This Growth Strategy Led Strava to a $1.5B Valuation
By: Alexandra Borbely
Tags: Mobile Marketing, Growth Strategy, App Marketing, Mobile Apps, Growth Hacking

In the last couple of weeks, those operating in mobile can’t help but hear about Strava’s massive investment.

The $110 M investment raised by Sequoia Capital and TCV, in a Series F round valued the company at more than $1.5 billion according to The WSJ.

Strava has not only managed to become a Unicorn during a global pandemic…

They’re also one of the most influential H&F Apps right now leading us to the future in a rapidly changing climate.

Today, we will look behind the curtains of this new Unicorn to take a sneak peek into what’s truly working for them and what’s not.

I will reverse-engineer their growth strategy including the product, their marketing efforts, their monetization model, and everything in between.

My goal is to show you what makes a winning Mobile Growth Strategy in this rapidly changing era.

You will soon realize, everything you see here today is based on pure data and facts. I am not here to make up theories about how they might have become successful.

Today, we talk about the actual strategies they used, and the tactics they implemented.

About Strava

Strava is a social fitness network founded by Mark Gainey and Michael Horvath in 2009.

Before Strava, they founded Kana Communications. It was their first startup hatched together and turned out to be a massive success. Little did they know it’s going to lead to founding Strava and reshaping the whole industry.

Strava means “strive” in Swedish as the company’s co-founder Michael Horvath lived in Sweden as a child.

Striving is at their core, and they truly mean that.

Their goal is to become “the next great sports brand of the 21st century,” as their former CEO, James Quarles puts it. Let’s see how they’re trying to achieve that!

Summary of Their Strategy

Strava became a Unicorn in front of our eyes in a matter of weeks. But the growth that made it all possible certainly didn’t happen overnight.

It has been years of iteration on the product side, on the monetization model, on the marketing strategy and the list goes on…

And then something unexpected happened: COVID-19 turned our world upside down causing a stir in each and every industry. The H&F sector turned out to have the most prosperous times during the pandemic (and keeps growing).

Strava was able to capitalize on these macro changes with new in-app features and campaign activities. New activities brought on a whopping number of new users.

Constant iterations and recent activities combined made Strava have spectacular growth this year.

They ended up becoming profitable in 2020 and closing on a $110m investment round that values the company at $1.5 B.

Current Climate

Before we dig deeper into Strava’s growth strategy, we must take a step back and analyze what is going on at a macro level these days.

After all, this is what impacted their growth (you’ll see how) which eventually led them to reach Unicorn status.

As we all know, COVID-19 turned our world upside down this year. It took a hard hit on many industries, however, the Health and Fitness sector has never been more in-demand than they are now.

App intelligence data tells the H&F industry reached a whopping 30% YoY growth generating more than 2.21b installs till the end of October.

No doubt, one of the biggest winners of this already rising sector has been Strava this year.

As a spokesperson for the company said to Business Insider “the meteoric rise of the company in recent months can largely be attributed to the impact of the coronavirus.”

You see, they have not only seen a positive response during the pandemic, their growth truly skyrocketed during the past few months.

People not only wanted to find a safe environment to exercise in again, but they also wanted to make this new experience as fun as possible — even if the circumstances are not ideal.

This is where Strava had a huge opportunity they soon realized.

And well, they certainly built on this momentum. Now, let’s see how…

User Experience

Strava’s User Experience and the constant iteration towards a sleeker, more satisfying product encounters for a huge amount of its growth.

“If it’s not fun and entertaining, we’ve missed the mark because that’s fundamentally what keeps us motivated.” — Mark Gainey, Co-founder & Chairman of Strava

It has always been a social fitness network where the product comes first. Period.

Being Social and Beyond

Strava’s goal is simple: it wants to be the one and only core of your active life.

You can not only track your activities but they want you to use it before and even after a sweaty session.

Normally with other apps once a session is over, you might look at your stats at home and then you leave the app until your next activity. And this is where Strava really stands out.

With Strava, you can join challenges, find new routes, find people in your neighborhood to go with.

You even have the opportunity to post your activity to your Feed, share it with your friends, talk about it. This way every activity is new content on the network.

You really can get social about every aspect of your active life.

What does that really mean from an analytics standpoint? They are aiming for increased retention and in-app engagements. Being a social network means virality is a huge factor in their growth. It’s not rocket science to figure the more a user is engaged the more likely she will refer it to a friend or invite them to use it together.

And if this hasn’t been enough, did I mention you can compete with your friends?

Source: Strava app

With challenges, you can complete goals, get on the top of leaderboards, and ultimately compete with your friends or even with complete strangers.

This sounds really fun alone. And yet there is a cherry on top…

They managed to monetize this experience by having branded challenges with promising prizes you can win.

One I joined had a 2500 GBP prize of Le Col winter gear. (More about their monetization tactics later.)

As I said, these challenges seem great fun in normal times alone.

Now, imagine how many jumped on the bandwagon during not-so-normal times (aka pandemic, global crisis).

One great example is the “SOLOdarity Challenge”. It has been designed to help users “stay active and connected while socially distancing,”. It ended up amassing nearly 1 million new users.

If that wouldn’t be enough, they did a little something else too…

Strava launched a new feature, the Local Legends, “a new way to compete on segments” as they call it.

The new feature came with robust marketing efforts too including film-quality promo videos (the ones you usually see in mobile game promos).

Local Legends crowns the person who has the most “efforts” over a 90-day period on a specific route, they become a local legend of that route and they receive a digital laurel crown. And here’s the twist: Strava’s free trial only lasts 30 days.

With this little maneuver, they generated 39% of their annual revenue in just 47 days. (Read that again.)

These recent challenges and campaign activities helped them reach impressive growth this year. Plus, they had an overwhelming part in the company becoming profitable and eventually reaching Unicorn status.

It has been nothing short of amazing to see how Strava’s journey unfolds during the last couple of months…

They truly made fitness social again even in times of social distancing.

User Acquisition

We already know what types of marketing activities brought them traction and eventually a massive growth this year.

Now let’s take a look at what types of users they’re looking for, and how their user acquisition looks like overall.

They hit a new milestone earlier this year reaching 3 Billion activity uploads and 50 Million athletes according to their press release. The numbers have been made official in early February — meaning it reflects their growth state before their big boom followed later this year.

When it comes to users, they prioritize engagement over no. of downloads. No surprise here, they want high-quality users, not just any new installs.

According to Adjust, Strava came up with a KPI called Cost-Per Strava Uploading Member in 7 Days (CPSUM7D).

“This metric tracks the cost of acquiring a user that would upload an activity within seven days of installing the app.

Because Strava found strong correlations between initially active users and eventual paying customers, the company wanted to know how much it cost to get the users that interacted with their app.

CPSUM7D was seen as one of several core indicators on the performance of Strava’s marketing efforts.” — Adjust

To put it simply, the more you use the app and post new activities, the more valuable you are to them. This is how they can grow their network (or well, their user base).

From a User Acquisition standpoint, what it really means is that they can optimize for the CPSUM7D event. Eg. on Facebook they can create campaigns that are specifically looking for people with similar characteristic trades to the ones completed the CPSUM7D event before. This is what essentially goes away with the coming IDFA changes on iOS.

According to intelligence data (and quick research on our end), their typical users are 25–44 yo. Males.

They are generally enthusiastic about being fit & healthy. They not only want a way to track activities, but they are keen to explore new routes, check how and where their friends are being active, and ultimately see how they are doing compared to others.

More than 80% of their user base is outside of the U.S. As you can see on their activity heatmap Europe is their largest market.

When it comes to devices, the biggest portion of their revenue comes from iOS.

However, they acquired 1M new Android users while only 700K on iOS in October 2020, according to Sensor Tower.

Data tells they can better monetize iOS users — which is a true phenomenon of the entire industry.

However, usually, there is a wider gap between the number of iOS and Android users, iOS being the bigger amount. It is nice to see they can acquire a lot of Android fellas as well.

When it comes to monetization, they brought on $1M from Android and $2M from iOS in October 2020, according to Sensor Tower.

Paid Acquisition

There is not a lot of data circling around about their paid performances. However, we can still take a sneak peek into some of their activities.

Like their approaches on Apple Search Ads.

According to an Apple Case Study, they used Creative Sets to optimize Screenshots which ended up driving them a 38% overall increase in App Store Conversion Rate.

Creative Sets are the easiest and cheapest ways to A/B test Screenshots on your App Store Page. Pro Tip: don’t believe benchmarks and settle with average results. Screenshot optimization is about constant testing and iteration just like any other type of testing.

App Monetization

Strava’s subscription model has been subject to lots of changes recently.

Their freemium model initially helped drive its stunning growth by making many of its features free to all.

After a certain point, they realized the model that helped them achieve great success was ultimately limiting them.

Once they reached a level of maturity, it was time for a change.

One thing was for sure: they didn’t want to bombard users with irrelevant ads. Strava has been known for its clean, sleek design. With that, in-app ads simply don’t fit.

Walking on thin ice, they started testing paid sponsorships in mid-2018. They promoted 3rd party integrations like Wahoo on the picture using embed promotions on user-generated content.

Banners like these have been automatically generated for each applicable post even if you were on a paid plan. You weren’t able to opt-out.

This might seem a slight change but it comes in a product that has been best-known for its uncluttered design and satisfying experience.

Needless to say, users were not happy. At all.

Moving forward, they tried to find the sweet spot between making more money and keeping the product the way it was.

They ended up making sponsored challenges like the Le Col Winter Gear Challenge I mentioned earlier.

Source: Strava App

Strava’s business program lets (sports) brands create their own sponsored challenges in the app.

As a user, you can join any challenges you like and have a chance to earn grand prizes from promoting brands.

For example, with the Le Col Giro Challenge, if you upload 4 hrs of activity till the end of the month, you have a chance to win £2.5k in Le Col gear.

These in-app promotions proved to be sleek and elegant enough, yet generating more revenue.

Or are they? It has clearly been not enough.

Strava focused on growth and not profitability until this year. This is when things started to change and ultimately led to making a move that many wouldn’t like…

That’s when Strava announced this May that many key free features (including the Leaderboard) are going to be only available if you pay for the app moving forward.

Pretty straightforward they said the company is losing money, and this will help survive.

Oh boy did they survive…

No judgment here, this step was simply necessary to their growth.

However, many users couldn’t swallow the pill this easily. The internet pretty much blew up.

However, they managed to put a positive spin on the message, saying:

Strava was redirecting its strategy to focus entirely on features for paid subscribers.

And it has been like that ever since.

New Unicorn

The question about Strava’s future is two-fold. They just closed their Series F round raising an additional $111m, the investment that earned them the Unicorn status.

Putting the title aside, the investment round raises questions about their growth plans for the future.

Aka how they plan to spend that money. This is what Horvath said about the investment to the WSJ:

“…we strive to enable athletes worldwide to get the most out of their active lives.” – Michael Horvath, Co-founder & Board Member of Strava

Obviously, they want to reach a bigger portion of the market by reaching more people and becoming a relevant fitness app in more geos.

The “how” is still in question, I guess we have to see it unfold in the upcoming months and years.

The other interesting thing that can impact Strava’s growth significantly happens at a macro level. It’s about whether Strava’s momentum will persist beyond the pandemic or not.

And that is a question to be raised for the entire H&F industry — can we expect the growth to continue?

Conclusion

If you are a competitor of Strava, you probably knew a lot about them already. However, I hope in this article you might have learned a thing or two about what areas they’re strong at and where they might be weak.

Operating in the H&F industry, we should all keep a close eye on our competitors and market needs looking for new trends.

No matter whether your marketing strategies are in place or not, you should be thinking about how to implement these working strategies to YOUR app, to YOUR growth model.

A lot thinks their app is unique and they need marketing tactics no one used before.

Trust me, after working with the most exciting H&F Apps in Europe, I can truly say no App is that different.

Look for similarities between industry leaders and your app. If you see a pattern you might be missing out on you should be thinking about how to implement them in your business. If you can tweak them to an even better version tailored to YOUR product, YOUR audience, you’ll rock. 💯🔥

What You Should Do Now

If you are serious about taking your app to the next level, you should download our 12-step Scaling Matrix — it’s incredibly useful if you want to scale your campaigns. (Best works at 30k+ ad spend.)

For 1-on-1 marketing help, click here 👈💰

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