21 Of this centuryHigh-tech startups, basicWhat I care about is that the company can grow rapidly.
By demonstrating economies of scale, pursuing large markets, and adopting unique non-traditional marketing,
What they are pursuing is to build a global business scope enterprise, generating millions of dollars, even billions of dollars in revenue every year.
The most successful todayHigh-growth startupsUse the "viral cycle" to promote innovative products and expand the user base.
But what is the "viral cycle"?
Why do the founders of startups care about this strategy?
New ventures die due to high costs
More than 90% of start-up companies ultimately face failure, and half of these failures are due to "insufficient funds" and "price and cost" issues.
The key to the economic struggle of the unicorn world lies in the unsustainable
High customer acquisition cost(Customer Acquisition Cost, CAC).
Kissmetrics is CAC Made a good explanation:
"CAC is the cost of persuading potential customers to purchase a product or service.
Your CAC can be calculated like this:
The cost of acquiring more customers
Number of customers acquired in time
For example: If a company spends $100 a year in marketing and acquires 100 customers in the same year, the company's CAC is $ 1.00. "
"For start-ups, a high CAC is often a disaster."
Because it spends too much money to acquire new customers, it is impossible to grow at a high speed, but the key to a new startup is to grow and expand rapidly.
Some very basic and specific figures prove this:
"An online company, such as an e-commerce store, may need to pay $200 or even $300 to acquire a new customer through traditional marketing and advertising.
Try to imagine Dropbox and Instagram, each paying between US$40 billion and US$60 billion in fees to accumulate a user base of 200 million people! "
Obviously, no company will spend $60 billion to acquire customers.
So how can start-ups like Airbnb, Facebook, and Google be able to collect so many users without paying a heavy price?
They useViral marketingThe power of, more accurately, the use ofViral cycle.
All current start-ups try to use "viral transmission" to double their growth,
We can define in two ways:
Through traditional marketing channels and non-traditional marketing channels, we have a preliminary understanding of viral marketing.
Traditional marketing funnel
Viral marketing funnel
Through viral marketing, each new user will then bring in one or more new users, and then attract one or more new users themselves, in an endless loop like this:
Viral marketing is based on product usage (for example: a new Facebook user recommends her friend to try social media sites)
Or the operation of the recommendation system (for example: Lyft users recycle the recommendation code, allowing the user himself and the person who applied for his user code to ride for free).
The goal of viral marketing is to achieve a strong "viral coefficient", which is the number of new users that each existing user brings to the company.
For example, a virus factor of 2.0 means that on average:
If your start-up company can maintain a viral coefficient higher than 1.0, then there is no need for additional marketing budgets to grow steadily.
"Viral loop" is used to describe the process from the first time a user sees your product to when they are satisfied with the product and recommend it to others.
In a sense, this is a cycle, a process of continuous expansion, and more and more users are brought into a growing user base.
As Yannick Feder pointed out, a virus cycle must have sufficient speed, development and self-sustainability in order to maintain a successful operation and allow your startup to grow.
The picture below is a brief introduction of the virus cycle by Tapdaq's Sam Hutchings:
Operating a viral startup does not include the traditional method of acquiring users, that is, paying for traffic, turning a small amount of traffic into potential customers and actual users, and then buying more traffic to repeat the entire process.
On the contrary, viral acquisition involves buying some initial traffic to get some eyes of your product and gain some initial users so that these first users can bring in more traffic without costing your company-it's an iterative process :
The key to designing and starting the virus cycle is to provide one or more features or rewards to encourage users to share your product with others.
The goal of a start-up company is contrary to the mess of a bunch of junk advertisements and other forms of contacting users’ mailboxes, which are detrimental to the company’s image.
You must provide users with somevaluableThings, such as: some practical and direct things that make them willing to bring friends, family or colleagues to the product.
The reward process must be easy to understand and easy to achieve, otherwise you may mess up the event too much and lose the opportunity to expand the user base through the event.
Now let's take a look at some well-known cases of startups with successful viral cycles.
Many of these cases have been presented, despite the use of very few direct advertising and marketing, how new startups have become so successful:
Group-buying website Groupon allows users to save huge deposits on attractive transactions, but only if only designated buyers can initiate transactions.
Over the years, Groupon has been using this strategy to expand its user base, persuading existing users to invite friends in order to obtain various discounts from food and entertainment activities to beauty experiences and clothing.
Super popular file sharing website Dropbox And the world's largest ride-sharing service Uber, As long as they recommend their platform to others, they will provide attractive rewards to users.
When Dropbox was first launched, it provided free storage space for all recommended users, gaining 1 million users for the company during the first 7 months of operation.
Uber's binary referral code system-when Ms. B gets 20 USD ride points, and Mr. A uses Ms. B's exclusive referral code to register, Mr. A also gets 20 USD free ride points-
This method is really very successful, about 50% of new customers are introduced to the platform.
useCross releaseFeature, users can automatically share their photos with friends on Facebook and Twitter, thereby encouraging people on other social networking sites to sign up for Instagram, press love, comment and share their photos.
A highly successful social media platform, the first batch of Internet startups that profited from email invitations, allowing new users to easily and quickly invite all email contacts to join the site.
Just like Instagram, Facebook encourages users to bring friends to the platform, which is very easy, and it also makes the Facebook experience more enjoyable (allowing users to share their online life, family and colleagues with more friends).
Use robots"Hacking" Craigslist Large-scale expansion allows new Airbnb users to share lists with others, creating a network effect that attracts others.
When Hotmail was launched, only 700,000 people were Internet users.
Nevertheless, every email sent by Hotmail through the server is marked with:
"PS: We love you, receive free e-mail on Hotmail", which successfully increased the number of users.
Neither they nor users need to pay for the transmission of simple messages on the Internet.
Hotmail effectively created the first viral cycle in this process and gained 66 million users (almost the entire market at the time).
The cross-platform function of Instagram encourages users to share IG posts through various social networks:
After the crossover feature was released in 2012, Instagram massively expanded its user base
(Because most of the IG personal page defaults are public, they can be immediately presented to new traffic, and the conversion rate is also improved):
3 examples of innovative growth
Leveraging partnerships: the Spotify case
Spotify current value $13 billion,have 50 million paying users, Quickly became popular on Facebook.
Spotify integrates Facebook’s Open Graph platform and establishes with social networking sitesPartnerships.
This acceleration of growth is not accidental: the founders of Spotify convinced one of the founders of Facebook, Sean Parker, to become a consultant for Spotify.
In order to expand on a large scale, Spotify allows users to share Spotify usage activities (listening to songs, creating track lists, etc.) to other Facebook users.
Building partnerships and growing on other platforms is obviously part of Spotify’s marketing strategy: as early as 2014,Spotify reached an agreement with Uber,Connect the two apps so that Uber drivers can listen to customized Spotify playlists while at work.
Screenshot of Spotify-Facebook integration:
New enterprise development technology: the case of YouTube and Soundcloud
Canceling partnership agreements, such as the cooperation agreement between Uber and Spotify, if the company is not very successful, usually requires multiple conference calls, referrals and negotiations.
Many early start-ups lack the means of contact, corporate reputation and resources for large-scale transactions with large companies.
Part of the reason is that more and more start-up companies use their new business development technology to
Like application programming interfaces (application programming interfaces, API), feeds, crawler technology, embedded code and even reverse engineering tools
(Please refer to the Airbnb case above) in order to achieve new sales channels.
YouTube and Soundcloud are two well-known examples. The content on the website can be easily embedded, greatly increasing the user base.
Users can easily share content of themselves or others on their personal websites and social media pages, allowing users to act as company ambassadors and naturally share content on the platform with others.
It is conceivable that if the band cannot embed the video on the band’s own website, they may give up uploading the music video to YouTube.
Screenshot of YouTube and Soundcloud embedded connection:
The point in time across the gap: Facebook, LinkedIn and Uber cases
The startup company can successfully reach a certain scale in the following situations:
It is not a coincidence that many successful startups use these strategies.
On the contrary, it is consistent with Geoffrey Moore's work.
Geoffrey Moore's book "Crossing the Chasm "It extends Everett Rogers’ belief that different types of people are facing revolutionary technology at different levels and speeds.ofDisruptive technology theory.
In fact, Moore believes that startups must focus on effectively dominating the early adopter market
-Fix errors, respond to customer problems, win the hearts of users, and gradually build brand reputation-
Before "crossing the gap", try to find a way to succeed in the mainstream market.
This gap is an important gap separating innovators and early adopters among mainstream customers:
Successful startups avoid marketing to mainstream customers because these customers usually:
"Don't believe in new technologies: they are looking for safety, security and brand reputation, and most start-up companies are annoying, unnamed, and no one endorses (maybe in the early days)"
Mainstream customers basically care about two things: recognized brand and safety.
They usually don’t buy new things unless someone else is already using (or recommending) them.
Early adopters don’t care whether the company’s brand has heard of it, or whether the new product sold is risky.
In fact, they are all attracted by these novel and radical qualities.
Overall, start-ups that target a small number of customer groups and existing market groups tend to do better than companies that try to capture large-scale markets from the start.
Facebook, LinkedIn, and Uber have largely achieved great success because they know when and how to overcome the traps of individual markets: