We all want to build mobile apps that are scaleable and have the potential to pursue larger and even global markets, that generate millions (or billions) of dollars in revenue each year. I'll give you some tips in this article of how you as a tech startup can maintain growth and watch your burn rate at the same time. A key feature of today's most successful startups is their use of "viral loops" to expand their user base and scale their business. So what is a "viral loop" and why should you know what that is? I'll give you the answers in this article as well as other key related information.
What kills startups?
Did you know that unfortunately over ninety percent of startups fail. And the number one reason... running out of money. One key cause of this is the fact that for a lot of new startups, their customer acquisition cost (CAC) is extremely high.
Customer acquisition costs are always going to be higher initially, but don't let that drain your funding and force you to shut up shop. Here's how CAC works: simply divide all the costs spent on acquiring new customer by hte number of customers acquired in the time period that money was spent. Costs may include marketing costs, wages, etc.
So, for example, “The average online company, such as an e-commerce store, might have to pay upwards of $200 or even $300 in order to acquire one new customer via traditional marketing and advertising. To put that into perspective, try and imagine Dropbox and Instagram each paying anywhere from $40 billion to $60 billion in order to accumulate their user bases of 200 million people!”
Obviously, no company would (or could) ever spend $60 billion to acquire its set of customers.
How, then, do startups like Airbnb, Facebook, and Google manage to amass so many users without paying humungous sums of money for them? They utilise the power of viral marketing and, in particular, viral loops.
For our purposes we will look at "virality" so to speak, as a specific term used in refer