An Ex Jumia Food and Hotels.ng CMO Shares User Acquisition Tactics For Startups
Justin Irabor was a digital marketing expert and illustrator. He began his career managing the community and product at Nigerian Bulletin(a Ringier product) and moved to Hotels.ng where he was Head of Content and eventually became the Head of Marketing where he managed multiple marketing channels and launched standalone products. Justin then transitioned to Jumia Food as the Regional Head of Marketing where he partnered with brands and launched activations, gaining the brand a local advantage. After Jumia Food, he moved on to Big Cabal Media as Head of Zikoko and then Head of Creative Services. Justin is popular for his Obaranda comic series where he shines a comical light on everyday Nigerian experiences.
What would you say should be the first step to acquire the very first user for a new startup?
Justin thinks the very first step should be to place oneself in the shoes and mind of the typical customer. “Plot what their ideal journey to purchase looks like. Some parts of some buyer’s journey especially in Nigeria doesn’t start online, it starts offline. So you might want to inject yourself at that beginning point”. Justin says if people begin the purchase journey offline, your startup should place itself right at that point. Many businesses seem to be confused when deciding what marketing channels to acquire users from. “Some say you know what, SEO is good so let’s do SEO”. He referenced a sports betting company that started by placing flyers and agents at viewing centers and actually acquired their first set of customers just by doing that. “They had no online presence for a while so it’s always best to test the smallest possible way so it’s not very expensive or complex”. It’s important to pick the smallest category out of your customer base, test as quickly as possible and see how they react to your product.This should happen before you finally invest hardware and tech into it. How long should this run for? Justin advises tests run for two years before you finally invest technology and more resources.
Should this process be an afterthought or before the technology product is even developed at all?
“It depends on the resources, for some people, it is easier for them to develop an app to MVP point”. Justin, however, provides a rule of thumb. “If anything is going to delay you from helping you test your cut market, you probably shouldn’t do it”. Startup founders need to look for the simplest and smallest representation of their product. It might be a prototype or survey.
Back to the length of testing marketing channels. How long should tests run before 1) the channel is given up on and 2) the channel is optimised to acquire more users?
All channels have their unique attributes, some are more expensive for customer acquisition than others and it’s a function of the density of your target audience in that channel. So the best way to think about the customer relationship is to think about your own customer cycle.
“The best way to think about customer acquisition for different channels is to find out your customer’s cycle”. Justin cites an example of a customer cycle of one month. This means it takes about a month to convince people to use a product after they’ve heard about it. A channel should be tested for twice as long as the buyer’s cycle. This helps to justify continuous spending on that marketing channel.
The second thing to note is the lifetime value of the customer. This is to predict how much the customer is going to spend while using your product. If your product is required to be used only once, then the lifetime value of the customer is just that purchase. Some products are subscription-based and require the customer to be a recurring user.
You’re saying that it if costs X amount to acquire a customer and it’s relatively high, but if the lifetime value is 10X it could make sense?
“Yes. Maybe a customer typically buys five times and costs maybe 50 dollars to acquire, and this customer spends 20 dollars per purchase so 5 times is 100.” In this example, the gain is $50.
Justin also advises paying attention to the ceiling of each marketing channel. When marketers use a new acquisition channel, acquisition costs are low because they are just learning. With time, the perfect customer becomes more expensive to acquire. “So maybe you enter at 20 dollars, then your cost of acquisition goes to 30 dollars and stays that way for a very long time because then you’re inside the optimized zone. The price might pump up a little bit, but not by very much so you can stay there for a very long time then eventually it begins to dips when it dips, your cost goes up from maybe 30-50 dollars and you’re getting fewer and fewer people and the cost keeps going up”. What happens at this point of the acquisition cycle is that you’re beginning to acquire late adopters who are typically stubborn. They would use your product only if it kills them to not use it” Late adopters cost a lot to be convinced. When you start to notice your acquisition costs are moving higher, you want to totally stop using that channel.
Let’s talk about prelaunch buzz. Is it advisable to do a pre-launch buzz or wait till the product launches and then launch a campaign? From your experience, what works and does it depend on the type of product?
“This is a tricky question because pre-launch buzz can be useful and very dangerous”. A pre-launch buzz can help startups acquire users even before the product is launched. Justin advises using a pre-launch buzz for sticky products. Products that you’re sure people are going to use. “Your product remains a failure for a very long time, so that it looks like you hit, gained traction and everything died. That speaks to some perceived confidence in your product. If I’m very sure that my product would stick, I can do a pre-launch buzz knowing that every single person that adopts the product will stick and each of those people will refer other people and that just keeps growing”. Justin uses Gmail as an example. When Gmail launched it was invite-only software. People could only use Gmail if someone using Gmail invited them. Gmail was also a better email product(in terms of managing spam) than Yahoo Mail. Users who signed up tended to actually use the product.
What are the methods for using early adopters to grow to acquire more users? For instance, if I have acquired 20 users and stop acquisition meaning I’m not spending money on marketing campaigns, how can I leverage on the initial 20 people to get more people?
“It is basic human nature to recommend a product they like, so if you assume; 1) that the product is good 2) that it is just okay. People tend not to recommend a product that is just okay. Products that work as they are intended do not have a wow factor. So including a wow factor into a product and building a product that solves a big problem will get people talking” . Justin gives an example of a laundry reminder that not only sends reminders but gets a laundry company to come pick up clothes. That’s a wow factor. He also gave another example of using Uber in a foreign country like a normal service but if you landed and they rolled out a red carpet, you will be wowed and would have to talk about it.
I feel like that’s what Uber did in Nigeria when they launched and sent everyone SUVs
“Yes. I spazzed about it. When you incorporate a wow factor into a product, then you can be assured that your first 20 customers can go in, you might want to incentivize them to be your marketers, such that you probably subsidize their cost if they recommend your product with a special referral code or something”
Don’t those kinds of gimmicks work initially and seem to go flat?
Justin says referral codes don’t need to work for very long. Eventually, people stopped sharing Uber codes because all the people that needed to use Uber, were already using Uber.
What is the most recent Nigerian product that you’ve used and had to talk about it? Not necessarily tech, but you felt was a great product and just had to share.
“EZ Wash and Dry. I love EZ Wash and Dry. I’ve actually never used the self-service there. I just drop-off and someone does my laundry”
Can you talk more about it? Was this the first or second time?
“The first three times I used it, I was impressed, maybe because I had never done laundry before then. When I came in, they were very polite, they didn’t assume I knew how to do it and that was very important to me because I didn’t want to be embarrassed like it was my first time.”
Secondly, they are very social media savvy, so when I talk about them, they actually respond to me on twitter. Thirdly, they try to make my laundry cheap” Justin visited EZWash at about 9 AM on a particular day and they informed him of a discount that would apply if he did laundry at 11AM. He also loves that the staff at EZWash are polite not because they have to be but because they are actually polite. “Also, there’s this thing I like when I walk in a place and they remember you and the service you need. They just say ‘Hi. Justin. Drop off’ they don’t ask me if it’s a drop off because I don’t want to have to always repeat myself if i’m your customer, you know what my needs are.”
Back to technology products now. What’s a product you really enjoy using?
“Oh yes! The service I like is Paylater”. Justin likes Paylater because the payout is fast. Whenever he has to use the service, it’s pretty much an emergency and Paylater dispenses instantly. “The first time they did it, I was shook, second time, still shook and I’m still shook” He’s used other loan apps and they either have complex routes to sign up or give a low amount as the maximum loan. “When it comes to Nigerian apps, it would be payment services, just them. It would be Paylater, Paystack, Piggybank”
Asides acquiring users, it’s pretty clear to grow that user base and make your users evangelists, you have to build an amazing product by incorporating a wow factor. Great products encourage users to talk about them and this turns product into a marketing channel itself.
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