Honeyfund and Plumfund co-founders Sara & Josh Margulis with Shark Tank's Mr. Wonderful
If you saw Honeyfund and Plumfund on Friday night's "Beyond the Tank," you saw us surprise our Shark-Tank investor, Kevin O'Leary, with the news that we are planning to cut 60 percent of Honeyfund's revenues by offering our premium product, Honeyfund Elite, free. "Are you nuts?" is exactly how Mr. Wonderful reacted in front of four million viewers.
Well it turns out being a little nuts can lead to some very good outcomes in business. In my last post, I talked about Honeyfund's mission and values, and how it's been a challenge to grow Honeyfund and Plumfund while staying committed to them. Our decision to cut Elite upgrades, 60 percent of our revenues in 2015, is a great example.
At Honeyfund our mission is to make wedding couples' dreams come true, without high fees. To do this, we focus on one simple goal: customer success. In 2015, we took a hard look at our upgrade packages and how they impacted success. It was clear that Honeyfund Elite customers received twice as much in gifts as free customers, and 58 percent more than the other paid Honeyfund account levels (at the time we offered three, starting at $19.99). So the question of customer success simply became: How do we get more customers on Honeyfund Elite? The answer seemed simple: Give Elite away.
At the time, paid upgrades made up 60 percent of Honeyfund's revenues. If we gave away Honeyfund Elite, that revenue stream would vanish. I'm proud to say the decision to go ahead with the change wasn't even a question. As I said, the success of our users is our #1 priority. So instead of debating whether or not to offer Elite for free, we started looking for creative ways to make it work.
The Honeyfund App
Since we had just launched the Honeyfund App, we decided to drive users to the App to claim the free Elite offer. It was a win-win; Customers were getting the power of Honeyfund in their hand, and we were gaining app downloads, fast. In just a few weeks since launch, Honeyfund has become the #1 wedding registry app in the App Store.
Next we looked at how to grow other revenue streams. What we found was shocking: Not only could we make up the lost Elite revenue, but we could grow far faster without charging customers for Elite than we could otherwise. In fact, we projected our other revenue streams, including partnerships that bring discounts and convenience to our users, would at least double with the change. What's more, this year, the company will earn 25 percent more revenue per Honeyfund customer, while reducing the cost of the service to our wedding couples. It turns out focusing on customer success is not only true to our mission, but also a huge boon to our bottom line.
And there's one more surprise boost that's come out of canceling upgrade revenues: More happy Honeyfund customers translates to more Plumfund customers—at an acquisition cost of zero. That's a massive advantage in the fiercely competitive crowdfunding industry. And it means we spend less time and resources figuring out how to get Plumfund customers and more energy creating successful baby funds, birthday funds, caring funds, charity fundraisers and more. Giving feels good and we aim to keep it that way.
About Sara Margulis, Honeyfund & Plumfund
Sara Margulis is the CEO and co-founder of Honeyfund and Plumfund. She writes about wedding gift etiquette, crowd gifting, entrepreneurship and women in leadership roles, as well as inspirational topics like financial freedom, corporate philanthropy and work-life balance. Sara and her husband Josh founded Honeyfund in 2006 after their wedding guests contributed more than $5,000 toward their honeymoon to Fiji. The couple launched Plumfund in 2013, expanding Honeyfund's crowd gifting technology beyond the wedding. Both sites offer 100 percent free options as well as the lowest processing fees in the crowdfunding industry. With 10 years personal gifting and etiquette experience, Sara's mission is to ensure that giving feels good.