Acquisition channels are places where you source customers from.
Think Facebook Ads, SEO, cold email, referrals, App Store and podcasts. And many more.
In fact: any place where potential customers can notice you for the very first time qualifies as a potential channel.
How to think about acquisition
Let's first develop some intuition.
Acquisition strategy consists of three components:
- Target audience — Potential customers. Who you’re trying to reach.
- Value proposition — Messaging that entices the audience to express interest.
- Channel — Where you reach the audience with the value proposition.
You reach (1) potential customers with a (2) value proposition through (3) a channel.
Your success doing so is a function of:
- How well you understand the behaviours, wants and needs of your customers.
- How well you’re able to address those in the value proposition. How do you tangibly make their lives better?
- How well audience and messaging fit within the context of the channel. For example, if you sell clinic management software to dentists, speaking at a dentistry conference will probably outperform LinkedIn ads — even though you can reach dentists there too.
From there, you can brainstorm your strategy in the following steps:
- Nail your messaging.
- Understand your customer.
- Ideate on ways to reach your customer.
- Win on paper.
- Score and rank each idea.
Let’s walk these steps using the somewhat absurd example of an AI-powered shovel you sell to onion farmers.
1. Nail your messaging
Clearly articulate how your product makes the lives of your customers better than it is right now.
- What is the product? An artificially intelligent shovel.
- Who is the customer? Onion farmers.
- What value do they get? Time saved through faster planting.
- How is it better than the old way? Less back pain.
Our AI-powered shovel helps onion farmers dig holes faster, so they can plant and sell more with less back pain than traditional shovels.
2. Understand your customer
Learn how your customers feels, thinks and acts through questions like:
- How do your target customers buy products like yours today? Where do your customers hang out online?
- What kind of content do your customers seek and consume? Which apps do your customers use?
- What questions are my customers asking?
- Where do your target customers connect with people like them? Where do your target customers get their information personally? Where do your target customers get their information professionally? Who do your target customers look up to?
- Who do your target customers trust?
3. Ideate on ways to reach your customer
Work from customer insights to dream up all the ways you could reach them.
- Buy sponsor slots on the annual OnionCon conference.
- Get a speaker slot on the annual OnionCon conference.
- Get an interview on the OnionPod podcast.
- Start a YouTube channel for onion farmers.
- Facebook advertising based on interest in onions and shovels.
- Google Ads targeted to keywords like ‘shovel’ and ‘onion farming’.
- Content creation on onion farming & shoveling.
- Sending sample shovels to all the speakers at OnionCon.
- Referral program to incentivize word-of-mouth among onion farmers.
- Make distribution deal with retailers where onion farmers shop for gear.
4. Win on paper
Asses the viability of ideas by simulating costs and revenue — working with conservative assumptions.
Idea: Sponsor an episode of OnionPod, which charges $1,000 per ad:
- 25,000 listeners of OnionPod
- 2% of listeners (500 people) visit your website because of the ad
- 2% of those visitors (10 people) buy a shovel
- $100 per shovel sold amounts to $1,000 in sales
5. Rank your ideas
Rank your ideas by scoring them 1-5 for:
- Product/channel fit — Is the channel relevant to product and customers? For example: hearing aids are not a good fit for Snapchat. Instagram is great for most e-commerce.
- Ease — How easy/costly is it to test? You can start running ads right now versus content creation typically takes months/years to take off.
- Scalability — Can you easily scale the idea? For example: how many other podcasts for onion farmers can you sponsor?
6. Test ideas
Take your best ideas and test them with an experimental mindset: run the minimum viable version and evaluate results against expectations.
- If it works, put more chips on it (scale).
- If something doesn’t work, try to understand why.
- Use insights to generate new, better ideas.
- Repeat cycle.
Scalable vs. unscalable
Ads, content, YouTube videos, tweets, reddit posts, referrals, cold emails, flyering, podcast features, community engagement. Anywhere you can reach a potential customer qualifies as an acquisition channel.
If that channel abundance feels overwhelming, I have good news: there are effectively only 4 types that allow for scalable acquisition.
A channel is scalable when it has (1) high volume and (2) when its returns compound over time:
- High volume means you can reach a lot of potential customers on the channel and use it for a long time. For example, you can target billions of people on Facebook and billions of search queries on Google every day.
- Compounding means the channel generates an output you can reinvest in more growth later on.
Prototypically, compounding acquisition looks like this:
- You get a new user or customer.
- That new customer creates some sort of output.
- You reinvest that output in the channel to get more customers.
For example: if you're Discord, each new user is likely to invite more new users, who each then also invite new users.
There are four types of such acquisition loops:
- Paid (ads) — Each acquired customer generates profit that can be re-invested in more ads.
- Organic (content) — New content acquires new users via search or share. New users bring in profit to reinvest in more content or create new content themselves (user-generated content).
- Virality — Each new user attracts more new users.
- Sales — Each new customers brings in profit that can be re-invested in more sales people.
We'll dig into each of these going forward.
In contrast, unscalable channels (1) run out of target audience quickly and/or (2) don't allow to compound results.
- There's only so many podcasts your audience can listen to.
- Press articles are excellent to introduce you to an audience, but the effect quickly runs out and isn't consistently replicable.
Examples of unscalable channels include:
- Friends and family
- ProductHunt launch
- Answering Quora questions
Unscalable channels are hit-or-miss. They're worth trying to get bursts of traction, but don't allow you to systematically scale in the longer run.
1. Paid acquisition
Paid channels include influencer marketing, sponsorships and all advertising platforms.
They're "paid" because your returns scale as a linear function of your spend. For example, you pay per click, per impression, per conversion, per referred sale.
This makes paid channels predictable: if $1000 gets you 20 customers, $2000 should get you ~40. The flip side is that paid growth can only ever be linear. What you get out is proportional to what you put in:
- # Customers = Total Spend / Customer Acquisition Cost (CAC)
Paid acquisition loop
When customers pay you more than you pay to acquire them through paid, you can structurally re-invest cashflow in running more ads — turning the flywheel.
Customer Acquisition Cost
CAC is the price you pay a channel per customer it brings you. For example, if $1000 gets you 20 customers, CAC is $50.
CAC is a function of funnel performance from channel impression to on-site purchase. For example:
- You pay a channel $2.5 every time a prospect clicks from ad to site.
- 2% of website visitors buys your product.
- You acquire a customer per $125 spent. That’s your CAC for the channel.
A paid channel is viable if the customers it brings you pay you (significantly) more than you pay the channel. How much more? Enough to cover costs and still earn a profit.
What can you afford?
Consider Affordable CAC: how much you can afford to spend to profitably acquire a customer.
- You sell coffee subscription boxes at $20 per month.
- On average, customers keep their subscription for 10 months. Average Revenue Per Customer (ARPC) is $200.
- It costs you $7 to source and deliver one box.
- Fixed employee and office costs add another $3 per box.
- 10 * ($20 - $7 - $3) = $100
- → You can spend up to $100 CAC without making a loss.
Put differently, the $125 CAC sample channel is too expensive to acquire customers for our coffee subscription boxes.
Discounting channel cost
To make a channel (more) affordable, you can (a) drive down CAC by optimising your funnel, and/or b) increase Affordable CAC by generating more revenue per customer.
- Funnel optimisation — Cost-per-click goes down as your engagement rate goes up. Say better ads and targeting bring down CPC from $2.5 to $1.5. At 2% site conversion, you now pay $75 CAC instead of $125.
- Funnel optimisation — If you improve landing page conversion from 2 to 3% conversion, channel CAC - at $2.5 CPC - drops from $125 to ~$83.
- Increase revenue — You increase the variety of coffee so customers stay subscribed for 12 months instead of 10. You now earn $240 ARPC, which grows Affordable CAC from $100 to $120.
- Increase revenue — You introduce a new subscription with rare coffee blends at $30 per month. As 25% of customers picks it over the $20 box, ARPC grows to $225 (10 months retention). Affordable CAC grows to $125.
Unfortunately, it also works the other way around.
Rising click costs caused by saturation (people getting tired of your ads) or increased competition can turn a channel unprofitable seemingly overnight. Still, paid channels come with more control than others — and they're easy to get going. Give or take, it takes ~$2000 ad spend for CAC to stabilise. From there, you can scale with confidence by reinvesting the set amount of revenue into more ads. In contrast, it’s common to not see any results from organic channels like content marketing in the first six months.
Paid channels mainly differ in how you target potential customers:
- Behaviour-targeting — Your ads reach people through actions that signal interest in your product. This how you show ads on Google and Amazon searches. If you sell pizza ovens, you're going to want to reach people that search for "pizza oven". Other examples of behavioural targeting are Pinterest (searches and pins) and Quora (searches and questions).
- Profile-targeting — Your ads reach people based on characteristics your ideal customers supposedly share. Facebook and just about all other ad channels work this way. For example, if you sell pizza ovens you'd target people aged 30-55 interested in italian food, home cooking, and maybe a barbecue brand like Weber. If you sponsor a YouTube channel, you'll assume the majority of its audience is a fit for your product.
Profile targeting comes with saturation risks. At some point your ads will start tiring audiences. In contrast, behaviour targeting matches your ads to real-time market demand. Timing is always on point.
When site visitors don't convert, you can re-target them with new ads. This works well because these people already know you. Their engagement validates interest.
Retargeting completes the trinity of paid acquisition:
- Behaviour-targeting connects you to ready buyers.
- Profile-targeting gets you on the radar of potential buyers.
- Re-targeting keeps pitching prospects you know are on the edge.
For example, I was unaware wood-fired pizza ovens sold for as little as $299 and so never Googled it. When the ad hit me on Instagram, I bought one on the spot. Had I clicked without buying, a retargeted ad would have closed my deal later.
High-level, paid acquisition success hinges on:
- Profit margin — The more you make per sale, the easier to make ads work. And the faster you can scale.
- Payback cycle — The quicker customers pay you cash, the quicker you can reinvest.
E-commerce is a natural fit: near-to-immediate purchases generate the cash to quickly turn paid loops self-sustaining. Subscription services typically demand more strategic diligence as it takes longer for revenue to pay off acquisition costs - especially when you’re a startup and customer lifetime revenue is still unclear. In fact, surprisingly few companies can rely on paid channels alone to turn profit.
There’s a bigger picture. Because they’re so easy to turn on and off, paid channels are ideal for:
- Fuelling funnel experiments — Buy sample audiences to test landing pages, checkout sequences, onboarding flows and other conversion rate optimisations.
- Seeding owned channels — Content runs on readers. Organic social runs on fans. Virality runs on users. All can be bought with cash at Facebook, Google & friends.
This makes an argument for burning cash on paid channels to accelerate owned channels (discussed next). These are naturally slow to get going, but don’t cost you per sale - making them much cheaper long-term. All the while supplying the volume necessary for statistically significant A/B tests. You temporarily overpay so to quicker graduate from paid to owned.
- Short feedback loop between experiments and results.
- Control over the channel's outputs like price, volume, and target audience.
- You can start running ads (getting results) quickly with low budgets.
- Highly competitive.
- Lots of effort to maintain performance over time.
- Things get more expensive/inefficient at scale.
- Products with moderate revenue per customer (ARPC). Low-value products likely won't be profitable. Expensive products generally struggle to convert via ads alone (ads can generate leads for sales people to close — see below).
- Products with short sales cycles — so you can re-invest profits quickly.
- Products that are quick to get when people scroll over the ad so they click: simple value props and visually appealing.
- Products serving large markets.
Paid channels come in many shades and colours. Subscribe to get notified of forthcoming material on paid channel strategy and success: what channels to use, how to make ads that sell, how to run ads at scale.
2. Organic acquisition
Organic channels revolve around content and community. Examples include blogging (SEO), newsletters, closed communities, shareable videos, and organic social media.
These channels are unpaid or owned: you invest in channels you own rather than rent channels owned by a third party, like Facebook or some influencer. Compared to paid channels, organic channels grow super-linearly (exponentially): you don’t pay more as returns scale.
- A blog post costs you today, but can still attract customers via Google Search three years from now. In fact, if it rises to rank on page 1, it can get you more than ten times as many.
- The more followers on Instagram and Twitter, the bigger the reach of your posts.
- The more members in a Discord community, the bigger the potential for value-sharing, engagement and impromptu recruiting.
- Your owned audience grows every time your newsletter is forwarded.
Organic channels come with barriers: it takes time, quality and persistent hard work for returns to start compounding. Consider how about 85% of all Google searchers click on results 1 to 8. Instead of paying Facebook for access to its 2.5 billion audience, you build your own from scratch. Once across the tipping point however, the same barriers work in your favour by protecting you from competition. Organic gains can’t be copied.
Content ⇄ Community
Content is organic's atomic particle. It connects your brand to customers on their terms, subtly educating them on why they should buy your product through something that matters to them.
Over time, content cheapens marketing costs as a function of quality. Quality disarms visitors on their guard against being sold to. It convinces to read (watch, listen) closely, cultivating casual attention into long-term connection. As prospects become subscribers, cost per impression slopes down to zero. Your brand morphes into a friend they know, like, trust — and would buy from.
Outwardly, the channel gains gravitational pull in two ways, mutually reinforcing:
- Word-of-mouth — Fans tell their friends.
- Algorithmic distribution —The higher ratios of quality to quantity, the more preference content gains with algorithms. You rank higher in search and get more real estate in news feeds.
Note that content impacts growth beyond acquisition. Even if it fails to acquire new ones, content can still educate and engage existing customers - driving retention and word-of-mouth.
Community is the organic end-game. It happens when content extends your brand into a culture, an implicit context for people to naturally engage. Distribution becomes decentralised: you get talked about (almost) regardless of what you put out. Network effects kick in: the bigger the community, the harder for outsiders to ignore and the harder for insiders to leave. Every node attracts and retains others. Growth marketing on steroids.
For acquisition, content strategies intersect two dimensions:
1. Sourcing — How content is created.
- Company — Content is created in-house, as if you were a publication. Scale/volume is a function of the internal resources allocated to it, e.g. employees and contractors.
- Community — Content created by users also goes by the name of user-generated content (UGC). This expands the potential for scale (communities are bigger than company teams), but comes in different leagues. For most, UGC is about hashtags and reviews. UGC champs have products designed for users to create content with. Examples:
- ~Eventbrite — Users create events.
- ~Reddit — Users create posts.
- ~Kickstarter — Users create crowdfunding projects.
- ~Typeform — Users create surveys.
- ~GoPro — Users create videos.
2. Distribution — How content reaches audiences.
- Search — Content reaches users as search results (e.g. Google, YouTube). Content reach is a function of keyword search volume and quality. Optimising content to rank higher in search is known as Search Engine Optimisation (SEO).
- Share — Content is shared with users via open (Twitter) and dark (WhatsApp) social networks. Content reach is a function of viral coefficient: # shares * (# views / share) - discussed in detail below.
Sourcing and distribution combine into four prototypical strategies:
1. Company + Search (SEO)
Company team creates content to rank highly for keywords that topically spill over into product value propositions. The end game is to be trusted as the ultimate authority in the space your product creates value in. Examples of high performers include Headspace (mental health), Runners' World (running) Square (small business owners), Ahrefs (SEO) and Lattice (people management).
2. Community + Search (SEO)
Rather than in-house, content is created by the company’s users - then ranked by search engines as search results. Typically high, because of larger scale. This is why sites like Quora, Pinterest, Deliveroo and Airbnb dominate Google page one for searches in their space.
3. Company + Sharing
While virality is hard to engineer, content is more likely to be shared when it presents a fresh take, stirs emotion and/or makes the user feel understood. This typically requires originality and opinion as well as an authentic voice - none of which fit well with ticking SEO boxes. Some best practices:
- Be the primary source. If you don’t have the resources for original research, leverage company data nobody else has. Spotify Wrapped and Pornhub's viewership reports provide wonderful examples.
- Nail the first impression. Sharing is preceded by the battle for eyeballs in newsfeeds. Your headline/intro/image gets about 5 seconds to lock in.
- Novelty hooks. Subvert common topics with fresh takes. Controversy gets clicks but might boomerang back if unfounded. Mr. Beast is the gold standard of surprising optimism.
- Leverage visuals. Our brains process images about 15x faster than text. Infographics are extraordinarily shareable because they minimise time-to-value (Digit and CourseHero show how it's done).
4. Community + Sharing
Users create content to share with others, who then discover your brand in the process. Note, for example, how often cat food subscription service Cat Person gets tagged on Instagram. Real UGC God Mode is when viral content creation is the product’s core function. TikTok, Twitch, Eventbrite, Typeform and Instagram itself are well-known examples. MyHeritage’s side-project Deep Nostalgia proves non-tech unicorns can pull this off too.
Organic acquisition loops
In organic loops, content attracts new users through search or share. These new users lead more content generation — either because they create it themselves (UGC) or because they bring in revenue that can be re-invested in more editorial content.
Content is a long-term game. While quality sets the pace, it inevitably takes time for sharing and SEO to compound. That said, don't sit on your hands waiting for network effects to switch on. Zero multiplied by whatever is still zero. To accelerate returns, build distribution around your content from the get-go:
- Get existing customers to read. Link from your site, share via email and structure in knowledge bases. It helps them get more value out of the product and trains them as evangelists.
- Partner with blogs, newsletters and influencers on the watchlist of your target audience. Arrange links, features, shares and guest blogs. Get it done by returning the favour or creating the content for them to share. Pay if it's worth it.
- Leverage your best content to build organic social channels. Resist the reflex to just share links and, instead, refashion the content for in-feed engagement. Turn blog posts into threads (Twitter) and slide decks (LinkedIn, Instagram). Rework videos and podcasts for native upload. True, this won't get you site traffic, but both platforms and users hate clicking away. Optimise for maximum value on the spot.
- Seed with ads. Paid channels are shortcuts to scale. Use them to test content on audiences and, once you validate content-audience fit, buy readers/viewers/listeners in droves.
- Leakproof your audience funnel to maximise long-term ROI. Iteratively design a content journey from discovery to subscription (e.g. newsletter) and sharing that performs well before opening the flood gates. Just another way to hammer home the importance of quality. Low quality multiplied by high volume turn network effects against you.
- No cash required to start — you can start in-house investing time and talent.
- Scales well. Traffic compounds over time.
- Less invasive than paid.
- Create assets once, distribute forever.
- Unlocks your users as growth lever.
- Can take very long to get significant results.
- Expensive at scale (if editorial).
- SEO barriers can be very high.
- Products users use to create content.
- Products/problems with significant existing search volume.
- Products/problems that require education.
- Spaces wherein thought leadership and trust is a competitive advantage.
- Products that generate unique proprietary data.
What about SEO and social media?
This post only scratches the strategic surface of organic channels. Stay tuned for tactical content on topics like SEO, newsletters, and organic social media.
We all trust friends over ads and brands. Getting word-of-mouth is straightforward: build a product people can't stop talking about.
Viral acquisition loop
Virality compounds through users sharing the product with others, who in turn themselves share the product with others.
Once up and running, you can structurally accelerate word-of-mouth by rewarding customers for referrals. Referral programs are sort of paid virality: you pay per referral.
This kind of artificial virality thrives when:
- The product already has word-of-mouth. Turns out you can't just pay people into referring. People only tell friends about products they think will put them in good light.
- Referrals are effortless. Inviting should feel as easy as talking. Time-to-value for the newcomer near immediate.
- The new customer also gets rewarded. This makes the referrer feel altruistic and the newcomer privileged.
- Rewards are not (purely) financial, but encourage further product use.
Some examples that make the last point:
- Dropbox pioneered the modern referral program. It originally rewarded both sides 500MB of extra storage.
- Get a friend to order Uber Eats through your link and you'll both get some free food.
- Tesla grants both sides with free charging miles.
Software products have potential for organic virality, also referred to as product-led growth. This is when the product's user experience naturally invites new users into it. For example:
- You can't do a Zoom call al by yourself. You invite someone to it.
- To receive money somebody sent you with Paypal, you need a Paypal account.
- Calendly lets you embed available meeting slots in emails. Recipients use Calendly when they book.
- The visual prototyping tool Figma is most useful when you collaborate in real-time with team members.
- When you write an answer on Quora, it can reach new users as a Google Search result.
- Intercom's live chat widget signals Powered by Intercom to its users' site visitors.
Viral product mechanisms
There are three prototypical ways through which products can acquire new users as a function of usage.
A product has pull virality when users invite new users because it increases the utility they get from the product.
- Collaboration — Product value grows as a function of working together on projects, e.g. Google Docs, Figma, Notion. B2B products can leverage this pattern by adding team features and plans.
- Transaction — Facilitate a transaction that users were going to do anyway. Example: when you send money through Venmo/Revolut or a contract through DocuSign, the other person becomes a user to accept and sign/receive.
- Conversation — When you're invited into conversations you care about, e.g. Zoom, Discord, Slack.
A product has push virality when users advertise the product by using it (billboarding).
- Airpods — Someone walking around with AirPods advertises them to new potential customers.
- Superhuman — Superhuman is an email client. Every time a Superhuman user sends an email, it says sent with Superhuman at the bottom — effectively advertising the product to all recipients Superhuman users send emails to. (Hotmail and iPhone used this tactic earlier).
- Calendly — Calendly allows users to embed their calendar availability in emails so recipients can quickly selects slots rather than sending emails back-and-forth. Each widget contains a CTA for Calendly advertising it.
User-generated content (UGC)
See organic acquisition.
Virality is measured as a coefficient: the ratio of referred customers per customer. For example, if you get 1 new customer per every 4 existing ones, your viral coefficient is 0.25. You can break this number further down into:
- Number of invites per existing customer. Example: The average Notion user shares pages with 5 non-users.
- Conversion rate per invite. Example: 1 out of 25 non-users becomes a user upon discovering Notion through a shared page.
- Viral coefficient = 5 * 0.04 = 0.2 → Every 5 customers bring in 1 extra.
Like organic channels, virality scales super-linearly so acquisition becomes cheaper over time. Every user acquired through virality in turn can bring in new users.
- Low to zero customer acquisition cost.
- Leverages the most trusted way to get customers to buy: people they know, like and trust.
- Hard to embed into the product retro-actively. (You best design virality in the product from the start).
- Function of product-market fit. Not much you can control outside of it.
- Can take long to reach critical mass and take off.
- Products that gain value with every new user (collaboration, network effects).
- Products that facilitate transactions and conversations.
- Products that easy-to-get with wide market relevance.
What about sales?
You need sales people if your product isn't something customers easily buy on the Internet.
This generally excludes:
- E-commerce — Customers browse your store, add products to cart, fill out shipping details and pay — all on their own. Examples: coffee, barbecues, supplements.
- B2C software — Customers find, use and pay for your app autonomously. Ads, content or referral gets them, landing page excites them, onboarding hooks them and the product experience keeps them. It's all self-service. Examples: Netflix, Airbnb, Headspace, Uber.
Sales logically associates with B2B. Of course, plenty of people pay for Zoom, Slack and Google Docs without ever talking to a sales person. Sales comes into the picture when 1-1 communication between buyer and seller significantly helps the purchase process.
- The product is complex/expensive to a point where the buyer needs a personalised explanation to properly evaluate the investment.
- The product needs input from the buyer to materialise. Think agencies, architects, kitchens, cars and custom enterprise software. Anything that is tailor-made.
Not every business can afford sales. The manual cycle of lead generation, qualification, pitching, negotiating and closing is costly. It takes serious profit margins for it to make sense. The bigger the companies you sell to, the more you'll rely on sales for acquisition.
That doesn't mean you get to skip ads, content and referrals. Rather, you work channels to generate leads for sales people to close.
- You draw the attention of an ideal customer (prospect) on a channel.
- The prospect clicks to your site and learns about your product.
- The prospect signals interest to buy (e.g. request an offer or demo) and becomes a sales lead.
Leads coming your way are inbound. Outbound means you take the initiative with cold calls, emails, LinkedIn DMs or at networking events.
Sales acquisition loop
In sales loops, a sales rep works to find and close new customers. The revenue generated from each customer can be invested in more sales people, who close more deals, which generates more revenue.
- Niche (one-on-one) targeting. Messaging can be tailored in real-time.
- Because one-on-one, messaging can be tailored in real-time.
- You can build predictable acquisition engines.
- Personal relationship development with customers.
- Allows to explain the product in context and detail.
- Very costly.
- Constant hiring and training of sales reps; as well as fleshing the process.
- Products with long/complex sales cycles
- Expensive products.
- Products that require training.
- Products that require customisation.
You don't pick the channel, the channel picks you
This post laid out the playing field. So, where do you play?
Ignore the mantra that says to "relentlessly test every channel." It's bad advice.
Whatever your product and business model, by design it will fit some channels and rule out others. This is fine because, contrary to popular belief, you usually only need one core channel to do the heavy lifting.
Strategically, the more a customer pays you, the more you can spend on acquisition.
From this it logically follows that social apps with minimal revenue per user (e.g. Facebook and WhatsApp) rely on organic virality to cheaply scale growth, whereas companies like Palantir pay sales people to negotiate big contracts.
In-between, companies with shorter pay-back cycles — how quickly a new customer returns the acquisition cost — use paid channels to fast-track revenue so they can reinvest in more ads, kick-starting a self-perpetuating loop. This naturally fits e-commerce. Subscription-based software (aka SaaS) products typically leverage paid channels to accelerate growth of unpaid channels, acquiring readers (SEO), followers (community) and/or users (virality). As we've seen, paid buys time to build one's own channels. Which are more expensive starting out but get cheaper over time.
A few examples help sharpen intuition.
- Clubhouse — Organic Virality.
- Discord — Organic Virality.
- Revolut — Organic Virality amplified with Paid.
- Tripadvisor — User-Generated Content (SEO).
- Kickstarter — User-Generated Content (Viral).
- Booking.com — User-Generated Content (SEO) amplified with Paid.
- Headspace — Paid.
- Adidas — Paid.
- Warby Parker — Paid.
- Dollar Shave Club — Paid multiplied by Artificial Virality.
- Patagonia — Word-Of-Mouth amplified with Paid.
- Eight Sleep — Paid multiplied by Word-Of-Mouth.
- Tesla — Virality-led Sales.
- Canva — Paid.
- Shopify — Organic Virality amplified with Paid.
- Eventbrite — User-Generated Content (Viral).
- Ahrefs — Content (SEO).
- Slack — Organic Virality + Sales.
- Notion — Organic Virality amplified with Paid.
- Intercom — Organic Virality + Sales.
- Hubspot — Content (SEO) + Sales.
- Salesforce — Sales.
Setting up new channels is costly: you need copy, creative, tracking and systems. If you take a shotgun approach to testing channels, most work will end up as sunk cost. Skip trial and error by matching how customers buy from you with patterns proven by success of others like you. There's no sense in testing what you can work out on paper.
Work out your channel mix
Forthcoming is a deep-dive on acquisition strategy. It'll help you narrow the field so you can exclude ill-timed bets and run high-impact experiments. Subscribe to get notified on release.