Building your growth model
The most powerful and fundamental growth marketing tool isn’t some amazing new app. It’s your growth model, built by you, in a spreadsheet. The growth model uses your acquisition and retention metrics to project future growth.
Why do you need a growth model? To help you overcome the biggest challenge in growth marketing: prioritising initiatives properly, so you get the most bang for your buck.
The framework model
The growth model includes three main components:
- Acquisition loops: The self-compounding ways you get new customers for your product or service (to be a proper loop, one new group of users leads to another and another, and so on)
- Linear channels: These are channels that don’t self-compound, but still contribute to acquisition
- Retention groups: A breakdown of your returning users over a certain period of time
This framework comes from a course I took called Reforge which I highly recommend.
To build your growth model, start by listing all your acquisition loops, along with all of their inputs. For example:
Next, in a separate tab, add a retention group for a given time period – either weekly or monthly.
Finally, create an overview in a separate tab that takes new user growth from each loop in the acquisition sheet, plus growth from returning users in the retention sheet, and break it out into weekly, or monthly projected growth (depending on the timeframe you chose for the retention cohort).
How to use your growth model
You’ll use your growth model to identify high-impact opportunities. By tweaking certain inputs in your acquisition loops or retention cohort, you can find areas where minimal effort can have a big impact. Use these areas to build a backlog of ideas for marketing initiatives.
It can also help you prioritise your growth marketing initiatives. Once you have a backlog of marketing ideas, you need to figure out which to tackle first and why. Use your growth model to make an informed assumption of how a marketing initiative will impact certain loops, tweak those input(s), and see how it impacts short-, mid-, and long-term growth. Then decide what to prioritise based on your company’s growth goals.
You can find and make a copy of a simple growth model example here.