Paid marketing looks like a money machine - spend on an ad, win a customer, repeat - but the infinitely scalable channel doesn't exist. As you pour more in, each customer costs more and growth stalls. So is there another way to grow beyond buying every user?
Nilan Peiris traces how Wise reached roughly 70% word-of-mouth growth by making its product an order of magnitude better than the banks it competes with. Through stories from the company's history - obsessing over what customers actually value, mocking up ideas fast, and building things thought impossible - he lays out a system for systematising word of mouth, using NPS to turn detractors into promoters and let the product grow itself.
Auto-generated transcript - may contain errors.
Tap a timestamp to jump the video.
Morning. And well done for making it up this morning. It was it was definitely painful for me. I'm sure it wasn't quite as painful for you, but good to see so many of you up and up and with it. So today, we're gonna be talking about, systemizing word-of-mouth growth.
I'll explain what that means in a sec. Quick introductions. So I'm I'm Nalan. I'm the VP growth at Wise, which is, like, what does that mean? It basically means I I look after our our product teams, at Wise. I've been at at Wise more or less since the very beginning, which is about ten years.
So from about from scaling from two people to to three thousand people, around the world. And I've been working with startups probably for the last, fifteen years. And, generally, I I love working and helping startups, and I I usually help them when they're in the, the dead zone.
Anyone anyone here working in a startup? Any anyone here in the dead zone? So the dead zone's kinda like when you're this graph when when the graph looks like this. Right? So you're, you turn up every day to work, and you kinda got the same number of customers as you had last month and the same number of customers you had the month before, maybe even slightly less.
And you're dreaming about the graph looking like this, and you kinda think you're on on this journey where it's, it's gonna take off. But you also don't know if it's gonna be kinda flat forever. Right? And you're, hoping one day that you'll manage to get it to tweak up a little bit.
And I've been meeting and working with founders for for fifteen years, and the question I get from them is how to how to get out of it, how to get to traction, and how to get to this this magical growth beginning to happen.
So I thought I'd I'd open by by sharing with you kind of a a typical kind of conversation I I have with founders. And to protect the founders' identity, I thought I'd anonymize them, using characters from Squid Game. It's like, I was chatting with my children around what topical reference would work with the young people these days, and they they reckon they reckon Squid Game.
So the conversation kinda goes like this. Dude, we're gonna run out of cash in six months. Let's go see a banker. He can give us funding. And if you've if you've watched Squid Game, you kind of know the banker only gives you funding when you've got so much money and you you don't need it anymore.
And that's kinda true in the VC world as well. You kinda get funding when you're growing, and you've got traction. It's pretty hard it's pretty hard to get to get funding when you're not growing. Okay. So back to square one. So how how are we gonna how are we gonna grow?
Well, there's this there's this magical thing called marketing. And, if we can if we could, if we could do some marketing, then we can get some customers, we can get some traction, we can get some more money. That would, that would be awesome.
But marketing's expensive, so we need money for marketing, so let's go see the banker again. And so the conversation just goes random round in the circle. And this sounds like a bit of a joke, but this really does happen quite a lot in startups.
And this is where where most of my conversations with with founders start. Kind of like, how do you do growth? And it quite quickly turns into how do you do marketing. And so let's let's start with a little bit before we we get on to word-of-mouth on on talking about marketing.
This, magical money machine where you kind of spend money, you pay for an ad, you get a customer, and then they give you money, and then you can pay for another ad, and then you get another customer. And you you keep doing this, and this is kinda cool.
And maybe you can raise some money and kinda layer this one on top of the other, and then you kind of then that should that should happen. But anyone who's worked in marketing knows that even if you did get marketing to work as your growth engine, the graph doesn't look like that.
The graph looks more like that. So as you invest more in marketing, you get less and less users. It becomes harder and harder and more and more expensive to acquire more customers. And there's a really hard point on the startup growth journey, which is when the growth begins to slow down when you're when you're trying to grow through marketing.
And so one message to take away from this if you're if you're growing your business is, marketing's awesome. It can totally help. But as I like to say, the the infinitely scalable marketing channel doesn't exist. I e, there isn't this place like Google or Facebook that you just keep putting money into, and you keep getting more and more customers out of.
So is there another way? Is that a picture of an Nutella jar? So the the alternative is is what I like to call the, the most seductive idea in, in product management, which is, can you can you ship a product that's so good that it get that it grows itself?
Sounds pretty cool, doesn't it? So I'm gonna try and talk you through our journey at Wise of how we how we learned how to do that. So that's a a Wise tale. Through that journey, I'm gonna share three learnings, or three fables. Bear with me on that one.
And then at the end, I'll try putting that all together into a a system for word-of-mouth that you could use in your start ups or your companies. Okay. So kicking off with with a wise tale. So like all all great start ups and great companies, we have an apocryphal founding story.
Our our founding story is true, though. Kind of great great startups are founded to solve usually the founders' problems, and these are these are our founders. That's Christo and Tarver. And Christo was living in in Christo was living in Estonia, and he was, sending money to pay for a mortgage in London.
And every time he sent a thousand euros from Estonia to London, he noticed he lost seventy seventy euros in the exchange rate. Because when he checked the rate he got with his bank, it wasn't the rate he saw on Google or on Reuters.
They marked it up by seven percent. He was pretty pretty pissed off with that. Tarbert was living in London, and he was sending his savings back to Estonia. And each time he sent a thousand euros worth of money, he lost seventy pounds. That was seventy euros.
He wasn't happy about this, and these two met, and they were talking about this. And they came up with this ingenious way to save the seventy euros, which was Christo put money into Tarvot's savings account, and Tarvot paid Christo's mortgage, and they both pocketed seventy euros.
And that was the first version of Wise. And it's kind of crazy, but when you fast forward to today, and we're moving more than five billion pounds a month, we're doing more or less that same thing around the world hundreds of thousands of times.
Because when banks send money internationally, money doesn't really cross borders. They're just matching people going in different directions, and it doesn't need to cost seventy euros to send a thousand. So today, we've scaled that successfully to over two thousand eight hundred wises in seventeen offices around the world.
We've been profitable for years, and we listed this year on the London Stock Exchange. Probably more more inspiringly, one in forty one out of every forty pounds globally that people move across borders moves on wise. And the stat that we're most proud of is we're saving our customers over a billion pounds in fees every year.
And this, you're probably wondering what these random blue blue things on the on the, on the slide are. So the the light blue line is is our user growth, and it's actually really what it looked like. And the dark blue line is illustrative, but it represents the number of users that found out about Wise from a friend.
And more or less consistently for the last ten years, around about seventy percent of the of our users found out about Wise from a friend. So we have ten million customers today. Seven million of them found out about them from a friend. It sounds pretty awesome, doesn't it?
And that didn't that didn't happen by accident, so I'm gonna talk you through a little bit around how we how we made that happen. So it all starts with understanding why do people recommend your product. And through talking to customers and understanding why they're recommending the product, We found out they're recommending for two broad sets of reasons.
When you listen to them, customers are talking about very rational reasons for recommending the product, but they're also talking about emotional reasons as well. On the rational side, when we listen to customers, they're describing our product. And on the emotional side, they're talking about our mission.
I used to say brand, but that really confuses marketing people, so I prefer to call it mission. On the product side, they're saying stuff like, you gotta use Wise because it's fast. You gotta use Wise because it's cheap. You gotta use Wise because it's really easy to use.
Price, speed, ease of use. We can measure these things. We can measure the speed of our transfers. We can measure the price of our transfers. We can also measure the alternatives in the market. What were our customers using before? And what we find is in order to get advocacy, in order for people to talk about us, we need to be an order of magnitude better than the alternative.
So banks charge seven percent to move money internationally. It's between five to seven percent whether you're in the US, you're in Australia, you're in Singapore, you're in the UK. More or less, that's what's the the spread. If we charged six point nine percent, you might use us, but you're not gonna tell your mom about us.
But banks charge seven percent, we charge point three. So you're sending a thousand pounds. You're not spending seventy pounds. You're spending three. And people talk about that. They don't say use Wise. They say, don't use your bank. On speed now, forty percent of our transfers are instant.
That means they're available to spend on the other side of the world now within, within twenty seconds. And actually, Amy Dickerts from Wise, who runs our speed team, is gonna be talking off to me on the on the product stage to talk through how how we make that happen.
But contrast that with banks. Since the nineteen seventies when Swift was installed, around the world, it's taken three to five days is the standard estimate of how long it takes to move money every time anyone tries to use do a cross border money transfer.
And we're now at forty percent instant. But why do we do this? Like, why why are we why are we dropping our prices? Why are we making the speeds faster? Why are we making it easier to use? Like, is there someone in why it's kind of, like, trying to trade off the marginal decrease in price or the marginal improvement in speed versus how many incremental users we get to to prioritize where to spend our time?
No. I we're a mission driven company, and the mission is to take price all the way down to as close to zero as we can, speed to instant, convenience to the touch of a button. And our customers see our authenticity in trying to do that and, talk about that too, but also try to help us achieve it.
So in in very high level summary, how we've managed to get to seventy percent word-of-mouth and this kind of crazy levels of growth are by trying really hard to build a ten times better product than the alternative and then building cause driven marketing.
So let's get a bit more specific. I'll share with you three fables, from the from the book of ways. So fable or story number one, test all the things. So this is these are all true stories. And, again, I'll I'll redact people's real names and replace them with characters from Squid Game to protect their identity.
So we hired Gong into our referral product team as product manager a few years ago. So we have so we have word-of-mouth referrals where people just recommend wise. Out of the seventy percent of, of users that joined us through, referrals, about fifty percent is is pure word-of-mouth, and about twenty is incentivized where you would like if you if I refer Matt or Mark, I'll get I'll get five pounds or ten pounds back for for every person I refer.
And that that product, the invite invite a friend product, we call our our virality product, and Gong was their product manager for that. So Gong joined, after his his first quarter at Wise, he hadn't he hadn't shipped anything. Just caught up with him, and I was like, so Gong, so what what are you gonna ship this quarter?
And he says, I don't know. So what I'm gonna do is I'm going to, I'm gonna change everything. I'm gonna I'm gonna change the subject lines in the emails. I'm gonna change the incentives. I'm gonna change the call to action on the buttons.
I'm gonna change the words on the landing page. I'm gonna change every single part of the product, and I'm gonna figure out which part gives me the most leverage, and then I'm gonna focus on that. And there is a school of, product management or growth, which is don't think too much about what you build.
Just build stuff and ship it and test everything. And this kind of can work. It's kind of driven by these stories of places like Google where they where they test twenty different shades of blue to figure out which one gets customers to click more on ads.
And it can maybe work as a credible growth strategy when you have tons of traffic. But for most of us, this just just doesn't work this way. And, really, I've learned when product managers say they want to test everything, they don't really know what matters to customers.
So I set Gong a challenge. Got two weeks to figure out one change to make. It's like two weeks? I won't have time to test anything. So so what do you do? You kind of end up talking to customers, finding the people that use the invite program, watching them use it.
And through that, you slowly understand their problems. And there's this phrase we use, you build conviction on what is the biggest problem to solve for those customers. And it's a very soft thing, this. It's not data can kind of drive you as to where the biggest drop off in the funnel is, but it doesn't tell you why people are dropping off, and it doesn't tell you what you should be shipping.
And this is something we really drive culturally. So Gong managed to figure out, this is this is what I'm going to change, and it was around some of the incentives, in the invite scheme, and and he shipped it. And, and he learned through that, and it and it worked.
So the moral of the fable is, and the first thing we learned on our journey of word-of-mouth is really talking to customers to build conviction in what to build is one of the the first steps on systemizing word-of-mouth growth. Fable number two. Twenty iterations in a week, this one's called.
So this here is an old email from when we were called TransferWise, and, this is the email we used to send out when, transfer was complete. It's a cool email. And, actually, Gong again was the product manager. He he redeemed himself, on this one a bit.
So he noticed when he was talking to customers that customers believed they saved money with Wise. They just didn't believe the amount. And he wondered, like, how would we need to change this email in order for customers to believe that number? So what he did was him and a designer, just sketched out a different version of that email, and they showed it to people in a coffee shop, actually this coffee shop, which is next door to our our old office.
And they kept and then they got feedback from customers and whether they or people, just random people, and whether they they believe the savings number. And they kept changing the UX of that email until people looked at the savings number and were like, oh my god.
I that if I was to use I'd save that amount of money? And the UX started looking like this, and this starts to get embedded in the email. It's kind of like, this is the rate you see on Google. This is the rate you got with Wise, and this is the rate you get with your bank.
And therefore, that's how much that fee is. And so instead of saying just ten pound saving, you can kind of understand where that savings coming from. This UX works so well. We had a seven hundred percent increase in recommendation rates and invite rates off the back of it.
And this is a a big learning that, for me on product marketing where when customers really understand the value that you're delivering in your product, if they think the value is, like, ten pounds or two pounds, they won't recommend that much. But if they really believe they're they're saving a lot, then they recommend a hell of a lot more.
So we we've been actually iterating and building out this comparison thing. And if you look at today, we have I think a lot of these are in my name. So I think I can say I have, I think about sixty bank accounts around the world.
And, we started off with people logging on to them and getting quotes for different amounts and different routes and and writing them down. And now we have bots and scrapers doing that. So when you log on to Wise and you look at our homepage and whichever country you are, it'll come up with a comparison of these are the different alternatives, in the market.
And this UX works so well, we put it in ads. This is an ad we ran in the Netherlands, and we even turned it into into fun videos on Facebook. So we we create we use the metaphor of how painful it is running on LEGO bricks. Those are LEGO bricks.
Right? To illustrate how painful hidden fees in bank charges were. And we can check it out on our Facebook page. It's quite a funny video. All good. So what's the moral of the story? Getting back to to word-of-mouth. So in if you have a build cycle where you're going to maybe talk to customers and then build something and then ship it and then measure, it it like to add, like, two or three weeks to figure out if you've if you've got something that's working, and it's very hard to figure out why it's working.
But quickly mocking something up and showing it to someone and seeing if it's good enough to get people to talk about it, is a really fast way of kind of shortening the feedback loop on on on improving your word-of-mouth growth. Okay. On to fable number three.
You want us to meet all our customers, the story's called. This is a story about Singapore. Today, we've got about two hundred people in Singapore. It's our biggest office in APAC. But five five years ago, we had no one. And we didn't have a license, so we we went to MAS, the regulator, And we had a we had a huge amount of demand.
We had about two thousand customers on our wait list for Singapore. And so we asked the regulator, hey. Could we have a a license for money transfer, for sending money out to Singapore? And they said, sure. Here's a license. But you have to physically meet face to face every single one of those two thousand customers before you can send their money out to Singapore.
We need to physically meet them? Yeah. We need to physically meet them. So we don't need to do that in the US. You don't need to do that in Malaysia. You don't need to do that in Australia. Why do we they're like, you need to do that in Singapore.
And so we sent a small verification team of one person to Singapore, and he sat in a WeWork office there. He's called Jack, and he, he started meeting and verifying these people. And customers hated it. I mean, there's nothing wrong with Jack. He's an awesome guy.
But just imagine, you download the app. You go through the process. At the end of the process, it says, now make an appointment to see Jack in the office before you can send money out. But the muscle we built was we we didn't get the customers to complain to us.
We we got the customers to complain to the regulator. And it took a year of lobbying before before we got the first license for online KYC, which means you could take a picture of your ID, a selfie, and then we could sign you up.
I'm gonna take a step back. This is a ten times better product than the alternative. So the alternatives in the market, whether you went into a bank, you went in with a load of documents, you signed up, and then you could move money, or you went into a money transfer company with the same kind of process.
And here, we've managed to get kind of like skip through all of that, and you can just take a selfie. It's even easier today. You don't even need to take a selfie. Can just sign up with your Singaporean I government ID. So ten times better product.
But the bits to remember about the journey we we went on here was you can imagine after six months in of manually verifying people, you're kind of thinking, like, we cannot scale this. This is never gonna work. And at the same time, you're lobbying the government, and you have no idea if that's ever going to change.
And if you're building a ten times better product, you're trying to build something that doesn't exist. And if you're doing it right, you don't know if you're ever gonna succeed in that. And that state of existential crisis is a is a really good place to be because it means you're trying to do something really valuable.
And that's what we encourage our product teams to do at Wise because if they're doing that, they're gonna end up doing something really game changing, which will get people to talk about it, which will result in growth. So moral of this third story was learn how to and incentivize building ten times better products.
Okay. There's three three awesome stories. Let's try putting it together into a system. So we started this journey talking about marketing, the magical money machine, and I think, hopefully, we've learned that it's customers, the magical marketing machine. And so what does systemizing word-of-mouth look like?
Well, say we've got a customer, and they tell three customers about Wise, and then they bring on another five customers. Let's just take a step back and think about how we model this growth. So by now, all of us having lived over a year in a in a pandemic, we're all quite comfortable with, what a virality coefficient is.
And so we define it as wise as the number of customers acquired by a customer within a month, and you can see it's eight here. The other thing we're all familiar with is if if the Virelli coefficient is more than one, you get exponential growth.
Right? So we we all know that now as well. And that's kinda cool. That just means if each customer brings in more than one customer within a month, it goes crazy. That's all you need to do. Right? Even if it's slightly less than one, you get pretty pretty awesome growth.
So how can we affect this? Well, the virality coefficient is a function of many things, but simplifying it is a function of the likelihood to recommend somebody and the likelihood for them to convert. And sharing with you a system on this. We like to use is NPS or Net Promoter Score.
So you may have seen this. How many people in the audience know what NPS is? Wow. I'll whizz through this. So you've probably seen this question. When you use a product, how likely are you to recommend it to a friend? What you don't know is if if someone gives you a a one to a six, you call them a detractor.
You kind of assume they they go around telling everyone don't use the product. Someone gives you a nine to a ten, you call them a promoter, and they they go around telling everybody to to use your product. And if they're like a seven or eight, they're like, meh.
It kinda doesn't really make a difference to my life. So it turns out oh, and you can calculate it as a percentage by by doing this. Well, it turns out as you move people up the scale, their propensity to recommend when we look at our data moves dramatically.
So when you move somebody from a five to a six, they double the number of people they tell. A seven to eight, they double the number of people they tell. And an eight to a nine, they double again. And this kinda makes sense.
If you have more promoters than detractors, you will grow. But this is why doesn't everyone do this? This is because this is really hard. Because normally when you build a product, you just about get it to work, then you iron out the issues with it, then you kind of make it slick.
But to get it to people to recommend it, you have to create an experience they didn't previously think was possible. That build a ten x better product thing. So how to turn this into a system? Simply send the NPS survey out, see what the promoters, people that give you a nine or a ten, do more of that stuff.
People that give you a one to six, fix those issues. For us, it was make it faster, make it cheaper, make it easier to use. And then over time, your detractors slowly turn into promoters, and you end up with this amazing word-of-mouth growth.
And being really specific for us, we see word-of-mouth taking off when NPS gets above seventy percent. And we've built enough conviction that you don't really need to look at NPS anymore. We just need to drop price, which we do every quarter, improve speed, which we do every quarter.
And so you get the growth by improving the likelihood of recommendation, improving NPS. And for us, that meant building conviction on what matters, iterating quickly, and building ten x better products. Cool. And that's it for me. I'm not around for q and a that much, but if you ping me, on on Twitter for follow-up questions, I'll be around at the back for a bit.
Hopefully, that was useful, and chat to you all soon. Take care.
