The biggest misconception about growth in Europe
During the last four years working in the field of growth with the bureau, our perception of growth varied from time to time. It went from being cool to being a growth hacker to growth marketer and it will eventually move to a growth product manager, soon. We see several companies we worked with in the past have a misconception about what growth is and where it should live in the organization.
If you would ask most CEO's, the answer will probably enhance something with; "marketing, of course!". However, if you zoom in at most successful international businesses, 70% will tell you that growth should be part of the product team in order to let the organization thrive.
After chatting with several CEO's in and around Europe and misinterpreted thoughts around this topic we started to wonder; Why are many European companies under-educated in the field of growth? And how did this misconception about growth get adopted in a bad way in Europe?
In this blog, we will briefly touch upon these developments and answer the following questions:
- How do most companies see growth?
- Where should growth live within an organisation?
- How do you structure your teams around growth?
A short history of growth 🕰
Back in the days, the majority of marketing teams were solely responsible for acquisition (top of the funnel). Growth within companies was all about acquiring new users and spending money at channels in order to fill the funnel. Due to the quickly transforming landscape, more and more products in tech (SaaS, mobile apps, marketplaces etc.) took over the industry.
Where traditional marketing teams were outstanding in running online campaigns, crafting beautiful brand campaigns or set up the launch of creative product promotions, new school marketers needed to understand how technical implementations and data analyses were done. As a result, the 'old marketers' had to be retrained to more data/technical marketers or made sure that they quickly adopted this new way of working in order to hire youngsters effectively.
The first tech marketers started in teams in Silicon Valley, working at companies like Facebook, Pinterest and PayPal. What these 'new wave' of technical marketers understood was that most of their growth was related to their product. Spending money on acquiring new users while the funnel is leaking isn’t what you should chase. Optimizing the product onboarding resulted in +100% growth rates instead, easy call. Furthermore the focus on retention features or improving referral programs resulted in exponential growth rates.
You grasp the idea that building these features was not tasked for the marketers, rather by the front-end- and back-end development teams. But due to the fact that marketers were becoming more and more product-focused instead of campaign focused organizations and team structures needed to change.
This new way of growing your user base by involving product eventually evolved to cross-functional teams. Marketers, product owners, developers, analysts & designers needed to start working together on how to improve onboarding or building new features that would improve the growth rates over time. To accelerate these product implementations, the velocity of experimenting is key. The Agile/Lean way of working is perfectly suited to make sure teams were moving faster than the competition because of the learnings per week/month.
While this was working for startups in Silicon Valley, this new approach slowly won territory in multiple European countries and got the attention of several influencers in our industry. We believe this is where the misconception about growth happened. The biggest mistake the European startup teams made was to tell their marketing department to "start running more experiments". However, most marketing teams were already familiar with running experiments within their online campaigns or on the website.
"So, what is really new about growth hacking"?
What this trend did not entail was that companies who were applying cross-functional teams and the lean way of working were embodied within the product teams, not in or around marketing teams.
This misconception paved the way where a lot of marketers started to learn about 'growth hacking' and a new generation of self-proclaimed growth marketers was born. In the meantime within the product teams, nobody noticed. Obviously, product teams were already working by the principles of Agile, but they were almost never involved nor informed about the growth metrics and the customer journey of users.
How should companies see growth? 👀
Let’s start to agree on some definitions. Growth does not equal marketing in our opinion. When we talk about the term ‘growth’, we are referring to the company or business as a whole. It’s not solely the marketing department that contributes or stalls the growth of your business. What do you think happens if the development teams aren’t able to quickly fix a bug that’s holding new users back in order to complete their signup? You won’t grow, pinky promise.
Everyone in the organisation, from Human Relations(HR) & Customer Service (CS), all the way to your developers contribute to the growth of your company. Therefore every team should have their own growth metrics or Objective Key Results (OKR’s).
For example, if HR doesn't make sure employee happiness results are in order, this will result in lower team performance over time. If the developers are delivering a poor product, customers will stop using your product or service and eventually churn. If your customer success team doesn't help properly or doesn’t act human, people will post bad reviews, which could harm App Store ranking positions or overall brand perception.
If you underestimate the intertwining of different teams, you eventually will be hurting your growth metrics over time. This is why you should map the customer journey, involve all the team disciplines and departments to spot dependencies and joined responsibilities. You can then start to draw your metric-ecosystem to influence all the inputs that lead to your goals (OKR’s).
Secondly, management needs to understand the different paths in order to grow the user base and improve metrics along the way. We like to break this down into two simple concepts:
- Changes in the product
- Communication nuances
Changes in the product (product-led growth)
This includes initiatives that have an impact on your product roadmap. You need a designer, developer and product owner to start running experiments within an initiative like this. For acquisition metrics, these could be app content indexing, for activation/retention this could be to improve onboarding to improve the First Time User Experience (FTUX).
All these initiatives will have an impact on your product roadmap, but could have a significant impact on your growth metrics over time because it’s in the core of what your customers and users are seeing. We call this product-led growth.
Changing communication (marketing-led growth)
These are initiatives that won’t have an impact on your product roadmap and can be executed autonomously by a marketer and without any other department (maybe with designer). For acquisition, this could be experimenting with different SEA campaigns. For activation, it could be something as improving the onboarding email flows or implementing push messages (when proper tooling is implemented, e.g. LeanPlum).
All these ideas have an impact on your growth metrics but can be executed without any help of your product owner or developers in the first place. We call this marketing-led growth.
Which one should you focus on? 🔎
As always, it depends, of course. Your growth model can help you determine the focus areas but from our experience, the initiatives with the biggest impact on your metrics are the ones that qualify for product-led-growth. For example, reducing friction in your onboarding screens would have way more impact versus email flows that try to resurrect customers after a drop-off between steps in your funnel. And if our experience isn't reassuring for you, maybe listen to one of the best growth practitioners in the field, Casey Winters:
"The best startups grow super fast not because of traditional marketing or online marketing, but because they tune the product to drive growth."
This doesn't mean you can't experiment with email flows and push messages anymore, but please understand that product initiatives could have bigger impacts, so always experiment with the biggest bets first. After the bigger bets, it will turn into optimalisation sooner or later.
Furthermore, a third one, and this is personally how we ideally like to see growth within a company; Growth = Unknown. Growth departments focus on problems within your organization which could have a big impact on your metrics but you don't know (yet) how to improve those metrics. Meaning, growth is validating new initiatives, and other departments (like marketing) are optimizing those initiatives.
When a growth team validates a high-over hypothesis, like the validation of a certain acquisition channel or MVP loyalty program for example. We prefer to task this to the marketing or product team who will become responsible for optimizing the outcomes. In doing so you can hire experts in that field that can start maximizing the outputs and you create a perfect distinguish between growth and other departments.
Finally, this is something everybody understands and should sound familiar, you iterate your way to growth. Meaning, stating assumptions and hypothesis which can be validated and need to be systemized. This way of working will become the standard routine and already is by a lot of early-days growth marketers and industry leaders.
How to structure teams around growth? 🏗
This is a very interesting topic to talk about, since there is no one size fits all. Additionally, there are a lot of growth practitioners out there that have their own experience and opinions about structuring growth teams within organizations. But since you're reading this, we would like to share ours on how we believe 'larger part' of companies should structure their growth teams to have the highest possibility to impact your growth rates.
First of all, don't focus on the setup of growth teams when you did not reached the point of product-market-fit (PMF). If you are not sure if you have PMF, you don't have it; plain simple. There are tons of articles about this topic so we won't deep dive into the why. Just don't do it, it's a trap 🕸
Once you established product-market-fit, you can justify the choice to form a dedicated growth team and pour gas on the fire. By launching structured experiments to drive a desired behavior or action from your customers (for example the one that influences your North Star Metric).
If your retention curves are flattened out, you are most likely ready to build a dedicated team that keeps improving your retention metrics, while acquiring and activating new users in parallel.
Your first growth team 🪂
Your first hire should never be a growth hacker or growth marketer (whatever you like to call it, but the buzzy words) but an experienced growth-focused Product Manager (PM). This growth PM needs to work closely with your developers and design team and will focus on optimising the metrics along the customer journey. Well done, your first cross-functional team is born.
A lot of companies that crossed the point of product-market-fit will choose to hire a growth marketer to boost new user acquisition. Most of the times because this seems the easiest way to grow your user base. But if we would like you to take away one single point from you reading this essay: don't go for quick, shiny short term, go for sustainable long-term growth. Build a product people love, tell their peers about and reduce every single point of friction for optimal product experience by iterating week over week.
The reason why most startups prefer to bring in a growth marketer is because the set-up of their founding team. Most founding teams have a Chief Executive Officer (CEO), Chief Technical Officer (CTO) and Chief Product Officer (CPO).
The CPO will remain responsible for the product roadmap for an extensive amount of time, but almost always until they hire the first 'experienced' Product Owner. Because of this, startups will roughly always start to hire a growth marketer first who can run acquisition experiments first. This sounds as it all makes sense, since you are missing these skills and expertise in your company.
But more and more seasoned practitioners in growth (i.e. Casey Winters we mentioned earlier) believe the best startups grow lightning fast because they are tuning the product, focus on big bets, not because their greatness in acquisition campaigns or marketing tactics.
Most European companies have a wrong perception of growth and where it should live in the organization. If you want to win in this competitive landscape continuously improve your biggest growth levers. Therefore focus on product initiatives first. You need a Growth Product Manager who will be data-oriented and have prior growth experience. His/her main goal must result in more people experiencing the product value. Therefore the Growth PM needs cross-functional team members who will also be responsible for these growth metrics. Together they will continuously improve your product that needs to result in exponential growth. Start to break the old way of thinking in your business and make sure everybody feels and contributes to the North Star metric of the company, not only the marketing teams.
At Off The Record, we help to build viable business together with founders and corporate innovators. We're a Techcrunch-recommended growth bureau that has helped Dutch startups scale globally.
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