I have been trying to find a scalable channel for acquiring potential customers for my startup, RecordBox. The target customer segment for RecordBox is music students. RecordBox aims to provide these students with simple tools for recording, storing, and organizing music. Based on conversations with musicians, it seems like my value proposition has some appeal.

So far so good. The next logical step in developing the business model is to find a scalable channel for reaching these students of music (ie. my target customers). The first two channels I have experimented with are:

  1. Online advertising. My first choice because of its scalability and measurability.
  2. Real-world contacts.

In this post I will share the experiments I have run in testing each of these channels, the lessons learnt, and the next steps in my journey.

Online advertising

To test this channel, I put up a landing page and ran three ad campaigns: Google Adwords, Google Adsense, and Facebook ads.

Google AdWords : My Adwords campaign was a failure. I got a total of 200 impressions for my ads over the course of 7 days. Simply put, nobody seemed to be searching for a simpler way to record music. I should have known this since I had used the Google Keyword Tool to estimate the traffic I could expect Google to drive to my site. But it turned out that I used the tool incorrectly. I made all the newbie mistakes as documented in this article by Rob Walling. Once I corrected those mistakes, it was plain to see that I could simply not rely on Adwords to try to drive traffic to my site.

Google AdSense : If no one was searching, then my only other online advertising option was display ads. So I started running ads through Google AdSense as well. I got 240,000 impressions in 3 days with around 120 clicks, giving me a Click Through Rate (CTR) of 0.06%. This is indicative of low consumer interest. The good news is that 2 of those clicks went all the way and clicked 'sign up' even after seeing that there was a price attached to my service. That is a conversion rate of 1.3%, which is encouraging.

Facebook Ads: I used facebook to target people who had listed themselves as music students. This campaign reached ~100,000 people over 7 days, and had around 250,000 impressions. I got 47 clicks, giving me a CTR of 0.019%. None of those 47 clicks converted.

Summary: All in all, I spent around 2 weeks playing with online advertising channels, invested around $150, got 160 visitors to my site, and 2 conversions to a trial signup. My Customer Acquisition Cost (CAC) through this channel was $80. That is really high by any standard, and especially for a boostrapper like me.

So I decided that I had to explore other channels, and began to tap into my real-world contacts.

Real-world contacts

Since I am a music student, I have a real-world network to leverage. I used this network to send out a survey which asked students about their recording habits. The survey reached around 140 people, out of which 33 responded.

From the survey it emerged that creating, managing, and finding recordings was pain for which there was no established solution. Further, over 50% of the respondents said that they might pay for a service which made recording easier.

I have been advised that it would not be wise to take the survey responses on face value. People's actions are known to diverge from their stated intentions when it comes to spending money: they may say such-and-such service would be worth paying for, but when the time comes to pay for it, they might find that they don't find it so appealing any more.

Hence I need a way to figure out whether my survey respondents mean what they say. One way to test this is:

  1. Design and build a Mock UI for my service in plain HTML / CSS.
  2. Use this Mock UI to build a new landing page with screenshots, videos, etc.
  3. Add a sign-up form which accepts credit card numbers. The form should look legit and should have SSL, etc. Wufoo would be good for this purpose.
  4. Send the new site out to some of the survey respondents anonymously. The message could say "You recently filled out a survey about your music recording habits and expressed interest in a tool which would make creating and managing recordings easier. So we thought you might be interested in RecordBox, a simple recording service for students of music. Check it out at [link]."

Where to go from here

If none my survey respondents are willing to part with their credit card number after saying that they would pay for a service like RecordBox, then that means that there is no known, viable, way that RecordBox can begin to gain paying customers for its value proposition. I would have to search for new channels, pivot the value proposition, or pivot target customers.

If, however, my survey respondents do provide a credit card number, then I can trust that my real world channel has legs.

This will allow me to move on to figuring out my cost-structure, my pricing, etc.. Once I can make the equation balance (ie. I have a validated value proposition, validated customers, validated scalable channels to those customers, and revenues exceeding costs), then it will come to down to product design and execution.

Writing this blog about my thoughts and my experiences is really therapeutic. If it is of help to some fellow entrepreneurs out there, I would love to know it!

Thanks for reading!