Creating a Growth Marketing Framework for Your Startup Business
The term startup refers to a company in the first stages of operations. Startups are founded by one or more entrepreneurs who want to develop a product or service for which they believe there is demand. These companies generally start with high costs and limited revenue.
A startup can graduate to a larger company by being acquired, and opening more than one office. This progression is what people think of when they think of startup life.
However, day-to-day life for startups can be far from glamorous. The risky reality when it comes to startups is that they’re vulnerable to risk and likely more than we would imagine. 90% of startup businesses fail. According to the National Business Capital, of the 6.5 million businesses launched each year, only 10% enjoy lasting success. These numbers could be seen as a deterrent for entrepreneurs.
Customer acquisition is understandably seen as the greatest challenge to startup success. In the early years of business, acquisition equals growth. Startups must reach out to the biggest audience possible, and to carefully plan their marketing efforts so that a high proportion of that audience converts to customers.
However, conventional marketing that focuses on marketing on time-specific campaigns just does not cut it for startups. The simple fact is that these campaigns require extensive marketing budgets, something that startups for the most part do not have. Moreover, since growth is paramount for the survival of these cash-strapped startups struggling to make an impact, this further compounds the issue.
Savvy businesses understand that marketing is not just about getting the brand name out there. Brand awareness is part of it, but so is customer acquisition and retention. It’s not enough for potential customers merely to know that your startup business exists. What you want is a loyal, engaged customer base that ultimately leads to organic growth. This is what you won’t get with traditional marketing methods alone.
In this article, we will examine how to go about creating a growth marketing strategy for startup businesses. In particular, we will examine how to apply a growth marketing framework for startup businesses. Moreover, we will look at the underlying elements behind creating a growth marketing strategy for startup businesses and examine various tactics that ought to be part of a growth marketing foundation for startups.
Why Is Generating Revenue Growth So Challenging for Startups?
Why do startups fail? Startups fail due to a wide variety of reasons, with the most significant being the absence of a product-market fit, poor marketing strategy formulation and implementation, lack of planning and analysis, and cash flow problems.
For example, suppose the startup owner fails to draw up a comprehensive business plan or build a business model that seems sustainable over the long run. In that case, the startup might lose money, encounter operational issues, and run into legal problems.
Insufficient marketing is another major reason for the high failure rates of startups. A sound marketing strategy allows startups to strategically share offers with a target audience and present their products and services as a solution to prospective customers’ problems.
However, if no market exists for the startup’s product or service, even the most creative and well-executed marketing strategy will fail. Extensive market research is crucial to ensure that there is a product-market fit.
Successful startups also encounter issues with product-market fit. However, the startup teams in these businesses do extensive market research, and they incorporate effective marketing strategies while adhering to a marketing budget.
Cash flow problems also contribute significantly to the business failure rate. Most entrepreneurs who launch with insufficient funding, product or service prices that are not market-related, or optimistic sales projections end up with a failing startup.
What Are the Key Characteristics of a Growth Marketing Framework?
Now that we have established the key characteristics of startups, we need to go about creating a comprehensive marketing strategy that is focused on leveraging on the realities that startup businesses face. However, before we go on ahead and examine how to construct a marketing strategy focused on startups, we need to establish a structure from which growth can be established. This is where our growth marketing framework comes in.
To put it in simple terms, a growth marketing framework is a way of examining the customer purchasing process. The idea here in analyzing the whole experience is to help a business grow as quickly as possible and most strategically. It is not just another generic marketing tactic, but rather a precise, targeted, comprehensive and ongoing approach required to stimulate growth. The key here is that this approach involves identifying the important phases of the overall business process while not ignoring both the uniqueness of the business and how it works into account in considering where the business wants and needs to get to.
Growth marketing considers the entire business cycle as a potential lever for growth. Now depending on the nature of the business itself, the specific framework way the framework is structured can differ. However, just as a reminder, the growth marketing framework consists of :
A: Acquisition
A: Activation
R. Retention
R. Revenue
R. Referral
This framework was created as a way of giving small companies a method by which to focus on the right metrics, and more importantly, the events/occurrences that truly impact their business’s success. By shifting a business’s focus to the channels and tactics that move the needle most at every stage, smaller companies can find a way to thrive and, in many cases, even outperform bigger competitors. They evaluate the best channels to focus on by metrics such as the number of interested visitors, conversion rates, ROI, CPA, etc. This framework has allowed many businesses to maximize growth on a comparably small budget
Compared to more established businesses, startups lack critical information about their customers and the markets within which they operate. For example, the short tenure in a market means startups might lack the following types of information:
Identifying the channels for communication, effective messaging, and knowing the cost of marketing
A thorough understanding of how their sales process is structured including customer insights, buying process, purchase considerations, decision-makers involved, budgets, typical deal sizes, seasonal preferences and variation, etc.
Potential partners for building credibility and driving customer acquisition
Competitors and their value propositions, pricing, revenue model, key channels, and sales processes
Depending on how far along you are as a startup, you might have some data as a function of validating your value proposition, but you will be missing the rest of the data. If you are an early-stage startup, most of the above information is essential for finding your product-market fit, as well as building a scalable business model.
Growth marketing helps test both the viability and effectiveness of channels and messaging. It also provides important data and insights that support the creation of better strategies and plans going forward.
Keep in mind growth marketing isn’t just for early-stage companies. As your startup grows, your strategic business objectives will evolve. Your growth marketing practices are critical to help you navigate through those business objectives. For instance:
Marketing channels become saturated. As such, you need to test and identify new channels
You want to expand into a new vertical and geographical market, each with its market dynamic
The two issues mentioned above are typical for companies that grow beyond $5–$50 million and must be tackled repeatedly to continue the growth trajectory. What this ultimately shows is that growth marketing is a strategic practice for any growth-oriented and ambitious startup.
How to Apply the Growth Marketing Framework to Measure the Progress of Startup Businesses?
For startups, understanding and tracking growth is paramount. One of the most effective ways to do this is through growth metrics, which provide measurable ways to track and assess performance against business goals. But how do we identify the right metrics? This is where the AARRR framework comes in.
Acquisition: This stage involves attracting potential users to your product or service. Metrics here could include website traffic, app downloads, or lead generation.
Activation: Here, the focus is on ensuring that users have a positive first experience with your product. Metrics could include user registration, first-time usage, or completing an onboarding process.
Retention: This stage is about keeping users engaged and ensuring they return to use your product. Metrics could include Daily Active Users (DAU), Monthly Active Users (MAU), or churn rate.
Referral: This involves encouraging existing users to refer others to your product. Metrics could include referral rates, viral coefficients, or Net Promoter Score (NPS).
Revenue: The final stage involves monetizing the user base. Metrics could include average revenue per user (ARPU), customer lifetime value (CLTV), or conversion rates (how many prospects become paying customers).
Aligning Growth Metrics with the AARRR Framework
To effectively measure growth, startups should align their metrics with the stages of the AARRR framework. This alignment ensures a comprehensive understanding of the user journey, from the initial discovery of the product to becoming a paying customer.
For instance, if a startup's goal is to increase user acquisition, it might focus on metrics like website traffic or app downloads. If the goal is to improve user retention, they might track DAU or MAU. By aligning metrics with the AARRR framework, startups can focus their efforts on specific areas of growth and measure their success in a structured way.
The Importance of Growth Metrics for Startups
Growth metrics are vital for startups for several reasons:
Performance Tracking:
Growth metrics provide a clear way to track progress against business goals. They offer quantifiable evidence of success or areas for improvement.
Decision Making:
By monitoring growth metrics, startups can make informed decisions about where to invest resources. For example, if the acquisition metrics are strong but retention metrics are weak, it might be worth investing more in improving the user experience to retain users.
Investor Attraction:
Investors want to see evidence of growth and the potential for future success. Strong growth metrics can help attract investment.
Team Alignment:
Clear metrics provide a shared understanding of what success looks like, helping to align the team around common goals.
Two examples of successful businesses that used the AARRR framework when they were startups to track their progress as businesses were Airbnb and Dropbox.
Airbnb used the AARRR framework to track their growth. They focused on metrics such as the number of new user registrations (acquisition), the percentage of users who completed their first booking (activation), and the percentage of users who made repeat bookings (retention).
Dropbox utilized the AARRR framework to drive growth. They measured metrics like the number of users who referred others to the platform (referral) and the average revenue generated per user (revenue).
How to Create a Growth Marketing Strategy for Startups
Startups operate in highly competitive environments, often with limited resources. Growth marketing, as mentioned earlier, provides startups with a framework to make the most out of their resources by focusing on high-impact activities, minimizing wastage, and driving sustainable growth.
By adopting a growth marketing mindset, startups can effectively scale their businesses and maximize their chances of success. Growth marketing allows startups to identify and prioritize the most promising growth opportunities, allocate their resources efficiently, and iterate on their strategies based on real-time feedback.
Creating a growth marketing strategy might seem overwhelming at first, but it’s surprisingly simple once you go through the process. All you need to do is follow the “AARRR” framework to identify the channels that lead to your ultimate goal. But remember, at each step of the way, you’ll also need to determine which metrics define a campaign’s “success” or “failure.” Now, let’s take a deep dive into the five steps you need to follow to build a unique growth marketing strategy for your team.
1. Understand your audience
Identifying your buyer personas will help you determine your brand’s target audience. This will let you know where to focus your marketing efforts and help you efficiently use your marketing funds and more buyers for your products because of better targeting.
Get as detailed as possible when analyzing your target customers to understand important issues such as their demographic, where they live, the online services they use, and how they look for your products/services. If you have a broad target audience, you must try to segment it carefully to ensure you are reaching each target user group properly with your marketing messages.
Analyzing your competitors will also help you understand your audience and its behavior, and how to reach them properly. Find the top-performing companies in your industry and have a look at their marketing strategy. Identify the channels they use to reach their audience effectively and use the insights to inform your own marketing strategy.
Lastly, check your ad sets analytics to know what types of people have interacted with your marketing campaign. This data will help you understand the unique characteristics of your target users, and you will be able to use this information to optimize upcoming campaigns.
2. Set high-level goals
Start by identifying what you want to accomplish and get specific. This goal can take many forms, but it needs to be concrete and have a clear definition of success. For example, you might have a general goal that you want more newsletter signups from your website. But you’d need a more tangible goal that allows you to determine if your marketing tactics are improving or if they still need work. A better objective would be that you want 20 new email newsletter signups per month.
That said, every company will need to define its own high-level goal and determine which metrics signal whether or not that goal has been achieved or if its strategy needs adjusting.
3. Establish KPIs and growth marketing metrics
Now that you have your high-level goal, you can break it down into smaller objectives. Look at which channels are leading to the highest growth and remember our conversion criteria. You’re looking for channels that:
Perform best in terms of conversions
Attract the highest volume of people
Cost the least to operate
Focus on your top two or three channels to start and grow from there as your resources/bandwidth allows. Then from those channels, identify concrete metrics that would define “success” as you work toward your higher-level goal. For example, you might see that your top two performing channels are social media and organic search traffic.
From there, you’d need to create specific KPIs related to your overall objective. You might create a goal that social channels need to drive $7,500 in sales/month, and the blog needs to bring in $7,500/month in Q1. Then you can track the results of how these channels perform to see if they’re moving the needle toward your higher-level goal.
4. Map out your customer journey and evaluate areas to prioritize
To create a sustainable growth marketing strategy, you need to understand both your customer and your customer journey. In the past, this was something that you might have been able to pull off with a free tool like Google Analytics. But as modern businesses are overwhelmed with data across multiple touchpoints throughout the customer lifecycle, even Google Analytics makes it difficult to map out your user journey, especially, for instance, as they move from your website to a mobile app.
Your best bet to track the modern customer experience is using more sophisticated software like Twilio Engage. This tool is built on a customer data platform (CDP) and gives you deeper insights into your customer’s end-to-end journey through all touchpoints. That gives you the ability to build consistent and personal marketing campaigns from each of your top-performing channels.
How? Once you fully understand your customer’s journey, you can more accurately track the success metrics for your goal at each step of the growth marketing framework:
Acquisition: Where are the bulk of your customers coming from?
Activation: Where are people being engaged on their first “happy visit”?
Retention: Which channels are bringing customers back to your brand?
Referral: Where is your word-of-mouth marketing gaining the most traction?
Revenue: Which channels are bringing the most paying customers?
When you see which channels are getting you the best results, you can build powerful audience segments that help you optimize for an even larger ROI.
5. Conduct focused growth experiments that emphasize conversion rate optimization
At this point, you have your high-level goal, and smaller KPIs to reach that objective, and you’ve identified the best-performing channels throughout the customer journey. Now it’s time to ensure you’re not leaving any conversions on the table by creating controlled experiments that focus on optimization. The exact tests you’ll run will depend on what your top-performing channels are. However, most testing comes down to:
A/B tests: This is where you show half of your audience one version of your content, and you show the other half something slightly different. Then you track which campaign performed best and improve future campaigns based on those results.
A/A tests: This is for smaller audience sizes where you show the entire audience one type of content and later show them a different type to see what resonated most.
So, if you found emails were your top-performing channel, for example, you might A/B test your subject lines to see which one gets the most opens. Or you might A/A test an HTML-based email template vs. a plain-text template to see what your target audience responds to.
Testing is important because it lets you accomplish two things:
Identify any channels with more potential than you’d previously seen
Optimize existing channels for even higher conversions
5. Scale experiments that drive positive results
Once you’ve identified your top-performing channels, it’s time to double down on your efforts. Imagine you found that social media brings you more traffic than organic search engines, but the posts that rank on Google bring you higher conversion rates. In this scenario, you’d put your social media efforts on hold to increase the output/results of your blog.
9 of the Best Growth Marketing Tactics Suited for Startups
Influencers
Influencer marketing is one of the best brand marketing techniques. It is a highly effective technique that allows you to gain visibility on social platforms and grow your small business. It gives your products great exposure and return as well as helping you gain trust and credibility with customers.
The key to a successful influencer campaign is to choose the right person to work with. You don’t necessarily have to go with celebrity influencers with millions of followers as this can be too expensive for your small business. You can instead look for free or cheaper opportunities with nano and micro-influencers in your niche. This will ensure your brand messages reach the right customer base, thus converting more users into paying customers.
2. Understanding the Marketing Analytics That Drive Growth For Your Startup Business
It is important to analyze the data your business collects from different touch points such as your website and social media pages. The analysis will inform your business decisions going forward, and this calls for companies to set up appropriate systems to capture user data.
Tracking your site data can be done for free with Google Analytics. It allows you to track where your web traffic is coming from, how long people spend on your website and the pages that are popular with visitors. For your Facebook Ads campaign, you can check the user stats from your Facebook Business Manager tab.
It is not enough to rely on these platforms to understand your customers’ needs and preferences. Consider using Google Forms to collect valuable user feedback and SurveyMonkey to capture the opinions of your target users.
Data should be the backbone of many of your company’s workflows, including marketing.
3) SEO
Search engine optimization (SEO) is one of the most effective ways of bringing traffic to your website. Your pages should be optimized with the right keywords to make it easy for prospects to find you when they perform a search. Every startup needs to focus on SEO to ensure they can generate organic traffic from search engines.
The good thing about SEO is that it allows businesses to acquire customers at no added cost. This makes it a foundation for a healthy business, especially for startups that are short on cash. It gives long-lasting results as well and helps businesses gain trust and authority in their industries.
4) Marketing Automation
Automation will streamline your marketing efforts and help you save time to perform other important tasks, while still nurturing leads and generating revenue. Email marketing is one of the focus areas for marketing automation, and it helps startups and small businesses get their messages to the right people at the best times.
The first thing businesses need to do when automating their marketing efforts is to segment their subscribers using features such as new/existing customers, those who have yet to make a purchase, demographic factors, and so on.
With the audience lists prepared, draft appropriate email communication for each list. Finally, set the automated processes using the right tools.
5)Personalization
Strongly correlated to marketing automation is personalization. Investing in personalized marketing allows businesses to build relationships and offer better experiences to their customers. The rewards are great for businesses as it helps them retain existing customers and attract new ones.
Companies that do not work to provide tailored experiences risk getting left behind. To improve the user experience through personalization, research, and analysis of customer data to find the best channels for connecting with them. If you are operating an online store, recommend relevant products to increase your cross-selling opportunities. Also, use data about what the type of content your prospects consume to send your customers personalized emails.
6. Video
People love videos. As such, it is easier to understand, that your marketing tactics should include how-to videos to promote your brand. 60 percent of consumers prefer watching videos to reading text, and this shows just how important video can be in marketing your business. You can create Youtube-centred video tutorials to show people how to use a product and explainer videos to highlight the features of your latest product.
7) Referral
Especially for startup businesses where customer acquisition and investing significant financial resources, referral programs represent one of the most powerful and useful growth marketing strategy options in the world today. As customers become more desensitized towards traditional marketing methods, they’re becoming more reliant on the opinions of others.
92% of customers say they trust referrals from people they know. Referral marketing is your opportunity to take advantage of the enduring power of word-of-mouth advertising.
An excellent and frequently referenced example of the power of referral marketing comes from Dropbox. Every friend who introduced a new user to Dropbox would receive an extra 500MB of free storage, with a limit of around 16GB. This program was so successful it drove a 3900% growth in just 15 months. Dropbox enhanced the impact of its referral program by offering two-way rewards (For both users) and even adding referral options to its onboarding process.
7) Empowering Existing Customers
Since a strong growth marketing strategy focuses on customers throughout their entire purchasing lifecycle, brands need to think about how they can empower existing users. Traditional marketing efforts only concentrate on capturing sales.
However, effective growth marketing efforts look for ways to delight and engage customers after they’ve made a purchase. Creating a powerful onboarding strategy, leveraging concepts like gamification, can be an excellent way to increase the customer lifetime value of each of your consumers and improve your results over time.
Teaching customers how to use your products with the right onboarding strategy means they’re more likely to feel loyal and committed to your brand. A good way to get started is to evaluate the issues your customers might have with your product or service, and subsequently create an onboarding program that allows them to seamlessly address those concerns.
For instance, the Shine company boasts an onboarding completion rate of around 80% by providing customers with progress bars to help them move through the process and offering step-by-step guidance every step of the way. They even shower their customers in digital confetti when they complete a stage of the onboarding process.
8. Social Proof
We’ve already mentioned that customers are relying more heavily on input from other consumers to help them make purchases these days. They want to see genuine evidence that every company they work with can actually deliver the results they’re looking for. That’s where social proof comes in.
Social proof in your growth marketing strategy makes it easy for customers to make intelligent purchases, using reviews, quotes, and testimonials to guide them. You can generate social proof in a range of ways, from using branded hashtags to encourage user-generated content to recruiting brand ambassadors and influencers to work with your company.
One excellent example of a company that knows how to leverage the power of social proof comes from Airbnb. The company found around half of its guests generally visit a host profile at least once before making a booking. A host without reviews was four times less likely to get a booking.
With these insights, Airbnb decided to make it easier for consumers to leave reviews. Using a double-blind review system, Airbnb allows visitors to review the hosts they book with, but it also encourages hosts to review their customers. The parties are also both encouraged to write a review within 14 days so the experience is still fresh in their mind.
9) Content Marketing
Content marketing isn’t just a growth marketing strategy. Approximately 70% of B2C marketers and 73% of B2B marketers consistently use content to connect with their audience. The difference between a standard content marketing campaign and one tailored for growth is a holistic approach.
Rather than just looking for ways to draw attention to your brand, you need to think about how you can generating value for your customers throughout the entire customer journey, before, during, and after a purchase. This means mapping your customer’s journey from start to finish and creating content that appeals to every stage in the funnel.
A great example of this comes from HubSpot. The company focuses so heavily on content marketing you’re likely to find a web page on Google when searching virtually any marketing term. HubSpot produces blogs to appeal to every one of its customer segments, from sales professionals to service experts. It also explores a range of different types of content.
Are You Running a Startup Business and Looking for Growth Marketing Strategy to Help Your Business Gain Traction? Reach Out to Us Today
Gaining an edge as a startup business is especially challenging in today’s business climate.
Whether it’s a focus on delivering exceptional customer service, running a multi-channel influencer marketing campaign, building an enviable customer-centric loyalty or referral program, or creating a targeted and content marketing strategy, knowing which tools to use and in what way helps to establish a growth marketing framework for your startup. This, in essence, is the key to getting your startup on the right track and establishing a solid revenue growth footing.
Finding the best strategies for your startup business is the only way you can stand out and thrive. Creating a growth marketing strategy that recognizes the importance of the growth marketing framework as it pertains to your startup will help greatly in this regard.
If you feel you need help in this regard, please reach out for a growth marketing consultation.
Our growth marketing consultants recognize that while there are many similarities in terms of the challenges a business might face, no startup business faces the same set of circumstances. If your startup business is struggling to set itself apart, we would be happy to examine your current marketing efforts for not just areas of improvement, but for insights that can provide opportunities that we can help your startup business leverage for prospective growth.