Growth Hacking: User Acquisition
User acquisition: everyone talks about it, but no one really knows how to do it. For your startup to be successful though, it is critical for you and your team to nail this. Peter Mansfield of CMO.LA outlined some strategies for driving user growth that deliver the most bang for your buck and that can be tailored to cash-strapped startup budgets on our User Acquisition Bootcamp For Startups webinar.
1. Attracting users starts with understanding your target audience. To do that, you need to think about the customer segment you’re catering to and dig deep to develop customer snapshots, or personas, that include gender, age, income, and interests to name just a few.
2. Really know your product and how people will engage with it. And be honest: is your product ready for prime time? There’s just no excuse for providing a poor user experience. Pinterest (read about it here: The Secret to Pinterest’s Astounding Success), and Instagram are excellent examples of how to create a killer user experience.
3. Be on the lookout for ways to reach out to your early adopters for feedback. And make sure you have adequate customer support. That means videos, FAQs resources, and a support solution like ZenDesk.
Next, get to work on your engagement strategy.
- Is your drip marketing campaign ready to go?
- Have you prepped key partners prior to your launch?
- Do you have feedback loops in place?
Know what your sales funnel (the sequence for converting prospects to long-term users) looks like
- How do users find you?
- Do they have a great first experience?
- Do they return? How often?
- How loyal are they?
One basic step is to calculate your CAC. Why is it important? Without tracking this key metric, you won’t know how to optimize your investment for a given result or be able to measure how efficient your sales team is. VCs will also expect to see your projections of customer lifetime value when you’re pitching them.
Your CAC = the cost of your sales and marketing divided by the number of customers you acquired.
But don’t just look at that number in isolation. Compare it to customers’ lifetime value. A ratio of 3:1 is ideal. If it’s higher than that you might be underinvesting in customer acquisition. Below that and you’re losing money.
Don’t get too hung up on metrics such as registered users, downloads, and/or page views. What’s really important is how many engaged users (measured by repeat actions and time between actions) you have.
So how can you gain customers/feed your funnel on a budget?
- 1. Compelling content can be created in many forms: blog, video, case studies, opinion pieces, webinars, ebook, podcasts, syndicated articles
- 2. Mint is a good example of using content as a distinguishing company feature.
Come up with an action plan that includes:
1. Monthly diagnostics: checking your site for faulty backlinks; and weekly reviews of key metrics (# of visits from top search engines, keywords driving traffic, site ranking, desktop vs. mobile searches)
2. Reviewing and refining your keyword content on a weekly basis
3. Regular partner outreach to help with link-building
4. Covering the bases by creating compelling images and a strong value proposition for your websites and landing pages
5. Customizing your message to your audience by testing different headlines and CTAs
1. Banner ads and AdWords
2. Facebook ads
3. Floating ads
1. Figure out how many channels you need to cover. Each channel has its relative strengths.—Facebook and Twitter are good for generating traffic: while LinkedIn is a great tool for raising brand awareness.
2. Match your audience with the relevant social media channel.
- 1. Get creative, but keep it simple—One great example of this is the email targeting AirBnb did with Craigslist users when it initially launched.
- 2. Tailor your campaign by customer segment, review your metrics, and test, test, test until you find success.
Partnering with organizations that have synergistic products and similar user bases to yours—plus a track record of partnership deals to help you do the heavy lifting of acquiring users—is a really effective growth hacking strategy.
What conversion rates should you expect from all these tactics?
It varies by product and business model (business to consumer, paid vs free app, etc.), but single digit rates, even as low as 1-2%, are decent.
The bottom line is that you don’t need to spend tons of money on splashy ads to grab users. You can drive pretty big gains in user acquisition by sizing your strategy to the budget you have, regularly monitoring the results, and changing tack as you need to.
Deborah Adeyanju is Content Strategist & Social Media Manager at Early Growth Financial Services (EGFS), an outsourced financial services firm that provides small to mid-sized companies with day-to-day accounting, strategic finance, CFO, tax, and valuation services and support. Prior to joining EGFS, Deborah spent more than a decade as an investment analyst and portfolio manager with leading financial institutions in New York, London, and Paris. Deborah is also a Chartered Financial Analyst (CFA) charterholder.