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We all know the golden rule of business: “it’s {10x cheaper|3 times easier|90% more profitable} to sell another unit to a current customer than to acquire a new one.” What we’re really talking about here is “replication” and it has much wider applications than customer acquisition.
A “Black Hat” Example
3-5 years ago, the name of the game in SEO was the “blog and ping” method. Essentially, this involved writing a blog post, and then “pinging”, or sending that URL to aggregation websites (Technorati is probably the most notable surviving member) where the links would be posted.
These aggregation sites were great for search engines, as it gave them an inside track to breaking news. They began to crawl the “New Posts” pages frequently, leading to rapid indexation for bloggers who participated in pinging. Eventually, the size of your ping list was just as important as the content of your post.
Of course, like anything with the potential to generate money, methods were invented to automate and scale. One method was to hide a 1-pixel iFrame on your site which loaded the submission page for a ping website. You could load 100s of these pixels on each page of your website. Because the page was loaded by your visitor’s browser, these 100s of pings seemed to come from all over the country, from different IP addresses.
What does this have to do with replication?
Let’s say Google crawled the Technorati page showing the most-pinged posts and saw John’s Blog post on “How I Repaired my Credit” at the top of the list. The spider makes a note to crawl John’s site and moves on. The blog post gets indexed, and John gets 5 hits on his site, each of those 5 people load his iFrames, which ping Technorati 5 more times.
Google comes back to the Technorati page an hour later and sees John’s post is still at the top of the list. The spider tells Google to put a rush on indexing John’s post. The post gets indexed and John gets 25 visitors on his site. Once again, the iFrame is fired 25 times from different IP addresses.
This could go on for days. Each time John gets a visitor, Technorati thinks that John’s site is growing in popularity, and Google sees John’s blog climbing the ranks. Google begins to think that John’s post is the authority on “how to repair credit” and sends him visitors. Those visitors inadvertently ping Technorati (and others) and Google keeps finding links to John’s site.
This is a great example of replication: 1 visitor leads to 2 visitors, leads to 5… on and on until you max out the machine.
A “White Hat” Example
If you haven’t signed up for LinkedIn you have probably at least gotten “invitations” to connect from friends and colleagues. That’s because, in the middle of the registration process, LinkedIn requests permission to look through your contact list to see who else is on LinkedIn. They also give you the option to spam invite people you know who aren’t yet on LinkedIn to join.
Of course, not everyone lets LinkedIn use their contact list, but there is incentive. A larger network on LinkedIn gives you certain benefits. So we know that some percentage of new users will expose their contacts to this system.
Let’s say that 1 in 10 take advantage of this feature, and that the average person has 100 contacts to send to, and that LinkedIn has a 10% signup rate, on average.
All LinkedIn has to do is get 10 signups before one person hands over their contacts, which leads to a further 10 signups (10% * 100), which leads to another 100 contacts mailed, and 10 more signups, and 100 more emails…
Optimizing the Replication
In the LinkedIn example, what would it be worth to increase their rate of “contact-allowance” to 20%? Or to increase their invitation response rate to 11%?
They would be increasing their net gain for each iteration. Improving either of those ratios leads to exponential gains down the line. If they increased both ratios simultaneously the gains are multiplied. By the third “generation” they’ve more than doubled their user population over the total if they had done nothing.
Increase Response Rate to 11%:
| Userbase | Iteration 1 | Iteration 2 | Iteration 3 |
| 10 | 20 | 40 | 80 |
| 10 | 21 | 44 | 92 |
Increase Permission to Invite Colleagues to 20%:
| Userbase | Iteration 1 | Iteration 2 | Iteration 3 |
| 10 | 20 | 40 | 80 |
| 10 | 30 | 90 | 270 |
Both Increases, Compounded:
| Userbase | Iteration 1 | Iteration 2 | Iteration 3 |
| 10 | 20 | 40 | 80 |
| 10 | 32 | 102 | 326 |
By improving their process, LinkedIn would quadruple their user base after just 3 iterations!
The Take Home
How can you use you website, your emails, your customer service processes, your products or your business itself to replicate something valuable? Once you have a replication action, measure the ratio. Then work on improving that ratio.
Tags: customer acquisition, google, money methods, name of the game, technorati