Today’s focus is on an approachable process for setting your growth strategy. In this blog post, I’ll outline a concise five-step method to define your growth strategy.
Step 1: Identify Your North Star(s) → Identify the Inputs
Your North Star Metric (NSM) is:
The primary outcome metric that measures the success of a company’s overall strategy and product vision. It should capture the core value delivered to customers.
In simpler terms, your NSM is an output metric that reflects the value your customers receive from your product. For an ad-driven business, this might be Daily or Weekly Active Users (DAU or WAU). In a marketplace, it could be transaction volume (rides for Lyft, bookings for Airbnb). The critical aspect is that an improvement in this metric indicates more value delivered to your customers.
While revenue is crucial, it isn’t the best NSM because it more closely aligns with the price customers pay rather than the value they receive. Instead, focus on metrics that reflect retention, engagement, and monetization.
Consider having three NSMs for a complex business to capture its nuances effectively. For instance:
• Retention-based metric: Weekly Active Users (WAU)
• Engagement-based metric: Frequency of return within a week (e.g., 4d7)
• Monetization-based metric: Number of ad clicks
Once you have your NSMs, break them down into their inputs. For example, WAU could be broken down into:
• Number of new signups
• Number of activated customers
• Number of retained customers
• Number of resurrected customers
These inputs contribute to your NSM, with some being more indicative of real intent (e.g., activated customers) than others (e.g., signups).
Step 2: Map Your Learnings
Mapping your learnings involves collecting and analyzing past experiment results, research, customer conversations, metrics, and trends. This helps you understand how these inputs impact your NSMs.
Useful resources for this step include:
• Experiment Documentation
• Mastering Product Discovery through Quant Research
• Collecting Customer Feedback
• Setting Up A Weekly Business Review
Organise your findings in a simple, structured format:
[Input]
Learning / link
Learning / link
Learning / link
This helps you see where your knowledge is robust and where it may be lacking or outdated, providing a clear picture of past impacts and guiding future actions.
Step 3: Leverage Your Learnings
Assuming you have a well-documented archive of learnings, leverage these insights to identify major themes and patterns. Modern tools like Large Language Models (LLMs) can simplify this process by helping to analyze and extract meaningful themes from your data.
Engage with an LLM to:
• Identify major themes from your insights
• Deep dive into specific areas to find recurring themes or patterns
• Conduct comparative analysis with past learnings to identify new or evolving trends
Your goal is to pinpoint which growth loops would benefit from acting on these insights and determine their potential impact across multiple NSMs.
For example, if you discover that users frequently share content from your product via Slack, there might be an opportunity to enhance this sharing feature within your product, creating a new growth loop.
Step 4: Sequence Your Opportunities
To sequence your opportunities effectively, estimate their potential impact using a simplified growth model. Adjust the model based on potential actions derived from your insights.
Use a prioritization methodology like RICE (Reach, Impact, Confidence, Effort) to sequence opportunities. This will result in a stack-ranked list of opportunities, forming the basis of your Growth Strategy: ‘Here are our opportunities and the order to address them for maximum impact on our loops.’
Step 5: Build Your Backlog
The final step involves breaking down sequenced opportunities into their component parts, primarily through experiments designed to test the hypotheses within these opportunities.
For instance, if you aim to reduce friction in the sharing process, break it down into hypotheses such as:
• Making sharing more obvious
• Prioritizing link copying over direct channel sharing
• Providing feedback on successful link copying
Develop a backlog of experiments, focusing on testing these hypotheses. Some changes might be low risk and implemented directly, while others, with potential downsides, should be tested first.
This step ensures you have
