[Funded Series] How 3 Former Covenant University Students Used A Simple Referral Marketing Strategy To Grow Their Business From Scratch To $80 Million in 48 Months.
As far back as you can recall entrepreneurship has always been a trendy word, I mean who doesn’t like the idea of starting something small that grows into something great.
However, that’s just the tip of the iceberg, and the other part we don’t see is the reason why 1 out of every 5 entrepreneurs strike gold.
Is it luck? or Fate? Or Destiny? Or hardwork?
Yes and No.
The reality of entrepreneurship is trading into an unknown with nothing but an unexplainable belief that what you’re seeking is out there and that you have what it takes.
Dealing with uncertainty is the path of entrepreneurship and its definitely not for the faint hearted.
I had previously written about why exponential growth is the holy grail of business success, we have seen fortune 500 companies use it, but it is quite an interesting sight to behold when you see it manifested in startups in Nigeria and that’s because the unfavourable factors could be intimidating.
Which brings us to the PIGGYVEST story.
Piggyvest (formerly piggybank) is an savings and investment fintech startup that launched in early 2016 by a group of former Covenant University students and in 48 months Piggyvest has grown its savings and investment portfolio to $80 million (at NGN365- $1 comes to NGN29.2 billion).
I’ll shed a bit more light on these numbers:
- In year 1 (end of 2016), they had about a 1000 users with a cumulative savings/ investment of about NGN 21 million,
- In year 2 (end of 2017), they had about 30,000 users with a cumulative savings /investment of about NGN 700 million,
- In year 3 (end of 2018), they had about 133,000 users with a cumulative savings/ investment of about NGN 4.3 billion,
- In year 4 (end of 2019), they had about 610,000 users with a cumulative savings/ investment of about NGN 29 billion.
All of these numbers comes from 2 core products;
Now, why this is very interesting is how they managed their human resource.
To give this a bit of context, last year jaws dropped as 21-year old Kylie Jenner became the youngest billionaire in the world, with her cosmetics company raking in over $300 million in revenue.
Guess how many staff they had?
Another example is Instagram which had only 13 employees when Facebook acquired them for $1 billion.
Now, with Piggyvest the story is not so different, and here’s why…
|Year||No. of staff||Savings/ Investment|
|2016||3||NGN 21 million|
|2017||8||NGN 700 million|
|2018||12||NGN 4.3 billion|
|2019||23||NGN 29.2 billion|
Get the picture now?
With staff strength of under 50 people (and of course technology leverage), they have grown their business exponentially.
I have to admit here that I’m intentionally making a digression here by diving into these details and that’s because the COVID-19 pandemic has brought about a new wave of opportunities as well as leverage.
To say it in simple terms, with good leverage you can scale a business for less the hands you think are necessary and Piggyvest as well as other companies are proof.
And to fully comprehend the magnitude of the impact COVID-19 has made, you must understand that for most organizations some so-called assets overnight became liabilities. Eg. office buildings, expensive furnitures, employee size etc.
In the face of lockdown, they all fall flat like a pack of cards.
Now, to bring this to closure so we can continue with the strategic insights on Piggyvest, you have to understand the Revenue per employee.
In order words, I’d rather have a company that has annual revenue of NGN 500 million with about 20 staff than one with annual revenue of NGN 1 billion with about 1000 staff because the former has a revenue per employee at NGN 25 million and the later N 1 million.
And this the advantage most tech startups have at their disposal…the ability to scale at will.
I’m sure you get the point, lets head back to Piggyvest.
You might be intrigued by their growth rate, however, as bold as these numbers are they were created by a very simple strategy that you might gloss over.
For Piggyvest, the strategy is referral marketing, which is the best kept open secret of business growth because it’s the most cost effective marketing strategy. As with most things you need trust and referral marketing replaces the huge budget most brands set aside to communicate how awesome they are with people telling other people how awesome you are.
Obviously, the latter is more effective.
And to prove how effective it was Piggyvest didn’t need investor funds till after 2years in business.
Now, let’s look at how their app is doing.
With over 500k apps downloads, you can tell that user engagement is quite high.
To get a good picture of how much traffic they have generated over the past months let’s take a look at below.
They hit a traffic peak of 1.35 million visitors in January 2020, considering its post-festive season we can expect such spike as withdrawals made and then in subsequent months we begin to see a sharp drop which I can attribute that to the impact of COVID-19 until April 2020 when it begins to climb again.
And most of the traffic they get comes from direct traffic, which accounts for 72.37%, followed with search at 18.15% and email, social at less than 10%.
The high number in direct traffic is as a result of the referral marketing strategy but in doing a search on Google you’ll find out that Piggyvest also runs adword campaigns and are also listed on Google my business.
And about 95% of the search made are organic which is surprisingly higher than social.
I have done a lot of research of startups and seeing one with social traffic at 3.58% is pretty low especially in a digital age, but with prior knowledge of their portfolio I got curious and I wanted to see how it has worked for them.
So I logged into the app and here’s what I saw…
We all know the importance of lead generation to a business, but what is most crucial for business growth is the lifetime value of a customer. So Piggyvest cuts down the Customer Acquisition Cost (CAC) by allowing users to invite friends and then uses a NGN 1000 incentive to drive the desired behavior.
For instance take a look at the my invite code here, which you can access by clicking on the refer and earn link at the bottom of the app.
You can click on the link here to see what I mean…
The interesting thing about this concept is how it cleverly taps into the typical human behavior of what’s in it for me.
Think about it…
What if you can cleverly answer the what’s in it for me question at any given time to your customer in a very logical and irresistible way, you can get them to literally do whatever you want.
Not only that you can have an army of die-hard ambassadors all rooting for you.
Before I conclude I want reiterate that Piggyvest did all of this with no VC investment in over 24months of being in business. The $1.1 million funding they raised through Leadpath Nigeria was only to acquire a unit microfinance bank license to scale operations but the concept was already proven.
Here are a few lessons you can take away from this article…
- Adopt a Referral Marketing Strategy
This is one of the most powerful and cost-effective strategies you can deploy in your business because once done right it gives you the ability to scale in half the time and less the resources needed as well as easy access to the marketplace. For Piggyvest, we only see one at play but you can have more than two referral strategies in your business and watch the business scale exponentially.
- Create a Customer Centric System
It’s hard to grow a business to its full potential without keeping the customer at the centre of everything you do. Businesses begin to fall apart when you forget that the most important job is ensuring the customer’s evolving needs are met. Thus, all units within the business must carry the consciousness that we exist to serve the customer.
- Only Use Tested and Proven Formulas
In growing a business there is always the temptation to cook up something new, but the best thing that can happen to you is when you resist it and focus on only tested and proven strategies that you can predict the outcome. Move from known to unknown and not the other way round.
- Use Decisions based on Data gathered.
As a business owner there are moments when you must lay aside your feelings and just let the data based on the patterns in your business speak. Data-driven decision are the difference between working hard and working smart.
- Know your Numbers
Always remember that numbers don’t lie and will always tell the truth about the state of your business. Monitoring metrics like customer acquisition cost, Average transactional value, frequency of transaction etc. are very important.