3 Types of Growth: The Lifeblood of a Startup

I’m not going to tell you what you want to hear. Instead, I am going to tell you what you should hear.

First, let’s take a poll:

Which of the following is the strongest factor for startup growth?

  1. Clever marketing
  2. A phenomenal product
  3. Timing: Company-wide strategy and execution
  4. Outside forces (economy, trends, recent tech innovations)

The answer?

B, a phenomenal product. But why?

As much as we believe clever marketing will be the tool to drive growth and adoption for our product, growth will actually be the result of an amazing product that has gone through multiple iterations and meets customers needs in the best way possible.

In short, marketing often accelerates growth rather than causes it.

I’m not here to share some black magic marketing secrets that’ll shoot your growth rate through the roof; instead, I’ll explain the importance of growth along with 3 different kinds of growth that you can leverage.

As Paul Graham frankly stated, “growth drives everything” in the business world. It leads to higher valuations, venture funding, acquisition offers and ultimately, to initial public offerings.

Growth marketing strategies and tactics ultimately fall into 3 categories: sticky, viral, and paid. By knowing these categories you can define the “why” behind your marketing actions before-hand, so you can spend your time & budget where it matters.

Sticky Growth

Retention. There’s a reason why they say 80% of sales come from 20% of your customers. Stickiness revolves around you doing everything possible to please and keep your current users on-board.

Amazon does this extremely well; they’ve quantified their average customer lifetime value (where the revenue received from a single customer is worth more the longer they have a relationship with each other).

Your business should be no different.

Recommendation: before spending any money on marketing, expand your customer support team. Start with your early customers; they hold golden nuggets of value:

  • They will be your greatest source of insight into who your target audience is
  • They will make it easier to grow in the future if you understand the patterns and issues driving these calls

Not to mention, providing phenomenal, personal support will drive customer loyalty for the long term (cheers, Amazon).

Consider making your marketers and developers part-time support agents so they can directly understand the customers concerns and needs, rather than hearing it through someone else (or never hearing it at all).

Viral Growth

Word of mouth. Viral (marketing) is defined as “seeking to spread info…from person to person by word of mouth or sharing via the Internet or email.” The reason why this concept is important is because virality has powerful exponential effects.

For example, if we take a startup’s viral coefficient, which is the ratio of how many new users the existing users bring in, a coefficient of 0.99 could mean RIP, while a coefficient of 1.01, only 0.02 more, drives slight positive growth! More on viral coefficient can be found here.

Why do people share a product, social post, or piece of content? It depends on the incentive, or innate value, which comes in both tangible and intangible forms.

It could be monetary (ex. affiliate marketing) or an emotional trigger (it’s surprisingly novel or builds controversy), but it has to be something that stirs your audience to action (i.e. spreading the good word of startup).

Recommendation: when you start to do any marketing (programs, campaigns, or creative), define the emotional trigger it’ll activate in your target audience. Here are 6 compelling triggers you can use:

  • Avoids pain, drives pleasure
  • Provides novelty (intrigues, is unique, bizarre, comical, sad, adorable)
  • Explains a “why” (provides an answer)
  • Tells a newsworthy story
  • Creates a common enemy (and unites us)
  • Builds controversy (think of the 2016 Russian Facebook ads)

Paid Growth

Any form of paid marketing which could include online (paid display, search, or social) and offline activities (radio, TV, billboards, print).

This also includes promotional campaigns (ex. Uber offering $20 credits to first-time users), but ultimately drives conversions, downloads or a specific action respective to your product.

Recommendation: Make paid growth the last lever you pull. Kevin Hale, Founder of Wufoo, believes that marketing is a “tax you pay for not making your product phenomenal enough”.

There is some truth in this statement and although it requires patience, viral growth undoubtedly has better Return On Time Invested (ROTI).

I also recommend leveraging free marketing tactics (SEO, content marketing, email marketing drip campaigns) first, OR use paid channels in conjunction with free, inbound tactics (ex. boosted Facebook posts).

Like A Newborn

Like a newborn, healthy growth means everything for a startup. The beauty of focusing on growth is that it turns the overwhelming complex concept of a startup into a simple optimization problem.

Once you embark on cracking this, start to define which of these 3 types of marketing efforts fits best and decide if it fits your big picture. Then experiment, reiterate, and optimize  :]


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