Scaling to 1,000 Users: A Blueprint for Consumer Internet Startups
Unlock Growth with Value Propositions, Distribution Hacks, and Monetisation Tactics
Hello, I am Saurabh Tandon and welcome to the weekly edition of More than Buzzwords. Today’s newsletter is relevant for all startup founders, growth marketers, product managers who want to take the 0 to 1 journey for their respective startups. The newsletter provides ample frameworks, tactics and examples to get to your forst 1000 subscribers.
Let’s dive in!
So, you’re on a quest to snag your first 1,000 subscribers—exciting, right? Picture this: you’re wandering through the jungle of the internet, armed only with your idea and a dream.
Every corner you turn reveals a new opportunity (or a competitor ready to snatch your lunch).
Not easy-peasy and not impossible either!
With the right blend of strategy and a few masterful moves, you’ll be very well underway.
So, let’s dive into why subscription businesses can take off faster than you can say “unsubscribe” and how to tackle the challenges that come with it.
The Bright and the Dark Sides
Launching a subscription-based business is like firing a starting gun at a race: it can happen quickly and with less cash than you’d think!
Imagine a world where you don’t need a sales team to sell to your potential customers.
Sounds fantastic, right? Instead, eager subscribers whip out their credit cards as soon as they hear about your brilliant idea.
The beauty of this model lies in low operating leverage and minimal costs when serving more subscribers.
Besides, payment gateways are easily integrated to take care of distribution and payments, allowing you to concentrate on creating captivating content instead of stressing over the logistics bit.
Neah! it’s not all rainbows and butterflies all the way!
You might stumble upon some pesky challenges as well, like low average revenue per user (ARPU) or even worse --- copycats lurking around.
Kind of frustrating, isn’t it?
You might gather subscribers like they’re going out of style, but if they aren’t paying much, it can feel like filling a bathtub with the drain wide open.
And churn rates? Yikes! Some subscribers will vanish quicker than socks in a dryer, leaving you scratching your head.
Higher commissions by Apple and Google can nibble away at your profits which is again—annoying, right?
Paid marketing may sometimes feel like tossing money into a wishing well, though—sure, you hope it’ll work, but you might just end up disappointed.
But hey, every successful business has faced these challenges. If you learn from them, you’ll find a way to rise above.
Creating Value from Subscriptions
The “PDM” Framework
#1. Proposition
Start by quickly connecting users to your app's core value proposition. This is the aha-moment which the users need to taste before they decide to churn.
For Duolingo, it’s all about making language learning fun and accessible. The app’s gamified lessons, filled with points, levels, and achievements, create an engaging experience that keeps users motivated
Spotify - “Listen to music you love, build playlists, and find new artists who match your taste”
Netflix - “Watch anywhere. Cancel anytime”
Noom - “Stop dieting: Get life-long results”
Look at the some of the keywords in the tag lines above and how quickly and seamlessly these apps let you experience their captioned promise.
#2. Distribution
This is a scalable cost effective method of distributing the app to users organically through word of mouth and SEO, as well as through reasonable paid acquisition
Duolingo's generous free plan allows users to explore the app without commitment, making it easy for satisfied learners to share their experiences. The app’s lively social media presence and engaging content also help drive organic growth
Spotify does partnerships with music festivals, concert tours, and other live events to spread the word. Its biggest hack is sharing playlists with friends leading to word of mouth
Netflix uses social media, print media, YouTube ads, billboards and tie ups with DTH, Wifi and Telecom operators
#3. Monetisation
This involves converting free users into paid subscribers. Various models in works are Free Trails (for 7 days), Freemium (where some content is always free and rest is behind a paywall), In-App purchases or Advertisements
Duolingo converts those free users into subscribers with the Super Duolingo plan! This premium option offers unlimited hearts, so users can make mistakes without worrying about running out and being forced to stop
Youtube Premium offers a one month free trial for its ad free experience and ability to download the videos and watch them offline
Canva uses a freemium model where users can get benefits like simple editor, stock photos, simple templates and 5GB of storage for free and premium templates, photos, customer support and team editing in their paid versions
6 Steps to get rolling on your scale up journey
#1: Define Your Unique Value Proposition
You need to nail down your unique and enduring core value promise.
A fun way to measure this is by asking your users, “How would you feel if you could no longer use your product!
Let’s say -- over 40% say they’d be “very disappointed,” you’re golden!
That’s the sweet sound of Product-Market Fit (PMF).
Now, focus on those who are really attached and find out what features they adore. This is your value proposition
#2 Optimise Your Pricing Strategy
Next up, let’s tackle pricing. Finding that sweet spot and ask yourself:
At what price would users think, “Wait, is this too cheap?”
When does it feel like a steal?
And when does it start to feel like they’re being taken for a ride?
Understanding these price perceptions will help you set the right price that leaves users feeling like they scored a deal.
#3: Streamline Onboarding for Quick Value Creation
Now, let’s talk onboarding! Your onboarding flow should be as smooth as butter on warm toast, helping new users quickly see why they need your product.
Highlight what your app does better than anyone else—like how Canva makes graphic design as easy as pie! Incorporate features like single sign-on and personalised journeys through quizzes or motivational screens.
Onboarding journey is a step of questions to better understand the users and create a personalised experience for them.
#4: Optimise Paywall Visibility
When it comes to converting free users into subscribers, paywall visibility is key. Think about it. Place those goodies where everyone can see them!
Interesting question to think is at what stage in the user journey you decide to monetise:
At sign-in/sign up but before onboarding
After the onboarding but before the app experience
After making the user experience your hero feature
When user comes back on the app again
Lots to think about!
#5: Reduce Involuntary Churn
Keep an eye on payment issues that might lead to involuntary churn. Common culprits include expired credit cards or insufficient funds—like running out of snacks during movie night!
Spotify has tackled this by supporting local payment methods and giving subscribers a friendly nudge when payment issues arise.
#6: Engage Users with Motivation Drivers
Finally, keep those engagement levels soaring! Use streaks, badges, and notifications— just like Duolingo—to tap into user motivations such as accomplishment and ownership.
Duolingo’s clever use of streaks encourages users to return regularly while creating a sense of community through leaderboards and achievements. These drivers help in users to come back to your platform again and again
Psychology Drivers fuelling subscriptions
Accomplishment
Leverage the thrill of achievement by offering rewards for milestones. Unlocking new levels or earning badges creates excitement—it's a party for your brain!Eg: Candy crush your way to new stages and milestones
Social Power
Foster a community where subscribers can connect and share experiences. It’s like having a built-in squad of friends who understand your subscription obsession! Eg: Share your Udemy certificate on LinkedINScarcity
A drive to want something because you have limited inventory. This creates an urgency to take action. Eg: Flight and Hotel Tickets - Buy before they fly!
Unpredictability
To find out what happens next as if its a thriller in the making. Remember how Netflix ends the last season of an episode and keeps you waiting for years for the next season to come out. Unpredictability at play!
Fear
To lose your time, money, status or relationships. These apps use FOMO (fear of missing out) strategy to woo users to their platforms
Eg: Fitnenss Apps like Noom, CultFit, Trading Apps like Groww, News Apps like Apple News
Putting it all together at Torrins
When I was working as the Vice-president of business and strategy at Torrins (music ed-tech subscription platform), my team and I had deployed various innovative distribution methods to get to our first 1000 consumers. Here is the short summary of the same:
#1. Performance Marketing - The primary aim was to drive signups to the platform which weer in the form of email ids and phone numbers. These coordinates were then given to the tele-sales executives for conversions
#2. Free Courses and Webinars - We had kept a few course and song lessons free as part of our freemium offering. We also offered free webinars every 15 days to teach a technique on guitar or piano to make users understand our teaching methodology.
#3. Influencer Marketing and Campus Ambassadors - We onboarded micro influencers (due to shoestring budgets) in vocals, guitar and keyboard niches. We also onboarded interns from campuses to sell our subscriptions within the campus.
The Bottomline
Reaching the first 1000 subscribers mark might feel like a challenge, but it's totally doable! Focus on what makes your product unique, tweak your strategy, and keep things fun for your audience.
Sure, you’ll face bumps like churn or low revenue, but hey, it’s all part of the process. Take notes from the big players, keep refining, and stay patient. Before you know it, you’ll be celebrating that big milestone! Keep going!
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