To Set Growth Strategy, Ask “How” Twice
Start With Financial Goals
1. Ask “how” to identify growth levers
The first time you ask “how”, it’s to unpack the different levers that you could pull to achieve your financial goals. With fast-growing B2B software companies in mind, and focused on go-to-market strategy, I’ve identified four families of growth levers.
Market strategy levers
To pull a strategy lever is to alter the game that you’re playing. This could mean changing the customers you’re selling to or changing what you’re selling them. Market strategy levers can impact financial metrics across the board: revenue, bookings, margin, etc.
Narrower focus increases efficiency to improve margins, or grow with less spend.
Entering a new segment or industry increases the addressable market.
Selling new products to new customers, or more products to each customer.
Expanding the customer base, increasing products sold to each customer, or both.
These levers are all about increasing volume. In many cases, that involves increasing inputs to increase outputs (e.g. spending more on marketing to generate more leads). But they can also entail investing in scalability plays that allow each person or process to perform at greater scale.
More employees to process more volume; either directly (e.g. hiring more AEs), or indirectly (e.g. hiring sales ops to help each AE be more productive)
More top of funnel leads to fuel bookings, whether they come from sales development, marketing, partnerships, or product-led growth.
Volume per rep
Enhance the capacity of individual employees (e.g. AE’s, onboarding managers, support reps) to process more volume.
These levers are all about improving yield. Unlike the scale levers, they’re not about doing more, they’re about doing better. They tend to help with both stretching limited growth war chests further, and with improving margins.
Improve the % of leads that become opportunities, by collecting the right ones, or nurturing them better.
Improve the % of deals won, by focusing on the right ones, or working them better.
Improve the speed (in terms of team-hours spent, or days to go-live) or effectiveness of customer onboarding
These levers are about extracting as much value as possible from existing assets, which could mean making the most of an existing capability, market position, or customer base.
Keep more customers, and grow accounts over time.
Sell more products to existing customers by upselling premium offerings or cross-selling complementary products.
Maximize value from each customer by matching product packaging and pricing with customer willingness to pay
2. Ask “how” again to pick growth tactics
Just as there are multiple growth levers that can serve each financial goal, there are multiple tactics that could be employed in the service of each growth lever.
A combination of growth levers help the company achieve its financial goal
Let’s say that an example company has a financial goal of accelerating bookings. It could get those bookings from its existing customers, from new customers in its existing market, or from new customers in a new market. For this example, let’s assume a more aggressive strategy–the company wants to both ramp new logo bookings, and also wants to demonstrate a growing total addressable market (TAM). It has decided to expand down market and accelerate growth by selling more, smaller customers.
Marketing strategy levers
New product – in order to expand downmarket, the company will launch a new, lighter product (assume the product is already built).
Lead volume and volume per rep – because the average deal size is smaller, the company will need to generate much higher lead volume, and to develop the capability of processing many more opportunities.
Customers activation – in order to scalably help smaller customers see value from the solution fast, the company will need to invest in its onboarding process.
Retention – because smaller customers will have a higher propensity to churn, the company will need to invest in customer and revenue retention to avoid pouring new customers into a leaky bucket.
Each growth lever is put into action with several tactical plays.
Use playbook to choose the right growth levers, and to find tactical experts to help you deploy them
Find tactical playbooks for areas where your team has less experience
Find tactical playbooks that make sense for your business model
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