Steady Growth vs Lucky Hack

THE ABC OF GROWTH FUNNELS

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For most startup founders, a key objective or goal is to grow their startups and make it attractive to potential investors. This involves a lot of effort, from trying to achieve product market fit, to establishing a viable business model as well as keeping an eye out for investment opportunities and best platforms to connect with these investors.

While of these are absolutely necessary to grow a startup, a key question most startups should seek to answer is how do I consistently deliver growth?  Put in another way, “What internal frameworks or processes have I put in place to ensure that growth is consistent rather than a one-off lucky hack? This is an important question because it takes founders beyond just thinking about how to attract investors, to how to maximise investments to drive to sustained growth.

There are a plethora of frameworks and tools that are useful for systemising growth in an organisation or startup. However, a basic framework that is helpful for founders to begin to think strategically about growth and systemise it in their startups is the Growth Funnel.

Simply put, a growth funnel is the measurable process through which a visitor becomes a paying customer. It maps out the step by step journey a person will go through from hearing about your product to becoming a paying client. There are several variations of the growth funnel but the 3 stages that are consistent across board are the Awareness, Consideration and Conversion stages.

The awareness stage is where customers first learn about your product or service through marketing efforts or even by word of mouth. At the consideration stage, potential customers are trying to make a decision whether to purchase from you or not based on information available to them like pricing, quality etc. At the conversion stage, customers have made a decision to pay for your product or service and are ready to transact with your organisation.

The growth funnel is applicable to every business whether it is an offline or strictly tech business.

Take the case of a groundnut seller for example. To drive more awareness for her groundnuts she can showcase her product in an area that has a high cluster of people or wear a bright red apron with “buy sweet groundnut” boldly written on it.

To encourage people to consider her groundnut above competitors, she can offer tasting opportunities to interested customers as well as have a wide range of pricing options. To drive conversion, she can ensure that she has change for paying customers and enough nylons to pack groundnuts for buyers.

Optimising Your Growth Funnel

 The growth funnel framework is straightforward, tested and tried. It helps businesses channel all their effort into driving growth for the organisation in a way that is replicable and scalable. Here are some basic steps that can help you begin to use the growth funnel to drive and track growth for your startup.

• 1. Define growth goals or objectives: Defining high level key growth metrics and drilling it down, is a great way to optimise the funnel. For example, company A is looking to grow its revenue from $10,000 to $20,000 over a period of 3 months. To achieve this target, company A needs to model out how many more people need to be aware of the product. Of those that become aware, how many need to consider and ultimately how many who are considering are likely to convert as paying customers. This creates a roadmap and baseline to develop a growth action plan that cuts across the entire value chain of the business.
• 2. Analyse, Test and Systemise: With a growth roadmap defined using the funnel framework, the next step is to analyse, test and then systemise positive tests.
  • You start by analysing what your current position is, so you are clear on where you currently are versus where you need to get.
  • Next, you run small / fast / cheap tests (or growth experiments as we like to call them) to find out what channels, tools, information etc are most effective in achieving your various funnel goals.
  • Finally, if a test yields positive results, you systemise it and make it a standard part of your operating strategy. If it doesn’t yield positive results, great! You’ve found out very quickly and cheaply, what NOT to do.
• 3. Track Track Track: Tracking performance across the growth funnel is key to accessing whether you are on-course to achieving your growth targets and making adjustments where necessary. A key question to ask is what are you tracking? It is important to track metrics that are directly linked to your growth targets and funnel objectives. For example, consideration metrics might include website duration, bounce rates, inbound inquiries. On the other hand, for awareness, you may track impressions, reach, and web sessions.

Getting the implementation of the growth funnel right will take practice and consistency. Despite the effort required to make it work, the funnel framework will help you achieve growth that is deterministic, consistent and scaleable.

Want to learn more about growth frameworks? Attend one of our Growth Training Courses, where you can learn less about “Growth Hacking” and more about our preferred approach of systematic “Growth Engineering”.