How to Start a Startup is a multi-part series on the intricacies of creating, sustaining and dominating the startup sphere derived from Y Combinator’s Lecture Series

Welcome to Startup 101. In Part 4 of our series, we discussed how to build product and take feedback to users. In this part, we will discuss user growth and the different methods one can use to achieve it.


Any startup’s fuel for success is growth. Now, that’s easier said than done. Nine out of ten startups fail because they cannot create enough growth so that they can sustain themselves. Effective growth can come in a startup when the marketing strategies are ironed out before entrepreneurs jump into capturing growth.
In this regard, this post is all you’d need to learn about the growth methods a young entrepreneur can use for his startup’s growth on platforms, including the social media. Before going further, one thing to keep in mind is that however much you attempt to use growth tools to increase your base, you need to still be creative to stand out from the crowded marketplace. Nothing can replace the innate creativity one possesses.

Effectively, there are three broad growth tools that will boost your product, which will discuss today.


Sticky Growth

Sticky Growth is a method of trying to get your existing users to come back and pay you more or use you more. Having someone come back repeatedly to use your product is referred to by the “sticky” nature of its name. The only thing that really matters here is that you are delivering a good experience. If you are providing a good experience to customers with your service then users will keep coming back for more. In fact, try making the experience addicting. This way you can also measure your retention metrics on your customers as well as your CLV (Customer Lifetime Value). The CLV is basically the net revenue the customer brings to your company over the course of a fixed time frame.


Viral Growth

When you use a product, you like it and you tell ten others about it and some of them tell ten others about it, this kind of growth is referred to as Viral Growth. It’s the kind of growth you receive when people are talking about you.

As it is with sticky growth, user experience is oh so important to try and grow effectively. Once that has been established, one must try to create an effective referral program. There should definitely be some sort of built in option within the product that users can refer to others. Another way to do this is by reminding users that they can refer to others after they’ve used it for a while.

You can also use program mechanics to maximise your efforts towards viral growth. Examples of such methods are rewards to the referrer – usually an INR 200 off on the next cab ride or similar discount schemes on products. Sell or rather up-sell your referral schemes so that conversion flow is high. There are many different strategies to do this: find your match.


Paid Growth

Paid Growth is perhaps the easiest and therefore the most expensive of all propositions to create growth. The most obvious examples of these are – SEO, Facebook Ads, Display Ads, Mailers, Groupon deals and other such options. So, effectively paid growth can take place only if you happen to have some excess money to spend and acquire users. One should try to keep in the back of their mind that they are spending a certain amount of money to get a certain amount of return. Therefore, one should make sure their Customer Lifetime Value (net revenue from the customer) is more than their Customer Acquisition Cost (CAC). While at it, use targeted ads so that you can create a marketplace effectively.


There are other factors that come into play, like Switch over cost. Well, the hardest customers to acquire are those that are already comfortable with another product and you’re trying to have them switch over to your product. To get them to come and use something else is probably the most difficult task in the world but this is where product differentiation comes into play. When you are building and creating product, you need to find the points where your offering is much better or very much differentiated from an existing solution. And once that is developed, you should be able to effectively explain to prospective customers how the little benefits which your product can provide aggregates in the long term which outweigh the switch over cost.


These tips and tricks help budding entrepreneurs understand what they’re getting into. In part 6, we will discuss about how to deal with and what to think about competition.




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