What an amazing time to be alive. Especially if you’re an entrepreneur. Thanks to technology, not only can you launch a company with little capital but you can scale that company to millions of users faster than any other time in history. In this post we look at the channels that the most successful startups have used to scale today and try to identify some emerging growth channels to test out.
Traction v Scale
When we talk about growth, it’s important to understand the difference between traction and scale.
Traction is all about finding your first customers - enough customers to evaluate if your startup will be profitable at scale. This often involves experimenting with different acquisition channels before settling on one to scale.
Once you have product market fit you can then turn your attention to scaling growth. This usually involves leveraging one, sometimes two channels, to find your millions of users.
So what are these channels?
Existing Scalable Channels
According to respected growth hacker Brian Balfour, there are 5 scalable growth channels. If you look at the most successful startups of the last decade, you will notice they all scaled to millions of users globally by tapping into 1 (max 2) of these channels.
SEO: Mint, Hubspot
SEM / DISPLAY: TripAdvisor and other online comparison sites with high LTV eg. car insurance
FACEBOOOK: Zygna, Instagram, Upworthy
VIRAL / WORD OF MOUTH: Uber, Snapchat, Evernote, Groupon
SALES / PARTNERSHIPS: Salesforce, Oracle, IBM, PayPal
For a while now, these channels have been a rocket ship for growth. Some still are, particularly viral and word of mouth (that will never change). Yet other channels such as Facebook are more challenging than ever before. Of course, all these channels are still scalable (due to their reach), they're just more competitive and expensive today.
No one understand this law better than growth hackers who look to exploit emerging growth channels and ride a rocket ship before it returns to earth and becomes a commercial airline.
The Best Growth Strategy Today
The existing growth channels are so entrenched that you need to pick one. For example, SEO isn’t going anywhere any time soon. That channel is arguably going to be around for long time so you can't dismiss existing channels. What I recommend startups do is focus on one existing channel while experimenting with an emerging growth channel that best fits their market.
Of course, experimenting with emerging growth channels is risky but who dares in the world of startups, often wins. With this in mind, let's look at 5 emerging channels to consider. Don’t be surprised if you hear about a startup that scaled off the back of one these channels in the near future.
LinkedIn is growing fast. According to the latest statistics, they have 300 million users with a long term target of reaching 3 billion. You can bet a few smart companies will be there for that growth ride. One reason to take LinkedIn seriously is the launch of it's publishing platform. Once a closed platform for content, users can now market their brand and message beyond their own network. Currently B2B startups get the most value out of this network but that could well change with the introduction of the publishing platform.
LinkedIn is still a channel that's evolving but there are few things you can do, starting today, to grow your business on this emerging platform.
Pinterest currently has 70+ million users with 80% being women. Considering the niche following, Pinterest needs to further grow it's platform to be considered a scalable channel on it's own. However, it's important to note that Pinterest users are more active than a lot of other channels and users have intent to buy. According to a study by Steelhouse, users on Pinterest are 79% more likely to purchase something they saw on Pinterest than Facebook.
With the recent changes to make Pinterest the ultimate discovery engine for the things you love it's a platform worth exploring, especially if your demographic is female and your product or service is visually enticing. Check out how to create awesome Pinterest content, or master the art of Pinterest images. Or click on the graphic below for more stats.
Another channel showing impressive signs of growth and active usage is Snapchat. With over 100 million users and more than 400m snaps sent daily (that's more photos shared than Facebook and Instagram), Snapchat is an exciting channel for startups targeting a young demographic. 26 percent of 18-29-year-old smartphone users report using Snapchat. Brands like Taco Bell, Karmaloop and 16 Handles have been using Snapchat for a while, however the launch of Snapchat Stories (new feature) has seen more brands get involved, such as HBO’s Girls, the New Orleans Saints, and Acura.
Time will tell if a startup can scale off the back of Snapchat alone. Whoever succeeds though is likely already building their following. Check out the infographic below for more stats.
Brought to you by Social Marketing Software by Marketo
4 Collaborative consumption
This is more a trend than a specific channel, but it's easy to see how a startup could ride off the back of collaborative consumption. For example, Airbnb are currently piloting a program that offers hosts cleaning services. As collaborative consumption grows, so do the needs of the market. In the case of Airbnb, increased cleaning services are needed by hosts. Cleaning companies missed an opportunity to become the go-to cleaners for Airbnb and so now Airbnb are doing it themselves. Just like eBay created demand for safe payments between individuals online (PayPal), new markets create new needs. If your startup fills those needs, why not ride the growth of new markets?
5 Google+ / Google Glass
Given Google's strangehold on SEO and the prospect we might all be wearing Google Glass soon, it's difficult to dismiss Google+ as a channel to find and engage customers. With 500 million users signed up (thanks to Gmail), Glass might be what Google+ needs to thrive. A big part of Glass is video and Google owns Youtube. Add in Google Maps and you begin to understand the Google juggernaut and how it could scale a startup.
Just on "wearable technology", that's another trend that will no doubt open up a host of opportunities for startups to grow.
If SEO is a big part of your growth plans and early tech adopters are your market, then you should already be on Google+ and/or signing up to test out Glass.
Scaling growth is hard. That's where growth hackers come in. The best exploit emerging channels. While it's important to focus on the big 5 existing scalable channels, it's also important to look at new opportunities. SEO was once an emerging channel, so to Facebook, SEM and display. What will be the next? Where will you place your bets? What did we leave out? Comment below.