Bakery CAC and Viral Coefficient

Preliminary look at early data from first unoptimized user (eater?) acquisition campaign for a pre-launch bakery

Happy Thanksgiving, internet strangers!

TLDR:

In early results, our viral coefficient is around 0.43, meaning that for every 100 people we get in our list, it looks like they’ll refer 43 people. Now we’ll start trying to improve a drip campaign to make it so that on average, every 100 users refers 100 more.

Building An Email List Before We Launch

A major focus before we launch is building an email list so we launch to ready prospects.

To that end, one of our first tests is to emulate what other companies have successfuly done to build their lists before launching.

For example:

• Harry’s built a 100k+ email list before launching with a referral program with milestones for different rewards.

• Dropbox offered rewards to both the inviter and the invitee.

“Give a Kolache, Get a Kolache” Promotion, Week 1

To get the word out and start building interest, we’re running a referral program where a person can give a friend a kolache and get one in return.

This is what our stats look like after 1 week:

Big picture:

Of 130 participants, 39 were referred by a friend. So that means that 91 (130-39) people signed up directly, and they generated 39 referrals.

Ideally, I’d like for every person who signs up to generate, on average 1 or more referrals.

If that were to happen, we’d effectively continue to accrue emails indefinitely without any further work.

We would, of course, then be on the hook for a large number of free kolaches, but this would be a good thing (unproven, but I believe that the LTV (lifetime value) of a customer is significantly higher than the cost of a kolache).

Current status:

We have a page that allows someone to enter their email address for a free kolache.

After signing up, the user gets a unique link to share that page with their friends. If their friends sign up, then both parties get a free kolache.

After someone signs up for a free kolache, we just send them a single email with a code to redeem a free kolache.

The user receives no further emails or communication from us.

What we aren’t doing (yet) that we should:

We are:

• sending users zero reminders to let them know they can earn more free kolaches

• not doing anything to engage our users or build a relationship with them

• not giving them any context beyond “you got a free thing you’ve never heard about”

Things we will (probably) try:

• Send a follow up with a short story about why we’re doing this, in order to personalize/humanize us and build a connection

• Send easy follow up questions to start a conversation (what neighborhood are they in? have they had a kolache before? what flavors do they like?) - these are useful for us for market research and to determine which areas to first push product

• Send at least 1 standalone reminder that is easy for them to forward to friends that will let them earn more kolaches.

Not sure how much these will move the needle, but hopefully we’ll see an improvement in our viral coefficient.

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Note: This all isn’t strictly right. Here are some of the reasons:

• Small sample size

• Different “account” ages - If someone just signed up today, they may refer people, but we haven’t captured that

• Dirty data — seeded by myself and friends, who exhibit different (probably better) sharing behaviors than “normal” users.

• I can’t tell how many of our referrals are secondary/tertiary referrals, which can give me better clarity about the referral shape.

• Thanksgiving week is probably not representative of normal user behavior.

Overall though, strategy is the same — see if we can optimize this into a forever growing referral engine.