How Tech Founders Can Acquire More Users While Reducing Performance Marketing Costs

Written By: Ajoke Emekene

For tech founders, launching their start-up is a literal race to the ‘unicorn’ finish line and rightly so. To get to unicorn status, however, tech start-ups have to scale fast and to do that, they have to acquire a large number of users. Having a large number of users benefits start-ups in many ways.

For some start-ups, having a large number of users results in network effects which is the phenomenon that occurs when a service or product becomes more valuable to the user because more people use it e.g social media apps like Facebook, marketplace apps like Fiverr. Other start-ups benefit from economies of scale which is another phenomenon where the service or product becomes more valuable to the business owner in the form of reduced cost and in turn can drive value for the user in the form of reduced fees. There are many more benefits that one can outline resulting from growth in the number of users of a tech product, but the bottom line is – investors, value the number of users above all else (in most cases).

One option for acquiring more users that comes up very quickly for tech founders is performance marketing. Performance Marketing is a marketing specialisation that allows marketers to pay for specific results as opposed to traditional marketing that pays for the opportunity to advertise. It’s understandable why performance marketing is an enticing option for tech founders. Performance Marketing gives a business more control, flexibility and visibility than any other form of marketing. With Performance marketing, it’s easy to determine the number of people that need to be reached and take the steps needed to reach them.

Performance marketing is effective when done right, however, it’s not the easiest thing to implement and some challenges that are pretty specific to the Technology sector quickly show up.

One of the critical challenges that a tech founder is bound to face is the problem of high user acquisition costs. According to a wordstream report on Facebook advertising trends by industry, the technology sector has the highest cost per action.

The impact of a high cost per action can be felt throughout the business. Firstly, a high cost per action means that conversion rates are relatively lower because more people have to be reached to get a single action except in cases where the audience pool is smaller and so the cost of reaching an individual within the pool is high. The action, in this case, refers to things like installs, purchases, add to cart, clicks, form submissions and more. Secondly, lower conversion rates naturally mean that the budget spent on campaigns that are run to acquire more users produce fewer results and this directly affects how much you spend on marketing. When the cost per action is reduced, it automatically frees up financial resources to be able to reinvest in acquiring more users or in other parts of the business like product development.
What can be done about it?

In order to bring the cost per action down and increase the conversion rate, it is important to experiment with all marketing elements. Experimenting drives the discovery of winning combinations that produce a low cost per action, increase conversions and ultimately reduce your start-up’s cost per acquisition. There are 5 critical elements I believe experiments should be conducted regularly on to get the best possible results.

Experiment with Funnels: A funnel is a path that has been designed to take an individual from never having heard about a product or service to the point where they know, like and trust the product or service. In the most basic sense, there are 3 stages of a funnel. The top of the funnel is all about driving awareness among people who have never heard about the product. The middle of the funnel focuses on inspiring consideration of the product or service among people who are aware of the product but haven’t taken any meaningful action. Consideration can be in the form of app installs, lead form sign-ups and more. While the bottom of the funnel is about getting the people who are in the consideration stage to take a higher-value action like purchase, a transaction, a referral and more.

The typical tech funnel involves some version of getting people to download the app which houses the product in question and follows that with a series of emails to carry out an action within the app. Experimenting with the funnels used for user acquisition will demand a willingness to re-evaluate what the most important action is. Many tech founders prize the ‘app install’ above all else and so their goal with all performance marketing campaigns hinges on this. However, when such a Founder decides that at the end of the day, action within the app is more important than the app install, it frees the marketing team up to think of new funnel ideas that may not instantly end up in an app install, but will always lead to the most important action.

Experiment with Creatives: Tech gets a bad rap for being a boring and complex field. The creatives used in advertising your start-up’s Tech products don’t have to live up to the expectation that tech is boring and for nerds alone. An example of a different creative angle to try includes user-generated content (this may not be exactly user-generated, but it can be styled this way). Another good example to try would be review/testimonial type content. The important thing is to have fun and step out of the brand’s comfort zone.

Experiment with Offers: Experimenting with offers isn’t only for apps that have a clear path to monetisation. The mistake many tech founders make is that they may not see the efforts they make to get more users as an offer. But it really is; whatever is done to entice people to become regular users of the app or to generate monetary value from them is an offer. When the founder sees it this way, they begin to think of creative ways to present the core offer. In order to generate more ideas for the offer, it is important to get closer to one’s audience and understand what the audience needs the most in order to craft offers that resonate and excite them. This might mean building out entirely new features and that’s okay.

Experiment with Placements: It’s normal, even expected that prime real estate is preferred when it comes to advertising placement. However, it’s important to understand that people experience the internet and social media beyond their newsfeed. This is why it’s important to not only try other placements that are not mainstream on the biggest social media platforms, it is also important to explore platforms that may not be widely recognised as advertising gold mines just yet.

Experiment with Experiments: When it comes to conducting experiments, people generally accept that finding winning combinations should be the priority. However, not very many people take it a step further to pit winning combinations against each other to discover even more winning winners. This basically means that one keeps testing tests even when great combinations are discovered. Vigilance is the watchword. Never rest on laurels.

When the experiments listed above are explored, it is bound to result in some interesting discoveries that ultimately drive the reduction of user acquisition costs and frees up capital that can be reinvested in growth. With that done, unicorn status is well within the view of the conscientious tech founder.

This article was written by Ajoke Emekene, a Performance Marketing Expert passionate about helping tech startups leverage performance marketing for growth. You can contact her via LinkedIn (Ajoke Emekene) or Instagram (@ajokee).