The simple equation of growth

Growth hacking here, growth tactics there, silver bullets over here - buzz, buzz, buzz.

Growth hacking is a big hype as every new super cool thing which some of the successful kids do / others get successful as well without clearly giving someone the title 'growth' in their team. And after the hype is over, some aspects will get cut off of it, people will understand it more and accept it, as a new function within a team, you can install or not.

Sometimes, growth hacking is put into the same category as marketing, sometimes it gets mistaken as product. Basically, growth can and is likely to be different for every product or service. Mainly it is the combination of lean startup methods with data. You have assumption which you test as fast as possible to generate user growth (either new users or not loose activated users; more below).

There are different steps and stages of the consumer lifetime circle you can build in 'growth mechanism'.

It starts with what marketing channels to choose - if any. Or rather finding a unexplored path to reach your users that is rather a user mine that you can harvest. The next step often is the sign up, so you 'acquired someone's interest' and now you better make sure you manage to make them sign up. Here it is mostly about removing frictions: either 1) physically (every process needs to run smoothly and needs to be clearly designed) or mentally (the user should get the right information in the right time and not having any uncertainty or doubts that stop him). 

Well, congratulations, you have a new user. Better make sure that you activate this user. "Activate a user? He just signed up!" Yes, he did. But unlike you, he likely never heard of your product and has no idea what to do. In a world with an attention span of minus 10 seconds, your job is to expose him to the USP of your product as smooth as possible. This is as well highly depends on your service. If it is a B2B software, the new user might spend some more time to get to know what you are offering and is willing to spend some time. On the other side, most of the consumer facing apps don't manage to hold more than 20% of their sign ups after the first week. Well, competition right here. Provide them with value right away.

If you manage this, you have an activated user. But that doesn't mean he will stay engaged forever, you have to make sure that his/her need constantly gets fulfilled - maybe this even changes over time. Plus, the use case from the first sign up/login is likely different from everything else the user will do in the future. Think about it and run reengagement mechanism to not loose users. If you acquire lots of users, but don't manage to retain them, what good is your acquisition efforts?

And now we come to the one line I actually had in mind, when I started this post.

New users - churned users = growth

Super simplified, but that's it. You can work on both variables. In fact, you need to work on both, otherwise, no growth, no satisfied users, no business.

btw. growth comes after product market fit. Meaning, in my perspective you need to start with churned users. Yes,obviously you need to attract some users, but don't start the acquisition engine before knowing that the users stay. Thus, how to make sure the users don't churn? Well, any activation or retention efforts won't help, if you don't actually solve someone's problem => product market fit.

In addition to that, if you manage to have a clear product market fit and have your first users, those are your best marketing engine anyway. Here again, remove friction, or rather: enable sharing mechanism and incentives. Don't make it hard for them to share your work, rather help them with the right tools at the right time to do it for you. Ideally, you offer them something for it and the persons they invite. This is called the viral loop and should be >1. So for every person, they bring more than one new person with them.

Here is how most growth teams are positioned:
1) acquisition
2) sign up
3) onboarding
4) retention

If I mentioned anything that is wrong from your perspective or you would like to continue the discussion and add something, feel free to teach me @nodwat. In fact, I want you to, as I just write to learn, not to be right.


Thank you for reading.