These 5 simple words helped Spotify gain 22 million paid customers and drop churn to 2.2%

I work with startups every day on their storytelling so they can raise capital and acquire customers.

Several founders who I’ve worked with recently are obsessed with 2 things:

1. Increasing Acquisition
2. Reducing Churn

These are the same things that investors are obsessed with. You have to constantly fill the top of the funnel, but you also can’t have any leaks in the funnel.

It’s one thing to acquire users and customers. It’s another to KEEP them.

This delicate balance works like a see-saw effect. If you focus solely on Acquisition, your Retention suffers, and your projections don’t pan out.

If you focus solely on Retention, your acquisition suffers, and your projections don’t pan out.

You have to find the middle ground where you’re not losing on either side, and your startup grows as you hope, and potential investors hope to see.

Think Like A Drug Dealer

At the end of the day, it’s like being a drug-dealer (Jay-Z can probably vouch for this analogy): Your stuff needs to be good enough that your customers keep coming back for more, and because it’s so good word on the street gets around and prospects come flooding in because they want a taste of that good sh**, too. And then they become repeat customers.

(Watch American Gangster and you’ll get a great lesson in acquisition and retention)

Bottom line: You can’t talk a big game, then have low-grade, watered-down work.

So, as a startup, you gada get them high on your supply.

How do you do that?

Software-based companies (aka most startups) are always trying to replicate the Dropbox Virality Effect.

It’s well-documented that Dropbox was able to significantly multiply its user base by implementing a referral program where both the referrer and the referred received free storage space. This was a huge success — Dropbox’s user base reportedly grew by 3900% over 2 years.

(By the way, check how the branding helped with that one. The copy for the referral page wasn’t “invite your friends”, or “share Dropbox”, it was “GET MORE SPACE.”)

It’s an incredible case study. But it is a significantly high cost to give free storage to two people for each referral — especially if you’re still in search of your Seed or Series A funding, and don’t yet have the resources to bear those costs.

There is no secret formula for increasing acquisition and reducing churn. Which is why I look to unique branding plays — The companies who find ways to use small, litttle-to-no-cost tweaks in their positioning and messaging to create big effects.

So let’s look at Spotify, and their 100% free method to increased acquisition, and in turn, reduced churn.

SPOTIFY: 32 Million Paid Subscribers | 2.2% Churn

Spotify too used a referral method, but didn’t give out free months for referring friends.

They leveraged bad technology and better copywriting to their advantage.

In late-2016 many smartphones began to update web-content text message sharing to seeing the graphic or actually being able to preview the content within the message itself.

For example, this is what sharing a YouTube video via text message looks like now, in 2018:

By early 2017, this was unanimous across pretty much all updated operating systems.

Prior to this time period, you may recall if someone shared a link with you via SMS, you would get the incredibly long URL chain and have virtually no idea what you would be taken to.

Sharing used to suck.

But in a share-sucking economy, Spotify decided to add 5 words before the hyperlink that set them apart from everyone else. If someone texted you a Spotify track, you got a text that read:

“Here’s a song for you…”

It made sharing a personalized experience.

Without those 5 simple words, “Here’s a song for you…”, you would have no idea what you were sent, and probably wouldn’t open an unknown URL that’s 50+ characters long.

I remember the first time a friend shared a spotify track with me I thought they actually wrote “here’s a song for you…” specifically for me, which ultimately led to me clicking and listening — aka me going back into the app and using it more — aka not losing me as a customer.

Had I just gotten the URL, I probably wouldn’t have clicked.

Even if it had said “LISTEN TO: Baby, I’m Bad Weather by Toussaint Morrison” (I still remember the song that was shared) I wouldn’t have clicked.

But Spotify turned their share copy into language that was actually how people talk.

They spoke human instead of computer.

By the way, ever since then, Toussaint Morrison is one of my saved artists. My friend was right, it was in fact a song for me.

Something as little as “Here’s a song for you…” — which is 100% free to implement — makes sharing more interesting, which makes users go back into the app more, which makes the app more talked about, which pulls in more prospective users.

From mid 2015 to early 2017, Spotify gained roughly 22 million paid subscribers, their fastest growth period up to that point. By July of 2016, their monthly churn rate was reported at 2.2%.

Remember, early 2017 is when new operating systems fully kicked in and sharing finally stopped sucking. So at a time when everyone else was sending out hyperlinks or making it look like spam, Spotify used 5 simple words and personalized the share.

Acquisition increased. Churn reduced.

Now, is this the sole contributor to their growth? Absolutely not. And this chart indicates correlation, not causation. But it was something different than what everyone else did at the time, and it made for a better user experience.

Your Startup

If you’re a startup who doesn’t have Silicon Valley money, you have to look at scrappy methods to make your brand more appealing to your consumers so that the overall experience is improved, and you in turn increase acquisition and reduce churn.

It doesn’t take any money to look at areas to improve your copy.

Can you improve your share language?

What about your onboarding tutorial?

What does your welcome email say?

Find scrappy methods like this and you’ll impress investors with your know-how, and impress customers with the experience you create for them.

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Hi, I’m Rajiv ‘RajNATION’ Nathan, founder of RajNATION Innovation. I use the power of performance to help startups like Muses and FanFood not suck at telling their story so they can pitch investors and acquire customers. Want to not suck? Holler at me.

I also host the popular Discover Your Inner Awesome Podcast — real convos with founders, artists and musicians to bring you the real side of success.