Chapter 2: The Iterative Experimentation Process

Understand the customer journey and your business model to efficiently drive growth.

This post is part of the Growthzilla Book series, which is an online draft of the print edition that will be available in 2018.

In this chapter, we will go over the fundamental toolkit that will make your growth development a science rather than an art. We will cover the iterative, data-driven experimentation approach as well as qualitative and quantitative evaluation methods that will help you to understand what is working and why. Finally, we will finish with some tools that are available in the marketplace today that you can start using immediately.

2.1 Understanding Your Business

A mistake I’ve seen business leaders make in developing growth is jumping right into experimentation without understanding the details of their business or having a comprehensive strategy. I’ve made this mistake a number of times myself before I learned that it leads to waste and inefficiency due to focusing on tactics with low potential or implementing changes that work against each other.

To understand the potential hazards of charging ahead without sufficient insights or strategy, let’s imagine that you are the head of marketing at a business that sells cloud-based project management software that allows your users to assign and track tasks with their co-workers. The board of directors is unhappy with the company’s customer acquisition rate and have mandated you to drive more growth. You waste no time and propose three high-priority initiatives:

  • Increase the overall marketing spend
  • Experiment with marketing messages and channels
  • Work with engineering to improve the signup form

At the surface, the above tactics sound very reasonable. However, after a few quarters have passed and you’ve implemented your strategy, you find that the growth rate ticked up just a little bit.

Rather than pouring more resources into the above initiatives, you decide to retrench. Why were the gains so marginal? After speaking to the customer support staff at your company as well as to a number of current and past customers, you discover a few clues. The marketing optimization coupled with a higher spend did result in many new leads, and the improved signup form helped with converting those leads to new customers. However, you also learn that the most avid users of your product usually come from their teammates inviting them to projects. At the same time, you learn that creating and sharing new projects is riddled with bugs and usability errors forcing new customers to abandon your product right away.

It hits you that rather than focusing on new signups, you should have been working with the engineering team to make the creation and sharing of new projects flawless since that’s your main engine for growth. Now it’s time for a difficult conversation with the board to explain that you should have focused your efforts elsewhere, and that your team will need another few quarters to show the kind of growth that they are expecting.

By first understanding your customers and business before creating solutions, you will start to see patterns about where customers hit roadblocks and what can be done to get rid of them. You will also start to identify what elements of the product and overall experience delight your customers and drive growth. Perhaps it’s how well your customer support staff helps new customers to get onboarded with the tool that is the strongest engine for growth, and you need to double-down on making it even better. Those are exactly the kinds of insights that you need to make a roadmap, so you don’t waste resources on things that won’t greatly impact your business’ growth trajectory.

There are two activities that seem to be particularly helpful in establishing a baseline understanding of how one’s business works. The first is customer journey mapping, which aims to detail every step in the customer experience with your product and business. It starts with the customer’s first exposure to your product and continues through their entire lifecycle as an active user and customer. It’s critical to map out the complete journey from prospective customer to customer and beyond because each step is a candidate for growth optimization. Customer journey mapping essentially provides you with a laundry list of things to try to improve!

The second key component to understanding your business is understanding your business model, so you can tie each step in the customer journey to key variables in how you make money. For example, it’s obvious that new purchases will drive revenue, but it’s also possible to affect revenue by increasing how often existing customers make purchases. It’s important to understand what actions the customer and your company take that add to both revenue and costs. For example, perhaps your customer support is not only helping to retain customers but is also helping to drive new customer acquisition because your current customers can’t stop raving about your outstanding support. Making this association will help you build intuition about what improvements are likely to have the biggest effect on your profitability.

Be sure to check back tomorrow to learn about customer journey mapping. New sections of Growthzilla are published every weekday.

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