The Growth Handbook

I call this “The Law of Shitty Clickthroughs”, because it’s something that has been with us for a really long time and will continue to be. For all of us in marketing and growth, that means we have to continually find the fresh powder, because inevitably whatever worked in the past will no longer work. By the time a case study has been published on Medium about something that works, it’s probably done. Everyone still has to do it, but then you have to move beyond it.

There are probably many ways to tackle it, but here I’ll delve into how we approached it at 500px, which is roughly following this framework:

You need a metric that specifically answers this. It can be “x people did three searches in the past week.” Or “y people visited my site nine times in the past month.” Or “z people made at least one purchase in the past 90 days.” Whatever it is, it should be a signal that customers are using your product in the way you expected and that they use it enough so that you believe they will come back to use it more and more.

That’s the point: There is no absolute right or wrong answer to what a company should be willing to pay for a customer. What you are willing to pay for a customer should be a function of what th

But there’s a better metric, your key metric, that you should track and score yourself to, and hold your VP of Marketing and your marketing team to qualified lead velocity rate (LVR), your growth in qualified leads, measure month over month, every month. It’s real time, not lagging, and it clearly predicts your future revenues and growth. And it’s more important strategically than your revenue growth this month or this quarter.

How do you find proxy metrics for your business? There’s no shortcut. Andrew Chen has written a blog post describing how to do it, step by step. Define the goal, explore the data, run a regression and then backtest.

Proxy metrics are powerful for four reasons:
They are easy to measure;
They are correlated to (and ideally predictive of) the business’ goals;
They are concrete and create a unifying vision for the team; and
They enable businesses to iterate faster by reducing latency.
Great companies employ proxy metrics all the time. If a new Facebook user adds seven friends in 10 days, they’ll be a long term user. The more engagement minutes a customer spent digging through their data in Looker during a trial, the greater the likelihood that trial customer converted to a paid customer.

One mistake I see at a lot of other early stage startups is that they don’t have well-defined sources of truth. People start talking about churn, but what are they really talking about? Are they talking about gross MRR (Monthly Recurring Revenue) churn? Are they talking about net MRR churn? Are they talking about customer churn? Too often, metrics get thrown out, and it’s unclear exactly what they mean.

It’s the low-effort, low-impact work that can kill you, because it’s so attractive. Hunter refers to it as “snacking”. It feels rewarding and can solve a short term problem, but if you never eat anything of substance you’ll suffer.
This work is easy to justify, because “Why not? It’ll only take a few hours.” And when it achieves nothing useful, it’s easy to excuse, because it “What’s the problem? We only spent a few hours on it”. The wasted time compounds a lot quicker than the insignificant results. Do this enough times and you’ll grow a low impact team that doesn’t achieve anything.

One big area I have found really fascinating is the ecosystem that’s being built around gaming right now. You can livestream things, you can do voice chat – you can do all of these different things around ephemeral networks of players who are getting together over a short period of time to play one game. You’re not going to want to add all these folks to your Skype or Google Hangouts because you are literally just coming together for one game. However, a product that understands that ephemeral network can then build a whole ecosystem around it, and that’s what we’ve seen with Discord and Twitch.