Groupon spent $613 million on user acquisition over the nine months leading up to their IPO.
Unfortunately, most app developers tend to have slightly less cash on hand. From conversations with fellow entrepreneurs, I’ve found that one of the main challenges in running a lean tech startup is figuring out how to maximize a rather minimal marketing budget. With limited resources for user acquisition, the big debate is whether to put the focus on quantity or quality in your marketing efforts.
Quantity
Achieving large spikes in new users/customers is exciting for a number of reasons. It can help with cash flow, buzz and also make your company more attractive to investors. It gives you reason to celebrate, brag and pat yourself on the back for a job well done. You can start using savvy phrases like “hockey-stick growth.”
Buying a large amount of mobile ad space that aggressively puts your app in front of potential customers usually comes at a cost. Our company chose to advertise our product on a major Internet radio service. While the move generated over 1,000 new downloads in one week, we noticed only a small portion of downloads converted to regular users.
Pushing a message out to as many eyes and ears as possible doesn’t always provide large benefits in the long term. Sure, it will get you a wave of page views or downloads, but those figures are meaningless if customers don’t continue to use the app.
Quality
Truthfully, organic and incremental growth isn’t sexy. It’s less fun to brag about growing at a responsible and predictable pace. Further this approach requires exceptional patience and confidence in the path your company is taking.
A few months ago, we did some simple app-store optimization that made our app more visible in relevant searches. We noticed an incremental increase in new users that was directly tied to an increase in long-term daily users.
These gradually acquired customers are the ones who stick. They found us because we fill a need and if our product is great, they’re more likely to reward us. We’ve learned that slow-and-steady growth feeds buzz and product referrals.
Decisions, Decisions
It’s easy to want to go for the showstopper, but often this isn’t the wisest choice. If you have $613 million to spare, then a big impact advertising campaign may make sense. Those with a tighter budget, though, shouldn’t be afraid to consider sacrificing short-term excitement for long-term potential and profitability. By cultivating a quality usership, your company builds a free marketing force that spreads your product through word-of-mouth.
Tyler is responsible for handling a portion of the day-to-day operations, implementing plans to grow rider audience, and executing sales strategies to keep up with customer growth targets. TransitChatter is based in Chicago, and working to become the leading platform for delivering personalized, geo-relevant content, advertisements and travel information to the riders of mass transit worldwide.
