throwing the startup mentality out the window when it comes to salary and getting the best people for the position even if you have to dig deeper into your budget.

“You need to hire as senior as a person as you can possibly afford and even push it a little bit. That’s been something that I realized every time we’ve hired somebody that was.

They cost more than we had budgeted, was a little overqualified than what we were looking for, and then they came in and crushed it.

A lot of startups get into hiring somebody because they have a pulse. They think they can train them. That’s true at the very beginning, but it’s an easy trap to fall into. You don’t realize how much that costs you. Number one rule: Don’t cheap out on hires.”

Hitting the Next Milestone

Intercom is valued at over a billion dollars.

It’s one of the fastest growing SaaS companies ever.

Here’s the catch: they’re not even on the same side as Drips. By focusing on lowering the acquisition cost, the metric companies often care more about than that of support KPIs, Aaron is propelling the next stage of growth. It’d be no surprise to see them go from 10 million in revenue to 100 million in the next couple of years.

Who knows, they might just be the next unicorn.

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