How Funnel Design Helped Airbnb Overcoming its Retention IssuesEstimated Reading Time: just 2 min

Growth Hacking is based on mapping each phase of the company’s relationships with the customers through the A.A.A.R.R.R. Funnel also known as Pirate Funnel.

A.A.A.R.R.R. Funnel consists of 6 phases:

  • Awareness
  • Acquisition
  • Activation
  • Retention
  • Revenue
  • Referral

One of the biggest business cases of a successful Funnel Design application is Airbnb.

A‌i‌r‌b‌n‌b‌ is a company based in San Francisco and it is one of the most famous online marketplace and hospitality service in the world.

The company does not own any of the real estate listings but, as a broker, it receives commissions from every booking.

The initial concept of the company was created by Brian Chesky and Joe Gebbia in October 2007 during the Industrial Design Conference held by Industrial Designers Society of America.

To pay the rent for their loft in San Francisco, they offered short-term living quarters, breakfast and a unique business networking opportunity for attendees who were not able to book a hotel during that period.

The idea worked so, together with Nathan Blecharczyk, they decided to launch the Airbedandbreakfast.com website in August 2008.

To raise enough money to sustain their business, Airbnb sold cereal boxes for Barack Obama and John McCain.

They sold 800 boxes at $40 each, netting $30,000 in funding for the company.

Airbnb started posting its announces on Craiglist gaining visibility and being able to drive traffic to its website because the detail of the posts was available by clicking a link that redirected the users to airbnb.com.

Suddenly and with very little investment made, Airbnb had an audience and the quality of the service did the rest.

In March 2009, due to the increasing popularity of the service the site’s content expanded from air beds and shared spaces to a variety of properties including entire homes and apartments, private rooms, castles, boats, manors, tree houses, tipis, igloos, private islands and other properties.

At this point, the company started to experience issues in the Retention stage of its Funnel.

By segmenting their customers, Airbnb noticed that there were 2 groups of advertisers:

  • Very active and happy ones
  • Unhappy ones that left the service

Looking into the two groups, Airbnb found that the difference between the two was in the quality of the photos in their ads. In fact, properties with professional, verified photos was booked 2,5 times more than those without and brought in the hosts an average of $1.025 per month more.

Therefore, the company decided to attempt something new and Airbnb started a free service of professional photographers that visited 13.000 properties in the first year.

The success of this initiative improved retention and helped to bring the company to exponential growth.

In fact, in 2017, Airbnb hit:

  • $2.6 billion in Revenues
  • $450 million in Operating Income
  • $93 million in Net Income
  • Around 3.100 of employees

Nicola Zaffonato Administrator

Business Strategy | Product Marketing | Executive Master eCommerce Management | Business Innovation Master | MSc

I am driven by my personal growth and of people/contexts that surround me.

I followed a professional path in Valentino Fashion Group and Luxottica during which, thanks to the ability to understand different businesses and interests, I was able to succeed in Operations, Merchandising and Retail.

These organizations have exploited my ability to mediate and translate needs/constraints into practice, assigning me to Project Management roles.

Luxottica relied on my ability to analyze, to anticipate things and to imagine/implement solutions by appointing me in Supply Chain Management department and assigning me to the Product Management of IoT solutions for Anti-counterfeiting and Retail digitalization.

During this professional path, I also developed my leadership by managing teams to build Processes, Organizations, Systems and Governance Tools.

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