Capital Efficient Entrepreneurship from Utah: Ben Dilts, Founder and CTO of Lucid Chart (Part 5)

Sramana Mitra: Your source of bringing people onto the site is all content marketing and SEO?

Ben Dilts: There are a couple of channels that have turned out to be tremendous sources of users. Early on, we were featured in the launch of the Chrome web store, which was a big deal with the Chrome team at that time. I think it has faded in popularity since then. It was, essentially, what showed up on your new tab page in the Google Chrome.

They had a marketplace there wherein you could list your applications. We got listed in the launch. We were very well-reviewed by the  users who found us there. It grew to be one of the top five installed apps in the first year after it was launched. When it launched, that channel immediately accounted for more than half of our registrations. That’s not the case anymore both because the Chrome web store is not as prominent as it once was but also because there’s fatigue there. The people who use it have already seen us there.

We still get a fair number of users through that channel. Interestingly when we look at the channels our users are coming in from, I talked about that core metric of brand new users to first payment. Depending on where people come from, that metric is wildly different. The Chrome web store is just a flood of users. It’s still probably one of our largest third-party channels in terms of raw numbers. But do you know how many people just give us an email address and a password? It’s still a fantastic channel, but very few of them pay. Proportionally, very few of them do.

We’ve taken emphasis away from that channel and other channels like it where there’s a large number of users who you could capture, but no hope of them eventually paying you. In contrast, there’s the Google Apps marketplace. They can also install third-party apps. We were there at the launch of that as well. That does not send a huge number of users. That is people who have Google Apps on their domain. When they install the apps from there, it inserts itself into a lot of different Google products for everyone on their domain.

Even though the install numbers are not enormous, the domains that have installed it account for more than 10 million users. That then becomes a channel through which we get a very high percentage of people who pay – probably double or triple the conversion rate that we find from other channels. We talk to the team at Google. We have a pretty good relationship with several different teams at Google. We have a pretty good relationship with the product managers as well as with the technical folks.

We actually pushed hard to get a couple of different things changed there in an effort to improve that channel for us. That’s in their best interests too. It has been a great channel for us. If you look at sheer number of registration, the bulk of it is direct traffic. That direct traffic on our brand name is probably the single biggest one. Then there’s SEO, content marketing, and a handful of other channels. The bulk of it, even after all of our work to improve all of these third-party channels, is still SEO, content marketing, and, now, paid search.

I mentioned that we got the average value of a user up drastically over the next few years. The value of a visitor to our website became high enough for us to be able to bid on AdWords at a competitive level. Very early on, we tried several times to get into AdWords. We just couldn’t show that the money was coming back to us in a reasonable amount of time.

Once we tried it and we had improved the registration and trial to payment funnel enough so that it became profitable and we could get paid back the money we pour into advertising inside of a year. At that point, we ramped it up as much as we could. We’re basically buying all of the English inventory that there is on AdWords. It’s a tremendous spend – $1 million a year. We get all of it back in cash inside of a year. That’s an interesting story because we tried it and failed multiple times.

It’s interesting because the formula that worked is somewhat an improvement in AdWords management. Now we have a couple of people working full-time just managing the AdWords campaign. The real reason why it became an important channel to us was because we had improved the product itself to the point where the visitor clicking through one of those ads was worth several times more than they used to be.

This segment is part 5 in the series : Capital Efficient Entrepreneurship from Utah: Ben Dilts, Founder and CTO of Lucid Chart
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