In 2006, Twitter was just a small micro-blogging startup. In 1976, Apple was just a few friends building computers. In 2005, Box was just a fledgling file storage company.
They built amazing products and acquired millions of users.
“Build a better mousetrap, and the world will beat a path to your door.” – Ralph Waldo Emerson (paraphrased)
As much as we’d like to think a solo inventor purely focused on making the best possible product can become an entrepreneurial success story, that kind of thing only happens in fiction.
In real-life, great products need great customers.
Central to the success of a business, then, is the process of user acquisition – finding and drawing sufficient numbers of customers.
Warning: Do Not Proceed Without a Great Product
Before you can seriously pursue user acquisition, you need an amazing product. Specifically, you need to reach product-market fit.
Oversimplified, more than 40% of surveyed customers should say they would be “very disappointed” without your product.
Until you have achieved product-market fit, you only want to attract enough customers to test your product improvements. Extra customers just means more frustrated people.
1. Determine Your Goal
“If you don’t know where you’re going, any road will get you there.” – Lewis Carroll (paraphrased)
Before just launching random advertising campaigns and SEO efforts to “get users”, take the time to determine your exact measure of success.
If you get 100,000 new visitors to your website, is that success? (possibly, if you’re an online publication) If you get a 5% increase in conversion rate on your homepage, is that success? (possibly, if you have a high volume of traffic and strong starting conversion rate) If you get 10 new paying customers, is that success? (possibly, if you’re a high lifetime value business)
If you don’t establish the definition of success before running user acquisition efforts, you won’t know whether you’re desperately failing or single-handedly making your company succeed.
Find one metric that matters
We all know the five metrics of the AARRR model, and each of those primary metrics can be examined more closely through dozens of other numbers and ratios. Each of these numbers have their use, but trying to watch all of them every day simply leads to analysis paralysis through the overwhelming level of noise.
To avoid this problem, focus on the one metric that matters. In Lean Analytics, Alistair Croll and Ben Yoskovitz explain every startup must find the one metric that matters at a particular time.
What is this one important metric?
It depends. This metric will vary based on what your startup does and what stage of development you have reached.
Make your goal SMART
“Growing the business” isn’t a goal – it’s a dream. Even “getting more paid users” doesn’t meet the lofty standards of a goal.
To make an effective goal, simply follow the traditional requirements of a “SMART” goal:
Your new goal might perhaps be closer to “increase monthly paid users 50% in.”
With a specific goal in place, you will know whether or not you’ve succeeded.
Setup tracking to measure results
Now you know your precise goal, but will you be able to accurately measure results?
For a fully-online business, properly configuring tracking with tools like Mixpanel and Google Analytics presents enough of a challenge. For online and offline businesses, tracking conversions becomes even more exciting.
One business I’ve been working with drives user acquisition online through Adwords, but the actual payment occurs over the phone.
To accurately track our conversions from the advertisement to the website to the phone call, we have an interesting combination of CallRail plus (soon) a custom API script. When a visitor clicks an advertisement, CallRail automatically shows them a unique phone number associated with their visit.
When they call that number, the phone operators mark their call as a successful or unsuccessful conversion. Finally, when the API script pushes the conversion tag into Google Analytics, “success” tags will be marked as goal conversions which are then automatically synced back to the original ad click in Adwords.
Most tracking systems won’t need to be quite that complicated (at least at first), but you’ll want to do whatever is needed to get solid tracking on the entire conversion process.
2. Define Your Target Audience
Now that you know your goal and have tracking ready, you need to determine your target audience.
In 1924, Phillip Morris introduced the Marlboro cigarette as a women’s brand with the slogan “Mild as May”. It sold well for a while, but eventually demand dipped too low. The brand was taken off the market.
In 1955, the danger of lung cancer began to make inroads in the public’s consciousness, and Phillip Morris saw an opportunity. Rebranding Marlboro as the safer alternative with the same taste as normal cigarettes, they relaunched Marlboros to a completely different audience: outdoorsmen (or at least wannabees).
Choosing the right audience can mean the difference between success and failure.
Talk with your target audience
Once you have a general idea of who wants your product, you need to learn everything about them.
If you already have customers, this is easy: Offer a free 15 minute consultation. Your customers will be thrilled, and you’ll get to see what problems your target audience encounter, plus the language they use.
If you don’t have customers yet, just go to your local coffee shop armed with $5 gift cards. Ask people to take a look at your product and tell you what they think.
However you do it, focus on active listening. Getting this user feedback can be amazing for your marketing (and product design), but you have to listen.
Get mid-action feedback
When we wanted to improve our user acquisition at SpeedyPrep, I decided to use mid-action user feedback. Mid-action feedback is golden, because you get an inside view on what your customers are thinking in the exact moment of decision.
On our homepage, I installed Olark chat and invited potential customers to ask questions. Many did, and I soon began to see trends in wording and sticking points.
Armed with these new hypotheses, I then installed Qualaroo to use their surveys to quickly validate my findings. These new learnings were then fed into my A/B testing plan to be prioritized and tested.
Instant chat can provide good qualitative feedback, but more people respond to Qualaroo surveys to provide semi-quantitative feedback.
While a full, in-person user testing session will go much deeper, this mid-action feedback helps with quickly identifying major trends.
Create a detailed persona
Best Buy is famous for their creative buyer personas.
Buzz was the single male with disposable income who had to have the latest and greatest. Jill, on the other hand, purchased the family camera and household electronics. Other personas generalized the other major customer groups.
Obviously no single customer is ever fully Buzz or fully Jill, but these stereotypical customer types made it easy for the average salesperson on the floor to serve Best Buy’s customers as effectively as possible.
You’ll want to create two or three personas of your own to guide your writing and designing.
To create a full persona, you should include eight primary elements:
- 140 Character Bio
- Technical Proficiency
- Favorite Websites
To actually create your own persona, I recommend Mike Abasov’s detailed guide to researching and writing a useful persona.
3. Start Testing Marketing Channels
Now that you have determined your goal and understand your target audience, you’re ready to start with the actual marketing techniques.
Early in user acquisition efforts, you’re unlikely to stumble upon the perfect channel, so your focus should be on quickly testing many different approaches.
The goal at this point in user acquisition is to throw things at the wall and see what sticks.
Over time, one or two channels will stand out as great opportunities which you can then double-down on to scale growth.
Brainstorm Dozens of Possibilities
“Brainstorming” has become a popular word in our business vernacular today, but how many of us really know what it means?
When Alex Osborn first developed brainstorming in 1939, he was trying to find a way to stimulate creative problem solving for ad campaigns.
Frustrated by the self-limiting and groupthink he noticed in his company, Osborn focused on two key principles: deferred judgement and focus on quantity – not quality.
As you look for marketing ideas, concentrate on simply generating dozens of different possibilities without letting reality slow your thinking.
To allow for maximum creativity, Dan Martell even recommends going so far as to do your brainstorming and realistic evaluation on two completely separate days.
Rank using quant marketing analysis
When Noah Kagan first started running marketing at Mint.com, the founder gave him a massive goal: 100,000 users within 6 months of launch. Through outstanding planning and execution, Noah actually drove over 1,000,000 users by that point – more than 10x higher.
How did he do it?
With the goal in mind, Noah worked backward to decide where to focus his marketing efforts. After brainstorming the different possibilities, he ranked them all in a quant-based marketing spreadsheet and isolated the efforts that would have the largest effect with the least cost.
Rather than blindly guessing which marketing channels will be most effective, use quant analysis to make a more educated decision.
Iterate through two or three marketing tests at a time
With so many amazing ideas from brainstorming, it can be tempting to run in a thousand directions at once. Unfortunately, that generally tends to lead to failure in everything.
Instead of doing thirty things halfway, practice serial excellence and focus on the two or three priorities.
Applying the lean approach to marketing, find a way to test your new marketing ideas as quickly and inexpensively as possible. Once you have either proven or disproven a particular channel, you can iterate to a new test or focus on optimizing further if a channel works.
In the short-term, this calculated approach to user acquisition can feel slower, but it will ultimately lead to faster and larger growth.
Invest as much time as you need in building a solid foundation for your growth engine. You’ll thank yourself later.
4. Do More Of What Works
Once you find a channel or two that work effectively, you can focus on maximizing those opportunities.
In SpeedyPrep, for instance, we found that search engine marketing (SEM) drove a lot of new signups, so we focused on optimizing even further. Through a combination of conversion rate testing on the landing pages and optimization of the ad wording and keyword targeting, we dropped cost per acquisition (CPA) by about 59%.
If you can find a marketing channel that works marginally well in initial testing, chances are strong that additional optimization can make it a profitable opportunity.
Time To Breakeven
When the normal college student invests thousands of dollars each year in their degree (through loans or self-funding), the time to breakeven is long. Even if they land a high paying job directly out of college, that’s four years from the initial investment to the first inkling of a return.
Even once a good job is landed, that student is probably still years away from breaking even on the tuition (even aside from missed earnings).
If college were a marketing channel, it would probably be the lowest priority – since the time to breakeven is so long.
The best marketing channels breakeven and become profitable within the first year, and sometimes even with the initial conversion. With a low enough CPA, search engine marketing can actually breakeven so fast that your customer pays you before you pay for the advertisement.
The faster your marketing channel breaks even, the sooner you can reinvest those funds.
Use CRO to improve conversions
Conversion rate optimization is Nitrous Oxide for growth.
SmartWool, a clothing and sock company, hired Blue Acorn to improve their website. Rethinking the product category page, Blue Acorn created a beautiful new design that emphasized certain products rather than presenting them all on the same level.
Before simply launching this new design, Blue Acorn also created a category page design following the traditional ecommerce design patterns.
In testing these two designs, they found that the ordinary, traditional design brought in 17.1% more revenue per visitor.
Now we could speculate that the more adventurous design violated customers’ mental models of ecommerce sites and thus caused confusion that hurt revenue, but that would be missing the larger point.
No human – even with years of practice – can accurately predict what design will perform best.
Don’t waste time on fruitless speculation, but simply use CRO to find what your customers want.
Look for scalable growth solutions
A few months ago, I discovered a great lunch deals app on my way to work.
As I walked out of the Montgomery St. subway station in San Francisco’s Financial District, I noticed someone standing on the street corner with some sort of orange sign. Briskly walking past him, I came upon a second person on the next corner. Though I still didn’t stop, this time I did notice that he was promoting some sort of a lunch app.
Although I didn’t take a flyer, their unusual marketing strategy got my attention. When a couple of my coworkers told me the app was a lunch deals app called Go Dish, I decided to give it a try.
As a result of those two people promoting their app to the Monday morning commuters, I now have their app on my phone, and I use it fairly regularly.
Early in your user acquisition efforts, promotions like this are a great way to build initial attention and get a decent customer group. As you build your growth engine, though, you want to watch for opportunities that are more scalable.
Try to find something (like Facebook advertising or content marketing) where a little time investment will continue driving users long after the initial event.
5. Try More Growth Channels
“The definition of insanity is doing the same thing over and over again and expecting different results.” – Rita Mae Brown (probably)
In growth, doing the same thing over and over again and expecting the same results is also insanity.
In any growth channel, you will eventually maximize potential user acquisition (called channel saturation). At this point, investing more time or money will not give you a profitable return.
Instead, you should maintain your current acquisition channels at a profitable level while branching out into other channels to drive further growth.
Run the quant analysis again
Wealthfront, an online investment firm, uses rebalancing as a key part of their investment methodology. Essentially, when a new investor joins, Wealthfront calculates the optimal mix of stocks, bonds, and other asset classes to meet the investors goals and risk tolerance.
As time passes, though, that original balance naturally shifts. Some assets grow in value while others shrink, and soon enough the investment portfolio looks nothing like what they started with.
To solve this problem, Wealthfront periodically rebalances their investment portfolios by reoptimizing for new market conditions and their customer’s current risk tolerance.
Within growth, the same rebalancing must occur to make sure we’re focused on the optimal user acquisition methods.
Pull out that quant marketing analysis from earlier and run through it again.
Don’t be afraid to focus
If you have not yet reached channel saturation, don’t be afraid to remain focused on maximizing the channels that currently work for you.
If they had switched focus to SEM or content marketing, Zynga would probably never have achieved the massive growth that they have achieved.
Continually evaluate the best course of action, but don’t feel the need to change for change’s sake.
Look for referrals
We love talking about “virality” and “viral coefficients” but sometimes overlook the true power of this channel.
Few products can – or should – achieve true virality , but nearly all can profit significantly from referrals.
You know how we ask our friends for recommendations when we’re looking for a new dentist?
The same holds true across product categories: A solid recommendation from someone your customers trust is worth more than a half dozen well-crafted advertisements.
So how do you drive referrals?
- Build it into your product
- Let it occur naturally being awesome
- Ask for recommendations
If you’re LinkedIn and your product lends itself to inviting friends, then absolutely use this to encourage referrals.
If that’s not possible, you can still drive significant virality by focusing on providing an amazing customer experience. USAA customers are rabid fans, and I doubt USAA needs to ask them to tell their friends how much they love their bank.
If you do find that referrals don’t occur naturally, you can definitely ask for them, but this is the least effective option. In this case, look for ways to improve your customer experience and create your own rabid fans.
Bottomline: Make your customers happy, and they will make you happy.
Building a user acquisition growth engine doesn’t happen overnight. Successful companies like Twitter or Apple achieved their growth over years – or decades – of testing and optimization.
Don’t feel like your initial efforts must pay off instantly – this war is not won or lost in the first battle.