Marketing/Growth Channel Coordinate System

Choosing, prioritizing, measuring, and optimizing different channels is a major part of any marketing/growth job.

But there is no such thing as the perfect channel that would work for every company and in every situation.

Once in a while, a new channel might emerge and it might perform better than everything else for certain companies for a period of time. But most of the time there are trade-offs to consider.

In this post, I’m sharing a simple visual guide to selecting the most promising starting channels for testing and understanding their inherent trade-offs.

Predictability vs. Cost Trade-off

The performance of some channels is easier to predict before you invest any time or effort. It’s also easier to forecast how they are going to perform in the future. Generally — but not always — these channels tend to cost more as companies are usually willing to pay extra for certainty.

Predictability vs. cost coordinate system.
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competitive intelligence tools, market research

Best Tools For Competitive Intelligence

Wouldn’t it be nice if you could always be on top of what your competition is up to without making this your full-time job?

There are many online tools available in 2018 that can help you achieve exactly that.

For the purposes of this post, I will omit all the context about competitive intelligence — what it is, why it’s important, how to do it systematically, and how to make it actionable. Instead, I will simply list useful tools and apps and provide brief descriptions.

Let’s dive right in!

Listen to Their Customers

  • B2B software companies: Capterra and G2Crowd reviews
  • E-commerce companies: Amazon reviews and Google Shopping reviews
  • Mobile apps: reviews on iTunes and on Google Play marketplaces
  • Reviews on social media platforms: read comments on ProductHunt, search Twitter for the responses to the company, look at comments on their Facebook page, and search for “company name Reddit”
  • Other categories: try searching directly for “company name reviews” or “product category reviews”

Listen to Their Employees

  • Do people enjoy working there or are they leaving in droves — Glassdoor.com
  • See how their headcount has been growing over time on LinkedIn

Review Their Funding and Investors

See Whom They Are Hiring And Where

Automatically Receive News About Your Competitors

Stay on Top of Company Announcements

  • Subscribe to their email newsletter(s)
  • Subscribe to their blogs and press releases

Detailed Analysis

  • Watch, read, or listen to interviews with their CEOs or key executives.
  • If your competitors are public, review their S-10, 10-Q or 10-K reports on sec.gov. Insights to expect: financial metrics, market intelligence, future plans, etc.
  • “Mystery shopping”. Sign up for product trials or product demos to learn more about their products. Visit their stores and talk to their salespeople.
  • Do your own qualitative research. Not only talk to your customers but to customers of competing products too — so that you could learn about their strengths and weaknesses.

Other Tools

  • Review their traffic — Similarweb
  • Review company profiles — Owler
  • Understand their content strategy — BuzzSumo
  • Review their SEO rankings and PPC strategy — SpyFu
  • Get notified when their website is updated — Visualping

Consider Purchasing Research Reports

Browse reports published by these companies:

Obvious But Sometimes Overlooked

  • Corporate website and blog.
  • Social media: LinkedIn, Twitter, Facebook, etc.

Leverage Your Colleagues

  • Create a slack channel for competitive intelligence. Post big news and encourage all customer-facing teams to do the same, so nothing important goes unnoticed.

Let me know if I left anything out!

How to Find Your Ideal Customers

Trying to market your product without knowing whom you should market to is like walking blindfolded. You might still end up in the right place. But it’s not very likely.

Any Customers Vs. Ideal Customers

A new startup might try anything to get its first customers. At this exploration stage, you cast the net wide. You approach different individuals and companies and do whatever it takes. Any customer is a great customer.

But as the company grows, it learns that not all customers are created equal. Some are easier to acquire. Others benefit more from the product and are easier to retain. Yet others are easier to expand and upsell to.

This raises a question. How do you know who is your primary target audience?

At an early stage, you “just know” your ideal customer. Your ideal customer profile is whoever was willing to buy your first product or sign an agreement before you even developed a prototype.

Of course, you can always stop here.

But if you’re planning to become a world-class company, you might need to take it to another level and make sure that your marketing is also world-class. All top technology–, and more narrowly, Software as a Service (SaaS) companies have a very clear understanding of their ideal customer profile. Even though this post will be particularly relevant to this type of company, the general principles can be applied to any industry.

A side-note on terminology: terms such as “ideal customer profile” and “target audience” are often used interchangeably. “Buyer Persona” is another similar term that emphasizes the focus on individuals – as opposed to companies.

Why Define Ideal Customer Profile (ICP)

An ideal customer is a customer that is more likely to like your product and pay for it. Knowing your ICP should help you grow revenue while investing less. This higher return on investment is achieved through better targeting among other things.

Imagine, you sell software that helps cities analyze traffic patterns and make better urban planning decisions. You could place a TV commercial and hope that the right people will see it. This would be utterly inefficient.

Alternatively, you could identify a subset of cities that are most likely to adopt this type of software, then identify the right officials who are most likely to be decision-makers and target them with a proposal that addresses their specific pains and explains how your product can alleviate them. Needless to say, this would be infinitely more effective.

And, by the way, customers will also appreciate this targeted approach. See “Principles of Ethical Marketing” for more on this.

If you need more reasons:

Ideal Customer Profile benefits: marketing targets, sales enablement, customer-centric products

How to Develop ICP

The approach will depend on a number of things:

  • Company size and stage
  • Available resources
  • Available data

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Monthly newsletter: technology, startups, business growth and marketing

Monthly Newsletter: Issue 2

This is an issue of my monthly newsletter. Main topics: technology, startups, business growth, and marketing. See other issues on my blog or subscribe. ~Max


Now, get a cup of coffee and enjoy!

Technology and Startups

Growth and Marketing

  • Intercom on Marketing (ebook). A good intro to marketing and, in particular, product marketing that will be interesting to those who are relatively inexperienced.
  • How to Design Marketing Campaigns. Basics of marketing segmentation, messaging hierarchy, and campaign management – this article will be useful to those who’re new to marketing or looking for a refresher.
  • HubSpot’s Pricing Page Redesign → MQL Conversions 165%↑ & Free Sign-Ups 89%↑. How: research first – usability testing, internal feedback, and customer intelligence; then design based on insights and A/B test.
  • What’s next in growth?” (video) talk by Andrew Chen who leads the rider growth at Uber. Andrew recommends you ignore “growth hacks” and focus on fundamentals that worked for decades. E.g. user referrals, shareable content, and using discounts to jumpstart demand for new products.

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market differentiation

How to Develop and Validate a Value Proposition (Product Positioning)

If I were to ask you these questions right now, would you be able to answer them?

  • What does your company do?
  • What product does your company sell, and how is it different from the competition?
  • Who is this product for?

Seriously, stop reading right now and try to answer these questions aloud or in your head.

Can you answer these questions in 1-3 sentences and in a clear way that wouldn’t invite follow-up questions from an average customer?

Can everyone in your organization?

What is a Value Proposition?

A value proposition is simply a way to connect a product offering with customer needs in a clear way.

It should resonate with customers and would motivate them to try or buy your product. Essentially, the value proposition is synonymous with the unique selling proposition and product positioning.

In order to find its product-market fit, startups need to come up with value proposition statements for its products. Initially, they begin with a hypothesis or a simple guess.

This hypothesis then needs to be validated with customers and refined as the product evolves and as the company acquires more knowledge about the market and customers.

A validated value proposition statement is the ultimate outcome of finding the product-market fit. This statement should encapsulate the key insights you’ve gathered about customers, as well as unique product strengths.

Do You Need One?

If you don’t have one, you’re shooting in the dark. If you have one but it’s not validated, you might be deluding yourself.

Here are some practical benefits of developing a value proposition:

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Principles of Ethical Marketing

“Aww, it’s just marketing…”

You probably heard people use marketing as a derogatory term.

Admit it, you probably did too.

Why?

You can probably think of many examples when marketing wasn’t practiced ethically. It’s true that one doesn’t need to go far to find them. Spam emails that lack “unsubscribe” buttons, misleading packaging, annoying pop-up, or video ads that you cannot skip.

Marketing can go wrong for all the same reasons business can go wrong: misaligned incentives, short-term focus, and tunnel vision.

But business is not inherently and inevitably net-negative to society – quite the contrary. So isn’t marketing.

The thing is not all marketing is created equal. It’s just that some people in marketing make the wrong decisions. Just like some engineers ignore safety standards, some doctors overprescribe medications, and some businesses pollute the environment.

Essentially, marketing is simply helping organizations serve more customers.

More specifically, marketing is about finding the right customers who actually need your product, using their feedback to make the product better, and consistently communicating useful information through the right channels and at scale.

With this in mind, I decided to outline a few high-level principles of ethical marketing.

Principles of Ethical Marketing

  1. Create value before capturing value.
  2. Long-term over short-term optimization.
  3. Customer feedback over company politics.
  4. Educate customers instead of misleading them.
  5. Build products that people want instead of selling the ones you have.
  6. Target customers who can benefit from the product instead of targeting everyone.
  7. Measure NPS, retention, virality, and product usage in addition to ROI, revenue, and growth metrics.
  8. Consider the impact of marketing decisions on employees, other companies, society, government, and the environment.

Here you go, a small manifesto of sorts.

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Monthly Newsletter: Issue 1

This is an issue of my monthly newsletter. Main topics: technology, startups, business growth, and marketing. See other issues on my blog or subscribe. ~Max

Technology and Startups

  • Ten-year Futures – a presentation by A16z. New technologies enable new use cases. Seeing them, as well as non-obvious “second order” effects, is key. E.g. mobile enabled Instagram, Instacart, and ride-sharing.
  • Decrypting Crypto – another presentation by A16z. Bitcoin is a combination of three old technologies: hashcash, public key cryptography, and distributed ledger. Value of cryptocurrencies goes beyond the traditional store of value and medium of exchange. E.g. tokens can help bootstrap new protocol-level innovation and incentivize developers, customers, and investors to contribute.
  • AlphaGo Zero masters the game of Go from scratch. The ML algorithm learned the game without any pre-existing understanding of rules or strategies. Building a general or at least a-little-bit-less-narrow AI appears to be a big priority for DeepMind. Perhaps this can count as a small step in this direction?
  • Delivering blood with drones in Rwanda – a TED talk by the founder of Zipline. What an amazing application of new technology and a case study in social entrepreneurship.
  • Tacotron 2 is a new text-to-speech technology by Google that is (almost?) indistinguishable from a human voice. If Google manages to make it less computationally demanding and ship it as part of the Android OS, all kinds of interesting use cases will be made possible. I personally will listen to more of my Pocket articles in audio.
  • Magic Leap is launching its SDK, shipping in 2018. AR/VR is already quite a saturated market. It’s not entirely clear yet how hyped Magic Leap technology will compare to Microsoft HoloLens, as well as to VR headsets: HTC Vive and Oculus Rift.

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Key Growth Metrics, Part 2: CLV/LTV, and CAC (SaaS)

Managing a business is a little bit like flying an airplane. Keep your eyes on the speed, altitude, drag, and fuel and you’ll get to your destination fast. Try flying blind and you’ll crash and burn.

Who Should Read This

Startup founders, marketing managers, and growth hackers who are new to the growth game. Anyone who’d like to understand basic business metrics tech startups use. Here is why you might care:

  • You’d like to grow your business faster and understand the highest-leverage areas to focus on
  • You’d like to evaluate the performance of your marketing
  • You’re raising a new round and want to be ready for the questions VCs are going to ask

So, let’s dive right in.

What We’ll Cover

Last time we focused on user growth. We looked into acquisition, retention, and virality metrics, as well as interactions among these three. Today, we’ll assess the dollar impact one user has on our business. To do it, we’ll learn to calculate and use another metric: customer lifetime value.

Summary (TL;DR)

  • Customer Lifetime Value (CLV) = dollar value a company can earn from serving one customer.
  • Retention ↑ => CLV ↑
  • Price ↑ => CLV ↑
  • Discount rate ↑ => CLV↓

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Key Growth Metrics, Part 1: Churn/Retention, and Virality (SaaS)

Managing a business is a little bit like flying an airplane. Keep your eyes on the speed, altitude, drag, and fuel and you’ll get to your destination fast. Try flying blind and you’ll crash and burn.

Who Should Read This

Startup founders, marketing managers, and growth hackers who are new to the growth game. Anyone who’d like to understand basic business metrics tech startups use. Here is why you might care:

  • You’d like to grow your business faster and understand the highest-leverage areas to focus on
  • You’d like to evaluate the performance of your marketing
  • You’re raising a new round and want to be ready for the questions VCs are going to ask

So, let’s dive right in.

What We’ll Cover

First, we’ll focus on user growth. Here we’ll look into acquisition, retention, and virality metrics, as well as interactions among these three.

Second, we’ll focus on the monetary value associated with users. Here we’ll look into customer lifetime value and customer acquisition cost.

Summary (TL;DR)

  • There are multiple variables that will define business growth dynamics
  • Main ones are acquisition rate, retention rate, and virality coefficient
  • At any given time you might choose to prioritize some of these metrics over others
  • This decision will depend on the business strategy, available resources, customer feedback, stage of the product lifecycle, and hundreds of other factors
  • Models like the one shown here can assist you in making better decisions by letting you see where your business will be at in the future under different scenarios

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