Growth Engine Theory
What is a growth engine?
Quite simply, if an organization engages with more customers, more efficiently, converts more of them and maximizes their value, there are more resources available to reinvest and repeat the cycle.
Creating a healthy growth engine requires a holistic review of the different customer touchpoints. A set of initiatives can then be defined and implemented to kickstart the growth cycle.
One of the main concerns for any business or budget owner is knowing that the money they invest is being used to its maximum benefit. This is where growth engine theory originates from.
Example: Your site attracts 100K new unique monthly visitors, has a conversion rate to purchase of 2% and your customers averagely purchase 3 items in their lifetime for a combined value of $1000.
If only one of those metrics ticks up as a direct result of increased resourcing you would generate more revenue but it wouldn't be the best possible return you could achieve. If all of those metrics are tweaked positively it would have a highly significant impact on revenue and lifetime value. A powerful action plan sets in place a series of initiatives around each metric concurrently, enabling the best return on investment.
Below are some high-level examples for each component.
- Identify the right target consumers
- Innovate existing channels
- Test new channels
- Define the correct KPIs
- Optimize through data
- Improve the User Experience
- Reduce friction
- Conduct experiments
- Test promotions and messaging
- Provide the right help
- Cross-Sell & Up-Sell
- Create loyalty
- Develop a relationship with your consumers
- Increase the perceived value of your product or service
- Excellence in customer service
- Smartly allocate the increased resources generated to additional Acquisition, Conversion and Maximization initiatives