Don't focus on growth yet
This is what you need in place first
Hi there,
Every startup is keen to focus fully on growth! Get a growth team in place, start experimenting, but it can be too soon.
As much as I love a focus on growth, your efforts could be wasted if you don’t ensure that you have these five things in place first.
These are really the foundations that will help ensure that when you fully focus on growth, it’s impactful and drives results.
1. Product-Market Fit (PMF)
PMF is defined as having the right product for the right market. If you don’t have PMF and validation that your product/service is matching and exceeding the needs of your customers, then you need to focus on this first
You can use a growth approach to focus on PMF, but be conscious:
The sprints and structure may be overkill, as finding PMF is a long-term project with longer-term actions as well as experiments
The term ‘growth’ team may set the wrong expectations; you may grow a bit while finding PMF, but it should not be the primary focus
To test whether or not you have PMF, survey your customers and ask them, “How disappointed would you be if you could no longer use the product/service?”
Offer the following options:
Very disappointed
Quite disappointed
Not disappointed
No longer use it
The rule of thumb is if 40% of your customers answer ‘very disappointed,’ you have PMF.
Other signs of PMF are high retention and engagement with the product/service as well as natural word-of-mouth.
2. Data analysis
Too often companies want to start focusing on growth, but they struggle to measure success, what is and isn’t working.
Often in these cases, it’s best to get a basic data setup in place:
Ability to measure key steps in the customer journey
Ability to understand where customers are coming from
Basic attribution
No organisation has 100% perfect data or attribution, but if the main analytics platform doesn’t measure key parts or is inaccurate, you’ll struggle to run experiments and evaluate their success
3. North Star Metric
Your North Star Metric (NSM) is your high-level metric that aligns all the teams in the organisation; it’s the star on the horizon that you want to go towards, the reason for your company’s existence.
A few guidelines if you haven’t set this yet:
It should not be revenue, but rather something that brings value to both you and the end customer, something people aspired to achieve
It should not change over time
It should be simple for everyone to understand
To learn about 2 more things you must have in place before starting working on growth, read my full article here.
Recommendation
For today’s recommendation, I absolutely could not recommend Sean Ellis and Morgan Brown’s Hacking Growth.
It’s absolutely fundamental to getting started with a growth approach (that is if you meet the criteria above!)
I read this book early on in my growth career, and it laid the foundations for understanding how to grow a startup from humble beginnings methodologically.
You can find it online here.
So before you can start switching to a growth approach, you need to ensure you have Product-Market Fit, the key data in place and a defined North Star Metric,.
A strong foundation will allow you to move so much faster and drive your experimentation forward.
Till next time,
Daphne