For most startups, their first customers are people they know or friends of friends. After that, distribution becomes a daily problem for every startup. Here’s a quick review of the various different techniques you can use to grow.
Referrals
What: Satisfied customers recommending you to others. In most cases, this happens naturally because your customer is so happy and proud to share the product, but there are also many success stories of referral systems built into an app, e.g., Dropbox offering free storage for referrals.
Why: Referrals are free, or almost free, and so always available as an option, regardless of your cash situation. In addition, new users can also refer others, so the scale is potentially infinite.
Problem: It’s not easy to scale referrals on your preferred timeline, as they are based on both the current size of your customer base and require customers to do a little work for you. You can use incentives and make mass invites easier, but that also lowers the quality of the incoming customers.
Media
What: Paid media includes Ads and Public Relations/Press, earned media is usually content that you’ve paid for with time or money; e.g., Ads — Google Ads, PR — an agency finds a journalist to write about you, Content — interesting blog posts.
Why: If you have capital available, you can achieve massive scale quickly via ads and PR. If you don’t have any money or don’t like ads, you can invest time to produce content and generate inbound interest.
Problem: Ads and agencies are expensive, reducing your runway, and there’s no guarantee people will like your content. As these strategies reach a broader, unfocused audience, the leads generated can be low quality.
Outreach
What: Reaching out to people cold. You might be directly asking them to buy or get them talking by asking for advice. Most successful strategies involve multiple touch points across email, social media (LinkedIn mostly), and phone calls. Here’s an example outreach email (section 3).
Why: Large scale is possible at a much lower cost than ads. Outreach can achieve a 30% response rate, if the messages are personalized properly. Flexible, as you can use these approaches to both sell and collect product feedback.
Problem: Sending high-quality, personalized emails is difficult and a constant grind. If you send more generic emails, the response rate is usually under 5% and you risk being labeled as spam.
Events
What: In-person events such as conferences or networking dinners. Usually, these events are focused on a specific industry or topic, e.g., every January, JP Morgan hosts a healthcare conference in San Francisco, attracting people from across the globe.
Why: Conferences and well-curated networking events can be highly targeted, making them very efficient for customer acquisition. Attendees are often more willing to meet and provide feedback during conferences or events, versus scheduling normally.
Problem: The number of conferences each year matching your customer profile will be limited, and you can only host so many events yourself. Events and conferences are efficient, but they do have an underlying, upfront cost.
As a founder, you’ll need to test a few different growth strategies to see which might work best for your company. For each approach, make sure you’re aware of its benefits and costs to give yourself the best chance of scaling efficiently.
Sterling Road invests in idea stage and pre-seed B2B startups based in the US, Canada and UK.
