One of the most successful self-funded products on the web, Grammarly is well known for using machine learning and artificial intelligence to help improve people’s writing. Ukrainian co-founders Alex Shevchenko and Max Lytvyn started the company in 2009 with the goal of making it possible for everyone to be heard and understood. Their marketing efforts were first aimed at universities, corporations, and large organizations — and business grew steadily. But they didn’t stop there.
Grammarly used the revenue they received from universities to improve their product so they could expand to the consumer market. It was when they incorporated their product directly into Microsoft Office that user growth really took off. By 2019, Grammarly was being hailed as the first Ukrainian unicorn and today it is regarded as a pioneer in AI-driven communications.
As Easy as Copying and Pasting
Grammarly helps millions of users communicate more clearly and effectively (and best of all, error-free). Grammarly’s free browser extension is available for Google Chrome, Apple Safari, Microsoft Edge, and Mozilla Firefox. Their add-ons for Microsoft Office, Google Docs, and Microsoft Outlook help Microsoft customers write clearer documents and better emails; the Grammarly Native App is a drag-and-drop application for Windows; and Grammarly Keyboard is a free predictive corrective keyboard for Android and IOS devices.
Grammarly’s free browser extension automatically detects writing errors or issues across almost all platforms. Just copy and paste your text into the editor, and it suggests correct grammar, spelling, vocabulary usage, punctuation, or writing style. It even helps avoid using overused words.
According to Grammarly CEO Brad Hoover: “Grammarly’s technology catches significantly more errors than competitors, while also offering unique features such as writing enhancement and citation suggestions.” Users who upgrade to the paid plan get access to plagiarism checks as well as contextual advice to improve writing.
How Does Grammarly Make Money?
In the early days, Grammarly’s co-founders focused on two things: “[B]uilding around a space that they were familiar with and where they could quickly find paying customers,” and “using feedback and revenue from those customers to improve the product.”
Grammarly’s initial product had over 150,000 students as registered users and made a profit even when they relied only on their premium subscription model. The idea behind turning the product into a “freemium” subscription service was to further expand their customer base. By 2011, Grammarly had 300,000 students as registered users and 250+ universities as customers. The company was making $10 million in revenue just three years after being founded.
Instead of focusing on creating a perfect product from the start, user recommendations helped improve the product, and feedback was used to make sure it was continuously improving, which helped Grammarly outperform competing products like Microsoft Word.
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Grammarly’s Business Model
Companies like LinkedIn and YouTube have perfected the freemium business model, where a relatively small percentage of a service’s subscribers actually pay for the software’s premium services.
For years, customers were accustomed to paying for software before they used it, but those habits (as well as expectations) have changed, and most customers now want to try things for free first. This led to the concept of a freemium service, which over time increases the service’s customer base and revenue when people end up purchasing the premium service.
Grammarly initially offered a seven-day free trial for their product, and then charged $11.99/month for their paid plan, which eventually grew to 80% of total revenue. The psychology behind this business strategy is known as the network effect, where a product (in theory) becomes more valuable the more people that use it. Year after year, Grammarly has doubled both users and revenue.
Creative Marketing Pays Off
Many members of the Grammarly team are or have been participants in National Novel Writing Month. According to Hoover: “We wanted to create an opportunity for writers to participate in NaNoWriMo that would be less time-consuming, so we created an integrated marketing campaign incorporating our blog, Twitter, and Facebook. We ultimately brought together thousands of highly engaged people to collaborate on a single novel.”
Grammarly has used many different creative marketing strategies to grow their customer base. At first focused on creating content for students and writers, they soon realized this was a relatively small, specialized audience.
Grammarly became social media experts by focusing on their fans in order to get ideas from them and by employing marketing tactics such as repeating popular content to capitalize on their ideal designs and continually attracting new followers. Strategies such as split-testing graphics across geography and time both on Facebook and Twitter have also contributed to their success on social media.
“The implementation is adjusted for audience preferences — usually confirmed by testing and detailed tracking — but the content is essentially the same,” says Grammarly social media manager Kimberly Joki. “By taking advantage of these similarities, you can save yourself and your team a lot of work.”
And rather than just posting about common grammar mistakes, the Grammarly team started creating content around a variety of uses and applications. By 2013, Grammarly had over a million Facebook followers. By 2016, they had seven million. Grammarly reports that by 2022 they had “30 million people and 50,000 teams around the world rely on our real-time suggestions to strengthen their writing and say what they really mean.”
The Ubiquitous Grammar Tool
With Grammarly recognized by Time magazine as one of the 100 most influential companies of 2022, what can we take away from its success? In their own words, Grammarly’s mission is to “strive to help people understand one another, whenever and wherever they communicate.” And they have done just that by building a great product, figuring out where their customers spend their time online, and by making sure Grammarly is available everywhere their customers write, every day.
