Andy Young is a Entrepreneur in Residence at 500 Startups, as well as a Growth Consultant and mentor at accelerators like Seedcamp, TechStars, EF, Ignite100 and Oxygen. He's also given talks and has led workshops at events such as WebSummit, South Summit, Leanconf & ProductTank.
Andy helps fun teams with big ambitions, from core strategy to getting his hands dirty with growth, product, analytics and code.
During London's Growth Marketing Conference 2017, Andy gave a talk on 'Building A Growth Model For Your Business', in which he walked us through the most important steps in creating a growth model for you.
Email or tweet Andy if you'd like to chat - andy@apexa.co.uk / @andyy
LinkedIn: https://www.linkedin.com/in/andrewyoung/
Growth Marketing Conference London 2017 - Andy Young - Building a Growth Model
1. Andy Young // @andyy // andyyoung.co
Building a
Growth Model
to drive your business
Andy Young
@andyy
2. Andy Young // @andyy // andyyoung.co
Hi, I’m Andy!
@andyy
#fb
PhotobyDanTaylor-dan@heisenbergmedia.com
3. Andy Young // @andyy // andyyoung.co
So what is this about
“Growth” anyways?
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● Typically growing our active customer/user base
● Growing whatever drives value in our business
● Not necessarily growing revenue $$$
● Growing whatever’s most strategically important to
us right now
What do we mean by Growth?
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Growth Marketing is finding growth that is:
● Measurable
● Predictable
● Repeatable & Scalable
Growth is a mindset, and a process.
Growth Truths
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How can we grow?
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ACQUIRING new customers
vs.
RETAINING existing customers
Ways to grow..
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Retention is a silent killer!
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Most important: Retention flattens
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When your retention curve flattens..
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Retention in a
transactional business?
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How can we grow..?
Ways to grow
Sustainably
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Paid Engine of Growth
Pay to acquire
new users Monetise those
users
Reinvest profit into acquiring
the next set of users
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Viral Engine of Growth
Acquire new users
(initially via
seeding)
Each new user
invites N friends
% of invites convert
to new users
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Sticky Engine of Growth
Acquire new users
(any channel)
Users stick
around
Acquisition >> churn
so we grow
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http://www.startuplessonslearned.com/2008/09/three-drivers-of-growth-for-your.html
https://www.slideshare.net/Leananalytics/lean-analytics-for-intrapreneurs-lean-startup-conference-dec-2013-public-share
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User-Generated Content Growth Loop
New users
discover content
via Google
Users sign up
and create new
content
Content is indexed by Google
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B2B Content Growth Loop
New users discover
content via
search & social
Users sign up
and/or follow
Profit is invested in
new content creation
Distributed to existing
followers, who amplify to
new users Brian Balfour, Reforge.com
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● Over time, you’ll typically make use of
multiple growth loops - powered by different engines
● But you’ll typically always have
one loop that dominates your growth
Which engine(s) work for you?
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● Is your engine of growth coherent?
● Beware attempts to force a user to take
unnatural behaviours
Watch out for
structural FAILURE!
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The myth of the
Hockey Stick
What growth actually looks like..
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What people think
hockey-stick growth
looks like..
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What people think
hockey-stick growth
looks like..
..what it actually looks like
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https://insomanic.me.uk/selective-tweets-3-years-zero-marketing-and-nearly-1m-users-later-now-open-source-851a011f6d5c
Selective Tweets - 1.3 million users
3 years
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Which
startup
is this?
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https://blog.rjmetrics.com/2012/04/27/airbnb-data-analysis-6-million-users-by-year-end-only-20-active/
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http://blog.airdna.co/2015-in-review-airbnb-data-for-the-usa/
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Engineering-driven Growth
AirBnB built on top of Craigslist
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http://blog.airdna.co/2015-in-review-airbnb-data-for-the-usa/
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http://leananalyticsbook.com/analytics-lessons-learned-free-e-book-with-13-case-studies/
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http://www.david.blog/blog/the-importance-of-launching-early-and-staying-alive
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http://www.david.blog/blog/the-importance-of-launching-early-and-staying-alive
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How can we grow?
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● ACQUISITION at top of funnel
○ How to reach HUGE new audiences in a cost-effective way
● CONVERSION at middle of funnel
○ Attracting and drawing people deeper into engaging with you
● REVENUE at bottom of funnel
○ Close to the $$$ - convert higher % and simply make more money!
Working across the whole FUNNEL
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Our most precious commodity is
TIME
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Identify Levers
and prioritise your backlog
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Levers:
things you can push
to get growth
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Prioritise using ICE
framework:
-Impact
-Chance of Success
-Effort (time/resources)
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Make predictions in advance!
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Build a Model
to understand your business
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What makes a
good dashboard?
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Growth model spreadsheet
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Not an operational dashboard:
metrics related to growth
1. Identify top-level KPI
2. Add nuance
3. Add drivers
4. Add funnel for these drivers
Template Google Sheet: bit.ly/kpi-sheet
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Building a Growth Model
1. Identify traction KPI
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Building a Growth Model
1. Identify traction KPI
It’s hard.
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Identify your Traction KPI
Keep it simple!
The good news: there’s probably a
pre-determined answer
for
what drives your business
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Identify your Traction KPI
There’s probably a pre-determined
answer for what drives your business
Spoiler: ultimately it’s $$$
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Identify your Traction KPI
There’s probably a pre-determined
answer for what drives your business
Commerce: # sales
Subscription / SaaS: # subscribers
Marketplace: # transactions
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Building a Growth Model
1. Identify traction KPI
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Building a Growth Model
1. Identify top-level KPI
2. Next, add nuance
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How’re we doing?
Nuance behind your top level KPI
E.g. for commerce: # sales
Nuance: average sale $; # customers
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How’re we doing?
1. Identify top-level KPI
2. Add nuance
3. Add drivers
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How’re we doing?
Drivers behind your top level KPI
E.g. for marketplaces: # transactions
Drivers: # suppliers, # customers
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How’re we doing?
1. Identify top-level KPI
2. Add nuance
3. Add drivers
4. Add funnel for these drivers
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How’re we doing?
1. Identify top-level KPI
2. Add nuance
3. Add drivers
4. Add funnel for these drivers
End up with AARRR
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How’re we doing?
1. Identify top-level KPI
2. Add nuance
3. Add drivers
4. Add funnel for these drivers
Model this out - put in a spreadsheet
(Template Google Sheet: http://bit.ly/kpi-sheet)
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How’re we doing?
Put in a spreadsheet
- key KPI at the top, nuance and drivers below, finally the
detailed funnel below for reference
- columns for weekly numbers, w/w growth
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Growth Model Spreadsheet
• Review weekly - zoom out vs. zoom in
• Share with whole team
• Use to predict and prioritise
• What to look at daily vs. weekly vs.
monthly
http://bit.ly/kpi-sheet
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Let’s see some
examples..
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http://bit.ly/kpi-sheet
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How’re we doing?
Put in a spreadsheet
- review weekly
- share with whole team
- set targets
- use as a model to predict and prioritize
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Identify your
One Metric That Matters (OMTM)
to get everyone pushing
in the same direction
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Weekly/Monthly reporting
% week-on-week or month-on-month growth
in your
One Metric That Matters
Focus. Set a target.
How to choose? Read this Lean Analytics post
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Thanks, & good luck!
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● Bryan Balfour: The Scientific Method: How to Design &
Track Viral Growth Experiments
● Dave McClure's Startup Metrics for Pirates
● Eric Ries’s Three Engines of Growth
● My deck on Analytics for Startups
Further references..