23. How Adoption.com Used Month-to-Month Contracts to Keep an Advertiser for 11 Years
(with Shirlee Davidson)
Back in the early days of the Internet, about 22 years ago, I hired a salesperson named Shirlee Davidson to help us generate revenue from Adoption.com. At the time, Adoption.com was very new and very unprofitable. Our expenses were more than three times higher than our revenue. Shirlee Davidson still works for Adoption.com today and has sold more adoption-related advertising than anyone in the world. Shirlee taught me the concept of relationship-driven sales, and Adoption.com used that strategy to keep a month-to-month client advertising with us every month for more than 11 years. In my interview with Shirlee, she shares this story, along with other secrets and strategies she’s gained from more than two decades helping pioneer digital monetization.
Many businesses believe that they will make more money by forcing clients to stay in long-term contracts they don’t want to be in. At Adoption.com, we developed a strategy that was the polar opposite. We offered month-to-month contracts because it lowered the initial barrier of entry for our clients to begin advertising. We didn’t want them to have any fear they were going to be forced to stay in a long-term contract that was not working for them.
More importantly, because of the month-to-month contracts, we were extremely motivated to make sure our customers were happy every single month, or they would leave. One month-to-month advertiser started with Adoption.com at just a couple thousand dollars per month, and as the advertising proved effective, the advertiser continued to increase their advertising through Adoption.com until they reached about $50,000 per month in recurring advertising. This customer advertised with Adoption.com on a month-to-month contract for more than 11 years.
The month-to-month advertising forced Adoption.com to perform better, to have more open communication with customers, understand their needs, and quickly make the changes necessary to keep our customers happy every month. We feel that we made more revenue through month-to-month contracts than by forcing customers into long-term contracts.
How to Figure Out Pricing When We’re Doing Something New
Shortly after Shirlee started with Adoption.com, she was working with a baby products company that wanted to advertise on Adoption.com. Online advertising was very new and Shirlee had no idea what to charge them. Shirlee went to the library and checked out a book about online advertising, but it was not very helpful. So, Shirlee went to her sales mentor and asked him what we should charge. The mentor replied, “Tell them to make you an offer.” Shirlee followed the advice, signed a contract starting with $2,000 per month of recurring advertising, and that organization advertised with Adoption.com every month for years.
Relationship-Driven Sales with Our First Large Customer
In the early days of Adoption.com, within a few months of Shirlee starting, she and I flew to Fort Worth, Texas to visit the Gladney Center for Adoption, one of the premier adoption agencies in the world. That day, we took a tour of their campus, went out with them for food, and were headed back to a meeting with Gladney’s management team.
Before that meeting, I asked Shirlee privately how we should handle this very important meeting. Shirlee responded that we should not mention numbers or pricing, just listen first and build a relationship. Then, we should walk away without making an offer. When we got home, we would send them a proposal customized to their needs.
That became the foundation of how we worked with clients over the years. We listened and got to know them and their needs. We walked away and later came back with a customized proposal. Because we listened first, it allowed us to make a proposal that was tailored to the potential customer’s needs. This low-pressure, relationship-driven sales approach worked well for us over the years. The Gladney Center for Adoption advertised with Adoption.com for the vast majority of two decades.
Relationship-Driven Strategy at Conferences
When we’re trying to make a sale, our first inclination is to try and tell people how great our company or products are. Shirlee taught me that everyone likes to talk about themselves and their passions much more than they want to listen to a salesperson. In other words, people are far more passionate about their lives than they are about our products and services. So, at adoption conferences, instead of trying to tell people why we are great, we focused on getting to know them, their organization, and what was important to them. People were happy to share that information, and it began to establish a relationship of trust and friendship. We connected with them through their passions.
Shirlee uses the analogy of marriage. We must date someone and build a relationship of trust before the relationship can progress to marriage. The same thing is true in relationship-driven sales. We have to focus on building the relationship of trust first and not get ahead of ourselves by asking for the sale before that has happened.
Building Trust by Refusing to Make a Sale
Shirlee tells the story of an advertiser who tried to buy a specific type of advertising, and Shirlee refused to sell it to them because she knew they would not be successful. Because Shirlee was looking out for that client’s best interest, that client trusted Shirlee so much, that later they adjusted their business practices to do a specific type of advertising with Adoption.com. The lesson of this story is to never sell a client a product that we do not feel will help them be successful.
Being There During Crisis
Shirlee helped Adoption.com build some very strong relationships with clients that went outside normal business relationships. For example, with one client we would regularly travel to his state to do activities together, such as playing sports, attending a sporting event, participating in a child’s religious ceremony, or introducing me to sushi for the first time. As a result, when his granddaughter drowned, I received a call saying that the client needed me there with him. So, within two hours I was on a flight and spent days mourning with the client and his family. Building strong relationships in advance can make it possible for clients to reach out when they are in crisis. Being there for others during times of crisis can often result in long-term loyalty and bonds that last many years and are hard to break.
Monetization Through Bundling
At one point Adoption.com had many different types of advertising products that we sold individually, and clients would “cherry-pick” elements of that advertising, and then we were left with a random assortment of unsold and unsaleable advertising. We were leaving a lot of money on the table.
While we were facing this challenge, we were attending a conference, and one of my daughters was with us. One evening my daughter wanted to swim, so Shirlee and I went down to the pool and sat on the pool deck while my daughter swam. While we sat there, we brainstormed how to solve this problem with the unsold inventory.
We knew our advertisers wanted to “own” their state. So, we used that desire to our advantage, and bundled together all of the advertising opportunities in a specific geographic area, and sold them as one exclusive package. It was kind of like Disney bundling all of their shows together and selling access to everything on Disney+ for a monthly subscription, instead of selling each movie individually. With the Adoption.com bundle, customers could own their geographic area, but to do so, they had to buy all the advertising available in that area. We included some new types of promotions that were only available through this package, added some exclusivity and scarcity, and gave them some priority over other advertisers in that state.
We rolled out this featured sponsor bundle of advertising and it radically increased our revenue in a very short period of time. One of the secrets that made this monetization breakthrough possible was that Shirlee and I were able to get out of the office without distractions and brainstorm a solution to a challenge we were facing. It’s important for team members to spend time away from the office together so they can build relationships, have time to work through issues, and find solutions together. We need to create spaces for innovation away from the daily office distractions.
“One of the best monetization strategies that have worked well in my career is to give something away for free and then to make money selling something else.”
– Nathan Gwilliam
In the freemium model, a business gives something away for free to build trust, credibility and reach, and then the business makes money by selling something else to that customer. Shirlee explains how the freemium model was one of the most successful monetization strategies at Adoption.com. Shirlee would give away a free advertising banner design along with a free month of advertising to hook the client and show them the results they can achieve. After Shirlee did this, a large percentage of the freemium clients converted into paying customers. This type of freemium model can help break down initial barriers to entry and help new customers who otherwise would not test our products and services to do so.
The 4-Step Evolutionary Involvement with an Industry Association
In the adoption community, the leading association is the National Council for Adoption (NCFA). In Shirlee’s interview, we talk about how over the years Adoption.com evolved through 4 different evolutionary types of interaction with this association.
1. No Credibility — In the early days of Adoption.com, Adoption.com was not allowed to attend the NCFA conference because we were untrusted outsiders with no credibility.
2. Sponsor — Then, Shirlee worked with NCFA to allow Adoption.com to help sponsor the conference and have a table, but we had to plead with people to come talk to us. At this point, our only real value to this organization was that we were providing funds to support the event.
3. Thought Leader — Then, NCFA invited me to speak at their event, and we instantly began to be perceived as trusted thought leaders. At this point, people started coming to us and asking for our help to solve their problems.
4. Leader — Then, years later NCFA invited me to serve on the Board of Directors (and later the Executive Committee) of the association, and I was able to serve in a leadership role to help the members and assist in fighting some legal and regulatory battles. Helping someone fighting their battles is one of the greatest ways to build trust and credibility. This helped build a much deeper level of credibility with adoption organizations. At this point, we were no longer outsiders. Instead, we became part of their community, a member of their tribe.
Credibility from Speaking at a Conference
We normally didn’t attend local adoption events because there weren’t enough people for us to see a return on our investment. However, one year they needed a featured sponsor in Florida, so we accepted an invitation to attend and for me to speak at the Florida Adoption Conference. We had not sold that Florida advertising package prior to the event, but while I was speaking, a customer left my speech and went to our booth to secure the advertising. By speaking at the credible event, that credibility flowed through to me, and I was perceived as a credible expert. Speaking at an association event is a tremendous way to establish credibility with members of that association.
Here are some of my key takeaways from Shirlee’s interview:
1. Month-to-month contracts might generate more money than long-term contracts because we are forced to keep customers happy every month.
2. When we’re selling something new and don’t know what to charge, one option is to ask the other person to make an offer so we at least have a starting point.
3. In business-to-business sales, focus on relationship-driven sales instead of high-pressure sales. Shirlee and I tried to meet the potential customer, listen to them, and build a relationship of trust with them first. Then walk away and send them a proposal later. When we focused on relationships first, the sales happened as a natural result.
4. Relationship-driven sales tend to lead to longer-term revenue streams.
5. Start the relationship by asking questions about the potential customer and their interests. We should listen, and build a relationship of trust before we try to talk about our business, products, or services.
6. Don’t sell customers a product or service we don’t believe will work for them. Find the right fit.
7. Being there for customers during hard times is a powerful way to build loyal relationships.
8. Consider bundling a group of products and services together to accelerate monetization and avoid leaving money on the table.
9. The freemium model is one of the most successful digital monetization strategies. Give something away for free, and then make money selling something else to those customers.
10. Find the best association(s) in our industry and work to evolve in our engagement and credibility with the members of that organization.
11. Speaking at association events is a powerful way to increase our credibility with members of those organizations.
If we desire monetization we have never before achieved, we must leverage strategies we have never before implemented.
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