Andrew Chen

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)