5 x 2: The Growth Grid. Issue #2

Find the first issue here.

Welcome to The Growth Grid, your go-to source for the latest and greatest in growth and marketing strategies. I've sifted through countless studies, experiments, and expert advice to bring you ten crucial lessons that will help you optimize your business and skyrocket your success. Let's dive in!

1. SaaS Products Don't Sell Themselves: Why Sales Matter

Navigating the Enterprise Sales Maze

You might think that a killer SaaS product will just fly off the virtual shelves on its own, but that's a myth. Enterprise sales are crucial because decision-making in large organizations is a complex beast. Multiple stakeholders, endless meetings, and countless considerations make it a long game. Strong sales teams are essential to guide customers through this labyrinth and create new value for them. It’s not just about pushing a product; it’s about helping customers navigate their internal processes and convincing them that your solution is the best fit.

Answering the Big Three Questions

To crack the enterprise market, you need to answer three fundamental questions: Why buy? Why you? And why now? These aren’t just questions; they’re the pillars of your sales strategy. Uncover customer initiatives, craft a unique value proposition, and help customers define success in terms of business architecture, scale, and feature criteria. Your sales team needs to be skilled in coordinating resources and actions at the right level and time. Remember, your biggest competition is often inertia—the natural tendency to do nothing.

Quantifiable Business Cases

Creating a quantifiable business case is like building a bridge between your product and the customer’s strategic goals. This involves aligning your product's capabilities with their initiatives, improving visibility into operational inefficiencies, and ensuring a shorter time to value. Investing in customer-facing resources pays off big time, expanding your footprint within accounts and building strong references. Good products don’t sell themselves, but champions—those satisfied customers who spread the word—can certainly help.

Dive deeper

2. Common CRO Mistakes That Beginners Often Make

Logical Thought Sequence on Landing Pages

Optimizing your landing pages isn't just about making them look good; it’s about creating a logical thought sequence that guides visitors from the ad to the landing page, answering their questions and building excitement along the way. Conduct in-person usability tests and ask visitors to "think aloud" to identify common questions and concerns. Using a framework like Marketing Experiments' optimization sequence can help arrange information logically, making the path to conversion clear and irresistible.

Understanding Your Audience's Internet Habits

Know your audience! Understanding the demographics of your visitors can significantly impact how they interact with your page. For example, a testimonial video might work wonders for a younger, tech-savvy crowd but could be a turn-off for older visitors with slower internet connections. Brookdale Living's A/B test showed that a landing page with a testimonial video outperformed a static image for their target audience of senior citizens. On the flip side, a static image might work better for audiences who prefer quick, straightforward information.

Optimizing Channels and Making Informed Design Choices

Optimizing the channels your visitors come from can significantly boost conversion rates. For instance, Ritz-Carlton saw a 40% increase in conversions by sending email subscribers from iPhones to mobile-optimized landing pages. Successful A/B tests consider both quantitative and qualitative data to make informed design choices that guide the right visitors through the page and encourage them to take action. Making informed design choices based on this data ensures that your landing pages are not only attractive but also effective.

Dive deeper

3. Customer Churn Can Kill Your Startup

The Impact of Churn on Growth

User growth is a key metric for startups, but churn—the proportion of existing customers who leave—can make or break your company. High-churn businesses might enjoy impressive initial growth thanks to viral loops, but they face problems after the first year as they struggle to replace lost customers. On the other hand, low-churn businesses may have modest initial growth but benefit from high switching costs and loyal customers, leading to a sustainable and attractive business model.

Revenue by Monthly Cohort

Visualize your revenue by monthly cohort to understand the long-term health of your business. In a low-churn scenario, the graph resembles a layer cake, with each cohort adding revenue over time. In contrast, a high-churn business shows cohorts that decay quickly, highlighting the constant need for new customer acquisition. This visualization helps you see the true impact of churn on your revenue and plan accordingly.

Strategies to Minimize Churn

To minimize churn, focus on creating high switching costs, designing a sales architecture that encourages retention, and building strong brand loyalty. Invest in creating a product or service that people love and can't easily replace. Understanding the inherent churn in your industry is crucial; it helps you plan for long-term infrastructure investment in high-churn industries and ensure sustainable value for customers in low-churn sectors.

Dive deeper

4. Building a $100 Million Business: Five Ways

Customer Categories

There are several ways to build a $100 million business, each targeting different customer categories. You could have 1000 enterprise customers paying $100k+ per year, 10,000 medium-sized companies paying $10k+ per year, 100,000 small businesses paying $1k+ per year, 1 million consumers or "prosumers" paying $100+ per year, or 10 million active consumers monetized at $10+ per year through ads. Each of these models requires different strategies and approaches to succeed.

Hunting Strategies for Different Segments

Different customer segments require different hunting strategies. For instance, hunting flies (10 million active consumers) demands 100 million downloads or website users, achievable through inherent social virality or large amounts of user-generated content. Hunting mice (1 million consumers or prosumers) often requires some level of virality and significant funding for paid marketing. For rabbits (100,000 small businesses), inbound marketing and OEM strategies are key.

Hunting Larger Prey

When it comes to larger prey like deer (10,000 medium-sized companies) and elephants (1000 enterprise customers), the strategies shift. Inside sales teams and attractive commissions for VARs and channel partners can help close leads for medium-sized companies. For large enterprises, having a solid solution for significant problems and a well-funded sales cycle is crucial. Most SaaS companies with $100 million+ revenues derive their income from large enterprises, making this a challenging but rewarding segment.

Dive deeper

5. Customer Development for Startups

Conducting Customer Interviews

The CEO of Groove conducted 500 customer interviews over four weeks to gain insights and feedback. Scheduling 30-minute calls using a Doodle poll and taking notes by hand allowed for open-ended conversations, providing raw and unfiltered feedback. This approach helps uncover unexpected aspects of the user experience, such as bugs, valuable minor features, and new use cases for the software.

Benefits of Customer Interviews

Conducting customer interviews provides deep insights into customer thinking, feelings, and usage patterns, which are critical for business growth and product roadmap decisions. These interviews can identify the need for improved second-tier onboarding to help users discover advanced features. Additionally, understanding customer concerns and sharing upcoming features can repair relationships with unhappy customers and create strong advocates.

Positive Outcomes and Acting on Feedback

Talking to customers one-on-one often leads to positive reactions and shows them that their opinions are valued. Quick fixes for customer issues can result in easy wins and delighted customers. Customer conversations also provide insights for improving marketing copy and connecting on a deeper level. Acting on feedback, such as organizing it, processing data, lining up case studies, and making customer development a habit, ensures continuous improvement and customer satisfaction.

Dive deeper

6. Traits of Uncommon Product Leaders

Embracing Imperfections and Failures

Great product leaders are happily dissatisfied with imperfections and view failures as opportunities to solve problems. They are personally engaged in user feedback and prioritize delighting users. This proactive approach helps them stay ahead of issues and continuously improve their products.

Collaboration and Design Skills

Active collaboration with knowledgeable peers and engaging in discussions about their craft are common traits of great product leaders. They are protective of their team, identifying and removing obstacles to progress. Strong design skills are also essential, as great design creates perceived value and enhances user experience.

Philosophy and Technical Expertise

A guiding philosophy and involving everyone, including users, in developing first principles are key characteristics of successful product leaders. They are experts in the technology involved and understand it in detail. This expertise allows them to iterate in steps after careful planning and execution, effectively switching from grand plans to detailed work as needed.

Dive deeper

7. The Hidden Reasons Why People Use Your Software

Understanding Customer Motivations

Customers hire products to perform specific "jobs" in their lives. Understanding these motivations increases the chances of success. For instance, people might buy coffee not just for caffeine but for the social experience or to take a break from work. Identifying these "Jobs to be Done" provides valuable insights for product development and marketing strategies.

Conducting JTBD Interviews

JTBD (Jobs to be Done) can be discovered through interviews and observations of recent purchasers or those who have canceled a product. The Four Forces framework helps examine the feelings that influence purchasing decisions, both positive and negative. Conducting interviews after sign-up or cancellation can reveal valuable information about the purchasing timeline and motivations.

Utilizing JTBD Insights

Practicing JTBD interviews with any product, even without having your own, can help hone your skills. The goal of software companies should be utilization, ensuring that customers use and benefit from the product. Applying these insights to your product development and marketing strategies can create a more compelling value proposition and improve customer satisfaction and retention.

Dive deeper

8. Designing Efficient Software

The Importance of Efficiency

Efficiency in software experience is often overlooked but can create a significant competitive advantage by saving customers time and money. Customers have limited time, and inefficiency not only wastes time but also causes aggravation and stress, disrupting their ability to focus and do their best work. For business customers, time is money, so saving them time directly translates to saving them money.

Prioritizing Efficiency

Despite knowing the importance of efficiency, many software designers and companies fail to prioritize it when designing customer experiences. Even when faced with immovable requirements, there's always room for improvement in efficiency by questioning every step, interface component, and customer-facing decision. For example, improving the efficiency of a parking garage experience shows that even in situations with limited control, one can design for greater efficiency.

Achieving Greater Efficiency

To achieve greater efficiency in software design, designers should critically examine every step, interface element, and task, aiming to eliminate unnecessary actions, repetitions, and decision-making. This approach creates a more streamlined and user-friendly experience. A case study of Noko Time Tracking illustrates the practical benefits of efficiency design, showcasing how it compares favorably to competitors in terms of time-saving features.

Dive deeper

9. You're Not the Best Unless Your Customers Say So

Engaging with Customers

Customer experience is key to a successful business. Engage with customers and make improvements based on their feedback. Conduct customer development before building a product to understand actual customer needs. Usability testing can identify frustrations with existing products, and analyzing customer support requests can highlight common issues.

Gathering and Acting on Feedback

Use open-ended surveys to gather customer input before adding new features. Companies fail by building things people don't want and ignoring customer feedback. Customer feedback helps determine the next steps and shapes customer perception of the business. By actively listening to customers and incorporating their suggestions, you can create a product that truly meets their needs.

Building Strong Relationships

Building strong relationships with customers involves continuous engagement and showing that their opinions are valued. Regularly checking in with customers and addressing their concerns can turn them into advocates for your product. This approach not only improves customer satisfaction but also enhances your brand's reputation and attracts new customers through positive word-of-mouth.

Dive deeper

10. The Growth Hacking Starter Guide: Real Examples

Growth Hacking Strategies

Growth hacking is a fast-paced marketing strategy that combines creative ideas, data-driven decisions, and constant testing to find the most effective methods for growing a business with limited resources. To successfully implement growth hacking strategies, businesses should ensure they are prepared to handle growth, measure and analyze data, embrace iterative experimentation, and reverse engineer the success stories of their competitors.

Real-Life Success Stories

Several companies have achieved explosive growth through innovative growth hacking strategies. Klarna's success came from forming strategic partnerships, analyzing data, and providing excellent customer service, making "buy now, pay later" essential for both merchants and consumers. Anthropic leveraged existing networks, created controversy, and positioned itself as a thought leader in the AI industry. LinkTree focused on product-market fit, introduced a freemium pricing model, and cultivated a community of creators.

Collaborations and Competitor Analysis

Collaborations with influencers or experts in your industry through live streams, interviews, or custom integrations can enhance your growth efforts. Analyzing what works for your competitors provides insights into effective strategies but remember, their success may not directly translate to yours. Continue experimenting and testing your own ideas to find the right strategies for your business. Growth hacking is about staying agile, innovative, and always ready to adapt to new opportunities.

Dive deeper

That’s it!

If you’re curious about how we can implement this knowledge to help your business grow, check out our FREE Business X-ray . It takes 30 seconds to fill, around 3 days for us to make. You can spend 30 seconds, right?

Enjoyed this read? Share your thoughts and experiences in the comments below. Let’s grow together!