The difference between startups and established businesses is the fact that the former is highly concerned with customer acquisition and retention more than anything else. This post talks about how popular startups understood the startup marketing funnel and applied successful hacks at every level to reach where they are today. Activation: Once people know about your business, why should they convert? Retention: Why should someone keep using your product or service when there are multiple options available in the market? Despite a healthy flow of new users, Groove’s 4.5% churn rate was making the business model unsustainable. Using this conversion optimization strategy, Groove was able to reduce churn rate by 71%. Key Takeaways Understanding where people might be struggling with your product/service and addressing the same could get amazing results. The success behind it’s viral growth is referral marketing. With paid marketing, Dropbox was spending $250 per customer for a product that was priced at $99. You can earn up to 16GB of free space using the strategy.
Startup marketing can be a challenging journey, especially if you are starting from scratch. With so many digital channels to invest in and thousands of experts offering you multiple strategies, it is hard to make an informed decision.
The difference between startups and established businesses is the fact that the former is highly concerned with customer acquisition and retention more than anything else.
An established business might have the budget to burn cash for awareness and branding, whereas a startup’s major concern is more likely paying customers that can be generated without that cash burn.
A popular article in Huffington Post reads:
A lot of entrepreneurs get too excited or maybe they just don’t have clarity of direction yet. On the other hand business owners that do have an overall plan and get all of their strategies pulling the same way, are thriving.
I couldn’t agree more with the above statement.
Sean Ellis, the first marketer at Dropbox coined the term growth hacking, with an entire science behind it focused towards technical startup marketing.
This post talks about how popular startups understood the startup marketing funnel and applied successful hacks at every level to reach where they are today.
Understanding the startup marketing funnel
The marketing funnel for startups is based on the AARRR model. Here is what it stands for:
Let’s dive into them with some more details:
- Acquisition: For startups, this would mean how you can gain the necessary awareness in order to see results from your marketing efforts.
- Activation: Once people know about your business, why should they convert? This step talks about how to move people further from the awareness stage.
- Retention: Why should someone keep using your product or service when there are multiple options available in the market? Retention explains how to keep your customers for life.
- Referral: Nothing is better than word of mouth marketing. This stage talks about how to get more customers out of your existing customers.
- Revenue: Finally, after executing all the above steps, understanding how your business will maintain a positive cash flow and growing profits is the key here.
Now that we are clear with the different steps of the startup marketing funnel, I am going to illustrate all these stages with examples from popular startups.
1. Acquisition: How Airbnb generated the right awareness for their product
After raising some initial funds for their business, the founders of Airbnb Brian Chesky and Joe Gebbia, started to analyze better ways of scaling their business other than paid acquisition.
They narrowed down their market research to one question.
Where does the target audience that looks for something other than a standard hotel experience hang out digitally?
The answer was Craigslist.
In order to get more traction for their listings, Airbnb decided to give an option to their site visitors for sharing their listing on Craigslist as well.
With a smooth marketing message, they encouraged people to share listings on Craigslist as well.
The results?
Using this hack, Airbnb received the attention of thousands of users…
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