Choosing an acquisition channel aligned to your product
While there are many channels via which you can acquire customers, only four allow you to achieve massive scale. Most likely, only one will actually work for you (3 min read).
There are so many acquisition channels available and so many tactics to try. But only a few of these channels can get you compounding 🔁 effects.
Every startup has only four scalable customer acquisition channels available to them, namely - paid ads, SEO, virality and sales. These are the only channels with a high ceiling that also allow for compounding results 📈.
Other channels have low ceilings, easily saturate and don’t yield compounding results. Email marketing depends on your email list (which also can get saturated quickly if you keep blasting emails), going viral on social media is hard to replicate, PR only leads to spikes in traffic and doesn’t compound, etc.
Now, consider the fact that not all four will actually work for you. The channel that you can use to grow is uniquely dependent on your product and your monetization model.
This is the reason most startups fail 📉 at getting good distribution.
“Most businesses get zero distribution channels to work: poor sales rather than bad product is the most common cause of failure. If you can get just one distribution channel to work, you have a great business. If you try for several but don’t nail one, you’re finished.” - Peter Thiel, Zero to One.
Let’s consider different channels and see why they might work for your startup:
Virality 🦠: Needs very low time-to-value, free to very low ticket-sizes and the product’s value prop should be applicable to a high % of the user’s network
User-generated content 👩👩👦👦: Product usage should allow users to generate content, which they should be motivated enough to share themselves, or the product itself should distribute it via SEO
Paid marketing 📣: Needs low time-to-value, low to medium ticket-size and upfront payments to fund next cycle of paid marketing
Sales 🤝: Best works for high ticket-size B2B SaaS companies with long negotiation cycles before closure
All fast-growing companies have achieved major scale through one of these 4 scalable channels which was uniquely suited to their circumstances:
Whatsapp scaled via organic invites (virality) - free product coupled with an inherent need for a user to invite their friends to chat 💬 with them
Dropbox 📤 scaled through a well-executed referral program (virality) - free product, users come to get storage and are incentivised with more storage if they invite their friends
Quora scaled with user generated content distributed via SEO - users come to Quora, write answers 🙋♀️ to questions from other users, and Quora distributes these answers through SEO, which enables more users on google to find them
Booking.com scaled with performance marketing 📣 - High search volume for keywords like “hotels in Paris”, multiplied hundreds of times for all the different cities and locations, enabled them to take advantage of Google Adwords
Veeva grew almost exclusively via sales - they sell $1M+ ARR 🤑 contracts to life sciences companies which need very long negotiation cycles, and this high ticket-size easily supports an enterprise sales team
Which distribution channel will you use to grow? Let us know in the comments.
That’s it for this Spotlight. Thanks for joining us!
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Be kind to everyone you meet
Don’t take yourself too seriously
Drink lots of water
See you next week!