“Focus on marketing strategies that are repeatable and predictable.” – Noah Kagan, Sumo CEO & Co-Founder
In their seminal book, Traction, authors Gabriel Weinberg and Justin Mares examine the 19 channels businesses can use to acquire customers:
- Affiliate Programs
- Business Development (BD)
- Community Building
- Content Marketing
- Email Marketing
- Engineering as Marketing
- Existing Platforms
- Offline Ads
- Offline Events
- Public Relations (PR)
- Search Engine Marketing (e.g. ads on Google or Bing)
- Search Engine Optimization (SEO)
- Social and Display Ads (e.g. prospecting ads)
- Speaking Engagements
- Target Market Blogs
- Trade Shows
- Unconventional Public Relations (PR)
- Viral Marketing
Although many of these channels won’t grow endlessly, they can still be a part of your strategy building the top of your funnel (TOFU).
Acquisition channel hypotheses should begin to emerge the moment you start interacting with users. You should explore those hypotheses one by one.
Discovering Prospect Acquisition Channels
Chances are that you’ll be able to find channel opportunities by looking for nascent behaviors. For example, when looking at your analytics:
- Are there sites or platforms that have started sending traffic your way? Could any of those be scaled?
- Looking at campaign parameters (UTMs), are there emails or other platforms that are sending traffic to your site?
- Have some pieces of content grown virally? Did some of your content start to attract a lot of organic search traffic?
- Looking at your site’s internal search, could some tangentially related searches be turned into side products or long-form pieces of content?
- Could some behaviors within the product be amplified? Nomad List founder Pieter Levels recommends taking big features that could stand on their own and spinning them off to drive acquisition: Could that be an option?
It’s important to cast a wide net. Consciously or not, we tend to focus on the tactics and strategies that have made us successful in the past. At this stage, ruling out channels too quickly can hurt your ability to grow your business.
Some channels will work best at different stages in the life cycle of your business. Content marketing, for example, can take more than six months to actually start generating results, so it’s important to plan ahead.
You need to run experiments in order to find the right acquisition channels for your business. Make sure that your tests are as cheap and as fast as possible—don’t spend a huge amount of time or money on your first experiments.
What you are looking for is a channel that:
- will allow you to acquire users with a reasonable amount of effort;
- can yield a positive ROI when you consider the time, costs, and resources involved;
- can last, at least, for the next six months;
- can attract your best fit customers; and
- can work for the unit economics of your business.
For each channel you evaluate, ask yourself:
- Can this channel allow me to directly reach prospects from our target market? and
- If it works, can we scale it?
Evaluating Channel Fit
In a famous series of posts, growth expert Brian Balfour explains how some businesses—based on their Costs of Acquisition (CAC) and their Customer’s Lifetime Value (CLV)—won’t be able to make certain channels work.
The unit economics of your business will limit the number of channels that can sustain your business.
The CLV should always be higher (much higher) than the CAC. As you will see in the case study below, you also need to avoid situations when the CLV is too low, in order to use the most appropriate acquisition strategies.
Determine your own criteria for evaluating channels.
Go through the list of 19 and any other channel hypotheses that you’ve come up with. Gabriel Weinberg and Justin Mares recommend doing a first assessment of the channels in a spreadsheet before prioritizing them, and then focusing on the top three channels for experiments.
Testing Acquisition Channels
“The kitchen sink approach doesn’t work. Most companies get zero distribution channels to work. If you get just one channel to work you have a great business. If you try for several but don’t nail one, you’re finished. Distribution follows the power law.” – Peter Thiel, Serial Entrepreneur
Focus on one acquisition channel at a time. Run rapid experiments to look for signs that you’re heading in the right direction. Are you attracting the right users?
Iterate and test a few concepts, but hold off on optimization. You’ll be able to improve effectiveness later on once a channel starts performing.
Depending on the size of your total addressable market (TAM), you should give a few hundred to a few thousand prospects the chance to check your product.
Keep experimenting until you find a channel that works. Once you find one, put all your efforts into acquiring as many users as possible from that channel.
As investor and entrepreneur Peter Thiel says in his book Zero to One: “Distribution follows the power law.” You need to find a few channels that work, but recognize that one channel will most likely drive the vast majority of your growth.
As Brian Balfour says: “We always build our businesses off the back of someone else’s platform.” We don’t control the channels, but we can control our product. When a channel shows real potential, consider molding your product to that channel.
Tripadvisor did this when they optimized the search engine indexing of the user-generated content (posts, reviews, guides, etc) on their platform, Airbnb did this by creating a double-sided referral program, and Unito did this by optimizing their presence in their partners’ app directories.
Keep in mind the power law. Make experimenting with new platforms and channels a part of your processes. Set time aside for finding and testing new channels.
Most channels eventually dry up. You need to make sure that you’re balancing your investments in short-term acquisition and future growth opportunities. Keep testing new acquisition strategies, even when your business is growing.
This post in an excerpt from Solving Product. If you enjoyed the content, you'll love the new book. You can download the first 3 chapters here →.