The most growth-stifling and frequent problems I encounter are (1) a lack of challenging growth goals and (2) a solid plan to get there. Imagine being on a treasure hunt without a map that helps you to get to the spot marked with an X, with no idea where you are and where you want to go. Who would go for such an aimless mission destined to fail?
Only a third of the team I meet have well-defined goals. I'm glad that models like OKRs (Objective and Key Results by John Dorr) and the AARRR Metrics (by Dave McClure) have increased in popularity. The teams using these methods often show deeper insights into their current situation and where they want to go. It usually depends on the team leader's affinity towards product, sales, or marketing how well the growth goals are defined and broken down into actionable projects that make meaningful progress on the company mission. As the person responsible for growth, you must define and communicate the goals and strategies to get there if you aren't satisfied with the clarity of the current goals.
Problem: Most teams don't get anywhere because they have no or meaningless goals.
(Graphic - Pirate Bills customer journey)
Let's look at an example to understand meaningful and challenging goals. Our fictional company is the 12 months old "Pirate Bills", a B2B SaaS solution for billing management. For context, let's look at their current weekly numbers for the growth team. I have encountered these realistic and reasonable numbers many times, but they can vary significantly from yours, which is fine.
-2.500€ Ad Spend (on a platform like Meta or Google)
100 New Trial Users (30 day free trial)
10 New Customers (after a 30 day trial period)
+500€ Current Revenue (after 1 month)
+5.000€ Expected Lifetime Value (after 10 months)
-2.000€ Net Revenue (after 1 month)
+/- 0€ Net Revenue (after 5 month)
+2.500€ Net Revenue (after 10 month)
What goals should a growth team in such a situation strive for? In these cases, I often see goals like this:
These sound reasonable on the surface but are flawed once looking a bit closer. Let's start with the overall goal of 75 new customers per week. Where does this random number come from? It's 7.5 the current customer acquisition speed, which is possible for young companies, but I recommend doubling it in three intervals from 10 to 20 to 40 to 80 new customers per week. It's more rewarding and reasonable, yet still quite challenging. And why "new customers" in the first place? We are talking about a moderately funded company that just got 300k USD as a convertible loan three months ago. This team of two founders and two employees aims to grow profitably in the coming 24 months. Shouldn't they optimize for more profit or at least net revenue? The overall focus on new customers sounds like something from an investor pitch deck or business plan. It's only a questionable means to an end.
Next, the ad spend reduction is driven by the fear of losing money over five months before the customer lifetime revenue surpasses acquisition costs. But they have shown that their early customers stayed on for ten months on average. What are the 300k good for, if not for the ability to bridge the time between cost per acquisition (CAC) and a positive return on that investment (ROI)? While lowering the cost per trial is generally a good goal to strive for, the more important goal is the balance between cost per trial and the resulting revenue from paying customers. You can measure that in return of advertising spend (ROAS) or the amount of predicted net revenue (customer lifetime value - cost per acquisition - cost of goods sold). The 5.000 subscribers, 10.000 followers, and 500 SEO visitors sound like goals any company "should" have these days, but are they actually contributing to the mission? To define better goals, we must first learn what the company truly wants to achieve.
Method: Set OKRs (Objectives and Key Results) based on your company mission.
(Graphic - OKR Pyramid)
What if the Pirate Bills team had subscribed to a goal-setting methodology like OKRs (Objectives and Key results)? What would challenging and meaningful goals look like for them? Let's start with their company-wide plan and break it down for the growth team.
The growth team must acquire as many customers as possible while ensuring enough revenue balances the costs. Or as we like to say:
"Grow the Products' Impact and Profit"
So, what is X on the map for the growth team of Pirate Bills? We break down the company goals to our area of responsibility and key results for the next three months:
This is our first draft of objective and key results for the growth team. It is subject to change as we dig deeper into understanding the bottlenecks and identifying breakthrough ideas. But it's a clear X on our growth roadmap, backed by the company's true goals.
Solution: These are the x steps to define the perfect OKRs for you.
Conclusion: Get your treasure map template and (transition to the next chapter)
Now it's your turn to define the X on your growth roadmap. Not doing this will result in you looking back 12 months later and asking yourself where the visible progress is. Get started with something that isn't perfect. Don't wait for the perfect clarification of the company goals, either. I still have to find the company that wouldn't be ok with more impact and profit as a basic direction for the growth team. You also don't have to go with the OKR method from the example. Pick what works for you and your team. Now, take a bit of time to sketch a rough draft of how your X is defined. It'll make all of the following parts much more relevant for you.
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