As a startup looking to significantly increase your customer base, the most important metric to focus on should be the resilience of your growth.
When it comes to customer growth, resilience isn’t an abstract concept but there are a number of very concrete and measurable factors that will increase the sustainability of your growth rates. As a result your startup is much more likely not just to thrive in the long-term but also to meet its short-term goals around funding and cash flow.
Of course this is especially relevant in a global downturn, but even in better times a resilient growth framework should be the foundation of your startup growth targets and marketing activity. I’d define resilience as your ability to maintain cost-effective customer growth, regardless of the performance of individual campaigns or marketing channels, or any unexpected changes in the economy, fundraising plans or your team - which can happen in any economic climate.
Improving the way to acquire and keep customers is exactly the kind of progress investors want to see.
Yes, there’s most likely a lot of pressure on founders and marketers, usually on getting more traction over the next 3-6 months, to raise funding or increase cash flow. Building resilience seems to get in the way of this. But, improving the way to acquire and keep customers is exactly the kind of progress investors want to see. It’ll also enable you to invest a lot more in paid advertising to scale up growth, if that’s what you’re planning to do, although in a much more cost-effective way compared to jumping in too quickly.
The metrics for resilience
The key to building resilience into your customer growth is to focus on three main areas: customer relationships, organic awareness, and diversifying marketing channels. Each of these can be measured quantitatively which makes it very doable to set specific goals and keep track of how resilience is building up.
- Customer retention and referrals: Strong relationships with your customers and a great product will keep your retention rates at a very high level, which is still by far the most effective way to grow a business. Those customers are also much more likely to refer friends and family, which is practically free growth. Make a plan to increase retention and referrals.
- Percentage of your customer growth coming through organic routes: This goes well beyond SEO and getting organic search traffic. The goal is to get more people to talk about your brand and to generate a general level of awareness, rather than just relying on paid marketing to pull people to your website. It might not always be measurable where people came from, but it’s crucial to keep track of the overall organic volumes.
- Number of marketing channels working well: Relying on too few paid marketing channels is risky, because their performance can change unexpectedly, and it tends to be much more expensive than diversifying budgets. You also need to build a proper marketing funnel including paid channels, but also email, sms, landing pages and the right targeted content. Early startups can start with 3-4 channels but once it gets to a scaling phase this should go up to 5-8.
How to improve the metrics of resilience
Once you’ve pulled out those metrics from your past performance, and set targets to improve them over the coming months, plan to work on these activities to hit your targets:
- Invest in organic growth as soon as possible. One of the best routes Is building partnerships with similar brands, media or influencers, based on being able to offer something valuable like content, giveaways or discounts. Secondly, create a focused content plan to talk to your target audience, and share it through your own and your partners’ channels. Optimise your website for organic search. And explore some very targeted PR, which might not drive direct sales but it’ll make those direct campaigns more effective.
- Improve the two-way communication between your brand and your customers. It will improve product development and the marketing funnel, driving higher retention, referrals and lifetime value. The best ways to do this are to build online communities, to schedule interviews with customers or organise events, and to have at least some direct engagement on social media (rather than just posting updates).
- Build understanding of the buying journeys of your customers. Most people take time and quite a few engagements to buy your product, so you need to help them with the right content and messaging at each stage. You don’t need detailed research or data, it’s better to start with an intuitive understanding of the funnel and improve it over time. Use paid marketing, email, landing pages and content to build journeys.
- Finally, scale paid advertising in a way you can repeat for 12-18 months. With strong customer retention, organic awareness and an effective funnel, any paid marketing activity will be that much more cost-effective. Then it comes down to regularly testing campaigns, creative and targeting, and scaling gradually. It’s better to show continuous progress than the occasional spike. The aim is to have 2-5 paid channels that run well and keep improving, and to reallocate budgets according to performance.
Improving resilience in customer growth is not an abstract aim but a very clear strategy that drives cost-effectiveness, helps startups hit their short-term customer targets and proves to investors the ability to continue growing. It’s also very directly measurable through customer metrics, organic performance and the diversity of marketing activity. Startups getting these foundations right will not just be more profitable, but they’ll also be able to grow their customer base faster. All marketing activity they run will be more effective thanks to having the right foundation.