As a CGO, CMO, VP of growth or product or an aspiring one, how do you enable long term sustainable growth for a scale up? Yara will share a handy framework, called the Growth Pyramid, to help you summarising and planning the crucial 5 steps that a start-up needs to go through to be able to execute against their growth objectives. What are the fundamental questions you need to ask yourself and your teams as a growth leader? Yara will also challenge the concept of Product Market Fit and dive into the different operational aspects of the delivery of growth from a people and tooling perspective.
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Grow Turing Fest 2023
The Growth Pyramid: Building Sustainable Long-term Growth
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My professor of cognitive psychology used to say that the world needs more great questions, not necessarily more answers. And this always inspired me to think about the most impactful questions that I, as a growth leader, should ask myself in order to build the best possible growth operating system around me.
So, today, what I will do is to share a question based model that I call the Growth Pyramid, that will help summarising and planning the crucial five steps that your start ups or growing company will need to go through in order to be able to execute against your long term sustainable growth objectives.
So, for example, do you know what are the fundamental questions that you need to ask yourself as a leader and to your teams? And do you know what are the core enablers that you need to put in place to empower your teams to answer those questions?
And then again, how does a successful growth team that operates across several levels of growth enablement might look like? I'm going to share some insights about these aspects. So, sustainable long term growth requires a growth strategy, and this usually comes in three components: acquisition, retention and monetisation.
And each one of these is built on a set of essential questions which are incontestably really hard to answer. So, things like how can we acquire more customers sustainably? That is a damn hard question, actually. Or how do we identify the best channel mix that is suited for our purpose?
And do we know how to optimise spend for greater return on investment and faster growth? Or, do we have the means and enough value created through our product to reengage our customers in the long term? And do we understand how to help our customers form a habit in using our products?
And then from another angle, how can I get a happy, retained customer to refer another? And last but not least, how can I monetize better my customers? The answers to these crucial questions and the delivery against these areas come through extensive growth enablement work that includes both tools and data on one side and people thinking frameworks on the other, so to support their best execution.
The growth pyramid here shows us basically how to operationalise the components of our growth strategy, and therefore is a good thinking framework to start building long term growth for your company. As a leader, you will need to facilitate the enablement across these five crucial steps so that your teams can deliver on your mission.
We start from the most basic ones at the bottom, and then we move up the pyramid with the more advanced ones, although these, of course, will overlap in time. But first, I'd like to challenge the product market fit concept. Traditionally, as a foundation for growth, we would want to build a strong product market fit for our products.
And the question we want to answer with product market fit is whether our product is creating value for our customers in our current market. However, I think that this is from enough to build solid foundation for our growth. And as a more sustainable foundation, we need unique product market fit.
We need, in fact, to change the question that we usually ask for our product, especially if you're going international and if there is lots of competition. And while product market fit is normally what we measure to see if our product is good enough, in a good enough market, Unique product market fit is about what unique value we build and how adaptively we position and distribute this value.
Basically, in order to make sure that our product gets both used and perceived as the best for a market that is made of well understood customers with well defined needs. One uncomfortable truth about unique product market fit is that this is not a binary concept, and I'm afraid that it's never done.
And that's why the end state for this level is an adaptive solid foundation for growth. The question you need to ask yourself at this level, as a leader, play on two levels. The first is the execution of your product growth strategy, and the second is the enablement of such execution.
So, if we go back to the question for this level, have you defined and validated your core unique product value proposition and its components? Have you worked on your brand positioning and thought how to define your comm strategy so that you can connect this unique product to your target customer needs?
April was all about this yesterday. How different is your core value offering from your competitors? What are you better at? And how does this vary in a different market? On the enablement side, this question translates into another one. Do you have a continuous and functional process in place to make sure that the market research you do, the customer feedback analysis and the related product development and sales pipeline work in synergy?
And does this process enable your teams to develop, validate and communicate your unique product market fit to your target audience? At Oda, where we became the number one online grocery retailer in Norway, our core product was defined as the sum of five elements that individually provided functional market fit, but together provided space for life uniquely.
Each dimension was linked actually to customer needs and untapped market opportunities that were derived by extensive market research and several data points. And then we developed a unique brand positioning that was meant to serve as an emotional umbrella that kept the uniqueness together.
The product value was then linked to clear marketing communications that resonated with our core target audience of families with kids. We won several best pricing awards, best customer service, and got fantastic NPS throughout the focused work on these dimensions. However, localising and adapting a unique product model for a very different market, where competition is higher and customer needs are perhaps very different, is a crucial and often breaking point.
And in fact, it is where the majority of failures happen, including for Oda. And especially if you have not managed to get the financial security to have enough time to validate Pivot and, as Geoffrey Moore would put it, cross the chasm. When we have, however, a strong foundation for unique product market fit, at least within certain groups, we can start investing more in marketing, namely the acquisition and reengagement channels.
And the desirable end state here is that we can enter a market, scale our marketing operation, and conquer greater market share sustainably. But to acquire sustainably, what we need to do is basically developing a way of ensuring good habits and profitable monetization for our customers.
So, are we acquiring our customers in the most efficient way? And are my customers using my product regularly and with increasing intensity? This, for a growth leader, translates into an enablement question once again. Do we have the right people in place to execute on sustainable acquisition and reengagement?
And are my teams empowered to do their job with the right tooling and data so that we can avoid waste and increase our return on investment? For example, at this level, some of our enablers would be things like an attribution model, incrementality testing, and root cause analysis.
Also, the creation of purposeful content and flexible SEO friendly landing pages, removing also the dependency on engineering to be able to create content at scale and rapidly. Second, we also need to implement the right CRM system so that we can manage life cycle communications and create habit loops that will help us increase our retention and our average revenue per customers.
At this level, we also need at least a draft of a growth model that tells us how our product grows, and a pricing structure to test against. This, of course, implies that we have clarified at the max all our growth metrics. All of this, of course, requires foundational data analysis capabilities and at least the groundwork of an experimentation platform.
Once we have developed a way of ensuring good retention and monetization, we need to worry about being more in control of our growth. And this very often means also reducing the dependencies on third party channels to grow exclusively from. And this is where product led growth opportunities and proprietary acquisition and retention channels play a part.
So, the question that you would ask yourself at this level are things like: Are we in control of our growth? Is it defensible enough? And do we have product led opportunities to explore? And then once again, how do I enable my teams to execute at this level?
When you as a leader think about which enablers you need to put in place to create proprietary defensive growth, a lot of stuff comes to mind. So, me pick some examples. For instance, growth oriented product features, tools to drive retention like price alerts for Skyscanner, or loyalty programmes for an e commerce, or tools to plan better with others to drive acquisition like shopping lists for an online grocery retailer.
Second, product led growth. How do we bake growth into our products so that our customers basically can self activate, self engage, and we therefore can convert that usage to a monetisation or extra business opportunity. And then third, brand as a key proprietary channel.
I talked about the importance of this already at level one, but that requires continuous work. This means also having the capability to track changes in our brand awareness via things like brand trackers, shares of voice measurement enablement, and things like that. Then, if we talk about proprietary channels, we should see conversion rate optimisation as an incremental growth proprietary channel.
And this requires growth leaders to work on AB testing and experimentation enablement across email, push, in product notification and throughout the entire user experience. Then, the last example, contextually relevant and personalised messages that are based on a good segmentation model will lead to better retention and monetisation.
And this relies also on the collection of proprietary first party data, which adds up to the defensibility of our own strategy. So, if we move forward, a unique, defensible and value based growth product with clear positioning attached is a highly desired prerequisite to facilitate the next level of compounding growth.
In fact, if you are not a product built on a viral or content loop, like Typeform, Zoom, or Instagram, you will want to figure out how to crack virality or how to build more compounding growth for your products. So, the next growth question that we want to think about here is around how can we grow faster than just linearly?
And if we focus specifically on the acquisition of customer problem, how can we get a customer to refer another? This level is basically about enabling micro and macro growth loop thinking and testing across your entire organisation. So, the end state here is that we can build, measure, and iterate on growth accelerators, so that we can increase our new users, the returning users, and their monetisation.
In simple terms, the enablers that you as a growth leader would need to put in place here are around the understanding of the experience of core value or the problem solving moments that your product creates, and then the identification of potential growth accelerators that can drive compounding growth opportunities for you.
This, of course, could happen in the form of getting your customer to generate more revenue, or getting them to take part into your growth model via virality or mechanics like user generated content. Some examples might be things like referral programmes of different types that get created and tested as tools for acquisition, or we could validate and add reasons to share or self serve the experience of value throughout your digital properties, these both on web and app.
And as a leader, you will need to build a pervasive compounding growth mindset across the teams that develop both product and proprietary channels. This often turns into the implication that you might invest in upskilling your UX people in growth loop thinking. And why?
So that they can support you first in embedding this thinking into the product design, and secondly, in a peer to peer upskilling programme. Last but not least of our questions: How can we grow outside our current product and market? This is an important question if we want to expand our growth opportunities and avoid to reach a ceiling.
We can think about this in several ways, amongst which geographical and core product expansion. And our desirable end stage here is that we want to identify and create new unique product market fits, so that we can remove the cap to our growth well before we reach saturation or inflection points.
This level, of course, might be initiated before in the process, so to accelerate growth, and we could include more markets and more products. And ultimately, we would just repeat the process all over again. I talked you through the five core levels that you need to enable as a growth leader to ensure long term sustainable growth for your product.
But this was, of course, just the top level overview of the core question that you need to ask yourself. This, of course, needs to be operationalised with the congruent, enabled organisation. So, to execute on the different steps of our growth parameters, what growth capabilities do we need to build teams for?
Here you can see the core areas around which a growth leader should build and enable their teams. Whether they belong to growth, product or marketing does not matter much. In fact, there are lots of growth responsibilities when it comes to execution of acquisition, retention and monetisation of customers.
So, for simplicity, I split them into three buckets. The first is what we call growth marketing, which includes all the technical and quantitative parts of user acquisition. The second is growth product, that is all areas of product that have great impact on our growth.
And the third is user and market research, growth insights, data and analytics capabilities. The last one should be enabled as embedded capabilities in whatever teams you will then chuck into bucket one and two. It is important to call out that the creation of brand value and the positioning serves as an encompassing defensive umbrella above all of these.
So, how do we structure our organisation to cover all these growth capabilities? When you're scaling up your work to execute against your growth strategy across all the levels of the parameters that I mentioned, we can visualise our core growth teams area, starting, for example, from local marketing teams and their related local growth operations.
The market teams here basically would deal with market specific local content creation and distribution and the localization of your growth strategy. So, things like PR or influencer marketing would fall in here. We then want to build global growth marketing capabilities where we deal with market agnostic, tech heavy, AI supported, automatable and scalable channels and content distribution solutions.
So, paid marketing, programmatic, technical, SEO, AI supported content creation would fall in here. Then, we need to have teams that work on growth funnel optimisation, R and D for proprietary acquisition and retention channels, and growth loops. I'd like to say that these three areas are actually external customer facing, while the fourth and fifth team areas are internal customer oriented and are meant to do core growth enablement work for growth marketing and smoother operations.
Okay, now the question we need to ask ourselves is: What does it mean in terms of overall mindset change? Typically, if this type of enablement work is not embedded since the start, and you need to create from scratch or even reshape your own growth operating system, the type of change that you need to make happen is around these three areas here.
First, you need to create a data driven organisation where we have reliable and relevant data, so that we can quickly make database decisions and then can automate lots of action for our customers. Second, we also want an experimental org that is able to rapidly experiment and validate hypotheses.
And last but not least, we want an organisation that is in control, meaning that it can optimise spend to acquire, retain and monetise customers across channels, funnels, loops and product led growth opportunities. So, this is a lot of enablement work to think about, and especially to get buy in for.
So, how do we even get started? So, the level of change enablement and the multiple areas execution that a growing growth organisation goes through are multiple and complex. So, perhaps we should simplify asking ourselves, how might all this look like on an eleven year old friendly road map that anybody could understand and relate to?
And in this sense, clarifying not only the what you're going to work on, but especially the why will get you a long way in getting buy in for the resources that you're going to need across the board. So, here you can see an example of a super simplified roadmap that as a growth leader, I used to create a shared, although basic understanding, and greater alignment on the jobs to be done.
This spans across the different levels of the growth parameters and includes the necessary growth enablement work to become capable of executing against our growth strategy. Of course, it comes to the actual growth teams and the definition of their missions, their KPIs and the contribution to our growth strategy, the level of detail will need to be much greater.
And as a leader, you can work with your future PMs define clearly the jobs to be done for internal and external customers. Then you can call out the relevant metrics that each team will own, the enablement tools and the frameworks to be implemented, as well as the hiring list of the talent that is going to get you there with your growth strategy.
This exercise, although undeniably tedious, can lead to greater direction of clarity and planning capabilities. And this somehow is good because it will lead to faster execution. A question that I get asked a lot is: How can we be sure that all this work will be linked to my growth strategy and especially to a growth impact that meets my company objectives.
And while it's difficult to guarantee results one hundred percent, as a leader your job is to control and minimise risk and then build for that impact. So, the answer sits on top of a growth metrics tree. You will want to make sure that you have mapped out and defined all your core growth metrics across your entire user journey, covering everything related to your growth strategy, starting from awareness, acquisition and then monetization.
Here you see an example of growth metrics for a B2C online retailer, but you can, of course, adapt this to any B2B scenario as well. My teams used to have clear accountability over a specific set of metrics, and the sum of the whole organisation ultimately needed to be able to deliver results against your entire growth strategy components.
So, how would this model play out in reality? I have picked an example of a team that was operating across the growth parameters levels and their framework, tooling and implementation. So, this was a retention team whose mission was to help customers build sustained habits within our products.
And always people come first. So, finding and hiring the right talent is of primary importance when it comes to enablement and execution of our growth targets. So, what I needed was a cross functional team with T shaped people that could help me to work across the growth pyramid levels.
The initial challenge that we were facing basically was that our in house tooling fulfilled mainly very basic transactional requirement, but was not built at all to be marketer friendly or experiment driven. We also had very tedious and long processes in sending out our comms and little to zero understanding of retention, let alone monetisation of our customers.
On top of this, we also had high reliance on external channels to control our growth. So, we had to define our desirable future state as having a third party life cycle engagement tool and a retention specialised team that would create and enable access to things like a segmentation model and self serve of custom segments and dynamic placeholders, then AB testing of complex multi communication flows, testing of new and proprietary channels, and then spotting new growth opportunities via data driven approach.
So, what we've done was to develop a vision and a strategy across three core areas that played a role into the bigger holistic growth strategy. In this case, we wanted to improve engagement, retention, and resurrection specifically. This meant also improving monetization of our customers while making our acquisition efforts more sustainable.
So, we created a clear roadmap that operationalized the strategy and then created clear expectations across the board, as well as, of course, greater and much needed alignment across the organisation. This kept us on track on the delivery of a very big change in our growth capabilities and the efficiency of our ways of working.
So, what we did was data driven and experimental work across engagement channels and communications, retention oriented features, and product led opportunities that you see listed here. These vary from referrals, loyalty programmes, to personalised grocery newsletters, and come back coupons activities. So, we worked on enablement as well as the execution of our growth parameter levels.
And when we talk about level two, we implemented lifecycle engagement toolings and then defined our AAR frameworks and metrics. The outcomes here were continuous rapid optimisation and experimentation of lifecycle comms, driven by local insights and then quality content from the country that was coordinating with the central team.
At level three, we implemented product features, self serve opportunities, and communication flows that created habit loops, which then drove our retention rate up. Things like loyalty programmes, for instance. At the level four, we enabled a single customer view across products, commercial, and growth, and of course across the entire lifecycle of the customer.
This was important because it allowed all teams to work to create compounding growth loops, aiming for example at an entire personalized shopping experience with unique product recommendations, intelligent card reminders, and leaderboard with friends and referral schemes. So, all this, of course, led to a tangible growth impact in terms of revenue and efficiency.
We tripled, for example, our throughput of experiments and increased our retention rates. We automated the entire comms flow, enabling self serve on the market side, and then we measured tangible impact on our top line for every set of successful experiments that we run.
And on top of this, we increased, of course, the learnings from failed experiments, which were a fair amount, in terms of redefining the core unique value that we were distributing to our customers. To conclude, I shared the growth pyramid model and the five steps that you need to enable as a growth leader, so to ensure long term sustainable growth for your company.
I also shared some of the enablers that you think about for each level, and then matched the different steps with the organisational change that you need to make happen from a mindset perspective, operational, structural, and problem area. I concluded just now with an example of one of the many growth themes that I created and that we implemented in our structure with the specific purpose of increasing retention and monetization.
And as you've seen, this presentation was mainly about questions. Now, I hope that you can go away and adapt some of these to your business reality and perhaps turn some of them into long term sustainable growth opportunities for your business. Thank you very much for questioning.