The marketing industry comes up with new methods and terminologies every few years. That’s why we see different roles such as Marketing Managers, Digital Marketing Managers, Brand Managers, Chief Marketing Officers, etc.
One new word that has created a buzz among this cluster. You guessed it right, we are talking about ‘growth marketing.’ Although it has entered the mainstream conversation for many years, a large pool of people still doesn’t have the exact idea about it.
In this blog, we will go under the hood of growth marketing to understand how it can be the booster shot that your business needs right now.
Let’s get started!
What is Growth Marketing?
Growth marketing is an emerging, data-driven concept to achieve sustainable success and increased revenue. It includes continuous and rapid experimentation through technical expertise, product development, and sales.
Growth marketing is:
- Statistics based
- Agile operation
- Acquisition focused
- Retention oriented
The business uses every possible method to ensure growth by collecting data, utilizing it to market the products, and generating a powerful sales funnel.
The most essential objective of growth marketing is to gain more happy customers, retain them and make them repeat their purchases. If you have metrics that you’d like to increase, growth marketing is the way to go.
History of Growth Marketing
First coined in 2010, the term Growth Marketing started emerging when Sean Ellis used it to describe the experimental growth approach of giants like Airbnb, Amazon, and the likes. These companies were conducting experimental marketing campaigns and using data-driven methodologies to optimize and improve the results of their target.
Growth marketing is the evolution of the marketing industry which enhances the traditional marketing model that is being followed for decades. The approach is to ensure sustainable growth and expansion of the business.
How is Growth Marketing different from Traditional Marketing?
Traditional and conventional marketing methods have been followed religiously for decades. Now, with the emergence of the new-age businesses and technologies, it is high time that more effective and agile methods that are suited to the current industry be implemented.
Traditional marketing helps with bringing in new customers but growth marketing does it at a much faster rate. It doesn’t only acquire new customers but makes sure that they’re retained.
Today, with technological advancements and customer accessibility, your businesses can offer more value based on research, data, and the needs and requirements in the industry.
Here are a few major points where Growth Marketing differs from Traditional Marketing:
|Traditional Marketing||Growth Marketing|
|More focused on business||More focused on customer needs|
|Has only two customer stages: awareness and acquisition||Involves six customer stages: awareness, acquisition, activation, retention, revenue and referral.|
|Based on ideas generated by the team||Based on the consumer data generated from the market|
|Plan-based operations||Agile-based operation|
|Large budgets||Flexible budgets|
Growth Marketing is Customer Centric: Traditional Marketing focuses more on the overall marketing of the company, the development of the product, and its brand. Growth Marketing is more customer-centric and the needs of the customers generated in research are the major driving factors behind the marketing strategies.
Decisions based on Data: When it comes to creating campaigns and generating new ideas, the traditional marketing approach was to work as a team and decide how to position the brand and the product, especially on the basis of the opinions provided by the management. In growth marketing strategies, the campaigns, the marketing, the entire strategy is formulated based on the data captured from the market. In simple words, growth marketing has bid adieu to decisions based out of “gut feeling” or “in my experience.”
Customer Centred Approach: You might have a huge company with the most advanced products, but a sound growth marketing strategy will point towards the needs of the consumer and will be formulated based on what the consumer will like and what product positioning will sell in the market.
Agile Methodology: Plan-based operations were a common thing when it came to conventional marketing methods. Like, digital marketers often employ content calendars to plan out their months or even a year. In growth marketing, an agile method is followed where there is a collaboration of different cross-functional teams to put together and run the campaigns.
Flexible Budget: Traditional marketing teams often used to have huge budgets that were spent on expensive marketing techniques. When it comes to growth marketing, the budget is kept flexible. Often, growth marketing is employed by startups that don’t have the funds to compete against the giants.
Result-Driven: Campaign-driven tactics are a huge thing of the past. Traditional marketing solely focused on their campaigns and plans that were set by their leader and focused on implementation. On the other hand, growth marketing strategies are all data-driven and can be changed at any time upon the changing preferences of their target audience.
Benefits of adopting a Growth Marketing Strategy
Some of the many benefits of a growth marketing strategy are:
- Enhanced brand perception
- More scalability and elasticity
- Achievement of revenue targets
- Better and well-informed decisions
Are major companies adopting Growth Marketing?
The emerging concept of growth marketing looks very attractive but are major companies and organizations adopting it? Let’s look back at the history and origins of this term. Growth marketing was coined in 2010, as a result of the experimental marketing tactics used by companies like Amazon and Airbnb.
As we all know, Amazon is a global conglomerate and Airbnb is one of the largest businesses in the tourism and travel space. Even though these companies had the best budgets and resources, they were conducting data-driven marketing to offer more value and personalized offers. This led them to acquire and retain a large customer base.
Thanks to the advantages it offers, you may see growth marketing being adopted by major companies as their go-to marketing strategy.
Facebook and Google are two big examples of growth marketing strategies as they provide personalized experiences to each and every user. You might have noticed them experimenting with different tactics.
Major objectives and measurements of a Growth Marketing Strategy
The sole purpose of a growth marketing strategy is to create sustainable growth and customer retention. How to achieve these two major goals? By establishing objectives. We follow the AAARRR METRICS to measure the achievements.
A – Awareness
A – Acquisition
A – Activation
R – Retention
R – Referral
Awareness: Brand awareness is very important to launch any product in the market. You need website traffic, an increased click-through rate, impressions, social media likes, comments, shares, and a buzz/hype of your product in the market.
Acquisition: This is what leads us to the next step – Acquisition. You have to measure the percentage of users that become leads and eventually customers. How many leads have been generated in a particular given time? How many leads did not pan out? What is the cost of acquisition that the company is bearing? These are the metrics that need to be measured and used for research and analysis.
You also need to keep track of how much time is spent on prospecting a client. If there are any repeat customers, their buying behaviour needs to be monitored and studied to provide a more customized and personalized experience to them. This will lead to customer loyalty.
Activation: Once you’ve generated a lead, it’s time to ‘activate’ them by giving a first-hand experience of your product or service. This step is crucial since it is what converts leads into customers. The metric here is how many leads you can activate in a specific time duration.
Revenue: When it comes to revenue, there needs to be a target for average deal size, how many sales are generated monthly by new customers and new customers against old customers. Even sales per category on a yearly basis, expected and actual should be kept track of.
For understanding how you are retaining your customers, keep count of the following metrics:
- Customer Lifetime Value
- Customer Retention Rate
- Churn Rate
- Product and Service Usage
Innovative Growth Marketing Methods
Contrary to popular belief, growth marketing isn’t a phenomenon from another planet, rather it tweaks traditional marketing methods so that we can get the best out of them. Let’s see some innovative methods used in growth marketing.
Personalized Content Through Various Platforms
Content plays a central role when it comes to growth marketing as it helps you stay in touch and interact with customers throughout the cycle. Instead of preparing generic content, growth marketing involves preparing personalized content based on the demographics, marketing channel, product, service, etc.
A/B Testing or Multivariate Testing
One of the most commonly used methods in growth marketing is A/B Testing or multivariate testing. It refers to spinning and repurposing your marketing content to see results and generate the same objectives through varied versions of the same approach. Buzzfeed, for instance, gives multiple blog headlines to see which one works the best for which platform.
Create a community for your brand
People like being associated with a community as being part of a group that gives them a symbol, a status in the society. While marketing for your business, create a community of users for your customers to interact with and engage with other users.
This will encourage users to talk about the benefits and usage of your product and at the same time, it brings in more leads and potential customers through word of mouth.
Growth marketing strategies for you to implement
Align strategies that you formulate with your marketing growth objectives and focus on creating a potential for expansion of your brand. This can be done by implementing the following strategies:
- Conduct a thorough market research
- Know your audience
- Use the platforms that your audience frequently uses
- Focus more on digital tactics
As mentioned before, growth marketing is a data-driven concept, and thus, thorough research is important before launching your brand and its positioning into the marketing.
Knowing your audience through data can help a lot in identifying areas of improvement for your product and help you optimize it for better deliverables.
As far as social media is concerned, your business needs to have a presence on the platforms that are frequently visited by your audience. You don’t need to use all platforms, but the ones that can give you the highest traction.
Key metrics to use for Customer Retention
When your end goal is customer retention, it is essential that you keep a few measures and targets to achieve. Here are some of the key metrics to keep used by growth marketing agencies for customer retention:
Customer Retention Rate – This is a very straightforward and easy-to-understand metric for analyzing customer loyalty and repeat purchases.
Customer retention rate = ( (NCE – NEW) / NCS ) X 100
NCE – Number of customers at the end of the time period
NEW – Number of newly acquired customers
NCS – Number of new customers at the start
Customer Churn Rate – The churn rate is similar to the turnover rate. It shows how many customers have stopped doing business with you and left the brand over a given period of time. Over 5-7% of churn rate is normal for any company but should it go above 8-9%, it is a cause for concern.
Churn rate = Number of current customers / Number of total customers
Net incremental value: This metric measures the change in the net revenue throughout the given period of time. It helps in identifying the alignment of the results to your objectives and set standards at the beginning.
Total Net Revenue = Qualifying revenue – Incentive costs
Repeat purchase ratio: Loyal customers’ rate is also known as ‘repeat purchase ratio.’ This helps you in understanding your loyal customers and their preferences. Eventually, this will help you provide special attention, and personalized offers to the customers who will, in turn, be retained.
Repeat purchase ratio = NRC / NTC
NRC – Number of returning customers
NTC – Number of total customers
Daily, weekly, and monthly active users: This is an important metric to keep track of the success of your marketing campaign as well as to increase the number of users. It creates a benchmark for you to keep them engaged and loyal to your brand.
Customer Lifetime Value: It refers to the value, the revenue that is generated by each customer. This is an important metric that every marketer should track. A steady increase in CLV should be your company’s goal.
Good Marketing is Growth Marketing
A business works best when it adapts to the change and is flexible in its marketing. When your business adopts a growth marketing strategy, it is bound to flourish with increasing customers, increasing brand value, and increasing revenue.
We, at LeanSummits, are a Growth Marketing company that assists you to realize the full potential of their business by evaluating your business model and developing a synergistic growth strategy for their organization. Book a free consultation to know how we can help you!