How much of your growth marketing tactics based around acquisition, and how much are they based around retention?
It really depends on the lifecycle stage of the product and the goals/OKRs set up each quarter. But it is very common for growth-focused initiatives to be organized around the audience lifecycle. I often organize my teams, strategies, and tactics around some version of the following but adapted to fit my product needs: acquisition, onboarding, retention, resurrection.
That way you will empower different team members to be accountable for each part of the customer journey and be able to measure where your product is excelling and struggling.
Each quarter, our team is generally proposing helping with KPIs around:
- acquisition of new users
- activating those new users
- expanding or upgrading users (using their credit card to buy something more)
- retaining those users month over month, and year over year
- talking to sales about our Enterprise plan
How much effort we put it into each really depends on the needs of the business, but we’re generally doing something for each.
This is going to depend entirely on the growth stage of your business and the health of your customer base.
If you're a startup, you'll need to focus on getting new customers in the door. But, if those prospects or trialers aren't converting into paying customers, or are churning out rapidly in the first few months, then there's no point in adding more into a leaky bucket. You'll need to patch up the bucket first.
In reality, balancing customer lifecycle initiatives will be an evolving and fluid activity. In order to maintain the right balance, you'll need insight into your lifecyle metrics. This means everything from setup and activation rate to churn and retention rate. (I'm a huge fan of the Reforge lifecycle model that they teach in their Growth Series.)
This data is even better if it's at a cohorted level. You might find that for one of your segments you need to focus on retention, but for another segment, the focus should be on acquisition.
At my current company, Clockwise, we’re focused on acquisition and monetization mostly. We’re a new product and there’s still lots of room for growth at the top of the funnel so we’re prioritizing efforts like nailing paid acquisition strategy, driving demand for the sales team with events and content launches, and experimenting on the user lifecycle to improve monetization.
We have incredible net revenue retention organically, so there's not a need for us to focus on retention at the moment.
When working on a product, the goal is that we are focusing on a problem that our merchants want us to solve. If we are doing that, there is already a natural interest in the product, which leads to acquisition. The audience that is organically interested in our product is likely to be the most highly qualified for the product or feature we’ve launched. Therefore, my priority is to ensure that we retain our existing customers and meet their expectations. If we are not doing this, then focusing on acquisition is not relevant. Once we have achieved product-market fit, it makes sense to move up the growth funnel.
Overall, the following framework can help you think about Growth Marketing and how to invest in each area.
There are four key focus areas:
Each of these focus areas has a desired outcome: perceived value, realized value, and ongoing value. To achieve these outcomes, there are primary tactics that can be used, such as paid media, SEM, email, direct mail, social media, and influencer marketing. Key metrics to focus on may include conversion rate, CPA, ROAS, new accounts, and revenue, with the ultimate goal of increasing Monthly Active Users.
How much of the Growth work is focused on acquisition vs retention depends on the business needs. For example, if you have a hard time keeping users engaged and retained, you may want to focus more on retention tactics. By determining where the challenges lie, you can focus on the right areas of growth.
This really depends on the maturity of your product and/or stage of the company you’re working at. For example, early stage and scaling growth companies often have a strong emphasis on customer acquisition to build the user base quickly. If this is where you’re at, then this is where the majority of your focus should be. For businesses with subscription models or have high customer lifetime value, a strong focus on retention is key. Because keeping existing customers happy and engaged is much cheaper than constantly trying to acquire new customers, and ultimately, contributes significantly to long-term success.