Ilan Abehassera

At the end of the day, you have to build a service that people want to use or no amount of marketing or advertising will help. But if you are successful in building something people want — if you have traction and positive feedback — you will still need to make a serious effort to acquire users. Simply relying on the idea of "build it and they will come" won't fly in the oversaturated world of startups we live in.

Track the Source of Your Traffic

Before knowing where or how to acquire new users for free, you need to understand where your best conversions are taking place. The way to do this is by adding tracking code to your site: (1) what website a visitor is arriving from; (2) the click on the signup form; and (3) the completed registration.

The last piece of the puzzle is calculating the lifetime value (LTV) of each registered user. You may see a lot of signups by a certain type of user, but that cohort may bring in only half the revenue of another cohort that may provide fewer total signups.

This kind of data is especially valuable. You want to trace back to the web environments of your most lucrative cohorts, figuring out who they are and why they're converting better than other users. You can then start to target these users specifically. For example, if Carbonmade knows that wedding photographers in Europe convert higher than any other users, we can target where they like to hang out (forums, blogs, newsletters, offline, etc.).

The Viral Strategy

We're all familiar with the idea of viral user acquisition: Your current users invite other users to use your service. Foursquare and similar viral success stories (Instagram, etc.) do a great job at this by tapping into your Facebook, Twitter, and phone's contact list to get friends to join you through their "Invite Friends" tab.

You want to be able to track how new viral users are coming into your system. Specifically, you want to be able to measure conversion and measure the average number of invites users are sending out. If these numbers are high, you're likely to have a viral service and your chances of huge growth are imminent.

The viral strategy isn't without its problems, though. You'll have little control over your demographics, which could overburden your support. For example, Tumblr found itself exploding in the Philippines very early on — Tumblr is among the top ten most visited sites in the Philippines — and they had to hire a huge team to support them there. Another issue is server growing pains. Twitter and Tumblr were knocked offline for long periods during their early viral growth days.

There are worse problems than exploding growth — who doesn't want it? — but imagine not having the money or manpower to support it, leading to a decline in the quality of your service that causes people to jump ship, possibly to a competitor.

Create Micro Sites

A micro site is a landing page designed around a specific demographic and type of user. After you've tracked the source of your traffic (see above), you can develop these landing pages for users with the highest conversion rates. In my example above, we'd create a micro site for wedding photographers in Europe if they were our most robust cohort of converting users. Then we'd work our way down our list of LTV users and make landing sites for them.

The advantages of creating micro sites are: better SEO (you can target specific keywords for search engines); they're great for A/B testing; the page is more targeted so you're speaking specifically to a user group; and, if you do buy advertisements, you can funnel those ads directly to a specific page.

Give Away Something People Want

The most notorious practice of giving away something people want to encourage signups is found on gambling sites. Gambling sites all offer a "free poker bonus" for signing up and playing on their site. People see free money and they can't resist. This doesn't even end up costing the gambling sites much money either, as the "free poker bonus" isn't unlocked until you've added $50 or more of your own money to your account and played a certain number of hands. By then, the poker site is banking that you've become hooked and plan on adding lots more money, and they've made money in any case from the rake they take on every hand played.

Of course giving away money can hardly be a strategy for "acquiring users for free," but there are other things you can give away to attract them. Everyone loves free stuff. You can give away free paid accounts (see: Bootstrap Marketing), offer limited edition virtual goods such as icons, and special early adopter features. People love the feeling that they've received something exclusive that people after them won't be able to get.

What Are Your Competitors Doing to Acquire Users?

One very effective way to acquire new users is to monitor how your competitors do it. Take note of where they're receiving press from and what marketing they're doing. This just happened recently to us at Carbonmade. A competitor reached out to a prominent Canadian photography website that wrote a detailed article about us and asked if the site would cover them next. Touché! I have to give them credit for trying.

While this photography website didn't end up writing a piece about them, just as often a writer will want to paint a complete picture of what they're covering and include your service in a follow-up or future article. You know they're interested in your space if they've already written about a competitor of yours.

You also want to see where your competitors are spending their money. If you see that they're pumping money into a particular means of acquiring users, then it's likely that they've found a sweet spot. You'll want to get a piece of the action too before it's too late.

Transitioning to Paying For Users

Acquiring users for free is great when you're just starting out and strapped for cash, but as soon as you've got the metrics worked out to support paying to acquire users, you should. You'll still need to have optimized your service with free user acquisition before paying to acquire them.

Even knowing that every dollar you put in makes you two back, you'll need revenue or financing to fund acquisition. This is often a Catch 22 for bootstrapped startups, as you have to decide whether spending money on a new hire to improve your product will net you a greater gain than paying to acquire users. When you're first starting out, I think it's better to hire.

The reasons to pay to acquire users are fairly simple. For starters, you'll make money, but more importantly you'll prevent competitors from entering the market by increasing your market share. Free users are still the best to generate a positive ROI, but don't neglect what money can buy you.