In the last ten years, “growth marketing” functions have sprung up inside Silicon Valley startups and yielded precious companies like Facebook, Pinterest, Uber, and others that have institutionalized their growth marketing approach.
As our experience with growth marketing has matured, we’re in an excellent place to document the best practices and modern methods any company can understand and adapt to help them unlock their full growth potential.
For most companies, growth marketing is the way of the future for leveraging data and agility to scale revenue and increase customer lifetime value. As campaigns continue to shift more toward digital, it’s easier to track and monitor every move.
Designing strategies around the entire customer journey and funnel and constantly being ready to iterate and improve will deliver clarity around attribution sources and fuel revenue growth. The days of guessing how to invest your user acquisition budget are over.
With a well-thought-out growth marketing strategy, you can now use real-time data to validate which efforts are working and which are not. With a well-thought-out growth marketing strategy, you can now use real-time data to validate which actions are working and which are not.
Entrepreneurs flock to Silicon Valley, affectionately called the “Valley of Dreams,” to build fast-growing startup companies fueled by venture capital. These startups aim to scale their growth to hundreds of millions of users and guide their company to a successful exit, whether through an acquisition by a larger entity or an IPO.
For the venture capitalists funding these endeavors, the risks and the rewards are high; most venture capital funds have a fund life of approximately ten years, in which they seek a liquidity event for their portfolio companies.
With this additional pressure on venture-backed startups, companies know that they must accelerate growth at all costs. The reality, however, is that most venture-backed startups fail spectacularly.
As discussed in “How VCs Deploy Operating Talent to Build Better Startups,” research estimates that 30% to 40% of high-potential startups liquidate all assets within the first five years. If failure is defined as failing to see the projected return on investment—say, a specific revenue growth rate or date to break even on cash flow—then more than 95% of startups fail.
Considering the risk of failure, startups must come to market prepared to address the three most significant challenges to success: hiring the right people, acquiring and keeping customers, and optimizing revenue growth. While every startup purports itself to be the next unicorn, it’s only the ones who are prepared to overcome these key challenges that become successful.
The financial pressure and constant state of resource constraint are also one of the startup’s most significant advantages because it fosters a creative, agile environment where teams are encouraged to experiment, learn, and outmaneuver incumbents and the competition.
In my book Lean AI, you’ll learn how to use the Lean AI + Customer Acquisition strategy for leveraging data and automation to scale your user growth.
One of the most crucial stages that have the potential to make or break any startup beyond determining your essential product/market fit is growth marketing.
Growth marketing looks at the entire customer funnel as a singular object with many working parts, experimenting with messaging at the top of the funnel and down-funnel hypothesizing and testing work together to increase customer acquisition rates by any means possible.
Understanding the intricacies of this marketing approach is critical to figuring out how you can use a new class of software—artificial intelligence and machine learning capable of making sense of immense amounts of data and market feedback—so we’ll spend plenty of time bringing clarity to the fundamental underpinnings of growth marketing.
In The Lean Startup, Eric Ries teaches entrepreneurs to be hyper-efficient with resources to make possible business decisions. He argues that entrepreneurs should run small experiments all the time.
Even though 9 out of 10 experiments may fail, the one that succeeds may make your business grow 100x faster. The growth marketer plays a crucial role in the Lean Startup process by constantly testing and tweaking to make the business grow as fast as possible.
The key is to take action—to try, to fail, to learn, and, eventually, to prevail.
A broad customer base is a critical determining factor for revenue and, consequently, the success of any startup. Acquiring this vast customer base is growth marketing’s primary function, making it an essential part of any marketing strategy. But the fact stands that the procedure requires ample time and intelligence to create a startup that stands out from the crowd.
Champions of growth marketing adopt a cross-functional approach with multiple stakeholders, including product, marketing, engineering, and data science.
These teams enable an organization to “compete on the rate of learning” and create a path to hyper-customer acquisition growth. In many ways, this book is an extension of the latter stages of a Lean Startup; after startups have reached product/market fit, the speed of learning needs to accelerate, and this book presents a framework for tackling that challenge.
The emergence of growth as a function has changed people’s expectations around velocity. Learning needs to happen faster because decisions must happen more quickly to compete.
Taking the wisdom of The Lean Startup’s approach into the golden dawn of artificial intelligence, we can radically improve our chances of successful outcomes.
A properly instrumented approach to modern artificial intelligence, machine learning, and automation combine to offer companies large and small the ability to conduct far more experiments simultaneously.
Conducting experiments at scale improves the likelihood of finding successful experiments, some of which you’d never have taken the time to test in a pre-AI world. Incremental experiments that otherwise would have been sidelined for cost or complexity are now valid for observation in autonomous marketing.
About the Author
Lomit Patel is a passionate leader with deep expertise in helping startups grow into successful businesses. He has played a critical role in scaling growth at startups, including Roku (IPO), TrustedID (acquired by Equifax), Texture (acquired. by Apple), and Together Labs (formerly IMVU). He is a public speaker, author, advisor, and recognized as a Mobile Hero by Liftoff. His book Lean AI is part of Eric Ries' best-selling "The Lean Startup" series.
Also published here.