Spotify, a Growth Hacking success story
Who doesn’t know Spotify today? While this platform was not the first to offer an online music service (remember Napster), it has been the most innovative when it comes to executing a marketing and sales plan to win subscriptions thanks to its technology, thus becoming a leader in its sector. Starting from Growth Hacking.
Growth Hacking is an innovative way of attacking a market, which has been adapted by many recently created start-ups (mainly in the United States) to make a difference and grow the number of their users exponentially, with minimal expense and effort.
How has Spotify made the difference?
Through a Freemium business model. While there have been other similar services before, these early platforms were more akin to online radio. The difference is that Spotify has allowed users to take control of what they want to listen to and how they prefer to listen to it.
Users subscribed to its free service hear ads every five or six songs, about three minutes of advertising for every hour of music. As you surely know, Spotify has a Premium option, unlimited free music for avery cheap flat monthly fee, which not only eliminates ads, but also allows its customers to listen to music offline.
To solve the case of piracy, Spotify includes some limitations on its platform and allocates 70% of its ad revenue to the authors of the songs. A system that has worked, since Spotify started with its free service in late 2008 and in 2012 already had four million subscribers responsible for at least 20 million euros of monthly revenue. By January 2015, Spotify had grown to 15 million paying customers and 45 million free users, who were still consuming advertising.
And how have they managed to grow?
As we have mentioned, Spotify has followed a Growth Hacking model, a viable model for those Star-ups and SaaS technologies that have an analytical and creative profile, that know their users and their product very well and that are committed to innovation. And the commercialization of Spotify has followed phases that we associate with Growth hacking:
As we mentioned, there were other free music platforms, such as Naspter, that had trouble marketing the product. The market need was there, and Spotify knew how to take advantage of the pull in a smart way through a Freemium model, which it was adapting according to the needs of its users, for example, with adding the free trial month in its Premium account.
2. Modifying their service to achieve virality.
When the product went live in 2008, only a handful of users got free accounts from this service, and the model to follow was by invitation. They introduced the concepts of urgency marketingsuch as “scarcity” and “privileges” by giving their users the opportunity to invite others to use the platform in a way that made it viral. Then, in 2011, its integration with Facebook’s “Open Graph,” which allows sharing audio tracks with friends, helped it gain more than 500,000 premium users.
3. Loyalizing its users.
Improving usability (for example with the ability to listen to music offline), creating opportunities to integrate its users’ ideas (with playlists), or making improvements to the service.
HubSpot, the Inbound Marketing success story par excellence
We can’t talk about digital marketing success stories from SaaS companies and forget to mention HubSpot. And we don’t really say that because we are partners, but because an entire community of professionals in the sector agrees. And the fact is that HubSpot has managed to position itself as a leader in digital marketing in a relatively short time, doing exactly what they preach: Inbound Marketing.
But who are they really?
For those who don’t know it, HubSpot is a SaaS that develops and sells all-in-one marketing, sales, customer service and analytics software.