This guide will outline the fundamental elements of growth, giving founders and growth leaders the tools they need to create an exceptional strategy.

By the time you have finished this guide, you should have a better understanding of the basic tenets of growth marketing, including:

• Inputs to a growth strategy
• Various growth models and how each works
• How to optimize your growth
• Building a growth organization

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The team at M13 is always here to help. If you're an M13 portfolio company who wants help navigating this walkthrough and any other supplemental analysis, please reach out.

Helpful Resources:
Growth Module - Channel Landscape‍

The Eiffel Tower, the Empire State Building, the Taj Mahal—every great construction starts with a blueprint, and your growth strategy is no exception. In this section, we’ll look at how to craft a growth strategy based on specific elements of the customer journey. This is relevant whether you have yet to launch your product and are establishing an overall marketing strategy or if you need a more cohesive strategy for the future.

And for today's businesses, the growth landscape is constantly in flux. Among widespread cultural shifts, ever-changing regulations, and ongoing supply chain issues, strategies that would have worked even a few years ago are likely to be poorly suited to today’s landscape. This means it’s more important than ever to lay the groundwork for an agile growth strategy, using thorough research and up-to-date data.

Fortunately, high-level growth models evolve much more slowly than the many tactics that comprise them. In this section, we’ll outline four main models that shape growth strategies.

A note on definitions

Before we continue, it’s important to distinguish between two terms we use throughout this guide: models and components.

Models are the core mechanisms through which you drive growth. Think of models as a general blueprint driven by the nature of your product, unit economics, funding, and growth expectations. Models aren’t mutually exclusive, and you will likely incorporate the strategies and tactics from other models into your growth plans. However, you will likely have a core model that drives the majority of your growth decisions.

Components are the pieces of your growth model that must be optimized for the model to run efficiently. Every component of your model will be affected by the others, interlocking to form an effective strategy. Early stage growth leaders must have the range to understand each relevant component and build the right team to optimize them.

Some components only work well in certain models, but others are effective in many contexts. For example, retargeting works very well following contextual targeting in a paid-led growth model – but retargeting is much less effective following outbound sales in a sales-led model. Free trials are highly generalizable and they can be effective in both paid-led sales models and sales-led growth models.

Perspective is key

Crafting a growth strategy requires business leadership to consider the company from a variety of angles. It’s important to take into account:

• The company perspective. Your growth plan must align with the broader strategy, ambitions, and financial complexion of your business.
• The market perspective. Growth is hugely dependent on the larger dynamics of your category and actions of your competitors—without a clear understanding of these landscapes, your growth strategy will be difficult to deploy.
• The customer perspective. Your growth strategy must be based on a deep understanding of your customer’s pain points, desires, and their journey

These perspectives are each a vital source of knowledge for founders looking to craft a growth strategy. Each viewpoint will tell you something different, providing a foundation on which to base your marketing efforts.

The company perspective

The first part of building an effective growth strategy is considering the broader goals of your business. For this, there is no one-size-fits-all solution—every business, product, and team will need to tailor their strategy to their own specific needs. However, there are a couple places to look to crystalize your thinking: goals and financial ambitions, and competitive advantage.

• Goals and financial ambitions: Consider your current position as a company. What are your monthly, quarterly, or yearly objectives? What is your brand voice and positioning? How might a growth strategy support or facilitate established marketing KPIs?
• Competitive advantage: take the time to clearly define your competitive advantage. A competitive advantage is the part of your product or service that sets it apart from other companies in the same market. You’ll know a feature of your business provides competitive advantage if it is:
  • Hard to imitate
  • Valued by customers
  • Compelling
  • Unique to your company

Defining a competitive advantage requires founders to look closely at their own business, but they must be studying their competitors just as closely. What can you do better than the competition? What can they do better than you? Do you have a meaningfully different growth trajectory than your competitors?

Keep in mind that not all markets or customer segments will be viable for every business at every point in time. Be decisive about your pursuits, and don’t worry that you’re missing an opportunity by focusing your energies—there’s every possibility you will have a chance to consider other areas of growth later in your business’s development.

The market perspective

If your company is a ship, the market is the sea it sails on, and can make all the difference on your growth journey. The market perspective concerns both your competitive landscape and the fundraising environment.

Everything from national policy to demographic shifts has the potential to impact your competitive landscape either by affecting the size of your market or by affecting your product’s position relative to competitors within it. Make sure to keep an eye on developments that may impact your competitive landscape.

The fundraising environment impacts how much capital you’ll be able to raise as well as which milestones your future investors will prioritize. Over the 2010s Fed interest rates were at 0% for an extended period. This meant investors were attracted to quickly growing companies, and their guardrails for profitability were very lenient. By 2022 interest rates began to increase and capital availability tightened, putting more scrutiny on unit economics and efficiency of growth.

The customer perspective

The customer perspective may be the most powerful tool in a founder’s belt—and it’s no surprise. Knowing your customer is the cornerstone of all marketing efforts, and companies spend massive amounts of time and resources to better understand their needs, wants, and behaviors.

Start by analyzing what you already know about your current customer segments. Draw from market research you have done in the past to build a picture of your target audience, and ask yourself:

• What problems are they facing?
• How do your customers feel about those problems?
• Where do they currently look for solutions to their problem?
• How do they solve the problem?
• "Are there ways to improve your process?

Consider the size of your demographic as well, and whether you can reasonably expand that base. As you move through this exercise, take note of any areas that you see as attractive for growth—these may end up developing into focus points later on.

The customer journey

A customer-centric mindset is the basis for sustainable, repeatable growth in an organization. At the center of this philosophy is the customer journey—a virtual map of the touchpoints required to change cold prospects into repeat users. While actively browsing your site a customer may progress through distinct steps in the journey within seconds or minutes. For some products the full customer journey can last years with weeks or months between customer journey steps.

There are critical moments in the customer journey that represent turning points for potential customers. Whether they decide to pursue your product or service further or abandon their journey depends on your company’s approach to these critical points. To understand which moments are most important to your customers, it's helpful to identify:

• Triggers that prompt a customer to re-address their current behavior. A trigger could be an inferior customer experience with a competitor, a well-placed digital ad, or even a life event such as the birth of a child or a new job. For some offerings, there may be only one trigger along the customer journey, while higher conviction offerings are likely to have various triggers.
• Barriers that stop a customer from taking action. These include things like switching costs (perceived or real), input from stakeholders (e.g., a partner in consumer purchase, a procurement team in a B2B purchase), or a simple lack of knowledge.

Converting a cold prospect usually requires a deep understanding of various triggers and barriers that dictate the customer’s actions. The threshold for this action isn’t static—it changes depending on each customer’s levels of friction or distraction. A savvy growth marketer will look for ways to create new touchpoints, especially during points in the customer journey where motivation is high and friction is low. Understanding the customer’s mindset at each step helps us determine when their motivation is highest.

Your growth model

Once you understand these elements of your customer journey, it’s time to clarify your growth model. When we talk about a growth model, we’re describing the most common ways that your prospects learn about, evaluate, and eventually use your product. For the purposes of this guide, we have identified four growth models:

The paid-led growth model focuses on the acquisition of customers through paid advertisements. A paid approach is an excellent way to drive awareness, and it excels at finding customers that aren't deeply researching a problem. To get the most out of a paid-led model, your product needs to be easily understood and well-defined enough that a passing ad on Instagram, a subway billboard, or a TV commercial is enough to hook a customer’s attention and possibly generate a sale.

Despite diminishing marginal returns, paid marketing is easy to scale and, once at scale, easy to test and optimize. This can be a problem for new companies if they quickly scale past the point of healthy unit economics, especially if they have not taken the time to understand the levers that can optimize paid marketing for maximum return. We advise companies relying heavily on paid marketing to diversify into other growth models, which are harder to scale, but ultimately provide greater competitive advantage.

The referral-led growth model incentivizes current customers, resellers, partners, and experts to advocate for your product through referrals. Many products solve problems that naturally come up in their customers’ conversations with friends, family, and colleagues. If your company’s product falls in that category, some of your satisfied users will organically recommend your product to others in their network. A referral-led growth strategy is a cost effective and advocate-led, thus authentic, way to supercharge that natural inclination.

Companies like Tesla and DropBox scaled quickly with a referral-dominant approach, but these days most companies use a referral model in conjunction with another growth model. Referral strategies work best for companies whose ideal customers are not motivated to actively seek out the product or service. Almost every company can benefit from some referral tactics, even if the referral-led model isn’t at the core of their growth machine. However, for a referral-led model to succeed, users must have a natural inclination to talk about the problem that your product solves.

The sales-led growth model is a tried-and-true staple for B2B companies. Companies that use sales-led growth invest their resources in business development representatives and account executives (to source and qualify prospects and close deals respectively). Generating demand this way is often necessary when your customer base isn’t actively seeking the solution you offer.

Products that have high barriers to entry due to price, diversity of stakeholders, or complexity of implementation benefit most from sales-led growth. Sales-led growth strategies should not be used to make low-ticket sales or to promote products with a short consideration phase. In those cases, there are more efficient ways to generate growth.

Sales-led growth is resource-intensive, and therefore difficult to dabble in successfully. Companies that use this model typically have few resources left over for other models, especially because sales are primarily founder-led in the early stages.

The product-led growth model allows the product or service to generate demand for itself, typically through viral product features, product-generated content, and a limited trial version. Product-led strategies are common for consumer products with a social element, or products whose prospects are actively seeking solutions but initially have a low willingness to pay. They’re also becoming increasingly common for "bottom-up” SaaS companies that appeal to individual contributors with a feature-limited product with a low barrier to entry, then try to up-sell their organizations onto a more expensive enterprise plan.

Product-led growth companies have been successful in industries that require multiple meetings, demos, and negotiations before the product can be tested. In these conditions, a pared-down trial period can serve to convince your customers of the validity of a product without the need for a sales team.

Product-led strategies are not well-suited when product implementation involves multiple shareholders, or when prospects are not actively seeking solutions.

Cryonic freezing is the future of space travel, and Novi is at the cutting edge of it.

The process of being frozen solid has not always been a pleasant one. Market leading cryonic chambers caused lingering numbness, stiffness, and mental sluggishness for astronauts (not to mention runny noses).Fortunately, Novi has a solution. They started their own brand of cryogenics: FroZEN, where you never lose your cool. FroZEN delivers an optimal cryonic experience without side effects, but it’s more expensive than mass market cryonic chambers. Novi knows they must focus on the likeliest early adopters instead of targeting a segment that’s too broad.Early customer research shows that the segments likeliest to splurge for FroZEN’s premium offering are:

• Super Sufferers that suffer more than average from common cryo side effects
• Luxury Vacationers that want to avoid unpleasant symptoms on their expensive trips
• Business Travelers that can’t afford cryo sluggishness during their important meetings

Go with us here, but your company’s growth model is like a car’s drivetrain. For your growth model to deliver results you need to make sure all of the components are working properly and in tandem with each other.

For a gas powered car to travel from point A to B, the engine needs to burn fuel and convert it into mechanical energy that is routed through the transmission, axles and other drivetrain components into the wheels; then the tires need to grip the road to propel the car forward. Similarly, a company’s growth model needs to be able to fill the funnel with quality prospects, engage them, and convert them into paying customers. If any component of your growth model is underperforming, it will create a point of failure (or frustrated potential customers!) regardless of how well the other components of your model are working. It doesn’t matter how powerful your car’s engine is if the clutch in your transmission is slipping and all of the energy is lost to friction instead of being transferred to the wheels.

In this section, we’ll outline the major components of each growth model that should be evaluated and optimized so that the entire system works effectively as a unit.

Components of paid-led growth models

Contextual targeting

In the age of the internet, ad platforms offer a plethora of audience targeting options based on a dizzying number of data points based on search terms and browsing history. Paid-led growth teams use this data to target individuals. However, recent limitations to user tracking and measurement have affected audience targeting capabilities across most channels.

Many advertisers have reacted by embracing contextual targeting as a strategy. Contextual targeting simply means targeting properties and placements based on the content, or context, that they appear next to.

Healthcare companies, for example, are heavily affected by privacy regulations. They can’t target a pool of people that have been diagnosed with a condition (because it’s illegal), so they place ads next to content about that condition, correctly assuming that visitors to that content will be highly qualified.

It’s important to note that digital targeting is great for paid-led growth, but it has one major downside: as targeting becomes more precise and accessible, it has become harder to maintain a competitive advantage simply by reaching people that your competitors aren’t. It can also become increasingly expensive to compete for that same, targeted group of potential customers.

Retargeting

Most of your paid ad impressions won’t hit your ideal customer at the perfect time, no matter how well-targeted they are. Retargeting is a component of paid-led models that ensures hand-raisers that indicate interest in your product get extra attention and budgets. Retargeting is effective for all site visitors or offline leads, but typically more effective the further down the funnel the user has navigated. For DTC e-commerce brands, abandon cart campaigns are a must, but almost all DTC— and even many B2B companies— use similar lower-funnel retargeting campaigns to great effect.

Retargeting efforts will be limited by the scale and specificity of your data collection. Newsletter sign-ups and lead generation forms are a great way to capture personally identifiable information (PII) to ensure you’re able to retarget your visitors later across many channels. Cookie-only retargeting will limit the scale of your retargeting pool. Use site activity, questionnaires, and other methods to capture specific information about your prospects that will allow you to segment your messaging.

Conversion rate optimization (CRO)

Once a customer has been successfully hooked, they enter the consideration phase. Oftentimes, this means browsing your website or app to continue learning about the product. Optimizing your conversion rate means making sure these owned properties get users from the consideration step to the activation step effectively.

Customer feedback will be important for this component. Not only will it help you refine your messaging strategy over time, but it will be a source of useful conversion-optimizing content such as reviews and testimonials.

Creative branding

Brand and creative optimization has been an important strategy since the inception of paid advertising. Your creative direction will be largely determined by what you know about your audience. This doesn’t mean that you’ll understand everything about your target audience on the first try—you’ll likely have to experiment with different creative hooks, brand tones, and visuals before finding the tactics that work best.

When conducting your research, don’t try to sell your product. In fact, it’s generally best to avoid mentioning your product at all. Instead, focus on the subject’s pain points, their emotional state, and the solutions they’re inclined to turn to. Use their own language to enter the conversation, molding your marketing efforts to the conversation that’s already going on in their head. Marketing hooks are too brief to convince customers to care about something if they don’t already.

Experiment with the language surrounding your product or service. Many companies find success presenting themselves as pain killers that solve immediate and familiar problems. This approach is often more effective than listing numerous, but abstract, benefits that don’t appeal to customers on an emotional level.

Components of referral-led growth models

Incentive programs

Incentive programs motivate your product’s loyal customer base to advocate your service or product by offering direct benefits—a discount on the user’s subscription, for example, or a free accessory. The combined incentives for the advocate and the referrer should be considered an acquisition expense, but they’re usually trivial compared to the customer acquisition cost for a paid ad campaign.

Paid referrals

Getting a paid affiliate, expert, or influencer to endorse your product has effectively driven growth for many companies. If your company uses paid referrals, it’s important to match the credentials of the advocate to your product’s appeal.

Athletic Greens has executed this strategy remarkably well by converting leading health influencers and experts into credible advocates. Note that expert referrals are more than just advertisements purchased on expert’s properties; they’re an authentic (even if paid) endorsement from a knowledgeable and trusted public personality.

Partnerships

Growth doesn’t always have to be a solo endeavor. Teaming up with other companies that offer complementary products or services is a great way to kickstart growth for some companies. We call these collaborations value-added partnerships.

There are many ways these can take form. One consumer skin care business we work with leveraged a network of dermatologists to recommend—and occasionally sell—their products. The dermatologists were given samples to offer their patients, and in exchange for this advocacy the dermatologists were provided valuable research that they previously didn’t have access to.

Value-added reselling is the practice of creating a single, seamless product that combines the best features of both companies’ offerings. This is typically accomplished by licensing your partner’s technology (or having them license yours), bundling complementary features and/or services, and reselling it. Value-added reselling is common for SaaS products that partner with implementation consultants.

Not all partnerships require such a heavy touch. Some companies might choose, instead, to co-market their product to users alongside an external product. This allows both brands to reach new customer segments without fundamentally changing or bundling either product.

Components of sales-led models

Demand generation

Most companies using a sales-led model will require a healthy mix of demand generation activities to fill their funnel. Demand generation tactics—which can include webinars, events, conferences, and even paid marketing—cast a fairly wide net. The goal of these tactics is to increase awareness within your market and drive interested leads to your website, or to lead forms where they can submit their contact information.

Inbound sales

As the only sales rep that is working around the clock, your website is critical for attracting and engaging prospects. Inbound sales is the development and optimization of marketing touchpoints on a company’s site and CRM to drive prospects to actively reach out to sales people. Inbound sales works by establishing the company as a trusted partner that can solve the prospect’s problems.

Companies develop educational content and use search engine optimization (SEO) to attract customers that are actively trying to solve certain problems. Companies then engage these visitors with case studies and demonstrations that show exactly how the company can solve the prospects problems. When done well, inbound sales is a source of qualified leads, with high purchase intent. Higher intent leads convert at higher rates, making sales teams more effective, and less reliant on outbound sales.

Outbound sales

Most companies using a sales-led growth model will rely heavily on one-to-one outbound sales, especially in the early-stages. The process for this will likely be familiar to you; business development representatives (BDRs) generate interest via one-to-one cold outreach, qualify leads, and hand them off to account executives (AEs) that demonstrate the product and convert leads into customers.

Account based marketing (ABM) is the prevailing outbound sales methodology today for one simple reason: it works. Use ABM to clearly define the highest value use cases that your product solves, then work backward to identify the ideal companies (i.e. accounts) for a demonstration. An ABM approach requires strong alignment between the AEs, BDRs, and marketing personnel.

AEs, BDRs, and marketers align by building an ideal customer profile (ICP) and using it to develop marketing content as well as target and qualify leads. Most B2B start-ups will have multiple clearly defined ICPs. All leads should be categorized so that their marketing touchpoints can be focused on the specific pain points and use cases that customer segment encounters, using case studies and social proof that resonate with them.

Sales enablement

Sales enablement refers to any strategy that uses technology, insights, and experimentation to improve the lead-to-close conversion rate. Teams often do this by investing in software that improves productivity through automation and measurement. By measuring the lead-to-conversion rate granularly, companies can double down on effective tactics and use their staff’s time more efficiently.

Sales enablement also includes the development of content—such as capabilities decks, case studies, FAQs, and software demos—that help account executives demonstrate the product’s value more completely and efficiently.

Components of product-led growth models

Product optimization

For companies embracing a product-led growth model, the lines between traditional product engineering and growth engineering are blurred. All attempts to improve a product can be considered a growth project.

Companies that fully buy into the product-led growth mindset may not even differentiate between their growth team and their core product/engineering team. In this model, these teams have very similar goals and methods. Growth engineering is more likely to focus on metrics like acquisition, conversion rate, and engagement rate. Engagement metrics are typically defined by using a cohort analysis to find the earliest predictors of long term retention. For example, Facebook’s growth team found that # of friends was strongly correlated with retention, so they created an engagement metric: users with 7+ friends and aggressively developed features to improve it—even to the detriment of other less important metrics.

Regardless of how your team is structured, new product features should be prioritized based on their potential to increase acquisition, usage, and retention relative to the resources that they require to implement.

Onboarding flows, trials, and freemium

Many product-led strategies make use of trial versions, lowering the barrier to the customer’s “aha!” moment. Trial versions must be complete enough to be attractive, but need not necessarily have all the features of the full version. Freemium (e.g. feature-limited) versions are commonly used when a product has strong network effects and non-paying users improve the product experience for paid users, despite having a low willingness to pay themselves.  

It’s best if your trial version is free, as paid trials have a very low success rate for most companies. Trial versions can be time-limited, feature-limited, or usage-limited depending on your product’s value metrics. Learn more about value metrics in our pricing guide here.

Product sharing

Product sharing is a component of product-led growth that leverages your customers’ product usage to share the product’s features with their network.

Product sharing is different from a referral because product shares don’t include an incentive for users. Instead, the referral happens automatically as the product provides value for people adjacent to the user over the normal course of usage. Zoom and Calendly, for example, are products that most current customers benefited from even before they became paying users.

Casual contact

Some companies have found other ways for current users to make their network aware of the product and its features. Many brands put effort into manufacturing a new touchpoint or adding explicit branding to an existing touchpoint—this component of growth is called casual contact.

When Lyft came on to the scene to challenge Uber, they asked their drivers to mount hot pink mustache pillows on their car’s exteriors to create more awareness through casual contact. The email app Superhuman takes a different approach—they add a subtle signature to every outbound message sent through their platform.

Novi decides to target all three segments: Super Sufferers, Luxury Vacationers, and Business Travelers with paid ads.

After a few weeks, Novi evaluates the ROAS, return on ad spend, and sees that the Super Sufferers and Luxury Vacationers campaigns are acquiring customers efficiently but the Business Travelers campaign isn’t performing well. None of the creative variations for the Business Travelers campaign are having much success.

Novi has high conviction that their value proposition and messaging are hitting the right customer pain point, validated by multiple customer interviews, so they figure that something must be wrong with their targeting. Either the audience targeting, contextual targeting (or both!) aren’t working.

Novi talks to more Business Travelers and discovers that many of them don’t actually book their own travel! They use travel agents that mostly work for one of a few big companies – and Novi realizes that a Referral-led model would perform much better in this context, so they focus their efforts on striking partnership deals with travel agencies, each of which gets them distribution to an entire pool potential customers.

Hypothesis-driven experimentation

Growth marketing is a science, and should be approached like one. For companies trying to optimize their growth, this means entering each situation with a hypothesis in mind. Your hypothesis should describe your optimal marketing touch point. A good growth hypothesis will deal with one or more of the following concepts:

• Who? Build and test a hypothesis around the behaviors, attitudes, and desires of the customers you’re trying to reach.
• Where? Test hypotheses about where your customers are concentrated and how best to reach them. What contexts naturally ingratiate your product to your customers?
• What? Consider what your target customer wants and what is motivating them to try your product in the first place. What do they need to see or hear to be compelled to try your product?
• When? At what point in the customer journey is your target audience most receptive?

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Like a scientist, you’ll need to design experiments that frame the success of your channels and tactics around one or more of these factors. This way, you and your team will derive valuable information about your market, product, and customer journey regardless of the outcome.

Not every experiment will result in a clear and unqualified insight, so train yourself to think probabilistically and adjust your hypotheses little by little. Many companies whipsaw between tactics because they draw overly broad conclusions from limited experiments. Take the time to analyze your strategies thoroughly, finding specific failures to optimize within the broader strategy.

Let’s say you decide to run ads on YouTube and your campaign flops. Your first conclusion might be that YouTube is a bad channel, poorly suited to your company’s needs. But if you decide to try an entirely new strategy, you’ll be throwing away the data you’ve gained from your first campaign and ignoring opportunities for improvement. It would be more prudent to conclude that at least one element of your original hypothesis was wrong, and to dive deeper into the elements that are the likeliest culprits.

Perhaps your audience targeting, contextual content, and value proposition were all excellent, but your creative hook wasn’t compelling. With YouTube’s diagnostic metrics, you can find the data to test and further refine your hypothesis. The “Video Played to 25%” metric would help you understand your hook’s performance, and you can use it as a target to evaluate different creative hooks against each other.

Prioritizing tactics

When it comes to growth strategy, all of a company’s eggs are rarely ever in the same basket. Odds are you will be (and should be) relying on multiple channels, since diversification allows companies to reach the largest number of their target prospects. There are three key considerations that will help guide you in allocating limited resources between various channels:

• Efficiency. Growth marketers are constantly seeking highly efficient acquisition channels. Unfortunately, efficiency isn’t always easy to measure. Determining which strategies will or won’t be efficient is an art and a science. You will have to predict a channel’s efficiency based on resonance with your audience (the art) and measure the results of your tests while adjusting your future predictions (the science). Even if you perfect both sides, there will be some error in your efficiency estimate, which is why it’s important to balance the estimated efficiency of potential channels with their measurability and cost to start.
• Measurability. Some channels can more accurately attribute clicks and orders to the stimuli that generate them, and hence are easier to measure. Channels with high measurability provide more accurate reporting metrics, giving marketers more confidence to increase or decrease spending in that channel. Some highly measurable channels also provide experimentation infrastructure, which allows marketers to iterate on their creative messaging with data-driven insights.
• Cost to start. Upfront costs can’t be recouped if a channel doesn’t perform, which is why it’s important to consider cost to start. If you’re considering a channel with high starting costs, be aware of the risks. It’s often best to avoid committing to such channels without a thorough risk analysis. Cost to start may vary by company, depending on your team’s experience.

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The channel landscape

So how should companies go about predicting the efficiency of various channels in the absence of perfect data? The channel landscape worksheet serves as a visual guide for companies that are trying to answer this question for themselves. This framework is designed to display the most important growth-related aspects of several different channels, allowing founders to easily see which ones are best suited to their needs.

Channels have been grouped into 5 categories: General Advertising, Social Media, Search Channels, Earned/Owned, and B2B Focused. It will be up to company leadership to determine which of these growth channels are best suited to their particular product and brand.

Channel format

The formatting columns **(D-G)** are designed to allow users to clearly see which media type will be most effective for a particular channel. Keep in mind that your channel may be well-suited to multiple formats.

Complexity

Not all marketing channels are equally easy to execute—some will require many more person-hours to launch and manage. The complexity column (**M**) will help you estimate how many resources this channel will consume.

The digital landscape is rich with highly effective channels. Platforms like Google, Meta, Snap and TikTok are very accessible and provide a huge number of targeting levers and options. Offline channels are usually comparatively more complex because they’re more fragmented, and therefore require agency intermediaries to acquire.

This rule isn’t absolute—keep in mind that it’s possible for online channels to have a high complexity, as they can require significant resources to manage and optimize.

Audience

Knowing the audience of a particular channel is vitally important to estimating efficiency. In **column H**, founders have a space to list the most important qualities of a certain channel’s audience—things like age, income, education, and other relevant demographic data.

Targeting

When comparing channels, look at the customer journey from the customer’s perspective; when do your target customers encounter the problem? Where do they go to learn more about it? Who do they talk to about it?

Asking these questions may lead you to make discoveries about the market you’re attempting to reach. You may find YouTube influencers generating great content in your niche market, or vibrant Reddit communities. As you traverse the customer journey, take note of the digital signals that are generated by the customer throughout their journey. Paid search keywords, Youtube channel subscriptions, and visits to competitors’ websites. Prioritize channels that capture the digital breadcrumbs that you’re after. This data will help you build a creative message that resonates with your customers and target them effectively.

The more niche your market, the more precise your targeting will have to be. In **column N**, you can rank various strategies based on the specificity of their targeting, allowing you to see how well a certain channel will penetrate your target market.

Measuring acquisition efficiency

Acquisition efficiency should be measured in terms of LTV:CAC (lifetime value to customer acquisition cost) or CAC Payback (how many cumulative months of customer profit are needed to “pay back” acquisition cost). Ad platforms generally report results on outcomes such as orders, leads, or revenue, but none of these are the same as lifetime value. It’s your job to adjust the platform results to truly understand the cost and bottom line profit of each outcome.

For example, if your Google Ads account is showing a 2:1 return on ad spend (ROAS), you may think you've found a very efficient channel. But if your contribution margin is 60%, your return rate is 15%, and you pay for shipping both ways, then your real ROAS is probably less than 1:1! Some platforms, including Google Ads, offer the ability to re-state the conversion amount retroactively, through an API, so that the platform can report on downstream metrics and train its algorithms on downstream metrics— like contribution profit— instead of data captured by the site tag.

Referral-led growth tactics should be measured by adding the cost of referral incentives (variable costs) as well as the implementation or partner expense to create the program (fixed cost).

Product-led growth teams should consider the headcount and other costs required to create growth features.

Novi's paid and referral-led strategy is working.

FroZEN’s user base is steadily growing, and the value-added partnerships have proven lucrative for both sides. But like any good entrepreneur, Novi is always trying to optimize. They use the channel landscape to comprehensively compare the channels they’re currently using with other potential sources of growth.

One of these channels involves CL Prime, a luxury beach resort on an asteroid just outside Pluto’s orbit. CL Prime would be a great place to target Luxury Vacationers. Novi thinks that buying billboard space on this route would be a highly efficient channel for growth. There’s just one problem: all advertising on this route is controlled by a single corporation.

The corporation requires new advertisers to commit to spending a large budget. What’s more, they don't do ROAS reporting. The combination of high cost and low measurability leads Novi  to forgo advertisements on the route to CL Prime despite the upside potential. Novi decides to prioritize less risky channels. It’s a difficult decision, but one that Novi plans to revisit after they’ve raised their next round of funding.

Funnel optimization

The days of growth at all costs are gone (for now), and funnel optimization is the new king. When improving your funnel, your primary focus should be on owned properties like apps or websites. These are practically free to use, while you’ll have to outbid competitors for ad space and other, more expensive paid touchpoints. Even companies adopting a paid-led strategy should start optimizing the bottom of the funnel before pouring money into the top. The correct downstream tactics, properly optimized, will give you a competitive advantage.

There are a few principles for optimizing the bottom-of-the-funnel across all growth models:

• Remove all unnecessary friction and shorten the customer journey to as few steps as possible.
• Increase motivation through copy and visuals that appeal to emotions and logic.
• Tag micro-conversions to identify your step-by-step conversion rate.
• Experiment at each step, using the step-by-step conversion rate as your success metric.
  

The marginal prospect

Oftentimes, we imagine the customer journey through the eyes of a motivated prospect. It’s often more useful, however, to look at it through the eyes of your **marginal prospect**—the person that was interested enough to engage, but failed to convert. Maybe they were skeptical or distracted, or they didn’t read all the copy on your website. They might have encountered a single unnecessary question in your sign-up flow, or a password rejection that turned them away forever. For the marginal customer, any amount of friction is meaningful. You should always be trying to convert users on the margin, eliminating as much friction as possible.

Novi knows that the best paid marketing campaigns are worth nothing if their website doesn’t convert prospects.

In the interest of turning warm leads into frozen customers, Novi invests in designing a website that touts the benefits of FroZEN’s proprietary technology, appealing to different segments.

Novi’s homepage did a great job of communicating many of the benefits FroZEN customers enjoy, but there was room for improvement. After taking a critical look at the customer journey Novi realized that they could improve prospective customers’ motivation and decrease friction with a few subtle tweaks.

Novi decides to create separate landing pages for each of their campaigns that emphasize customer reviews and testimonials from customers in each segment. Ads targeted at Super Sufferers lead to landing pages that highlight customer testimonials from the same group. The more similar a prospective customer feels to the customer giving the testimonial, the more inspired they’ll be.

Novi also uses follow-up retargeting to communicate secondary and tertiary benefits for customers that don’t purchase on the first site visit. Mid-flight thaws are more than just uncomfortable— they’re dangerous. Novi knows this isn’t their core customers’ primary pain point, but it can nudge some marginal prospects over the line.

Lastly, Novi optimizes the checkout process by adding multiple payment and delivery options that reduce friction on the checkout page. Each small tweak improves Novi’s conversion rate and ROAS in turn, allowing them to significantly increase heir marketing budget while maintaining positive unit economics.

In marketing and in life, change is the only constant. Your growth strategy will need occasional adjustment and refinement to remain effective. Most of this adaptation is likely to happen quite soon after launch, when you’re still defining the optimal strategies for your particular company. In this section, we’ll look at how to optimize your growth strategy using an experimentation mindset.

Finding the proper resources for your growth strategy often presents a hurdle for new companies; as you draw up your blueprint and plot your course forward, you might find that your company lacks sufficient data, tactical expertise, creative manpower, or any number of other necessary items. In this section, we’ll talk about how to resource a growth marketing organization.

Just as your growth strategy will be entirely unique to your organization, so will the resources you need to implement it. This means that resourcing for growth doesn’t have a strict recipe to follow—look at it as a chance to explore and iterate your market resourcing.

The importance of leadership

As with any team, we recommend bringing in some sort of functional leader sooner to guide strategy and build a team. Of course, financial constraints, and capabilities of the existing team may alter that recommendation.

This person should be close enough to your strategy that they can mentor and guide the team through each step of the process. This leader will help craft the strategy based on the team’s tactical capabilities and resource constraints.

In growth marketing, a breadth of experience can often prove more useful than highly specialized knowledge. Leadership that has seen and been part of many different marketing strategies will be able to craft a strategy that is suited to the specific needs of your business.

Generalists vs. specialists

The question of when to specialize isn’t limited to leadership. When resourcing for growth, founders will find themselves weighing breadth of skill against depth at nearly every level of the organization.

Sometimes, it’s ok to bring on talent with a very deep and narrow skillset, since highly specific knowledge can be useful to founders in any number of situations. However, especially in early-stage companies, it’s often better to find people with generalizable experience. Talent with a breadth of knowledge is frequently better able to adapt to the dynamism of new companies, editing their role more fluidly as organizational priorities change and develop.

Designing for the future

The word “growth” implies the future in its very definition, and yet it’s all too easy to forget to be future-minded in your growth plans. Be sure to stay focused on the company you _will have_, not the one you have today. This will allow you to resource your talent more prudently.

Being future-minded allows you to be opportunistic with talent that comes into your network. Since you’ll have a clear vision of the resources you still need to acquire, you can strike quickly when those resources present themselves.

The needs of your company will likely change over time. As new information about your customer’s behavior arises, incorporate it into your future plans. Has your visual content received a lot of attention recently? Prioritize snapping up a great graphic designer. Does community engagement have a big role to play in your growth strategy? Keep an eye out for a talented community manager. The future of your organization will change periodically—revisit your vision often to make sure the actions and priorities of your company reflect this.

Insourcing vs outsourcing

Employees and contractors play very different roles for companies in the early stages. Deciding which type of professional is best for your company is a complex question that depends on a host of company specifics.

Generally speaking, you will receive more time and higher product quality from people inside your company. The reasons for this are intuitive; your employees have bought into your process, and are often much closer to the inner workings of the company. As a result of their position, they have a certain level of investment and personal economics in the success.

On the other hand, flexibility is a major concern for companies in the early stages of their growth. As company needs and priorities continue to develop, contractors and other outsourced talent will allow your company to adapt and change course more quickly.

This key difference used to mean that performance marketers and analysts were nearly always brought in-house early, as they needed a deep understanding of customer data. This is still a relevant consideration for most companies. However, as performance channels expand outside of the Meta and Google ecosystems, it’s possible to be left with someone with deep expertise in a channel you’re not investing in anymore. Keep this in mind if your channel priorities are still evolving.

Likewise, certain types of work have been traditionally outsourced to take advantage of the flexibility that comes with contract work—content creation and graphic design are the quintessential examples. Companies often find that their need for content and graphic work changes over the course of a year, and hence take advantage of the flexibility offered by outsourced creators. These days, brand is increasingly important for breakthrough, community building, and retention. As a result, many firms are bringing these services in house earlier than they would in the past to establish competitive advantage in these areas.

A note on agencies

Agencies get a bad rap, and it’s no surprise. Company investment is high when working with an agency, and expectations are similarly lofty. But agencies—and their market knowledge, consumer familiarity, and creative flexibility—can add tremendous value at the right points in a brand’s growth trajectory. In our experience, a successful agency/client relationship comes down to a few core things:

• Be clear on your needs. Look over the needs of your company, and find an agency that fits. Do not tailor your needs to the offer of the agency. From the beginning, be clear about your ask. Properly briefing is a skill and an art—ensuring your project briefs are clear and thorough will minimize confusion and produce superior products.
• Know your team. Sometimes, the team that pitches the business is not the same team you’ll be working with. Get to know the actual team members who will be on your account, and make sure their style will fit your needs.
• Understand retainers. Many agencies work on a retainer model, meaning you pay in advance for professional work to be defined later in a certain time period. This fixed up front cost is initially unappealing for some companies, and it’s certainly not right for every business. However, it’s important to understand the benefits of a retainer model—in exchange for your money, you get dedicated people who know your business, will think about ideas opportunistically, and can be relied upon for a certain level of performance. If you do decide to bring an agency on retainer, it’s important to build clear milestones into your contract and periodically reevaluate whether the agreement is working to your satisfaction.
• Agencies are your partners. As such, treat your interactions with them as a partnership. Be clear about the future trajectory of your business, and foster an environment of collaboration towards a common goal. And, as with every partnership, know when to end it if needed.

We’ve had the pleasure of working with a number of talented agencies over the last few years. For a list of agencies that have earned our personal recommendation, send us a message.

After optimizing their tactics and comparing channels in the channel landscape, their growth strategy is uniquely suited to FroZEN's product.

But as the business grows (along the number of growth channels it utilizes), Novi has a harder time keeping everything running smoothly. The time has come for FroZEN to start hiring.
Novi has a choice between hiring full-time employees or part-time growth consultants. None of the candidates have expertise in all of the Paid-led and Referral-led tactics that Novi wants to test. Eventually, Novi realizes that they should hire a person with complementary skills and train them in the areas where Novi is already very experienced. Novi decides to hire a referral-led growth expert and mentor them on paid-led growth before fully ceding ownership over FroZEN’s paid channels.