I’ve helped 400+ startups acquire customers. Here’s the framework I teach them—for ads, content, referrals, and product. Hope this helps! A thread:
Part 1. The growth trajectory Steps I’m seeing startups follow in 2021: 1. Build an amazing product that naturally encourages word-of-mouth. 2. Then kickstart user growth with a scalable acquisition channel, such as ads.
3. In parallel, I’m seeing them spend most of their growth resources optimizing their user funnel + product experience. At every step of the user’s journey, they A/B test to maximize per-user revenue.
4. Once their funnel is profitable + efficient, they scale it. They also start to experiment with many more channels until they exhaust all of them.
5. Over time, they switch their emphasis to more sustainable and cost-efficient channels, such as: • Product-led growth • Organic social • Influencers • Referrals • Content • Sales • More This removes their dependency on ads, which can be volatile.
Part 2. How do you succeed at paid channels? Most companies never make paid acquisition (ads, sponsorships) profitable. Think about it: If they did, more companies would be successful—given how quickly scalable ads are.
To be specific, most companies are unable to profitably acquire paying users through ad platforms such as: • Instagram Ads • Facebook Ads • Google Ads • More
If they get one of those working at scale, it might be a holy grail when paired with strong word-of-mouth. WOM is a force multiplier: every paid user attracts more unpaid ones That’s why I encourage folks to harden their conversion + referral rates before investing big in paid.
However, there are constraints that make paid channels difficult: A. Profit margin: How much profit you earn per sale is critical to making paid work. B. Audience size: Audience isn’t just a function of how many people want your product, but more narrowly…
…how many are potentially suitable users of your product, want your product more than your competition, want it now, and can afford it. The resulting audience is smaller than you estimate. Many startups find their audience is too small to keep Facebook ads running at-scale.
C. Next factor in making ads work: Degree of product demand How badly does your market want your product? If your product is just a nicety, you’re at a disadvantage relative to companies selling what people critically need—or THINK they need—such as health insurance or loans.
Further, the less obviously valuable your product is, the better you need to be at pitching it. This can take exceptional marketing skill and months of iteration.
@mkobach is a great example of exceptional marketing skill btw. props to him