My Growth hacking to 100,000 customers for free, using Groupon + social media

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Before I launched Zaggora.com in July 2011, I had 2 classic growth hacking problems.

1) I had no budget and

2) I had no idea what I was doing.

10 weeks later I had 100,000 paying customers, without spending a penny on up-front marketing. 2 years later, from $30,000 I initially invested, I had a business that was making over $30ml in sales with no investors, debt, or further investment.

I won a National Business award, was featured as a Harvard Business School Case Study and was featured in all sorts of publications including the Financial Times. Wow.

So what did I do to growth hack this?

My 2 problems aren’t unique, but one faced by most entrepreneurs, startups and first time CEOs. Indeed, anyone without a marketing budget. In my case, I had never launched a consumer product before. I didn’t have a budget because I didn’t want to invest any money into paid marketing given my second problem,  I didn’t know what I was doing. So, I turned to growth hacking. (I didn’t know this was growth hacking at the time, this is a recent discovery).

Growth hacking is effectively building marketing into product design so that it markets itself, achieving user growth / sales, without paying through traditional marketing channels (print ads, online ads etc). It’s data driven, precisely, to test, test, test and iterate what you’re doing to find the most effective methods to market your product. I wrote about Growth hacking in another post, if you’re interested.

At the age of 29, I had spent the previous 10 years working in finance and investments. This was a lot of fun, I was quite successful, but bored. I wanted to solve problems for consumers, in a new business, of my own. So, when my wife had this great idea for pants that make you hot, and in so doing boost the results of your exercise, I couldn’t resist. Our HOTPANTS™ were born.

But how to market, given my 2 problems.

I turned to a free solution, social media, to test whether at least there was any interest in this idea of ours and whether or not anyone would be interested in buying. But first, I thought, ‘lets just give some away’. I had read this was how Red Bull had started, just by giving away the product. Also, we had the problem of creating a new product, proving that it works. Who’s really going to believe by wearing our product, I’ll be able to burn more calories and get more out of my exercise? Whilst we had research from universities to prove it, we need real people, like you and me.

So I turned to Facebook. Thinking that if I asked my friends to try it, and it worked for them, they’d tell their friends, and they’d tell their friends and before we knew it, millions of people would know about our product. Of course, that didn’t happen. In fact, only 4 of my 683 ‘friends’ liked my post :(. This was clearly doomed to failure.

However, friends are friends. They’re not customers. So, lets try Twitter, I thought. In theory, I can have a conversation with anyone and if I have to tweets with hundreds of women myself, so be it. So, I created a twitter account @gethotpants, and started asking women I targeted in search (fitness, blogger, gym) to try a free pair of my Hotpants. I just needed their address. Also on twitter, nobody was really listening. Although one woman did threaten to report me to the police because of my ‘perverted’ Hotpants suggestion, and that I wanted her address. How rude.

I needed to explain, in more than 140 characters, what the product was. So I created a free presentation on slideshare.net (these are my first presentations). I then included the link to this in my tweets. Slowly, after maybe sending 2,000 tweets, I started to get responses. And after 2 months, I had 500 women who agreed to try a pair and then write an honest review on our facebook page.

Since there seemed to be some interest in the idea of our product, I decided to build a website. I went to a website designer I knew, agreed a small fee, whereby I would pay half when the site was finished and the other half, a month later. I hoped that the first sales would pay for this second part.

We sent the products out on July 1st 2011.

The reviews from the first 500 testers were awesome. The facebook community quickly grew, as friends of the reviewers saw their posts. And the sales started to come in. Not many, but from around 500 visits a day to the website, we had maybe 25 orders, a conversion rate of 5%.

This was my twitter feed, with some early feedback. We used this feedback to make some product changes.

twitter

Here’s what our Facebook page looked like when we had 79,000 fans.

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I quickly realised, these kinds of reviews are awesome, and will be really important for anyone who’s visiting the website to see them. After all, if you see that people are loving your products, wouldn’t you want to share that? Then, I thought, if we could somehow drive a lot of traffic to the website, for lots of people to see the great reviews, we’d get lots of orders?

So, we incorporated the Facebook feed, the wall, into the homepage of the website. So anyone seeing it, would immediately see at least the honest reviews, from real people. Hopefully, this would help convince them at least the product was for real.

This is a screenshot of our homepage at that time, the Facebook feed on homepage on right hand side.

homepage

So now, how to get traffic to the website, without paying for it? Sure, there was some referral and word of mouth from the early testers and on Twitter and facebook, but I wanted more. A lot more. But how?

It was around this time, by luck, I had a dinner with some friends who told me about ‘Groupon’, a site that allowed you to buy services at 50%-90% off. I had a look and realised that this could easily be used also for e-commerce and products, products like mine. Sure, we’d have to sell at a discount, but this way, given Groupon had sprouted up in so many markets, we could test to see whether people were really interested in buying the products, and to massive scale. Groupon had already 50 million subscribers.

So, I went to a friend who had just started working at Groupon and suggested to him we run a deal. He was just a junior analyst, who passed it to the sales team. They came back and said no, they were only doing services, not products. Dissapointed, but not deterred, I thought some more. Lets read some books! So, I read my first marketing book, Trust Me I’m Lying by Ryan Holiday about how to market, and for free.There was an interesting story about how bloggers work. Small bloggers feed the bigger bloggers who feed the mainstream press. There was a value chain. Hmmm.

If I could test the daily deal concept with some smaller sites, prove that we could sell (or not) then surely we’d get noticed by the bigger sites like Groupon.

So, in the third week of July 2011, we ran a deal with Kelkoo Select, selling around 300 products for £30. A discount for sure from our full price of £45, but we didn’t pay any money up front for the exposure, only a fee from the sales. The conversion rate on the site was 8%.

We then went to a slightly bigger site, in the fourth week of July, with Wowcher, and also ran the same deal. We sold 1,100. We then ran, in the first week of August, a deal with KGB Deals, selling 5,154.

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And then of course, by the second week of September, Groupon noticed.

We ran our first deal in the first week of September 2011, selling 25,000 products in 3 days in the UK for £19 each. Whilst this was quite a haircut, from our full price, since the product was genuinely effective, we were hoping that these customers told their friends. And they did.

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By October, Groupon USA noticed, and we ran a deal selling 120,000 products. After this, we went onto run deals with groupon in 54 markets around the world. Proving that there was a demand for our product. By December, as word of mouth spread, we had customers in 80 countries around the world.

We were able to fulfil the demand by making our products quickly. With an order to supply range of 20 days with a bespoke manufacturing solution we put together in Asia. I’ll write about this separately one day.

We were seeing a huge increase in traffic numbers to the site, by July 2012, in our first year, we had over 4 million. We also had around 20,000 full price orders. We were then on our way. So, we stopped doing Groupon deals, and focused on full price, listening to customers, introducing new products and driving excitement on social media. By now, we have over 527,000 facebook fans.

It was only late last year did I realise that we had executed some fairly well known ideas, from the startup toolbox

1. Lean Startup – We tested, changed messaging, and started selling from a basic product.

2. Customer Development – Product was improved from early feedback, we found our market.

3. Growth Hacking – Not paying for marketing, but figuring out how to get it for free

4. Viral loops – By having social media reviews on site, we had formed a loop. Customers would visit site, buy. Write review. Loop repeats.