Quick Overview
|Image2|Business Valuation Resources grew revenues from $2 million in 2005 to $6 million this year, despite nearly maxing out subscribers in its core audience of business appraisers. The secret: Diversifying like crazy. Owner David Foster describes how they expanded their target audience to include lawyers, M&A advisers and business owners, and how they use content licensing and widespread repurposing to create more than 250 premium products. Plus, he explains how single-product sales like an ebook or premium webinar have become the typical entry point for an eventual subscription sale.
Company Snapshot
Founded: 1995 as Pratt’s Stats online database of business transactions
No. of Employees: 30
Business Model: Hybrid (60% online subscriptions, 40% book/guide sales, paid webinars/training and consulting services)
Annual Revenues: $6 million
Headquarters: Portland, Ore.
http://www.bvresources.com
Target Audience
Primary audience is the 6,500 certified business appraisers in the U.S who need data and how-to content to help them develop valuations. “None of the people in this industry could do their job,” without a subscription to the site’s core Pratt’s Stats database, says Foster.
Although that market is still growing, the company’s near total penetration of the appraiser niche inspired it to target several secondary audiences with ties to business valuation, including: Attorneys who litigate business valuation disputes; M&A advisors, VCs, and private-equity firms that need valuation data; and CFOs or business owners who want to know what their businesses are worth.
Content Model
Business Valuation Resources offers about 250 products in the following major product categories:
– Premium databases — 18 searchable resources covering private and public company transactions, cost of equity and cost of capital calculators, executive compensation, royalty and licensing rates for intellectual property, and more.
– Premium newsletters and library archives, such as the BV Update newsletter, the BV Law case library, and a quarterly economic outlook report.
– Printed books, online guides and special reports on valuation topics such as a guide to intellectual property valuation and annual reports on M&A transactions by industry.
– Online training webinars, such as a webinar series on developing healthcare valuations.
– Free resources, such as a free email newsletter, four blogs, podcasts and videos.
Core online databases
Subscriptions to online databases are still the largest source of company revenue, with the original Pratt’s Stats database remaining one of the most popular products.
Founder Shannon Pratt built that database of hard-to-find private company M&A transaction data by partnering with an association of business brokers to share its members’ recent deal documents. After redacting identifying information about companies and owners, the financial information from each transaction was added to the Pratt’s Stats database.
Pratt’s Stats paid the association for every document it shared, and after a few years those payments made up 35% of the association’s budget. “So they were very motivated to share deal documentation,” says Foster.
Today, the company updates the database by sending its analysts to business brokers’ offices to manually sort through deal documents in their files.
Repurposing and repackaging content
The company routinely creates new products by repurposing and reformatting existing content. For example, they use the Pratt’s Stats database to compile annual reports on transactions for specific sectors, such as all 2010 transactions involving full-service restaurants or HVAC companies. These reports are available as paid PDF downloads or print-on-demand books.
They also create new ebooks or online guides by combining pieces of several existing resources, such as chapters of books, webinar transcripts, cases in the legal database, transactional data, and so on.
Turnaround time for new content can be as short as two weeks, thanks to a strong team that includes product managers who identify new content opportunities, managing editors who find and edit content from multiple sources, and marketing and sales directors who get the word out about new products.
Licensing content
Licensed content makes up 35% of company revenues. Content partners include authors of existing books on valuation topics and owners of proprietary databases like Duff & Phelps and FactSet.
Licensing provides additional upsell opportunities for no upfront content creation costs. It also helps the company operate with a relatively small number of employees. “Initially I was opposed to licensing products, but now that I’ve worked with them a little more I see they give you the kind of growth that’s risk free.”
Typical licensing deals pay the content owner 50% of the subscription fee or product sale price, and both partners receive the buyers’ names and contact information for future marketing.
“I know I could probably negotiate for [a larger percentage of the sale], but 50% feels comfortable and tends to foster good, long-term relationships with other content producers.”
Revenue Streams
Subscriptions make up 60% of total company revenue, with the remaining 40% coming from single product purchases, ticket sales to premium webinars, one-time database searches, and consulting fees.
1. Subscriptions
Annual subscriptions are offered for the 18 databases, but do not autorenew (in fact, none of the company’s subscription products autorenew). Prices are typically in the hundreds of dollars per year. For example, a Pratt’s Stats subscription costs $749 annually.
Premium newsletters and access to online libraries are also sold on an annual, non-autorenewal plan, with prices ranging from $129-$369 annually.
Annual subscriptions to online training programs provide access for up to 25 of the company’s premium webinars. Training up to 5 employees for a year costs $995, with prices increasing for additional employees to a maximum of $2,495 annually for training up to 20 people.
Several BVR books also feature subscription-based online guides that provide real-time updates and transactional data to complement the book’s content. These online guides cost $279 or $329 annually, and include the print version of the book in the price.
Group subscriptions are available for all subscription products, with pricing negotiated on a case-by-case basis. Typical discounts can be as high as 70%-off the individual subscription price for larger groups, and the highest value site license the company has is around $75,000 a year.
2. One-time database searches
The site allows visitors to pay for a one-time search most of its databases. Pricing for a single search is typically ½ to ¼ of the annual subscription price to encourage users to upgrade to a subscription. For example, it costs $219 for a single search of the Pratt’s Stats database, vs. the $749 annual subscription.
3. Single-product sales
Printed books, ebooks, single library articles, and webinars are sold individually for a range of prices. For example, BVR’s ebooks and hard-cover books range from $45 to $1,750, depending on the product. A single premium webinar typically costs $139.
4. Advisory/consulting services
The company’s advisory/consulting business is less than a year old and aimed at the core business appraiser audience. Most projects are small, one-time events, such as reviewing a valuation report prior to its release to the client.
The company charges ~$1,000 for small projects like this, but has a dozen clients on retainer for $1,000 – $3,000 a month.
Marketing Tactics
In the past three years, single-product sales and one-time searches have become the primary entry point for BVR’s new customers. That’s a major shift from the traditional online publishing model that used direct marketing to get visitors to sign up for a free newsletter, from which they could be converted into a subscriber and then sold ancillary content like books and webinars.
“The subscriptions are the ancillary products — they are the upsell opportunity,” says Foster. “I don’t even track first-time contacts who came into the database on a subscription sale. They’re hitting those one-shots first.”
As a result, the site’s marketing is focused on getting visitors to first purchase a single product. They then use direct marketing and a sales team to convert them to additional product purchases and, ultimately, a subscription.
SEO
“Right now about 60% of first-time customers are people who are finding our books through SEO.”
The team creates products with specific titles that help attract the kind of detailed, long-tail searches that bring highly qualified visitors directly to a product page. For example, an appraiser searching for data on all 2010 business sales involving convenience stores would find a BVR page dedicated to that ebook.
The company’s four blogs also contribute to SEO by creating specific websites for different markets. In addition to the primary BVWire valuation news blog, the company maintains a blog for lawyers, a blog covering intellectual property valuations, and a blog for business owners.
Email marketing
The main BVR site and its four blogs include opt-in boxes for visitors to receive free email newsletters. The primary BVWire weekly newsletter “is one of the most powerful marketing tools we have,” says Foster.
In addition to the weekly email newsletter, email opt-ins typically receive four weekly product marketing emails.
Traditional direct marketing
The company also conducts regular promotions for new products via postcards, inserts, press-releases and other direct-marketing tactics to drive visitors back to the site.
Sales team
The company’s four-person sales department works leads developed from all marketing channels.
Each month, the marketing team delivers a list of every new contact in the BVR database, along with their demographic information and purchase history. Sales reps also check for new leads daily in their hottest product areas. Then, the sales reps coordinate their outreach to those leads for cross-selling and upselling.
For example, a customer who purchased a single report on healthcare valuation might be offered a ticket to a premium healthcare valuation webinar, or a subscription to the Pratt’s Stats database.
The sales team also is responsible for renewal marketing, and the company’s commission structure is designed to encourage upselling/cross-selling during the renewal process. The commission on a straight renewal is 4%, says Foster, but the commission on upsales and new sales is 15%.
Technology and Vendors Used
The BVR website and its proprietary databases are built on custom-developed platforms. Key third-party vendors include:
Lightning Source: Print-on-Demand vendor that prints BVR books. Offers automatic ISBN numbering and inclusion in major online catalogs and bookselling sites like Amazon.com.
http://www.lightningsource.com/
Interspire Email Marketer (formerly SendStudio): The site’s email marketing platform.
http://www.interspire.com/emailmarketer/
About David Foster
Foster jokes that no one graduated from college in the 70s or 80s with plans to become an online publisher. In fact, he was pursuing his PhD in English when he was hired to launch a newsletter publishing company.
But in that role he met Shannon Pratt, an author of 10 text books on business valuation and the creator in 1995 of the Pratt’s Stats online database. Pratt sold the business to Foster in 2005, and Foster immediately went to work expanding the site’s content and target audience to create a publishing company with a diversified mix of online and offline products. “Just when you figure out the answer to the question of what your audience wants, your next product launch proves you wrong,” says Foster. “It’s a lesson in humility and a lesson that you have to keep learning.”
Subscription Site Insider’s Analysis
BVR’s growth is a testament to the power of a diversified product mix and target audience. The company’s editorial, product and marketing teams are conditioned to re-use and re-package every piece of content in as many formats and products as possible. Licensing agreements add even more fuel to the site’s content engine, and should inspire other B2B publishers to consider partnership opportunities of their own. Despite the expansion, the team has never lost focus on its core audience of business appraisers, as evidenced by new ventures such as the advisory services.
With so much going on, BVR’s website is in desperate need of a redesign to make it easier to discover products and pricing options. Foster says a major redesign is in the works, and we’d recommend they take a close look at design of their subscription product pages to better highlight pricing and purchasing options. The current site uses mostly text links to promote its purchasing options, but better graphics, buttons, and product comparison charts could make it easier for first-time visitors to decide which option is right for them. Likewise, the new site design could make better connections between related products to facilitate online upselling and cross-selling.
