What's stopping our growth? Our marketing or our product?
A UK consumer lens on Lenny's recent Growth Inflections post.
Lenny Rachitsky has just written on growth inflections1. He narrows a lot of complexity down into three categories:
1. Product developments
2. Outside forces
3. Doubling down on your growth engine
It was a good reminder of what "Growth" really is.
There is still a lingering sense in the European tech ecosystem that 'Growth' is the startup name for marketing.
Growth is all three of the forces above.
Which inflection should you focus on?
As always, you need to focus. What can most consumer businesses do to maximise their chance of success?
1. Product developments
If you are a DTC, this is one of the hardest areas. And, I say this with deep experience (and love) of running a DTC/hybrid business.
Most DTCs are built on a single product idea.
"Let's do a better version of the crisps. We can make them healthier, full of protein, vegan, while still tasting of crisps."
That business could make a big splash early on (Outside forces), but when it gets to nailing the growth engine, will probably struggle.
How do you think then about product development? The answer is often different flavours, or sizes of bag, or maybe an algorithm that matches your taste in wine to your ideal crisp profile. At Wine List, we went through volume of wine bottles (cases, doubles), content (video, physical, zoom), and then repackaged (glass pouches). We tried concierged recommendations, events, WhatsApp groups. We tried park delivery services, Deliveroo delivery, branded partnerships.
The point is, they were all pretty standard ways to sell wine.
With physical products, you are significantly more limited than you are in a tech company. If you're Facebook, the number of product journeys a user can take is comparatively infinite.
This problem rears its head most powerfully before you've found product market fit.
Developing the muscle of product innovation is good. And if you are able to overcome a PMF challenge through product innovation, that muscle will also help to fuel future Growth Inflections.
2. Outside forces
At Wine list, our biggest outside force was covid. Not something you can base a strategy around.
The two most relevant ones that are designable are press & influencers.
Press was how Notion, Slack and BeReal made it big in the early days.
I’ve been cynical on this in the past, equating PR with brand marketing. But hype is important. And learning how to craft a story consistently that gains attention is vital in your marketing.
The goal though is to build genuine hype that creates a groundswell of attention. Not the occasional press mention, but consistent campaigns that make the public take notice and talk about you.
Every single time I've run a 'Where did you first hear about us?' survey, PR was responsible for a much larger portion of the budget than it was being given. Invest in PR.
The other side is influencers. A friend of mine who used to run growth at a big consumer health tech told me how influencers were responsible for all of their early growth. Like with PR, this can’t be a flash in the pan ‘test’ activity. It’s not something you can spend £5k on, and see what happens. Invest early and commit.
3. Doubling down on your growth engine
Product improvements & external factors are clearly avenues of Growth Inflections. But if your growth engine isn't repeatable/embedded, the impact will die quickly.
BeReal is facing extinction. Clubhouse is already over.
But Notion & Slack? They had great growth engines in place to take advantage of those press mentions, and early traction.
So while product & outside forces are important, you also need to ensure your growth engine is firing.
For most consumer businesses, that means performance marketing (future posts on this soon).
Why?
First, to be sustainable, you need to acquire a customer for a lot less than that customer makes you in profit.
If your product nets you £40 profit, that means you can't pay more than £40 to acquire them.
Second, true startups – businesses defined by their ability to grow – require outsized returns. You might be able to grow an organic-driven consumer business to a healthy 7 or 8 figure position, but organic caps your TAM and your speed.
So where does that leave you?
The core divide is as ever are you pre or post PMF?
Pre: ignore these. You should be doing minimum viable marketing, to get enough users to understand the product. And iterating.
Post: your growth engine is the most important thing. Great outside forces and product development will only ever top up a leaky system otherwise.
Start with the engine, then introduce (or likely alongside) the outside forces. And then when you hit a ceiling, start to think about the next waves of product development.
Growth Inflections, Lenny’s Newsletter.
Also, a huge thanks to Beth Carter for helping with revisions on this post.