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An app that helps businesses attract customers through word-of-mouth marketing just went live in the midst of the pandemic. Its cofounder shares how it works and the strategies that enabled the company to accelerate its launch date.

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  • Cofounders Rob Frohwein and Kathryn Petralia decided to speed up the launch process of their early-stage startup, Drum, to kick off in April amid the coronavirus pandemic. 
  • They saw a need for their platform, which helps small businesses advertise promotions and attract customers through offering commissions to shop and spread the word.
  • Discounts are decided on by the businesses, and during the outbreak, customers can choose to decline incentives. 
  • To get to market quickly, the cofounders pushed a modified version public and cut fees for businesses. 
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Even with most of the country under shelter-in-place orders and businesses of all sizes impacted financially, that didn't stop the $11 million-funded, early-stage startup Drum, backed by American Express Ventures and SV Angel (whose portfolio of investments includes Doordash, Warby Parker, and Airbnb, among others) from launching its Android and iOS apps mid-April.
Led by cofounders Rob Frohwein and Kathryn Petralia — who are also the cofounders of Kabbage, Inc., a lending platform for small businesses — the 15-person team decided to escalate its launch timeline to start helping its dual audiences: small business owners and individuals, such as gig-economy workers, looking to make extra money on the side.
During an initial pilot in New York City and Atlanta in the fall of 2019, the company welcomed several hundred businesses and several thousand individuals (whom they call "Drummers") as members of the new community. Seeing clear interest in the product, which enables companies to create offers and incentivize individuals to share them via the platform in exchange for monetary rewards or discounts, the team then planned for a summer 2020 go-live date to release an updated version of the technology, this time to the broader United States.
That all changed toward the end of March 2020. Within the span of a 48-hour period, the summer 2020 launch date was sped up to a more aggressive mid-April debut.
Rob Frohwein Headshot 17
When the magnitude of the pandemic started to set in, Drum CEO Frohwein told Business Insider that the company realized it needed to accelerate their timeline. The goal: To rally their resources with "urgency and immediacy," Frohwein said, with the hopes of driving more awareness and (digital) foot traffic to companies using the platform and more cash in the pockets of its members who may be affected by income loss related to the pandemic.
Once that was set in motion, departments across the company banded together to leverage the beta-launch technology along with what had been in the works to be updated for the summer launch, combining them into one new product — the one that's currently live.
The company's CEO shared with Business Insider more details about how the platform works and what the company's strategy looks like now in the wake of the global coronavirus pandemic.

How Drum adapted its business plan to cater to the new realities of the pandemic

In the face of the coronavirus, Drum adapted its original strategy in three major ways.
First, the company used a modified version of the technology employees had been working on to be able to go live in a timely manner.
Frohwein said that companies looking to make a similar move should set over-aggressive timelines and ask themselves, "If we had to solve this problem in one day as opposed to 30, how would we do it?" When evaluating product offerings, he also suggested asking yourself, "Is this critical to the customer, or just something that seems cool?"
Second, the team made the decision to waive all fees for businesses so that anything a company pays goes directly to the Drummer who promoted the offer. Once the country reopens for business, Frohwein said the company will reassess when to start implementing fees, noting that customers will have plenty of notice before any change goes into effect.
Drum's end goal is to "only ever make money when both a business and a Drummer profit at the same time." That's something it's able to do with the support of its investors, who Frohwein said believe strongly in its vision, allowing the team to grow the product and audience without needing to generate revenue or make changes to employees' salaries.
Ideally, the company will monetize the platform after the economy recovers, but Drum's taking a wait-and-see approach and has the runway to continue without charging fees for several months.
"Our future success is aligned with the ability of businesses everywhere to navigate this period successfully, so our strategy is to help communities rebuild to the extent we can," shared Frohwein.
The third major shift: Giving businesses who join the platform and promote their services via the app the option to create no-commission promotions (that is, encouraging individuals to share its offers without offering an incentive to them), to help drive small business growth without cutting into struggling companies' costs. While individuals may lose out on snagging a deal, they can still help local businesses at a time when people are rallying to help mom and pop shops.
The company has other ideas in the works, including how to enable merchants, even those without an advanced digital presence, to promote gift cards, merchandise, and service bookings online through Drum.
Frohwein believes the Drum model fits these times, even as physical distancing affects many businesses. "We may not be leaving home, but people are more connected than ever before catching up with family, friends, coworkers, and community digitally," he noted.
He added, "Communities are strongest when people and businesses work together. The company has rallied around the urgency and immediacy of helping our communities in whatever way we can, and we believe we've got plenty of runway to do that."

How Drum works

Businesses looking to grow awareness and sales can join the platform for free and publish offers that fit their model and appeal to their customer base. The exact type of offer or amount of discount that's given (if at all) is entirely up to the business.
"For example, restaurants [can] publish an offer for 10% off takeout orders, or a dry cleaner could publish an offer for $100 in services sold for $90 [to] new customers willing to purchase in advance," explained Frohwein. "At this point, Drum is taking no commission. The only cost the business pays is passed directly to the Drummer who referred business."
Drum.io
Putting the controls around the type of offer the business promotes directly in the hands of companies is what attracted Atlanta "Drummer" Stephen Doversola, whose professional background is in ad sales, to the platform.
"I saw that some offer platforms required businesses to offer large discounts and also took large commissions," he shared. "They put a lot of pressure on businesses and didn't serve their interests." Drum, on the other hand, was appealing to Doversola since it gives businesses "the power to offer what they can afford," he said.
Drum is currently allowing businesses impacted by closures or limited business due to the pandemic to create promotions that don't offer individuals a commission, so customers who want to support local business during this time, without any financial incentive, can without compensation if they want, Frohwein explained.
But for individuals looking to earn money on the side, Drummers can earn a commission for sharing new businesses with their communities via social media, text message, email, or other messaging apps. "Once we're out and about again, you can even share a QR code in person that can be scanned with your phone's camera to share an offer," Frohwein added.
Drum.io
So far, Drum members have joined the platform organically — most having been businesses and individuals that voiced "continued excitement about the platform after our beta in the fall," including those impacted by the national pandemic, Frohwein said.
In the future, the company plans on exploring paid advertising. "But we're most excited by the organic response the platform is generating," Frohwein shared.
SEE ALSO: A 28-year-old CEO launched a quarantine dating app and a job search platform for salespeople all in one month. Here's his best advice for entrepreneurs looking to innovate quickly in a time of crisis.
NOW READ: A product manager whose company laid off 100 employees launched a career coaching platform to connect hiring experts with job seekers — and made 50 matches in 24 hours. Here's how she did it.
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Source
https://www.businessinsider.com/how-app-drum-works-word-of-mouth-marketing-launched-pandemic-2020-4?IR=T


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