With digital media always changing, it's important for startups to constantly keep abreast of the best marketing strategies. And that's why marketing expert and friend of the Founder Institute Shivankit Arora has written this guest post that outlines the basic strategies a startup can employ to increase their internet presence.
Growth hacking has been riding the tide in the startup world for a while. While the phrase has been used by marketers more often than before, most of them still limit the concept to search engine optimization, email automation and social media marketing strategy etc.
However, this is not what defines growth hacking.
Growth Hacking refers to a set of marketing channels that will trigger your business growth in a data driven and cost effective fashion. A successful growth hack comprises the following:
Brainstorming and experimenting with a number of hypotheses to come down to a marketing strategy to take your startup to the next level.
Continuously optimising your efforts, CPAs and and user retention with the discovered hacks.
Now that we understand what growth hacking is all about let’s have a look into the growth hacking funnel or what it is popularly known as “startup marketing funnel”.
Growth Hacking Funnel
The growth hacking funnel for startup marketing comprises of 5 stages based on the AARRR model.
Image Source: Referral Saasquatch
Acquisition: For startup or a small business, this stage is where you gain the necessary awareness among your target audience to see results from your marketing efforts.
Activation: Now that your audience knows about your business and the services/products you have to offer, it’s time to convert them into customers. This stage helps you take your audience closer to the ‘customer’ stage.
Retention: The market is where you meet your competitors. However, there’s must be something that gives you an edge over others. This is the stage where you tap into your USP to convince your customer to keep using your product or service instead of multiple options available in the market.
Referral: It wouldn’t be wrong to say that ‘word of mouth’ marketing is the best form of marketing out there. This is the stage that deals with getting more customers out of your existing set of customers.
Revenue: This is the end result achieved after optimised execution of all the above steps. Here you need to understand how your business will maintain a healthy cash flow with rising profit margin.
Now that we have a basic understanding of the startup marketing funnel, let’s dive into some these stages with examples from popular startups.
1. Acquisition: How Airbnb generates the right awareness for their product
The founders of Airbnb, Brian Chesky and Joe Gebbia, had just raised some initial funds for their business. However soon they started brainstorming better ways to scale their business rather than the current way of paid acquisition.
They began by narrowing down their market research to one basic question.
What are the digital channels where there target audience searches for something more than just a standard hotel experience?
Craigslist was the answer.
The next thing that Airbnb had under their radar was to get their listings on Craigslist too. This would help them get more traction for their own listings.
Using this hack, Airbnb managed to pull in thousands of users from Craigslist. Moreover, since their listings were much more comprehensive aided with better descriptions and photographs than Craigslist, the idea led to a viral growth cycle.
Image Source: Growth Hackers
2. Activation: How to activate users, the ‘PayPal style’
PayPal grew to 5 million users in summer 2000 from 1 million users in March 2000. This is one of the reasons why it is one of the most growth-oriented startup of the late 1990s.
The first step they took to trigger growth is activate users by paying them to sign up. With every sign up, you were credited $20 (apart from $20 for a referral). Over a period of time as the number of signups boomed exponentially, they reduced the bonus offered, eventually fropping down to nothing.
This way PayPal makes a classic example of activating users by awarding them adaptive incentives. While the company did invest in varied advertising practises, the above method was the best hack to achieve lowest CAC.
Image Source: Quora
3. Retention: How Groove pulled down their churn rate by 71%
One of the major obstacles every SaaS company faces is high churn rates. Churn rate is nothing but the percentage of people exiting out of your subscription based business.
Groove was one of them. Groove is an easy to use help desk software for businesses coming at $15 per user.
Although the company had a healthy flow of new users, Groove’s 4.5% churn rate was gradually turning the business model on an unsustainable path.
So the folks at Groove analyzed users who stayed on-board for more than 30 days and the ones who quit before that. They divided people in the following categories:
AT the end of a lot of brainstorming, Groove made up its mind to send targeted emails to people who spent less time on the platform or/and were likely to opt out after 30 days period.
People who were spending less than 2 minutes on the site in one session were sent this message:
Image Source: Kissmetrics
For someone who checked in fewer than 2 times in the first 10 days was sent the following message:
Image Source: Kissmetrics
This conversion optimization strategy, helped Groove reduce their churn rate by as much as 71%.
Understanding the point where your users struggle while using your product/service and addressing the same could just save the day for you.
4. Referral: Dropbox fueled their growth by tapping into referral marketing
The success mantra for Dropbox to be one of the most popular tech startups is tapping into the power of referral marketing.
With a paid marketing campaign under progress, Dropbox spent $250 per customer for a product that was priced at $99.
Every friend you referred Dropbox to, was in turn credited with 500 MB additional storage. You got to earn up to 16GB of free space using this hack.
Image Source : Referral Candy
The next thing they gave attention to was making sure the referral process was as smooth as possible.
Image Source: Referral Candy
The key takeaway here is that ‘word of mouth’ marketing is a powerful hack to pull in more users/traffic on-board. Incorporating referral signups/purchases in your business model with complementary incentives for customers can trigger growth.
5. Revenue: The growth engine of PicMonkey
PicMonkey is a company in the photo editing space. But their share of growth hack involves building a great product with a freemium model.
While millions of users were joining in, every month they were editing billions of photos using PicMonkey. While they could access basic filters for free, advanced filters and tools were available for a monthly fee of $4.99.
In addition to this, hundreds of thousands of users pay that subscription price.
Image Source: Fortune
The company has been riding the tide of increasing profits ever since, with the exact growth being 40% year over year.
The major takeaway here is that going freemium could be the ultimate growth hack for your business. Offering a part of your service as free is a way of educating them how good your product is and in turn assuring them of the value they’ll get once they purchase the premium product/service.
In a nutshell, growth hacking isn’t just about SEO or social media marketing. It comprises of an optimised mix of digital marketing strategies and tools that can pull in significant traction for your business in a cost-effective way.
About the Author
Shivankit Arora is a growth hacker and the founder of a startup marketing agency, MarketingMasala.com. You can connect with him on Twitter to know more about growth hacking and startup marketing.