How Salesnexus CEO Craig Klein grew to $5.3M revenue and 5K customers in 2024.

hello everybody my guest today is Craig Klein he's the founder and CEO of sales Nexus dot-com a leading CRM marketing automation and lead generation solution for sales teams from 10 to 100 he's also the author of inside out selling a guide to growing and managing sales teams Craig earlier you take us to the top yes sir what is wrong this space is so competitive what is going through your head why compete why not why not quit move on and try something less competitive yeah that's a great question well first of all we started 15 years ago when there wasn't so many competitors and at that time our target market was people that have been using act if you remember that that was like the granddaddy of all it's still around they were just they were just on the show Swift page oh yeah yeah awesome yeah great program and everybody loved it but you know it wasn't in the cloud and Salesforce came around and put everything in the cloud that was our plans we're gonna help everybody using act get into the cloud so why did Benioff take the take the win there and you didn't you didn't win well he bootstrapped yeah I love that ok very good I always love a good bootstrap story okay so 2003 about 15 years ago you founded tell me what the average customer pays you per month would you say about 3 or 4 users you know so they're they're paying 150 200 dollars a month ok that's fairly healthy and where are on the earlier 2003 walk me through what that first year looked like I mean were you developing was a pre revenue the whole year what happened yeah the first year we were we were I was I still had my day job we were moonlighting you know all that and we had some development contractors that were helping us write the code and that was man what an eye-opening experience that was what about it I had never managed the development project so I had manage sales people surprise things right so I learned a lot about all of that but we got it done we got it released and and you know it worked it worked great we we got off to a good start and that was right around the time also that Google was just starting to offer pay-per-click and things like that right so and back then we didn't have 30 other competitors bidding up the keyword so we were able to drive lots of traffic with Paperclip know and really get off to a really ramp you know ramped up quickly how many how many customers you saw at that first year do you remember oh man it was enough time you know but for us at the time it was it was a lot you know I'm gonna say three or four hundred okay and what have you scaled to today now we're at about five thousand five okay that's great so 5,000 customers and have you done a bunch of pricing experiments or it's always been about 150,000 or $50 per month average no we played around with different things one of the things that we do is that's different is we include the implementation service in the in what we provide we don't farm that out for consultants like most of our competitors you're talking about spa that has a lot of value-added resellers yeah exactly so we don't do that we do it ourselves because we know that's how we're gonna help our customers get it right and as you probably know people often get CRM very wrong so anyway we've played around with packaging that service in different ways and today though we find that we have to compete on you know people evaluate our website when they come to it based on the price right we've got to have some packages that compare with what they're seeing elsewhere right and then once we start talking to them we tell them about the other services everything also and so give me a general sense of kind of where got today in terms of revenue what's your run rate today well let's see we're doing about three and a half 399 a year yeah okay so walk me through so 3 and 1/2 million a year would be about 300 grand per month but if I take that 5,000 number you just gave me of customers multiplied by the $150 a month average that would put you at about double that so is it the 150 is actually lower your average is actually lower than that or do you have less customers well we have a lot of small customers that aren't paying at the 150 or 200 right got it they might pay us 50 bucks a month I see I see okay so if you're at if you're at the 3.5 million run rate today which means you're doing about 300 grand per month if I divide 5,000 into that that means your historical average is about 58 bucks per customer per month that's not more accurate yeah you know that sounds about right like say I'd say a third or so of our businesses single user accounts you know they with for years and years of use the only reason I'm pushing that average question is because on you've seen a lot of these is you figure out creative ways to kind of increase pricing over time so that's why maybe you have a lot of customers but your current day starting ARPU is much higher than your historical average so what how do you increase pricing over time and if so what has allowed you to do that yeah well part of it is the you know the market system shirt right and and we've got we added probably five years in our marketing automation capabilities or at least we began to layer those in and so that allowed us to increase prices okay and so now when we're competing people are comparing our prices they're really comparing us with the cost of a CRM and a marketing automation or email marketing sales and walk me through kind of your growth rate if you're doing 3.5 million run rate today where were you a year ago um about three and a quarter okay that's not bad growth for bootstrapping right yeah we're we're not in the business of trying to take over the world we're in the business of keeping our customers for a long time that's how we make okay so you know my next question is gonna be if you mentioned keeping customers right what's your turn you know I figured out how you guys calculate churn in the map but what I can tell you is the average customer lifetime in the CRM business is about 28 months believe it or not so people sign up the Salesforce or HubSpot or whatever and two years later they're looking for a replacement what's yours I don't wish that on anybody ours is five years five years okay so that would be what sick about sixty months something like that yeah okay and so what makes that differed runs stays with you for five years meaning let's say set of a hundred customers this month and if we fast forward five years from now they'll all be you're close to all of them will be turned that means that you're turning only about two percent of logos per month that's how you calculate churn okay that sounds about right that's about right about every year it's about ten percent yeah okay yeah okay well two percent a month would be twenty four percent but ten percent I get we were coming from UM when what are you doing so when someone signs up for that your crm platform what's the first thing you've got to get them to do like in their first session to drastically increase the likelihood they stay with you for a long time we gotta get them to customize right that's the that's our magic ingredient no way specifically well customize just the the layout in the fields the data they're gonna capture when they're on the phone with a customer what do they put them in there right we're gonna lay all that out for them so that it's easy for the salesperson with one hand with a master go click click click and capture the key data right because that's gonna Drive all their marketing automation and everything else we can get them to that but we then just being a sales person in the CRM starts getting easy and that's really the key to success because that's you know sales people don't use it CRM doesn't work you don't stay a customer yep how are the funnel today how are you getting new customers we're doing a lot of online advertising and recently how much how much per month [Music] around 10k okay that's that's not horrible that's only what that's less than 5% of your monthly revenue yeah I mean you know we do a little bit of everything else right but that's the main piece and what's really been working well for us lately is video ads is that interesting yeah so you're got a face for TV is what you're telling me huh know about me but we we found some good people that helped us put together some nice little demo kind of you know what is it sort of videos and a few other things and they're working really well so you're spending 10 15 grand a month on paid spend I assume then you really you can back into what your customer acquisition cost is what is it today it's around let's see I know that cost per lead bit cost so it's around three in a row okay and you're in and you're how you're doing okay cost per lead is 10 bucks and we need 30 leads for one new customer so 300 yeah interesting what do you have to do with those leads to get one of them to convert is it just the customization thing same answer like I mentioned before we have that a lot of small customers that use our solution although our target is you know medium size sales team you know five pinyon or more sales people where you got the sales manager maybe some regional managers that kind of thing that's where our system really shines in so that's step one for us it's triaging the leads as they come in are we talking about a small business or you know some sort of a medium-size business or a lot you know large sales team we kind of handle those differently right what's your team size today our sales team notice you and everyone everyone oh we're about 20 people 20 folks that's great where is everyone remote or everyone is down in Houston no we're mostly in Houston but we were actually virtual we had an office for years and years and about a year ago we went virtually man we love it it's great and and you save a big lease five grand a month right yeah although that wasn't really the issue the issue was I live kind of in Central Houston and I live five minutes from where the office was and nice for me but everyone else was in this suburb and they would spend an hour and a half in the car every day at least yeah yeah and so it just made sense and frankly I like and are you guys cashflow positive today oh yeah so let me ask you a question how do you I mean it sounds like you built it Jim Collins as good as the enemy of great right you've built a company that's spending off cash flow you've built over the past 15 years there's no incentive for you to do anything with it because you're making money from it you live a healthy life you're comfortable you're happy how do you make a decision if someone comes to you and says hey we'll pay you five times your annual revenue right to buy the company how do you decide on a yes or no decision well first of all you know I'm not battled that I'm trying to get out of it and I think that we we have a lot of things that we want to do you know the the world's changing a lot has changed a lot in the 15 years we've been doing this and our mission has always been to help salespeople be better at building long-term relationships with their customers and I see tons of opportunity to add capabilities in our system that help salespeople do that I also see the sales world is changing radically right and so it's if I were buying a CRM right now I would be pulling my hair out because there's so many options and how do you know what the future is going to look like next year you know we see some opportunities to integrate with telephony and do some things with mobile things like that that can really do some new things both sales person it's not really using the tool and more they're just doing their job these are all this is the right answer Craig the product focus but I mean are you married right now no ok ok well that takes that question off you have kids yeah ok so if you went home to you own more than 50% of the company yeah ok if you went home to your kids tonight and said hey fellas and ladies or whatever I just turned down a 20 million dollar offer to sell the company do they kill you they go dad are you you're crazy what's going on no I don't think so I mean it's not like we're starving over here we're all having fun we're doing fine I like what I do I have a passion for what I do you know that's why I wrote my book you know I've been doing this for 12 or 13 years when I started working on it what I found was that I'm working with all these customers and there's a lot about managing their sales team that they just don't know not because they're stupid or anything it's just they don't know because they're not sales managers their business them know and I think that we're in a unique position to really help businesses get sales right in this crazy new world that's that's alright Craig let's wrap them here with the famous five number one what's your favorite business book besides your own you know I would say it's the greatest salesman in the world by augmenting it number two is their CEO you're falling or studying right now I can't think of one off caught my head that you would recognize I've been I've been really have my head into the blockchain world lately and there's all kind of name one the whole point is to find someone I don't recognize Roger Janie with which with which company with bear marketing bear marketing very good number three what's your favorite online tool for building your business besides your own favorite Google number for how many hours of sleep to get every night and what's your situation well you mentioned sorry how many kids you have three three kiddos and how old are you I am fifty two last question what he was your 20 year old self new start sooner guys dairy Evan start sooner coming from a guy that launched in the CRM space pretty early he was he was pretty soon for his industry in 2003 helped usher in that era today has 5,000 paying customers doing about 3.5 million bucks in terms of AR run rate that's up about call it twenty ten percent from about a year ago when he was doing about three point two in terms of a are but bootstrapped which I love cash flow positive 2% logo turn per month so healthy lifetime value pays on average 300 bucks to acquire a customer so it gets paid back in less than call it five six months team of 20 based in Houston and other remote locations Craig thank you for taking us to the top thank you