Successful startups spend more on marketing than product development. This does not typically occur in the very early stages, but it will happen sooner than most founders think. The marketing practice startups must rely on is referred to as growth marketing (although the name will probably change soon, since all marketers love a good re-brand…).
Growth marketing looks across the entirety of the marketing process, from raising awareness to driving traffic, and from creating engagement to converting users and driving referrals. This holistic perspective on marketing shows both the ambition and importance of growth marketing, as its success is directly linked to revenue generation.
A critical element of growth marketing is that it assumes a data-driven, decision-making approach to tracking channel and messaging performance. It relies on systematic and iterative testing of and experimenting with marketing tactics.
The purpose of growth marketing is to establish and continually evolve the company’s growth engine. For some startups, the goal of growth marketing is to arrive at a fully digital customer acquisition process, automating each step of the funnel and thus driving down the cost of customer acquisition.
Why is growth marketing important?
Compared to more established businesses, startups lack critical information about their customers and the markets within which they operate. For example, the short tenure in a market means startups might lack the following types of information:
- Channels for communication, effective messaging, cost of marketing, and sales processes
- Customers’ insights, such as buying processes, buying considerations, decision makers, budgets, typical deal sizes, seasonal preferences, etc.
- Potential partners for building credibility and driving customer acquisition
- Competitors and their value propositions, pricing, revenue model, key channels, and sales processes
Depending on how far along you are as a startup, you might have some data as a function of validating your value proposition, but you will be missing the rest of the data. If you are an early-stage startup, most of the above information is essential for finding your product-market fit, as well as building a scalable business model.
Growth marketing helps test both the viability and effectiveness of channels and messaging. It also provides important data and insights that support the creation of better strategies and plans going forward.
But growth marketing isn’t just for early-stage companies. As your startup grows, your strategic business objectives will evolve. Your growth marketing practices are critical to help you navigate through those business objectives. For instance:
- Marketing channels become saturated and you need to test and identify new channels
- You want to expand into a new vertical and geographical market, each with its own market dynamic
The two issues mentioned above are typical for companies that grow beyond $5–$50 million and must be tackled repeatedly to continue the growth trajectory. This means growth marketing is a strategic practice for any growth-oriented and ambitious startup.
Principles for planning and managing growth marketing projects
Growth marketing will look different for every business, as the nature of your product and the responsiveness of your particular market will impact your planning and execution cycles. That said, the following general principles are critical in making growth marketing deliver results for your business:
- Build and hone your growth marketing practice: Aim for consistency in the execution of your growth marketing projects. Focus on achieving high standards in how you design and conduct your tests. The direct impact on the business is clear in that better tests yield better data, which in turn allows for more accurate insights that inform your business decisions. Beyond that, consistency in execution allows you to build growth marketing as an organizational strategic capability. In our experience, the key to achieving consistency lies in your retrospectives and your ability to follow through on the insights and recommendations from the retrospective sessions.
- Focus on business strategy: As any digital marketer knows, an endless number of A/B tests can be conducted through email campaigns, AdWords, social ads, etc. While that will keep you busy generating data, it might not be relevant for your strategy. To ensure you focus on strategy, focus your tests using two broad principles:
- Top to bottom: You will achieve greater strategic impact by solving problems at the top of the funnel before solving problems further down the funnel. There are exceptions to this rule: if there’s an unusually sharp drop in conversion from one stage to another, then it might be worth fixing that before adding more volume to the funnel.
- Channel before message: While Marshall McLuhan’s old adage “The medium is the message” isn’t necessarily 100% accurate, it might serve as a helpful hint to growth marketers about the relative importance of channels/media over key messages. The general idea is that a channel reaches a certain audience; finding the right audience takes priority over optimizing messages, which is more efficiently done once you reach the right audience.
- Data drives the work: Growth marketers are data-driven, which means going where the data takes them. If the data is radically different from the original expectation, rather than discarding the data, go back and re-evaluate the goals of the growth marketing initiative. This recommendation follows the general belief that newer data is better than old data.
- Dedicate five to 10 per cent of your resources to exploring new channels: This can be a challenge for smaller startup teams, but it is an essential part of growth marketing. When channels become saturated, revenue begins to decline. To avoid this situation, startups must look for and test the next potential channel.
- Stay on strategy: Growth marketing processes involve a lot of flailing about. As you iterate and learn, continue to stay aligned with the overall business strategy.
- Have fun: Growth marketing is difficult but also impactful and rewarding. Remember to enjoy the creative elements and collaboration, and to celebrate learning and progress.
Executing the growth marketing process
The growth marketing process is based on an agile approach. The key steps of the process are as follows:
- Start with your business strategy: The growth marketing process must help you achieve one or more business objectives. In a startup, this is generally not that complicated, but it is an important step to build into your growth marketing practice to maintain alignment with higher level business objectives as your company grows. Use your business strategy to set goals for your growth marketing efforts.
- Get the team prepared:
- Establish mindset and ground rules: Stay strategically aligned, take a customer-centric approach, embrace data
- Set expectations for how to work: Collaborate, make everyone individually accountable, hold daily stand-ups to create new insights
- Build infrastructure: Create a physical location for data and documentation, build a Kanban for organizing and sharing the workflow
- Mine existing data and insights: Look for customer pain points and opportunities in the customer buying process, as well as other insights to help guide the creative process. Share with the entire team.
- Brainstorm: Identify potential high impact areas of improvement and formulate one or more hypotheses for testing. Design appropriate tests for each hypothesis and prioritize tests based on the potential impact on business combined with ease of implementation (matrix). Organize tests and tasks using a Kanban board or similar method.
- Execute two- to six-week sprints: Make sure each team member understands their tasks. Even though speed is critical, learning is more important so don’t shy away from long-term tests if the potential impact is commensurate. Stay aligned and prioritize effort by having daily stand-ups.
- Track and analyze the performance of each test: Was the hypothesis proven or not? If not, what important lessons are to be learned? How could you respond? Generate an actionable report.
- Conduct a retrospective and review insights: Involve the whole team in the retrospective and discussion of the results. Set aside sufficient time to allow comprehensive treatment of the data and its implications.
- Implement learnings and re-prioritize tests: A key element of the growth marketing process is your latest sprint might have revealed data that impacts how you would like to prioritize your backlog.
- Plan your next sprint: Use the steps above to leverage the insights generated from prior sprints.
- In parallel: Drive growth by pursuing opportunities revealed by your new data and findings. The challenge is to find the balance between capturing the opportunities while continuing to test new channels and messages. In any startup, there will be many bottlenecks, as well as within the growth marketing team. Solve some bottlenecks by gradually automating key internal and external processes; other bottlenecks require the addition of team members, expertise, and funding.
The growth marketing process involves continuously gaining new insights and responding to them in a timely manner. It is a constant quest for new data; even if your startup has reached the growth stage, you will continue looking for new growth segments, verticals, and channels. Dedicating time and resources to develop your growth marketing practice at an early stage will yield long-term rewards for your company.