How to do Digital Customer Acquisition Like a Unicorn
What does it take to grow a tech startup into a unicorn? What secret strategies, processes, and formulas ensured the success of today’s unicorns despite the odds being overwhelmingly in favour of their failure?
Our team analyzed the strategic history of 98 different technology unicorns, and discovered that over 80% used digital customer acquisition as their primary strategy for growth. While sadly there is no magic pill to guarantee a company’s rocket-like growth, there is also no disputing that an investment into digital customer acquisition is one critical element.
But what does a digital customer acquisition strategy actually look like from the perspective of some of the greatest tech company success stories of all time? This post takes a look at a few of the most common digital customer acquisition strategies, and which of the world’s leading unicorns used them as a key driver of their rapid growth.
They say that “content is king”, and for unicorns such as HubSpot (and budding unicorns such as Intercom) that has certainly been the case. When people talk about a content creation strategy they are most commonly referring to blogging, but content can also include infographics, video, white papers, ebooks, and more.
One of the most attractive attributes of content marketing for a startup is that it is relatively cheap (often only costing the founders’ or internal team’s time), and can continue to return value for months and years after it is created. Given that over 70% of consumers prefer information found in blogs to those found in advertisements, it’s no wonder that content creation strategies are so common (and effective).
HubSpot is a tech unicorn that has become the poster child for the potential of an effective content marketing strategy. Their blog, which has specific tracks for audiences in sales, marketing, and customers success, nurtures readers towards adopting their suite of products by providing consistent value over time. HubSpot’s blog now has an incredible 400,000 subscribers, and attracts over 2 million monthly visitors.
Intercom is one of the fastest growing startups around, having reached $50 million in ARR faster than Twilio, Shopify, and many others, and is another example of content marketing strategy success. Like many startups, Intercom competes in a very crowded space, but has stood out by developing one of the most value-rich blogs available anywhere. They leverage a wide combination of blog posts, e-books, podcasts and more, all of which are made to the highest standard of information and design.
One of the keys to success with content creation is to have a well thought out strategy behind your efforts, and not to simply create content for the sake of content. Providing value to your target market that goes in hand with the value proposition of your product is most important. There are countless ways to creatively produce unique content from there. And, in the event that writer’s block threatens to shut down your entire content creation strategy, there are always affordable third-party platforms like Crowd Content that are happy to create affordable quality content for you.
Referral programs are another digital customer acquisition strategy that can drive a startup’s hockey-stick growth, for a relatively small investment. When designed well, referral programs become increasingly effective as a company grows. It’s no wonder that some of the most recognizable tech unicorns of all time were in large-part driven by referrals.
The Dropbox customer referral program is probably one of the most famous examples of a customer referral program on the internet today. With referrals, Dropbox went from 100,000 to 4,000,000 users in only 15 months. Dropbox’s clever take on its referral program is to give extra storage space to both the referrer and referee’s, making it attractive for all parties. This simultaneously drives both product adoption and company growth.
The example of PayPal illustrates one of the original cases in which a referral program compelled the creation of a unicorn. In fact, the success of PayPal’s referral program was the inspiration behind DropBox creating their own. One of PayPal’s founders, Peter Thiel, described how referrals came to be the most effective digital customer acquisition channel for the company:
“PayPal’s big challenge was to get new customers. They tried advertising. It was too expensive. They tried BD deals with big banks. Bureaucratic hilarity ensued. Over ice cream, the PayPal team reached an important conclusion: BD didn’t work. They needed organic, viral growth. They needed to give people money. So that’s what they did. New customers got $10 for signing up, and existing ones got $10 for referrals. Growth went exponential, and PayPal wound up paying $20 for each new customer.”
The ability to use different incentives for referral programs is another reason why they are so effective at driving exponential growth. For Dropbox, the incentive is to provide more of their core product (storage space), while for PayPal the incentive was real money (also aligned with their core product). In the example of Facebook, the incentive is simply to get greater enjoyment out of the experience by having more friends to interact with.
This flexibility, the relative cost-effectiveness, and the proven track record of success are all reasons why referral programs are one of the most powerful digital customer acquisition strategies out there. An early stage startup can create their own program driven purely by behind-the-scenes effort (manually keeping track of referrer and referee progress and rewards). If the program proves successful and the company grows to the point where a degree of automation becomes necessary, then most companies have to build an automated referral program inside their product, or work with a platform such as Saasquatch to devise something that’s as effective as possible.
Cost-per-click (CPC) advertising is another commonly used form of digital customer acquisition thanks to how simple it is to get started, and how accurately its return on investment can be evaluated. Whether it be Google Adwords, Facebook Ads, YouTube Ads, LinkedIn Ads, or one of the many other options, CPC advertising is amazing for running quick tests and driving rapid results.
The phrase “you have to spend money to make money” does a pretty decent job at summarizing the essence of cpc ads, and a few of the unicorns who have gained huge success by doing this effectively are Stripe, Square, and Sonos.
Unicorn companies are consistently foregoing cold calls and sales demos in favour of acquiring customers digitally through cpc ads. In Stripe’s case, their co-founder John Collinson said that it’s “better to allow a customer to use a product then have them sit through a sales pitch”, and their cpc ads are designed to deliver potential customers directly to a landing page where they can create an account. Sonos’s efforts on Facebook’s advertising platform have been so successful, that Facebook themselves created a case study to share Sonos’s best practices.
CPC advertising is utilized by nearly every single tech unicorn out there. With cpc, continuously testing and evaluating keywords, platforms, and strategies will improve return on investment over time, so the best time to start trying is always today. There are an abundance of free resources out that teach best practices (QuickSprout University is great for beginners and intermediates), and for optimal results companies like Pretio can help take your efforts to a whole other level.
Leveraging user-generated content or an amazing company story, in combination with a social media platform, is another powerful digital customer acquisition strategy employed by unicorns.
GoPro is famous for using both its own submissions and user-created content to maintain some of the most amazing social media accounts out there. The company’s value proposition centers around helping people create stunning visual productions. Their social media accounts re-enforce this value and further promote their products through an ingenious social media strategy.
Reddit has demonstrated another method for leveraging social media for growth, in that content originally shared to their site is then often repeatedly re-shared across various social media platforms. They encourage this activity by making it easy (relative to the rest of Reddit’s UI at least) for users to do this sharing, and then reap the benefits of posts going viral.
When creating your own social media customer acquisition strategy, a great place to start is by first looking at the examples of companies who have found success themselves. If social media develops into a large source of growth for your venture, then a company like Echosec can help acquire even greater insights into your customers.
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From early stage startups, to billion dollar unicorns, and everywhere in between, companies looking to scale and grow must develop a focused strategy for digital customer acquisition.
With strategies ranging from content creation, to referral programs, cpc advertising, social media, and beyond, there are many potential areas of focus for driving digital customer acquisition, and it is essential to determine which works best for your venture.
The Alacrity ecosystem is built around founders, mentors, and startups that are worldwide leaders in digital customer acquisition. We have experienced the advantages of these practices first hand, and we can’t wait to help the next generation of startups fine-tune the digital customer acquisition strategies that will grow them into the tech unicorns of tomorrow.