Determining Growth Strategies in Emerging Markets

I’m continuing re-posting and elaborating on my AMA from Growthhackers.com.

This was a great question from Hila Qu: In your current role at Naspers, I imagine you help with growth strategies for multiple products in multiple countries. When you face a unique business in a country you have never worked in, what is your method to find relevant strategies?

In terms of finding strategies, I start by understanding what the key metrics for the business are. What’s the company measuring and worrying about? What sort of business are they running? Is it a conversion business, subscription, content, two-sided marketplace, or something else? From there, it strongly influences the potential growth channels we start to look at. (Note: this step is incredibly important and will be a topic of a future post).

User Acquisition

After this, the next step is looking at user acquisition channels to understand where most users are coming from. If we are seeing strength from a particular channel, then that offers an ability to double down and spend more money or resources to continue to optimize that channel. It’s also important to measure the channel to the point of the critical user action, and not by a CPI, CPC, or other simple metric. Otherwise, the channel isn’t being truly measured. While this seems simple, country to country, you get very different performance by channel, so it’s critical to understand what channels perform well for the particular business in their market.

Other big things that need to be thought through at a market level:

  • Smartphone platform adoption. Many emerging markets are much more strongly Android, so that shapes a large part of your mobile focus and where to place resources. However, it’s not just platform that matters, but also device mix. You’ll often see lower end devices in many markets and you need to determine how you’ll support those users.
  • What paid acquisition channels are available and which ones are worth pursuing? For many markets, things are similar to the United States and primary paid acquisition channels are still Google and Facebook. However, there can be a time lag for the latest developments from these marketing platforms coming to emerging markets, the scale of the channels in the markets, and other differences. For smaller economies with growing smartphone usage, there’s a marginal return to advertising that happens a lot more rapidly than it might in the United States. (meaning you may hit a point rapidly where finding new users in these channels becomes hard and expensive more quickly than it would be in a different, more developed market).
  • How you reach your customers. In many markets, partnering with local companies is the best way to get in front of your customers. Whether it be a service they use all the time like their home ISP, establishing these relationships is a critical way to get share of mind with users. In many cases, these relationships are even more important than they would be in the developed world because these companies often occupy large roles, especially local telcos and ISPs. Remember that credit card and payment penetration is lower in these markets. If you can establish a relationship with the user through a company they are already paying, it can alleviate the struggle to convert users to pay.
  • SEO has a murky role. Given the prominence of mobile and SEO’s potentially lessened role on mobile, it’s not clear if SEO will be the channel in mobile-first emerging markets that it has been in the desktop heavy United States. This is definitely a hypothesis, but it’s a channel to watch closely in emerging markets and in mobile as it develops.
  • Referral and viral marketing matter, but depend on the vertical and the adoption within the country. It’s critical to try to leverage key channels for referral in these markets. Given that you may see email opens and CTRs lower due to mobile penetration and lack of desktop, looking at channels like Whatsapp and Facebook may be critical to have a referral marketing system that works.
  • Payment methods differ throughout the world and Cash on Delivery still matters in many markets. As you’re thinking about growth, figuring out how to get paid is ultimately a complex problem in markets where credit card penetration can be low and where cash is still the preferred payment method for many folks. It means you need to get creative with how you solve transactions and offer lots of solutions for unbanked customers or customers without credit cards (things like prepaid cards, direct to cell billing, cash pickup are all tactics that have been tried and used by companies we work with)

Retention

The approach is similar with retention – it’s critical to spend time to figure out what’s working in the market and what isn’t. I try to understand what activities users who retain are doing to learn what types of users they are, where they came from, and what actions they are taking. Essentially, if we can get close to a “One Metric That Matters” based on examining the data from existing users, it gives us a huge opportunity to optimize our retention channels. We then leverage this to test retention hypotheses.

It’s also important to make sure you are seeing what’s working in the retention channels that the business is using now. Look at the value of various channels like push, in-app notifications, email and then double down on what’s actually working. Don’t assume that everything is the same business to business and market to market.

Costs of data in the market can impact your retention. In many of our markets, data costs are incredibly high. When we encounter this, it often means you have to come up with elegant solutions to drive usage and retention. For example, with our Showmax product in South Africa, we introduced downloads for our Android and iOS apps early on, allowing users to download content at home with wifi rather than having to use their mobile data to watch on the go. Doing work like this strongly improves the number of views per user and aids in the overall retention of the product.

Remember that if you don’t show value, people with phones with less data will just delete your app. You have to do a good job hooking them immediately, keep your data usage low, and immediately deliver some value to keep them engaged.

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