Growth Strategy for Startups: Assess Go-to-Market Options

There are different routes to growth: Product-led, Sales-led or Marketing-led. 

While each of them is likely better suited to perform in certain circumstances, I’m not a fan of absolutist thinking. It’s best to test and assess what growth motion [or more likely a combination of motions] makes the most sense for your product, audience and business model. This could evolve based on the lifecycle of your business, these decisions should not be set in stone but revisited on a periodic basis. 

A. Product Led Growth (PLG)

A product led growth (PLG) strategy focuses on leveraging the product itself to drive customer success, adoption, advocacy, and growth, aligning closely with product development and scalability.

• Best suited for: Low value, low friction B2C or B2B products. Why? Users are able to experience the value of the offering on their own and form a habit.
• Common tactics: In product triggers and notifications, integrations & interoperability with related products to build stickiness
• How it can boost growth:
  • Acquisition: Users refer / invite others triggered by natural collaborative usage or virality [eg. a Dropbox user shares a file with another contact] leading to lower customer acquisition costs (CAC). 
  • Engagement and Retention: Freemium users develop a habit, upgrade to a paid plan with additional upsells / cross-sells over time.
  • Monetization: Once you have a sizable user base, there are additional monetization opportunities via ads. We’re all aware of this being the dominant business model for social media networks, but it’s also been margin-accretive for other businesses with a sizable user base and lucrative behavioral data.  [eg. Grab, Uber]. 

Areas to watch out for: ‍

• Scale & Speed: 
  • The Product-Led Growth motion depends upon habit formation with a self-serve approach. It tends to work well for frequencies ranging from daily to monthly usage. If the natural frequency of your product is lower than this or your product is not intuitive or simple enough for users to get to value on their own, you could experience a higher degree of churn and may need to re-acquire users. 
  • It’s the proverbial ‘cold start’ issue. Yes, you need the initial momentum to get the flywheel moving. But you also need a natural ‘sharing’ tendency that you can trigger in product, or sustainable financial incentives to grow the base. ‍
• Signs of dissatisfaction with product offering / experience: 
  • If your core user base doesn’t see the value anymore or finds a better (or cheaper) alternative, engagement rates could start to decline and retention as well as new referrals) can become a challenge. 

B. Sales Led Growth

Best suited for:

High value, complex solutions with a longer buying cycle. Eg. B2B software for Mid-market or Enterprise customers typically needs a high-touch consultative approach. 

Common tactics:

‍Outreach [Calls / meetings] via SDRs/ BDRs for new customers & AEs for existing customers. 

How it can boost growth:

‍Deeper and direct engagement with customers makes it easier to identify opportunities for upsells/cross-sells, long-term relationships with accounts can foster loyalty and retention.  

What to invest in / watch out for:

‍Sales capacity & productivity, CRM infrastructure, training and enablement solutions

C. Marketing Led Growth

Best suited for:

• Primary: Low - medium value B2C or B2B products with shorter buying cycles
• In conjunction with other motions:
  • Marketing + Product led: Marketing could support the initial acquisition loop that starts the PLG flywheel, provide educational content [How to’s / guides] to sustain engagement or help to re-engage high-value users that have dropped off.
  • Marketing + Sales led: Support high-value products or services that have a longer buying cycle. This could entail building consideration as well as generating qualified leads to route to sales teams to nurture and convert. 

How can it boost growth?

• Broad reach awareness and consideration can boost other growth motions (organic / direct traffic to site, inbound leads to sales, and improved engagement and conversions).
• Targeted paid acquisition can drive sign ups & revenue

What you should know: 

Inbound Marketing

Inbound marketing is a marketing approach that prioritizes useful content and related experiences to drive user acquisition. Common tactics include SEO, organic social, email and community engagement.  Inbound marketing is an efficient and high quality route, however it normally takes longer to scale. 

Why? 

SEO & Content: It takes time for a new domain to rank on search engines [particularly if you play in a competitive keyword category] and for your content to build relevance, authority and gain valuable backlinks. 

Note: If the category itself has low search query volume [e.g. a breakthrough innovation that has low awareness], you will have to operate one level up [‘needs / pain points’ topics] and take on the heavy lift of education before you see commercial gains. 

Email: You need to build a sizable first party database for email to be a scalable channel. Yes, you can scrape together contacts via 3rd party tools and intent data to run a cold email outreach campaign, but you run the risk of spamming users who have not explicitly decided to engage with you. Take the time to build and nurture ‘hand raisers’ instead through high quality content and community engagement. 

Note: While inbound may not have “media spend” behind it, be prepared to invest in content marketing, CRM & SEO resources [people and tools]. If you can get support on PR / communications, this can help accelerate the inbound flywheel. 

Outbound / Paid Marketing

A. Brand Marketing:

Brand marketing focuses on building a positive emotional connection and a long-term relationship between the brand and the customer. It primarily pursues three goals: to increase a brand's awareness, improve a brand's image, and strengthen customer loyalty. Common channels include broad reach media such as TV, print, outdoor as well as digital channels such as display, paid social and video.

Spends & Audience: Higher minimum spends required to get a credible SOV (Share of Voice) for broad reach vehicles such as TV or print media. Given this, broad reach media is likely better suited for mainstream products that are looking for a larger audience or can afford wastage. Digital and social media platforms with demographics and interest targeting capabilities are a better fit for startups / SMBs that have a narrower audience base. 

Measurement: Do not measure the impact or effectiveness of brand spends in an isolated manner [i.e. CAC of brand investments alone]. These are investments in awareness, reputation and consideration that will pay off over a longer period of time.     

Here are a few signals that you should consider instead of a lower funnel efficiency metric: 

• Measure SOV in the category you operate in as well as lift in brand awareness, consideration / preference with your target audience. Correlate with market share improvements over a period of time. 
• Map brand investments to growth in brand search keyword volume, direct traffic and inbound inquiries to the sales team over time. 
• Run a bi-annual Marketing Mix Model (MMM) to estimate the impact of brand vs. performance spend (break out into granular channels, if possible) on sales as well as other factors such as pricing, seasonality and distribution. 

If you're not sure when to start investing in brand marketing, here are a few factors to keep in mind and recommendations by funding stage.

B. Performance Marketing: 

Performance marketing is an umbrella term for paid marketing activities that drive measurable results (clicks, leads, downloads, orders/revenue) tied to business objectives. Common channels include Paid search, display, paid social & video, content syndication, and affiliates. 

If you're just starting out with performance marketing, review these pre-conditions to ensure you're setup for success.

• Scalability: Channels like paid search, paid social and display can scale quickly if you have the budget, a material addressable audience coupled with appropriate targeting capabilities, the right assets for each platform, and an efficient user journey on your site / app. 
• ROI: Remember that you could initially see high ROI (or low Cost per Action/ Conversion) because you’re bidding for high intent audiences at the bottom of the funnel. All things being equal, higher  conversion rates will lower your CAC. This is particularly true for paid search which targets intent and captures demand efficiently. 
• Importance of mid-funnel & measurement: To scale sustainably and not squeeze your funnel dry, it’s important to also invest in campaigns that drive consideration, not just action. E.g. for paid search, this could mean investing in category keywords that are more expensive than bidding on your own brand keywords, but are likely more incremental.

Think about it this way: 

Would you rather spend all your budget to convert prospects who may have organically converted - without seeing your ad? 

OR 

Would you rather spend on prospects you are not likely to acquire without ad exposure? 

• Ongoing optimization: Performance is better placed to succeed when you can route existing conversion data [from your analytics platform] back to the ad platform in real time to inform your targeting and optimize bids for valuable prospects. Without this, you aren’t giving the algorithm the right signals on what’s important for you.