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.