A Guide on Building a Growth Process for your SaaS

3 Phases of Building a Growth Process:

In phase 1 we work on defining our growth model, mapping out our customer journey, and identifying all of our growth channels.
In phase 2 we explore data, identify our quarterly goals and build the roadmap to execute these goals.
In phase 3 we build experiments, ship our experiments, analyze them and then either automate or scale them

This guide will talk about the phase 1 and 2 of building a growth process for your business.

Let’s take a look at what will we learn in this article:

The details of the “AARRR” framework
Questions to ask before customer journey mapping
Most popular user acquisitions channels
How to find the best user acquisition channel for your business
Quarterly growth planning

Most popular Growth Model:

The ‘AARRR’ framework is one of the most famous growth frameworks which focuses on the full funnel. Improving each metric will lead to business growth.

Let’s understand the framework in detail:

Acquisition:

Where are our users/customers coming from? This process is all about how your users/customers are coming to know about you? There are 3 fundamental questions that you should ask yourself for your acquisition process.

What channel is driving the most traffic?
What channel is performing the best in customer conversion?
What channel has the lowest customer acquisition cost?

Activation:

How good are the users/customers’ first experiences? This also means how soon can you take your customer to the “Aha moment”. Aha moment means the first time the user/customer understands your value.

Once twitter realized that people are more likely to come back when they followed 30 people, they started suggesting popular accounts to follow while signing up. Dropbox realized that users are more likely to come back when they upload their first file so they started to direct people to upload their first file at the time of signing up.

Retention:

How many customers are staying with you and why others are leaving? Focusing on customer retention can skyrocket your business. It’s one of the most important things that startups ignore.

Retention means your user keep coming back to you. For E-commerce, this can mean your customer buys from you multiple times. For SaaS, this can mean your user keep using your product.

The opposite of customer retention is customer churn. Keep a look at your churn rates. Your churn rates tell you if you have achieved a good product/market fit.

Your customer churn rate should always be lower than your customer acquisition rate.

Harvard business review has stated that it’s 5 to 25 times more expensive to acquire a new customer than to retain an existing one.

Referral

Referrals are one of the best growth drivers. Dropbox’s referral program was one of the best examples of this. They understood this early that their referral program is one of their major growth drivers and hence they put a lot of effort into this.

Try reading the growth case studies of other companies for inspiration. What works for others may not work for you. Prefer reading them to deeply understand their growth process.

In Referral you should be constantly tracking two important metrics:

Net Promoter Score: It is an index that measures how likely your customers are going to recommend you.
Viral coefficient: It gives the number of users a customer refers to you. Increasing your viral coefficient can be super profitable for your business.

Revenue:

Revenue is always on the right side of the equation and if you have already solved the left side of the equation by using the “AARR” framework then you have already sensed the flow of money!

But if you want to optimize the process now and see how you can increase your revenues then you can do that by doing two major things:

Increase your customer lifetime value (CLV): The amount of money that you make from one customer is the customer lifetime value. Figure out ways to increase the CLV and you can also increase your revenues.
Decrease your customer acquisition cost (CAC): CAC is the amount of money you spend to acquire one customer. Figure out ways to decrease your customer acquisition costs. Keep optimizing your sales funnels to get the best CAC possible. A ratio of 3:1 is termed as good for CLV: CAC

After understanding the growth framework, it’s time for you to map your customer journey. The first step towards customer journey mapping is to build data-driven personas.

Once you are done with the personas consider asking yourself the following questions on your customers:

Questions to Ask:

How they come to know about you? Assume an ideal way as there could be hundreds of factors. (Also find what’s the best way for them to find about your brand).
What is the optimal experience you can imagine them having when they came to your site for the first time?
What would be the best thing they could possibly expect?
How do you want to feel after they buy?
What are the touchpoints that they got via email or push etc?
After their first purchase, what leads them to refer a friend

The best practice is to do the above exercise quarterly. This can be really helpful for your brand.

The third step of phase one is to choose your growth channels. Not every channel will work for every business. You have to constantly test and find the growth channels for your business.

Let’s take a look at the most popular user acquisition channels:

User Acquisition Channels:

Cold email or Cold calling: Cold reach out is an art! Sometimes you even have to warm your leads by connecting with them on social media. Cold reaches out works really for a lot of businesses only if you are reaching out to the right audience.
Viral referral loops: This can include word of mouth or your existing users referring your product or service to other people. This can be one of the best forms of marketing that you can do but this also requires the next level of effort. As a customer who is not amazed by your product will not bother to recommend you.
Paid Advertising: It is one of the most used user acquisition options there. Lots of businesses solely rely on advertising platforms to reach the people that they are targeting. If you are also using the paid advertising then try the different channels available like Facebook ads, google ads, LinkedIn ads, or even Twitter ads. Make sure that you track your ROI else you will blow your budget.
Content Marketing or SEO: This is also a very popular form of marketing that people are using there in the market. But you can’t expect instant results with this form of marketing. Usually content takes months to give you results so if you are betting on content marketing the make sure that you have patience.
Influencer marketing: It’s all about finding a famous person to love your product and yell about it till all the people know that a famous person loves that product or service. Influencer marketing can be expensive for a lot of businesses there a lot of small businesses don’t prefer trying their hands on influencer marketing.

How you can find the best growth channel for your business?

Check where your customers are? You will most probably not sell a B2B software to a fortunate 500 company on Instagram! LinkedIn can possibly be your choice. Similarly, find where your target customers are?
Check your competitors and what channels are they using? In the start try experimenting with different channels.
With constant experimentation, you will find the channel that works best for you. Then pick 1–3 best channels for your businesses.

This ends phase 1 of building a growth process for your business. Once you are done with this you can move to the second phase of building the growth process. Let’s move to the Quarterly growth planning.

Quarterly Growth Planning:

Start with analyzing the data with the customer journey in view. Think through all of the different steps that your customer takes on their way of finding out the information about your product or service to all the way towards becoming a loyal, frequent habitual customer.
The most important things in Growth are prioritizing the most impactful things and finding the most impactful ways to grow the business. Explore data and set your goals and OKRs — objective and key result.
Setting goals for every 3 months is one of the best ways to work. In a growth team maximum of 4 to 5 people should focus on one metric like acquisition or engagement.
One of the other most important things is to prioritize what you will work on. Estimate the impact of your experiment and see if you have tried any similar experiment before. Understand what resources you have, what growth hack you can use, how confident are you about it then list out, which one will you do first.

Yes, that’s all you need to do to build your growth process! That seems like a lot of work but yes it is actually a lot of work!

Building a growth process is one of the most important parts of a business. Building and following the right growth process can skyrocket your revenues.

So now that you already know the full procedure, when are you planning to build your growth process?