1-2-3, growth strategy

Are you working on a growth strategy? Here are three crucial questions you should keep in mind to ensure you’re on the right track.

1. Which user cohort are you trying to grow?

Identifying your target audience will help you narrow your scope. Are you focusing on new users, existing customers, or a specific segment of your user base? Understanding this will help tailor your marketing efforts and product development to meet the specific needs of your chosen cohort.

For instance, new users might need more onboarding support, existing customers could benefit from loyalty programs or upsell opportunities. Clearly defining your target cohort allows you to craft solutions that resonate deeply with your selected audience.

2. How much did the additional customer cost?

This involves calculating the CAC, but with a nuanced approach. Measure the cost on the uplift, not on the whole base. Focus on the incremental cost of acquiring each additional customer rather than the average cost across all customers. With this approach, you better understand the ROI of your marketing efforts.

For example, if you’re running a specific campaign, assess the costs associated with that campaign alone and compare it to the revenue generated from the new customers it brings in. Or when sending out an incentive to your base, measure the additional orders on top of your baseline. This granularity will help you make more informed decisions about where to allocate your budget for maximum impact.

3. What's the quality of these new customers?

You need to ensure they are high-quality customers who will drive long-term value for your business. Consider both leading metrics like what and how much they are buying, and lagging metrics at the first or third month of retention.

Leading metrics provide immediate insights into the behaviour and preferences of your new customers, helping you to quickly adjust your strategies if needed. Lagging metrics, on the other hand, give you a longer-term view of customer engagement and loyalty. High retention rates indicate that your product or service is meeting the needs of your customers and that your acquisition efforts are sustainable.

By regularly evaluating these three questions, you can create a focused, efficient, and effective growth strategy. You ensure you’re not just expanding your user base, but doing so in a way that maximises value and supports long-term success.

Always remember, growth is not just about sales and acquisition numbers and volumes; it’s about quality and sustainability too!