Growing Your Social App and Transitioning from SAAS to a Marketplace

Growing Your Social App and Transitioning from SAAS to a Marketplace

Introduction:

Growing a social app and transitioning from a SAAS (Software as a Service) business to a marketplace can be challenging but rewarding endeavors. In this article, we will explore the key metrics to benchmark your social app's growth and discuss the necessary steps to successfully transition from a SAAS business model to a marketplace. By understanding these concepts, you can position your app for long-term success and capitalize on the evolving needs of your target audience.

Benchmarking Growth for Social Apps:

When benchmarking the growth of your social app, it is crucial to define your core metric. For most consumer social apps, the daily active users (DAUs) metric is essential as it indicates consistent user engagement. For apps with less frequent use cases, weekly active users (WAUs) can serve as a suitable starting metric. However, it is important to upgrade to DAUs if you aim to secure a prominent position on users' home screens.

To gauge the success of your monthly user growth in seed-stage consumer social companies, consider the following benchmarks:

• OK: 20% monthly user growth
• Good: 35% monthly user growth
• Great: 50% monthly user growth

It is crucial for the majority of this growth to come organically. Social apps often struggle to monetize in the early stages, making it challenging to invest heavily in paid marketing. Additionally, a viral and inviting user experience should be at the core of your app, encouraging users to invite their friends.

Benchmarking User Engagement:

User engagement is a vital aspect of social app success. To benchmark your app's engagement, consider the following metrics:

1. DAU/MAU Ratio:

• OK: 25% DAU/MAU ratio
• Good: 40% DAU/MAU ratio
• Great: 50%+ DAU/MAU ratio

A higher DAU/MAU ratio indicates that users are incorporating your app into their daily lives, signifying stronger user engagement and potential viral growth.

2. L-ness Curve (L5+):

• OK: 30% users in the app five, six, or seven days a week
• Good: 40% users in the app five, six, or seven days a week
• Great: 50%+ users in the app five, six, or seven days a week

The L-ness curve measures the frequency of users accessing your app. A higher percentage of users accessing the app regularly signifies a strong user habit and potential for sustained growth.

3. Retention (n-day retention):

• OK: d1 50%, d7 35%, d30 20% retention
• Good: d1 60%, d7 40%, d30 25% retention
• Great: d1 70%, d7 50%, d30 30% retention

Retention rates indicate how well your app retains users over time. Aim for higher retention rates, particularly in the early days of user onboarding, as this reflects a positive user experience and potential for long-term growth.

Transitioning from SAAS to a Marketplace:

Transitioning from a SAAS business model to a marketplace can unlock new growth opportunities. Here are key considerations for a successful transition:

1. Change the Incentive Structure:
   Founders must shift the incentive structure of the company to prioritize the new marketplace initiative. This can involve making the entire company's growth revolve around the new initiative or creating a separate team with distinct goals and reporting lines.

2. Cultivate the Right Resources and Company Culture:
   Transitioning to a marketplace requires the right resources and a shift in company culture. Founders should recruit individuals passionate about the opportunity and with a background in consumer product development. Consider bringing in leaders with consumer backgrounds to lead teams involved in this transition.

3. Validate Demand and Align with Business Models:
   Ensure that there is a demand side to the marketplace you aim to create and that it aligns with your customers' needs and your business model. Marketplaces thrive when there is a strong demand for the services offered. Consider the characteristics of successful marketplaces and evaluate if your opportunity aligns with those traits.

Conclusion:

Growing a social app and transitioning from a SAAS business to a marketplace require careful planning and execution. By benchmarking your app's growth metrics and understanding the necessary steps for a successful transition, you can position your app for long-term success in an evolving market. Remember to prioritize organic growth, user engagement, and retention while exploring new opportunities to cater to the needs of your target audience.