How do I grow my business?
Whether you are a large enterprise looking to provide greater returns for your shareholders or a startup looking to grow, this is THE question that most businesses focus on.
There are no shortage of new growth hacks, best practices and latest techniques that can be applied to a business. However, from my experience most startups and businesses don’t understand the structures behind growth and as a result throw large amounts of money or resources to see incremental improvements without fixing the underlying issues behind the lack of results.
There are unlimited ways to spend your money, but unfortunately, most companies don’t have an unlimited budget to play with. At Playbook Media, our focus is based around optimising the growth outcomes given the current state of the business and the resources we have to work with.
In this post, I’ll share our process and approach to testing, identifying and implementing an effective growth strategy for businesses by focusing on the 3 Pillars of Business Growth
The Growth Equation
Before jumping in and coming up with campaign ideas, we want to look at the data and identify what’s working and what isn’t working within the business.
To get a broad understanding of the business we look at the Growth Equation (with revenue as the growth output of interest).
Revenue = Leads x Conversion x LTV
Our end goal is to increase revenue. All else being equal, our 3 variables that affect revenue are Leads, Conversion and Customer Value.
Leads/ Users: The number of leads obtained from our marketing efforts (e.g. signups, visits on a website etc)
Conversion: The percentage of leads that convert into paying customers via your store, eCommerce platform or website
Lifetime Value (LTV): The value of an individual customer converting to your business (i.e. revenue/ profit associated to your revenue with a customer)
Let’s look at some basic examples to see how these factors affect revenue
Example 1: Optimisation
Business X is currently generating $100,000 in sales per month and we have the broad goal of doubling monthly revenue.
The current figures of the business are:
10,000 leads per month, at a conversion rate of 10% with a customer value of $100
Revenue = 10,000 x 0.10 x 100 = $100,000
Let’s now look at what adjustments we can make to these variables to reach the goal.
20,000 Leads/ Users a month, at a conversion rate of 10% with a customer value of $100
Revenue = 20,000 x 0.10 x 100 = $200,000
Double Conversion Rate
10,000 Leads/ Users a month, at a conversion rate of 20% with a customer value of $100
Revenue = 10,000 x 0.20 x 100 = $200,000
10,000 Leads/ Users a month, at a conversion rate of 10% with a customer value of $200
Revenue = 10,000 x 0.10 x 200 = $200,000
In the same way that optimising a variable can lead to significant growth, the lack of performance of a channel can severely hamper the overall effectiveness and lift the burden on other channels to achieve the same outcome.
Example 2: Low Conversions
Business Y also wants to get to $200,000 in monthly revenue, but it’s conversion rate is only 5%. Using the same example as above, we would need to optimise its revenue pillars to get:
40,000 Leads/ Users a month, at a conversion rate of 5% with a customer value of $100
Revenue = 40,000 x 0.05 x 100 = $200,000
10,000 Leads/ Users a month, at a conversion rate of 5% with a customer value of $200
Revenue = 10,000 x 0.05 x 400 = $200,000
Putting this simplistic example into a practice, it’s a more likely (and cost effective) outcome to make improvements to a couple of areas and optimise from there rather than trying to get dramatic results in one variable to overcome the shortcomings in others.
This is why the first thing you need to do to create an effective growth solution is to diagnose the problem areas. Which of these three areas needs the most work or provides the most upside to achieve our goals.
Let’s now dive a little deeper into the process and strategies we use to drive growth for our clients within each of these variables.
A business that is reliant on word of mouth or referrals, usually has a great underlying product (which is why people are spreading it on!). As a result, they have great conversions and the business is able to retain users/ clients. However, they have neglected the top of funnel to bring in leads to the business.
The great news is that this is potentially the easiest variable to fix as you generally know specifically who you are targeting (hint – have a look at your current customer base).
Our process for increasing leads for our clients is to reverse engineer the specific type of leads we want to bring into the funnel/ site. We do this by following the first phase of a process we created called: “Data-Driven Storytelling”.
This initial phase is based around:
Customers: Who do you want to target/ attract or, which segment of your target audience is going to be the easiest and cheapest to acquire.
Channel: What are the channels we can reach and engage with our target customers?
Storytelling: What is the right message, value proposition and story that we need to convey to our target customers to engage them once we have found them?
Medium/ Content: What is the right delivery mechanism or medium for us to share that story within the specific channel to reach our target customer?
Questions for effective customer profiling
There’s a lot that goes into effective customer profiling, here are some basic areas/ topics to help you get started.
- What are their interests (outside of your product)?
- What are their goals (and what product features will help them get there)
- What level of awareness would they have for your product/ problem you are going after
- What channels/ platforms etc have their attention?
- What do they value?
These will be audience specific but some of the areas we look at include:
- Online/ offline Publications
- Email newsletters
- Partner communities
- Industry Influencers
Types of content
There is no shortage of types of content you can create. Here is a list of different types of content for you to consider using to engage with your audience.
- Blog Post
- Social “Live” Videos
Conversion Rate Optimisation (CRO) is an often neglected factor (and skill) when online businesses are looking to grow. From my experience, most businesses overlook or are unaware of how to increase conversion rates on their websites which are significantly limiting their ability to drive revenue growth.
Especially when playing with limited marketing budgets, you want to ensure that your spend is not going to waste by converting as many potential users and leads as possible.
It’s important to note that no site will ever be 100% perfect, it’s a matter of constantly iterating and A/B testing to ensure that you are constantly improving conversions on your site.
Below are some best practices and suggestions around A/B testing that can be used to improve conversions on your website
- User flow: what is the flow of the person coming to your site for the first time, can they find what they need and take the next logical step easily? Another way of looking at this, is how can you limit the number of clicks required from landing to converting?
- Compelling offer: Give people a reason or incentive to take an action/ convert on the spot
- Optimise for mobile: From our data, over 80% of browsing happens through mobile, so design the experience around mobile first
- Sell: Don’t bombard people with information, but be crystal clear on the value proposition and message the customers need to see on specific pages/ points in time
- Make best use of website real estate
- Show your prices as discounted (to indicate deal)
- Add constraints (i.e. limited offer within a specified time period)
- A/B test colours and fonts
- Use photos with real people
- Add visual cues to capture attention
- Add reviews and testimonials
- Offer a free trial
- Offer a chat function
- Offer multiple payment methods
- Demonstrate social proof
Lifetime Value (LTV)
Converting leads into customers is great! But if you do not have a large margin on the customers once acquired or are unable to retain them, you are throwing money down the drain!
Customer retention can be a great way to increase your revenue without having to pay for additional customers or go through a lengthy on boarding process for new clients.
Some techniques to get more out of your current customers:
- Incentivise referrals by offering credits etc for everyone customer they refer on
- Upsell your customers on new products based on previous purchases
- Run special offers just for your existing customers
- Build fan engagement via social sharing etc
- Add loyalty programs for customers
*Protip: Understand your customer data and segment them based on key variables so they receive communication/ information from you which is relevant to their interests and buying habits