- On May 19, 2016
- In General
- By Rishi Sethi
The Growth Continuum
One of the most common mistakes we see our clients making is assuming that users acquired from different channels will engage with your product equally. If you are launching a product, your first users are almost always your friends and family. Since they personally know you, they will use your product extensively. Many entrepreneurs then extrapolate and claim that they have a very compelling product, and believe that when they launch they’ll have an extremely engaged user base.
Users who are closest to your inner circle are much more likely to be engaged with your product, and users who you acquire through paid marketing efforts tend to engage much less frequently. You can compare the relative value among these acquisition sources along what we call the Growth Continuum.
From highest value to least:
- Your friends, team, and investors. They are almost always the ones most engaged with your site or product.
- Users who discover your product virally through one of their friends or colleagues. Virality can be done through word of mouth or through a share function on your app or site.
- Users acquired organically. This typically occurs from your SEO/ASO efforts.
- Users acquired through press and promotions.
- Users who discover your product through highly targeted paid media spending. Highly targeted spending such as Facebook ads, Google AdWords or targeted LinkedIn ads that target a specific group of people.
- Users who discover your product through less targeted paid media spending. Less targeted spending like Fiksu or buying remnant inventory.
- Users who are incentivized to use your product.
Now, let’s break each of these categories down.
Your close friends, team and investors:
Your inner circle will use your product extensively no matter how poor the experience. As we mentioned before, be careful extrapolating how your product will perform when only your friends are using the app.
Users who discover your product virally through one of their friends or colleagues:
The key to getting new users quickly at scale is to get viral growth. Chances are you joined Instagram because your friend was on it, not because you saw it in an ad. Virality naturally occurs when you have a very compelling user use case and when you make it very easy for people to invite their friends to your product.
Designing a product with a very compelling use case takes a lot of time and effort, and a viral product is the holy grail of growth. Users who are referred through their friends are highly likely to use your product.
Users acquired organically:
ASO (AppStore Optimization) and SEO (Search Engine Optimization) are key cornerstones of growth for any product. Your offering needs to be discoverable through search. Best of all, users who are searching for something have a very high intent to convert.
Note: Spammy SEO tactics that work only temporarily and then either gets you shut down by Google and hurts your rankings (see Rap Genius). Remember that the best long term SEO strategy revolves around putting out good content.
Press and Promotions:
Having an article published about your company can lead to a temporary spike in growth, but typically users who discover your product through press will churn at a higher rate than users who discover it organically or virally. Typically, it’s best to not count on press leading to meaningful, sustained long term growth.
Paid User Acquisition:
Paid acquisition is a very common way of getting growth to your site or app. Unfortunately, most companies do this without realizing that a click or an install is worthless if your acquired users do not engage with your app. A restaurant doesn’t run a promotion just to get more customers through the door. They want loyal, returning customers.
Before you spend money on acquiring users, we recommend that you do the following:
- Collect data through the entire customer journey. Optimize campaigns based on how users convert, not on how many users click on your ad. Make sure you are tracking the funnel from a user clicking on an ad, to using the product to converting.
- Optimize based on cost per key metric. Looking at cost per key metric allows you to think about how much are you paying for a user to perform a key action in your app, and not just how much are you paying for an install.
- Good marketing requires lots of testing. Marketing requires extensive iteration. Never launch a campaign and then let it run, always be tweaking ad network, copy, landing pages and your product offering to optimize your cost per key metric.
Typically, more targeted ads will lead to higher quality leads. Networks like Facebook, LinkedIn and Google AdWords that allow you to target will mean you will pay a higher amount per lead, but leads are more likely to convert. Networks with less premium inventory (sometimes called “blind” ad networks because they don’t disclose where your ads are being shown) are cheaper.
Since you should always be tying your ad strategy back to cost per key metric, you should be experimenting running your ads on all types of networks. As Andrew Chen writes, certain business models perform particularly well on blind ad networks.
An incentivized user is a user who has a certain incentive to download your app or click on your website. The incentive typically is related to virtual currency. If a user installs and launches your app, they will get virtual currency in the game or app where they see your ad.
Incentivized installs yield extremely low quality users, but they can be an effective ASO strategy if you are trying to drive AppStore rankings higher. Recently, there has been a marked shift away from incentivized installs, and Google and Apple have been cracking down on incentivized ad networks.
Always remember that product discovery is not a simple matter of the number of installs or web hits you get; it’s about getting people to use your app and become engaged users. Your team needs to have a unified definition of what an engaged user is.
When you are thinking about acquiring users, remember that different quality users come from different parts of the growth continuum.