3 min read

How Nextdoor shifted from marketing-led to product-led growth in 4 steps

How Nextdoor shifted from marketing-led to product-led growth in 4 steps

Shifting from marketing-led growth to product-led growth is a great idea: it can simultaneously increase your revenue and cut costs. However, before starting the transition, it’s important to do the prep work and set the right metrics, theories, and analytics.

Sounds complicated? It’s not. Check the case of Nextdoor — a social media app for neighbors and local businesses to stay in touch. Here are the four steps they took to attract users with the power of the product.

About Nextdoor

Nextdoor is a platform for neighbors, local businesses, and authorities to stay in touch and share local news, recommendations, and other information about the neighborhood. All users who join the platform are verified to ensure they are neighbors. The app works in the US, Western Europe, Canada, and Australia.

  • Over 63 million users
  • $45.8 million revenue
  • Valued at $4.3 billion

Refine your product to drive growth

When acquiring new users, Nextdoor has to make sure that they are actual neighbors. The app can’t just offer existing users to invite people from their contact list because those people don’t necessarily live in the same neighborhood. For this reason, until recently new users were acquired mainly through marketing and invitations mailed to certain addresses.

To stop relying on marketing and have the product and its features attract and invite new users, the company took 4 steps.

Step 1. Make sure you have the right metrics to grow the right way

Nextdoor adopted several metrics that would reflect different types of growth. To keep track of very short-term growth, the company started monitoring Product Value. It was built upon Revenue and the number of Daily Active Users.

To look a bit forward and understand what things would drive longer-term growth, Nextdoor added the Product Love metric. It was built upon Net Promoter Score (NPS) that showed how much the users would recommend or promote the app to other people.

Finally, Nextdoor adopted the Neighbourhood Vitality metric. It showed if users stayed on the platform for long. The company believed that content that made users angry and responsive only led to short-term growth. It meant the best way to retain users was to decrease the amount of abusive content.

To do so, Nextdoor introduced full-screen pop-ups that appeared and asked for confirmation when users were about to post something that had been reported as abusive in the past.

Step 2. Fix the “leaky buckets”

Nextdoor needed to make sure that there were no places where retention dropped and undid all of their hard work. The company analyzed its user experience and discovered that for instance, if people were engaged in conversations in the first few days on the platform, they were more likely to be retained as users.

To achieve it, Nextdoor prompted new users to post about themselves and leave comments.

Step 3. Have a theory of growth

Another key thing to do is to choose a theory of growth. That is, to understand how different parts of the product work to drive revenue and attract customers. Nextdoor built its theory of growth on the flywheel model of the product, which was based on positive feedback loops that created a retention mechanism.

Their flywheel consisted of four stages of product experience: content, engagement, local connection, and organic invitations that influenced each other. Nextdoor built and improved product experiences upon these stages. This way, the product would do the work of growing its user base, engagement, and revenue.

To improve product experience, Nextdoor introduced:

  • New content types (polls, news & weather updates, etc.)
  • Better UX (roll-ups, carousel posts, bigger images, etc.)
  • New options for local connection (such as neighborhood groups)
  • New options for organic user acquisition (like off-platform sharing)

Step 4. Put good analytics in place

Nextdoor used analytics to check how many visitors came to the app, how many of them stayed, and how they interacted with the product.

The gain & result

After setting these four things right, Nextdoor was ready for product-led growth and could substantially cut marketing costs.

“Over the almost two years that I was at Nextdoor, we were able to turn off the vast majority of our marketing dollars, because the product was doing so much of the work to drive growth for the platform. Our valuation did very well, our engagement just shot through the roof in 2020, and it was in large part because of the pieces and the components that we had in place to drive that growth flywheel.”

- Tatyana Mamut, Ph.D., ex-Head of Product at Nextdoor, SVP at Pendo

To see more of Tatyana's incredible insights, watch it here! You can access it for FREE with our 7-days trial.

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