A common misconception about growth is that it's all about product marketing or relentless selling. However, at its core, growth is about the relationship with our customer. In Step 7: Product Roadmap, we defined the product and in Business Model Innovation, we identified our business model(s). Now we're going to think through the relationship with our customer along every step of their journey with our product and company. Most customer relationships go through three main stages - get, keep, grow.
We call this process or journey the customer funnel.
Starting at the very top of our funnel (or the left side of the representation above), people first hear about our product through paid or free channels. Some of them are interested in what we're offering enough to visit our website or store to learn more. A portion of that group may even give us their email or some way for us to contact them. Either on their own or through a salesperson, a fraction of interested customers will make the decision to purchase our product, download our app, sign up for our service, etc. The number of people decreases in each stage, creating a funnel shape.
Once people are using or paying for our product, they become our users. In order to retain them, we have to keep them engaged and continue to provide value so they continue to return to the product again and again. This part of the funnel flattens out to reflect retention of existing users.
To grow, we can either go back to the beginning of the funnel to acquire new customers or we can leverage existing users. To make more money from existing users, we can upsell and/or cross-sell. Upselling is where the seller encourages customers to upgrade or purchase a comparably higher-end product than the one they are currently using. Cross-selling invites customers to buy related or complementary items. An example of cross-selling is when a sales representative at a phone retailer suggests that the customer also purchase a case to protect the phone or a Bluetooth speaker that pairs with the phone. We can also leverage existing customers by getting them to refer new customers to us, reducing our cost of customer acquisition.
Our goal is to remove the friction it takes for a customer to move through each stage of the funnel. How do we make sure that our marketing and product decisions reduce this friction? We will apply the same experimental iterative process (build > measure > learn) that we applied to our product.
The method we'll use the most for our experiments will be A/B testing, which we introduced in Step 6: Broader Interest, as it relates to our ads and landing page. When we have multiple options, A/B testing allows us to make data-driven decisions rather than relying solely on our gut.
Example (link): Obama's 2008 presidential campaign was able to significantly increase conversion on their website through some simple A/B testing. By testing different images, videos, and copy for their call to action, they were able to identify a combination that increased the percentage of people who shared their emails from 8.26 percent to 11.6 percent. Though a seemingly small difference, it was equivalent to 2,880,000 email addresses.
For A/B testing to be effective and for your results to be statistically significant, make sure you have a large enough sample size to split between different variations. If done correctly, these small tweaks in different parts of our funnel can really add up, especially as more people come in contact with your product.
While A/B testing can have powerful compounding effects, it cannot guide us in larger strategic decisions. When it comes to larger decisions, you will have to go with your gut based on everything you have learned about the customer up until that point. But you should still measure the outcomes of these strategic changes; After all, they're still experiments.