How to Scale Piñata 🪅
Piñata is an app that rewards users for paying their rent on time. Here's how they should scale their customer base.
Growth Case study: Piñata
Piñata is an app that allows apartment renters to earn rewards just for paying rent on time, without requiring their landlord to use the app as well. Landlords get paid on time and renters earn discounts and credits on everyday expenses - all while building their credit.
In February 2022, Piñata raised $13 million round led by Wilshire Lane Capital with participation from Ron Moelis, Chairman & Co-founder of L+M Development Partners. With it, they hope transform the rental experience and help turn an unavoidable expense into a net positive for both landlords and renters.
Here’s how I think they should use that investment to scale their customer base.
Product & Positioning
Piñata’s positioning focuses around the slogan of “Make Rent Rewarding”. The implication here seems to be that for most renters, paying rent is a straight expense with little additional value created aside from providing a roof for over their heads. Most renters pay landlords by cash, cheque, or bank transfer, so there’s no opportunity for credit card points or credit building in most situations.
There are a few issues they need to work out, though.
First, the ambiguity. Piñata works with landlords, but its unique angle is the fact that any renter can use it whether their landlord does or not. This makes their addressable market effectively anyone who rents an apartment. The tagline “Make Rent Rewarding” seems to imply it’s aimed at landlords, as one would usually make something “rewarding” for another rather than making it so for themselves.
Not only that, but the next headline on the page “Rent is Broken. We’re Going to Fix It” could refer to any of the multitude of issues involved with renting an apartment, from damage deposits to shady landlords. Saying exactly what Piñata aims to fix and how it will do so will help immensely here. Straight to the point always wins in web copy.
The second issue with Piñata’s positioning is how unclear it is what the product is and how it works. There’s a whole long web page with seven fairly vague headlines seemingly dedicated to avoiding answering that question clearly. If even one of them said something like “Earn rewards and build your credit by paying your rent through Piñata”, I think they’d be in much better shape.
The product itself seems like such a no-brainer for anyone paying rent that cleaning up how it’s talked about should go a long way toward streamlining user acquisition. But copy can only do so much, and the primary objection most people have before signing up for yet another rewards program is “How much do I really stand to save/make from joining?”
The easy way to answer this question would be a simple calculator. Allow users to enter their average monthly rent to produce an estimated cash value for all the rewards they’ll make during their first year using Piñata. This should crush objections potential users have to downloading the app, and whet people’s appetites for more details.
Acquisition Channels & Strategy
Piñata faces a very common problem for startups building something new - nobody is looking for a solution like it yet, so there’s very little search volume to take advantage of.
When inbound marketing is out, startups must look to outbound and viral channels. Piñata is perfectly positioned to combine these by building out an influencer marketing channel.
A free app download is the perfect product to sell through influencers - the time-to-action is short, the commitment required to sign up is small, and the value proposition obvious.
Piñata’s ideal users are first-time renters who feel the pain of paying rent more acutely than older, more established people. Luckily, this demographic also has the densest network of Tiktok and Youtube influencers to draw upon.
Step one should be building a list of college life social influencers and pitching them a flat rate plus download & activation incentive as per whatever the product’s unit economics will support. Be generous - it will pay back over time.
Once content is being produced and distributed, partner with the most successful creators by sponsoring their content through Facebook, Instagram, and TikTok ads. The name recognition plus social proof should make this more effective than non-native ads.
Then, compare CPAs across native and paid influencer campaigns. Drop the losers and double down on the winners, and expand to new verticals when ready.
The revenue opportunities Piñata has once they scale are boundless. Helping renters become homeowners is one of the most obvious. Partnering with mortgage providers to deliver good mortgage rates and taking a commission could be particularly lucrative.
The other obvious direction would be to monetize their user base with a low priced premium subscription that provides enhanced point accumulation and exclusive deals.
Pitfalls to Avoid
With any rewards product, managing the economics of the rewards marketplace is of paramount concern. Promising users too much that advertising partners can’t (or won’t) make good on down the line is the biggest risk to making this work.
Another potential issue will be around when users move to a different place. Even if Piñata doesn’t require them to move around financial info to accommodate their new payments, they’ll want to make sure the users are properly activated by the time this happens, lest the user decides it’s not worth their time.