Acquiring users is always a major challenge for most bootstrapped businesses. In fact it's one of those challenges that stay with the business for most of its initial life albeit in different forms. The very first users, also known as early adopters give valuable feedback to help the product evolve in a certain direction and they are the users we will focus on in this first part of our two part series on user acquisition.
In the next part, we will talk about the users who add continuity to a business once the launch euphoria is over and the business has already found traction with its initial user base. However, the initial users still remain valuable as they are the ones who spread the early word about a product to make it successful.
This post mostly talks about the initial phase of product's journey when user acquisition is most challenging. Founders are usually confused on what will work and what won't . Some of them are also vulnerable and they start giving up if they get too much negative feedback on the product.
Most founders try little bit of everything and when nothing works they start giving up. But those who succeed with a bootstrap business model will tell you that they carefully experimented with just 3 or 4 mediums of user acquisition and stuck with just 1 or 2 for initial years to grow their business.
The list of products that failed because it couldn't find a market is endless. Yet, we see products with seemingly weird ideas gaining traction and enjoying a healthy user base all the time. So what's the key behind some products getting traction and other with great ideas and useful products getting lost in the crowd? Here's an analysis of 500+ bootstrapped businesses that made it in the market to find answers to this conundrum.
Important Stats From The Study
- Big Bang Launch Vs Slow Growth- 72.62% companies went with a big bang launch approach where they leveraged one or more conventional mediums like PR, Product Hunt, Meetups, Cold emails, social media, advertisements to announce their product launch and get initial traction. Out of the remaining 27.38%, 10.71% decided to leverage their existing audience from a blog, online course, group they already managed and grew for years or pitched to the users from an existing product to build the initial traction and 16.67% decided to grow organically from word of mouth and search traffic. Organic and search based growth are the most time consuming process because of the way search engines operate. Referrals among users played a key role in such cases when the users already knew about a person behind a product and were willing to back their new ventures by sharing it through emails, messaging etc.
- 22.62% of the SaaS businesses found their initial traction from communities like Hacker News, Indie Hackers, Reddit, betalist and Product Hunt. Out of them 8.33% or almost a third of all SaaS businesses that found success from communities, found their traction through Product Hunt (PH) launch.
- Cold calling/ cold emailing is the third most popular way for bootstrap founders to gain early attention as 11.9% founders use it to find early traction. It works mostly when we are dealing with a niche audience who don't hang out in the common platforms or don't have popular online communities of their own.
- Blogging and content creation- 7.14% businesses covered in this study took advantage of a blogging platform to reach out to a target audience and address their pain points. Once they got their attention , they tactfully pushed their solution to that audience who were ready for it.
- 5.95% products were successful by making the product speak for itself. When the product was used by other businesses it became a referral on its own. We found this one of the most interesting techniques to get traction for a new product.
- 4.76% of the businesses attribute their early audience acquisition to Media and PR. The stories about how these bootstrapped businesses managed to get media attention can easily become a post on its own. I have covered the highlights from these stories in the sections below.
- The businesses that leveraged an app distribution platform to attract early users stood at 4.76%
- 3.57% of the products acquired users from social media (Twitter, Facebook, Linkedin etc.)
- Since our study was focused on bootstrapped SaaS with limited funding, paid ads were often not a solution for such businesses- only a meagre 2.38% bootstrapped companies used advertisements to acquire the initial users
- The rest of the sources were meetups, unconventional marketing (growth hacks), app directories, trade shows, webinars etc.
Contents
- How Much Do Different Business Models Rely on A Core Traffic Source?
- 3 primary sources of traffic
- What types of businesses relied on inbound marketing?
- What Type of Businesses Relied On outbound marketing For Traction?
- Which business types are best for referral marketing?
- Do early stage businesses get users from organic search?
- Study Method
How Much Do Different Business Models Rely on A Core Traffic Channel?
Our study on initial traffic acquisition found that over 90% businesses relied on a single channel to acquire their first 1000 users (a channel is a group of mediums that require a similar approach- like social media, communities, PR etc.).
In the above context, I treated Quora, YouTube and Instagram as communities because they are follower based platforms. People follow other like minded people that they want to hear from.
On the the other hand, Twitter, Facebook and Linkedin are networks where people mostly connect with their friends and acquaintances and friends of friends. Although there are groups that behave somewhat like communities they come with some restrictions and they work in a very differently manner.
Since most of these business had between one and three founders, managing multiple channels for user acquisition was counterproductive at the early stages. Focusing on a single channel helped them build expertise on that channel and they were able to build a dedicated following which helped them grow their business.
Interestingly, many founders mentioned that success of a bootstrapped product depends on onboarding the right users at this stage even if they are few in numbers.
Onboarding too many users, who are just not genuinely interested in your product will only mislead you (in terms of features, usage, pricing etc.) and divert your attention from your core audience who can help you grow.
3 Primary Sources of Traffic
If we categorize all these traffic sources, it will come down to 3 broad categories: inbound, referral and outbound.
Inbound can be anything where you create some form of content to attract people to your product. Be it social media, blogs, email marketing, ebooks, SEO, viral videos, webinars etc.
Outbound is where you actively reach out to people- it can be cold emails, advertisements, trade shows, cold calling etc.
Referral is where you approach an influencer or established source to promote your product and direct their traffic to your site.
Now if we look at our entire sample, the traffic sources can be divided into 3 major categories as below:
- Inbound- 64.28% of the traffic sources for the businesses we studied can be classified as inbound
- Outbound- 16.67% fall under this category
- Referral- 19.05% can be classified as referral
An important thing to keep in mind here is that the individual channels that these businesses leveraged to get early traction may not continue to get them traffic over a long term. But the broad strategy that they adopted to get their traffic will more or less stick for a good amount of time.
You need to find a channel, test it, and evaluate it. It's no different from finding your first channel, it just happens later on in the lifecycle.
For example, a product that was a major hit in Product Hunt can't get traffic from PH few weeks after launch. But by being successful in PH, they have proved that the product has the potential to grow. PH will give them enough cues for the next step in their growth journey, be it PR, communities, referral or outbound. The founders need to evaluate them and move forward.
What types of businesses rely on inbound marketing?
The type of business that were successful with inbound channels understood two things:
- The focus should always be on one primary content type- it can be blog, videos, images, emails, partnerships depending on the type of content you are comfortable with. But managing multiple content types at the same time is a recipe for disaster for an early stage product.
- The objective isn't just to maximize traffic but to maximize quality traffic who will potentially convert to paid customers
However, the realization about the best traffic channel doesn't come naturally to most founders. And arriving at the perfect channel and traffic quality fit will require a proper process of channel evaluation.
Here's a generalized approach that I derived by studying their methods:
- Based on your media preference (blog, video, images, codes etc.) start with a channel where you think your audience might be present (it's great if you can speak with someone who has experience with a successful business and who can guide you on this)
- Spend time on that channel, exploring popular content and create your own content (relevant to your product) that will trigger response from your target audience (if it's community, try to get to the first page and newsletters with your posts)
- Start a conversation by responding to comments. This will also grab attention from others who were not directly involved in those conversation (as these conversations happen publicly for most social media and blog platforms)
- Pitch your solution with the right context. According to most founders there is a right time to pitch your product to an audience.
- Since many people skip the steps 1-3 and straightaway pitch their products, they get very little attention from a channel. Remember, you can't make multiple announcements about your product without being spammy. But you can engage in multiple conversations, build a reputation and then bring people to your fold without being intrusive. This way you'll also onboard the right users.
What type of businesses rely on outbound marketing?
Outbound marketing works best for products with a very specific target market and where your product can address a specific pain point very quickly. For example, if you are targeting a product specifically to gym trainers, it will make sense to reach out to them directly.
However, if you are building something for a broader market, like gym goers, it's difficult to reach out to the audience via outbound marketing as it will be difficult to identify and target people with a cold email/ cold call based on their gym going habit.
Do Early Stage Businesses Get Users From Organic Search?
Let's find out which types of businesses were search engine dependent based on how much traffic they generate from searches.
Businesses where the founder already had an existing product or blog, were successful with search engines as their initial channel.
The other type of founders who relied on search engines were the ones where founder(s) took years to finetune the product and over that period the product acquired users, generated buzz and gradually started ranking for different keywords.
However, the above two are some exceptional cases. For a majority of businesses relying on search engine traffic for acquiring early users is not an option.
Search engine as a channel can't be tested in a short period of time (say 3 months). Some other such channels are PR, integrations etc.
Only after we carry out channel tests, we can understand whether content, PR or Product Hunt will work for our business or cold calling, online communities or meetups will.
Later, in the section called "User Acquisition By Business Type" you can find the details of how businesses chose a certain user acquisition strategy categorized by different business types.
What Type of Businesses Relied On Cold Calling/Cold Emails For Traction?
Acquiring search traffic is not a solution for many businesses. Some of them are competing for highly competitive terms that one can't easily rank for. Other are targeting niches with very low search volumes or products that are seldom searched for. These are some of the factors that demand a very targeted approach to user acquisition and cold email/cold calling proved to be a perfect solution for such founders. Here are the types of businesses that relied on cold calling or cold emails for user acquisition.
Which business types are best for referral marketing?
Referral works best with products that have well developed communities with influencers. For example, if you have a specific product that caters to food aficionados or fashion enthusiasts you can reach out to them via influencers with hundreds of thousands of following. You can offer them affiliate commissions in return.
Study Method
We collected data for 507 SaaS businesses with MRR between $1,000 and $20,000 for this study.
All these businesses were bootstrapped- they never raised any capital to attain their current level of earnings.