Question

Topic: Strategy

At What Point Do You Pull The Plug?

Posted byJoeon11/21/2007 at 12:11 AM ET 250 Points
I have a website which I built as a side thing in 2005 and launched in Jan. 2006. Many many hours coding, teaching myself php as I went, and I finally got it working. It's a subscription-based site which helps would-be real estate investors crunch numbers on investment properties (https://www.real-estate-genius.com/）.该网站是在房地产boom, when people were paying crazy prices that my MBA training told me could never be justified.

At the time, competing products were all boxed install-on-your-pc programs, so I created something which was web-based, and monthly subscription (so much lower cost to try for a month or two). I figured I couldn't lose, as my overhead would be low and the subscription base would rapidly grow and have me driving a Maserati in no time.

So, in reality, what happened was... not much. I have not been able to get past a small user base, my customer retention is not great, conversion rates are too low, and of course the real estate market has subsequently crashed, surely driving many potential customers away.

I was of the impression I did a decent job with positioning this thing, and a so-so job with marketing it. Pretty decent SEO anyways. But as a business, it just won't take hold. I've built and run a site at my primary job where I have a drastically different result-- people basically seem to throw money at us. So it's become very frustrating to me that I can't get this thing to fly. This site is a sideline for me, so it's not the end of the world, but of course I don't need the cash drain. It is my first entrepreneurial effort, so I really wanted it to go well. But my gut feeling is that if the site were going to work, it should have a whole lot more momentum than it does.

My question is: how or at what point would you folks decide that you're throwing good money after bad and kill your baby? While I'd welcome any feedback or gut reactions on my site, my primary purpose for posting is to get a feel of how other people would decide hold 'em vs. fold 'em.
To continue reading this question and the solution, sign up ... it's free!
SUBSCRIBE
或,SIGN IN

RESPONSES

  • Posted byPeter (henna gaijin)on11/21/2007 at 12:42 AM Accepted
    At what point would I decide - that would be when I really don't think I could make a go of it any more. Not a fixed time or number - just a gut feeling I have. The point where I don't want to put the effort in, or I don't think that it could be made to work.

    Outside of this, just a quick thought. I suspect many real estate investors are looking at investing in just one rental property, so may get scared off by "a monthly subscription" (which they would have to unsubscribe from, with the fear that it would be difficult to do so). Maybe you can try a 1 time sign up (say $10 for 2 months where it automatically shuts off afterwards - though of course you would try to get them to convert to monthly subscriptions). This way they can run the numbers when they buy the property, but won't feel like they are stuck in any long term situation.

  • Posted byHans De Keulenaeron11/21/2007 at 1:08 AM Accepted
    Dear Joe:

    Looking at your site, it looks like you've done many of the right things right. Your website is well engineered, looks good and you run a blog to establish thought leadership in your niche (the blog could be a bit better integrated into the site, but that's not a major issue).

    I'm not a skeptical person, and surely much less skeptical than even the least skeptical real estate agent. But I find it hard to believe the claim made on the front page: "Our real estate investment software predicts whether your investment will be profitable... in just minutes!". Taking the tour, what it appears to do is to calculate a financial return on a number of scenario's based on agent input.

    Have you asked agents whether your products meets a need? Can they use the scenario projections in front of a prospective customer without legal exposure? Such case studies might do at least 3 things for you:
    - material to liven up your blog
    - material to demonstrate user benefits on the home page (right now, it's a bit product and feature oriented, rather than user and benefit oriented; you need product & feature, but it needs to be demoted)
    - hints how to pitch the product

    Alternatively, you have now developed a lot of experience for developing a web-based application and marketing it. I would not be afraid of building on that experience for starting something fresh at some stage. We're still scratching the surface for web-based applications.

    This being said, building a revenue base based on online subscriptions is a tall order. There's just so much on the internet and so much of it is free.

    Hope this helps.

    Regards,
    Hans

  • Posted bywnelsonon11/21/2007 at 1:12 AM Accepted
    Joe,

    The point I would decide to pull the plug is just after I had the idea, surveyed the market to see if any real estate investors had needs this satisfied, how you'd reach those people who did have needs, if any, did a careful competitive evaluation to understand strengths and weaknesses of competitors' products, completed a SWOT analysis, set some strategies - like pricing, brand, product, etc.

    If the survey results came back that this idea didn't meet anyone's needs or that the market of those who did have needs was so small as to make the investment never pay off - that's the point I would pull the plug. In other words, after I did my marketing analysis. Past tense.

    也许你这样做,发现很多支持formation. If so, maybe it's time to resurvey. If the results come back that it's a "dry hold," then pull the plug.

    I hope this helps.

    Wayde
  • Posted byCarolBlahaon11/21/2007 at 1:51 AM Member
    What did you do to promote the site? Why do you have poor customer retention? I would think that while the real estate market is down-- investors would be up. They is money to be had.

    Sell Well and Prosper tm
  • Posted byFrank Hurtteon11/21/2007 at 9:35 AM Accepted
    Joe,
    Before you just pull the plug, i would look for a buyer. You have done much of the heavy lifting. There may be somebody out there who is willing to take your site and add it to their collection of sites. The beauty of the internet is a few dollars from 100 sites and you are making real money.
  • Posted byJay Hamilton-Rothon11/21/2007 at 10:48 AM Accepted
    In the core statistics that you mentioned: " I have not been able to get past a small user base, my customer retention is not great, conversion rates are too low..."

    As you know, to be viable you need traffic, conversions, and retention. I would first focus on retention: why are people leaving? These people would have a goldmine of information for you to make wise future decisions.

    If you're not getting conversions, then the problem is either your copy, offer, or you're targeting the wrong people. My guess is you're not giving them a reason to trust you - you want people to pay $4.95/mo but they can't try-before-they-buy.

    If you're not getting traffic - you need to build it. But don't do it until after you've solved retention and conversions.

    As for pulling the plug - you have a great experiment, and if you treat it as such (rather than an urgent source of revenue), you have the opportunity to learn a lot and potentially succeed.
  • Posted on11/21/2007 at 12:02 PM Accepted
    Maybe you're going after the wrong market with the product...maybe it should be marketed to the accountants to save them time drilling down the numbers...don't investors run their numbers by their accountants?

    Just a thought.
  • Posted byJoeon11/21/2007 at 1:29 PM Author
    Thanks for all of this feedback folks. There are some great ideas in the responses. The 3 ideas which jump out at me most are:
    1) modify the homepage message,

    2) tweak the subscription model, probably away from auto-renew in favor of buying access for a certain amount of time (then push the 'No Commitments' benefit), and

    3) figure out some way to offer a free / limited access membership so people can try before they buy.

    Now I have my work cut out for me over the long weekend... Thanks for your input!
BACK TO TOP

Post a Comment

Related Discussions

Community Info

Top 25 Experts
(Strategy)