Customer acquisition for startups, and a bunch of fairly random numbers.

I’m often surprised by how customer acquisition is left to the “marketers” (that haven’t been hired yet) at startups. When really, it affects how you build the website, which features you add, the information architecture of the site, everything.

I’m also sometimes surprised by the naivete surrounding customer acquisition. Regardless of some success stories that apparently just became popular just “because”, most startups have to work hard at this.

If you’re trying to get paying users, a customer acquisition cost of 10 US$ / user is normal. 20$ would be normal too.

(Figures vary widely from site to site of course, but I’m adding some that have been fairly typical for sites I’ve worked on just because this information is so hard to get.)

That means, for example, that if your business model assumes you will only make 10$ per paying user over time, you’re not going anywhere.

There is also often little understanding about the amount of customers you can reasonably expect to get, and what that means.

For example, if you have 10,000 signed-up users for a free service, that most likely means squat, nada, zilch, nothing. Your 10,000 first users are rather easy to get.  If you have 100,000 users, that is a good start, 100,000 users is a respectable start. A million users, that’s doing well, someone might want to buy you.

Again a disclaimer: numbers are just numbers, and your situation will always be different. I’m just putting them out here as a kind of rough guideline.

As another example, if you’re getting 100 new signups a day, and it’s not trending upwards, that doesn’t mean much either. If it *is* trending upwards, then you might be going somewhere. At 1,000 new users a day, *if* those users actually use and enjoy the site, you’re doing good, going somewhere. You might get an investor interested with those numbers.

Another example. If you are hoping to get 10,000 paying users for your app, that’s certainly doable. If you then think you’ll get to a million just as easily, you’re mistaken. A million paying users means a *lot* of work doing purely customer acquisition. Years of work. And yes, that means marketing, amongst other things.

A much more useful metric than users are active users. Those are people that have used your site in the past week or month. You can accumulate 100s of 1000s of users, but if they signed up and then forgot about your site, there’s not much happening there. If you have even a few 100 very active users, that can be enough to jumpstart your site.

Digg only recently hit the million users point, and most of those users don’t post stories. Using Digg is very easy – just visit the homepage and click some links. That simpleness of the action is one of the reasons it’s been so successfull I believe. Next level, you can sign up and vote for stuff. Voting is super easy too: there’s only 1 button. No thinking required. Then the next level (and a very small % of users does this) is submitting articles.

So Digg has relatively few users for being such a powerhouse. And even when they only had a few 10,000 users they were considered popular.

Anyways, this post is mostly for testing Windows Livewriter, an excellent product from Redmond.


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