How to get more (of the right) customers
You’ve heard the phrase ‘quality not quantity’. We say when it comes to customers, we want both! Happily there are lots of techniques you can implement straight away to grow your customer base in quantity and quality — just look at companies like Growth Hackers who’ve built their entire model on their sharing acquisition expertise.
As a startup it can be particularly difficult. You need to get those first 10 customers so you can learn from them and grow to 100, and then to 1,000 (hopefully continuing to world domination). But even for established businesses it can be tricky to continuously add value and build brand value to prevent churn and extend your customers’ lifetime value.
There’s one strategy that’s starting to make waves, and that’s distributing your business’s equity to your customers. It’s an untapped and inventive strategy that can work wonders on your customer acquisition and retention.
Who’s already doing it and how?
Thank you shares
The team at ParcelHero used crowdfunding to build a following of people who took an interest in their brand, then picked 10 of those to become shareholders with £150 in shares each. In the words of ParcelHero founder and MD, Roger Sumner-Rivers, ‘It’s a fun way of saying ‘thank you’ to our ever-growing number of loyal customers, and giving them a slice of our success’.
Giving back to the community
The Reddit team used a different approach. After raising $50 million in funding in September 2014, it decided to give 10% of that funding back to its community in the form of ‘Reddit Notes’. Despite using the term ‘cryptocurrency’ when the idea first came out, the company is now referring to it as more like a customer rewards scheme and less a real currency.
By doing this Reddit is putting its customer base at the forefront, even when dealing with investors, and rewarding those customers who’ve stayed loyal.
Building a tribe
Chris Drummond and the Crafted Crate team used their love of craft beer to drive their new subscription business. For them the business was more than just sending beer to people every month, they wanted to build a community of beer lovers and share their knowledge of beer and its many capabilities with the world. They couldn’t do that on their own, they needed a community to help them.
They decided to try giving 20 shares in Crafted Crate Ltd to customers when they sign up for 12 consecutive months of craft beer delivery at £36 per month.
The result? Within four weeks of launching the equity offer they had 119 paying customers, now at time of writing they have over 240 paying subscribers. But what’s even more unique about Chris’s equity reward is that it’s not solely for money. His terms for getting your equity reward include a year’s subscription — so not only is he getting the new customer but he’s guaranteeing they’ll stick with him for at least a year.
For customers it’s a win-win situation. In return for their commitment and loyalty, they become a real shareholder in the business and get to share in the success of what they support.
Why doesn’t everyone do it?
So, if there are such obvious benefits to rewarding your customers with equity, why’s it a strategy that’s been kept in the shadows? Simply put, until now it’s difficult, costly and time-consuming to distribute your equity.
As this matrix shows, crowdfunding and trying to issue it manually can be problematic. These people are investors, not customers, and once you have their investment you still have to go out and try and make the business work. Its a really inefficient use of equity.
While crowdfunding may be cheap, to run a crowdfunding campaign can take months and you have to get a certain percentage lined up ahead of time and often you still need to find a lead investor.
And doing it yourself? Perhaps you enjoy drowning in paperwork and the tackling of legal challenges, not to mention navigating the tax liabilities this method can create for your customers… but i bet you don’t.
Vestd is different. It’s an equity distribution platform that’s cost-effective, simple (distribute to hundreds of people in seconds!), tax efficient and all done on your terms.