Review of Case Study: How AppSumo grew to 500,000 customers in only 18 months

hipster partyTonight I skipped a Friday night on the town in Los Angeles with Silverlake hipsters, Hollywood socialites and Venice Beach Dogtown skater boys to watch a video case study on how a company called AppSumo grew to 500,000 customers in only 18 months. The information in the videos was AWESOME.

AppSumo is like a Groupon for web applications. I discovered the case study as a deal on their website homepage. Though the headline was alluring, the trigger for buying the video series was hearing from Andrew Chen, an analytics and metrics master who Noah Kagan, the founder of AppSumo, raves about in his business talks.  Being that Noah was the 4th employee at the ever successful financial website MINT and the 30th employee at the world dominating Facebook, I knew that if he thinks Andrew is worth listening to, then I should too. Andrew is an investor and adviser for Appsumo.

andrew chen and noah kagan cohort analysis

After watching the candid 7 part video interviews I am able to understand what realistic expectations can be set in place for a new business owner growing a company. Noah and Andrew give us many tactics and tips, but I wouldn’t call the videos a traditional “course”.  It’s not a step-by-step micro level how to guide.  It’s better than that.  They give us an overall plan. What the videos share is a broken down, easy to digest, process outline for how to build a significant customer base in a short amount of time. They reveal how to discover and scale working marketing tactics.

hustlingThey break it down into 3 parts. Phase 1 is the “Hustle Stage” from Zero – 1,000 customers. In the first stage it’s all about defining who our customers are and where they hang out in order to reach them.  What websites do they visit? What content do they read? They remind us if a product or service sucks no marketing will work. The goal is to find out what marketing works for customer acquisition to be on an upward trajectory because they reinforce ‘you can’t scale a flat line’.

Then Phase 2 is the “Puberty Stage” from 1,001 to 50,000 customers where we take what we learned in phase one and review what marketing tactics worked that can be scaled, then test if they perform to meet our long term expectations. In the second stage they suggest focusing on one specific marketing tactic and mastering it so that it is scalable, repeatable and predictable. For AppSumo this was online advertising also known as PPC, Pay Per Click.puberty stages

Phase 3 is the “Scale Stage” from 50,001 to 500,000 where we have spent time seasoning ourselves in very specific marketing tactics, have enough data to know how much each customer is costing us and making sure we are getting at least a 10x return on our efforts. Most importantly in phase 3 we want to analyze the long-term activity of our customers to embrace how much we can spend to acquire new ones. In the last stage it’s all about data and looking at how people are interacting with your company over the long term. This is called cohort analysis. How much revenue is each customer generating the first week, 2nd month, 6 months, etc. Compare marketing and site presence to what type of customer was attracted to your company and analyze their site activity. Tweak your company marketing accordingly to what components contribute to a customers who spend the most money over an extended period of time. upward trajectory

Though I highly recommend checking out these interviews, rather than trusting me take a look at the intro video below to see if it suits what you are looking to learn.

Good Luck!


“the Girl who Gets it Done” :-)

Part 1: How to Grow from 0 to 500,000


No comments yet

Leave a Reply