Growth marketers are busy today helping all sorts of startups take advantage of the market boom, but it has been a hard journey through the pandemic.
Keep reading for more from Tyler about maintaining focus and resources on the right kind of growth, even when the markets are rollicking.
It’s been a while since we last spoke with you. How have the trends in growth marketing shifted between the beginning of the pandemic and now, as we begin to exit lockdowns?
Tyler Elliston: It’s been a rollercoaster! Early in the pandemic, we saw plummeting CPMs and slashed budgets. The rebound started relatively quickly over the summer of 2020 and accelerated into the fall and now 2021.
First, it was e-com companies, both those with strong pre-COVID sales online and historically brick-and-mortar brands scrambling to shift online to find much-needed sales. Then many other businesses — both new and existing — emerged with new products, value propositions and positioning to survive or even thrive in the pandemic.
Now, we continue to see very high consumer demand broadly and a corresponding eagerness amongst brands to accelerate customer acquisition, including through paid advertising. Very active investors have been a strong tailwind with respect to budgets.
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We’ve talked before about how you like your team to be treated as a partner rather than a vendor. How have they been able to accomplish this during the pandemic?
The biggest thing is that we were able to lean on our reputation for being a good strategic partner that serves our clients’ best interests. Because they know we’ll tell them when we don’t think they should keep paying us for something, they also trust us when we say something like “I know this sounds crazy right now, but you should increase your budget due to a shift in your demand curve and channel economics.”
We were proactively honest with clients about what we believed the pandemic meant for their businesses, points of view we reached through a framework we outlined on our blog. For some, that meant supporting immediate termination of our partnership for them to conserve funds. In other cases, it meant pushing them to consider leaning into their performance marketing to capitalize on the changing environment and channel economics.
During the recovery, many companies have looked to external agencies and consultants to fill a temporary staffing gap in a lower-risk way. Shifting attitudes toward external resourcing and the evolution of company processes and culture to support remote workers have helped us more quickly and fully integrate with our clients’ internal teams.
In a previous conversation, you mentioned, “We regularly tell companies, ‘You don’t need any growth marketing right now. Focus on product-market fit.'” How can startups tell that it’s the right time to come work with you?
Growth marketing is an amplification tool. It shines a bright spotlight on a product or solution, believing that if only people knew about it, they would want it and love it. The “want it” and “love it” represent product-market fit. To measure these, we look at customer reviews, referral activity leading to organic growth, retention, product engagement, and ultimately realized and expected lifetime value.
Seeing good conversion rates and attractive customer acquisition costs in small-scale channel testing suggest that not only is there a group of people that love it, but that they can be reached. These are prerequisites for sustainable growth, in my view.
If an early-stage company has limited resources, how should they prioritize their funds in regards to marketing?
First, invest in the product to make it excellent, as judged by real, paying customers. Marketing plays a role in this iterative process of traffic acquisition, funnel measurement and feedback collection; it’s just not “growth marketing.” It’s better considered to be “go-to-market marketing,” typically staffed by a product marketer or similar.
Once the product is in a good place, I typically recommend at least some investment in nonpaid marketing efforts and some testing of paid advertising, most often Facebook and/or Google. It’s rare for a company to find a great scalable channel if neither of these work. They serve as bellwethers for online marketing performance, generally speaking.
The best nonpaid marketing investments are highly contextual on the target customer and a company’s differentiation from the competitive landscape.
What do startups continue to get wrong?
Focusing on growth before finding product/market fit is the biggest [thing that startups continue to get wrong]. Early-stage founders are under intense pressure to grow successfully. For all but the lucky few who find incredible early customer success, finding product-market fit requires an unbelievable dose of patience. I think this is one of the reasons we see a pattern of success among founders who are solving a problem they deeply care about personally. For them, it’s first and foremost about solving the problem for themselves, not others. It’s not about money or some notion of macro success. It’s about micro success. From there, it’s an easy jump to passionately share this solution you so desperately needed.
From an advertising standpoint, many companies try to run too many channels at once and expect success too quickly, leading to false negatives. Most channels are quite nuanced at this point and require both expertise and patience to crack, for most businesses.
How do your growth marketing strategies change when working with early-stage startups as opposed to mature companies?
With very early-stage companies, our work is typically not related to growth, per se. It’s more about getting a foundation in place (ex: pixels, tech stack, initial value props, early staffing), driving traffic through new funnels to gather early data, or setting up email campaigns. Once the product is in a good place, we are often working with a founder or first marketing hire to stand up their initial paid channels and try to get them from 0 to 1. Can we spend $5,000, $10,000, $20,000/month with a good return?
On the nonpaid side, it could be executing a content strategy, launching a referral program or cultivating partnerships. Once a company is spending hundreds of thousands or millions of dollars per month profitably, we are typically helping them improve channel performance, better measure the incremental impact of their spend, break through to a new level of scale, or diversify channels (paid or nonpaid).