Argentine startup SocialTools had a problem. While they had a great tool for social media marketing that customers in Latin America loved, they just couldn't break out of their home market and achieve the kind of growth they dreamed off. Getting the attention of customers in other markets was proving to be just too expensive.
"Getting out from the LATAM market seemed impossible for us. The cost to acquire a customer in USA was almost 3X our lifetime value," founder and CEO Lucas Emma explained in a recent 500 Startups blog post.
The team's first move was to try to acquire their way around the problem. The company bought a small Dutch company called Postcron that allowed its 20,000 or so users to schedule social media posts across platforms. Postcron had users all over the world, but there weren't many of them and they brought in a tiny $7 a month each on average. Postcron did have one huge advantage going for it, however, the customers it did have really loved the product.
Which is what finally inspired SocialTools to try the brilliant user acquisition hack that would send their user numbers soaring 500 percent in five months. "When we acquiring Postcron, we spent days reading and answering tickets from our new customers, learning from them, getting to know their culture, and trying to understand why they liked Postcron so much," Emma explains.
(He adds this pro tip: "everyone--developers, growth, sales etc--on your team should spend at least a few days reading and answering tickets, if not looking at customer support inbound REGULARLY.")
Can't pay? Then evangelize
What SocialTools realized from interacting so closely with Postcron's customers was that many of them were simply unable to pay the far heftier price of a SocialTools subscription. These customers were freelance community managers and direct sales consultants who lacked the budget for a $140 a month tool. Their slim wallets might have been seen as a defeat by some startup teams, but SocialTools found a clever way to turn the limited budgets of many of these customers into an advantage.
"We noticed that many users were creating content--blog posts, YouTube videos, tweets--all about how great their product experience was, and most of these users were community managers with large social accounts and influence... all without being asked," writes Emma. "Next, we observed that if someone had been a free user for 90 days after signup, they were probably never going to convert to a paid user."
So what SocialTools had was users who weren't going to pay for premium but still loved the product -- and had large networks. With this knowledge in hand, the start-up made a cunning marketing play, capitalizing on that enthusiasm without demanding a penny in return.
"We decided to contact these users and ask them if they could make a short YouTube product review in exchange for a free 6 month premium subscription. The answer in most cases was a big YES. (Many people even wrote lengthy blog posts about our product)," explains Emma.
Reviews started coming out in languages like Arabic, German and Italian, and that finally helped SocialTools crack new markets. The results were truly impressive. "This one experiment turned into the most effective marketing strategy we could ever have run," Emma enthuses. "Word of mouth around Postcron spread like crazy, and after 5 month, we went from 150k social accounts in 30 countries, to more than 2 millions social accounts in 170 countries."
The bottom line for Emma (and perhaps for other entrepreneurs looking to mimic SocialTools' incredible results): "If you have a great product, nobody will ever sell it better than a happy customer."