We recently spoke with Mike Bandar, founding partner of Turn Partners, who specialise in turning round under-performing businesses.
Alongside fellow founder James Vardy, they acquired niche dating site Toyboy Warehouse last year.
Bandar gives us an exclusive insight into the inner workings of the site, how they achieved the impressive transformation of the brand, and what it is like to grow a successful niche dating site in an increasingly competitive market.
Tell us a little about your background, and about Turn Partners.
Turn Partners is focused on the acquisition and turnaround of distressed and underutilised businesses. It is founded upon a passion for enterprise and an interest in various business models and industries.
I have been running businesses since the age of 15, naturally gaining exposure to numerous industries and developing a thirst to maintain diversity. At the same time, I drew parallels across other different projects and developed methods of best practice.
In 2011, I met James Vardy on an entrepreneur development programme called the New Entrepreneurs’ Foundation. Although from very different professional backgrounds, James and I share the same passion for enterprise and are well aligned in terms of ambition, ethics and drive. In addition to being extremely commercial, James’ academic background in industrial design, and his previous product management role, have provided him with a fantastic eye for product, both online and offline. He also has an excellent technical understanding, complementing my approach which is often more directed towards sales and marketing.
After working on several projects together, James and I gained an understanding of our collective strengths and weaknesses, deciding we would try to apply our skills in the most efficient way, whether to a new or existing project.
The idea for Turn Partners was born, supported by our previous businesses, we wanted to explore the idea of applying our skills to a business that has already survived the startup phase, but is struggling to achieve continued growth.
How did the acquisition of Toyboy Warehouse come about?
The acquisition of Toyboy Warehouse came about almost by accident.
James met Julia Macmillian, the founder of Toyboy Warehouse, at a networking event. At the time, Julia was seeking assistance with her new venture Radical Dining Society (RDS). James recommended that Julia and I meet to discuss the available opportunities to commercialise RDS.
During our first discussion, Julia mentioned she had launched a niche dating site six years ago. However she seemed a little despondent, and she’d be the first to admit that she had lost her original passion for the business. The site she had launched was Toyboy Warehouse, the UK’s original dating site specifically for older women and younger men. James and I immediately identified Toyboy Warehouse as a diamond in the rough, and were keen to explore what we could do differently to restore the business and continue its growth.
We did some basic due diligence and drafted a two year change roadmap. Although we didn’t have previous dating industry experience, we knew people who did, and identified that the skills and resources needed to grow the business were very well aligned with our skill sets and those of our accessible team.
It was the perfect situation. Julia was keen to take a step back and needed extra resources to invest into RDS, whilst James and I were ready for our next big challenge.
Mike Bandar and James Vardy, Turn Partners.
What sort of state was the site in when you acquired it?
Toyboy Warehouse had a great reputation within the niche, and had a strong and loyal membership. Unlike a lot of the niche sites, Toyboy Warehouse is fun, cheeky and provocative, its brand is predominantly female-focused and had originally established itself as the “anti-cougar” – appealing to the thousands of older women who like younger men, but don’t associate with the overly-sexualised “cougar” title. We believed this to be a great foundation for brand development.
Although the business was still profitable on acquisition, revenue was declining at about 35% a year.
As well as the financial impact, this was having a negative impact on the user network. Toyboy Warehouse is an independent dating site, and being niche means that when in decline the network is susceptible to stagnate — a negative spiral that is extremely difficult to reverse. In an attempt to maintain interaction, “Free upgrade days” had previously been introduced every Sunday. This caused a spike in activity, but a decline in paid memberships over time.
One area we had underestimated was the huge technical debt. The code base was in turmoil, the site was buggy and slow, and although we wanted to avoid it at the time, we knew the whole site needed rebuilding.
The site was also poorly designed, with no clear calls to action and limited upselling. In short, it was the perfect turnaround project!
After the acquisition, how did you map out your strategy for turning the business around?
We’ve always had a very clear goal of where we want to take the business – in terms of revenue and profit. We originally took a holistic view of the company, looking at the amount and speed of the growth we needed each week and month to achieve this goal. We then simply filled out a roadmap with activity that would enable us to achieve this growth within 18 months, first beginning with the “low hanging fruit” such as recurring billing, user permission changes and redesigning logged-in homepages and menus for better navigation.
Our growth strategy focuses on three core activity areas: onboarding (acquiring new customers), upgrading (converting free to paid members) and retention (maintaining paid members for longer). Each activity area has its own targets and associated tasks owned and managed by a separate internal team member, although there is lots of overlap between activities, that ensures we can maintain momentum in all areas.
What market and consumer research did you do?
Our initial research was all based on quantitative figures such as analysing the number of niche specific keyword searches, and the size of our competition. Apart from this, we still struggle to assess the potential size of the niche.
As a six-year-old dating site, Toyboy Warehouse came with a rich data set that acted as a treasure trove of ideas and opportunities.
Before making any changes to the site, James and I spent time meeting with and speaking to many of our members, old and new, to find out why they enjoy Toyboy Warehouse. We quickly learnt that Toyboy Warehouse means different things to different people, but it often played an important part in their social life. To maintain the integrity of the site, we established a steering group of trusted members who we still use to sense check all of our amendments to our brand and the site.
Which dating brands did you take inspiration from?
We originally signed up to every dating site we came across to understand what other sites were doing differently to Toyboy Warehouse, however we understand that Toyboy Warehouse’s success has so far come from being slightly different and individual, so we’ve tried to maintain that. We occasionally check on Badoo & Lovestruck to see if any new functionality has stuck. We’ve reviewed the upgrade and retention process of White Label Dating sites, and although we try to implement what we consider to be the best processes in the industry and appreciate the huge commercial benefit to their network, we chose not implement a similar process in Toyboy Warehouse.
We often look at the landing pages of other sites and test ours to increase conversion. When we first acquired Toyboy Warehouse, there was only one landing page which was outdated and somewhat confused. We tested a variety of different styles, taking inspiration from the sleek landing page of Badoo with minimal information, the friendly and informative pages of Lovestruck, the straightforward landing pages of Twoo, with the obvious call to action and the member-teasing of Match.com. From our experiments, we developed a totally different approach for male and female members. We found that the member previews and clear call to actions are more effective for our younger men, whereas longer-form copy, information and case studies work much better for women.
We’ve always admired the way OkCupid communicate with members. Although Toyboy Warehouse’s tone is naturally quite different, we’ve certainly taken inspiration from their fun and friendly marketing emails, and their well designed and informative transactional emails.
For over a year we’ve made a conscious effort not to target ourselves against industry averages and benchmarks. This is so we do not create a glass ceiling for ourselves using other sites’ conversion rates. After recently reviewing this, it appears to have paid dividends, and I believe our rate of visitor-to-sign-up, and female free-to-paid member far exceeds industry averages.
What were some of the biggest initial changes you made to the business? What payment changes did you make?
Toyboy Warehouse has an extremely loyal following. Some of the members have been with the site since its inception, which exceeds the industry averages for membership retention. As a result, any changes had to be carefully planned and were made with the help and consultation of our steering group to make sure new features met their needs.
Within the first six months, before fully understanding the brand and rebuilding the site, we only made minor changes. Initially we changed our user permissions, limiting the access for free members, revamped our homepage and logged in homepage, redesigned the upgrade pages and condensed the upgrade packages to just have free and premium instead of the previous free, bronze, silver & gold, which were confusing members. Finally we switched to subscription billing, although we ensured it is extremely easy for users to cancel their membership, which has maintained our ethical and consumer-friendly brand.
All in all, from these changes, we achieved a revenue increase of 450% within the first six months.
How do you monetise – is it all on subscriptions? What are the subscription rates?
We run an entirely freemium model, making money only by paid subscriptions, and the occasional event. We’ve decided not to place advertising on the site. Our current rate is £20 for one month, £45 for three months and £120 for a year.
What did you do in terms of marketing, PR and advertising?
Our marketing strategy is focused on finding scalable, profitable marketing channels but it is quite important for us that each channel must have a high level of automation.Our main successful marketing efforts are SEO, PPC and press.
The site has always had a strong SEO presence, ranking number one on Google for all major “toyboy” related keywords, we have recently seen growth by better appealing to the “cougar” audience.
Since day one, we put a large focus on PPC, however have had varying success at the hands of a wayward PPC agency – we worked with Mediaworks – a recommended mid-sized agency. Despite giving the agency the benefit of the doubt, our account was very poorly managed and they were never able to positively impact our PPC campaign, resulting in sizeable financial and opportunity costs for the business. We have since taken this task back in-house and with the aid of a fantastic consultant based in Australia, this continues to become a stronger channel for us.
Toyboy Warehouse originally grew as a result of good exposure in the press, this was one of Julia’s main strengths. Although this isn’t an automated channel for us, we do give it an increasing emphasis. One benefit as an independent site is that we have a lot of exclusive success stories and case studies. After deciding against appointing a PR agency, we remodelled our press efforts into becoming a revenue-driving activity. We have developed strong relationships with online, print and TV media and we have successfully sold various case studies and success stories that are gathered from our membership base.
What is your user acquisition strategy?
Our user acquisition strategy is targeted to achieve five independent acquisition channels, e.g. Google Adwords, advertorials, SEO and content seeding. Each one is targeted against our company-wide target cost per acquisition. However we have a 20% +/- allowance for each channel, as long as the overall cost averages out. We introduced this as we found that some channels may not be as profitable, however they may still increase the positive network effect and benefit our overall retention.
We love to run tests, so we are constantly testing and optimising new and existing channels, however if something isn’t close to our CPA target within three months we will generally axe it.
Our strategy ensures that we test one new channel every two months, our next major focus is expanding on press and introducing a membership referral network in the place of a traditional affiliate programme.
How did you increase user engagement? How did design changes help with this?
Since taking over the business we have continued to increase user numbers which has a positive network effect on user engagement.
In April 2014 we launched our fully rebuilt product. This was designed and developed from the ground up to make interaction and conversation easier for users. With strong call to actions on each page to begin interactions with more users, more intuitive search pages and strong user recommendation widgets, the sessions on site increased by 26%, and page views increased 105% within one month.
In addition to design changes, we’ve enjoyed increased user engagement by overhauling our email communication funnel, now with better interaction notifications and reminders. This resulted in returning visitors from email increasing by 21% since the new site launch.
What are the most successful features you introduced?
When rebuilding the site we decided to slim down on functionality, getting rid of forums and group chat rooms. However we laid a heavier focus on the search functionality and a Tinder-style “encounters” widget on the logged in homepage, where users can explore other members and interact with a simple wink or nope.
We also introduced instant chat instead of the previous email-style messaging. This has been extremely successful at keeping users on site for longer even after they’ve met someone.
15 months after acquisition and 12 months since our first commercial changes, we’re please to see that the turnaround of Toyboy Warehouse is well ahead of schedule. We passed the business’s previous peak six months into the turnaround, and are now at an all-time high.
We’ve grown our revenue by just over 1000% in the year, whilst remaining profitable month on month. We are now sustaining a 10 — 15% monthly revenue growth.
We have also more than doubled our user base and increased interaction by 325%.
What are your conversion stats? How do they compare with the rest of the industry?
Our conversations are hugely varied depending on user demographic, mainly age and gender. Our highest converting demographic is 50 to 55-year-old women, we enjoy a 40% conversion rate from approved profile to paid upgrade. Our lowest converting demographic is 18 to 25-year-old men, although this traffic is much cheaper for us to acquire, and members of this demographic can often have a negative effect on the network, as they are often too young and too sexualised for the women of Toyboy Warehouse.
Are you on mobile? What is the split between mobile and desktop?
We’ve noticed a huge increase in mobile traffic. In May 2013 our traffic was split 67% desktop, 24% mobile and 9% tablet. The previous site had no mobile optimisation and was a generally bad experience for mobile users.
Before we launched the new site, we introduced mobile landing pages and sign up process. This, along with natural growth in mobile dating browsing, saw mobile traffic rise to 38% in May 2014 – a 14 point rise. Tablet also grew to 11% and desktop 51%.
Since launching the new fully mobile-optimised site in April, mobile has grown again to account for 41% of traffic in August 2014, 11% tablet and 47% desktop.
Toyboy Warehouse is now optimised for mobile and fully responsive. Although we do not have imminent plans for app development, this is on our development roadmap in the future.
How big is your team?
Our team is made up of just three full-time staff and six contracted area specialists. We have maintained an extremely close-knit core team that manages the majority of activities. We hope to maintain this structure and ensure as much automation as possible, whilst still giving users a personalised service.
What is your events strategy?
Prior to the acquisition, Toyboy Warehouse previously organised Toyboy Parties with varying success. When focusing on rapid online growth, we paused all offline events however have recently introduced monthly events in central London. Although we don’t consider this to be a core focus of Toyboy Warehouse, we have noticed that they have had a positive affect on retention of those who have attended and we will continue to host these parties but don’t have immediate plans to grow them.
What did growing a niche site tell you about the online dating industry?
Entering the industry with no previous experience has resulted in an incredibly sharp learning curve for James and I. We were originally keen to prove the industry wrong when it suggested that the days of independent niche sites were over. Although we’re proud of the businesses performance over the last year, we both appreciate why many people believe this is the case, as it has been incredibly hard work.
Pitting ourselves against niche sites on the larger network platforms means that when rebuilding the site we naturally had to do a lot more internally. However we’ve managed to thrive, and although painful at times, especially during the site rebuild, we’ve proved that building our own platform has already started to deliver long-term benefits and will continue to do so. Both for us as a business and by offering an authentic niche dating experience to our members.
We’ve learnt that as the industry becomes increasingly consolidated and as larger players make pre-IPO moves to monopolise the industry, this has increased the short-term pressure on smaller independent sites. However, we believe that this is already proving to be short-lived, as consumers continue to better understand the industry and demand a better online experience, there will always be the growing demand for more agile and authentic independent dating sites.
With the site you have built, are you looking to acquire and run other sites using the same platform?
As we come into the final furlong of the Toyboy Warehouse turnaround, James and I are actively seeking our next project. Our approach to this is looking at our current resources, skills and opportunities. One of the major assets that we currently have is a well built, high-converting dating platform, now with a solid understanding of the industry. Although we aren’t actively looking for other dating sites, should a similar opportunity arise we would be keen to seriously consider it as we are confident we could turnaround a similar business again in a fraction of the time.
What are you focussing on as a business for the next year? How are you looking to grow?
Toyboy Warehouse will continue to grow beyond the day to day involvement of the Turn Partners team. As James and I are beginning to reduce our time spent in the business, we are carefully managing the transition to ensure that we continue to sustain 10-15% monthly growth and an even more active community of members across the UK.
With the recent integration of mixpanel analytics, our next improvements will be focused on optimising our lifecycle emails, for example introducing additional behaviour triggered drip campaigns to engage users when it is most needed.
We are currently developing a post-turnaround strategy to maintain and expand upon the current growth, this will focus on the continued optimisation and development of new marketing channels and iterative development on our platform.
Although we’re happy with the progress of the business so far, we’re very excited by the growth potential that is still easily available for Toyboy Warehouse. As well as developing a strong affinity to the brand and a new appreciation of a niche that we barely knew existed, James and I have had an extremely enjoyable and insightful year learning lots about the wonderful dating industry. We are both confident that this is merely the beginning of both Toyboy Warehouse and Turn Partner’s involvement in the dating industry.
Visit Toyboy Warehouse here.