The acquisition of users 🛍️

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Welcome to "note to self" #11 focused on marketing & growth 💻

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Today we're discussing the acquisition of users. Let's dig in 🍽

User Acquisition - an overview

It goes without saying that acquiring customers must be costing you less than you stand to make from those customers, but many companies fall into the trap of not doing so. Ensuring that acquisition efforts are cost-effective as possible is always good for business.

Large-scale acquisition growth or customer acquisition should not be launched until your company has achieved product/market fit, and you’ve determined your product as a must-have for your target market ( for network effect-driven businesses, user acquisition and product development actually work alongside each other ).

The acquisition of users:

1. Language/market fit

Language/market fit is about using marketing language to best communicate what is special about what you’re offering. This means having a deep understanding of the needs and wants of your target market and being able to communicate your product's value proposition in a way that resonates with them.

Your consumers need to understand how your product can benefit them, and connecting with a need/desire is a great way to hook them in. You need to answer the question at the front of the consumer’s mind “how is thing going to improve my life”, and one of the best ways to do that is by communicating your product's core value. To do this, you need to speak the same language as your target market. This means using the same terminology and jargon that they use to describe their problems and needs. For example, you might adopt the same language that your customers use to describe your product and its value to their friends or draw on how your customer describes your product in online reviews or previous surveys you’ve conducted.

2. Product/channel fit

Ensuring that you have a strong product/channel fit is imperative. This means that your product needs to be available on the channels that your target market is using and that your product is a good fit for the channels you're using to reach your target market.

Optimising one or a few channels that are most likely to be effective for your growth is better than trying to utilise a variety of channels. As Peter Thiel put it “If you can get one distribution channel to work, you have a great business”. It is pointless following the crowd and using the same channels as everyone else because certain channels might be more effective for your specific product. Discovery and optimization are important here, where the discovery phase will let you realise the most effective channels, and optimisation lets you maximize the reach of each of those channels and maximise their cost-effectiveness for your business. Identifying core channels and leveraging those channels for optimal growth, will be a key decider in whether your distribution succeeds.

User Acquisition Case Study: Hotmail

Sabeer Batia & Jack Smith launched Hotmail, a free web-based email service, in 1996. They knew that the success of the business would be based on the size of their user base, so they employed a growth tactic and displayed a message at the bottom of each Hotmail email sent, which turned out to be the key driver in growing to 12 million users in 18 months.

Each Hotmail message arrived in someone's mailbox, with the message "PS: Get your free email at Hotmail" displayed at the bottom. By clicking on this message, the email recipient was taken to Hotmail's home page where they could utilise the free webmail service. In 1996, most users paid for use of the internet and could only access their email accounts on their home computers. Hotmail solved both of these problems but also built a really great product. By employing this viral loop tactic, along with a great product, they were able to grow exponentially.

In other news: 📰

-> Binance signed an LOI to acquire FTX until they did their due diligence.

-> Twitter update: Blue check subscriptions cause confusion - fake LeBron James says he's leaving the Lakers.

-> Blog/Pod/Video of the week: AI for the Next Era

Have a great weekend!

Harry Arkwright