5 Growth Strategy Case Studies and Key Takeaways

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It’s always challenging to grow a company from scratch or to the next level. Hence the whole concept of growth was coined by Sean Ellis in 2010 and has ever since stuck around to be a familiar word in the industry especially in the startup world. Sticking to the basic concept of growth, growth hacking is essentially a process that has been designed to acquire, engage and retain users at relatively lower costs than traditional marketing techniques In most cases, it’s finding a specific attribute and tweaking it in order to reach a better result. But growth for every company is different. What works on one may not work on another. The main question you should be asking is ‘what does your customer want?’. Once you know this, you can leverage strategies to help pinpoint this problemand then deliver it via different channels as we will go through below. Let’s go through 5 case studies of startups that managed to deliver growth in a successful way and their key takeaways.

1. Zapier

Zapier is one of the most awesome tools in the market. One of Y Combinator’s alumni, it is one of the few startups that hasn’t needed much funding at all. Its growth strategy is super smart and one I didn’t even notice until I was in it myself. Zapier itself is all about integrations. It’s known as a ‘translator’ between web APIs, making user’s tool stacks speak to each other. For example, if you received a lead in your CRM and then wanted to trigger an event in another tool, this is where Zapier shines and helps integrate. But how did it grow into a $35 M ARR machine? Zapier’s growth strategy is all around content marketing. It’s blog consists of hundreds of guides on how to plug tools into each other. Such titles include “Send a Gmail email from new deals in Hubspot CRM”. By appearing in searches for these topics, it has managed to sneakily become a destination for people’s inquiries which results in users trying out the tool.

What’s brilliant is that it nails the whole aspect of capitalizing on long-tail keywords. Generally, it’s pretty hard to rank for 1-3 keywords so being able to capture longer search terms is brilliant. This strategy helped the blog get to over 600,000 readers in just three years from scratch, and the blog continues to grow as new tools and integrations are added to Zapier. Takeaway: Content Marketing can still be king if done correctly. Do some research and see if writing out some guides is good for your startup.

2. Paypal

An oldie but still one of the classic examples. Paypal was using growth strategies before the whole notion of growth hacking was invented. As a new payment system in the market, most people would obviously be skeptical. Most payment methods back when PayPal was in the market (or Zip2 / X.Com) relied mainly on the bank so this was quite a newer concept. In order to build this trust and grow their initial user base, Paypal did something a bit radical (probably not as recommended these days) which allowed them to grow to a healthy 5 million daily users in a few months. It was simple, Paypal paid you to sign up. Bonuses went from $20, $10, $5 and then nothing but by then it already had enough of an organic base to not give away money.

“We must have spent tens of millions in signup and referral bonuses the first year,” says David Sacks, original COO at Paypal. But that initial investment worked.

It’s amazing how much of an incentive program works if executed well (or if you have enough money to give away). Takeaway: Although cash incentives may not be the best idea, incentives do work. Look at ways to use incentives to not only grow userbase but also retain!

3. Dropbox

Let’s chuck in another classic example! Dropbox is one of the well-known cloud startups sitting in the valley. Initially starting in 2008, it’s an early success is attributed to a growth strategy they executed that revolved around the very concept of referral marketing.

“Dropbox went from 100,000 to 4,000,000 users in 15 months”

The whole notion that made current referral startups like ViralLoops successful in recent times played on these ‘referral strategies’. Each friend you referred to Dropbox would increase your own storage space. Even though there were other options such as connecting your social accounts, this by far was the most popular option. Every friend you referred to Dropbox will earn you 500 MB more storage. You could have earned up to 16GB of free space using the strategy. This played on the fact everyone wanted extra storage. Back then where space was limited, this was a great early incentive for people to refer friends. The key takeaway from this story is that word of mouth marketing is one of the most powerful strategies. They managed to grow by a whopping 3900% over a 15 month period. I am sure every startup would love to grow by that amount! Takeaway: Referral strategies are always strong when implemented well. It can be incorporated at any stage from pre-launch, growth and even user retention.

4. Groove

Most of the current case studies focus on user acquisition so let’s look at one that focuses on the opposite, user retention. In 2013, Groove (help desk startup) was looking at a troubling rate of 4.5% of churn. User acquisition was healthy but many people who signed up ended up leaving. What soon followed was a strategy they implemented to reduce their churn rate from 4.5% to 1.6%.

“Your customers probably won’t tell you when they hit a snag,” says Alex Turnbull, founder and CEO of Groove.

Using KISSmetrics, they identified two groups, one who stayed and one who didn’t. By pinpointing these two groups, they could examine data that correlated to someone staying on the app. They found that this group tended to perform key actions such as creating widgets initially. On the other hand, those who churned were not as successful as doing this, which may attribute to them unsuccessfully creating their first widget (strong onboarding can prevent this!). By using this data, Groove was able to send targeted emails to help bring them back and provide assistance where needed when these behaviors were noticed. Honestly churn is often an overlooked metric as people focus too much on user acquisition. Look at the example below:

In both scenarios, we have the same amount of customers acquired. The only difference is the customer churn amount. It’s easy to see where a revenue drop exists and that is through losing your customers which would provide you potential revenue into the future. Takeaways: Look at how you’re retaining customers. Growth is also about helping retain customers as they are still your user base!

5. Canva

As an Aussie, I am inclined to include one from down under! Canva is one of the sensations gripping Australia in recent startup times. Since launching in 2013, it is following Atlassian’s footsteps in becoming one of the biggest graphic design software in the world. But there aren’t any nifty growth hacks with Canva. Canva has grown through pinpointing a huge pain point, that current design software is too hard for the normal person to use. By creating a product that pinpointed this exact problem with an excellent onboarding and sharing strategy, Canva has utilized word of mouth to catapult itself into unicorn status. But going back to the on-boarding component, this in itself is what stands out. Most design software out there (I’ve used a lot of them) have terrible onboarding and require you to learn it from scratch. Canvas onboarding is end to end. It helps you at the start all the way to sharing the design when you finish. By holding the user’s hand, it allows designing to be easy and takes minutes to create a cool design from scratch. This has allowed them to create a tool that has been made easy to share and has since helped grow the company exponentially. Takeaways: Growth hacking isn’t always finding the ‘hack’ that will catapult your company. Creating a great product in itself is your growth strategy and being able to create something that users love to share is a huge growth opportunity in itself.

Summary:

I personally don’t like the whole notion of growth hacking. I believe finding ‘growth hacks’ go beyond just finding loopholes. It’s about understanding your product and how to leverage certain strategies to best improve your business. The first question to really ask is “what does your customer really want?” Dropbox was a startup focused on storage space so it was a no-brainer to have their strategy focused around that. If you spin that around, giving more storage to users on Canva would have not worked. It’s important to be able to understand your customer, your product and then work internally to collect as much data as possible is all part of the growth strategy and mindset needed to find those ‘hacks’ needed to grow your business.

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