How to Start Your Growth Strategy on the Right Foot
The other day, my husband and I went to see the new Kung Fu Panda. From the first scene, it was obvious that this new chapter wasn’t on the same level as the previous ones — and I love Kung Fu Panda. Since my husband is a professional filmmaker, we later discussed why sequels often don't match the original's quality. He had a great insight: a good sequel can only be made if you understand exactly why the first movie was great. James Cameron took quite a few years with Avatar for the exact same purpose but often teams don't take the time to figure this out.
I believe this insight is equally applicable to product growth.
If you want to start working systematically on product growth, begin by asking three questions:
Who buys my product?
Why do they buy it?
How can we grow?
Though broad, these questions are crucial as they sketch out a general view of your growth model. It’s essential that everyone on your team can answer these consistently. Consider the following as you consider those questions:
Are your answers straightforward, or are you making them up now? Many realize they need to focus on product growth because they don’t have clear answers. If that’s the case, gathering data should be your first step.
Are your answers based on evidence, or are they just assumptions? Often, people have ideas and hypotheses they don’t know how to test or verify. In my consulting work, I often ask, “How do we know this?” and “How sure are we?” It's common to find that something presented as fact is merely an unchecked hypothesis.
Will everyone on your team give the same answers? Alignment is crucial because, without it, different teams may pull the product in various directions. I've seen marketing and product teams have completely different understandings of a product’s core value, causing significant mismatches in acquisition and retention strategies.
Building a company can be as daunting as eating glass, especially in the pre-product-market fit (PMF) stage. When something finally works, teams often become so grateful and excited that they forget to investigate why it works. This leads to what I call the “move fast but don’t touch things” approach, where teams are reluctant to make even minor adjustments for fear of breaking the "magic."
I understand the hesitation — if you don’t know what’s effective, you might fear changing the one thing that’s working. But why not figure it out?
Who buys my product?
To identify your customers:
Examine your acquisition channels: For instance, if you mainly grow through online ads, you need to know the demographics, interests, and typical behaviors of your target audience. If you're working with sales, you’ll likely have a B2B and B2C split, with segmentation by roles.
Analyze your use-cases within the product: Segment users by how they use your product, which features they use, and how often. This helps connect the profile you acquire to the profile you retain.
How to gather information:
Product Analytics: Examine user pathways, frequency, and functionality usage.
Interviews: Speak with new and loyal users to test your hypotheses about what defines your audience.
Surveys: Understand the distribution of parameters in a large sample.
Open Data Research: Review the social media accounts of your target audience, observing what they post and who they follow.
Why do they buy it?
To answer this, it's crucial to understand:
Your competitive advantage. When launching a, lets say, AI psychotherapist, it's essential to know what sets your product apart from others. What makes your product unique compared to direct and indirect competitors? Also, consider how your target audience differs from those of your competitors and why they might prefer your solution.
Your unique value proposition. It's common for users to be drawn to your product for one reason but stay for another. Understanding what initially sparks their interest and leads them to install your app is key. This insight will help you tailor your marketing efforts and product features more effectively.
Why do users return to your product? Identify the features they use most frequently and determine your key retention metrics. Pinpointing the 'aha' moment when users realize the value of your product is crucial for fostering long-term engagement.
How to gather information:
Product Analytics: Identify the key feature of your product that users return to use repeatedly.
A/B Tests: Test different offers on landing pages and during onboarding steps to see what works best.
Competitor Analysis: Examine the pain points and offers of your competitors.
Interviews: Speak with your loyal users to understand the value they get from the product.
How do we even grow?
This is my favorite part! It's essential to know more than just "we use ads." Growth is about more than acquisition; it includes retention, monetization, and re-engagement.
How to answer:
Describe your user acquisition strategies: For example, you might use paid Facebook ads to sell a course. You could also use content marketing on LinkedIn to engage potential customers by sharing insights or excerpts from your course.
Explain your monetization model: What do users pay for, how much, when, and does it scale with the value they get from the product? If there's no way for users to pay more even if they want to, you might be missing out on potential revenue.
Outline the user lifecycle: How do you activate, retain, and resurrect users? Understanding the different paths and how they contribute to growth is vital. For instance, even though B2B sales might bring a significant initial purchase, B2C customers might be smaller but return more frequently and have better renewal rates, potentially offering more value over time.
How to gather data:
Marketing Analytics: Evaluate your user cohorts by different acquisition channels and measure the returns from each.
Product Analytics: Examine the user lifecycle and how engagement with the product varies at each stage.
Monetization Analysis: Analyze the revenue from different plans and cohorts to determine which stream works best for your goals.
User Journey Mapping: Map out your user journey step by step to see when and how you currently engage with them.
When we know what makes our product successful and why, we can try new things without messing with what already works.
I often see teams jump into making plans without a clear grasp of what's actually working. But you can't really grow your product effectively if you don't understand its value. So, take a moment to figure out where you stand, make sure everyone on your team understands this, and then start building your growth strategy together.