What does Dollar Shave Club have to do with Crypto?
In this post, we’re going to focus on a crucial component that is often overlooked when evaluating a blockchain or crypto asset’s potential — Marketing, Branding & Growth Strategies.
How does a new project get the word out? How does it engage with its community? How does it curate its unique brand image? For a project where “success” is so closely tied to adoption by the community, these are very pertinent questions that every project must answer.
Let’s take a real-world example of this. Dollar Shave Club. Dollar Shave Club, a company you’ve probably heard about, was founded seven years ago and just made its way to unicorn status (i.e. >$1 billion valuation). Hmm — they must have had a killer product or something really proprietary, right? Well, here’s news for you: they sell razor blades and shaving cream. Nothing complicated about the product, and the shaving cream itself is pretty indistinguishable from the one at your local pharmacy. So how did they achieve home-run success? It clearly wasn’t the actual product itself. Gillette already had a stronghold in the men’s shaving market for years.
Dollar Shave Club’s success had a lot to do with its business model. Its value proposition was that it would regularly deliver blades and shaving cream to consumers. Simple. The value-add for consumers was time-savings and convenience of delivery. Their main innovation, however, was in the branding. Dollar Shave Club strived to market two points — it’s low cost and simplicity. Their marketing is not fancy, sophisticated, or sleek by any means. In fact, they took a contrarian approach and purposely tried to look buffoonish and use profane language in their marketing. And…it worked. Take a look at this ad by Michael Dubin, the founder. This commercial took place in 2012, before the real growth occurred.
The branding is still similar to this day. Now how does this example tie into thinking about crypto? Many of these projects are anywhere from just a few weeks or months to a few years in progress. So they are essentially at a stage not too far from where Dollar Shave Club was in 2012, during the time the commercial took place. So, when you have many projects trying to achieve the same goal — i.e. be the premier digital currency, or the best privacy coin, the #1 smart contracts platform, or the most widely utilized predictions market, how do you differentiate yourself? Let’s assume for a minute that these projects are similar in other respects.
One answer is that you have to look at how they’re actually trying to acquire and win their users over, especially in comparison to non-blockchain players that already have customers and networks effects at play. Of course, that’s in conjunction with comparing against other crypto projects themselves that are aiming to do the same thing.
A high rate of user adoption in turn drives value within a distributed, decentralized ecosystem, which in turn drives up the intrinsic value of the crypto asset. This is a classic example of network effects at play — the more users, the more valuable the ecosystem gets, compelling more users to join. Increases in intrinsic, or fundamental value, should eventually manifest itself in the price. Branding and engagement of the community plays a key role in getting users to adopt a platform. The message you convey about who you are and the psychological feelings you provoke in your users plays a big role in winning customers over.
Partnerships are King
High-quality partnerships are massively influential in forming users’ perception of the brand. Why does Coca Cola or Nike pay a premium for highly recognizable athletes to be part of their commercials? When comparing crypto assets with similar project visions and technologies, a good differentiating factor is typically the quality of partnerships each has. Well-reputed and well-connected individuals can accelerate crypto adoption in real-world markets purely through channel marketing. In addition, the validation and legitimacy that these individuals confer upon the project is invaluable in signaling to potential users that the project is legit.
Let’s zoom out and go beyond just the scope of branding, which has mostly to do with the project itself and the image they’re trying to portray. Let’s look at how the project engages with customers directly. Especially in crypto, social media plays a big role in community engagement. How is the team communicating with users or anyone interested in the project? Most projects use some or all of the following: Twitter, Reddit, Medium, Telegram, Facebook, Github, and Discord accounts. Take some time to go through these channels and see what’s going on. In the remainder of post, we’ll detail some metrics and techniques we use to analyze various things like sentiment, strength of marketing efforts, quality of posts, excitement in subscribers, etc. Let’s look at Reddit and Twitter as an example.
Start with a list of some high level questions you want answered.
- Is there a lot of activity on threads?
- Is the user community active? Are there many upvotes/downvotes on threads?
- Does sentiment appear to be positive or negative?
- Is there diversity amongst active users or is it limited to the same individuals?
Aggregate some data to help you answer these questions. We mean things like # of subscribers, # of posts with > 100 upvotes, average # of comments for posts with > 100 upvotes, etc. Don’t base an opinion solely off these data points, as they will change depending on how you slice and dice the metric, on the time period used, and multiple other factors. However, the exercise will still provide some value in getting a sense of the community and quantifying it using raw data.
Once you have this data, you can create metrics to measure across coins:
# of Subscribers to Market Cap Ratio — This is a proxy for assessing how large the community is relative to the size of the crypto asset. A higher ratio is better, all things equal.
# of Posts with > 100 Upvotes (last 30 days) to # of Subscribers Ratio — This is a representation of the excitement within the community in the past month. The assumption here is that posts with > 100 upvotes not only represents the activity of users, but also positive sentiment amongst them. A higher ratio is better, all things equal.
Average # of Comments per Upvote for posts with > 100 Upvotes (last 30 days) to # of Posts with > 100 Upvotes (last 30 days) Ratio — This ratio separates the active community members from the lurkers. Active community members are preferred, as they will be the ones critical in attracting new users, and promoting the project on other platforms. Lurkers are passive community members that are less valuable to the overall network. A higher ratio is better, all things equal.
Assessing the Twitter account of a particular coin is helpful in determining its marketing strength and growth pickup. Some data points we look to obtain include # of Tweets, # of Followers, and the history of the account. With this data, we can perform the following calculations to get metrics that are comparable across peers:
# of Followers to # of Tweets Ratio: This is a proxy for assessing the effectiveness of a project’s tweets in attracting followers. It also gives an indication of the size of the community with respect to the content being delivered, and in general the effectiveness of marketing in gaining new users. A higher ratio is better, all things equal.
# of Tweets to Years since Joined Twitter Ratio: This indicates the average number of tweets on a yearly basis. A higher number of tweets in a normalized year suggests more active marketing efforts from the team. We believe this number is more representative of the above in the project’s earlier years. An established project with significant traction may not, after all, need as much focus on outbound marketing if they are saturated with inbound users. As such, this would lower the ratio in later years, artificially underestimating a company’s strength in this respect (throughout its life). A higher ratio is better, all things equal.
Keep in mind that these are just a sample of metrics that can be used, and there are many ways to shift the parameters. Also, outputs should be given a serious look, but should only be used in conjunction with other data points to form an overall assessment.
While we went in-depth on Reddit and Twitter as potential channels to extract useful information on marketing and growth strategies, these frameworks can be applied to various other channels. Telegram and Discord are good for AMA-type interactions and instant messaging, so it’s a good way to see if the team is listening to users and seeing what the community at large want to know. It’s important that they provide high quality responses to user requests and inquiries in a timely manner. Psychologically, this provides people with a good feeling and also shows that the team is on top of their game. Medium is good for producing content related to project roadmap as well as general educational material — content is king when it comes to growing a business.
Marketing, sales, branding, partnerships, and community sentiment play an extremely important role in the success of a startup and are an important part of the execution engine. The next time you evaluate any project, look out for these factors.