How to never spend another dollar on user acquisition

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The title sounds promising, doesn’t it?

I was watching a live podcast by Stapho Thienpont in which Nicki Friis was explaining what the big companies out there are doing to hook us with their products and decrease acquisition costs.

In the podcast I have seen an example of how Linkedin does and I figured out that more companies do it, too.

The good part?

You can also implement this in your business. I will explain what kind of loops they are using and why with time they will be spending next to nothing on user acquisition (and you can do the same).

I am going to expose the growth loops that Linkedin, TikTok, Facebook, and Superhuman use.

 

rail

 

What is a growth loop?

Growth loops are a combination of how your product, channel, and monetization model work together in a single system rather than treating them as silos. As a result they end up being more specific to your product and company. That makes them harder for others to replicate.

This the general way a loop works.

You have a source of incoming traffic and it generates an input – let’s say a user who starts to use your product, service or application. That user generates an action such as referring a friend, which creates an output because his friend also joins the network.

Input →Action => Output →New Input => Action→Output

Under the right circumstances, several loops combined will create an evergreen acquisition channel and minimize your costs. But before I jump into explaining how they work I need to underline a few existing conditions which will enable the loops to spin.

 

Staircase

 

Paid ads and linear channels

Growth loops are like car wheels, and in order to start spinning you will need some traction.

Before the wheel starts spinning, you need to push it a bit!

Right?

The problem is we cannot start without having a linear channel in place which will provide the initial traction. In your car, that is the engine.

A linear channel is a channel that brings new users into the product, but it does not necessarily bring new users with an old user. An example of a linear channel can be any sort of ads or PR.

That is why we need some linear channels such as PR, Facebook or Linkedin ads – a source of traffic that will generate an amount of users who will engage with your product.

 

a book

Acquisition loops

Now once we have a source of traffic and people are interacting with our product, we come to the next step, in which I will describe 2 main categories of loops: acquisition loops and retention loops. We will start with describing the most common acquisition loop, the viral one.

Viral loop

The viral loop is a particular step that a product or network takes by using network effects and enhances its virality by making it more shareable.

Slack case study

This is how it worked for Slack, which instead of going from the top to the bottom (selling to higher management first) they went from the bottom to the top and focused on everyone else but higher management.

  1. Somebody tried out Slack
  2. They invited a team member to try it out (an average team consists of 12 members)
  3. Together they invited other people and created a team
  4. Current team users click on the invite to get new users into the loop

Tiktok case study

  1. Users see viral TikTok content and are driven to download and install the app.
  2. User opens TikTok, sees the content, and starts browsing.
  3. Once there is something really cool, they share it with their friends, who need to install Tiktok to watch it.
 

a loop

 

SEO Loop and User Generated Content

User-generated content (UGC) is any content—text, videos, images, reviews, etc.—that is created by people rather than brands. And brands will often share UGC on their own social media accounts, website, and other marketing channels.

In order for this part to work, your product needs to have an amount of user generated content and your content needs to be indexed by Google.

Linkedin case study

When you get an invitation to Linkedin, you normally start to interact with content, like posts, write a few comments.

Eventually when someone researches you or you research someone new, you check them on Google:

You might be surpised to know that a Linkedin profile is on the first place in Google search when you search for a person’s name if he or she has a profile on Linkedin.
This happens because user-enerated content such as comments, posts, articles, our profiles from Linkedin are indexed by Google, which loves these things and passes even more authority to Linkedin.

Tiktok case study

  1. Existing Tiktok users create content once they join the community
  2. This content is sent out to the TikTok community, and easily findable/sortable via specific hashtags.
  3. Content is downloaded off the app (a feature made intentionally by TikTok) and re-packaged into YouTube compilations where it’s more accessible to non-TikTok users. New users watch and enjoy the content, want to see what TikTok is all about, and download the app.
 

a leaf

 

Sales Loop

Linkedin case study

Eventually after using Linkedin’s platform, getting an invitation and signing up, you start to engage with the platform and the people on the platform.

You read posts, comment on them, and sometimes endorse someone, and eventually you start to understand that Linkedin can be used for business purposes.

You check their trial for Linkedin Navigator

If you are a recruiter, you check the recruiter platform and post a few vacancies.

Congratulations – you are hooked on Linkedin!

 

Evergreen Content loop

Imagine that you have articles on your website and you create awareness, but are publishing more frequently and distributing your content on social media.

For some of those articles, you will create a content upgrade.

Then you can ask people to give you their email adress in return for a case study. You can use the case studies as a content upgrade for your audience.

Potential clients will happily trade you their email address for a good case study.

Once I have the email from a potential customer, I put it into a nurturing sequence or send it to a sales representative who eventually seals the deal with that customer. This creates a wonderful experience for that customer, whom I then ask for a new case study which will create new customers for your business.

 

woman sitting in hammock

 

Distribution Loops

Superhuman case study

Since customer referrals and word of mouth are Superhuman’s main acquisition channel, Superhuman’s users are the core driver of their new acquisition.

A user is both a paying customer of Superhuman and potentially a distribution channel to new customers.After all, sharing is caring, as they say, and people love to recommend cool stuff to their friends.

All customers are created equal, one could say, but some are more equal than others! Here is why.

While customers may pay the same amount, they are not of equal value as distribution.

Some categories of customers, such as founders or high profile users, are likely larger drivers of new customer referral or increasing brand awareness for Superhuman than others.

Let’s say one of these customers is not using the app since he or she considers the price too high.

This disproportionately hurts the acquisition loop, since it’s driven by user-distributed channels.

There are categories of founders: who user Superhuman that the company cannot afford to lose. These founders’ networks are so strong that to lose them would be catastrophic from a distribution standpoint, so they offer them the product for free.

 

How to apply acquisition loops in your business:

Basic method

Brainstorm all the kinds of loops or ways you can leverage the network effects in your business.

You should invite 6 to 8 people to a brainstorming session. All of these people should be from different departments (marketing, sales, product, management, etc.)

If you have a large organization, you can organize a few of these meetings to make the process more efficient.

Ideally, you will end up with at least 20 ideas for loops. Since you are just brainstorming, you can use any amount of loops, be these acquisition loops or retention loops. After that, focus on 4 loops that you can try in the first iteration.

Examples of loops:

  • You can join the app only if you invite someone in (exclusivity based)
  • By discovering more profiles, you get more matches (Shapr)
  • After 4 days, the profiles disappear (Shapr) scarcity
  • Invite based (Dropbox)
  • Email all your connections and ask them to join (Linkedin, Facebook)

Try to implement them and make them work. Here is a bit of help.

If you decide to implement an acquisition loop, let’s say exclusive invitations (Superhuman), talk to your product team and try to do it manually for a limited amount of users to keep it lean.
Another way to test this would be to create a landing page for 5% of your new users and see if the loop works.

Ask your new users why did the feature work in case you see virality building up. Also ask them why it did not work in case you cannot see the effects you were counting on.

Based on this feedback you come up with new ideas which might work for spinning the wheel in your product.

 

a lady

 

Digging deeper

With this exercise, we want to dig deeper and get into the skin of our user. Let’s start to describe the average John Doe for our business on Linkedin’s example. He uses Linkedin every second day and looks at the feed, does not use groups. Nowadays he is getting more and more news in the feed which he does not enjoy so it would be great to be able to filter his feed.
Also, he uses Linkedin’s message box and it seems too cluttered, it is getting harder and harder to find the people he needs there.
My goal as a product manager at Linkedin would be to create a better way for him to filter his news and Linkedin CRM.

Let’s imagine that I have a beta for the Linkedin Inbox CRM but I don’t want to reveal it to everyone. I start with beta testers and once I have the initial feedback, I will let them invite only their friends whom I need to qualify through a demo call.

There are 2 important factors here:

  • Your user knows someone who can benefit and has the same values.
  • There is a transfer or value and trust here from our current client to a potential client.

We will have a compulsory demo call with the referred friend in order to understand that the client will receive maximum value and we will manually guide him through the optimal experience of how to use the product in the right way from day 1.

Remember that people will churn anyway, but you can prevent that by always adjusting this optimal experience, so called aha moment.

Your goal eventually is to sell impressively and fast-track your customer to the “aha moment.” Then you can minimize the churn and use your current customers as a distribution channel. Over time, you will gradually spend less money on acquisition.

About the author

Stefan Repin is a growth marketer who goes the extra kilometer to scale SAAS, tech, and personal brands. He has a proven track record in getting results for clients such as Itegration, Reinvently, and Angloville by through a combination of content marketing, social media, and creativity.
 Stefan founded Luckboosters in January 2019.
Stefan-Repin1

Stefan Repin

Head of Growth