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When and how should startups outsource growth?

Matt Dean

Head of Growth

The success or failure of a young startup can really depend on where you choose to use your energy. Be too inflexible to pick up tasks that need doing, and you risk missing the opportunity in front of you. But equally, spread yourself too thin tackling challenges outside your natural strength and you’re simply not using your limited time where it will have most impact.

That’s why you might turn to outsourcing, especially in specialist areas like growth.

However, getting your timing right for this challenge is just as important. If you pull the trigger too early, you’re sending users towards a product that will disappoint them (and you don’t get a second chance at a first impression.)

Not too soon

So the first lesson is: early-stage startups really shouldn’t rush to outsource. In this case, “early” means businesses pre-product/ market fit.

When you’re at this stage, your primary focus should be on building a product that actually works for your customers. You need to be retaining your users/ customers before you think about outsourcing growth.

Focusing on acquiring new customers when you’re not retaining the ones you have doesn’t lead to scalable growth.

So only think about outsourcing once you’ve found product/ market fit. You’ve got a product that your customers love, your retention metrics are looking strong and you’ve maybe already found 1-2 channels that are driving most of the traction.

(Incidentally, wondering how to know if you’ve got product/market fit? I’ll leave it to the inventor of Growth Marketing, Sean Ellis to explain

So you’ve reached product/market fit, now it’s time to double down on those channels and outsource the work to an expert to scale those channels effectively.

So how do you decide whether to outsource or hire for this responsibility?

Here’s a walkthrough of the main considerations.

The benefits: Reduce cost and gain focus

This is the obvious one.

When you’re a small company, every employee can add a huge overhead. There’s the cost to hire, train, retain and support that talent. Meanwhile, at an agency, that’s what they do all day, every day, to ensure they have a team of experienced channel managers.

It also answers the question of how you continue to ship time-intensive and necessary tasks, while still being able to focus on the key strategic decisions of running your business.

For example, you might have a need to scale up something like email marketing to bring new users in, but you as a founder have never set up an email campaign in your life and could be adding more value by focusing on intelligent product decisions that maximise the impact on the users it brings in. Outsourcing gives you the time to focus on areas where you’ll have the greatest impact.

Flexibility against channel risk

Let’s say you saw strong results with PPC ads early on, and so you bring in an agency to scale up your efforts. Things progress well for a while, but you hit a lower than expected search ceiling and you start to see the efficiency drop off, and no change in budget or keyword lists is bringing it back where you need it.

The decision to move budget away from PPC to another channel is far quicker and easier than having to work out how to reallocate that (often specialist) employee. And the time to find, say, an SEO agency instead is quicker than replacing an internal hire with another.

However, this doesn’t always run smoothly.

Risk of outsourcing wrong

It’s important to look for an outsourced partner that has relevant experience with businesses that operate similarly to yours. That means both in terms of size and business model.

An agency may have a stellar track record with ecommerce businesses, but that doesn’t always translate into the same performance for a service-based business that has a 2 month long consideration period.

This can be compounded if...

...Their goals aren’t your goals

I know this is an obvious one, but it really can’t be overstated. A freelancer or an agency’s goals don’t completely match yours. The path to success for them is not the same as you.

They will only do what you ask them to, so you need to make sure you are being clear and specific about actions that use their time sensibly against exactly what you need most. You can’t rely on them to self-optimise.

They’re focusing on acquisition, not growth

It’s important to realise that in all likelihood you’re going to be outsourcing the management of a single acquisition channel here and growth encompasses a lot more than just acquisition.

They won’t be asking “how can this one cohort of new users generate another cohort through referrals, invites or reviews?” They’ll be looking at the channel they’ve been tasked to manage and (in most cases) will optimise it in isolation.

An agency will acquire customers for you, but the question of how to retain and maximise revenue from those customers will still land firmly on your side of the court.

Remember, outsourcing still requires management. But in doing so, it only reflects the natural journey of becoming more hands off as a founder and a team.

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