Growth Story: How Grammarly Is Helping the World Communicate Better
What does it take to start and scale a business with an addressable market of 2 billion people? Just ask Alex Shevchenko and Max Lytvyn, the two Ukrainians who built Grammarly, a smart writing application for English speakers around the world, into one of the most exciting and fastest growing companies in Silicon Valley. This is their growth story.
Grammarly was brought into a spotlight when it recently announced a $110 million funding round, yet few people realize that its bootstrapped success story has been eight years in the making.
For Grammarly’s founders, developing writing applications has been a recurring theme that started with a side project during their college days at International Christian University in Kyiv.
A few years later, they created MyDropBox, a service that checked essays and research papers for plagiarism, which counted about 800 North American universities as customers at the time it was sold to Blackboard in 2007.
Once the two-year non-compete clause from the sale expired, the two friends launched their new project — Grammarly.
Road to product/market fit
It took about two years for the upstart to gain traction. The initial product — technology aimed at helping English language learners write better — was to be sold to universities, a market they knew well from their previous venture.
Yet, once the product was made available, the company saw that students and faculty weren’t the only ones signing up for the service. In fact, about a half of the users were from outside academia and needed the service for writing technical papers, letters, and resumes.
And while product sales to the university market were slow due to long purchase cycles and bureaucracy, the consumer segment was demonstrating solid growth.
It is then that Grammarly decided to pivot. The company shifted focus from an enterprise model to a consumer model, while at the same time expanding the addressable market for its writing tool to include all people who use English in their everyday life.
Redefining the target market and repositioning the product was the breakthrough that helped the company get to product/market fit.
Today, students still make up around 25% of the company’s user base, whereas the majority of those using the service are professionals that create documents on a daily basis, including consultants, lawyers, marketers, bloggers, and journalists.
Business strategy
User-driven functionality
The concept behind Grammarly isn’t unique. There are other standalone applications for the same use case, while Google and Microsoft are two of the biggest names that have integrated spell check and grammar check tools into their products.
But until Grammarly, no one had gotten it quite right. Other applications are unreliable in identifying and correcting mistakes despite the companies throwing significant resources at solving the problem.
Grammarly decided to take a different approach to this highly technical issue by enlisting the help of its users. It added an option in the app for the user to indicate whether the correction it made was valid or not.
Soliciting customer feedback helped reduce the negative effect of erroneous corrections, but more importantly, it enabled the company to build up a knowledge base of thousands of grammar rules and become the world’s most advanced grammar checker.
Today, the company is continuously refining the quality of its platform using powerful cloud-based computers and linguistic machine learning to process massive amounts of data from its millions of users.
Writing-enhancement platform
Hell-bent on the mission of improving the way people communicate, Grammarly is driving growth by moving its feature set beyond the standard grammar checker and proofreader.
It is deploying sophisticated AI algorithms to help people with both the content and the meaning of their writing.
In real-time mode, it tracks spelling, grammar, and syntax errors and provides suggestions around clarity, readability, effectiveness, vocabulary usage, tone, and writing style to help customers make their written communication clear, mistake-free, and effective.
Personalization
The power of personalization in today’s digital world cannot be overstated, and it’s another pillar of Grammarly’s business strategy. The application makes suggestions on how to improve text by taking into account the user’s individual style and communication goals.
Grammarly also allows you to track progress over time, highlighting improvements and deficits in user performance, and compare your performance to the larger user population.
Freemium model
For the first six years, Grammarly’s application was available only on a paid subscription basis. While user growth during that period was healthy, things really took off in 2015, when the company switched to the freemium model.
Today, consumers can choose a powerful free version or expand functionality with a Premium version for $11.99 per month based on an annual subscription.
When Grammarly switched to the freemium model, it was faced with a big drop-off between the installation of a free browser extension and the sign-up for an account that allows the user to get more out of the free product and eventually convert into a Premium customer.
How did the company address this challenge? It uses in-product messaging, email, and retargeting campaigns to communicate value proposition around why an account creation is an important part of the process to the user without detracting from the value of the free product.
Interface integration
The company has made it easy for the users to find and use the application by making it available in a variety of writing interfaces, including browser extensions (Chrome, Firefox, Safari), desktop operating environments (Mac, Windows), Microsoft Office, and an online editor. The Chrome extension alone has over 10 million users.
Marketing strategy
Product positioning
Being placed into a utility category significantly limits Grammarly’s growth potential, so the company has focused its recent marketing efforts on positioning itself as a lifestyle aspirational brand.
Instead of touting its app as the world’s best grammar checker, the company is now marketing it as a tool to help you communicate more effectively in your personal and professional life. The idea being that quality writing — clear, concise, and error-free — leads to academic or professional success and a higher level of confidence.
By educating people on the benefits of high quality written communication, the company looks to appeal to a broader audience. Its content and advertising highlight use cases of the product that may not be immediately associated with an application like Grammarly’s.
Whether you are applying for a job, drafting a contract, or filling out an online dating profile, the message is simple: using Grammarly gives you the peace of mind regarding the quality of your writing.
The messaging also emphasizes increased productivity and efficiency for professionals in a wide range of fields, including marketing, sales and customer support.
Channel strategy
Since inception, Grammarly strategy has been to actively explore high-potential but less crowded growth channels to gain first-mover advantage.
Benefiting from attractive pricing and lower competition, it has been able to double down on those channels and drive user growth before the economics got eroded due to competition and shifting demographics.
Yuriy Timen describes the strategy as follows:
We looked at our channel mix, and we likened it to drilling oil wells. You have your existing channels and they’re producing for you, but you don’t know how deep they are. It’s really hard to predict how much oil is left in your channels, so you have to diversify by mining for new oil wells.
Social media marketing
Grammarly has built a powerful social media presence across Facebook, Twitter, Google+, LinkedIn, Pinterest, and Instagram.
With 7 million followers, Facebook is the company’s primary engagement platform, content hub, and the place for experimenting with new campaigns.
How did the company build such a large audience? By being creative, offering value, and using data-driven experimentation to decide which type of content to publish.
In the early days, Grammarly created a fairly dry, specialized content for people interested in grammar and writing. It was clear that strategy wasn’t working, so the company’s social media team began experimenting with different content types and themes to find a format that resonated with a broader audience.
It found that the format of tips, jokes, and comics that made language fun drove the highest engagement.
More recently, Grammarly added long-form content focused around lifestyle advice, productivity, careers, and similar topics. This content strategy is consistent with the company’s new positioning and provides value to the audience beyond the product itself.
The company’s social media strategy is always evolving and is informed by both a quantitative view and a qualitative view.
Quantitatively, the company looks at its principal social media metric — organic engagement ratio (total engagement divided by organic reach) to identify topics and formats that perform best. On the qualitative side, Grammarly pre-screens content by surveying a group of its brand advocates.
For the benefit of the new followers, Grammarly recycles and repurposes its best content from the past based on how it had performed against an engagement benchmark.
Paid search
Paid advertising on search engines was one of the initial growth channels for Grammarly and continues to be an important part of the company’s growth marketing mix to this day.
In addition to Google, the company has seen excellent results on the Bing platform, as detailed in the following case study.
The channel where Grammarly has really been crushing it is video advertising. It has performed well as a paid acquisition channel and provided lift in brand awareness. Some of the ad collateral on the company’s YouTube channel, like this one, have over 80 million views.
With paid acquisition, the company is harnessing the power of sequential advertising to improve ROI. By constructing a narrative over the customer journey and tailoring the ad message for each consideration phase, Grammarly is creating a personalized experience that translates into a higher conversion rate.
To test message copy at different stages of the customer journey, Grammarly is using a high tempo experimentation framework, which was baked early into the bootstrapped company’s DNA.
At the top of the funnel, the messaging is aspirational, focusing on the value that the product brings to people’s lives, while subsequent messaging becomes more and more feature-based.
What’s interesting is that Grammarly found that inspirational, results-based content in many cases does better than informational content even at the bottom of the funnel.
Offline advertising
TV and out-of-home advertising, such as subways and billboards, are the two channels that the growth team at Grammarly is really excited about.
Following the recent funding round, the company is investing heavily in offline advertising in a bid to transform it into a major growth channel for the company. At the time of this writing, Grammarly is looking for a growth marketer to lead this effort.
Traditional advertising channels offer scaled-up brands another touchpoint for building an emotional connection with the consumer. Growth marketers tend to stay away from them because of measurability issues, but Grammarly’s growth team is finding a way around the problem.
By picking certain geography or certain period of time and creating high frequency exposure, the company is able to measure the lift in conversions and therefore the ROI of its campaign.
Its debut TV ad didn’t hit the right note, judging by the reviews and the viewer sentiment on its YouTube channel, so the company needs to find the right ad creative that resonates with its target audience.
Email marketing
Grammarly uses email marketing to provide users with personalized, engaging content and, where appropriate, guide them towards purchasing the Premium package. The cornerstone of this effort is a weekly newsletter — Grammarly Insights — that is sent to all free and premium customers.
The company populates each newsletter with actionable subscriber data, such as words written, corrections made, and vocabulary used. It recently expanded the level of insights provided in each newsletter to include trends in writing quality over a four-week period, earn-and-learn badges, and personal record alerts.
The company only includes a Premium offer in the email if the user exhibits enough mistakes to merit the cost.
Using the power of today’s marketing automation tools the company has been able to engage in one-to-one conversations with its users and achieve email open rates of over 20% and a lift in Premium conversions.
For an in-depth review of Grammarly’s email drip campaign, check out this article.
Targeting the enterprise market
While the growth and marketing team at Grammarly historically had been focused on the consumer segment, with the new funding in place, they will be joining efforts with the sales team to make a big push into the enterprise market.
Grammarly’s roster of enterprise clients features Fortune 100 companies, such as Cisco, Dell, and Boeing, as well as over 600 universities, including Arizona State University, Penn State University, and University of Illinois. Yet, enterprise sales comprise less than 20% of revenue, and the company wants to change that.
On the academic side, there is Grammarly@EDU which universities license to all of their students. An important selling point for academic clients that eschew marketing claims in favor of hard facts are the two research studies conducted by Central Michigan University and Flinders University in Australia demonstrating the effect of using Grammarly on student grades and writing confidence.
On the corporate side, Grammarly’s growth to date has been principally via a consumerized enterprise model, where the growth in the number of individual users within a company who adopted the application leads to a centralized purchasing decision.
Currently, Grammarly is looking into building out a self-serve enterprise product — similar to Slack or Dropbox — which would add a whole new dimension to the company’s growth profile.
Key takeaways from Grammarly’s growth journey
- Soliciting customer feedback is a key paradigm of the lean startup framework, and Grammarly leveraged it to develop the functionality of its product.
- The company aggressively seeks first mover advantage in new channels by deploying high tempo experiments and refining its measurement approaches.
- By bringing a high degree of personalization into its product and messaging, Grammarly is delivering better brand experience that converts users into loyal fans and premium subscribers.
With an addressable market of a quarter of the world’s population, Grammarly is on a mission to change the way the world communicates. Transitioning from a proofreading tool to an AI-driven communication assistant will require both technical and marketing prowess, and Grammarly seems to be up to the challenge.
It looks like the best chapters of Grammarly’s growth story are yet to be written.
Originally published at growthengineers.com.
