At GrowthBay we talk to a lot of startups and very similar questions come up all the time.
- What should we measure?
- What are the right channels for us?
- How should we structure our team?
It depends on your stage
It's impossible to give a cookie cutter answer to these questions. It depends so much on the stage a given startup or company is in.
Every new company, new product and new feature seems to go through three stages:
Traction → Transition → Growth
The goals, metrics, channels, focus, team structure, everything evolves and changes as you move through these three phases. Knowing where you are in this path helps you understand what you should be spending your time on.
Focusing on the right tactics at the right time helps move you through this path efficiently and successfully. This obviously varies widely from business to business.
Brian Balfour from Reforge created a really useful table to illustrate this path:
Let's have a look at each of these phases.
Phase 1: Traction
- The one and only goal should be to find product-market fit among some audience segment (and making sure that segment is big enough, so you can build a compelling business).
- Retention is the name of the game. Are the customers coming back after they have tried your product? If your product does not retain users, there is no point in growing the top of the funnel.
- Choose 2 - 3 channels as your leading hypotheses. Managing too many channels creates overhead and will spread you and your team too thin.
- Focus on macro-optimizations. Try big changes in messaging, user flow, target audience, etc. Don’t get caught in the trap of focusing on micro optimizations such as button colors, word tweaks, etc. That's for later.
- One of the founders is in charge of growth, with the help of a dev and designer.
Phase 2: Transition
How Brian says:
The transition phase is like the awkward teenage years. There are going to be some growing pains. But this is where you start to lay the foundation of a team, tools, and process to really crank on growth.
- The primary goal in the traction phase is to identify, define, and understand the growth levers for your business.
- The metric to start tracking is growth rate on either a weekly or monthly basis. Your growth rate will be your guiding star from here on out. You may already have data on LTV (life time value of a customer) which you can track, and focusing on payback period lower than 3 months would be preferable to stay liquid.
- Identify the one channel that has the highest upper-limit potential and double down. You want to minimize that overhead as you build out your growth team and process.
- During the transition phase you should start to build out a dedicated growth team. This typically involves one growth leader. Either a PM or VP of Growth. In addition to designer and developer support, you might need a content marketer/writer if you are doing content marketing (which you probably should).
Phase 3: Growth
- Focus on your growth levers to tweak and crank them up (high volume), since you now know what brings results.
- Next to growth rate, now the payback period (time from investing into acquiring a customer to them recouping that investment) comes into focus. The larger the payback period you can afford, the more channels and options you typically have at your disposal. If it's too long you won't have the capital to expand.
- In our experience, most companies get 80%+ of their growth from a single channel. So a lot of your time in the growth stage will still be spent on one primary channel. With at least 20% of your time you can still run experiments and build up other channels on the side.
- At this point you probably know the big things that work for your audience. So this is the time to focus in on micro optimizations. Small changes across a very large base can have meaningful results.
- Team-wise it starts to make sense to have own growth leads for different metrics (demand gen, retention etc.), with each of them having their own team of data analysts, designers, devs and channel specific marketers.
Tables and frameworks like these help you to get more confidence on where you want to put in your resources. For example, I see a lot of folks doing micro-changes when they are in the traction phase. Or teams managing five channels at a time and loosing focus on what actually works.
This stuff is hard to figure out and every case is different, but I find it helps to let yourself guide by brilliant minds like Brian Balfour who have seen hundreds of startups go from traction to growth.