Virality and Enterprise Software

Learnings from early growth tactics at PLG SaaS companies Loom, and Dropbox

In our previous post, we explored the core product philosophies behind building PLG SaaS products. It turns out that most PLG companies use multi-player modes to both enhance their core product experience while fueling their growth engine with efficient built-in virality at the same time.

Multi-player features such as the now ubiquitous "share" button are effective viral loops. When they work, they attract new users at a low CAC, have a higher conversion to install, and result in higher overall user engagement & stickiness, which itself leads to more... viral loops! So, pretty much a no-brainer when done right.

The question is, how do you embed these viral growth loops, in practice? We met with Shahed Khan (Co-founder at Loom) and Giancarlo "GC" Lionetti (former CMO at Confluent, VP Self-serve Growth at Dropbox, Product Marketing at Atlassian) to discuss their learnings on building viral growth loops from the ground up. Note for the purpose of this post, GC spoke from the perspective of his time at Dropbox. Check it out 👇🏼

---

Our 2 key findings

1. Activation is a precursor to user acquisition

   • Identify and iterate on your leading indicator of activation

   • Nail onboarding to help users activate faster

2. Pick the sharing method(s) that works best for your app

   • Word of mouth

   • Incentivized Sharing

   • Collaboration Features

   • Implicit Sharing

---

1. Activation as a precursor to user acquisition

While all of your lifecycle funnel metrics are important, we'd argue that, early on, you'll want to optimize for user activation before amping up user acquisition. Having some level of confidence that users are effectively activating on your product is critical because otherwise, you'll end up with a leaky bucket.

Identify and iterate on your leading indicator of activation

Shahed Khan (Loom): Early on, before we hit the 50k user mark, we thought that the right way to define an active user was by measuring their completion of two tasks: the user signing up and recording a video. This was actually incorrect - we discovered we were wrong because we would look at our retention cohorts and noticed that despite completing this, users were still dropping off.

What we discovered was that a user recording a video, sharing the video, and then getting a notification that someone watched it was the proper way to tie user activation with the user getting value from the product. To this day, a user completing those three tasks is the main way we measure user activation. In many ways, it's fairly obvious if you look at Loom now. A user sharing the video and then getting validation that someone watched it (and inherently got value from it) is what the product is intended to do.

That said, years ago, video recording in the workplace was a new habit, and it was harder to pinpoint what our activation metric was. Loom was not a DAU (daily active use) product at that point as our metrics were too weak. That gives you a sense of the state of the category at that time and goes to show how non-obvious and iterative it can be to accurately identify what those leading indicators are early on.

Nail onboarding to help users activate faster

GC Lionetti (Dropbox): You never completely nail onboarding - you're iterating, tweaking, and experimenting with it. At Dropbox, we notoriously used a (viral) onboarding checklist in the early days, and even when I was there in 2014, we were still testing the steps in the checklist. It started with seven key actions, and we simplified it down after deeper experimentation to about four actions. We realized seven actions was too much for a user to get through quickly (and get to the high-value moments). A user putting a file in their folder, and then sharing a file were critical onboarding activation metrics. It seems obvious, but you do those two things and you're already in the next stage of your journey with Dropbox. Finding what those high-value activation metrics are in the early days is mission-critical (and takes experimenting).

Shahed (Loom): Onboarding was something we put a lot of investment in because we knew it would pay dividends. Once a user downloads your product, you want them to reach that 'aha' moment as quickly as possible. Onboarding checklists were a big way we helped users get there fast. There's something psychologically satisfying for a user to see something checked off when it's been completed. Once we discovered our activation metric, we embedded it into our onboarding checklist.

2. Double down on the sharing method(s) that work best for your app

Based on our review of SaaS companies, we identified four common sharing mechanisms that when done right, can work successfully to help grow your base of users:

When reviewing Loom and Dropbox, they tackle all 4 of the sharing methods exceptionally well. Take Loom for example:

Word of mouth: User-generated content is one of the most compelling ways to grow your base - it drives trust and creates radical social proof. It's no wonder why consumers are 2.4 times more likely to view user-generated content as authentic compared to content created by brands. All it takes is a quick search of Loom on Twitter to reveal die-hard fans of the product. A further search on Google reveals just as much love for the product, with many outlets calling it "the app you can't live without". Loom's awesome product is the foundation for all of the user love - the short story here is you need to focus on building a remarkable product for people to remark on it.

Collaboration: By using Loom, your intent is to create a video to share it with other users, naturally creating multi-player dynamics. This coupled with the gratification you get when you are notified when someone sees it creates a virtuous cycle that influences you to record and share again. On top of this, Loom has awesome features like a team space, comments, and reactions which enable collaboration through and through.

Implicit sharing: When you send a Loom recording, it's apparent that it's from Loom. The branding is right there. Even if you don't click the share link, you can't unsee the brand. It sticks with you, and curiosity might lead you to their site. Albeit, other companies also do this exceptionally well. For example, Superhuman has "Sent by Superhuman" in their users' email signature block. Wordpress has "Powered by Wordpress" included in hosted websites in its free plan.

Incentivized sharing: Loom practiced incentivized sharing really well too, leveraging a hybrid of giving away premium features along with credits to get customers to share. When we talked to Shahed about Loom's strategy on incentivized sharing, he mentioned:

"Over time, we would only give incentives to users whose referrals did the following: registered and authenticated with email address + recorded one video + shared that video. This was to avoid gaming behavior. On top of that, we customized the referral language to 'refer your coworker' to ensure we were getting qualified users in"

One of the most fascinating things is that Loom was also not monetizing when they introduced their incentivized sharing mechanism. "We would redirect users to our Customer Support page if they asked about our pricing plan. It had some language on features that were coming. We were also always very transparent about our roadmap but we were never monetizing directly when we started offering credits and premium features for referrals" says Shahed.

This demonstrates that you don't necessarily need to turn monetization on in order to reap the benefits of incentivized sharing - it's a clever hack for startups who are early in their pricing journey.

---

A very big thank you to Shahed and GC for sharing their early playbook on viral loops with us 🙏🏼.

Next up, we’ll be highlighting tips on churn from our friends at Atlassian. Like what you’re reading? Hit this button to subscribe 👇