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Understanding Cohort Analysis

Cohort analysis is conceptually pretty simple yet it’s one of the most important and powerful analysis approach a startup can adopt. I had in my earlier post discussed the importance of Lean Methodology for startups to minimize wastage of resources and getting to product/ market fit first before scaling up. Cohorts play a crucial role in helping us understand user behavior on each iteration or improvement to the product. There are plenty of other business questions that can be understood better using Cohort Analysis. To give you some examples:

1) How are the optimizations made to the product in a defined period affecting conversions?
2) Which traffic source is generating maximum conversions?
3) Which source tends to bring in users with maximum engagement on the platform?
4) Are customers acquired via email marketing more likely to repeat purchase or are they more likely to upgrade, compared to those acquired e.g. via AdWords marketing?

And more. Products such as Mixpanel and Kissmetrics enable us to easily create and analyze cohorts. Cohorts have never been a core part of Google Analytics, however there are certain hacks you can do to make it work. Even then there are restrictions to creating different types pf cohorts using GA, for eg: a cohort based on the date of purchase of any product on the website. With the latest update GA does allow one to segment users based on the date of their first visit.

What is a Cohort?

A cohort is simply a group of people who share something in common and is time bound, ie, they had something in common when the grouping was first made. A Cohort is very similar to a segment and often there is a lot of confusion on the difference. To understand better, you can consider a segment as “Employees working in the Marketing Department” while a cohort would be more like “Employees who joined in November 2013”.

Cohort Analysis
Cohort Analysis is very popular in medicine where it is used to study the long term effects of drugs and vaccines:

A cohort is a group of people who share a common characteristic or experience within a defined period (e.g., are born, are exposed to a drug or a vaccine, etc.). Thus a group of people who were born on a day or in a particular period, say 1948, form a birth cohort. The comparison group may be the general population from which the cohort is drawn, or it may be another cohort of persons thought to have had little or no exposure to the substance under investigation, but otherwise similar. Alternatively, subgroups within the cohort may be compared with each other.
Source: Wikipedia

We can apply the same concepts for an online portal/ startup to understand better the different type of users and their behavior on the platform. How we define the cohorts to compare and what we compare about their behavior will depend on the business question we are seeking an answer for. In the case of a Lean Startup, the basic premise is that the product is constantly iterated to find the product/market fit and then iterated on to optimize conversions and scale. This is one of the prime applications of a cohort analysis. We can use Cohort Analysis to compare the users acquired during each iteration and compare their behavior on the platform in terms of retention, engagement, conversions etc. Joshua Porter’s excellent blog post on twitter’s use of Cohort Analysis to track engagement with product improvements is a great example of this.

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If you look at the fig, it has rows for cohorts ( User acquired during each month is grouped as a separate cohort) and the columns give the engagement or retention figures for the cohort over a 12-Month period. As you can see this is the only manner in which one could clearly understand if the iterations and product improvements which twitter was rolling out on a regular basis was continually improving the engagement on the platform. Under a normal graph where in the cohorts are not present, many a times this picture won’t get reflected as the engagement from the early set of users will mask the engagement metrics of a particular group, be it in a negative or a positive manner.

The above example from twitter represents just one application of Cohort analysis. There are various business questions as discussed earlier that can be answered using cohorts. Let’s first understand the various ways to define cohorts:

1. Cohorts defined by when the user first Visits:
Many a times a user does not sign up or engage the first time they visit a platform. Grouping users based on their first visit will help one to understand the number of touches required before they sign up or engage on the platform and on what product iterations does one increase the conversion or the engagement metric based on the date of first visit. The earlier case study of Twitter is a good example of using cohorts to understand user engagement for a product.

2. Cohorts defined by when the user Converts:
By Converts, I mean any type of conversion or micro-conversion on the platform. It could be signing up, registering, making a first purchase, subscribing to the list etc.

3. Cohorts define by what channel the user was acquired on:
It’s really important to understand the best channels of user acquisition and the behavior of the users acquired through each channel so that one can focus more on the channels that yield best results. Cohorts based on the Channel of acquisition helps in this.

4. Cohorts based on User behavior:
Users can also be grouped based on the behavior they exhibit on the platform. For eg: In case of Zoomdeck, there are users who are frequent visitors and infrequent visitors. Users can be grouped in to various cohorts based on their re-visit rate and engagement on the platform. This is important as it helps us better understand them by having a look at other metrics exhibited by them. For an e-commerce companies one would need to strategize differently for frequent buyers vs infrequent buyers and this can be done better through cohorts.

5. Cohorts based on Customer Lifecycle:
For a platform having a number of stages it’s important to track various metrics like retention, Customer Lifetime Value, Engagement etc. It could be a simple game having various levels and classifying users based on the levels they are in and understanding the various metrics exhibited by these cohorts would help one take better decision to incentivize the users and make them shift levels.

6. Cohorts based on User Characteristic:
There might be cases where one would also want to create cohorts based on certain user characteristics like Men Vs Women, The Country of Origin, Age Group etc to create targeted campaigns or provide customized incentives to improve the engagement, retention or revenue metrics exhibited by them.

We have covered in general the various cohorts that can be created, although I do agree there might be a few specific ones related to the niche you are operating in. Creating cohorts form just one part of the puzzle, the most important part is to use various metrics to understand the behavior exhibited by these cohorts which enables you to take business decisions. There are various metrics one would need to track depending on the niche, type of product and the product lifecycle stage the Product is in.

Metrics most often tracked between cohorts are:

1. Measures of User Engagement:
During the early stage of a product before validation, User Engagement (including activation) and Retention becomes two of the most important metric. Cohorts based on date of first visit/ conversion, enables us to understand how product iteration is improving user engagement or if any changes made to the product has negatively affected engagement. The earlier example of Twitter was about tracking engagement on the platform. Depending on the product you can define what user action is termed as engagement or activation on your platform.

2. Retention:
Just like engagement is important as a metric, any successful product should have good retention figures as well. I had covered the importance of retention and how it affects virality, cost of user acquisition and customer lifetime value in my earlier posts on Virality. Cohorts help us understand retention better by enabling us to accurately define what features and user flows are improving the retention numbers. Funnel tools don’t help us track retention which needs to record user activity over longer periods.

3. Customer Lifetime Value:
Customer Lifetime Value is probably the most difficult metric to track. One of the questions we might want to understand could be the channels of user acquisition that result in giving us the max. value for CLV, the particular activity that drives a user to upgrade plans, split-test different pricing plans to understand the optimum one, features or user flow changes that results in better CLV. All of these can only be understood better using a cohort group as it allows us to track a cohort over a period of time to better understand their behavior on the platform.

4. Measuring long life-cycle events:
A product undergoes many iterations and feature roll-out. It’s impossible to measure long lifecycle events using just funnels. A prime example could be measuring revenues or retention which is typically a long term thing.

Now depending on the niche and the stage of growth your startup is in, you would have to choose the various metric that you need to track and also for the various cohorts we had earlier described. At the end of the day for any product, things finally boil down to user growth, engagement, retention and revenue. Analytics enable us to improve on each of those metric and cohort analysis is a technique that gives us great insights in measuring metric that are typically long cycle.

Cohort Analysis Presentation (Example)

I love this presentation of Cohort analysis (quoted from this Blog post) :

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What you can see immediately is that the area on the right (Period 5) stacks up the current status with users from Period 1 to Period 4. The really interesting piece of the puzzle comes into play when you are considering what exactly your users represent: active, subscribers, etc. So here is what we can infer from the chart:

  • The height of the chart at Period 5 (at 280) is the number of users currently using (or paying for) our system/app.
  • The individual stacks have a drop-off. As we can see, the drop-off is high in the beginning and then starts to level out but does not go down to zero. Since this is homogeneous across all periods, we can infer that there is something we are doing right: user behavior becomes predictable.
  • For each period 1 to 4, new users were signing up and the number of users from Period 1 makes up 17.8% (50 out of 280) of the users in Period 5.
  • The fall off of users from one Period to the next is higher in subsequent Periods, leveling out at about 25%  of the original sign-ups after 3 periods.

References:

Using Data & Analytic Tools to Better Understand Your Users – Measuring the Right Metrics

Startups be it a product or a services based one, is in an extremely competitive landscape vying for every impression it can get among the millions of potential customers available online. Getting your startup visible or discoverable is one thing, getting them to convert on your website and retain them is an even tougher task with the plethora of services and products that the consumer is forced upon. This is why it becomes so very important for startups to understand each and every activity of the user right from the first time a potential customer/ user discovers their service or product on the web to the point they convert and start coming back to their website.

There are plenty of data that’s available to a startup these days and a vast variety of analytic tools to analyze them as well. A few years back, one would have managed analytics and data tracking using just a Visitor analytics tool like Google Analytics, but that is no more the case now. With growing competition, you have far less room to fail. Based on your website and your requirements you can choose from the various Analytic Tools that’s available to you. More often than not, you would need to have a combination of these tools below to better understand user behavior. The below chart gives you the various classes of Analytic tools and their strength in measuring various parameters:

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Source: www.moz.com

It is crucial for a marketer to appreciate the insights data can provide on user behavior and take necessary actions to correct and optimize wherever required. It is also crucial for a marketer to measure the right data and understand it’s essence for better improvement of the customer lifecycle on their website.

In my previous post, we had discussed the importance of measuring the right macro metrics. For understanding and validating Product/ Market fit, one needs to measure Activation and Retention. However to completely understand the lifecycle of the Customer one needs to also measure the other three elements: Acquisition, Revenue and Referral.

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Funnels are a great way to understand user behavior on your website. They are visual, simple and map well to most of the events related to measuring the macro metrics. But Funnels alone have their limitations as well. Imagine if you wanted to measure the impact of repeated product iterations you have pushed out to during a period on the revenue. It becomes extremely difficult to track the same using only funnel, one because the impact on revenue is a long term thing and also because you would need to segment users who signed up during the period when each iteration was rolled out to effectively understand the impact on revenue for the set of users who started off with a particular variation of the product. This is where cohorts play an important part. Think, I would cover cohorts in the next post and explain in detail the methodology to track metrics like retention, revenue, impact of feature iterations on both and more. In this post, we will focus on using Google Analytics in tracking the channels resulting in any of your user interacting with your brand, converting on your product/ service and also on coming back to your product/ service. The Digital Marketing Funnel as represented in the figure earlier can be broken down in to 3 components:

  • TOF – Top of Funnel
  • MOF – Middle of Funnel
  • BOF – Bottom of Funnel

Top of Funnel:

Top of the funnel represents the first interaction a user has with your brand/ product. There are plenty of channels on which the interaction would happen and one would need to optimize for each of the channels the interaction happens on. The best solution is to always focus on at max two of the channels where the interactions seem to be most effective. With the new Universal Google Analytics Tool, you can get the channel details at Acquisition » All Traffic.

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The above table gives you a good understanding of all the various channels that drive traffic on to your platform. You can export the data to an excel sheet and then use a pivot table to understand what medium acts as the best option to drive first time traffic so that you can focus and optimize for that channel/ medium.

You can drill down further to understand the best referral sources through Acquisition » All Referrals

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Determining which sites have referred the best traffic to your website is important as it enables you to focus on those channels. You can focus on important parameters like Bounce Rate and Time Spent on site to understand the engagement of the users coming from various channels. Not only that, you can also identify websites that are similar to the ones driving traffic on to your website by doing a search on Google [ Use the search query related:”site name”]or on Similar Web to try and leverage on to the similar audience on those sites to generate traffic. For eg: If weheartit.com is a major referrer to your site, then doing a search for related websites on google gives you these results:

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The above search result gives you a healthy number of similar sites with similar target audience who would be interested in your site. Refining and cross-posting your contents across these websites can also help you in getting additional traffic. You can even automate a few of these by using a service like IFTTT where you create recipes for simultaneously posting on a number of these platforms.

Remember, it’s always a good practice to tag the various URLs you use to drive traffic from various campaigns on referring sites. You can use the standard URL builder which google provides to generate tags.

By generating campaign URLs, you can identify the source of referrals to your website, whether visitors found the link from within a newsletter, social media post or other marketing campaigns. By naming the three main campaign tagging elements:  source, medium and campaign, Google Analytics will display information about where the referral originated. Simply complete the tool’s three-step form.

Here are just a few examples of valuable KPI data points you might consider tracking as part of acquisition:

  • Organic Search (SEO)
  • Paid Search Marketing (SEM)
  • Social Campaigns
  • Banner Campaigns
  • Links from External Sites
  • Links from Online Videos
  • Email Recipients
  • RSS Subscribers

Another important parameter which you would want to track is the landing page and how you can optimize them for better conversions. Google analytics helps you identify the most important landing pages on your site and the user flow thereafter. This would give you a better understanding on which pages are performing badly and helps you understand what you can do to further improve user interaction on those pages. [Behavior » Site Content » Landing Pages or Content Drill Down ]

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On Improving weak landing pages:

  • Optimize the content to make it relevant if it’s outdated.
  • If it’s your main landing page, change the message or positioning if required. Use the heatmap tool to better understand the user interaction on the pages and optimize your page accordingly.
  • Make the content more comprehensive so that more people will find it interesting and informative.
  • Build more relevant internal links to the weaker pages to give them more link juice.
  • You can prompt the user to sign-up for email newsletters or at least try and convert them on any of your micro-conversions before the user leaves.

Middle of Funnel:

Middle of Funnel in the Digital Marketing Funnel is the point where in the user is moving from an initial product or brand interaction to a first sale/ to any major interaction on the platform. You might not be able to get a user to convert during this stage but it’s crucially important for companies to target micro-conversions during this stage.

It’s important to track the sources or channels through which the users come back to your site during this stage and it’s also important to measure the paths taken by the users in completing the micro-conversions or goals set on your page. For understanding user paths, GA has an option called Visitor Flow under Audience that visually represents the user path on the website and the drop-offs at each stage. The Visit Flow Report is a nice and a better representation of the traditional click path report. One can view the visitors moving between nodes. One also has the option to view particular segments of users based on region, campaign, traffic source, country etc and their flow/ browsing pattern on the website.

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You can also create your own funnel for any of the goals you have set using GA to better understand where the users are dropping off. For setting up goals or micro-conversions in your site, you would need to clearly define the business objectives for creating goals (micro-conversions). Few examples of good engagement goals to track:

  • Account signup
  • Email signup
  • RSS subscription
  • Watching video
  • Content interactions (e.g. photo zoom, faceted search attributes, etc.)
  • Product Purchase

The goals would vary based on the type of website you are measuring for. To set up these goals, you can login in to the admin panel of your Google Analytics dashboard and then click on the Goal tab.

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You have different goal types to chose from: Destination, Duration, Pages/ Screens per visit or Event. In case of an E-commerece website for eg, if the marketer needs to track how many users complete the check-out process, then he/ she would have to chose the type of the goal as “Destination” in the first step. In the second step he/ she would have to define the destination page which would complete the goal (Conversions).

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For creating the funnel, you would need to specify each step (page) the user traverses before completing the final goal. The funnel visually represents each stage in the micro-conversion process also specifying the drop-offs at each stage. You can create, based on your requirements, multiple mini-conversions and funnels to better understand user flow during this middle stage of user lifecycle.

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[Fig: A funnel representation of a goal set to White paper Downloads from the start page clearly indicating the conversions and drop-offs at each stage.]

In the middle of the funnel (MOF) for the Digital Marketing Funnel, it’s also important to analyze the most effective and popular channels that bring the user back. For this, GA provides Multi-Channel attribution tools under the “Conversions” section. There are various attribution models one could use. For a full guide refer this. The Linear Attribution Mode, which gives equal weightage to any channel in the funnel irrespective of where it appears,  gives us great insight in to which channel accounts for the most revenue overall. You can use the Model Comparison Tool in GA to find this out:

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For figuring out the most popular channels in the MOF, we would have to do some manipulation using excel to weed out the first and the last interaction channels.

Bottom of the Funnel:

The bottom of the funnel is the last touch before someone buys. These channels are very important as it let’s you identify which channels to focus on to complete conversions. You can find this data in Conversion > Attribution > Model Comparison Tool and select your model as the Last interaction.

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You can use these data on the best channels for driving traffic on to your website to further improve and optimize.

Segmenting:

In addition to standard segments that are available in GA to chose from ( You would have noticed this when we discussed the User Flow path), there are also a wide variety of custom user segmenting options that lets you better understand each set of users. You can create your own segments from the dashboard by clicking on the drop-down next to the All Visits tab that’s present as default. GA with the latest update now has the ability to segment visitors and not just visits, which is something GA lacked compared to tools like Kissmetrics and Mixpanel.

Now click on the Create Segments Icon to define your segments. There are a wide variety of parameters you can use to create segments or else you can use any of your own created events as well to define a segment.

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Refer this post for a great list of custom advanced segments which you can use.

Using segments, you can slice and dice your audience in ways never imagined before. You can create segments based on first purchase value, browser being used, platform being used, device on which the visitor opened the site, purchase value during a period etc. I can very well use this data to do a cohort analysis which is very important at an early stage especially if you are on a lean methodology and constantly iterating, measuring the behavior of the set of users who come in during each of these iterations. Even otherwise, there is tremendous amount of insights analyzing segments will give you. I will cover Cohort analysis in detail in the next post.

Making your products Viral : Understanding Virality

One of the major challenges for a marketer or an entrepreneur is to get users and grow for an eternity. Paul Graham would tell you that you ain’t doing it right if you are not growing by a minimum of 5-7% Week-on-Week. And there are plenty of channels one could use to grow, be it the Press, Text Ads or Visual Ads, Partnerships. All of these techniques require money to be spent proportionally to the amount of visits/ click throughs or conversions you are going to get. Wouldn’t it be so much better if we could get hundreds of users for an eternity for virtually no marketing spend. This is where the inherent Virality of products help.

 What is Viral growth? Viral growth is nothing but an existing user bringing you new users either through a generic invite sent on any of the platforms the potential user is on or by directly using the product ( sharing a file link on dropbox) or by any means possible. Google with gmail was phenomenally successful in creating a viral growth. Google initially started with a base of 1000 people who were given a limited number of invitations to share with friends/ family. Gmail finally went public in the year 2007 but by April, 2006 Gmail had through viral referrals grown phenomenally to a base of 7.1 million users. Quite incredible. Products like Instagram, Dropbox, Youtube etc grew rapidly to a million users through virality.

As with any product the key to being successful in growing virally is to have a world-class product, a product people would love to use and would love to share with their friends. Word of Mouth is a great, free channel for products to grow. But that’s not the only way to build virality in to your products. Look at products that grew phenomenally and you would understand that they built in and utilized at least one or two incredibly viral features in their products. Let’s examine the various viral features a product could have:

1) Inherent Virality : It’s incredibly difficult to achieve this type of virality in all products. There are certain products and niches where the products are inherently viral like gmail or Whatsapp or facebook. These products thrive on users inviting others users because the user gets no value out of them without his families or friends or someone else. But do understand that the easier you make it for a user to invite his friends or family, the more invitations they send out whereby increasing your virality.

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2) Signature Virality : Remember the messages “sent from my Blackberry” or “Sent from my ipad”? This type of virality encourages people to include the messages as signature because they think it makes them cool. Again, you would need a world class product that people would aspire to use to truly achieve this. Could you imagine someone using the signature “sent from my Nokia?” Kidding. But yeah, the point is to spread the message like Hotmail did with a simple “ Get your free email at Hotmail” signature and grew rapidly from a nominal base to 1 million in 6 months and in the next 5 weeks to 2 million. Remember this was a time when there were only 70 million Internet users and in 18 months they had about 12 million users.

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Paypal with their autolinks on ebay is another great example. It automatically inserted Paypal logo to the bottom of each of the listings of the sellers who used Paypal. This was incredibly successful in making Paypal grow virally.

3) Incentivized Virality: Companies like Fab.com or Dropbox are great examples of this. They incentivized their users to send invitations to their network for either monetary benefits or extra storage space in the case of Dropbox. It worked and people brought in an incredible number of referral traffic. Think of Affiliates as well. They thrive on this. The company grows and sells products by incentivizing the affiliate marketer to sell more or bring him more buyers. Amazon has achieved an incredible amount of success through their affiliate networks.

My facebook feed is filled with shares from this new to be launched service :Trevolta

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Of course one is going to share this with their friends, there is no better thing in this world than travelling around the world on someone else’s money! 🙂

4) Embeddable Virality: The biggest example of this is Youtube. Youtube was not the only video sharing website available during its initial stages but what made Youtube a leader was when they made the videos embeddable. People started embedding Youtube videos on their website and with it Youtube amassed massive views and made itself visible to an incredible number of people. This shifted the balance in youtube’s favor and there was no looking back.

5) Social Virality: In this case, Products depend on Social Network like facebook, twitter, pinterest etc to rapidly spread their base. There is a psychology behind Social virality. The key here is always to give people a set of tools to create something awesome which they would want to flaunt with their social graph. Instagram exploded because they could make photos beautiful and people loved flaunting their good looking self to the world. Services like twitter or Scoop.it grew virally because they allowed people to project a certain persona. Even the content shares that are done on any of these networks is in effect a way for a user to project a certain type of persona. If one could get this aspect right, then the product is a sure shot bet to grow virally. What I like about Twitter or Tumblr is the re-tweet or re-blog option which enables a user to create content effortlessly while actually he or she is curating content. It increases engagement on the platform and also gives a sense of satisfaction to the user that he or she is actually creating content.

I guess it’s easy to understand virality but its difficult building virality in to a product and even more difficult trying to measure it accurately.

For measuring Virality, one needs to understand two components:

  • Viral Coefficient
  • Viral Loop time

Let’s assume the scenario where:

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This implies that each user brings you an additional user within a time frame of 10 days ( the Viral Loop time), which is absolutely incredible if you are able to achieve it! J As we had discussed earlier there are different types of virality and in this case we are assuming a simple scenario where each user is sending out invitations to get their friends in (it could be incentivized or simply because your user loves your product)

Now if we were to look at the growth the product would have by the 20th day:

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Understanding Viral Loop time is important because Virality is inversely related to it. The shorter the Viral loop time, the better virality one would be able to achieve. Imagine if the Viral loop time in the earlier case was 1 day, ie, each user invites a set of users and the new user signs up all in a day’s time. That would make the user acquisition 5 times faster than the earlier scenario and your table would look like this:

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Let us plot a graph to understand our growth curve in the first scenario:

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Assuming a product has a viral coefficient that is equal to or greater than 1, it results in a steep upward growth curve. In reality a product having 1 or a number greater than 1 as its viral coefficient throughout its lifetime is impossible although there might be intervals during which the product shows such a viral coefficient. In reality a viral coefficient of 0.4-0.6 for a product is extremely good. Now let us consider such a scenario where the Viral coefficient is 0.5 assuming the rest of the numbers remain the same from our earlier example.

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And if we were to plot this on a graph, the growth curve would look something like this:

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The growth curve flattens out after a particular interval. It’s important for growth hackers and marketers to understand that in reality for most of the viral product this is how the graph would look like if they only depend on user acquisition through virality. So it’s important to plan out the metrics in such a manner that you constantly boost up user acquisition from other channels as well to have a steep growth curve which a product requires to be successful.  Remember Paul Graham and his number for the ideal growth rate for a startup? Utilize not just the virality of the product but also other channels like Press, Market Places , Creation of Viral Content, Paid Advertising or anything that boosts traffic and discoverability of your product/ service which drives conversions in order to maintain an upward trending growth curve.

Now if I were to simply consider the scenario earlier described with users sending ‘n’ invites and x% converts from them giving us a Viral Coefficient of K=n*x%, then the User Base at any particular point of time would be (considering only viral growth):

User Base (t) = User Base(0) * (K ^ (t/vlt +1) – 1)  /  (K-1)

(where vlt is the Viral loop time)

[Reference: David Skok’s article]

The above is not a comprehensive model as there are various things we have left out which includes:

  • The sending invitations process is always staggered. We have just assumed it to happen in one go. If I were to give an example – Imagine dropbox, you will always end up inviting people in a staggered way as you interact with them and share docs with them. It does not happen in one go. And If I were a user of dropbox and If I were to stop using it all together one fine day, then dropbox loses out on any referral signups from me.
  • The churn your product will have as it affects the above mentioned parameter.
  • We have not considered virality across the many channels and the different forms of virality.
  • We have also not included the saturation of a particular channel. If I were using a platform which has a total base of 10Million as the target base for sending out invitations, once I cover the entire user base I can’t rely on the formula.

The Viral Loop

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The viral loop highlighted in the diagram is what can be called as the single viral loop. It’s important where it’s possible to have a double viral loop to fasten your user acquisition. This is possible especially in case of Social networks. Like we discussed earlier, retention is a key component that defines the Viral Coefficient. An increased retention will result in increased Viral Coefficient and hence a faster user growth. There are simple techniques one could do to improve retention and engagement on the platform. This forms part of the double viral loop. Re-connection always increases engagement and retention and hence it’s important to re-connect people by prompting them as well as by making it easy for them.

For ex on LinkedIn, after we sign up, it prompts us to export contacts from our address books and re-connects us. This removes the friction normally people will have in searching for people and then connecting with them. Also, it helps in retaining dormant users. This is a technique employed by many of the Social networks to bring back dormant users on to the platform. Notifications on follow improves your chances of brining back dormant users.

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This simple step resulted in an increase of 16% in the number of invitations sent. Check the stats below:

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Source: http://www.slideshare.net/joshelman/josh-elman-threegrowthhacksgrowconf81413

Or in case of twitter they take you step by step through the various things one can do on twitter and by it helps you in getting content on your feed and making you follow a few popular people on login itself. It alleviates any friction the user will have initially to engage on the platform and also interacting with the popular users sets the context for them to get active. In doing so Twitter achieves more invitations and requests sent to users and prospective users and also re-connections and engagement between existing users. That’s a double viral loop.

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Similarly, it’s important for any marketer to understand the viral loop of their product, one would have to iterate and measure to understand in detail the parameters and the best possible viral loops.

At Zoomdeck, we are creating a platform for making photos interactive. A User can spot anything interesting inside photos to ask a question or add notes or add spots to highlight an interesting story or experience about an element inside photos, then make it much more engaging by linking the spots to audio, video, products, people, places or any link relevant. Users would be able to discover and share the stories and elements in photos using interactive spots and have contextual conversations around each spot. We have a web version, an iOS app and an embedding option which along with viral content shared across various Social Media sites would be a key driver of traffic and user acquisition for us. When I look at the various channels of virality for Zoomdeck, I have:

  1. Embedding: Bloggers and Publishers embedding Interactive Photos on their website. Similar to how Youtube utilized embedding as an important element of their Viral growth.
  2. User joins Zoomdeck, takes photos and makes them interactive by adding spots. Shares it with their friends and family (Invite). ( This will have a longer Viral Loop time) Similar to how Instagram or Pinterest built their viral loop.
  3. Directly recommends the product to their contacts through the invite option in the app or in person.
  4. Sharing of Interactive Photos they find interesting on Zoomdeck( Content) on Social platforms ( Facebook, twitter or Pinterest). Their network discovers, finds it interesting and shares with their friends. ( This will have a much shorter Viral Loop time) The advantage of having content that is viral in nature is the Viral Loop time significantly reduces as you are providing ready made things for people to share and not asking them to create which is always time consuming and requires an effort and hence would always have friction. A Youtube or Twitter is a great example of this.

The four basic viral loops in the case of Zoomdeck as mentioned above would each have different conversion ratios. While the first option and the fourth option would enable Zoomdeck to reach a much larger base of audience and that too multiple number of times, the conversion percentage is going to be a lot lesser than the second and third option where in our chances of conversions are much higher. Similarly, the Viral loop time for the first and fourth option would be much lesser than the VLT number for the other two. So measure the various parameters continuously and optimize for the ones that give best results.

Importance of Seeding :

Imagine for calculation purpose the current user base of a product as 5000 and consider only the 2nd and the 3rd channels of virality listed above as the growth channels for easiness in quantifying. (Assume a Viral Coefficient of 0.6 and a Vlt of 10 days) We would have a table that looks like this

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And our user graph would look like this:

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Now, assume acquisition of a constant number of users from other channels, we have (all values are hypothetical):

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Seeding initially is critical as that’s what enables the viral growth to kick in. In the first example we flatten out our user base after 2 months. This is why seeding should always be an ongoing process to leverage maximum value from virality or else we should have a viral coefficient greater than 1 to have an eternal upward curve for our user graph which is very difficult to achieve throughout the lifetime of the product. There would be short bursts when the viral coefficient is greater than 1 and would result in phenomenal growth especially if you are on a larger base as well but not through the lifetime of a product.

Key-points:

  • Virality is something that should be inherent in the product. It’s important to design and incorporate virality during product conceptualization itself.
  • Always measure and track various metrics to understand what works best and dig deep into those channels.
  • Iterate as fast as possible to understand the best viral channels. The longer the iteration cycle, the longer it will take for you to spot your best viral loop.
  • Reduce the number of steps required to do any action that results in virality. Make it as easy as possible for the users to send invitations. Understand that the easier you make, the better your metrics would look.
  • Two factors that influence Virality are: Viral Coefficient (K) and Viral Loop time (Vlt). Increase ‘K’ and decrease ‘Vlt’ for rapid growth.
  • Retention and re-connection are important factors that help in Viral growth.
  • Important to seed users initially.
  • Exponential growth from Virality kicks in after a threshold limit. Make use of various channels for seeding the initial audience.
  • It’s very difficult to achieve sustaining growth through virality where you require a viral coefficient greater than 1. Hence, compensate for this and balance it out by seeding users through other channels as well – if required paid channels also to maintain momentum.

References:

http://www.forentrepreneurs.com/lessons-learnt-viral-marketing/

http://www.linkedin.com/today/post/article/20130402154324-18876785-how-to-model-viral-growth-retention-virality-curves

http://andrewchen.co/2007/07/11/whats-your-viral-loop-understanding-the-engine-of-adoption/

Growth Hacking : It’s about being creative, smart and a lot of hard-work!

Making your product/ service or platform discoverable and increasing its visibility across the web is one of the most difficult yet the most important task for an entrepreneur or a blog owner. The best way is always to try out all the channels available to you and then gauge the conversions from each of those channels so that you can invest more time and money on the ones that’s giving you the best results. The strategy that’s best for you would also depend on your product and the niche you are operating in. You could split the strategies you could adopt into push and pull or paid and non-paid strategies.

I’m going to leave out the AirBnB or the Mint.com example which is quoted very often as examples of growth hacking. Sure, they were incredibly successful with their ideas and execution and I am sure you have already come across them as well. There would always be certain incredibly brilliant idea that would apply to your product or niche. Let’s leave those out for now and in this post explore the generic pull techniques one could employ. Of course these strategies would require plenty of your time and effort. Nothing comes for free! J

1) Blogging

Blogging is one of the most proven and effective strategies for gaining visibility and establishing yourself as a thought leader. If used in the right way and provided the quality of the content is awesome, it could easily be the best channel to drive traffic. You would want to have blog posts that are read and shared. So ensure that you create quality content, try and analyse what sells or are the most popular blog topics in your niche. Take note of the ones that’s trending and write your own version for best results.

One can adopt various Blogging strategies including what the content and theme of the Blog should be. It’s more important to understand your target audience before you decide on the contents of your Blog to drive maximum traffic. You could either create your own Blog Page or else you could get to post a few as a Guest blogger on Blogs having your target audience. I would suggest you to definitely have your own blog but also try and get yourself a space or two on a few of the more popular blogs in your niche. The advantage of guest blogging is that you open up your thoughts, ideas & your product to a large audience in one go. All along try and build your own blog site as well, because there is nothing like having a large following on your blog as you have complete control over your blog. You don’t necessarily have that control over someone else’s blog and can’t aggressively push your product or services for an eternity. You can always try and exchange blog posts as well with bloggers in your niche. This Is a good strategy to employ to grow your audience faster.

The advantages of Guest Blogging are:

  • Builds natural links
  • Increases your online authority
  • Builds Relationship
  • Opens up your product/ service to a large audience quickly

I’m a big fan of Kissmetrics, Buffer & Moz and each of them have taken the blogging strategy to an all new level to drive traffic on to their service/ product.

Kissmetrics, is an analytics platform. It has its own blog and the contents on the blog are super awesome and cover a wide variety of posts related to SEO/ Analytics/ Digital Marketing etc. They have steadily built up an extremely impressive reader base and invariably converts a lot of them as well. They also encourage guest bloggers on their blog page.

Buffer on the other hand grew phenomenally in its early days using the Guest blogging strategy. Leo Wildrich, co-founder of Buffer admits that using the guest blogging strategy alone, they were able to acquire 100,000 users in the first nine months. That’s like quite incredible. Two sites that you should definitely consider for getting guest blog opportunities are MyBlogGuest and Bloggerlinkup.

Moz similarly used blogging as a tool to build an ever growing subscriber base and with it a healthy base for it’s products.

2) Infographics:

Infographics is a great way to engage your audience and create something that is extremely viral in nature. Creating one is not that expensive either. You can do it yourself or hire someone on fiverr who could create an awesome Infographic for as much as $5. They are visual, useful, entertaining and sharable. This awesome infographic lays out the creative process pictorially of making an Infographic.

8 Steps to Create an Infographic

by mainstreethost on visual.ly

And this is a great Infographic created on infographics by Zabisco.

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Check out these great free tools for creating awesome Infographics : http://www.infographicsarchive.com/create-infographics-and-data-visualization/

3) Social Media:

Social Media is one of the best channels for getting visibility for your product/ service. It’s also very often the most cost effective and viral of channels. Infographics are content and Social media provides the best possible channel to make your content viral and with it bring a truck load of traffic.

  • Understand that your activity on Social Media is for the long run.
  • Build great engagement and brand awareness and slowly you will start seeing results.
  • Content is King – Create great sharable content that would in turn enable you to reach more people.
  • Always be responsive to questions or comments from your followers. Build a healthy community.
  • Depending on your content decide on which of Facebook, twitter, Pinterest, Stumble Upon, Instagram, Google+, Reddit, Youtube, Linkedin or any other platform would work for you. Try and stay active on the ones that give you better engagement and reach based on your content and niche.

Cracking visibility and engagement on each of these channels is an art in itself. I will cover in detail the things one should avoid and the things one should follow to build a community on any of these platforms. ( Check my earlier post on Stumble Upon. Will be covering each of Pinterest, facebook, Twitter and Instagram).

4) Influencer Marketing:

Influencers are gold! Most of us are quite aware of what Influencer marketing is. Let me explain if you aren’t aware. Influencer marketing is marketing to influencers in your niche be it bloggers, journalists, consultants or Industry analysts. And If you spend time and effort there is nothing better to build credibility and visibility.

The first step is to identify influencers in your niche. There are a number of ways by which you could create a list of Influencers.

  • Relevant keyword search on Twitter or Linkedin would give you a great list to start with.
  • PR Tools like Vocus and Cision are also great for finding list of Influencers.
  • Google Blog Search and Technorati can be great tools for finding bloggers in your niche.
  • Set Google Alerts on keywords that you want to track. It will enable you to keep track of all new posts related to those keywords and with it identify the person posting the same.
  • Try and scan Forums/ Communities in your niche to find influencers and be active on those forums so that people start noticing you.
  • I for once find Mom Bloggers almost always a great way to influence women and it’s almost unavoidable in niches like Fashion, Interiors, Gardening, Cooking etc. Try Blogher.

Remember that influencers are almost always busy people and it’s difficult to get their attention. You would have to spend time and effort in building relationship with them.

  • Follow them on twitter and connect with them on Linkedin if possible. Share their content and try and start a relevant conversation on any of their posts. This would slowly make them take a note of you which you could leverage when needed.
  • Or else try and email them either asking a question or appreciating them for their latest content/ post and start a conversation. It might be difficult to get email IDs of influencers as very often they tend to not put it out in public. Use a tool like Rapportive to try a few combinations until you get the right one connected to any of their Social Profiles or read this article to find the best way to find someone’s email ID.
  • Sending gifts to influencers is another great way to build relationship with them. Brands in fashion, food categories more often than not send their products to Influencers who tries them and almost always writes about their experience. It’s a great way to improve credibility and reach a large user base.
  • Creating a list of top influencers in your niche by actually ranking them and sharing it with the masses is a slightly expensive and time consuming exercise but is a great way yet again to reach out to the Influencers. If possible generate a widget as well so that the bloggers could use it in their blogs and very often they would do that as well giving you credible back-links.

5) E-Books & White papers:

Like I mentioned before a lot of the inexpensive strategy would involve your time and effort. Content is the King in all sense. You can decide if Blogging or E-Books and White papers are a better option for you. The latter would involve significant amount of time and effort in producing something of greater value while the former would involve producing a number of shorter posts to keep improving your visibility and reputation.

E-books and White papers are pretty comprehensive in their content and if it’s a niche you are interested in then it’s almost always catches your eye and makes you go through it. Check this awesome collection of blogs on the Kissmetric platform : http://blog.kissmetrics.com/marketing-guides/

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6) Powerpoint Presentations:

Are you using Slideshare? If you are not, then you are missing out on one of the best lead generation channels especially for businesses. Slideshare is the world’s largest content sharing community for professionals.

“With 60 million monthly visitors and 130 million pageviews, Slideshare is amongst the most visited 200 websites in the world.”

This is not the only reason for you to be on Slideshare. Slideshare presentations tend to rank really well in Google for certain keywords.  Look at the Google search results for startup metrics:

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It would do you all so well if you could create your own decks on slideshare. It is inherently viral in nature. Things to Remember while creating content on Slideshare:

  • Create a compelling presentation:  keep in mind the quality of the content and attractiveness of your graphics.
  • Understand that your animations won’t be re-produced on Slideshare and that you are not going to present the deck. So your content should speak for itself.
  • Use nicely designed templates for creating the deck. You may use services like SlideRocket or PhotoSnack slide creation.
  • Ensure that the privacy setting is set to [Public] Everyone.
  • You can include Youtube videos in your presentations or “slidecast”, meaning you can sync an MP3 soundtrack.
  • Just like other Social Media channels, you can follow people, like their presentations, download and interact with them. Do that and slowly build a following.
  • Ensure that you keep your links in the presentation. It’s helpful not only in terms of driving traffic to your site but also gives you good SEO benefits.
  • Always have a call to action on the last slide and provide contact info. If people have made the effort to browse through all of your slides, then they definitely are prospects. Try and convert them.

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7) SEO:

In the earlier methods we have tried various content creation and distribution strategies and all of those add to your SEO efforts. Let’s break up the SEO strategy in to on-page and off-page SEO.  Remember Content is the King, always be creating content that’s valuable.

Refer this representation of the various factors influencing your SEO strategy:

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Highlighting the various steps one could take to improve the on-page SEO:

  • Valuable content and be hyper-relevant to a specific topic
    • Include subject in title tag
    • Include subject in URL
    • Include subject in image alt text
    • Specify subject several times throughout text content
    • Provide Meta description and meta keywords.
    • Crawler/ Bot accessible
      • Make sure there is no duplicate content.
      • Don’t block bots.
      • URLs should follow best practices around length, being static vs dynamic, and being included in any appropriate RSS feeds or XML Sitemap files.
      • Phenomenal UX
      • Make it easy for your users to share the content.  Shares on Social media sites act as strong signals for search engines.
      • Multi-devices ready.

And for your off-page SEO:

  • Share your content with your friends circle on all major Social networks.
  • Keep Blogging and if possible do guest blog on major blogs in your niche.
  • Engage on forums in your niche. Ensure that you add value to the forum and just not another spam backlink generator. Contrbuting to discussions in the group will establish you as an authority in your niche.
  • Submit your websites to the topmost quality directories like DMOZ, Yahoo Directory, ZoomInfo, One Mission, Pegasus, etc.
  • Social Bookmarking is yet another technique. Search engines love these sites and often track them. Ensure that you submit your contents to sites like Digg, Stumble Upon, Delicious etc. Also ensure to tag the contents properly.
  • You can try exchanging links with similar blogs.
  • Video promotions. Submit your videos on all major video upload websites like Youtube, Dailymotion etc. They are quality sources of traffic and helps you with your off-page SEO.
  • Contact Review sites to review your product or offerings.
  • Use Press Release service providers like PRMac or PRWeb to issue press releases. Gives you backlinks and in cases where the press release excites people, you might get a lot of additional coverage as well.
  • Get active on sites like Yahoo Answers, Cha-Cha, Answer bag etc.

These are in brief the few on-page and off-page SEO techniques you could employ in making your website more search engine friendly and with it gain significant amounts of traffic. Remember, always be creating content that’s valuable and extremely viral in nature.

8) Go Mobile:

Well, I wouldn’t necessarily say that you should go mobile just for the sake of getting more traffic to your website. With the smart phone explosion it’s suicidal if one is not on mobile. It’s so very important in terms of not losing your existing users, making their experience better, improving user retention, in being connected with the users 24*7 and all of this adds to your growth. It’s a call you need to make if you need to be on mobile as a native app or as a mobile web app based on the product/ service you provide. There is some amount of resource you would need to spend on building a native app and you would need to understand the returns it would give you to take a call on.  At Zoomdeck, this was a call we took and we did not even think twice. For a social network like us being on the app marketplace was a no-brainer both in terms of increasing our user base and also in terms of increasing the engagement our users would have with our app. The ability that an app provides to be in constant touch with your users is phenomenal. One wouldn’t want to spam the users, but an efficient use of the push notifications will go a long way in improving user retention.

A market place like the app store, google play or the amazon store opens up an entirely new channel for users to discover your product or service and engage. People spend crazy amounts of time on their phones and any product wouldn’t want to miss out on this. I have covered in detail the tips and tricks you need to employ to gain maximum from your appstore debut.

Few other articles on app store strategies:

9) Contests and Give Aways:

If executed properly Contests and Give Aways are a great way to engage your audience and build base. It’s very important to understand the exact reason you are running a contest. If you aren’t sure on that you would probably drift from the core thing you want to achieve and more often than not it would not give you a good ROI. You could run a contest:

  • To increase your social authority : Get Facebook likes or twitter/ pinterest followers and so on.
  • To drive more sales and with it revenue.
  • To build awareness and buzz around your product.
  • To collect email info and other customer information.
  • To generate new leads.
  • To engage you existing audience base.

Before you start a contest clearly define your end result and measure. Now based on the end result you want to achieve, create a very creative contest plan. Few examples of cleverly crafted contests are:

(i) Vera Bradley is fantastic at visual social media marketing and they created this awesome contest on Instagram. The contest asked people to post as many Instagram photos as they liked showing them wearing or carrying a favorite Vera Bradley bag. Submitting was as easy as including the #VBStyleShare hashtag when posting images to Instagram.

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The Vera Bradley Instagram contest was short – just about 4-5 days. At the end, 10 winners received a free wristlet.

(ii) Contiki  Vacation’s “Get on the Bus” Promotion : Contiki, a travel firm that caters to the 18-35 year-old demo, dropped a promotion in mid-February that let winter-weary web surfers imagine their perfect vacation. The winner got one of eight vacations worth around $25,000.

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The “Get on the Bus” promo challenged fans to get a crew with four friends together, choose a trip and then try to get as many votes as possible in order to win. the effort, which ran from February 23 through March 31, garnered 8,000 Likes for Contiki and generated more than 10 million ad impressions through Facebook shares, Likes, tweets and blog coverage. One reason for the success was a feature that let users and their friends create a bus, which incorporated music, movies, Likes and interests that users had in common via their Facebook profiles.

Summing up a few pointers to remember while running a contest:

  • Plan your contest based on the end-result you want to achieve.
  • Give meaningful prizes to your audience.
  • Always include more than one prize if possible. You could have one major prize and a few consolation prizes.
  • Always use multiple channels to promote your competitions so that more people see it and participate in it.
  • Try and keep the entry simple so that you get maximum participation. Have different levels in the competition that would increase the chances of people winning the competition.
  • Decide on the duration of your contest: I would say for a simple straight forward contest – 3 weeks would be ideal as it’s not too long or too short for you get good engagement. It would also depend on the type of contest you are running.
  • Do blog, tweet, make a facebook post, share across different platforms on announcing the winner. Experiences are the best form of give aways and always capture the winners moment. Creates an instant connect.

Check a few of the incredibly successful & awesomely creative campaigns but of course they all had a bit of budget as well. Never know, they might encourage you to try something really creative and innovative but not expensive though

(i) Heineken’s departure roulette was brilliant. It was expensive but made an instant connect with the audience. They set up a board at JFK’s Terminal 8 and dared travellers to play “Departure Roulette”—changing their destination to a more exotic location with the press of a button. They had to agree to drop their existing travel plans—without knowing the new destination first—and immediately board a flight to the new place.

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(ii) Or this brilliant campaign from TNT, this was incredibly viral :

(iii) “The Old Spice Guy” campaign was just phenomenal; its viral success is something that hasn’t been matched In the short history of Internet. Isaiah Mustafa, the Old Spice Guy, was able to pump out hundreds of hilarious videos at alarming pace in response to Old Spice Video commentators. They even had a Reddit thread to respond to others.

This one has more than 46 million views. Incredible.

(iv) Hugh Macleod is a professional cartoonist and his idea of releasing a succession of Daily Biz Cards was just brilliant.b

In his campaign he creates cartoon in which he targets a particular individual, a random person, a celebrity but always someone. His market is pretty huge and he would of course need a lot of visibility to build his business. He relied on the ego and the influence of several large names on the internet who would circulate or share the cartoon with their tribe giving him greater visibility. Brilliant stuff.image

(v) Red Bull’s Stratos Space Jump vowed the world and is one of the most brilliant campaigns executed ever. Dubbed “the mission to the edge of space,” it featured Felix Baumgartner making a freefall jump from 24 miles above the earth last October. The jump broke five records, according to officials at Guinness World Records, and Mr. Baumgartner became the first human to break the sound barrier without engine power. Mr. Baumgartner’s feat captured consumers’ attention the world over. TV stations, news reports and journalists all referred to the event as “Red Bull Stratos” rather than shortening it to simply “Stratos,” as is so often done with branded events.

The event was carried on nearly 80 TV stations in 50 countries. The live webcast was distributed through 280 digital partners and racked up 52 million views, making it the most-watched live stream in history.

There are plenty more of such brilliant and creative campaigns that’s been incredibly successful and pulled in a lot of visibility and conversions for the brands. The essence of the success of anything you do to leverage “Pull ” is to create quality content and to tap in to all channels to reach the audience who would get excited by it. Be smart, be creative and put in a bit of hard-work! Focus not just on getting traffic, but also focus on retaining your existing users and delighting them always! J