Startup Funnels | The holy grail to product market fitPosted on 29/07/2018
Heyday! You’re idea turned into something marketable. Be it a workable MVP or a fully functional 150% alfa and beta tested, shiny ready for the masses product….you’re getting in the ring, you’re taking on the market.
So first and foremost, can we please get a raving applause from the crowd? Building products isn’t a walk in the park. The fact of the matter is that you already passed that first big hurdle. You already differentiated yourself from the dreamers by actually building and launching something. Kudos again.
So what to do now!?
To give it to you straight, you need to get out of your dusty startup offices (basements, attics, garages, Starbucks, public libraries, hotel lobbies). Start selling your product to everybody. Go to meetups, conferences, family parties and crash weddings. Explain what your product is and why it adds value. Chances are that nobody will get what you’re saying during the early days, but as you keep finding new ways to explain what it actually is that you do, you should end up with something relatively straightforward and understandable.
Aside from that, you should start building and exploring your funnel based on the feedback you get from those early adopters (advice: first let them play with your product for a month without harassing them). Your funnel is basically the main instrument you have to reach so-called product/market fit.
Build and explore your funnel
Your basic marketing funnel should have three main blocks. The first one is called ‘acquisition’ and focuses on identifying and onboarding qualified users. The second one is called ‘engagement’ and focuses on interacting and starting conversations with onboarded users. The third is called ‘retention’ and focuses on making your engaged users hang around happy and satisfied.
You remember those early adopters? Well, now it’s the time to start engaging. You don’t need a lot of them, just make sure they have different profiles. Go talk to them over coffee or in other socially comfortable situations and ask them the WWWH questions. Why, When, Where and How they use(d) your product. Never hesitate to keep on asking, go deeper and deeper on every answer they give you until there is nothing left but a blank face (that’s when you know you asked them numb). Based on the feedback you should have identified a number of use cases. These use cases are fields of application for your product that arose after the convos with your early adopters.
It’s all about retention and engagement
Although you want some traffic at the top of your funnel (top = acquisition) to understand user behavior, you need to focus on retaining your users from the get-go. This because (1) retention is a good indication of how valuable your product is to people, (2) retaining users is significantly less expensive than acquiring new users and (3) because it doesn’t make sense to onboard new users if they’re going to use your product only (maybe) once.
But how do you define retention? Well, this is a case by case question and the answer strongly depends on your industry and the kind of product. In the case of a social media app, retention could be defined by the stickiness of the product. Stickiness itself is the result of dividing your Daily Active Users (DAU) by your Monthly Active Users (MAU). The higher the outcome of this equation, the better your retention.
And how do you work on retention? Well, basically, through engaging with your users. And engaging is nothing more or nothing less than interacting with your community. This can be done through a number of means. Think of emails, push notifications, chatbots et cetera. The main thing here is understanding what the marginal effects of your engagement efforts are. Some might even be counterproductive…To understand this, you need to experiment fast and fearlessly. Each week should basically equal a new experiment and this for a couple of weeks or months.
Tadaaaa…Your growth engine
After having gone through a couple of funnel sprints, you should be able to detect what works and what doesn’t work and who is most likely to find value in your product (the ones coming back for more). This information should guide you in choosing which acquisition, engagement and retention actions to pursue. Now instead of doing this on a small experimental scale, you should start amping your efforts at the top of the funnel and start guiding or following your users through the funnel. This combination of the right acquisition, engagement and retention efforts can be called your growth engine. You should cherish, nurture and maintain this engine, as it’s going to be your ticket to the finals one day. It will help you decide on recruitment efforts, funding needs, product alterations, engineering changes…basically, everything to make your company grow!