© 2017 500 Startups

Case Study: YoDerm

Despite having an excellent service, a medical consultation business will often struggle from high acquisition costs and low customer life-time value. Learn how this B2C startup overcame these challenges to succeed.

 

ACCOMPLISHMENTS:

4x revenue in 16 weeks

3x customers while decreasing CPA by 30%

Closed $1.6M seed round within 30 days after accelerator

ABOUT THE COMPANY:  

YoDerm provides on-demand consultations from online dermatologists.

THE CHALLENGE:

  

How do you increase revenue while facing high acquisition costs and low customer life-time value?

  • Given the nature of healthcare decision-making, many startups find that the costs of customer acquisition are relatively high compared to most B2C businesses

  • For the average, relatively healthy patient, healthcare isn't consumed at high frequency or regularity; how do you generate recurring revenue despite this?

HOW THE 500 PROGRAM HELPED:

  • Driving revenues by increasing unit transaction value: experts sat down with YoDerm weekly to help the team leverage bundling, up-sells, and various other strategies to increase unit transaction value. Their growth-hacker point-of-contact not only helped to write and create effective content, but also worked with the founders to implement these strategies from a technical side. 

  • Discovering emerging channels: experienced growth-hackers "give you the scoop" on newer marketing and advertising channels before they become popularized. Lower advertising volume on these early platforms allows for potentially cheap, high-conversion advertising (in YoDerm's case, this was Pinterest 18 months ago).

  • Optimizing existing channels: mentors helped YoDerm segment customers and prospects based off their point in the sales funnel, and subsequently utilized targeted messaging via email-drip and re-targeting to maximize conversion and retention

  • Jumpstarting fundraising via the 500 Network: in addition to qualified introductions from venture partners and former founders that are recognized in the industry, the alumni network (current and past 500 founders) offered access to a far-reaching network of angels for potential introductions, meetings, and checks

THE RESULTS:

4x revenue in 16 weeks

Implementing strategies such as bundling and up-selling increased both the average transaction value and the likelihood that consumers would become loyal repeat-customers. These factors ultimately quadrupled revenue.

3x customers while decreasing CPA by 30%

Meticulous segmentation of prospects (consumption history, point in sales funnel, etc.) and specific, targeted marketing led to a greater volume of customers at a lower average cost-per-acquisition. 

Closed $1.6M seed round within 30 days

Frequent pitch-preparation and feedback from experts at 500 Startups, in addition to a great deal of hustle from YoDerm's founders, led their team to close the seed round within 30 days of completing the accelerator program.

Benjamin Holber,

Co-Founder

500 provided the framework we've used to grow the business by 7x in the past 9 months. They won't spoon-feed you and they won't lie to you. Soak up their experience, collaborate with your batch, and work your ass off to succeed

Chris Minnich,

Co-Founder

It's similar to Alcoholics Anonymous: 'the system works if you work the system'…also there's free coffee and real people confiding in one another on a daily basis :-)

Ryan Hambley, 

Co-Founder

500 Startups helped us solidify our growth framework: experimenting, prioritizing, thinking about growth in more scientific fashion. That, plus it granted us access to a network of investors, hustling founders, and helpful mentors that jumpstarted our fundraising process.