The fundamentals of Data-Driven Growth
Before taking any action towards growth companies must have achieved a certain product/market fit.
Marc Andreessen, the founder of Andreessen Horowitz, stated that a business went through two stages: before product-market fit and after. This is very true and getting to product-market fit as a business is critical to the long-term growth potential of that business. Without reaching this milestone, a company has no chance of any long-term success and should not start to take any action towards achieving growth.
Growth is a step by step process and every fundament of data driven growth will be explained in the next modules and lessons. In chronological order the fundamentals are:
- Customer Centricity is the ability of people in an organization to understand customers’ situations, perceptions, and expectations. Customer centricity demands that the customer is the focal point of all decisions related to delivering products, services and experiences to create customer satisfaction, loyalty and advocacy.
- Product Market Fit has to be achieved before transitioning to growth. Marc Andreessen defined product-market fit as “being in a good market with a product that can satisfy that market.” The key to successful product-market fit is adding value for your customer so they become a long-term customer of the business, as retention is a primary driver of your business growth potential.If you haven’t determined a product is valuable, why would you waste time and money trying to grow it? Product Market Fit will be explained in detail in the next lesson
- Once we identified who our customers, what their needs, pains, gains and jobs to be done are and we have Product/Market Fit, then it is the right time to talk about Growth. The first step is The Growth Funnel, also know as, the Pirate Funnel, named by Dave MCLure.* The Growth Funnel are the steps from Awareness, Activation, Retention, Revenue, Referral. The Growth Funnel is the process that describes the stages of the customer. In every company some stages of this funnel are more developed and the presence is stonger than in other stages. The key to growth is to have an end-to-end measurement and know where the weak spots are and where to put the focus on at any given moment.
- After having completed the Growth Funnel Analysis, the first step is to create and outline a Growth Model which includes the North Star Metric of the company.
- When the direction of the company is set and underlying metrics and KPI’s including baseline, targets and experiment hypotheses have ben set, the next fundamental item is to implement the Growth Process. This process is vital to achieving long-term and scalable growth. The phases of the growth process are:
- Ideation – Brainstorm experiments
- Design the experiments
- Rank the experiments
- Execute the experiments
- Analyze the outcome
- The Growth Culture involves everything from: Composing a Growth team, Adopting to the Growth Mindset, Oranizing a Growth Meeting and Reporting on Growth Metrics and Objectives.
Ready? Let’s get started!
*(Dave MCLure is The founding partner of 500 Startups, McClure has built a global network of startup programs and a seed fund that’s backed more than 1,800 companies across 60 nations, including unicorn Credit Karma and up-and-comers such as Udemy, TalkDesk and Intercom.)