Actionable advice and learnings: How do you attract users to your app or platform?

At our seventh StartupTalk, we tried to wheedle down how to build a critical mass of users in your app or platform. As co-founder of Vivino, it’s fair to say one of our speakers, Heini Zachariassen, have been successful in doing just that. With his experience growing Vivino from zero to 32m users worldwide he has a few tips and tricks up his sleeve. Luckily, he wasn’t shy about sharing his most valuable learnings with the crowd. Neither was the second speaker, Morten Møgelmose. As co-founder of Zliide he has just started the process of lurking users into the Zliide platform. He revealed how Zliide currently is approaching this major challenge. To tie things up, we had no other than our trusted friend and facilitator at PreSeed Academy, Nicolaj Højer.

What most apps and platforms hunt in regards of attracting users are the sweet benefits of the network effect. In its basics, the network effect means that your business’ strength and value progress with the number of users. It’s the classic “the more, the merrier” effect. Just imagine Facebook with only one user being yourself: No users equal no content equals no value. The network effect doesn’t come by itself and only once you’ve reached a critical mass of users it will be present. But if you manage to get the network effect rolling, the reward is enormous. As Nicolaj Højer pointed out: “The winner takes it all,” referring to the valuation of dominating platforms such as Facebook and YouTube.
But there’s a long way to become the winner. The commercialization of apps and platforms is challenging. On one side, it’s inexpensive gaining new users, in the sense that the marginal costs are very low — there areno manufacturing costs for every new user, as there is in let’s say shoe manufacturing where you must produce a new pair of shoes for every new customer. That makes for an attractive business model. On the other side, it’s an expensive process as most don’t make money until they hit the critical mass of users. Due to the many apps and platforms trying to reach this mass, most start out with a ‘freemium’ model. Therefore, the value of each new user is relatively low. You need to reach an appropriate number of users to get the network effect rolling and then start leveraging the business potential.
It’s easier said than done, so here’s 4 key learnings from Heini and Morten that just might put you in the right direction of the Eldorado of apps and platforms:

1. Know your (target) user

It sounds simple and you’ve probably heard it a thousand times before. However, it is a vital discipline to know exactly who you’re targeting. As Heini stressed: “You simply cannot target everybody, without missing everyone.” You have to be very specific in who you’re targeting to focus on what your unique type of user wants and how they want it. Target a type of user who intuitively understands your product, who sees the value of your product, and needs a minimum of guidance to get on board. Morten used his sister as an example of the ideal Zliide user: She’s a Millennial, who is tech-savvy and likes to go shopping. The more she can do herself and on her phone, the better. When she’s out shopping, she’ll rather have Queen B blasting through her headphones than talking to a sales assistant to pay for her product at the register. If she needs style advise she uses Instagram. With Zliide she can pay for the product in the app and leave the clothing store directly and therefore she sees the benefit right away. If Zliide targeted an elder generation, who are less tech-savvy and enjoys conversating with sales assistants, they needed to spend costly resources on both convincing and guiding them to use the product. The onboarding would be way too expensive, and the user would maybe end up being unsatisfied. And as Morten pinpointed: “It’s better to have 10 users who love your product than 100 who likes it.” There’s a higher chance that loyal users will be valuable in the long run, and they’re more likely to provide you with effective feedback, which is vital especially in the early stages. Also, they’re more likely to recommend your product to their surroundings — all free of charge for you. Once you have solid user love from your targeted user type, more users will eventually come.

2. Be easy, not beautiful

So, you know your target users and what they want. Now you need to ensure you’re delivering the value they’re looking for and that you say you deliver. You shouldn’t focus on making a beautiful design, but instead focus on the core of your product: The needs you satisfy for your target user and the value they get from it. Creating a stunning look is a classic example of a task that takes up a lot of costly resources before you’ve finished building the core functionality of your product. If your product delivers concrete value, your users will use it no matter the looks. Therefore, you also have to forget about monetizing initially and simply focus on winning the users. If you’re able to get feedback from your users, then you’re able to understand how they perceive and use your product. Then you can improve it. But, if your app or platform seems complicated, the user will be gone in a matter of seconds. You need to keep the experience easy and seamless, so that they can see the benefit and practicality of your product right away. Know what value your product creates, focus on improving just that and aggressively ignore anything else.

3. The scavenger hunt — incentivizing users

Even with an excellent and simple product — at least according to yourself and your mom — the users painstakingly enough don’t come by themselves. That’s what Zliide experienced when they launched: They almost assumed retail stores and users would beg for their product due to its uniqueness. They quickly realized that wasn’t the case. Had they asked Heini and Vivino they could have warned them, as they went through the same experience years earlier. So, how did they take matters into their own hands and lured users to try out their products?

At Zliide, Morten and his team found an effective way to incentivize people to install and use Zliide when shopping for clothing in stores. They created a scavenger hunt, where users could get big discounts on pieces of clothing, but in order to find the ‘jackpot’ pieces they had to scan clothing tags using the Zliide app. This didn’t only motivate the user to try out Zliide, but it also had the user experience the benefit of using the product. Last, but not least it, it kickstarted Zliide’s first stages of collecting data while also testing how the users actually interacted with their product.
Vivino also had to think outside the box when they needed their very first data in the form of people adding photos of wine labels. They made a simple competition: The one who scanned the most wine labels within a certain time frame won a brilliant wine. It resulted in approximately 20.000 wine labels scanned, which was data that set the ground for a considerable better product making it even more attractive for new users to try out.

As both cases show, not only did Zliide and Vivino manage to have users try their product, it also provided both with valuable feedback and initial data.

4. Start small, think big

Once you’ve had users try your product, you’re well on your way. Even though you should focus on the core of your product and keep it simple, you also need to have a bigger vision in place: How are you eventually going to commercialize your app or/and platform? Vivino is a perfect example of how to start out with a very simple product, but as a launchpad to reach a much bigger vision: It started out as a simple wine reviewing app, but the goal was all along to pivot into the world’s biggest wine community and marketplace. Once Vivino had sufficient data and users, they had the perfect setup for a brand-new marketplace for wine sales. The many users plus data showing what wines the users like, what wines were trending, what the users were looking for in a wine, and much more, enabled Vivino to convince wine retailers that their brand-new marketplace was the right spot for them to sell their wines. With both the critical mass of users and wine retailers on board, Vivino could really commercialize their business. Because Vivino had the picture in place from the very beginning, they could take the right measures in each step towards the goal, which have helped be where they are today. It gave them direction, but it wouldn’t have been possible without the smaller versions of the final solution that helped them get the users, get the wine labels, the reviews and so on.

It all sounds somewhat simple, right? However, there is one last thing you should be aware of when trying to attract users to your app or platform. A thing that hardly can be learned, but both Heini and Morten stressed: Timing. Heini made the point that you don’t even have to be smarter or better than your competitors, you just have to hit the timing right. And let’s stick with Heini and use Vivino as an example: When Vivino launched, smartphones had really increased in popularity alongside with online reviewing sites such as IMDb, TripAdviser, Trustpilot, etc. Therefore, it was the perfect timing for an online wine reviewing database that could be accessed from your smartphone. If Vivino had launched two years earlier, both smartphones and online reviewing sites wouldn’t have been as popular which their product probably wouldn’t have been either. If they had launched two years later, the competition would have been too intense, and they might have drowned in a red ocean market.

Timing can be a booster, but it’s not everything. The above advice in combination with a talented hardworking team and the right execution will get you a long way and you might just end up tasting the sweet benefits of the network effect after all. Just remember that the user always comes first. Good luck hurling those users in!

Users are obviously important, but so is the law. Our next Startup Talk will concern legal aspects of running a startup. Be there and avoid making potential costly mistakes!

PreSeed Ventures

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Your early investment partner. https://www.preseedventures.dk

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