The most successful startups that get to millions of users and paying customers always focus on one or two key growth strategies, which they optimize to perfection before moving on to other strategies. Here are the top five user acquisition strategies to consider to help you scale up your startup growth:
A common mistake with venture-funded startups is to start burning tons of cash to buy customers without having a business model in place to monetize those users. You really need to have a plan for a business model that has a path to solve for profitability to build a successful long-term business.
If you can monetize your customers to pay you more money than the cost to acquire them, then you can experiment with many different paid channels to figure out which ones have your best potential user audiences (e.g. Google, Facebook, affiliates, paid search, TV, podcasts, etc.).
A good place to start is by sharing data on who your best Lifetime Value (LTV) customers are with these paid channels to help them build lookalike audiences to help you find more users like them within those channels.
The rule of thumb is that you will lose money up front testing different channels but your goal is to optimize your ideal Customer acquisition cost (CAC) to maintain a 3:1 LTV: CAC ratio to keep the margins reasonable after other costs.
This strategy can have a big impact on growth because you have much more control over the levers to scale up quickly depending on results and make a faster impact on business growth.
If your users love your product, then you can get major “word of mouth” virality driven by a high Net Promoter Score (NPS) and positive user reviews. The key is to make sure you build a great product or user experience
that people love and make it easy for them to share it with their network. The goal is to convert them into a community of evangelists who end up becoming your biggest advocates for marketing your product.
In general, a higher NPS score correlates with generating more word of mouth marketing. Most of the successful startups have leveraged viral loops to generate even more virality by testing different options to make it easy to share with your networks with the right incentives to encourage more of that behavior (e.g. Dropbox giving free storage space to both referrers and referees).
People often measure the viral coefficient to see how effectively existing users attract new users, and the best practice is to get your viral coefficient to exceed 1.0.
A viral coefficient of 2 means that every customer you acquire will bring in two more customers. A viral coefficient above 1 is advantageous to your customer acquisition costs because as more users come through word of mouth and other unpaid channels, the CAC declines.
Other options include working with paid influencers who resonate well with your target audience and leveraging them to promote your product by seeding them to talk about their positive experiences on the product with their fans and followers (e.g. Instagram influencers for beauty and fashion products).
If your product creates a ton of unique content, in the form of Q&A, articles, customer reviews, blogs, videos, podcasts, etc., you might end up with millions of unique pages that can in turn attract hundreds of millions of new users who are searching for content via search engines and other channels like social media, podcasts, app store pages, and smart audio devices.
The content is an effective long-term user acquisition strategy because it takes time for the content to start getting better visibility and building a community of followers, but it is definitely well worth the investment.
If you get content marketing working, then you are able to retarget people, build better lookalike audiences on different channels, and build backlinks to your content, which brings up your domain authority for SEO.
As you write and publish more content across more platforms the momentum would start to grow to influence new users, but everything starts with figuring out developing the right content first.
Ideally, you should choose multiple platforms for publishing your content, even if you publish the same or slightly different variations of that content to match the desired formats on each platform. Look at a lot of media companies—they’re building agency services divisions now.
It’s easier to build an audience first, and then from there, you can start to branch out into other areas. A great example is Glossier, which started as a beauty blog in 2010 and has since morphed into one of the rare makeup companies that do almost all of their business online; it is now valued at over one billion dollars.
Capitalizing on the success of another platform or business is a great way to grow your own. Try to find a way to work with other relevant platforms, businesses, products, or services whose audiences align well with your target customers.
The key is to find partners who reach similar users but are not directly competitive with your product. The partnership has to be a win-win for both sides and has an exchange of value (doesn’t have to be monetary but something you both find valuable to your business).
The value exchanged should be balanced, fair, and benefit you both. An example of this is Roku’s early growth strategy, which included strategic partnerships with different content providers on the Roku platform to reach new users in exchange for providing co-marketing opportunities to acquire new users for both partners.
This partner marketing strategy worked out well to attract key partners like Netflix, Hulu, and Amazon as well as broadcasters like Fox, CBS, and Bloomberg to promote Roku to their massive customer bases, to help create awareness for Roku to highly relevant audiences looking for ways to stream their content on the TV.
Most innovations improve and complement the core business of a company, taking advantage of and enhancing its most valuable assets with the potential to drive results for all companies (especially technology companies). What matters is the pace of innovation. That are the fundamental determinants of competitiveness.
This makes sense as small improvements in a big business can have a meaningful impact by continuing to increase your addressable market of users (e.g. International expansion into new countries), payment options (e.g. PayPal, mobile wallets, Apple Pay, Google Pay, Amazon checkout, etc.), cross-platform experiences (e.g. IMVU desktop and mobile apps, etc.), and product or brand extensions (e.g. Apple Mac, iPhones, iPads, iTunes, Music, etc.).
However, diversification outside of the core is a much riskier strategy with longer odds of success, which is why this isn’t recommended for early-stage startups until they have fully developed their core user audience.
Marketing is becoming more expensive, customers are becoming less trusting of brands, and customer acquisition is going to be even more challenging for startups who have smaller budgets and low brand awareness working
against them. This isn’t the time to give up; it simply means startups have to get smarter with leveraging the right strategy for their business at different stages of growth. In today’s distracted world, you’ll only win by acquiring customers in ways that clearly differentiate you from the crowd and build an enthusiastic customer base that sticks around.
The key to success starts with building a great product or experience, which helps you attract a community of loyalists who collaborate with you on a journey to build a great brand together, as well as leveraging strategic
partners and/or product innovations that can help accelerate your reach to attract more relevant customers. Once you have proven the business model, hit the accelerator pedal and invest as much as you can afford based on the economics of growth.
You’ll want to grow the business as fast as possible before a competitor realizes what you have done, and tries to copy you to steal your market share!
Lomit Patel is the Vice President of Growth at IMVU. Prior to IMVU, Lomit managed growth at early-stage startups including Roku (IPO), TrustedID (acquired by Equifax), Texture (acquired. by Apple) and EarthLink. Lomit is a public speaker, author, advisor, and recognized as a Mobile Hero by Liftoff. Lomit’s new book Lean AI, which is part of Eric Ries’ best-selling “The Lean Startup” series, is now available at Amazon.Reblogged 6 months ago from www.clickz.com