It took online wine retailer Vinomofo a number of iterations before they settled on a customer acquisition strategy the team felt was working best.
The startup gives $25 credit to new signups and their referrers with Vinomofo co-founder Justin Dry saying it is very important to get this split right.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
“We tested lots of different levels of incentives,” he says.
“We started with it loaded towards the invitee, with nothing for the recipient, and then the other way around. It started with $10 but we realised we were willing to pay $50 to get them to try Vino, and once they try it they’ll stick around.”
Referrals attract loyal customers
Of course, they’re constantly reassessing their strategies, but Dry says encouraging this sort of word-of-mouth promotion, and letting users do the advertising for you, helps attract loyal customers, the kind likely to stick around.
“It’s our biggest channel for new signups, and they’re great signups as well,” he says.
“It’s your friend saying, ‘come try this’. It’s a really powerful referral.”
Search engine optimisation can also be utilised to improve customer acquisition, Dry says, but it’s important to maintain your startup’s overall message and values through this.
“Some people want to see everything on the front page, but we want to keep truthful to our story,” he says.
“Sometimes we have to not go for the best optimisation. We’ve launched landing pages and our conversion rates have gone down, but we’ve stayed with them because we think it’s a better story. People that do come through end up better aligned with us.”
The method might reach a lower amount of potential customers, Dry says, but those it does appeal to are much more valuable.
“We’ve appealed to less to get more loyal users,” he says.
Melbourne-based online furniture marketplace startup Brosa has been enjoying huge customer growth recently thanks to organic customer acquisition methods, with founder Ivan Lim saying the customer base is increasing by 40-50% month-on-month.
“The organic channels are continuing to drive a lot of that growth,” Lim says.
“It’s something that’s defensible over time. You’re not just spending money on ads, you’re building a community.”
A common form of organic customer acquisition is content, in the form of blog or social media posts, an area Brosa has been focusing on.
“The cost of acquisition is low,” Lim says.
“The users are looking for specific items in different categories, so we’re driving product development to meet the needs of the customers.
“You own the content, it’s yours. It’s not like an ad that’ll disappear once you stop paying money. The content becomes an asset; it’s a worthwhile investment and will be a big part of our continued plans.”
It’s an area Vinomofo has also been increasingly focusing on too.
“We’ve got a content team of about five that we’ve built up, and the traffic it drives is really good,” Dry says.
“It’s content that we were going to write anyway, so when you research what people are looking for, you can blend that with what you were writing anyway and it’s really powerful.”
He points to the success of a recent decanting video posted by Vinomofo, which showed the team in a humorous light and helped build a personal connection with their customers. If this is linked with existing products, it can also lead to more sales.
“A lot of people wanted to know about that, and it brought in a lot of traffic,” Dry says.
Lim agrees it’s important to make sure content is connected to products. Brosa is currently pushing content focusing on Notting Hill to coincide with the launch of a range of new products.
“We pushed that out to the community, and it’s a great way to merchandise and build traffic to the site as well,” he says.
“We’re very product-driven with our content. We launch new products every two or three days, and the new product itself can be content. It allows us to generate more leads for customers who are looking to purchase more.”