Developing your product growth strategy
TL; DR: An example-based approach to marketing-driven product growth beginning from understanding the customer journey, identifying the north star metric, deriving key performance indexes, and finally strategizing.
Discussion on growth roadmaps tends to venture into conversations about all sorts of (vanity) metrics, over-ambitious goals, and intangible work items leaving the meeting room clueless about the action items moving forward. After testifying such meetings myself, I realize it is exceptionally important to have a structured approach to form a solid growth strategy and follow it through. Let’s dive into it with the help of an example.
Problem Statement: We have just launched a food delivery app in a city with a certain number of restaurants, without the monetization. Early adopters have given positive feedback and are regularly placing orders using the app. This has helped the app to persevere. How do we grow from here?
Step 1: Comprehending the Customer Journey
To begin with, a customer journey, in simple terms, is customers’ progression through each phase of the growth funnel. AARRR Framework helps to define the funnel for your business while Harvard Business Review’s resources come handy to understand a customer journey. Any customer journey is subjective to the product and the business.
In our specific case, we’re not focusing on the button-level detail here. Instead, we’re trying to provide a goal-oriented customer journey, excluding the monetization aspect.
Step 2: Identifying the Growth Metric
Growth metric, also known as the “North Star” metric, is a subjective one. Like the customer journey, this differs by product and business. Identifying the north star takes digging into data and truly understanding the value the user gets from your product. For instance, it could be Daily Active Users (DAU), Net Promoter Score (NPS) for engagement products while for subscription models it could be Monthly Recurring Revenue (MRR). It will fall into some aspect of AARRR. The entire growth strategy is based on the North Star metric of the product and the business. Consequently, defining this requires collaboration with broader teams and sign off by the management of the business.
In our example, it is clear that the number of orders placed on the app is the key indicator of growth. The number of orders placed is indicative of how well the app is doing with the users and at the same time, helps in acquiring new restaurant partners for the platform. These aspects collectively determine the growth of the product.
Step 3: Mapping the Key Performance Indicators to Growth
By now, we know how our customers advance through the funnel and the growth metric we need to focus on. The next step is to comprehend the broad factors, within the customer journey, that can influence the growth metric. These factors are the Key Performance Indicators (KPI) of the product. If the KPIs do not impact any stage of the growth funnel, then something went wrong in Step 1 and/or Step 2.
For our food delivery app, the number of orders on our app directly depends on the number of users (Acquisition of AARRR), the variety of food choices (Activation of AARRR), and user engagement (Retention of AARRR).
Step 4: Strategize and Prioritize
Defining any strategy requires us to understand where we currently are and then defining where we want to be. To determine where the product stands, we begin with auditing the customer journey. Understanding customer drops at every stage, supplemented by powerful data points, helps to induce the current state of the key performance indexes. A thorough digging into data at each step of the funnel will clarify the areas which need improvements, strategy revision, and prioritization.
For instance, while reviewing the activation in the funnel, we notice the users not moving past the search page. We remark 70% of search results empty. This quickly helps us learn that users do not have sufficient options on our platform and we need to provide more menu options (increase restaurant acquisition) for growth. Hence, the hypothesis here seems a cause-effect problem, subject to validation.
The outcome of this step is a prioritized series of well-defined hypotheses targeted towards one or more themes of the growth funnel. Now, we have a list of to-do items need to be subjected to the roadmap framework. An important thing to note is each hypothesis’s result holds the ability to amend the roadmap.
Pursuing product growth is like a marathon and requires understanding customers and data because only that can tell you how to move your metrics. Running the right tests to validate and learning from your hypothesis keeps you in the right direction. There is no magic trick, it’s all perseverance :)
