3.1 — Growth tools and business considerations
Recap
We’ve covered unit economics, partnerships (paid, strategic and unpaid), product integrations and total addressable markets in our first and second articles. Now we’ll focus on how to execute and drive incremental gains, by discussing different growth tools to set up and scale channels, as well as business considerations that are important to incorporate whilst scaling.
Overview
There is a variety of software in the market that allows teams to manage and automate growth processes effectively, whilst also collecting data which you can glean insights from. It’s important to structure these properly in order to analyse each stage of the funnel in isolation and to facilitate incremental process improvements and gains to drive strong unit economics. We’ll focus on the principles throughout the article, and have included a sample list of vendors for those who are interested in finding out more about the tools.
We’ll also explore how growth can impact on other areas of the business and why it is important to collaborate across teams, notably with the legal, IT, risk, finance teams.
Definitions
A/B tests: measuring the effectiveness of different content, sales approaches, customer touch points, ads, carried out on different cohorts in order to identify incremental gains on key metrics. Tests may show that something new that you’re experimenting with performs poorly, which is why it is important to incorporate testing as much as possible so that you optimise towards what works.
- Example: teams conduct an A/B test with a generic landing page against a new customised landing page that features a partner’s logo and a tailored message, confirming the offer provided to the partner’s customers. This partner generates 1000 page visits per week and they’re looking at the impact of the old generic page against the new custom page on the conversion metric.
- Potential impact: the generic landing page has a conversion rate of 10%, providing you with 100 new customers. The custom landing page has a conversion rate of 12%, providing them with 20 new customers per week. The 2% increase in conversion on the landing page results in a 20% increase in sign ups from that partner.
ARPU: average revenue per user — this is the amount of revenue you generate divided by the number of users you have. It is a particularly useful figure when understanding which channels drive the highest revenue generating users.
Business considerations: although growth is primarily carried out by business development and marketing teams, it should be guided and informed by other parts of the business (legal, IT, risk and finance).
Clickthrough rate (CTR): the percentage of those who read your email (opens) or who are shown your ad (impressions) that click on your call-to-action (CTA) to visit your site.
- Example: 5000 open your email and 75 click the CTA to visit your site, giving you a clickthrough rate of 1.5%.
- Suggested test: the positioning of the CTA and content around it could be modified to optimise the CTR.
Content Management System (CMS): software such as Joomla or Wordpress that allow you to create and store digital content such as websites and blogs. Such systems might also offer plugins to help optimise content for SEO purposes.
Conversion (via website): the percentage of website visitors that go on to sign up.
- Example: a partner’s affiliate link generates 1000 visitors per week to your website, of which 150 begin signing up for an account.
- Suggested test: customise the landing page that your partner’s referrals are directed to, by including their logo and consistent messaging with what is on the partner’s site to measure how that affects the conversion rate.
Cost per click (CPC): this is calculated by dividing the total spend on a particular ad or marketing campaign, by the number of clicks to your website generated.
- Example: if a marketing campaign cost £1000 and generated 100 clicks, the CPC is £10.
- Suggested test: still images could be replaced by videos or graphics, and messaging could be tailored for custom audiences to identify what performs best.
Customer Relationship Management system (CRM): software such as Salesforce that allows businesses to manage relationships with their customers, organise data and information efficiently and to track and optimise conversion processes. CRM systems might also have CMS facilities, they may provide an array of off-the-shelf tools for A/B tests or offer much deeper integration opportunities through their APIs.
Employee productivity: from a growth perspective, we’re referring to the number of interactions employees can have with clients, either inbound (calls answered, emails replied to, tickets resolved) or outbound (emails sent, calls made, demos completed).
- Example: a sales development representative (SDR) using a mobile phone won’t be able to measure how many calls they make unless they manually track this. Let’s assume incrementally it takes 15 seconds longer to manually log a call and 100 calls are made each day. The SDR loses 25 minutes per day, 2 hours per week and 13 days per year.
- Potential impact: by integrating voice calls and emails within a CRM software such as HubSpot, managers are able to view real-time dashboards of how many calls and emails each employee is making to measure them more effectively. In addition to this, employees can leave notes about their interactions with clients and partners within the software.
Growth tools: these allow businesses to set up scalable processes, by automating workflows and organising data efficiently. We’ve found them particularly beneficial to driving incremental gains.
- Example: HubSpot allows you to set up sequencing, which automatically sends a follow up email at any given time. This saves team members from needing to manually find an email, type an email and send it.
- Potential impact: Let’s assume a business development representative sends 60 follow-up emails per day and by using sequencing they incrementally save one minute per email. Through automating the sequencing, you’ve saved them one hour per day, five hours per week and 260 hours per year (32.5 working days).
Multivariate tests: while an A/B test measures the difference of one variable (e.g. subject line), multivariate tests measure the difference of a combination of elements (e.g. headers, CTA buttons, images) and what incremental differences they drive to identify the best combination.
Open rate: the percentage of email recipients that open your email.
- Example: an email is delivered to 2000 recipients but is only opened by 50 people, giving you an open rate of 2.5%.
- Suggested test: the subject line of the email could be changed to be more engaging (perhaps by inputting the recipient’s first name, a quantifiable insight or an emoji) to increase the open rate.
Search Engine Optimisation (SEO): SEO refers to generating more and better quality traffic from organic search engines such as Google, through website optimisation.
Traffic sources: website traffic comes from a variety of sources, allowing you to understand the split between traffic generated from digital marketing, partners, search engines or organic. Knowing your channel split is useful when focusing on inbound leads and dialing up campaign spend.
- Example: you note that two partners with a similar profile send you 500 visitors per day each, however, one partner’s traffic reduces to 300 per day. Upon investigation you see that this partner has now listed your competitor ahead of you on a price comparison site.
- Impact: by monitoring your source traffic, you’re able to identify a leading indicator that sign ups will fall as a result of reduced traffic, and pinpoint precisely where that drop has come from.
Funnel breakdown
Breaking down your funnel will allow you to identify what types of A/B tests you can run at each stage, in order to drive incremental growth.
Prior to using a new piece of software, you should identify the following:
- What stage of the funnel and corresponding metric will this tool help drive?
- What A/B tests and experiments can you use to measure the tool’s impact?
- Will there be any crossover or process impact on other software you use?
- Are there any industry benchmarks for the metric that you’re trying to drive? (Mailchimp provides a fantastic breakdown of email marketing benchmarks).
Some pieces of software might facilitate A/B tests at multiple phases e.g. Google Optimize which integrates with Google Ads and also allows you to conduct A/B tests and multivariate tests on your pages.
Growth strategies need to be supported by a strong retention strategy, so that your hard work is not lost to churn. Gathering feedback from existing customers and partners before embarking on a huge growth campaign is useful so that the product team can fix any key issues that are impacting monetisation, activity or retention rates.
Consider the following questions — what types of experiments could you run based upon the responses to build upon your strengths, and turn your weaknesses into opportunities?
Monetisation:
- What profile of customer monetise the quickest?
- What profile of customer monetises the least or not at all?
- Which channels drive customers with the highest ARPU?
Activity:
- What are the top three reasons users use your product?
- What are the top three reasons users aren’t using your product?
- What tests are being run to drive activity?
Retention:
- What does your retention strategy look like to a user?
- What types of customer journeys and behaviours are associated with customers that churn?
- At what frequency (e.g. 15/30/90/180 days) are tests being run to prevent churn?
3.2 — What tracking and technical considerations should you take into account?
Overall data tracking
Collecting and organising data efficiently allows you to deep dive into each of your channels and identify incremental gains or losses in isolation. Having a tool such as Google Analytics, which brings together all of your data sources, allows you to monitor data at a high level. For example, when well organised Google Analytics allows you to:
- Monitor the source of website traffic
- Measure conversion by channel (business development, marketing, sales) and campaign (product announcement, flash sale, partner launch)
- Understand customer behaviour by channel/source (organic, ads, referrals)
Definition: Google Analytics is a set of tools that allow you to aggregate and analyse data derived from websites, apps and products. Google Analytics allows you to break up data via source (e.g. Facebook ads, organic searches, affiliate partners), and collates data in an organised manner so that you’re able to visualise key metrics such as: impressions, cost per click/view/lead and sign ups.
Aggregate vs. individualised tracking
In a perfect world, you’d be able to identify and pinpoint each user’s journey individually. However, the reality is that some channels such as Google Analytics provide more aggregated data, which is great for identifying overall trends. It is only when you begin to track your customers on your internal system that you can identify each customer’s unique journey and begin to dig even deeper.
- Example: when a user begins signing up, you take their email address and are likely to create a unique identifier for that customer with your database. This allows you to measure each of their touch points on your application or website.
Products such as Amplitude facilitate data collection and tracking at an individual level, particularly on the product side.
Definition: Amplitude helps its clients gather product intelligence and data (e.g. feature adoption and usage) so that they’re able to better understand and respond to their users’ behaviour (via A/B tests and experiments). This can be particularly useful when conducting tests on:
- Identifying friction points — where in the onboarding process did your customers get stuck?
- Referral campaigns — what type of customer journey leads to increased conversion?
- Beta testing — what tests can you do to drive up incremental engagement prior to launch?
- Product launches — what type of in-app nudges leads to more active users?
Industry tips and examples
Pedro Pinto (Head of Growth at Neat) provided us with some insight into the importance of overarching tracking through Google Analytics (for websites and marketing) and product tracking through Amplitude (for individual users and cohorts):
Why do you think Google Analytics is crucial for growth teams?
Google Analytics is a mandatory tool for any online marketer. In order to be a good marketer, you have to know:
- Where is your traffic coming from?
- Has the site been optimized for search engines?
- Can you track how your digital ads and social media campaigns perform?
- What content works best?
- Have you got a full overview of your sales funnel?
- How can you take control over it?
- What are people doing on your website?
A marketer who doesn’t master the trade of analytics is leading the ship blindfolded.
Example: Google Analytics is critical to understand the traffic behaviour of users. From analysing the ratio of mobile to desktop traffic, the sources of the traffic and which pages have the best conversion rate, to analysing the funnel to discover where traffic may be dropping out, and the cause. Perhaps even more importantly, attribution reports help understand which channels to allocate budget to and the expected return.
How has Amplitude helped you to drive data driven growth?
Product analytics are one of the most important tool sets for growth professionals, they provide deep insights into:
- How users get value from a product
- What behaviours indicate churning or retention
This is key to finding the ‘aha moment’ for your users, we have all heard of Facebook’s “7 friends in 10 days” — all products have one, which acts as a leading indicator for engagement or retention.
At Huddle we deployed Amplitude to help us address a poor adoption rate. By analysing user behaviour and A/B testing several experiments across multiple cohorts we were able to identify the features that lead to greater adoption and to virality. This allowed us to adapt our onboarding to deliver value to the user much earlier in their journey.
Impact: The result was an increase in user activity by more than 40% in the user’s first 90 days and an improvement in NPS by 13 points.
N.B. Google provides a range of free courses through the Analytics Academy, which are useful if you’d like to learn more.
3.3 — When scaling quickly, what are the key considerations?
Choosing the right tools should be a combination of where you are now, and where you plan to be when it comes to customer growth. Tools are like infrastructure — it is hard to upgrade a road once it’s already built without disrupting traffic.
When you upgrade a road, you might cause additional traffic to travel down other roads — this is the same when you choose to use different pieces of software as you might inadvertently create extra work for your colleagues. That said, it can be difficult to account for all eventualities so when you are choosing your preferred platforms, try to give yourself as much flexibility as possible for future integrations and APIs.
Decisions on which tools to invest in should include some type of scenario analysis to ensure that they’ll still be suitable as you grow, particularly because pricing can change depending on the amount of team members, the number of customers or features that you plan to use.
Scale considerations
Map out your growth roadmap and understand what functions are needed from tools across a 12–24 month period. Ask yourself:
- How many team members do you plan to have?
- How many customers do you think you will attract based upon the next products you’re going to release?
- Will changes in team members or customers affect the product’s pricing?
- How many customers will you be able to attract through growth channels?
- What is the forecast amount of customers referred by each partner?
- How much digital marketing will you have this year compared to last?
- Have you changed the way you’re incentivising your affiliates?
- Are you launching into any new markets?
- Does the tool you’re considering support that market? E.g. Does Impact support automated affiliate payouts in new regions you’re exploring?
Off-the-shelf vs. custom products
Will an off-the-shelf solution provide the team with the tools they need?
- Example: will members of the marketing team be able to use a CMS or CRM system’s marketing suite to create emails, or use drag and drop features to create landing pages without requiring CSS or HTML skills? Will they constantly need to refer back to colleagues with technical skills?
- Solution: map out workflows based upon what tasks the team needs to carry out, and make sure that these are questions that you pose to a software provider during demos and that you test during free trials.
Data synchronisation
Will the software provide me with the data I need?
- Example: is there a pre-built integration between the CRM (e.g. Salesforce or HubSpot) and your data management platform, indirectly through a provider such as Zapier, or will you need to build this via an API?
- Solution: map out user stories, find out from engineers or the data team how long this would take.
Will any additional engineering or product work need to take place?
- Example: in order to build customised landing pages, how much of your colleagues’ time will need to be dedicated to ensuring that the landing pages’ brand aligns with your brand and allowing the software to connect to your website’s DNS.
Over reliance on a provider
Many of the large players such as HubSpot offer content management systems and hosting facilities for websites, cookie management and other off-the-shelf solutions. Whilst this is a fantastic way to empower growth teams to scale quickly through self-service tools, there are some disadvantages to having these features accessible via a third party:
- Branding: Any changes to branding on the main website may need to be updated manually via the HubSpot interface using CSS and HTML.
- Data flows: data collected by a piece of software needs to be sent to your business intelligence software (e.g. Metabase or Holistics), unless you choose to rely solely on the software for reporting. If this requires an API integration, then ensure that the required stakeholders are brought onboard as early as possible.
3.4 — What other business considerations relate to tools?
Risk
Understanding who your partners are and what processes you have in place to collect such information is important, particularly for regulated firms. Businesses should factor in what level of data they need to collect, as part of their vendor onboarding and due diligence processes:
- Example: a financial institution may choose to collect data on ownership structures of its vendors and partners, in order to identify whether any operate in higher risk jurisdictions. They might also choose to run adverse media checks against the firm and notable stakeholders.
- Case study: the Perth Mint may have inadvertently purchased ‘conflict gold’, leading to an audit on whether the process they undertake to conduct due diligence on suppliers aligns with the LBMA’s responsible sourcing policy.
Information Technology
Data security and management has received increased attention in the past few years due to high profile cyber attacks and denial-of-service attacks. It’s important to build out a data governance framework for your growth team to access third party software that the IT team is comfortable with. The International Organization for Standardization (ISO) provides a framework and suggested best practices for managing information risks — identify and understand best practice guidelines for your industry.
- Example: Google uses the OAuth 2.0 authorisation framework for sign in, so that you can give permission to third parties such as a chrome extension to access data in a controlled and scalable manner.
- Impact: IT teams can limit what types of data are shared with third party providers, and block particular extensions from being used by anyone within the organisation (e.g. if they identify a provider has been the victim of a cyber attack).
Legal
General Data Protection Regulation (GDPR) and how personal data is managed should be key considerations when choosing new vendors and working with third parties — the processes that businesses follow store personal details are particularly important, especially since the introduction of GDPR. Legal contracts should always be thoroughly reviewed so that indemnities, fair use policies and GDPR standpoints are understood prior to signing. Be sure to understand any costs or terms associated with contract terminations before deciding whether to take up a month by month contract (if available) or a 12 month contract (sometimes paid up-front with a discount).
- Example: British Airways received a fine for a GDPR breach where personal and card details were compromised.
- Impact: the Information Commissioner’s Office (ICO) fined British Airways £183.39 million for the breach. Firms can be fined up to 4% of their total global revenue for GDPR breaches.
Financial
Automated payouts save the finance team time, but mistakes can still be made which is why it’s crucial to explore what type of safeguards can be put in place. Payment approvals, thresholds and read-only access for certain team members can all help to prevent costly accidents.
- Example: when paying affiliates out on cost per click or cost per lead metrics, incorrect payment terms can be catastrophic. Check, double check and triple check these terms, use templated agreements wherever possible to avoid human error and set up approval flows for new agreements.
- Impact: intending to pay £10 per lead but accidentally adding an extra zero will lead you to pay £100 per lead, representing a huge cost blowout particularly if those leads don’t monetise. Even if you are in a position to recuperate accidental mis-payments from partners, the relationship and reputational damage will have a longer-term economic effect.
3.5 — What are the key learnings of growth tools and business considerations?
Incremental growth can have a huge impact, both in terms of driving conversion but also employee productivity. Unit economics can be positively impacted by relatively small incremental gains and improvements in your sales funnel.
Tools checklist
When considering purchasing a new tool or software, make sure you consider:
- Problem: what pain point(s) will this tool solve?
- Impact: what is the predicted quantifiable impact per metric?
- Synchronisation: how does this tool work with other tools? Is any type of migration required?
Considerations checklist
- Risk: have I provided the risk team with information about who this company is, what they do and who owns them?
- IT/data: what level of access will this company have to our IT systems and database?
- Legal: are the legal team comfortable with the new processes I am proposing and the contract that I am signing?
- Financial: how will we be billed? What payment controls are in place to prevent overpayments?
3.6 — Wrap up of the series
Paid partnerships and unit economics
- User behaviour: companies striving to optimise their CAC to LTV ratio should focus on aligning their paid acquisition channel commission models with customer behaviours that drive activation.
- Key metrics: firms that are focused on hyper growth or a particular stage of the funnel should clearly define what their funnel looks like and understand the drivers before optimising accordingly.
Value led/strategic partnerships and increasing total addressable markets
- Value-led: stay focused on solving problems for partners and their customer base, in order to drive strong active rates amongst their users and minimise your acquisition cost. Keeping partners focussed on driving new business is possible without financial incentives provided that the partnership is mutually beneficial.
- Feedback: listen to feedback from partners and their clients, to understand what pain points you could solve through product development or integrations so you can expand your total addressable market.
Tools and considerations
- Incremental gains: identify tests that you can carry out on each metric to identify incremental growth opportunities — small improvements at the top of the funnel can have a strong impact on unit economics.
- Business considerations: consider how your growth plans and tools could affect other parts of the business — make sure that you’ve consulted with other teams, particularly if you’re operating in a highly regulated industry.
Appendix — vendor list
We’ve grouped tools into different categories based upon what they’re useful for. It is important to note that many of the tools listed below will have functionality beyond the definitions or examples provided. We have decided to convey only the use cases relevant to growth and driving unit economics.
Prospecting, digital marketing and outreach
Definition: a platform that analyses website traffic — specifically in a B2B context.
Example: you can use this to understand the website traffic on prospective affiliate or partner sites, to establish their audience size and the size of the opportunity.
Key metrics: impressions and reach. Set specific goals for your affiliate programme audience. With a minimum monthly visits threshold you will avoid wasting time and you can also set a top-end cut off if you think larger brands are unlikely to engage with a startup. MoneySuperMarket receives nearly 7 million visits per month, with an average visit duration of nearly 30 minutes — these thresholds will vary per industry.
Definition: a tool designed specifically for marketing outreach, to consolidate channels, audiences and data. It also comes with a range of integrations and a CRM system.
Example: generating marketing campaigns across different channels: email, digital ads, landing pages, using entirely bespoke and brand-specific templates.
Key metrics: open rates and click-through-rates. Understand engagement metrics for your industry here before committing to this tool. The automated campaigns will also increase efficiency and still allow personalised messaging.
Definition: affiliate partner prospecting, outreach and affiliate management tool.
Example: through key-words and granular metadata fields, Mediarails will crawl the web to create a list of websites specific to your industry. From here, you will qualify the list and add relevant prospects to tailored sequenced emails. Being fully integrated with Impact (below), you can also engage automated affiliate management e.g. congratulatory email after the first referred acquisition or a personalised nudge when performance has been poor.
Key metrics: number of affiliate prospects engaged. If you are running a high volume affiliate channel then this tool allows a small team to effectively manage existing affiliates and continue to add prospects to the pipeline. The value of this tool is massively increased when used in conjunction with Impact.
- Lead generation: Mediarails populates entire lists into an organised format in seconds, whereas it would take a team member seconds or minutes per website.
- Sequencing: automated outreach and follow up will save your team significant amounts of time, as per the example in section one — a business development representative sends 60 emails per day and by using sequencing they incrementally save one minute per email — you’ve saved them one hour per day, five hours per week and 260 hours per year (32.5 working days).
Definition: integrated CRM allowing automated email campaigns and landing page creation.
Example: personalised email campaigns are set up and the sequencing settings are intuitive and very granular. HubSpot also provides full oversight of all prospective partners, which is more applicable to strategic partners or influencers than high volume affiliate programmes as there are with limitations on outreach. Once partners are engaged and the agreement has been formalised, landing pages can be created to improve the user journey — this is very easy to do with HubSpot.
Key metrics: open rates, click-through-rates, landing page conversions, sequencing. Reduced resource costs through the high level of automation throughout. A good choice also for future-proofing as HubSpot have worked hard to deliver a raft of valuable API integrations directly and even more via Zapier.
Definition: a collaborative live webinar hosting platform.
Example: Livestorm facilitates automated webinars and reminder emails, allowing you to pre-record a video or demo and play it automatically at every session or on demand, in order to engage and sell to partners and clients. This allows your team to spend one hour recording a webinar instead of conducting them live ten times a week. Integrations mean that your team won’t need to manually transfer leads onto separate platforms. It also offers functionality of live chat for Q&A and added engagement with your audience.
Key metrics: number of webinars held, attendee to sign up conversion, number of sign ups from webinar channel.
Definition: a data extraction plugin that can be useful for extracting large quantities of data into excel or csv files.
Example: If you deploy this tool on a website that reviews the top 500 bloggers on a specific topic that is relevant to your business, then you can select individual fields of data to export into a single document.
Potential impact: manually gathering the data at a rate of one website per minute means that it will take 500 minutes to scrape all of the data. Using a scraper will take only the initial set up time (15–30 minutes), leaving your team members with an additional 450 minutes assuming the accuracy of the data is high (if it isn’t, they may need to go back and spend some time cross-checking).
Definition: A database of softwares including reviews and descriptions. A fantastic platform to find new software or product integration opportunities.
Example: As we discussed in the second article, co-creation and product partnerships can significantly increase your organisation’s total addressable market and Capterra is a perfect place to find potential product partners.
Potential impact: time saved through efficient prospecting. Accurate and trusted source of information.
Website visitors — engaging with leads
Definition: a business messenger allowing visitors to engage directly with your organisation via employee or bot, with a strong focus on customer experience.
Example: increase the conversion of website traffic through qualification and quick introductions to sales teams.
Potential impact: website received 10,000 visitors per day with a conversion rate of 5% equating to 500 new sign ups. Intercom was introduced which increased the conversion rate to 7%, an incremental gain of 200 sign ups — a whopping 40% increase.
Definition: a conversational marketing platform that allows businesses to create a pipeline and build up revenue.
Example: increase the conversion of website traffic through qualification and quick introductions to sales teams.
Potential impact: same as Intercom.
Definition: a tool that allows you to manage canned responses for teams across multiple different channels.
Example: sales teams using Intercom or Drift might be faced with the same objections from multiple different inbound customers. Given that these can be pre-empted, having canned responses on hand saves the agents time.
Potential impact: incremental time savings each time a team member needs to respond to a FAQ or objection.
Partner retention, engagement and payouts
Definition: partnership management platform from performance analysis, communication and payments.
Example: Impact allows you to formalise partnerships with tailored contracts, communicate with all or specific partners through bespoke emails and automatically pay partners based on performance.
Potential impact: as your programme grows, tracking performance and manually paying affiliates will become next to impossible. Impact provides accurate data and they have positioned themselves as a trusted source and well-respected platform that saves their clients time and money.
Definition: partnership management programme.
Example: large partner marketplace to assist organisations identify relevant partners or affiliates. Tracking, performance analysis and payouts are all automated by Circlewise.
Potential impact: with so much automation, you can spend more time on running your business or building deeper strategic partnerships while this affiliate marketing machine works in the background.
Definition: growth service specialising in building and leveraging a network of partners and communities to drive commercial metrics.
Example: a more consultative solution to partnership management and development. Partnerise can help to build the strategy as well as execute.
Quantified impact: third party growth partnerships service allowing you to spend time elsewhere and save on resource costs incurred by in-house development.
