#GROWTHSTORY How LiveChat Scaled to 20,000 Users with Organic Growth Strategy
Having grown from its humble Polish roots, LiveChat has become one of the leading live chat software providers in the world. What’s even more remarkable is that it achieved most of this growth without a sales team and with zero spent on advertising. In this post, we’ll look into how they did it.
When it comes to live chat software for customer service and online sales, LiveChat is the go-to choice. Top-ranked by GetApp, Capterra, and G2Crowd, LiveChat is used by small online stores and global brands such as Orange, Adobe, and Samsung, as well as by universities and public institutions, such as the US Department of State.
Early years: Struggling with a direct sales model
The idea for LiveChat was conceived in 2002 as a cost-effective customer service alternative to the traditional call center model.
For the first six years of its existence LiveChat tried to succeed in a very traditional way: by directly selling to enterprise customers a license for the company’s software to run on their own network. SaaS was a nascent concept at the time.
Sales cycles extended for 6-12 months and progress was excruciatingly slow. And with the sales-heavy approach, the company could not extend its reach beyond the Polish market.
In 2008, the company secured investment from a subsidiary of Naspers that owned the most popular instant chat in Poland. In theory, the combination of investor’s strong brand and LiveChat’s technological strength should have translated into stronger sales, but with the onset of the financial crisis the business continued to slide.
The turning point: Pivot to SaaS
It was clear the existing business model wasn’t working. LiveChat faced an uphill battle in educating local customers on the need for a live chat product, whereas outside Poland, the customers themselves were looking for such solutions.
Also, the Polish market was small: for most local companies, the product was too expensive.
With LiveChat on the brink of failure, it made a move that breathed second life into the struggling business – it pivoted to a SaaS model.
The company saw immediate success with international customers and quickly turned cash flow positive.
Maintaining strong product focus
One of the reasons for LiveChat’s success is its relentless focus on delivering high level of product experience to every user. LiveChat has been perfecting its product for over 10 years and is able to offer customers a best-in-class solution with a powerful feature set.
LiveChat is one of a few pure play live chat software providers. For other companies, live chat functionality is integrated into a broader customer service software package, such as the case for the market leader – Zendesk.
While full-stack customer service solutions may be appealing to some users, there is a downside in trying to be all things to all people. With a product designed for millions of users, companies get to the point where they are no longer executing well on each specific part, which creates a distinct competitive advantage for companies like LiveChat.
Finding success with a premium model
If you look at the pricing options offered by LiveChat, you won’t find any free plans.
It was a conscious decision by the company from the very beginning because it perceives freemium as a cost rather than a source of leads.
In a freemium model, the company’s refusal to compromise on product experience means that the company would incur significant costs to support free users who will likely never become paying customers. And that just doesn’t make economic sense.
Instead, the company offers prospective customers a free 30-day trial. It found that to be an effective strategy because a free trial can instill a sense of loss in potential customers that gets them to sign on.
Shift from a sales-driven to an organic growth strategy
If you look at the market for live chat software, you’ll see that LiveChat is one of the most expensive products out there. How has it been successful?
Having a well-designed, flawlessy executed, and easy-to-use product is part of the answer.
Outstanding customer support is another differentiator for LiveChat and that, of course, means being its own customer. The company found that visitors to its website who use live chat before or during the trial period are three times more likely to convert than those who do not engage with its customer support.
Marketing is the other important piece of its growth engine. With the switch to the SaaS model, the company folded its sales effort and focused on digital marketing channels for reaching its target audience.
Having scraped by during the peak crisis years of 2008-2009 when the business was nearly forced out of existence, the company had developed a lean DNA. It is this mindset that drove the company’s decision to focus solely on organic acquisition channels, and it has served the company well.
Thanks to its prudent marketing strategy, LiveChat has been highly profitable since 2010. In the latest fiscal year, the company reported revenues of €17.5 million and net profit of €9.9 million.
LiveChat’s marketing efforts traditionally centered around SEO, affiliate marketing, content marketing, email marketing, and referrals. Let’s take a closer look at some of these channels.
For LiveChat, content marketing is a foundational strategy that aims to educate and engage potential customers, build credibility and brand awareness, and drive search engine rankings.
The company employs three full-time content writers producing hundreds of pieces of content, both for its own site and other publications.
The company’s blog is a linchpin of its content strategy. It brings over 100,000 unique visitors per month and offers insights on how to increase online sales and improve customer service.
LiveChat delivers value to potential customers through other resources as well, such as ebooks and reports. Take its Customer Service Report 2017. The publication, which details customer service trends, benchmarks, and strategies based on data from 13,500 companies, resulted in thousands of visits and shares and generated lots of publicity for the company.
LiveChat uses email marketing to nurture inbound leads, convert free trials into paying users, and connect with existing customers. It infuses high level of personalization in its email campaigns to drive high open and click rates.
- Lead generation – content download drip nurture
- Sales outreach – follow up with leads from support
- Customer loyalty – request reviews from high NPS customers
- Trial onboarding – convert free trials into customers
- Proactive customer support – deliver content in response to customer pain points
How LiveChat Increased Email Engagement 360% with Customer Journey Marketing
Growth hacking: LiveChat’s new approach to growth
Over time, the company’s traditional growth channels have become saturated and crowded. Its primary channel – SEO – is seeing intense competition for customer eyeballs from companies plowing money into Google Ads.
The company had to look for novel approaches to acquire and retain users, and in 2016, it assembled a growth team. Since then, the team, headed by Michal Fiech, has been successfully testing a number of innovative strategies and tactics.
This is, by the way, a checklist used by the growth team for each experiment.
Optimizing the “Powered by” link
The “Powered by” or a similar link embedded in your product is a great way to leverage a free resource you already have – your existing users. Pioneered by Hotmail, this growth hacking tactic is now used by Drift, Gleam, and a number of other SaaS companies.
With “Powered by LiveChat” links placed at the bottom of chat windows on its customers’ sites, LiveChat is able to get its name in front of a larger audience without spending a dollar from its marketing budget.
Chat windows represent one of the largest sources of traffic for the company, with hundreds of thousands sessions monthly, but until the growth team was brought in, no one looked at optimizing its conversion.
The growth team focused on making the user experience more personal:
- Set up a separate landing page, whereas the link was previously redirected to the company’s homepage.
- Created a simple GIF showing what LiveChat does – lets you connect with your customers right on your website.
- To add context, used the URL of the redirecting website in the headline.
This experiment boosted conversion rate by 114% and generated hundreds of extra trials on a monthly basis.
Engineering as marketing
Another strategy deployed by the growth team at LiveChat is engineering as marketing. It involves developing free tools and resources complementary to your core product – calculators, widgets, and micro-sites – to get your company in front of potential customers.
They provide value to your current target audience, promote your company, and feed customer acquisition. Think Drift and Drift Daily or Buffer and Pablo.
Engineering as Marketing
LiveChat’s clients are companies with customer support teams, so it’s developing tools and resources to help them make these teams more effective. Here are a few of them:
- Typing Speed Test gauges the speed of response of your customer support agents.
- Customer Service Course is a 5-day email program that helps you improve your customer service attitude, communication skills, analytical thinking, and technical skills.
- Customer Service Benchmark lets you see how well your customer service is doing when compared to the global peer group.
Improving onboarding conversion by 3x
LiveChat had a major onboarding problem. Only 12% of customers who signed up for the service ended up installing the code on their websites. It means that practically 9 out of 10 people who made a decision to use LiveChat did not onboard and never generated any revenue for the company!
What was the problem? Most users, being non-technical in nature, didn’t know how to install the code.
How did the company make this step easier and more intuitive? By offering more options.
In fact, the three options were available in the old onboarding as well, but in the new window they are much more visible and have a clear copy.
There were other tweaks to further streamline the onboarding process. For the integration option, the company set up a feature to automatically suggest the appropriate platform by looking at the user’s website code.
After introducing the new onboarding interface, the number of users installing the code skyrocketed from 12% to 35%.
Key takeaways from LiveChat’s growth journey
- LiveChat has succeeded with a premium model in a highly competitive space by maintaining a strong product focus, investing in top-notch customer service, and pursuing a sound marketing strategy.
- The company has chosen the path of steady, profitable growth by taking a long-term view on its business and focusing on inbound marketing strategies.
- Hiring a growth team enabled the company to identify new sources of growth throughout the funnel and supplement its traditional acquisition channels.
Lead Ledger estimates global market size for live chat services at 3.2 million businesses and a total penetration of less than 5%, which translates into a huge opportunity for LiveChat for years to come.
The creator of the oldest live chat tool out there will likely stick to its winning strategy of organic, profitable growth. And we expect to see more creative approaches from LiveChat’s growth team as it looks for ways in which the company can stand out in a crowded market.
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