Even though I'd spent a long time following the startup scene and reading all the standard blogs and books before founding my first startup CoderStack (a job board for software developers) when it came to actually putting theory into practice I ran across a lot of gaps in my knowledge.
So I've decided to write a series of blog posts describing my experiences and sharing the advice that I wish someone had given me before I started.
I've tried to roughly break the blog posts into themes and the first (this one) is going to be about user acquisition.
User Acquisition in your Business Plan
If I look back at my own plans from before I started working on my startup I actually cringe a little at my user acquisition strategy, I made the same mistakes that I see many other startup founders making now. My strategy was made up of broad terms like "SEO" and "Advertising" without any serious attempt to model how much traffic each of these approaches would generate and what the cost of user acquisition would be.
Any form of user acquisition has a cost, it might be defined in terms of your time rather than money, but unless you sit down and create a model for analyzing the amount of traffic you can generate and what that will involve you have no idea if a particular form of user acquisition is worthwhile.
Any form of user acquisition can also be modelled whether it's viral growth, PR, SEO, etc. By sitting down and building a model in Excel it helps you evaluate the strategy and understand the hidden assumptions (for example for viral growth what percentage of your users will tell their friends about your product) you're basing your business on. If I'd done that to start with it would have saved me a huge amount of time down the line.
Once you launch and are actually implementing your strategy it's trivial to update your spreadsheet and replace your assumptions with the hard data and see how that impacts the end results. You might find that once the assumptions have to be modified to match reality that the strategy you're using no-longer works. And it's much much better to find that out up front rather than six months down the line when you're wondering why you haven't grown as fast as you expected.
SEO
SEO is hard, one prong of our growth strategy was getting decent rankings for focused keywords like "Python jobs". I went into this without really understanding SEO as well as I should. Even through I managed to get first page listing for many keywords (we were helped by getting links from sites like Techcrunch and Business Insider) getting into the top position for competitive keywords is much harder than I thought.
As a new startup you automatically get a penalty for not having an "aged" domain (older websites get higher ranking), but it's close to impossible to beat off sites which have hundreds of thousands of established links, even if those links aren't as focused.
I also didn't really analyse the numbers as I should have, the phrase "Python jobs" gets roughly 500 searches a month in the UK. The top ranked result for that search will probably only get 20% click-through (i.e a hundred visits). If you're 5th in the rankings, you'll probably get 15 visitors a month.
In many cases the SEO effort taken to improve rankings wasn't worth the resultant traffic.
If you plan to use SEO as strategy for your startup make sure you use Google Keyword tools to figure out how many searches are made on the keywords you're targeting and how many links, etc. you'll need to get in order to get a worthwhile ranking (I've found Seomoz and SEMRush can be good for this).
Advertising
I've talked about my experiences in advertising my startup extensively elsewhere, so I won't go into too much details but the key fact I discovered was that obtaining cheap traffic comes down to two things:
- Increasing your click-through-rate (good ad copy, etc.)
- Finding underpriced ad space (using demographic targeting, buying ads on smaller sites etc.)
On pretty much any ad platform you can reduce your costs by optimizing your ads (in some cases by as much as 100x), so it's definitely worth investing time and money to learn which optimization techniques work well on the ad platforms you're using.
Our original business plan was based around buying long-tail technical keywords (e.g. "concurrenthashmap") on Google cheaply, this strategy didn't work as it was based on the underlying assumption that long tail keywords with no other advertisers would be cheap. It turns out that due to the changes Google have made to the Quality Scoring algorithm part of their Adwords platform it's very hard to buy cheap adverts on non-"commercial intent" keywords.
We were however lucky that we managed to figure out an alternative strategy (extermely targeted ads on social networks) that turned out to give us the cost effective advertising we were after.
Social Media
Having a social media strategy is often equated with having a presence on social media websites, but there are actually lots of different types of presence.
Usage of social media by companies generally falls into one of these three categories:
- Companies using it to broadcast company news
- Companies using it to interact with customers (support, etc.)
- Companies using it as a promotional tool
The first two help you keep in touch with existing users and perhaps generate repeat business, but don't really help you gain new users.
If you want to use social media as a user acquisition vector you really need to make sure you fall into the last category, and that means focusing on generating content that your users want to promote to their friends.
If you're a content based startup it's definitely worth driving your content through your Facebook and Twitter content streams, because it's content far more than anything else that gets shared through the social networks.
Direct Sales
Direct sales is one of the highest converting ways to get users. How effectively this scales obviously depends on how much each user is worth to you as it typically has a high cost per user acquired. Even if it's not a viable long term strategy for your business it can be good way to get your initial users.
I'm not a natural extrovert and I still cringe a little when making sales cold calls or sending sales emails, but it's much easier than you think and once you get started it gets easier. The first few cold sales are the hardest.
It also has the huge advantage that you're speaking on a one-to-one basis with many customers and getting invaluable feedback that can help you iterate on your product.
That's it from me on user acquisition, if you have any questions or have particular areas you'd like me to talk about in detail feel free to leave a comment. You can also follow me at @imranghory on twitter.