Case Study ClickFunnels Russell Brunson

By Matthew Bates · Published August 9, 2022

ClickFunnels

  • Product: Sales Funnel & Marketing SaaS
  • Founder: Russell Brunson
  • Launched: 2014
  • Staff: 485
  • Turnover: $360 million ARR (as of August 2021)

Background

If your childhood was anything like mine, you probably went through a collecting phase. Personally, I had an obsession with Star Wars figures and later, old coins. For some strange reason, other kids in my neighborhood collected fallen car hub caps. You, dear reader, might have collected stamps, dolls, or baseball cards. 

Russell Brunson took a more leftfield approach to this pastime - and I doubt you would guess what it was.

Because this kid collected junk mail.

Yes, junk mail. The type that sometimes floods your postbox with offers of cheap loans, credit card offers, and garden services. 

Young Russell, it seems, had an early fascination with advertising, marketing, or any creative print designed to entice and persuade. He set about collecting junk mail, one would suppose, to study the art of advertising. This supposition is further supported by his apparent interest in commercial breaks and newspaper adverts. I know, right?

And when I say collect – I mean really collect - lording over several large bags, full of junk mail. While other kids compared soccer stickers, he flicked through his precious sales letters, in awe at the art of persuasion. 

You might find this something of an oddity for a young child, and to be honest, so do I. But I think we should give the kid a pass because this odd fascination spawned a healthy career. Very healthy indeed. A career that, among a host of successful ventures, would result in owning a SaaS company providing sales funnel software worth $360 million as of 2021. 

And he did it all without borrowing a single dime.

The company is called ClickFunnels. If you are even vaguely involved in online marketing, you might know them because their service, offering high conversion sales funnel software, has exploded in popularity and enjoyed phenomenal growth since its launch in 2014.

We love an excellent bootstrapping story here at Startup Geek. The notion of building a highly successful company without the help of VC appeals to our dogged entrepreneurial nature, so with our interest piqued, we started digging into Russell's backstory and his road to success.

But first, what exactly is a sales funnel?

You might already be familiar with the term – it does seem to be in vogue these days, with many savvy marketers swearing by the concept. Marketing forums are full of people discussing which funnel they are using and how to optimize it. 

But It has only recently exploded into the e-commerce narrative, so for those who aren’t familiar, we shall briefly explain.

A sales funnel combines a number of stages to convert and upsell customers. It starts with a prospect seeing an advert and entering the website (top of the funnel) to the purchase action (the bottom of the funnel.) The funnel presents a series of strategies designed to 'squeeze' prospects towards a purchase, data collection, and retargeting. 

If it sounds coldly manipulative, it isn't – high street stores have used funnels for decades. Whenever you visit Gap for a quick browse, but then leave with three tee shirts, matching shorts, and a belt, you have experienced a funnel designed to interest, upsell, and close - through clever point of sale, staff trained in upselling, and strong promotions for purchasing multiple items.

An online sales funnel is simply a digital version of that experience, with bells on. 

Websites are often guilty of a weak conversion strategy, many of which could be described as simple online brochures with an add-to-cart button. They might look great but often leak customers through a lack of conversion techniques. A sales funnel is a more targeted approach, with specific pages revealed at each step designed to convert and close depending on the previous actions. 

That is the very basic sales funnel, but there are dozens more, many of which are complicated and highly strategized. At one stage of the funnel, for example, you might show a pop-up pointing to a free giveaway in return for an email address for retargeting – those extra additions to your website require time, skill, and expense to implement, and manage. 

ClickFunnels provide a plug-and-play toolkit for funnels that seamlessly integrates with your website and is easily managed with different funnel templates. No coding or additional cost requirements, apart from the monthly subscription for the service. 

You simply design your landing page and stitch it together with all the funnel options available.

So, with the sales funnel explained, let's look at the ClickFunnels story. But first, we need to go back a little.

Young entrepreneur 

Russel Brunson has always been a natural entrepreneur with an eye for a deal, trying out various money-making hustles in his youth.

As an ambitious 16-year-old, he began flipping classified items that offered margin potential. Within a year or so his ambition had grown, and he was now dabbling in direct response marketing. He ran a 1-900 number for recorded astrology readings before he even had a driving license and would roam around thrift stores looking for stuff to flip on eBay. 

His first foray into direct sales - which might sound a little bizarre - was a DVD instructional on how to build the perfect potato gun. It worked. He sold quite a few. I know…potato guns.

After leaving college, a period of projects and hustles with varying success followed. During this post-college period, Russell hit the marketing info courses hard, reading and listening to everything he could get his hands on. Another obsession soon developed, and an idea struck him; what if he could resell some of these courses under his own branding?

His favorite book was 12 Month Millionaire. The author, Vince James, made over $100 million selling health supplements through direct mail and described in his book the process and strategies involved with his success. 

Russel read the book, then immediately emailed James asking for an interview. Over three weekends, he managed to get six hours’ worth of recorded content from James over the phone.

Then followed an almost hilariously simple idea. 

He packaged the audio into Mp3 format, indexed into titled sections, and aggressively marketed it as the 12-Month Online Millionaire, available for download at $37. A few tweaks were made here and there to modify the book's techniques for online sales, but it was basically the same product, just rebranded as an MP3 and well marketed through social media adverts.

Incredibly, Russel made his first million out of that campaign. 

There is a lesson in that, somewhere. I suppose it demonstrates how the simplest of business ideas can really blow up, providing you execute the marketing very well. 

And that was Russel's strongest card – an ability to sell was baked into his DNA, and selling is something he has a passion for well-written clever copy and catchy, emotive advertising techniques seemed to be gifted to this chap, naturally.

Deciding the info-course niche was his way forward; he set about creating various other licensed, rebranded marketing courses over the next few years, with encouraging results. 

Russel was beginning to develop a name for himself. His online courses were flying off the shelves, metaphorically speaking, and now instead of just rebranding other people's courses, he was creating his own and running seminars. He had become a marketing course guru.

Growth

Around this time, a new supplements company headhunted Russel to create an entire marketing strategy in return for equity. For months, Russel devised all advertorials, copy, and creatives. He also personally trained the sales staff to pitch the product over the phone. 

Despite the company's success, he didn't receive a single dime in equity. In other words, he was burnt. 

So, now quite perplexed and probably completely pissed by this experience, he launched his own company, Neuracel, selling the same product only better and cheaper.

It was a huge success and for what it's worth, the other company went into bankruptcy. So, another lesson there – don't bite the hand that feeds you, and recognize a unique talent when you have it on your side. 

It was through Neuracel that Russel began to explore sales funnels, a technique that was the main reason for his success. Instead of building a catchy website and relying purely on strong copy, he made a series of landing pages with complex strategies involving data collection, retargeting, upselling and special promotions. 

He began to grow, launching other direct response companies, sales funnel courses, and webinars, each with a different strategy and brand of sales funnels. 

Finding traction with his courses and webinars, he began to focus on membership programs (eventually building a roster of one million ‘members’ who would subscribe to his marketing webinars and courses.)

He also promoted a multitude of products through direct response funnel-based marketing, favoring anything that translated very well into urgency and desire; such as weight loss shakes, coupons, supplements, or even tech services.

In a reasonably short period, he had amassed a group of companies with close to 100 staff, teaching, selling, or informing.

The general theme here is that Russel understood the key elements of online sales and promotions; excellent copy, solid creatives, and a flair for creating urgency. 

This skill set fits perfectly into the services and products he was selling, and business boomed.

Facing bankruptcy

You might agree that disaster has a habit of striking just as things are going great.

And disaster struck. At the peak of his success, Russel lost most of his merchant accounts overnight - the details are pretty vague, but it relates to the banks suspending merchant accounts for companies providing membership programs. 

With it, he lost the ability to process payments through all his ventures. Sales ground to a halt. This created a cascading effect in which there was no revenue stream to keep the business running, and things started quickly spiraling downward.

Soon, with Russel unable to meet payroll, staff began leaving of their own accord, or he had to let people go. His office of close to 100 staff now consisted of just a handful of loyal or crucial people. 

Things suddenly looked quite grim.

There is a truth to the adage 'it never rains, it pours,' and with that in mind, an issue with staff payroll taxes emerged. Russel now faced the real prospect of jail time unless he could find $250,000 to pay the labor department. It was raining torrentially.

It's incredible, isn't it, the chaotic nature of life. One moment you are flying along with a golden touch, an office full of staff, and a string of great business projects. The next minute you are in an empty office and facing jail. Disaster can, at times, happen as suddenly as that.

Russel admits he was very close to throwing the towel in, walking away from the business, and accepting his fate. But his wife encouraged him to fight, and he did. By relocating to much smaller premises and digging deep, he survived the ordeal by the skin of his teeth.

Now exploring further ventures with the aim of growth and generally just getting back on track, he met Todd Dickerson; a programmer who suggested building software that would streamline Russel's sales funnels, making it easier to implement funnel strategies across his direct response websites. 

Todd's idea was that highly strategized landing pages and funnels are time-consuming and costly to implement. A specialized toolkit would offer the ability to execute sales funnels into any website without coding or building. 

They built the software, and Russel ran it across his existing direct response websites. And then, an idea came to him.

The birth of ClickFunnels

With the software built and running sales funnels on his stores, Russel realized he could be onto something - why not sell the actual funnel software as a service? 

At the time, competition in this space was limited but available through one platform or another. Keap’s Infusionsoft for example offered funnel solutions as part of a more comprehensive CRM and business automation platform. No SaaS existed specifically for sales funnels built into landing pages, however. 

Seeing this as a gap in the market, Russel partnered with Todd and launched ClickFunnels in 2014. ClickFunnels would be positioned as sales funnel creation software, with a savvy, well-experienced sales funnel marketer as the architect. 

Initially, the service failed to gain traction; the usual strategies employed in marketing an SaaS failed to truly propel ClickFunnels forward. But this is a highly enthusiastic, energetic marketeer with a lively personality and a great sales pitch. 

So, time to put that energy to use and promote ClickFunnels through Webinars and conferences, teaching everything there is to know about funnels. Through that process, he could promote the software. He did, and it worked.

It also helped that he had an email list of one million happy 'students' and customers through his various webinars and seminars over the last few years. He sent out an email to the entire list promoting ClickFunnels and had a high take-up rate from it.

Russel also created various promotions through his webinars and events. They would offer a free two-week trial for ClickFunnels, free eBooks, and free courses. In return, he had a target audience of prospects to market towards, which is the essence of a funnel in and of itself.

The software is now used by over 100,000 active subscribers and is the largest non-venture-backed company in the world, with a valuation teetering around the $400 million mark and approaching 500 staff through various locations (as of August 2022).

He cites two people as key to his success; his wife, who motivated him to keep slogging away when bankruptcy looked all but certain, and his ClickFunnels partner, Todd. By his own admission, he had never wanted a partner, but teaming up with Todd was, in his mind, the best business decision he had ever made, and the two quite different personalities bounce off each other very well.

Its been an exciting journey, and at just 42 years of age, you would imagine there will be further exciting business developments with this energetic entrepreneur.

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