5 Steps to Teach Yourself Growth Marketing (Part V)
Without customers there is no business. So how does an owner drive new customers to their startup, or keep existing ones engaged? The answer is simple: Growth marketing.
It’s not a secret that growth marketing is a valuable skillset to possess in the current job market. Taking a look at LinkedIn in October of 2022 for the available jobs with the search phrase “growth marketing”, shows that there are more than 50,000 openings spread across a variety of employers from small startups to 30,000-employee behemoths like Uber.
The inevitable next question becomes, how does one learn the skills for growth marketing? I am here to tell you that the best growth marketing course isn’t an actual course.
As a growth marketer who has honed this craft for the past decade and been exposed to countless courses, I can confidently attest that with this subject, doing is the best form of learning. However, I am not saying you need to immediately join a series-A startup or land a growth marketing role at a large corporation, who can then afford to teach you.
Instead, I have broken down how you can teach yourself growth marketing in five easy steps. Sit back, relax, and I hope you will enjoy this series!
Teach Yourself Growth Marketing-Part V: Deciding which metrics matter the most for your startup
In part five of my five-part series (Teach Yourself Growth Marketing), we’ll cover how to determine which metrics matter for your startup. For the entirety of this series, we will use the example of learning growth marketing with a direct-to-consumer (D2C) athletic supplement brand.
I’ll discuss what metrics mattered the most while I was with Uber and Coinbase, an example of metric analysis, and why it’s important to pivot metrics when necessary.
Uber and Coinbase
Many will automatically assume that the most important metrics for growth teams at companies like Uber and Coinbase will be new riders and traders. They would be wrong. While those metrics do matter, when I was with both companies, instead we were primarily focused on much deeper metrics that could tell us how valuable various users were.
On the Rider growth team at Uber, we measured the performance of each growth channel individually and segmented by city. When we looked at each growth channel and city combination, our north-star metrics were ROAS (return on ad spend) and pLTV (predictive lifetime-value). While there were many calculations happening in the background to compute these metrics, it gave us an understanding on how much revenue each Rider would ultimately bring to the company. Similarly, at Coinbase we weren’t just concerned with how much it cost to acquire a trader, but instead, on the quality of each trader we acquired. The ROAS was calculated by using a rolling average of how much volume each user was trading based on the channel they were acquired from.
It’s very easy to get lost in upper-funnel metrics as the most crucial for your startup. Don’t get lost in this trap. Instead, think about the ideal user or consumer for your startup. For our athletic supplement brand, it would be far from ideal if consumers only purchased a one-month initial supply and then never ordered again. At Postmates, we called users “whales” when they consistently ordered a certain amount of food deliveries every month. We would prioritize acquiring users from channels that netted the highest quality users and as many “whales” as possible.
Here’s a simple exercise that can be performed to understand which acquisition channel is best for your startup.
Example acquisition efficiency exercise. Image courtesy of Jonathan Martinez.
In this example, assuming AOV (average order value) is consistent across growth channels, Google and TikTok are best with the highest LTV (lifetime-value). If we purely looked at CAC (customer acquisition cost), we would think that YouTube is the best channel, but consumers acquired from there only purchase twice making their LTV the worst.
Activation and retention metrics
Facebook famously found that they needed to get users to seven friends within their first 10 days to keep them returning to the platform. What their early growth team led by Chamath Palihapitiya learned was that if users didn’t get to seven friends early enough, they would churn, and ultimately never come back. This spurred the product and growth teams to create features that would drive a new user to add more friends as soon as they had signing up.
So how do you find the right metric to optimize for your startup? If you’re starting an e-commerce store, the metrics won’t be like a platform like Facebook, but the same principles apply.
Below are two simple steps to help you understand what keeps your users or consumers coming back.
Slice user/consumer data by different data points
Analyze these segments by your north-star metric
For our athletic supplement brand, we could slice the data by products purchased or by reasons consumers are purchasing the supplement. What if we discover that consumers who purchase Athletic Supplement X for increased energy continue to purchase it much more frequently than those who buy Athletic Supplement Y for weight loss? This could help us steer our acquisition messaging to consumers interested in more energy throughout their days, before attempting to cross-sell them other products we offer.
Find the reasons that make your product or service “sticky” and you can prevent a lot of time being unfortunately spent running in circles.
When we launched the NFT marketplace at Coinbase to compete with marketplaces including OpenSea, I was on the growth team tasked with crafting our primary market strategy. Being in the cryptocurrency vertical, a portion of the messaging and budget was inherently spent on customer education, due of how unfamiliar non-fungible tokens still were to most of the population.
What I hypothesized was that advertising the new NFT marketplace would be even more expensive to acquire users for rather than our evergreen acquisition for users to “buy cryptocurrency” on the Coinbase exchange. Buying Bitcoins was becoming much more widely accepted in comparison to NFTs, which consumers understood far less. Instead of focusing our acquisition on the NFT marketplace, it made the most sense to onboard users to a lower-friction product like our exchange and eventually educate them about NFTs and the marketplace we had built.
What you should always be ready and willing to do for your startup is challenge the status quo, especially as metrics change over time. They won’t change as frequently for a mature business-like Uber, but most startups must constantly adjust the metrics that matter most. If we found that consumers purchased our athletic supplement more frequently if they received a free e-book alongside their order, we could take away that education was an important factor for consumers to purchase more. Our strategy here could possibly adjust to include offering consumers stuck in the funnel more educational content and utilizing consumer education as a metric. For example, we could send these consumers five pieces of educational content in the first two weeks.
For the purposes of teaching yourself growth marketing, learn your metrics, and what makes some more important than others.
This concludes my five-part series on how you can teach yourself the valuable skill of growth marketing. It’s especially important for startup founders and you are now equipped to learn in real-time. If you’ve come this far and would like to learn more advanced techniques in growth marketing, check out my other columns on Substack.
I: Setting up a landing page
II: Launching a paid acquisition channel
III: Launching email marketing
IV: A/B test growth experimentation
V: Deciding which metrics matter most for your startup