Attracting a strong and loyal customer base is a matter of life or death for your e-commerce company. Ideally, adoption will snowball, and your startup's future will be bright and profitable. But how to make it happen?
Take some advice from Mitch Wainer, CMO of DigitalOcean, a cloud hosting site for developers. In two years, Wainer has expanded the company to 130,000 users through what he calls "growth hacks," which any online business can use. Here's how they work:
1. Acquire and understand 100 early adopters.
DigitalOcean attracted its first 50 customers by demoing in front of a New York tech meetup.
However you capture your first cadre of users, make sure to offer whatever you're creating or building for free in beta and then learn from your mistakes as quickly as possible.
"'Fail faster' is the motto, and that's going to allow you to adjust and find the success stories and work within those success stories," Wainer says. "You want to learn as much as possible about your first hundred users in the beginning."
When DigitalOcean was in its infancy, Wainer says, he would have phone conversations with early adopters and ask them a variety of questions, about their favorite foods and books, what kinds of blogs and websites they visited most often, as well as how they found DigitalOcean in the first place. The point? To come up with a blueprint of a typical customer to know how to target the rest of the 900 you want, or 199,900 you eventually want, using your products or services.
2. Allocate a small marketing budget, set goals, and diligently track your progress meeting them.
You may be bootstrapping, but getting the world to find and try your website or app isn't going to happen without at least a bit of investment. Set goals such as doubling your user numbers within 30 days or by a certain percentage.
"Whatever it is, you want to set targets and goals month over month, and you want to be tracking day to day," he says.
3. Offer promo codes to increase conversions.
They're highly effective in increasing user growth and engagement and can be distributed via banner and text ads as well as social media.
"Display advertising worked really well for us when we were building the first hundred customers," Wainer says. "We used BuySellAds.com and BuyAds.com to find relevant websites to place a banner ad on, and on those banner ads, we would offer a promo code."
4. Measure your conversions.
In the beginning, as you're accelerating, it's important to closely monitor every marketing campaign you set in motion as well as every tweak you make to your website to understand what's most effective in getting people to sign up or otherwise take an action you want them to take. To do that, Wainer suggests creating monthly key performance indicator (KPI) reports, an easy thing to do with a simple spreadsheet populated with data from Google Analytics as well your conversion data. For example, are people signing up with a credit card or only with an email and password?
"You want to build monthly reports to track your channels and your spend, and how many users came through that channel, and then the CPA (cost per action) for those specific channels," Wainer says. "For instance, if it's social media or if it's banner ads [that are] producing a high CPA, and then you find that retargeting generates a lower CPA, you might want to allocate your funds to retargeting instead of investing more money into social media."
Wainer says he uses Google Analytics URL Builder nearly every day to gauge campaign performance by creating a tracking link. To use it, you enter the URL for a page to which you want to redirect an ad, as well as the campaign medium, such as Google, Twitter, or Facebook, and whether it's cost per click, a banner, or an email. After assigning a name based on the campaign title, the tool creates a long URL you can shrink on a URL shortener such as bit.ly.
"You can create different campaigns with that link and add it to your Google Analytics account to understand how many conversions a campaign drove, and then make a decision on whether or not to scale that campaign or to cut back," he says.
5. Hire a writer and get serious about content marketing.
Providing quality content for free is a fantastic way not only to draw people to your website but to demonstrate your domain expertise. For example, DigitalOcean not only provides programming tutorials on its site, it also pays developers $50 per post to contribute content.
Wainer says startups should aim for about 20 posts per month that appeal to a typical customer. More of his advice:
- Create listicle BuzzFeed-type headlines involving numbers, such as "5 Ways to Do XYZ."
- Post longer content. Google likes 500-plus words.
- Use Google's keyword tool within AdWords to understand which key words generate high-volume traffic, high-search volumes, and low competition. Google Trends also shows which words people are searching for most at the moment.
- Include calls to action at the bottom of blog posts or articles, where they tend to get more engagement compared with other places on the page.
- Optimize headlines and meta descriptions with H1, H2, H3 tags (check out that link if you don't know what this means).
- Post content on other websites and include links back to your site.
- Consider including a user community on your site where people can ask and answer questions. "[At DigitalOcean] those questions become individual pages, so essentially we're having user-generated content on our website that gets indexed by Google and drives more traffic to our website, which again gets retargeted throughout the Web," Wainer says.
In short, you need to build a marketing engine that puts into motion a snowball effect.
6. Measure churn, cost of acquiring customers, lifetime value of customers, and more.
To get the next 900 users and beyond, it's important to measure as much as possible, including your monthly churn--which is the percentage of users who unsubscribe or stop using your service--a number that shouldn't rise above 10 percent, with 2 percent being an acceptable number, Wainer says.
Other things to measure: cost of customer acquisition (CAC), lifetime value of your customer (LTV), and the relationship between the two. Wainer says software as a service (SaaS) companies like DigitalOcean should aim for an LTV to be three times greater than a CAC.
"Also, you want to understand...how many months it will take to pay back the CAC," he says. "The best SaaS businesses are able to recover their CAC between five to seven months."
7. Play with your pricing and website design.
Wainer says DigitalOcean was able to expand the number of users fourfold by AB testing call-to-action buttons, pricing models, positioning, messaging, and design. The important thing is to track the funnel of how users interact with your website--when they sign up with an email address, enter payment information, convert, and activate.
"You want to create this funnel and attach numbers to each layer of the funnel going down," says Wainer, "and then basically you're going to build out [the] percentages [of] your conversion rates from when they sign up to when they activate with a payment profile."
8. Be aggressive with PR.
Wainer used his personal network to find a friend of a friend who could make an introduction to someone at TechCrunch, and then spent time selling the writer on an exclusive story that would announce a product launch.
"It catapulted our growth immediately," he says, "so we were signing up about 10 customers a day, and then after the release came out, we started signing up over 100 a day, so PR can really help spark a new level of growth for your business if you pair it with the right product release of the right announcement that's going to disrupt the market. So just work your network, and don't be afraid to cold email the writers that write about your industry."
9. Incentivize users with a referral program.
If you want your customers to become your salespeople, it's important to empower them with ready-made banner ads and materials that are easy to share on the Web and create referral links that generate more traffic for your website.
DigitalOcean also offers to pay customers who successfully promote the platform with credits for reduced-price subscriptions instead of cash, a strategy Wainer says helps keep costs down. His favorite referral automation tool: Ambassador, which has plans that start at $99 a month.
"Another great referral tactic is to create a contest to incentivize your users to generate more signups within a given time frame, like a 30-day period," he says. "At the end of the 30-day period, you can reward them with 2X or 3X commissions for the month. And maybe create a leaderboard for a little bit more of a competitive environment."
10. Target and engage with key influencers and ideal customers on social media.
DigitalOcean has used HootSuite and Sprout Social as well as Facebook and Twitter ads to get help doing this.
"[It's] understanding who your key influencers are in the industry, engaging with them, retweeting them, favoriting their tweets to get on their radar, reaching out to your user base with promo codes or incentives to sign up for your product online," Wainer says. "Actively participate in tweets and mentions in a timely manner. Engage with them, create conversations, create relationships, because those relationships build more awareness and spread via word of mouth your product or service."
He also suggests answering highly visible questions on Quora that are relevant to your industry or your business and position your company as a thought leader.
11. Use email marketing, but keep it simple.
DigitalOcean has used MailChimp and Campaign Monitor for help with email campaigns, but Wainer says the most important thing here is to keep emails and subject lines as simple and short as possible.
"An email with a subject line with just 'Thank you' works really well," he says. "A/B test every email. Focus on subject lines, add large calls to action at the bottom of every email to increase engagement. Include incentives such as a promo code."
The best time to send promotional emails? Midweek between the hours of 11 a.m. and 4 p.m. ET, when overall Web activity is at its peak.
Goodwill works well, too. Wainer says DigitalOcean has had success automatically sending customers who drop the service an email from the CEO asking for their feedback along with a note telling them their account has been auto-credited. In fact, during one 30-day period in which the company sent out 4,700 emails, 15 percent reactivated.
"It generated an additional $100,000 in annual run rate," says Wainer.
Clearly DigitalOcean is doing something right. The company--valued at $153 million--recently raised $37 million in Series A funding led by Andreessen Horowitz.