Welcome to episode 10 of the newsletter Crew podcast/blog.
I’m your host Yaro Bagriy bringing you another amazing episode. Today we have Louis Nichols. I’ve known him on Twitter for quite some time now and I have to say he’s an amazing founder and newsletter Creator.
Louis runs two newsletters. The first is sales for Founders, which is a newsletter but also an in-depth course as well as. His second newsletter is called five-minute founder, which is a passion project of his.
On this post we’ll dive into growth and referral programs. Louis is an expert in referral programs since he founded a referral program tool for newsletters called @SparkLoopHQ, so if you’re interested if a referral program is right for your newsletter, then you don’t want to miss this episode.
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Interview with Louis Nichols
[Y] So you run one newsletter called Five Minute Founder. Could you give a little bit more info about what that newsletter is?
[L] I run two newsletters at the moment. One of them is called five-minute founder and it’s very simple. Once a week on a Monday I send out a quick actionable tip for founders on how to improve their business ideally by one percent or more and the idea is it takes like 5 minutes to read through and no more than five hours to implement.
So the other newsletter that I run is a kind of a formal newsletter teaching Founders how to do sales. I run a course on sales called sales for Founders. And as part of that. I have a newsletter that goes out about once a week(ish).
It’s full of useful information for early-stage Founders who are trying to improve their sales skills.
[Y] So I was looking at fiveminutefounder.com and it definitely looks like you’re not using kind of the standard stack that people use like Substack or Revue. It looks like you’re using a custom solution.
Could you tell us a little bit more about that Tech stack that you’re using for your newsletter and kind of why you chose that Tech stack?
[L] Yeah. Sure. So Five Minute Founder actually I (actually) enjoy doing it – it’s kind of an embarrassing story…
I started out writing these tips and things on @indiehackers for founders who were probably a couple of years behind where I was at that point and I kind of got fed up of saying the same thing again and again in different places.
So I thought okay, I’ll just put up a really simple page. I already had a MailChimp account from some stuff I’d be doing earlier. So I just added in a MailChimp form there. And to be honest I haven’t really looked at the page or changed anything on it since. It’s not perfect by any means, but it’s a pretty simple signup flow.
So, people just go over to this custom HTML coded page on a domain that I bought with GoDaddy or something probably and sign up by MailChimp and they get a weekly email from there.
[Y] And your other newsletter – I’m guessing you’re using convertkit or is it off Whistler stack?
[L] Yes, it’s using Convertkit. So that is again a different custom-made HTML page. It’s a bit more complex because I have a course and a podcast and stuff that’s on the same domain and stuff as well. So it’s not just a newsletter, but the actual newsletter itself is using convertkit, which I really really like.
It’s my kind of newsletter tool of choice.
Convertkit lets me do all the clever stuff like sequences, and tagging, and custom fields, and automation, and everything I need to run my course as well.
I also have a little right message widget on the site, which I use for sign ups as well to increase conversion rates.
[Y] Why do you think newsletters are a great business for someone to start?
[L] Yeah, actually I think for most people newsletters are a pretty bad business to start.
I think having a newsletter is a great way to connect with an audience of people who will want to buy something else from you in a lot of cases, right?
So I would say, for sales-for-Founders, my newsletter isn’t the business.
The business is in the course or the coaching. The newsletter is one of the ways that I build trust, and build my audience, and get in front of the right people.
[Y] Nice so you’re definitely coming from the side that newsletters are mostly just a channel to build your audience. Essentially just another marketing channel?
[L] Yeah. I like to see it as my way of having conversations at scale with my customers. I think when you run a newsletter, you basically have two choices right? You can either say okay. I’m going to monetize my audience as the product and do some sponsorships or advertising.
Or you can say I want my audience to be the customers. In my experience, it’s easier for most people to make more revenue having their audiences their customers rather than as the product and it also just seems more enjoyable to me. Not having to worry about what a third party cares about.
I enjoy just being able to worry about what my audience wants and that way we’re always aligned because if I provide them with value, then they’re going to give me money and if I don’t then they won’t.
[Y] Right, right. Yeah, that’s definitely a really interesting take you have there. Because, I’ve spoken to a lot of newsletter founders and people that run newsletters and everyone kind of has their own monetisation strategy.
There’s people out there like you said ‘build that audience and sell them something’. Be that a course or an e-book.
Then there’s other people that simply just have a pay wall in front of the newsletter and essentially just sell the content.
So what are your main marketing channels and growth channels for your newsletter?
[L] Yes, so when it comes to 5-minute founders, honestly, I don’t really have one.
In the early days. I was sharing on Twitter or on Indie hackers. I was doing small bits of cross-promotion, kind of like a long form writing out the content and cross-posting that to other places and that pretty much got me to probably about 2,000 subscribers within a couple of weeks, which is nice.
From there, I don’t think I’ve cross-posted or anything again. I don’t think I even really post on Twitter when I’m about to post something. It’s just something that I like to write and somehow 20-30 people or something find it somewhere each week. So I don’t really promote that in any way at all.
For sales-for-founders is very different because that’s less of a kind of small side project and more of an actual business.
I’m very particular about posting on Twitter as the main channel for me; answering questions, being helpful, sharing links and on @Indiehackers/@Reddit places like that.
There’s a small and ever-increasing amount of SEO which is bringing people to the page, which is nice.
I also run a referral program with a small tool called @SparkLoopHQl. But I actually built it with a co-founder of mine which allows us to run a referral program and grow that way as well.
[Y] You talk about this referral program as one of your channels that you use to build your newsletter.
When you said you and your co-founder built a tool called @SparkLoopHQ. Could you tell us a bit more about @SparkLoopHQ and what it is why it’s useful for a newsletter or a newsletter founder?
[L] Yeah, of course. Yeah, so I think kind of the fundamental dichotomy of trying to grow your audience is you don’t just want to grow your audience. You also want to grow an engaged audience who are interested in what you have to say and open your emails and maybe buy something from you potentially down the road.
Just having a lot of subscriber numbers isn’t really enough or useful.
When it comes to trying to grow that audience you basically have with most channels you have two options, right?
So you have the channels that take up a lot of time and effort and then you have the channels that cost quite a lot.
So Facebook ads Google ads that kind of thing doesn’t really take any time to do once you’ve set it up, but it costs you quite a lot. So, in the u.s. looking at two to three dollars if you’re doing pretty well. If you’re in a niche you can easily be spending five, ten, twenty, thirty, dollars per subscriber which most people when they’re starting a newsletter cannot afford and never going to make that back from their subscribers anytime soon.
Then on the other hand, obviously, you also have the effort involved, right? So, yes, you can go out and cross promote and cross-post and do all that kind of stuff. I’ve done a lot of that myself. You can write on your blog and hope that gets shared and hope that gets picked up by SEO at some point too…
Eventually all that stuff is worth doing totally, but it takes a lot of manual time. Takes a lot of work and can take some time to start seeing results as well.
With @SparkLoopHQ what we basically wanted to do was to find a way to make word-of-mouth happen more often. With word-of-mouth obviously being something that you don’t really have to put much time into and it also doesn’t cost anything. So it’s like that nice middle ground growth channel that you can have.
For most newsletters, they’ll get a couple of subscribers every now and again from word-of-mouth as people recommend it on Twitter or share it with their friends, etc. But there’s no kind of systematic approach to make it happen more often to turn it into a serious channel and that’s what we are trying to do is @SparkLoopHQ.
[Y] Could you explain what a referral program is?
I’m sure a lot of people who are listening to this already know, but just kind of have a base to work off of?
[L] yeah, of course, that was a very kind of long-winded explanation. I just gave, kind of the thinking behind it. So yeah, let’s kind of dive into what it actually is.
People may know the @MorningBrew the The Hustle Newsletters like that that kind of really kicked off the referral side of things. At its core basically what you’re saying is you have some subscribers already. Those subscribers probably know other people who are like them who would also really like to see your newsletter.
What you can do with a referral tool like @SparkLoopHQ is basically say, okay if you go and share this unique link on Twitter, by email, Facebook wherever with those friends of yours who you think would also like to sign up to this newsletter. Then when you do refer people when they sign up by your link, we will give you a reward.
That could be something digital. E.g access to a free course or a secret extra version of the newsletter. It could even be some stickers or a t-shirt or, it could be anything. Just something that they want and that incentivises them to go and share it with their friends.
[Y] So kind of a follow-up question on referral programs in general, why should every newsletter creator that is serious about building their newsletter have a referral program?
[L] So I don’t think every newsletter should have one obviously as a newsletter you have to prioritize your time and your money, right?
And when you’re in the very early days, you simply don’t have enough subscribers for it to be worth adding a referral program. Because even 5%-10% of them share, if you only have 50 subscribers, then the the hour that you spend setting up a referral program just isn’t going to be worth it compared to doing some some cross-posting or some, some cross-promotion or just sharing on Twitter and tagging people stuff like that.
So there’s kind of a minimum size when it does make sense to do a referral program. And for most people I’d say that starts at about 500 subscribers. By the time you have 2,000 3,000 subscribers, it’s kind of an absolute no-brainer. You’d be you’d be stupid not to do it.
[Y] You say you start your referral program? What kind of monthly growth do you think a newsletter creator will see in the referral program once they hit that break point right there?
[L] Yeah, that’s really interesting. So it depends on basically three things.
1. Is the reward right?
So how much of an incentive can you give people to go and share? Because the more they want whatever it is you’re going to give them for referring people the more likely they are to put in the work and actually go share it in the first place.
2. How often do you ask people and how well do you ask them?
Do you make it easy for them to share? Do you make it exciting for them to go and share? Do you ask them every week or do you only ask them once every six months?
3. How easy is it for someone one of your subscribers to refer their friends or their colleagues?
So if you’re someone like the @MorningBrew where pretty much everyone in the U.S. is an ideal subscriber then it’s really really easy for your subscribers to find 5, 10, 20 people. They know who would like to sign up for Morning Brew.
However, if you run a niche newsletter on e.g “influencer marketing”. Then most of the people who subscribe to your newsletter can probably only think of maybe two, three, four people that they know who would also like to be subscribed.
I think it’s all about the comparative growth as opposed to the absolute growth.
We have people using @SparkLoopHQ who are growing 300-500 percent faster than they were without it. But we also have people who are growing 5 or 6 percent faster and are insanely happy because it’s just so difficult for them to find the kind of people that like their niche newsletter.
[Y] Well, that’s that’s really nice answer. So you kind of saying that the more general the newsletter is, the easier it is to grow with the referral program versus like a niche newsletter that only a few people might know other people in that niche. Is that more or less, correct?
[L] Yes, but again, we think of it like comparatively right?
So the more generic your newsletter is the more broad the audience for your newsletter is the easier it is to grow fast with everything: Facebook ads, google ads, because you’re getting in front of more of those people, because there are more of them.
You’ll get overall better results with a referral program if your audience is broad.
But if you compare a referral program compared to the other things that you could be doing, it’s kind of consistent no matter what your audience size is. Because, if you have one of those really difficult niche audiences, then you’re going to be spending a lot of money and time on Facebook ads.
Essentially growing a referral programme is as hard or as easy as anything else in your marketing arsenal, it all comes down to your audience and market fit.
[Y] You referred to this a little earlier when you said that referral programs aren’t for every newsletter.
Can you dive a little deeper into what types of newsletters referral programs are good for?
[L] Yeah, so I mean we have a really broad spectrum of people using @SparkLoopHQ right now.
It tends to be people from the 500 subscribers upwards and that’s really the only thing that we look at now when it comes to who’s a good fit. So we kind of split people into two broad categories.
You have the people who monetise their newsletter and the people who don’t monitise.
So people who for example run a newsletter where they run sponsorships – in that case it is super important to grow your audience pretty much as fast as you can, because the bigger your audience the more money you make.
But the value of each subscriber (the money you make per subscriber) is quite low. So you have a real pressure to grow as fast as you can, whilst also being constrained money wise in how much you can afford to grow that audience (how much you can pay per subscriber/CAC).
So in that case a referral program with @SparkLoopHQ can make a lot of sense because you can prioritise rewards that are really cheap/that don’t cost you anything.
Therefore when you grow from the referral channel, you can afford to spend more on more expensive and higher CAC channels such as Facebook Ads.
On the other hand…
If you run a course or something with your newsletter then the value of one of your subscribers is probably not 1 or 2 dollars but maybe 30, 40, or 50 dollars.
In that case even if you aren’t growing your audience by a ridiculous amount. Let’s say you only grow your audience like 10% faster with a referral program. Maybe you only add an extra 50 subscribers each month with it. That’s still 2,500 dollars for basically no work that you get each month.
At @SparkLoopHQ we have a great mix of newsletters that range from professional information for lawyers, to weekly wine and dog newsletters…
[Y] I’d love to be subscribing to that wine and dogs one!
So what are you seeing as the most effective types of rewards? Is it digital Rewards or physical rewards?
[L] I tend to split it into thinking about this in two ways.
So I tend to ask, are you trying to incentivize people to refer as many people as possible? Or are you trying to use the reward as an upsell to get people to convert to whatever you’re selling right?
So if you run for example a newsletter that has a paid tier. $5-$10 a month to get premium access or to get access behind a paywall. Then obviously you want as many people as possible.
So what you can do is you can say for example. Okay, when you refer us to people, we will give you a month’s free access.
Not everybody wants that so not everybody goes out and shares. But normally quite a few people do want that, and they will usually convert for that offer.
And usually they stay behind the paywall too…
On the other hand if you’re thinking more about reach. You really want to think about what you have that’s cheap and easy for you to offer, yet something your audience would still want.
If you’ve ever done a webinar or something and you have a recording, that can be great. Just stuff that you have already in most cases that can be repurposed that your audience would really enjoy.
If you’re trying to grow really really fast (if that’s going to be a number one priority) then you can gamify it – having different reward tiers and do something more similar to what the @MorningBrew does with stickers, coffee mug, t-shirts, hoodies, and stuff like that – bit more pricey, but you get faster growth.
[Y] Where does referral marketing stand on all the growth channels out there?
I mean we’ve got referrals as one potential channel, then you’ve got Twitter as another channel. You’ve essentially got a bunch of other channels.
Where does referral marketing stand?
[L] Yeah, I like to visualize it kind of as like a Venn-diagram with three circles almost right?
So you’ve got the bucket of channels which are good because they’re low effort. Like I don’t involve a lot of time.
You have a bucket of channels that are good because they don’t cost very much.
And then you have a bucket of channels that are good because you do it once and then they carry on giving you results, right? So they’re scalable in that sense. Kind of set and forget almost I’d say.
Classic example of low effort is something like Facebook ads right where you set it up and it runs over night and they cost you money. But gets you lots of people through the door.
Classic example of low cost/high effort. Would be Twitter posting, and long blog posts on HackerNews or something like that.
Classic example for scalability is writing for SEO so that you get people coming through from Google search all the time. Write a really good blog post once, and it’s almost set and forget. But you have to invest a lot of time into actually creating the article in the first place.
Referrals are right in the middle of all of those 3.
Doesn’t cost much.
Doesn’t take much time.
Can be set and forget, whilst it also scales.
[Y] Thank you so much for taking the time to be on today Louis.
[L] Yeah, it was a pleasure thank you for having me.