The 2 Most Popular Scaled Growth Channels for Unicorn Consumer Companies: Referrals and Artificial Intelligence in Business

The 2 Most Popular Scaled Growth Channels for Unicorn Consumer Companies: Referrals and Artificial Intelligence in Business

In today's competitive business landscape, finding effective growth channels is crucial for the success of consumer companies. Two of the most popular channels that have proven to be successful for unicorn companies are referrals and artificial intelligence (AI) in business. While they may seem like disparate strategies, there are common points that connect them and can be leveraged for even greater growth.

Referrals, as a growth channel, have become increasingly popular due to their simplicity and effectiveness. The basic premise of a referral program is straightforward - if you invite another user, both you and the user receive a monetary reward. This incentivizes users to spread the word about a product or service, leading to organic growth. However, with the banning of advertising on Google to get referrals, many companies have turned to search engine optimization (SEO) to drive traffic and promote their referral codes.

To determine the product-channel fit for referrals, companies need to consider several metrics. One of the most important factors is the discount rate. A high enough discount rate encourages users to refer others, but it should not be so high that the customer acquisition cost (CAC) becomes unmanageable. Another metric to consider is the CAC through paid channels. If the CAC through paid channels is significantly lower than the discount rate, it may be necessary to lower the discount rate. Ultimately, if there is a discount rate that entices users, falls below the customer lifetime value (LTV), has a low payback period, and is below the paid CAC, it indicates that referrals as a growth channel are worth pursuing.

On the other hand, AI in business has been revolutionizing various industries by providing advanced capabilities. AI systems should possess natural language processing to communicate in a natural language, knowledge representation to store information, automated reasoning to answer questions and draw conclusions, and machine learning to adapt to new circumstances and detect patterns. The worldwide spending on cognitive and AI systems has been steadily increasing, reaching $24.0 billion in 2018.

To encourage further advancements in AI research for business applications, it is essential for practitioners and researchers to have comprehensive knowledge about previous investigations and applications in different business domains and disciplinary fields. Over the years, companies have improved their data science skills and business analytics capabilities, thanks to the availability of consumer information and IoT devices. Gartner defines four stages of business analytics maturity, starting from a descriptive use of information to a diagnostic analysis stage that involves understanding the root causes of specific outcomes.

Looking at the common points between referrals and AI in business, we can identify the importance of leveraging data and customer insights. Both strategies rely on understanding customer behavior and preferences to drive growth. Referral programs thrive on the power of word-of-mouth marketing, which requires a deep understanding of what motivates customers to refer others. AI, on the other hand, relies on analyzing vast amounts of data to uncover patterns and make accurate predictions.

In conclusion, referrals and AI in business are two powerful growth channels that have proven to be successful for unicorn consumer companies. By understanding the product-channel fit for referrals, companies can leverage the power of word-of-mouth marketing. Additionally, by embracing AI and its capabilities, businesses can unlock new opportunities for growth and gain a competitive edge. To maximize the potential of these growth channels, here are three actionable pieces of advice:

1. Invest in comprehensive customer data analysis: To drive successful referral programs and leverage AI, it is crucial to have a deep understanding of customer behavior and preferences. Invest in data analysis tools and resources to uncover valuable insights.

2. Continuously optimize and iterate: Referral programs and AI systems are not one-time endeavors. Continuously test and optimize your referral program to find the ideal discount rate and incentives. Similarly, iterate on your AI systems to adapt to changing circumstances and improve accuracy.

3. Foster a culture of innovation: Both referrals and AI require a culture of innovation and experimentation. Encourage your team to think outside the box, test new ideas, and embrace emerging technologies. Foster a learning environment that encourages growth and creativity.

By combining the power of referrals and AI, consumer companies can unlock new horizons of growth and stay ahead in today's competitive market. Embrace these strategies, adapt them to your unique business needs, and watch your company thrive.