Edmonton Lean Startup Circle

So instead of launching a multi-million dollar ad campaign to bring in people, my gym implemented a growth hack. They turned customers into marketers by incentivizing them to bring in a friend. Then the friend possibly could become a member. The math works out for them as well. Let’s break it down: T-shirts ($3 each) x 2 = $6 Complimentary lunch = $0 A total of 100 members bring in a friend. The total cost of the promotion — $600. The result is that 3% of the 100 members convert their friends to members at $55 per month for each membership. The total ROI in the first month — $165/$600.

The promotional cost for each customer is very cheap. The t-shirt probably cost a few dollars, and the complimentary lunch probably was a gift certificate to a local restaurant that cost the gym $0.

Everything we’ll be discussing has one thing in common — incentives. Economists almost universally agree that people respond to them. Businesses should give their current and prospective customers an incentive to act on their offer. It has to benefit both parties or it won’t be nearly as effective. Not all the incentives are monetary, as we’ll see.

Launched in 2007, Airbnb has grown to become a $1 billion company. When Airbnb launched, they faced a tall task: How do we get people to learn about and trust our little-known website? In other words… How do we acquire users? So what approach did they take? Post on Craigslist! In a story posted by Dave Gooden, he finds out that Airbnb would contact people who were offering their homes to rent on Craigslist. The email would come from a random person (who was really from Airbnb) telling them of a “lovely site” known as Airbnb. Here’s a sample email:

1. 80/20 rule from Noah Kagan Appsumo’s founder, Noah Kagan, notes that one rule of thumb that they follow is to use 80% of their marketing budget for things that are working and 20% on newer marketing initiatives. One more thing: they go all in when they find marketing channels that work. You can watch one of his presentations where he shares his experiences of growing Mint, Facebook, and AppSumo here.

2. Communicate, communicate, communicate At Treehouse, we work remotely and as you might imagine. There are some that think there is no replacement to working in person while others support it. For us, we’re half and half – we have an office in Orlando and we also have a team up in Portland. The rest of us are distributed. But hey, it works because we communicate a lot. If you don’t feel like you are running enough A/B tests, speak up about it. If you feel like the team needs more developers, speak up. If you feel like an executive decision is going to cost the company money in the long run, talk. People might not always agree with you but it’s your job to communicate. You’re doing the company a disservice if you aren’t being honest. To get you started, here are some tools we use to communicate: Campfire Skype Google Chat Google Hangout GoToMeeting – we use GoToMeeting for our leadership meetings. It’s very simple to use and the video quality is pretty good.

3. Be a voracious reader Although there’s a lot of crappy content circulating the internet, there’s always going to be someone you can learn from. The key is being able to discern signal from noise. For example, if I’m looking to learn more on conversion rate optimization, there are great blogs such as Unbounce, ConversionXL, KISSmetrics, SEOmoz, and more. Just look at the detailed blog posts that they write: 10 Useful Findings About How People Use Websites – ConversionXL 5 Landing Page Conversion Killers – Unbounce The Ultimate Guide to Conversion Rate Optimization – SEOmoz If your goal is to squeeze every penny out of your website, you should be reading conversion rate optimization articles like the ones above. They cost no money to read and stand to help create original ideas that will eventually create more profit for you. This applies to any topic you’re interested in. Using the right tools can go a long way in helping you save time. If you’re on the go and don’t have time to read, you can use Pocket. To help you find relevant topics/articles via Twitter, you can grab curated lists using Listorious. Finally, I like picking off interesting topics from Inbound.org or Hacker News. Key takeaway: don’t read every single blog out there. Find the ones that actually add value and follow them.

Marketing is about segmentation and targeting there is nothing more to it. Segmentation is recognizing that different people buy different products for different reasons and  finding those reasons, occasions, usage scenarios and hence what the customer is willing to pay for.

Targeting is delivering versions that meets those reasons and customer’s willingness to pay. I started a new series of articles on what I called “Fidelity Trap“.