Have you ever heard about the rule of 72?
It’s a simple hack used in business to quickly figure out how many years it would take you to double your money, given the annual rate of return.
But since we’re not venture capitalists (not yet at least!) we’re instead going to use the rule to figure out how much time it would take to double the growth or revenue of a business.
How to Apply the Rule of 72 for SaaS Growth Hacking
72 ÷ interest rate = Years required to double investment
So, if you divide 72 by an interest rate of 12%, the rule shows that you need 6 years to double your money. Quite a bit of time, eh? I guess it depends on the size of the investment. :)
What if you take it a step further and use the rule of 72 to figure out how much it would take to double your SaaS growth?
All you need to know to begin your growth hacking (aside from the magical rule of 72 of course) is how many steps an initial visitor would have to take before they bring in revenue for your business.
If a visitor has to go through a journey of 6 steps before he gets to pay for your app, it means you would have to increase each separate step by 12% in order to double your app’s revenue. (72 divided by the six steps = 12%)
Let’s look at two examples. One of them is a B2B company, and the other one is a B2C. We’ll walk you step by step through the whole growth hacking process, and show you how they can increase each of the following metrics by 12%:
This article is part 1 of 6 from our upcoming ebook, Hacking Growth With the Rule of 72. Sign up to pre-order your free copy.
Presenting FinTechApp, an accounting company for IT startups, and MyStyleApp, a fashion application which offers fashionistas access to exclusive outfit designs. These are their sales funnels:
Doubling revenue can be a difficult task to consider, but if you look at it as optimizing each separate step by just 12% it becomes much more tangible. Also, end result is the same: you get to double the money.
Let’s get to it:
1. Increase amount of visitors by 12%
For FinTechApp, here is how the traffic split looks like:
- 30% organic
- 40% paid
- 30% referrals
An increase of 12% over the existing 20 000 visitors per month means that FinTechApp needs to add a total of 2400 new visitors each month, split as it follows:
- 720 from organic traffic
- 960 from paid traffic
- 720 from referrals
Increasing Organic Traffic
Let’s take on our first goal: increasing organic traffic by 720 visits.
There are many ways to do it but in this specific scenario, the easiest way to growth hack the proccess is to identify one or two keywords that:
- Your website ranks #3 to #10 for
- and deliver more than 100 visits each month
The reason behind this is that the first result in the search engine usually gets more than 30% out of the total traffic.
That’s 3-4 times more than positions 3 to 10 would get.
Here are a couple of case studies you can look at if you want to find out more information on this topic:
- Google Organic Click-Through Rates in 2014
- No. 1 Position in Google Gets 33% of Search Traffic [Study]
- What Makes Us Click on a SERP Result? [SEO click through rate study]
You’ll find the keywords that are positioned #3 to #10 inside your Google Webmaster Tools.
The next step is to analyze the websites that rank on the first position and make a list of what you need to do to outrank them. You can use tools like:
You can check out the Best SEO tools for 2016 by 36 industry experts to see which tools are being used by your favorite SEO experts.
Most search engine optimization scenarios will get down to:
- Making sure your webpages are easy to read and understood by the search engines
- You have more (and better) links than your #1 ranked competitor
- Your page is secure and loading really fast
- You have a low bounce rate on these pages (people don’t click back immediately after loading the page)
Going from #5-#10 to #1-#3 can often take around a month of consistent effort. The traffic increase will stick with you for a long time, if you manage to keep the earned positions.
Make sure the keywords you’re targeting are relevant to your business. Otherwise you generate 720 visits of traffic that has no real interest in your business.
Increasing your paid traffic by 12% means adding 960 new paid visits each month.
One of the easiest ways to find out how much will it cost you to generate new paid visits each month is to analyze what your competition is doing.
For this purpose FinTechApp used SEMRush to get an idea how much their competition is spending on keywords.
How to Analyze Your Competition’s Keywords
Here is one analysis FinTechApp ran on its main competitors.
What we are looking for is the average bid Google is suggesting for keywords in your niche. For FinTechApp it seems to be around $13 for a click.
The volume of traffic estimated by Google seems low for most of the keywords.
This means that there probably isn’t the opportunity to go for long tail keywords with lower competition because there probably won’t be enough traffic.
At best you’ll probably manage to get the 960 visitors by paying an average of $8 per click, meaning a budget of more than $7500.
According to the numbers FinTechApp already has, out of those 960 visitors, approximately 5 of them will purchase the product, bringing a revenue of $250 per month.
These visitors would need to keep using the product for at least 3 years until the campaign will become profitable. A very long time to count on.
The alternative for FinTechApp is to try other paid channels like Facebook, Twitter or Linkedin. These networks can allow them to stay within budgets of less than $1500 to generate the new 960 visitors required.
Referral Traffic: Still Relevant for SaaS Growth Hacking?
In the past FintechApp had success securing partnerships with different blogs where they posted educational content, also known as guest blogging.
They decide to invest more resources into this tactic in order to get 720 new visitors each month.
Guest blogging can have multiple benefits for your business: exposure, credibility, referral traffic and quality backlinks that can help you in SEO.
We will concentrate on guest blogging as our focus to increase the referral traffic.
Tim Soulo from BloggerJet published an analysis of 273 guest posts and was kind enough to share with us what he learned.
His data shows that, on average, a guest blog brings you 56 visits from referral traffic:
While reaching out to hundreds of people I have collected the exact traffic numbers behind 239 guest posts that were published on 78 blogs in the marketing niche.
So do you want to know the average referral traffic across these 239 guest posts?
This doesn’t sound very encouraging, but there is more:
Out of these 239 guest articles, 35% generated less than 10 visits and only 15% generated more than 100 visits
So how much would it take for FinTechApp to increase their traffic by 720 visitors through guest posting?
If they focus on high quality and posting on well circulated blogs, they can probably achieve that number with 2 or 3 guest posts per month.
Writing these 2-3 guest posts is substantial as only top notch content is usually accepted by these blogs.
Going for volume, more than 15 guest posts would need to be published each month.
For the Fashion company, the traffic split looks like this:
- 40% – organic
- 40% – direct and social media
- 20% – paid campaigns
To increase their traffic by 12% it means they have to add 12 000 new visits each month, split into:
- 4800 new visits from organic traffic
- 4800 new visits from social media
- 2400 new visits from paid campaigns
The challenge Fashion Company is facing looks a bit more daunting, but considering the results they already have it can be achieved with a bit of strategy.
As that content will get distributed over social media channels as well, they will kill two birds with one stone.
So, how many new articles need to be published every month to generate the 9600 extra visits from organic and social media campaigns.
On average, you need 1 to 2 social shares for 10 visits, meaning the company will need to generate around 500 to 1000 extra social shares to get the 4800 visits they need.
Here is are the amount of social shares and pageviews for some of our blog posts:
- SaaS Growth Experiment: Fast vs. Considered Signup – 310 social shares – 1924 pageviews
- Make Your Retention Great Again: A Growth Hacker’s Guide to Retention Optimization – 286 social shares – 1687 pageviews
- A Growth Hacker’s Guide to Onboarding Your First 100 Users – 1059 social shares – 1159 pageviews
It seems like there’s no direct connection between the number of shares and pageviews an article gets. From our experience, having an article shared around more didn’t translate into an increased amount of pageviews.
- 6 Growth Experiments Sidekick Ran to Improve Retention – 331 shares – 3,210 uniques
- Why User Onboarding is the Most Important Part of the Customer Journey by 2.6x – 769 shares – 5,912 uniques
- The 15 Minute Guide to Growth Marketing – 861 shares – 1,356 uniques
These posts are definitely better than average in terms of traffic, but they are by no means the top 3…in fact only one of them is.
Social seems to help drive traffic, but just because people are sharing it doesn’t mean people click.
For example the post with the most shares (15 minute guide to growth marketing) gets shared a TON…mostly because #growthhacking is such a popular topic on twitter.
The other two posts with more traffic saw more shares via LinkedIn than Buffer (Twitter), and I think that is a better indication of true interest (and therefore traffic).
Posts that really crush it have channels they take off on like DesignerNews or HackerNews or Organic that I think lead to more traffic.
Again, social can be a good channel, but its not always correlated with traffic.
Marketing Director, Appcues
We’ve tried to dig up more numbers to see if other people have experienced the same thing. We were able to find a thread on reddit where the results were mixed.
It seems that some people from the B2B and SaaS industry were able to get some good traffic from Twitter using a well defined promotion strategy. There are others had similar results as the ones we’ve shared above.
There were others had similar results as the ones we’ve shared above.
The question was already answered on Quora, where a few users mentioned other mixed experiences. They’ve noticed the pageviews go up and down depending the audience that shared their articles.
Adjusting the Social Media Strategy of Your App
If MyStyleApp manages around 100 new social shares per article, they would need somewhere between 5 and 10 engaging articles per month.
If they only manage 50 new social shares per article, the number of articles needed could reach 20.
To make sure they fulfill their organic search increase they’ll also need each article to generate between 500 and 1000 visits from organic search, from long tail queries.
All of the above methods are common methods and not out of the ordinary.
Here are some growth hacking case studies outlining strategies that helped companies increase the number of visitors to their website:
- How We Grew Traffic to 16,000 in 4.5 months on $52/month (and every tool we use)
- How Slack Became the Fastest Growing B2B SaaS Business (Maybe) Ever
- Influencer marketing: how a brand new site with 0-DA acquired 3600+ traffic
- How We Increased Organic Traffic by Over 50% Using Technical SEO Updates
As for the paid campaigns, research tells us that the competition of MyStyleApp probably pays around $1 per click.
With a good optimization process they can manage to bid around 0.5$ per click. Therefore, the 2400 new visits needed for our goal will cost around 1200$.
These steps will help our two companies increase the traffic to their website by 12%. This doesn’t mean that they should stop here.
You need to double the revenue, remember?
Don’t forget to tell us in the comments which of these tactics you’re going to use to increase your traffic!
In Part 2 we’re going to outline the steps you can take to increase the conversion rate by 12%. Pre-order our free guide: “Hacking Growth With the Rule of 72” to have it delivered automatically when it’s launched!