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Today, we’ll go over something you probably heard about: ChatGPT. Don’t worry, this will not be about the top 5 prompts to use or how IA will replace us all.
This free website got huge growth, fully organic. Everyone heard of it and talks about it. What can we learn from it and how can you do the same? That’s what we’ll analyze.
Let’s dive in!
ChatGPT got 1 million users in its first 5 days and about 100 million in January 2023.
That’s massive.
We don’t know yet how many users upgraded to the paid plan, but we’ll see how their growth system is well organized to increase this number.
In growth marketing, we usually use the (A)AARRR framework.
Awareness - people hear about you for the first time
Acquisition - they learn about you, for example by visiting your website or social media profile
Activation - they try your offer, for free or not
Retention - you keep your customers longer or encourage them to come back and be engaged
Referral - they refer your solution to others
Revenue - all of these lead to generating revenue, by either selling more to your customer, or to more customers
In case that wasn’t clear, here is ChatGPT’s definition of it:
This framework is traditionally used as a funnel, with Awareness as the entry point, and Revenue as the final outcome.
But to build sustainable growth, you actually want to make your system more like a loop, or a flywheel.
That’s what OpenAI managed to do. Here is ChatGPT’s AAARRR:
Each part is fueling another. That’s brilliant.
I was going to write you a detailed explanation of each part, but I thought it would only interest growth nerds like me.
So we’ll just focus on the key points: this framework actually contains 3 growth loops and 2 growth hacks.
Growth Loop #1 - Retention and Revenue boost each other
Retention is the core of this system. Or rather, user satisfaction.
As users use the IA, the longer they do and get used to it, the more likely they will upgrade to the paid plan.
To help them do so, OpenAI uses its Revenue to invest in researching and developing its tool: its service is getting better and better.
And the better it gets, the longer users will want to use it.
Here goes the first growth loop.
note: a reminder that OpenAI is backed up by Microsoft, so the first Retention was built using funds.
Growth Loop #2 - Every step has a shortcut to Referral
Whatever step the users are at, they can talk about ChatGPT.
They just discovered it (Awareness stage)
→ they get the concept and will talk about itThey used it once (Activation stage)
→ they can share what they tried it forThey are recurrent users (Retention stage)
→ they will share how they use it
Usually, Referrals come after a certain period, of use, and satisfaction.
Customers only refer to solutions when they really like them or find them useful; but here, as it’s free but useful, every step of the funnel can lead to referrals.
You got it, this IA is made for social sharing.
Growth Loop #3 - Awareness is built organically and cleverly
Before we talk about the third and last growth loop, which is pretty dense, I want to first explain the 2 main growth “hacks” within it.
Growth Hack #1 - Using Product-Led Growth principles to onboard users
It’s simple. Getting the use of ChatGPT is simple. Only after a few seconds of hearing what it is about, you get it.
And when you onboard and try it, only after the first seconds you type your first prompt and get the “aha moment” (when you get how the product can benefit you).
As each user enters the framework, they immediately get its concept, how to use it, and its potential.
The tool itself is designed, both on the experience and visual (UX/UI) for easy use by anyone. That’s what OpenAI sought: making a chatbot-like tool to make IA accessible.
Using a free model (not a freemium - as the entire tool is free) helps to make this entire user experience seamless and easy.
There’s almost no barrier to going through the activation part, from hearing about the tool, trying it, and getting the aha moment: that’s exactly what we aim for in PLG approaches.
Long story short, thinking ChatGPT as a free, user-friendly tool, is for sure a growth hack. And another proof that product-led growth models are more than viable for SaaS.
Growth Hack #2 - Focusing on an extremely lucrative target audience
You could think ChatGPT is for everyone. But it’s not.
Everyone can use it, doesn’t mean the company targets everyone. Some users are way more profitable, it’s about having a clear and lucrative niche.
For OpenAI, it’s really clear: who do use computers and SaaS on a daily basis, are always looking to save time, and have a huge potential in terms of visibility for the tool?
Marketers, including content creators.
They:
they can have a great impact on the software’s visibility
search the internet daily, and may need an alternative
are always looking for better digital tools
will find a ton of long-term uses
I include content creators as they do, in their own way, some marketing (and live from it).
For marketing, we marketers recommend having:
a generic target (anyone who can use your solution),
a core target (the very specific type of person who will need your solution),
as well as an ambassador target (people who will maybe not use your solution but will help you promote it).
For ChatGPT, marketers fit all of these types of targets. Bingo.
That’s a growth hack in itself, but to go even further:
OpenAI not only made their tool entirely free, they also shared access to its API.
It means anyone can connect their own tool with it! And that’s exactly the type of thing digital marketers like to do.
Zapier* for instance was the fastest to take advantage of it.
They connected their SaaS with ChatGPT, offering a whole new range of possibilities for every user, and especially marketers.
Double bingo.
*Zapier is an automation tool, to automate your processes and connect digital tools easily
Now, back to the growth loop: this organic awareness strategy.
We just saw a little preview of how ChatGPT achieved such organic growth: being free, easy to use, having a great target in terms of visibility, and implementing shortcuts for Referrals.
This growth loop is actually not one. It’s more of a growth strategy outside of the company’s system: they took the lead of a huge industry and fired up their competitors.
In short, they made some noise, started a trend, and made some people jealous.
Using everything we saw earlier, OpenAI started a popular trend, and their system is built to sustain this trend.
What I mean is that ChaptGPT wasn’t the first IA tool: there are thousands out there already.
But what does it have more than others? Everything we just analyzed:
Product-led growth principles, that make it easy to try and use,
Shortcuts towards boosting its awareness,
And Retention/Revenue combo that grows by itself
So what happened?
Other AI started doing the same: offering free trials, encouraging referrals…
But most importantly, using ChatGPT as a reference for selling their solution.
“Our tool is the ChatGPT for image creation”
“Our extensions also works with ChatGPT”
This put ChatGPT as the leader of the AI industry, at least in terms of brand image.
So how is this a growth loop? Well, as Revenue fuels Retention, the tool keeps getting better and more competitors try to either integrate it or show they are better.
It maintains the trend, such as when Google announced its new AI tool named “Bard” to compete with ChatGPT (everything alike, except that it will natively have access to Google).
And as the popularity of ChatGPT rises, each announcement made by OpenAI gives the trend a little push. For example, when they announced the AI’s new version, it created a second wave of virality.
And it keeps going, as Microsoft announced that Bing and Edge will integrate ChatGP’T’s AI (and the use of OpenAI’s AI model: Prometheus).
All of this growth is organic, OpenAI didn’t spend a dime on marketing. Imagine if they did.
To summarize,
OpenAI built a growth system where every step leads to Referrals, which boosts Awareness, and has Retention as its core.
The tool is designed to be used by anyone, but its marketing target is precise and efficient, both for its interest in ChatGPT and also for its impact on the AI’s Awareness.
OpenAI implemented shortcuts to reach its goals: its UX/UI is friendly, there is no entry barrier, and giving access to its API lead to many different usages.
They started a trend, and everything they do helps keep it alive and running.
But all of that was made possible thanks to the millions invested by Microsoft into OpenAI. The company has made many trials, and tests, until finally having a successful project.
Also, building such a growth system was possible thanks to Microsoft backing the company, which allowed ChatGPT to not focus on revenue for a long time (and we don’t know if they are profitable yet).
Hope you enjoyed this edition of Growth Systems, and that it did inspire you for your business. If it did, please share it ;)
See you in two weeks,
Gaspard