How To Grow Without Advertising: A Case Study

I've never ordered anything from Zappos.com, but I keep hearing about what a great company it is. They don't do any advertising...but let's look at their growth pattern:

• 1999: Startup...almost zero sales
• 2000: $1.6 Million in sales
• 2001: $8.6 Million (800% growth in one year!)
• 2002: $32 Million (400% growth from previous year!)
• 2003: $70 Million (200% growth)
• 2004: $184 Million (250%)
• 2005: $370 Million (200%)
• 2006: $597 Million (160%)
• 2007: $800 Million (135%)

Phenomenal. Absolutely phenomenal. All without advertising.

How did they do it?

Obviously, there are many factors contributing to this kind of spectacular success. But one reason is they understand the three ways to grow a business...

1. Get more customers
2. Increase the average transaction value.
3. Increase the frequency of purchase.

Step 1: Get More Customers

Zappos depends almost entirely on word of mouth / viral / referral marketing. All pretty much the same thing, but your company needs to be worthy of being referred to someone else. And that's where Zappos excels. Their slogan is "We're a service company that happens to sell."

Take a look at this customer testimonial.

They realize they're not in the commodity shoe business, but in the business of servicing customers. They have a well-articulated unique selling proposition. See Why Shop at Zappos.com.

Step 2: Increase the average transaction value.

Zappos doesn't have the lowest prices because they don't compete on price. They compete on service. And NO ONE does better.

I haven't purchased from them, but if they're smart (and they must be) they'll offer cross-sells and up-sells at the close of the transaction.

Step 3: Increase the frequency of purchase.

I know the CEO, Tony Hsieh, understands this because of a quote in Direct Magazine. Here's what he says...

"Our business is based on repeat customers and word of mouth..."

Did you get that? Repeat Customers. The formula for long-term success.

If you're chasing after new customers all the time, and ignoring or not communicating with the ones you have, you'll never enjoy long-term success, and you'll never experience phenomenal growth.

How can you improve each of these areas in your business?