Engines for Massively Scaleable Startups

I was excited to attend MeshU (maybe a little too excited). I love it when events over deliver. MeshU was a fantastic conference. I saw two of the best in-the-trenches startup sessions with Sean Ellis and Dan Martell. They both presented ideas that are changing how I think about product design and go-to-market activities. April Dunford then added an updated framework  for product marketing which was a great evolution of traditional product marketing. Sean Ellis added his model for Key Elements of Massively Scaleable Startups that presented a new idea of the marketing basics that need to be present for high potential startups.

Key Elements of Massively Scalable Startups - A Marketing Framework based on April Dunford & Sean Ellis

The breaking down of 4 elements coupled with traditional strategy and tactics make for a very effective marketing evaluation of most startups.

Gratification Engine

The Gratification Engine was a new piece of the marketing activities. What differentiates must have products and services? How do you reward your customers? How does your application turn “cold prospects into highly gratified customers”? This is a change in my thinking about the role of making your users feel like rockstars.  

“you can’t force customers to want, need or like what you have created.  Building an effective gratification engine is an iterative process driven by a lot of prospective customer feedback.  Once you get the basics right, your process of gratifying users can be optimized with tools like Performable for landing pages and KISSmetrics for full funnel tracking/improvement (I’m an advisor to both).” – Sean Ellis

 It builds upon seminal work of Kathy Sierra about engaging users. The Gratification Engine pushes this out beyond the existing experience but treats the conversion and effectiveness of new users.

Making a Bestseller

Making a Bestseller by Kathy SierraHow fast and how far can you take your users? by Kathy Sierra

 Where this hit home for me was starting to think about the game mechanics used for upsell and cross sell offers for new customers. Dan Martell, Dave McClure, Marc Gingras and I had breakfast at StartupCampMontreal and discussed how to build effective offers for existing customers to invite their friends to an application. There was a great discussion about using game mechanics around the offer. You have existing users that if they invite new users, i.e., their friends, where if the friends sign up that both the friend and the user get new unique functionality. It changed my thinking about many times I’ve received an offer to sign up from a friend for a service, and how the effectiveness of this would change with some basic game mechanics:

“Jevon has invited you to join X. Jevon is 1 sign up away from enabling the super awesome next level feature. Sign up now and enable the feature for both you and Jevon”

This all has to be done in an open, honest and unintrusive manner. But it’s about how do you enhance the lives and experiences of customers and potential customers. There are great opportunities to use game design and mechanics to help improve the experience and conversion rates in web and mobile applications.

  • http://twitter.com/soravanahalli Karthik Rao

    Good article w/ informative slide decks… so much for studying accounting.

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  • http://twitter.com/soravanahalli Karthik Rao

    Good article w/ informative slide decks… so much for studying accounting.

  • http://twitter.com/smrosenberg Stephen

    Not to oversimplify, but customer-centric business models are nothing new. It's adopting the right technologies to achieve strategic aims that makes your work an order winner. That said, I love the part about “unlocking” added functionality via referrals, so long as it doesn't diminish the experience for non-referring customers.

    Great post,

    Stephen

  • http://twitter.com/aprildunford April Dunford

    Wow, this is a really interesting post. Here are a few general comments:
    1/ Sean's concept of Huge Addressable Market isn't something that I've called out specifically in my framework. I've made an assumption here that the work around estimating an addressable market has been done, and although you'll be revisiting this each time you come back to segments, it isn't something that I've called out as a distinct marketing function.
    2/ I don't know if I totally understand what Sean calls the “Gratification Engine” but it probably includes at least some of the pieces of my framework you include there plus “Sales Process”
    3/ Sean's growth engine if I understand it correctly is all about how you acquire customers at a profit. In my framework that's a combination of market strategy, the business model and your tactics (lead generation, retention and visibility).
    It's neat to see Sean's stuff and mine mashed up together so I'll have to think more about it.
    I think they were created for different purposes. Mine was designed as a practical framework for startup marketers who are asking the question – “Am I doing everything I need to be doing?” I view Sean's as a yardstick for folks to decide “Can this be a really big business?” I'd love to hear Sean's thoughts on it though….
    Either way I've had more theoretical discussions around marketing in the past 2 weeks than I've had in the past 10 years which I think is awesome! Thanks so much for sharing this.
    April

  • http://davidcrow.ca/ davidcrow

    Customer-centric models are a little different than the proposal of the gratification engine. The gratification engine (and the cluster immune system) require the systems including the measurement and deployment to be automated. You have customer performance, i.e., business metrics baselined and then you A/B test or track promoted changes against the baseline and automate the stay at trunk or rollback to previous iteration. The idea is that it is fundamentally the user/customer performance data that alters the application.

    I do like the gratification approach to features. It's about a reward system and making users and potential users play an achievement and social game.

  • http://davidcrow.ca/ davidcrow

    Hi April,

    I agree. I think Sean's model was these are the pieces in the go-to-market plan that a startup needs to make sure they are “high potential”, venture fundable, etc. I started thinking about using this to flavour the traditional tactics and strategy.

    I'm thinking that the premise is that everything can be measured. All designs and tactics have an impact on the applications performance. If you're measuring everything you can determine the effectiveness of design changes and marketing strategies. It's particularly true of inbound marketing techniques.

    The gratification engine for me is where the game mechanics arise. How do you engage potential customers in a game? One method is where they share the social graph with existing customers. It's harder if they are just random or from other channels. But if you're delivering a compelling value proposition, then the better you design the game and experience the easier it should be to keep them achieving levels and helping you with your lead generation.

  • http://twitter.com/smrosenberg Stephen Rosenberg

    Not to oversimplify, but customer-centric business models are nothing new. It’s adopting the right technologies to achieve strategic aims that makes your work an order winner. That said, I love the part about “unlocking” added functionality via referrals, so long as it doesn’t diminish the experience for non-referring customers.

    Great post,

    Stephen

  • http://twitter.com/aprildunford April Dunford

    Wow, this is a really interesting post. Here are a few general comments:
    1/ Sean’s concept of Huge Addressable Market isn’t something that I’ve called out specifically in my framework. I’ve made an assumption here that the work around estimating an addressable market has been done, and although you’ll be revisiting this each time you come back to segments, it isn’t something that I’ve called out as a distinct marketing function.
    2/ I don’t know if I totally understand what Sean calls the “Gratification Engine” but it probably includes at least some of the pieces of my framework you include there plus “Sales Process”
    3/ Sean’s growth engine if I understand it correctly is all about how you acquire customers at a profit. In my framework that’s a combination of market strategy, the business model and your tactics (lead generation, retention and visibility).
    It’s neat to see Sean’s stuff and mine mashed up together so I’ll have to think more about it.
    I think they were created for different purposes. Mine was designed as a practical framework for startup marketers who are asking the question – “Am I doing everything I need to be doing?” I view Sean’s as a yardstick for folks to decide “Can this be a really big business?” I’d love to hear Sean’s thoughts on it though….
    Either way I’ve had more theoretical discussions around marketing in the past 2 weeks than I’ve had in the past 10 years which I think is awesome! Thanks so much for sharing this.
    April

  • http://davidcrow.ca/ davidcrow

    Customer-centric models are a little different than the proposal of the gratification engine. The gratification engine (and the cluster immune system) require the systems including the measurement and deployment to be automated. You have customer performance, i.e., business metrics baselined and then you A/B test or track promoted changes against the baseline and automate the stay at trunk or rollback to previous iteration. The idea is that it is fundamentally the user/customer performance data that alters the application.

    I do like the gratification approach to features. It’s about a reward system and making users and potential users play an achievement and social game.

  • http://davidcrow.ca/ davidcrow

    Customer-centric models are a little different than the proposal of the gratification engine. The gratification engine (and the cluster immune system) require the systems including the measurement and deployment to be automated. You have customer performance, i.e., business metrics baselined and then you A/B test or track promoted changes against the baseline and automate the stay at trunk or rollback to previous iteration. The idea is that it is fundamentally the user/customer performance data that alters the application. nnI do like the gratification approach to features. It’s about a reward system and making users and potential users play an achievement and social game.

  • http://davidcrow.ca/ davidcrow

    Hi April,

    I agree. I think Sean’s model was these are the pieces in the go-to-market plan that a startup needs to make sure they are “high potential”, venture fundable, etc. I started thinking about using this to flavour the traditional tactics and strategy.

    I’m thinking that the premise is that everything can be measured. All designs and tactics have an impact on the applications performance. If you’re measuring everything you can determine the effectiveness of design changes and marketing strategies. It’s particularly true of inbound marketing techniques.

    The gratification engine for me is where the game mechanics arise. How do you engage potential customers in a game? One method is where they share the social graph with existing customers. It’s harder if they are just random or from other channels. But if you’re delivering a compelling value proposition, then the better you design the game and experience the easier it should be to keep them achieving levels and helping you with your lead generation.

  • http://davidcrow.ca/ davidcrow

    Hi April,nnI agree. I think Sean’s model was these are the pieces in the go-to-market plan that a startup needs to make sure they are “high potential”, venture fundable, etc. I started thinking about using this to flavour the traditional tactics and strategy. nnI’m thinking that the premise is that everything can be measured. All designs and tactics have an impact on the applications performance. If you’re measuring everything you can determine the effectiveness of design changes and marketing strategies. It’s particularly true of inbound marketing techniques. nnThe gratification engine for me is where the game mechanics arise. How do you engage potential customers in a game? One method is where they share the social graph with existing customers. It’s harder if they are just random or from other channels. But if you’re delivering a compelling value proposition, then the better you design the game and experience the easier it should be to keep them achieving levels and helping you with your lead generation.

  • http://www.startup-marketing.com Sean Ellis

    Hi David, great to see you building on and combining some of the ideas/observations discussed at meshu. To me, gratification is the hardest and most important part to get right for a startup. I include messaging, funnel, and the ultimate gratifying experience as all part of the gratification engine. It's really about making meaningful promise and then delivering the experience that matches that promise to the users. Also, not sure whose ROI you were referring to when you wrote “ROI Tracking.” If it's the customer's ROI, then gratification is probably the right place. Otherwise, it probably should be in growth or economics. Just my thoughts of course. It's all debatable.

  • http://www.startup-marketing.com Sean Ellis

    Hi David, great to see you building on and combining some of the ideas/observations discussed at meshu. To me, gratification is the hardest and most important part to get right for a startup. I include messaging, funnel, and the ultimate gratifying experience as all part of the gratification engine. It’s really about making meaningful promise and then delivering the experience that matches that promise to the users. Also, not sure whose ROI you were referring to when you wrote “ROI Tracking.” If it’s the customer’s ROI, then gratification is probably the right place. Otherwise, it probably should be in growth or economics. Just my thoughts of course. It’s all debatable.

  • http://www.startup-marketing.com Sean Ellis

    Hi David, great to see you building on and combining some of the ideas/observations discussed at meshu. To me, gratification is the hardest and most important part to get right for a startup. I include messaging, funnel, and the ultimate gratifying experience as all part of the gratification engine. It’s really about making meaningful promise and then delivering the experience that matches that promise to the users. Also, not sure whose ROI you were referring to when you wrote “ROI Tracking.” If it’s the customer’s ROI, then gratification is probably the right place. Otherwise, it probably should be in growth or economics. Just my thoughts of course. It’s all debatable.