In an ever-changing changing world, it seems crazy to assume that one can predict the future. Nonetheless, some methods can help you analyze the market and spot what will become the next...
How to develop product growth strategy?
Let’s say you’ve achieved a product-market fit (congratulations!). What should you do next? Well, the next step is to figure out how to grow the number of customers using your product. At Startup Development House (SDH), we’ve discovered that there isn’t one best growth strategy for scaling products. That’s why you should have a comprehensive understanding of what techniques are the best for your product and why you’ve decided to pursue this particular strategy. In this article, we will examine the most effective growth levers for extremely successful products. We recommend keeping them in mind while building your product development growth strategy and hope that you will find these examples useful.
Back in 2010, the Airbnb team was aware that Craigslist was the place where Airbnb’s target group searched for listings. In order to fight for this potential market, Airbnb offered users who listed properties on its platform to post them to Craigslist as well. If you want to delve deeply into this particular example, we strongly recommend Morgan Brown’s article which you can find here. The results of the Airbnb/Craigslist integration were exceptional. Firstly, it dramatically increased the number of potential users accessible via Craigslist. Secondly, Airbnb’s listings were way higher standard than for the apartments available on Craigslist. Mainly because they were much more personal, with more detailed descriptions and high-quality photos. Thirdly, let’s say that a Craigslist’s user booked via Airbnb, they were significantly more likely to rebook through Airbnb in the future. In other words, it was a sustainable acquisition channel for Airbnb, which had an amazing product. Last but not least, Airbnb’s hosts with properties listed on Airbnb ended up making more money on their listings, which also kept them using the service. As a result, Airbnb improved its retention rate dramatically. There is a great article about those benefits written by former Head of Growth at Uber, Andrew Chen. If you are interested in reading it, you can head over to Chens’ blog.
Another very famous growth hack was discovered by Linkedin. It is called the double viral loop. Let us now explain where the word ‘double’ comes from. Every time a user registers for LinkedIn, they filled out their current company and title. Once new users have signed up, they received a list of people at their current or previous company that already use LinkedIn and they are asked the question, ‘Who do you know?’. Connecting was very simple. You just had to go through and check a list of people. As more users joined Linkedin and sent invitations to connect, users who were not actively using the product were brought back to the site and encouraged to invite and connect with their potential colleagues. The process described above is called the ‘double viral loop’ because new users not only invite more new users, but they also activate old users (who go on to ask new users themselves.) As a result, two viral loops are happening at the same moment.
If you have a high Net Promoter Score (NPS) you can most likely launch a successful referral program. In my view, Dropbox has launched the best referral program ever. The idea was simple. You can find Dropbox’s original description of the referral campaign below:
Earn more space by referring friends
You can earn extra space by inviting your friends to try out Dropbox:
Basic accounts get 500 MB per referral and can earn up to 16 GB
Plus accounts get 1GB per referral and can earn up to 32 GB
Why is Dropbox’s referral program so successful?
Well, it is extremely simple - it rewards users by giving them more of what they need to experience the value of the product - storage space. The more space the account has, the more files the user can store. By using space as a referral reward, Dropbox’s clients are more motivated to refer friends.
We think it is a way better referral program than e.g. Uber’s. A free ride on Uber can only be used once per referral. If I want another free ride I have to refer another friend. On Dropbox, referring a friend means the user earns more space forever, thus making the product constantly more valuable to the user for the rest of their experience with it. It significantly increases the likelihood that customers remain on the platform. Undoubtedly, Dropbox’s referral program is a great combination of a retention and acquisition strategy.
Also, Dropbox allows its users to track the progress of their referrals with remarkable transparency. Basically, it means that when a user refers someone, they can see exactly where that friend is in the process, which lets the referee encourage the referred person to finish the process.
There isn’t one good recipe for a sustainable product growth strategy. I hope you will come up with a new product growth strategy for your product after reading this article. Below you will find a few readings if you want to deepen your understanding of the topic.
A list of recommended resources:
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