Growth patterns of the digital age


In my post about healthy businesses in the digital age I described, how digital technology is massively changing the composition of modern business models. In this post, I want to go into more detail on how digital technology and resulting network effects change the way companies acquire customers.


Launching a product in the old days

Traditionally, companies invest large amounts of time, money and effort into conquering new markets and reaching customers. Super bowl commercials are a perfect example for that. Prices for a 30 seconds spot have skyrocketed to around $4.5 million over the last 10 years, yet big brands still haven’t stopped investing into the format.


With the advent of the social web and mobile devices, there are now more effective ways to enter a market and grow a following. Young tech companies have developed strategies to efficiently build and use networks to reach new customers — in short: growth hacking. The following examples are 3 of the most famous growth hacks:


Growing a following today

Dollar Shave Club - Go viral.
The Dollar Shave Club sells a simple product: razor blades. Through a subscription service, customers receive a fresh pair of blades every month. When the service launched in 2012, the company produced a short video that generated more than 12.000 new customers in the first 48 hours. Today, the company is on track to generate $140 million this year. Why? Because their video is fun to watch, at least, that’s what more than 22 million viewers are thinking.


Dropbox - Refer a friend.
Dropbox is an eight-year-old online storage company currently valued at $4 billion. What did they do to make their business so successful? 

Dropbox offered incentives to existing users to invite others to use Dropbox. This way, Dropbox was able to increase signup rates massively and grew their customer base to 400 million users in only 8 years. Friend referrals not only instilled more trust, they also provided benefits by increasing the free storage capacity of both parties by 500MB.

 Source:  D  ropbox  

Source: Dropbox 


AirBnB - Leverage existing networks.
AirBnb facilitates vacation rentals between peers. To grow rapidly, the company made use of the biggest American classifieds network craigslist. AirBnB used the network to find listings of houses for rent and reached out to the renters asking them to place their ads on AirBnB instead. Also, an automated listing generator on the AirBnB platform was used to extend their reach beyond their own platform and leverage the user base of craigslist. To read more about the strategies applied by AirBnB have a look here.

Designing messages that move through networks organically is priority number one.

Today’s marketing efforts are determined by an inherent focus on digital networks – messages are made to spread organically. Whether it’s about sharing funny videos, referring products or using the reach of existing networks; designing messages that move through networks organically is priority number one.
To do so, it is much more important to have smart and skilled people with creative ideas and an understanding of technology and networks inside the team than spending large amounts of ad dollars.