How to Build a Growth Engine for your Startup?
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From early-stage chaos to growth... Leading growth at @fabrikator, Shopify app.
Many articles and videos are out there, telling how marketing and sales should be done for growth. You should do digital ads, SEO, content marketing, emailing, outreach, inbound, and many more. Launching those channels all at once with a lack of resources (human, knowledge, and maybe capital for some cases) may feel like swimming in an ocean, unknown and scary... It's hard not to get overwhelmed as they tell you what to do, but not exactly where you should focus, holistically. The reason why is that they all are tactics after all. And, without a robust strategy and a good hypothesis, they might result in focusing on the wrong ones, costing you time and money.
In this article, I dig deep into the basics of growth. Of course, I'm not offering a magical tool that will fuel your engines in one blog post. If there is any content that offers that, it's probably written for SEO purposes. :) However, what you'll find here is a perspective on where you should focus while sharing some references for how you can start.
Let's start with the basics and define what the growth engine is!
The growth channels consist of scalable channels that grow the business by acquiring new customers with affordable costs and/or with customer acquisition cost that is coherent with customer lifetime value (CLV).
Keeping that in mind, to kickstart your fueling growth engines, you need to have an understanding of your market, your goals, and restrictions along with introductory knowledge of acquisition channels! I'll explain it with Demand Curve's Five Fits model below:
Define where you stand in the market
When you have started with your idea, you have probably done your homework for researching your market. What is the size of the market? Who are your competitors? Have they been there for a long time? etc.
The market is where your product or services are offered to customers. However, it's not a stand-alone concept, it is related to other dimensions of your business: product, brand, acquisition channel, and business model. Let's see briefly how they are interrelated.
Product, also known as product/ market fit, is one of the most well-known. Once you build your product, you'll keep doing adjustments to meet the need and the demand of the market. For those interested in the topic, here is a Y Combinator video about product/ market fit that might be helpful.
Brand is about to whom you are offering your product or services. The brand world includes the visuality (logo, colors, UI, website design, etc.) and the copyright/language (how you define yourself, your choice of tone, and wording). It also needs iteration, and one of the easiest ways is to start playing with language/ market fit.
Acquisition channel needs to be built on where and how your customers spend time online. To scale, acquisition channels need to be high-converting with "meaningful" costs (it shouldn't be higher than CLV). Also, the nature of the channels varies on their capability to target and convert and it is different for each market. Your product & services will define which channels are more suitable for your business than others.
Business model will affect your acquisition and your pricing strategy, which is deeply affected by the willingness-to-buy of the customers). It's one of the most difficult areas to iterate as it's your business's backbone; however, many startups are pivoting their models for growth.
Here are some questions as food for thought:
Most of this information can be summarized in a business model canvas. If you haven't done yet, you can start creating your own to put your thoughts in order. Here is a business model template for you!
Build your growth hypothesis
When you think about the market in relation to the product, brand, acquisition channel, and business model, you have actually built many hypotheses about each of them such as persona hypothesis, problem hypothesis, and value proposition hypothesis. With the growth hypothesis, you are aiming to define how you are acquiring customers in a sustainable way.
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Let's say that you have a good sense of the market. To define your growth hypothesis, you need to set goals and constraints that you face. I think defining goals is pretty straightforward, but when it comes to constraints, you need to do a little more thinking about:
There can be other restrictions specific to the market such as due to the law and regulations. Knowing about acquisition channels and how they work will help you to set up testing, and iterating.
Know at least the basics of acquisition channels
There are many tools and methods that can be adopted for growth. Doing them all at once is not possible; however, when you know the basics of their mechanisms, with the help of all the thinking you have done before, you'll have a clearer vision of which channels will be more beneficial to start testing.
To goal is to find scalable channels for building the growth engine. Even though some channels are unscalable such as PR, joining events or organizing events, and contributing to online groups, they can be used as a tactic to get some traction. There is no one truth, and all channels have their pros/ cons, and they can usually be used in combination.
Here are the scalable channels that I think can be used for growth:
Paid Acquisition consists of advertising (mostly digital advertising such as LinkedIn ads, Google Ads, Meta ads, etc.), affiliate, and influencer marketing. If the unit economics of a product is clear or if the value proposition is simple or if it's appealing to a mass audience, it can be a great choice. On the downside, the competition is high and it can even get more expensive when you're starting to scale. Here is a free lesson if you want to explore more.
Content can be in many forms: blogs, e-books, videos, tweets, etc. When you adopt the content as your growth channel, your aim is discoverability (SEO), education, thought leadership, or virality. If you are creating content, you must also think about distribution. As a quick start, I suggest picking up a main type of content and dividing it into chunks to distribute as many channels as possible. For instance, let's say that you have picked blogging as your main type of content, turn it into a social post, create a tweet thread, and use it in your nurturing emails.
Community is about building a community around a brand. In addition to acquiring new customers, it nourishes loyalty and advocacy. However, it can take a while to build and sustain communities. A good example of community-led growth is Discord. It started with the gaming community; even though it has outgrown the gaming industry, its community strategy perseveres. I suggest checking this blog, if you'd like to learn more about community strategy.
WOM (Word of Mouth) focuses on virality. It would help if you made people speak about you on your behalf, and/ or make others take the designated action/ conversion. It can be hard to find the virality strategy and it might be hard to control it. Referral programs and "made with" badges help virality. I'll share a personal experience as an example to WOM. At Barty, a peer-to-peer bartering platform, (which I co-founded), we built a referral system where people could invite others. If the invitee signed up at Barty, they both earned Barty coins. We acquired 15% of our active users with this referral strategy. One famous example is Dropbox; if you want to examine how they pull it off, check this out.
BONUS: Outbound / Sales
It's a bit out of the scope; however, if you have an expansive and/or complex product with long sales cycles, sales can be also a scalable acquisition strategy. To acquire customers, first, you need to generate leads with cold outreach or with marketing efforts such as content, newsletters, and paid advertising. Then, you need to reach out to the prospecting customers, educate them and negotiate with them until the deal is closed. I'm not a sales expert, but sales can be a scalable acquisition channel for sure.
Growth tactics without a robust strategy might look like running around like a headless chicken as your team is crushing under the workload, not receiving the results they want. To build a sustainable and scalable growth engine, you need to do the thinking about the market and know the basics of the acquisition channels and how they work.
If you have come so far, I assume you have found this content beneficial. I'd love to hear your feedback, please share your thoughts in a comment. If you want to help spread the word, liking or sharing is always a good option. Also, if you want to discuss it more, feel free to reach out to me. See you next time...