Peggy Anne Salz

If your download rates are starting to plateau, turn your current users into app advocates who actively and eagerly recommend your app to other people. The good news: it’s incredibly effective. The even better news: it can come extremely cheap. Our host Peggy Anne Salz catches up with Justin Adler, Co-Founder, and COO at NorthOne, a mobile banking platform transforming the way that startups, small businesses, and freelancers manage their company's finances. They discuss the steps you can take to develop an effective referral program and why "product is the new marketing."Peggy: Hello and welcome to "Mobile Growth," the podcast series where frontline growth marketing experts share their insights and expertise so you can become a better mobile marketer. That's what it's all about here at Mobile Growth. I'm your host, Peggy Anne Salz from Mobile Growth where I help my clients grow their revenues and audience through content marketing. And on my watch, this series will introduce you to the people who know how to drive growth. They do it as their daily job. We're gonna learn about it here and we're gonna learn about it first hand. And my guest today is Justin Adler, co-founder, and COO at NorthOne. NorthOne is a mobile banking platform transforming the way that startups, small businesses, and freelancers manage their company's finances.  Justin, great to have you here on Mobile Growth.


Justin: Hi Peggy. Great to be here.


Peggy: I'm excited because it's the type of app, Justin, you know, that sort of already writes its own rules, right? Because it's not growth as we know it, it's not about user acquisition, it's basically trying to figure out a value proposition that's going to activate an audience.


Justin: You know, NorthOne, as you mentioned is, you know, mobile first digital banking platform specifically made for the needs of small businesses, startups, and freelancers. You know, I think the key insight that we had is that, you know, a lot of folks are great at what they do. So they're you know, fantastic marketing agency owners or you know, freelance designers or web developers, but when it comes to the financial side of their business, they just get a headache, right? It's painful. It takes away time from, you know, acquiring clients, actually doing your work.


So we wanted to create, you know, a banking experience that automated just a lot of that. So, you know, when it comes to, you know, bookkeeping, categorizing expenses, capturing those expenses, and really creating a digital banking experience that, you know, kind of takes the CFO that you wish you had and puts that into your phone. So, you know, I think that was the key insight that led us to kind of create NorthOne.


You know, we started off really simple. We started off with things that didn't scale. So, you know, going to conferences, writing content. That stuff is really hard to scale, but we kind of started off with it because we were good at it.


And then, you know, as we kind of grew the company, we added in, you know, different things for our marketing mix. So, you know, right now we have a pretty robust marketing mix that uses paid advertising, uses content, but probably most importantly, it uses, you know, network effect ambassador and referral programs in combination with a free tool strategy. And we can get into both of those.


Peggy: Absolutely. Because that's what I'm really excited about. I'm thinking about referral programs. I mean, I follow the industry and you know, paid marketing, you know, in combination with something else is what really moves the needle.


And okay, we've done our social media, we've done our influencer marketing, we've kind of figured out that that's a little hard just even to calculate the impact on the bottom of line, let alone really, you know, not just measure it, but see that it's doing something to the overall results. So we've been through those. We're looking now at referral marketing as a way to do that.


I just wanna step back to be clear about one thing that Justin, how do you actually make your money with the app? Are you a subscription app or what am I doing as a user to use your services?


Justin: Yeah. a great question. So it's a subscription and I think, again, what really differentiates us from, you know, the bank that your business might use today is that, you know, unlike a traditional bank where, you know, maybe there's an upfront cost and then, you know, every transaction costs, you know, an X amount of dollars and cents. And at the end of the month you say, "Oh my God, I spent $80 or $100 on my bank account than I thought it was gonna cost me $5." We have a flat fee structure so, you know, what you're paying upfront and there's no surprises along the way.


Peggy: Okay. So it's a flat-fee structure, it's the subscription app. Let's talk about exactly what you started talking before, which was, you know, how to scale. I mean, maybe we'll talk about the journey because it was interesting you said, you know, "We did the things we were good at. That was content marketing, it was going to events and all the rest of it." I mean, what told you that it was time to move it up a gear?


Justin: Yeah. You know, I think we set really aggressive growth targets for ourselves and it started off, I mean, these things sound easy when you're at the beginning, right? Like when we had, you know, our first email list and we said, "Okay, we wanna grow this by, you know, 45%, you know, every month. And that's fine, you know, when, you know, you're moving from 1 sign up a week to, you know, 2 signups, to 10, that's okay. And I think you can get away with doing things that don't scale, you know, where you're really just kind of testing out small-scale versions of what you might wanna build out later. So you might wanna say, okay, like let's say, I think Twitter or LinkedIn is a really good acquisition mechanism for me. What is the easiest or lowest cost version I can do that? Even if that obviously, you know, has a ceiling, so I'm never gonna get more than, you know, maybe 50 people to sign up for my service a month through this? It just kind of tells me like, is this network good? Is this sort of channel valid?


And I think just using, you know, hypothesis-driven testing, I'm coming up with ideas, projecting out results and then seeing, "Okay, after about two weeks of running this experiment, did I achieve my result?" That kind of lets you know whether you should kind of invest a little bit more and now maybe it's time to put down money or invest real time into an idea or maybe, you know, maybe not. Maybe you were proven wrong and it's time to move onto something else.


Peggy: Well, that's good to have a little bit of an informal checklist there because, I mean, that's the beginning of the thought of, "Okay, I need to do something." Now, you've chosen amongst other things, to literally, no pun intended, you know, cash in on the network effect of a referral program. Making sort of your app advocates and ambassadors into your growth engine. How did that actually come about? Is there a specific model or blueprint you had in mind or did you just say, "Let's just do it and see what happens?" Because, you know, in the many approaches, I'd like to know, well, yeah, how you started, how did you do this?


Justin: Sure. Yeah. So you know, actually, kind of the idea came to myself and my co-founder in a pretty organic way. Where, you know, when someone would signup for on NorthOne to, you know, get access to our platform, we'd send them, you know, just a drip email. And in that drip email, we had something that seemed pretty innocuous at the time, which was as the last line of the email, which was from my co-founder who's the CEO of the company, just kind of a very personal welcome email. The last line said, you know, "One more thing before I go, you know, tell me why you signed up for NorthOne. You know, your feedback means the world to us and you know, we read every single email that you write back to us." And you know, it wasn't going to a "no reply" or you know, an or anything like that. It really went to his email address and it still does. I don't know how he keeps up with the emails that we get, but what we really quickly saw was that we were just inundated with all these folks saying like, you know, "I hate my bank, or I feel disrespected by my bank or you know, I'm scared of finance and I need someone to help me."


Which we know is a pretty common sentiment, but we realized then that, you know, when you have people who are feeling really strongly about something and there's sort of, I guess, a group of people that are different but different in the same way, I guess, that that's really the root of what, you know, creates a community. That's sort of the foundation.


And so we sort of asked ourselves, "Okay, well, what does the natural extension of this look like? But, you know, in a way that doesn't force us to invest tons of time and money." Because, you know, we wanted to see, "Okay. Well, this is our hypothesis. Is this right?"


So, you know, we started off in a really simple way. We started off with this idea that when you sign up for NorthOne you're given a referral code, and this was, you know, prelaunch. So you're given a referral code, you're also given sort of an assigned place in our queue, right? So maybe you sign up and you're placed at 10,000. And every single person that signs up through your specific referral link, so unique # that's assigned to you, you move up in our queue. And so this is a system called the Viral Queue, right? And it's immensely powerful.


And what we saw was that, you know, not everyone was doing this, but you know, a lot of folks were bringing us one, two, three, five signups, and then you had this sort of valley and at the other end of that you had these folks who are just so passionate about spreading the message that, you know, we were getting, you know, 20, 30, 100 people to sign up just through their link.


Peggy: And excuse me, Justin, I just wanna understand this for a moment. What was in it for them? Was it just the joy of saying, "Hey guys, this is gonna make your life different" or what is the reward? Because usually there has to be something.


Justin: Sure. So, at this stage, there wasn't too much of a reward. That's what we found really interesting. The reward was really for every person you join, you move up the queue. So you get access to the platform faster. So, you know, instead of being placed 10,000 and having to wait a while to get in, if you share it and a bunch of people sign-up through your link, suddenly, you know, you're placed number 10 or place number 20 and you're, you know, among the first people to get access to this platform. And we found that pretty powerful. But you know, and just to hypothesize a little bit, I sort of think that there's a little bit of psychology baked into that too. You know, I, I remember the founding team of Snapchat when they were asked, you know, what led to their viral growth. Their insight was that you know, "I think that people want to share things that make them look interesting or intelligent or unique." And so I think that you know, this will happen whether or not you have a referral system in your product or you know, when you sign up flow, but what you sort of enable by having that system there is you will let it be trackable and you kind of nurture that desire to share interesting stuff.


So as long as you have a company that's doing something novel, I mean, interesting that kind of people feel good to share it, they're gonna wanna do it. And I think just more even than just sort of the reward of getting that early access, that acts as a huge motivator for people to kind of share your messaging.


Peggy: I couldn't hope for a better segue because you're sharing your ideas and we wanna hear more of those. I wanna hear more about, you know, how you actually got this program to scale, I wanna understand tracking, but right now we have to go to a short break, so don't go away listeners, we'll be right back.


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Peggy: And we're back to Mobile Growth. And our guest today, Justin Adler, co-founder and COO at NorthOne. Justin, right before the break we were talking about, you know, how I guess you sort of tapped into our human instinct. You know, it's like product hunt. We wanna seem cool, we wanna lead the pack, we wanna share some great ideas. So, you tapped into that, but you've made it work as a growth engine. Now that's quite a jump. So, tell me about the process and what you did and maybe didn't do to make this more of you know, a procedure. And also, above all, one thing is to tap into our need to wanna share things. It's another to want to really find, reward, track the power-sharing users amongst us.


Justin: Absolutely.  So I think, you know, before we get into the really kind of tactical nuts and bolts, I think that you know, the kind of predominant formula that you know, you need to think about before you set this up really to kind of benchmark how well it's working is, you know, using a simple kind of K-factor formula. So a K-factor for anyone who's not familiar with it is actually something around you know, measuring how viral something is. So it's actually taken from the medical community. And it's looking at kind of how fast are viruses spread.


So how we use that in marketing is to understand the, you know, relative success and if a referral program will be successful. So the formula is actually really simple. You know, your K-factor is simply the number of invites sent by each customer multiplied by the percent conversion of each invite. And that formula will give you, you know, your K-value. And what you're really looking for is having a K-value of one or I mean, in an ideal world, greater than one. And that'll let you know that you know, you're doing good when it comes to referral marketing. You should always be kind of shooting for that. If you're putting a lot of effort into it and you know, you can't get there, you may wanna kind of step back and rethink, you know, your tactics and your messaging.


Now, to get into kind of the nuts and bolts of how we set up just our initial, you know, referral program. So we did a really basic setup. You know, I didn't wanna get too fancy with it. So we're really relying on two pieces of software. So one is a piece of software called Waitlisted. I couldn't recommend it more, and so you can visit it at And they have a free version, they have a paid version. And really this handles a lot of the technical stuff of someone. You know, you place it within your checkout flow or your signup flow and it will handle the generating that unique referral code for you, as well as tracking the position that everyone is in. And you can program in your messaging in there as well. And so it's a really nice piece of software.


Then the other thing that we're reliant on, which I would hope most marketers are familiar with at this stage is Google Analytics. And you know, by placing event tracking within that Waitlisted flow, we can actually measure, okay, well not just kind of the source and medium that are leading to conversions, but which you know, sources and campaigns are generating more conversions which generate in turn, you know, referrals, right? And so that way you can kind of very holistically, view your funnel as not just, you know, like traffic conversion but traffic conversion and then kind of, you know, a referral activity as sort of the third step.


And that's something that we really paid a lot of attention to, not just when we're deciding, you know, whether to invest or kill different tactics and channels, but you know, in fact, you know, by cross-referencing things like geography or even, you know, device characteristics,it helps us better target our ads and better target, kind of, our organic tactics too.


Peggy: So is it something that you do before or after the fact? Are you saying that you're looking for audiences where there are, you know, sort of the characteristics of people who are more likely to refer? So it's sort of like going after the high-value users from the very start. You don't do a broad campaign, you just go for them or do you do the campaign, then they result, and then you nurture them?


Justin: Yeah, that's right. You know, I'm not a big fan of trying, you know, to focus on hitting a home run every time. I like starting very broad, figuring out what's working, trying to find that value within kind of the noise of a broader campaign, and then, you know, iterating and refocusing my efforts based on what's working. And in the same way that, you know, traditionally you might look at a paid campaign and say, "Okay, you know, this ad or this channel or this campaign brought me X amount of customers. You know, this like, cap, so I'm gonna invest more heavily in that." You know, we'll use referral as another kind of benchmark to say, "Okay, was this campaign successful?"


And you know, it certainly happened to us where we'll have certain campaigns that, you know, actually have a higher cap or even a lower overall conversion, but they'll bring us substantially more valuable users when it comes to referrals. Who in turn, you know, ultimately reduce the cost of that campaign drastically.


And so, I think, it's really kind of super important to not start off with too much of a prescriptive mentality and really try to kind of be a little bit broader and then refocus after you see those results come in.


Peggy: How do you keep them referring? I mean, some people are just gonna be sharing by nature as you said. You know, some people are just hardwired to say, "Hey, this is cool, check it out." Okay. They move up the list. It's very interesting because it flies in the face of everything I read. I read tons of stuff about, you know, what discount, what price, what reward and when? You know, "You have to give us something." Here you're, you know, just moving me up in like a virtual list. It's sort of interesting. Is that the way it's gonna be or is there going to be... You don't always have to give people money, but I'm sure there's something else. Is there something else?


Justin: Yes. So right now you know, we're really focused on early adopters. So those are the folks who you mentioned, kind of like the product hunt market who are really excited to share novel things because, you know, it says something about who they are as people, as individuals, right? And I think just before we get into, kind of, what stage two looks like, you know, when we're talking about keeping those folks engaged, it's really done it in an automated way. So we'll take our customers, we'll pop them into MailChimp and we have, you know, drips that are based on different actions that they take during, you know, the timeline of the drip.


So, you know, we might ask them, you know, to fill out a survey to let us know a little bit more about their business. We might sort of wanna send them some content. We might wanna like ask if they wanna do, you know, user-testing to get early access to, you know, new features that we're building into the platform.


This is sort of the beginnings of what we ultimately wanna take that, you know, strategy. And I think that there's sort of two parts then. This is sort of the evolution of it, right? I think that you know, the first step is once you kind of move your affiliate or referral program beyond a simple, "Okay, this makes me look interesting," you know, out of the early-adopter stage, you have to start some hits. I think what a lot of folks, I guess, mistakenly do, is they try to kind of subtly incentivize some new users. So you see this a lot, especially in financial services where you might see, "Oh, will sign up for a new account and get X, Y, Z."


The problem with this is that you're not capitalizing on, you know, the folks that are already using your product and love you. So I think that if you look at a double-sided referral system, Uber does this especially well. Where, you know, the idea is every time you share their message and they get a new customer, you know, the new customer gets something but you get something too. This really kind of keeps people super engaged and really active in sharing, and you know, keeps them really engaged in the product experience as well.


So I think that's sort of the first step. Then I think that you know, there's also that like 1% group who are just rabidly in love with your product. And I think for those folks, you know, a real ambassador program where they feel empowered and they feel like they have a voice in the direction of the product is really the way to go.


You know, prior to NorthOne, I was one of the founding members of a startup called Frank and Oak where we set up a similar program. And I think that that's really kind of the mature version of where ambassador programs can go. I think that, you know, by bringing your most engaged, you know, referrals into a program that allows them to have direct input into product roadmaps, into future campaigns or even, you know, if you're a consumer brand, you know, something like partnerships to say like, "Okay, who do you think that, you know, we should do a collaboration with?" That really, sort of, makes them feel empowered and kind of keeps them becoming, you know, deeper and deeper ingrained into that advocating experience.


Peggy: It's interesting because this goes back away, but I've been in the industry, also, for a while, and I remember, excellent, excellent book, "Democratizing Innovation," Eric von Hippel at MIT Sloan Institute talking about lead users. How you have to get them in, how you have to, you know, make them part of the process and they will love you for life. Now, that was written long before mobile. And what you're saying is the same thing. You know, get them in there. Give them a voice. This is more powerful in many ways than money, certainly more lasting.


You talked about product yourself there and that's another thing you're doing over there, Justin. Tell me about that because you're also using tools as a way to keep people, you know, coming back, staying loyal, spreading the word.


Justin: Yeah, absolutely. So, you know, I think one thing that we remarked, before we even really started the company, you know, we were just doing our market research, was that a lot of folks, especially in finance, tend to use direct response ads aggressively. And because, you know, a lot of financial products, there's a trust component in there. For a new player in the industry or you know, even an incumbent who maybe has had some issues with customer service or trusting the path, direct response ads are tough, right? They work even less well than you might see in consumer-facing, you know, products.


So, you know, we developed this kind of thesis that to kind of get really engaged customers we needed to, you know, give a whole lot before we started to ask them for something. So, prior to launch, we, you know, spoke to hundreds of prospective customers, so small business owners all over the country, and we tried to isolate the biggest pain points that they had as small business owners. Really just by talking to them. So sort of taking an anthropological look at what a day in their life looked like. And we broke those problem sets down into, kind of, you know, themes that we saw and then we started thinking about, "Well, as technologists, how can we create tools that address these and actually, you know, create actual value?"


So, you know, when we're talking about tools, we're not talking about, you know, a calculator that's on a landing page that is really just there as a small novelty so that you'll sign up for something. We're talking about things that you know, become part of people's lives before they even really consider, you know, adopting your paid product. So I'll give you an example to bring this to life so it's a little less abstract.


You know, one thing that we heard from a lot of folks is that for small business owners, especially freelancers, invoicing is a headache. You know, most folks do it with Microsoft Excel or with, you know, the Mac equivalent. They have to be at their laptop, you know, they have to like fight through these different weird templates. There are some mobile solutions, but you know, all of them are paid and you know, especially if it's a side hustle for you as a freelancer, they're expensive. You know, they're like $30, $40 a month. So we asked ourselves, "Well, you know, we're technologists, we can build a great mobile invoicing application that's totally free."


And so we did. You know, it's called Free Invoice. It's actually on the Apple Store and Google Play Store right now. And, you know, since we came out with that a couple of months ago, we've had thousands upon thousands of people download it and use it. And you know, we get feedback from those folks all the time. Some of them saying, you know, "This has actually changed my life. Where I don't have to wait to go home after a meeting, after closing a deal, I have to drive an hour back to my house, get on my computer, you know, tell my kids to wait a minute, create an invoice and then send that. I can do it at the meeting as it finishes."


And that's really kind of a strategy we've taken with free tools. It's about, you know, creating things that truly provide value for people before we ask them to, you know, sign up for NorthOne. And then, when we finally do that becomes a really organic conversation where they say, "Oh well, I know what your team is. I understand its values. I know that you understand the pain points in my life." And so now that conversion becomes a lot easier.


Peggy: I love what I'm hearing here because I hear this now so often that we have to just take a step back in UAE and say, "Is the product good? Is the product really good? Is it good enough?" In other words, product is the new marketing. And what I'm hearing here is exactly that. You know, think of some free tools that make sense that are going to help you, you know, acquire the users you want, you know, you keep them. And it's all about just giving those couple of tools that people are clamoring for. And that's good. You know, and that's probably a lot less stress and certainly a lot easier to deal with as a company than to say, "Okay, so what other channel are we gonna pour some ad-spend into?"


Justin: Absolutely. And you know, it's actually more cost-effective too. So, you know, when we're specking out a new product, we will look at, you know, "Okay, here is our project cost." So for developers, for design, for project management, "Here's how much it will cost us to produce this tool." And then we'll include some distribution costs in there as well. And then we'll kind of compare that to, okay, so based on that tool, "Here's our projections for how many new, you know, signups we expect to get out of that. And then we'll compare that to, you know, "Okay, well, if we were to take that same amount of money and spend it on paid ads, what does that give us?"


And not always, but frequently, it actually makes more sense to build tools, you know, at this stage, rather than just to pour money into direct response ads. We'll still do that to support, you know, our growth posts, of course. But this really lets you be a little bit more diversified in your marketing mix. And it kind of brings down your overall cap pretty substantially.


Peggy: I love this. Justin, we'll have to have you back again or do something to check in with this because this is an approach to marketing that is all about all the other things that can be in your toolbox in 2019. You know, going into the new year thinking about new ways to approach it.


In the meantime, how would listeners stay in touch with you? Maybe stay up to date with what you're doing, maybe get an idea on how else you plan to scale growth and the other ways that you're doing it? Justin, what's the best way to do that?


Justin: Sure. So for all things NorthOne, we have a blog on our website, that you know, listeners can go to. They can also follow NorthOne on Twitter. So, @northoneapp. Or if they're interested in, you know, myself and what I'm doing in terms of growth, I publish articles pretty frequently. They can follow me on Twitter, @thejustinadler on Twitter.


Peggy: Very cool. I will do that myself, actually. Justin, thanks so much for being on the show today and thank you, listeners, for listening to this episode of the "Mobile Growth" podcast.


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