Notes on customer acquisition and viral marketing from First Round Capital CEO Summit

I was recently invited to lead a session on customer acquisition and viral marketing at the First Round Capital CEO Summit (thanks Josh!). I wanted to share the notes I prepared for the discussion below – hopefully most of them will be self-explanatory.

I’m on blogging break right now, but I may expand the below notes into a series of posts when I have more time. Brb!

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How to get have sustained viral growth:
– Have a great product (ideally in communication or social content)
- Convert user growth ideas into Excel-based hypotheses and clear user funnels
- Build and track each step of your funnels
- Get an initial stream of traffic (Adwords is OK)
- Optimize until every user is bringing in a new user
Timeline: weeks to months

Getting scientific about user acquisition:
– Start with your laundry list of acquisition ideas
- SEO, tell a friend, Twitter, etc.
- Convert into 2-3 testable hypotheses
- “Buy users for $1, monetize at $5″
- “20% of registered users will import addressbooks, >5 of their friends will register”

Viral loops in SaaS/enterprise
- What things do people share? What tools do they use for communication?
- files, wikis, Outlook, Excel, USB keys, etc.
- These are your viral channels (vs Newsfeed/Notifications on Facebook)
- If your value prop can align with a channel, then you might make it viral
- Case studies: Yousendit, Dropbox, Wikis, Basecamp, etc.

How quick-hit viral loops work for consumer products
– Cialdini’s “Influence: The Psychology of Persuasion”
- Quizzes: Social norms
- Top friends, eCards: Reciprocation
- 8 invites left: Scarcity
- But what’s the followup?
- Hide quoted text -

Value propositions for viral loops
– Best value prop is like Skype
- great for both parties (inviter and invitee)
- build deeply into the product (takes 2 to tango)
- Worst value prop is like lots of FB apps
- little to no value for the inviter/invitee
- lots of churn, feels spammy
- Sustainable viral growth is key for long-term value creation

Different acquisition models work for different kinds of businesses
– Vertical social networks -> SEO/SEM
- SaaS/enterprise -> SEO/SEM
- Consumer/communication/social content -> viral
- Themes, decorations for blogs/profiles -> widgets

Optimize your funnels by brainstorming levers
– Lets say you have funnel of Signup -> Download -> Install -> Fill out profile
- Lots of ways to improve
- change the order of steps
- remove steps
- combine steps
- use lightboxes, or longer pages, or progress bars, or lots of other UI tricks
- To optimize just the download-to-install step, you have dozens of options
- headline
- button placement
- “hero” photo or video
- target their OS
- size of download
- AIR
- small installer vs all-at-once
- installer filename
- etc.

Books and more resources
– Adam Penenberg, “Viral Loop”
- Robert Cialdini, “Influence, The Psychology of Persuasion”
- Tim Ash, “Landing Page Optimization”
- David King and Siqi Chen, “Metrics for Social Games” (Slideshare)
(lots of other resources on Slideshare)

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http://mohanarun.com/ Mohan Arun L

For anyone who is interested.. until Andrew has more time to elaborate on his brain map Refr: The six principles of influence as developed by Robert B. Cialdini in his book Influence: 'The Psychology of Persuasion' are Reciprocity, Commitment & Consistency, Social Proof, Liking, Authority and Scarcity. It is widely used as a reader in persuasive marketing. Another of his recent books is summarized here – http://www.moskalyuk.com/blog/yes-50-scientific…. Andrew, when you are developing points for talking like these, you may want to use a mind map. It looks more sophisticated and impressive!
stephanwehner

Thanks … Your notes are much easier to read than the usual slide show — Stephan
http://www.appwhirl.com Richard Jordan

Another great post Andrew… we're in optimization mode now we've done a lot of basic learning about our customers through our minimum viable product over the last few months… your tips have been a great help.
http://twitter.com/duncan_m duncan_m

Great post.
brezina

Andrew – thanks for leading this session. I enjoyed. My favorite part was “Optimize your funnels by brainstorming levers”

It'd be great to create a giant list of these levers. I think i'm going to blog my list. The one I was surprised you had and that we've thought about (but never tested) is the filename. That can be huge for downloadable software. Drop off between download and install is high in the funnel and can often be 10-50% depending on channel.

Thanks for posting.
http://www.facebook.com/gary.gil1 Gary Gil

Andrew, great post! I'd love to see the video of your presentation. Will it be available?
http://DCincome.com/blog TJ Corruthers

We must remember PPC is temporary while SEO is forever, SEO is an important factor of viral marketing
popupbooster

In Saas/Enterprise cold calling is still one of the major customer acquisition methods.
popupbooster

In Saas/Enterprise cold calling is still one of the major customer acquisition methods.
http://www.dearpurses.com/ dearpurses

i also love to see this video too. http://www.dearpurses.com/
http://www.dearpurses.com/ dearpurses

small installer vs all-at-once. size of download. http://www.dearpurses.com/
http://www.thecuillincollective.co.uk/ Viral videos

We all know that viral marketing had created a big impact on the internet marketing world, viral marketing is a marketing techniques which uses pre-existing social networks in order to achieve marketing objectives like product sales by self-replicating viral processes.
GallagherEli

Making money from ads on the web is a balancing act. Always, you are trying to maintain the highest possible CPM while still filling out your inventory.

@andrewchen