Growth Newsletter #180

Fundamentally, there are only 4 high-level ways to drive growth.

This image from MKT1 summarizes it perfectly:

A startup can do a million things to grow (we’ve covered over 455 of them here), but given extremely limited resources, you should find the highest leverage place to apply pressure to grow now.

Understanding these 4 primary levers helps you prioritize. Let’s dive into each:

1. Get more $$$ from your current slice of pie

• Charge more money from existing customers (make sure to increase perceived value too).
• Sell more products to existing customers (upsell/cross-sell)
• For SaaS, increase revenue per customer by adding new features and tiers, increase the number of seats they use, or increase product usage.
• Reduce churn so revenue can grow over time. The SaaS Quick Ratio is a handy metric for determining whether your growth and churn are healthy.

2. Capture the same pie more efficiently

You’re always getting new customers, but you can do it better. You can generate more revenue with the same or less cost and effort.

There are really only two fundamental ways to do this:

• Increase conversion rates with better funnels (copy, landing pages, lead magnets, sales, etc).
• Lower acquisition costs with better creatives, targeting, lead quality, (and conversion rates ;0)

Note: Check our Growth Vault for 84+ tactics to increase conversions

3. Capture more of the same pie

You’re growing within the same market segment but can get MORE leads:

• Double down on what’s working, but always experiment with creative ideas.
• Watch out for diminishing returns (increasing acquisition costs), especially on ads, if you’ve been going after the same market for a while and keep increasing budgets. That’s especially true if it’s a niche market.
• If you’re steadily growing, don’t wait until you cap out before expanding the pie because it takes longer than you think.
• Set up a different growth engine (content or sales instead of ads)

Note: No matter how good you are, you will never get the whole pie, sorry!

4. Expand the pie (or test new pies entirely)

• Go after new markets/segments (industries, company sizes, geos, verticals).
  • If you’re very early stage, this is just trying to find product-market fit.
• Depending on the new segment, you can either use the same growth engine (ads) or you need to set up another one (i.e., outbound or content).
• Create new content, messaging, and funnels tailored to the new “pie”.
• Always run small tests before going all in. Make sure to prioritize your tests using the RICE/DRICE frameworks.
• Double down if you have similar or higher conversion rates with this new market or segment.

How to use it

Every few months, pick one of these to prioritize and go hard on it. What matters most will depend on your current circumstances (and likely stage). For example:

• A very early-stage company is either focusing hard on one market/segment or testing several to find product-market fit.
• A startup with PMF will likely want to improve conversion rates with well-optimized funnels, great onboarding, and strong retention.
• Then they'll want to focus on capturing more of the same pie by ramping up their current growth engine (ads) or setting up a second (outbound).
• Then they might want to get more from their current customers by charging more and upselling and cross-selling.
• Then, they might want to expand markets/segments as they reach saturation in their current ones.

To dive deeper into this concept, check out the rest of MKT1's great article.