Growth Experimentation for Startup Founders
A big belief in the world is that when you launch a company, you just spend a lot of money on marketing and sales, and eventually, it comes back as revenue and you'll do fine. People always optimize these things, and the saying goes "I know 50% of my marketing dollars are wasted, and I just don't know which 50%". So, what I found in Silicon Valley is that the companies that grow really, really fast, hold this core fundamental belief that if you measure the right things and test the right things and run the right experiments, you can actually manipulate growth, continually, sustainably, profitably. When people have that belief inherent in them, that it's not random, but something that they can control in their business, that's when they're able to build a business that grows really fast. That's because 1) they believe it's possible, 2) they start paying attention to the right things, and 3) they start identifying what metrics they should measure and what metrics they shouldn't measure.
An estimated 90% of startups fail, most of them in their second to fifth year of business. Most of the time, it’s because founders forget to include predictable growth in their startup go-to-market plan. Entrepreneurs must make decisions based on information, hypotheses, and execution to grow a business — and this is where experimentation comes in.
What Is Growth Experimentation?
Growth experimentation is a process that uses data and messaging to achieve predictable revenue for businesses.
Contrary to accepted belief, growth experimentation is not the same as a test — an activity that causes an output. Growth experimentation is a repeatable process that includes testing as a crucial step.
It's a reliable source of valuable knowledge for a company. The most successful startups integrate this process into their operations, from optimization to product development and marketing. It's a powerful tool that bridges the gap between perception and reality.
Every growth method is unique, and each one can make a massive impact on achieving your goals. It’s crucial to test one process at a time to validate findings.
Growth Experimentation Methods:
Message Market Fit
The message market fit method focuses on establishing core messaging that resonates with the market. It’s not enough to develop a product that addresses consumer pain points to create market demand. You have to speak the same language as your target market, you have to understand the culture and personality, not only to effectively communicate product features but to establish credibility and create trust. Your message is your first impression, and it has to resonate, to make it a good one.
Proof of Concept/Sales Process
This method aims to bring in revenue and set companies up for growth. Building a proof of concept (POC) is inevitable in closing your first paying customers. It's what you need to turn calls into sales, and sales into customer success. POCs should create an"ah-ha" moment for your potential customers and get them emotionally bought into your company, your mission, and how you're serving them. POCs are particularly helpful for solutions with no direct competitors.
The product-market fit method aims to maximize customer satisfaction. With this method, the ideal scenario is having consumers buy, use, and tell others about your product. If you turn customer success into referrals and achieve this in massive numbers, it can sustain your product’s growth.
Most founders believe that their decision-making is fool-proof, but more often than not, that confidence stems from gut-feel, rather than truth. Brains do not grow businesses, systems do.
Some companies have growth experimentation included and grow consistently and repeatably, and some don't and they sometimes grow and need monumental amounts of effort to grow. The reality is, if you’re not prioritizing these methods, you’re not going to create predictable growth and ultimately fail.