- Growing by 10% every week is 10x faster than growing by 5% every week;
- Your first growth will come from hustling, but you can also grow by optimising your funnel;
- Put your numbers on the wall so your team 'owns the challenge'.
Can you grow by 5-10% each week?
To go from having an embryonic product to meaningful revenues, you need to relentlessly focus on building customer transactions. More transactions lets you test changes faster (e.g. A/B tests) and deliver results for your supply chain. Keeping the focus on improving the previous week's revenue is a habit that great teams will form. Continuous incremental growth is more realistic for some businesses than others. Some products lend themselves to weekly growth targets better than others. At one end of the scale are high frequency transactions that are more predictable (e.g. consumer mass market ecommerce), at the other end are lower frequency transactions that are more volatile (e.g. enterprise software where there is a seasonal buying pattern). Even in high frequency, low volatility environments growth doesn't just happen by itself. You need to work at it every single day. This is important, because the difference between 5% weekly growth and 10% weekly growth is huge:
- Imagine you start with 10 transactions a week, and see 5% a week incremental growth. After a year you'll have 120 transactions a week – no bad, 12x growth.
- However, 10% a week incremental growth sees 1,291 transactions a week after one year – that's 129x growth!
In the beginning, growth comes from hustling
Your first customers, your early adopters and your early growth will require you to do things that don't scale. With little revenue and limited funding, you need to be imaginative. "Can I get a press release out?", "Can I write a guest post on a blog?", "Can I do a partnership with someone?" This kind of thing is basically human effort and hard graft. You can't just turn on the taps when it comes to paid advertising because you'll burn through all your money. You want to spend just enough to keep learning. That's why you do unscalable things in the beginning. Maybe you go out on the street and give out flyers. You might not get much traffic, but it'll be enough to hit your 10% growth target for a few weeks. At some point as you grow that won't make sense any more, so you'll have to try something else.
Grow by optimising
Once a startup has its home page and a basic product (even if the call to action is simply a web form), it's effectively a small funnel – people are coming in, and they're completing a few steps. Monitor how many people are hitting the home page and how many of them are filling out that form. This funnel then gives a mechanism to turn to in order to achieve our 5-10% of growth. Some of that growth might come from driving more people to the site. But some it might be that people are coming to the homepage but not filling out the form. Spending some time fixing the form might give us the growth we need. That might be an A/B test. Or it might be doing some user tests with people, where you watch them fill out the form and see where they struggle. It’s a constant process. You're then constantly looking for ways to improve the service until the point where you feel like it all works.
A great product will grow faster
The better the product, the more sustainable the growth. Early growth is all about getting enough customers through the website or app in order to test and iterate on the product until you have a truly valued product. To define valued, Sean Ellis proposes his "must have" product question. He asks customers:
"How would you feel if you could no longer use [product]?"
The answer choices are:
- Very disappointed
- Somewhat disappointed
- Not disappointed (it isn’t really that useful)
- N/A – I no longer use [product]
If more than 40% the respondents answer "very disappointed", you then have a "must have" product.
This 40% benchmark was determined by comparing results across 100s startups. Those that were above 40% are generally able to sustainably scale the businesses; those significantly below 40% always seem to struggle.
A must have product means two things;
- customers will be loyal, so retention will be high
- customers will be easier (and cheaper) to acquire
Make the numbers visible
A great way to help form a growth focused team is to physically display the headline numbers every day. These days there are plenty of software solutions to track metrics, but sadly even the best software fails when it comes to improving team effectiveness. That's because looking at a computer screen is generally not a public process, and public processes create peer pressure. Simply getting the numbers on a wall and updating it on a daily basis creates awareness amongst all team members and prompts discussions such as, "yes! - we beat our previous all time high!", "we're not going to hit our target so what can we do differently?" or "we're doing well, let's keep it going". By making the data public and keeping it updated the team starts to work together to address the challenge. You might think that post-it notes, whiteboards etc are an extra layer of information processing that you don't need if you already track on a computer. Even if there is an extra cost or effort in maintaining real time analogue notices, the teamwork gains are worth the extra effort. It's counter-intuitive but like many counter-intuitive things it has a surprising effect.