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Growth PM

Growth Marketing

What is growth marketing?

What’s the difference between growth marketing and brand marketing?

Brand marketing increases the potential energy for revenue. It primes users to convert at a higher rate in the future.

Growth marketing, on the other hand, converts that potential energy into kinetic: it gets purchases.

Specifically, growth marketing is data-driven revenue maximization.

Counter to popular belief, growth is not a series of "hacks." It's a rigorous methodology consisting of experimentation, data collection, iteration, and behavioral psychology—in pursuit of continually increasing revenue.

You'll sometimes hear growth marketing referred to as "growth hacking" or "performance marketing."

Hiring growth marketers+

Click the plus to show this section.

Who's Julian Shapiro?

I spend thousands of hours deconstructing how things work. I compile my insights into free handbooks (like the one you're reading). Over a million people read them annually. Insights that don't make it into handbooks are shared on

Twitter⁠

I'm also the founder of

Demand Curve⁠

, a company that trains startups in growth marketing and helps them find great marketing hires.

You can read more about me on my

about page⁠

The growth trajectory

Here's what the growth trajectory looks like for many startups:

Build an amazing product that naturally encourages word-of-mouth.

Kickstart your user growth with a scalable acquisition channel, such as ads. Even if it's temporarily unprofitable, ignite the fire.

In parallel, spend the majority of your growth resources optimizing your funnel: at every step,

A/B Test⁠

conversion to maximize per-user revenue.

Once you have a profitable and efficient funnel, scale it. Experiment with every acquisition channel that might work.

Over time, switch your focus to sustainable, cost-efficient acquisition channels—such as product-led growth, organic social, content, and sales. This removes your dependency on ads, which have volatile costs.

The growth funnel

Let's develop an intuition for why the growth trajectory plays out the way it does.

Consider the growth funnel:

Lead Acquisition → Conversion → Engagement → Revenue → Referral

This is the journey a customer takes through their experience interacting with your company: you acquire them as a lead, you convert them into a customer, then you keep them engaged to maximize their lifetime revenue. Finally, you compel them to refer others to generate even more leads.

Let's walk through this.

1 Lead acquisition

An acquisition "channel" is a place you source leads from. For example, ads, content marketing, and sales are all acquisition channels.

Acquisition channels split into two categories:

Paid channels — This includes advertising and sponsorships. "Paid" means you're paying more money as your success with that channel scales. For example, for every click, impression, or referred sale, you're paying.

Unpaid channels — This includes content marketing, referrals, virality, PR, community, and more. "Unpaid" channels do have labor and logistical costs, but they don't necessitate paying more as your success scales.

Of these channels, this handbook focuses on

Ads, ⁠

⁠

Content Marketing,⁠

and

Sales.⁠

⁠

You should know that most companies never actually get paid channels to work profitably. Instead, they rely on a mixture of sales, word of mouth, product-led growth, and content marketing.

If they do get paid to work, it's often just kindling to build their initial customer base—it's then unpaid that powers the rocket from there.

Growth employees who focus on this step have job titles including user acquisition, SEO analyst, paid social analyst, copywriter, and growth marketer.

2 Conversion

Once you've attracted visitors with your messaging, some of them "convert" into the next step in your product journey: they become a user or email subscriber. Later, they "convert" once again—this time into a paying customer.

Growth marketers continuously run tests to improve the conversion rate at each step in their growth funnel.

This handbook explores the topic of conversion optimization through

Landing Pages⁠

and

A/B Testing⁠

Growth employees who focus on this step have job titles including copywriter, UX designer, growth engineer, lifecycle marketer, email marketer, marketing automation, content strategist, and growth marketer.

3 Engagement

In the Engagement stage of the growth funnel, a lead has converted into an active, recurring user.

This happens through empowering them with product education, motivation, and success. Your goal is to get them to try new features, buy more products, and build a recurring habit of relying on the product.

This handbook teaches engagement optimization via

User Onboarding⁠

For some B2B companies, Engagement is the stage where you encourage users to invite their colleagues (which is called product-led growth).

Growth employees who focus on this step have job titles including data scientist, product manager, product marketing manager, growth engineer, lifecycle marketer, marketing automation, and growth marketer.

4 Revenue

Your revenue per customer can be maximized by reducing your costs and increasing conversion, retention, cross-selling, up-selling, and prices.

Unfortunately, revenue maximization is outside the scope of this handbook.

5 Referral

Word of mouth, sometimes accelerated by referral programs, is the most cost-effective and sustainable way to scale a business.

Your goal is to make your product so good that customers do your selling for you.

This handbook teaches referrals on the

User Onboarding⁠

page.

Tip — See the bottom of your screen for handbook navigation links.

Note: The growth funnel is not linear

While the growth funnel is depicted as linear, it's actually a series of loops.

Consider how a lead may repeatedly loop between seeing your ads and testing your product before finally converting into a paying user.

Here's another loop example: the Ecommerce Repurchase Loop. After someone purchases, you might email them a coupon to buy a second product. This prompts them to repeat earlier steps in the funnel: revisit your website, purchase a new product, and receive another coupon via email.

Every growth optimization should consider where the lead is in your funnel, and deliver exactly what they need to compel them to the next step—and sometimes that means starting over.

Succeeding at paid channels

Most companies never make paid acquisition channels profitable. If they did, more companies would be successful—given how easily scalable ads are.

To be specific, most companies are not able to profitably acquire paying users through ad networks such as Facebook Ads, Instagram Ads, and Google Ads.

If they do get one of these channels working at scale, it's a holy grail when paired with strong word-of-mouth, which acts as a force multiplier: every paid user attracts many more unpaid users.

This is why I encourage marketers to harden their funnel's conversion and referral rates before investing heavily into paid. It makes paid cheaper.

There are three thresholds that make paid channels difficult:

Profit margin — How much profit you earn per sale is critical to making paid work. For reference, it's hard to acquire an ecommerce customer for less than $30 USD via Facebook or Instagram ads, which are typically the cheapest ad channels. For B2B SaaS companies, many can't acquire a paying customer for less than $500 USD on these channels. Therefore, if you don't earn at least that back in the customer's lifetime (including the profit generated via who they refer), then these channels aren't sustainable.

Significant audience size — Audience size isn't just a function of how many people want your product, but more narrowly how many are suitable users of your product, and want your product more than your competition, and want it now, and can afford it. It narrows down quickly. The resulting audience is smaller than you estimate. Many companies find their target audience is too small to keep their Facebook or Instagram ads running at-scale consistently.

Degree of product demand — How badly does your addressable market want your product? If your product is just a nicety, you're at a disadvantage relative to companies selling what people critically need—or think they critically need—such as health insurance or loans. Further, the less obviously valuable your product is, the better you need to be at pitching it. This can take exceptional marketing skill and months of iteration.

You won't know whether your product crosses these profit, size, and demand thresholds until you've spent a statistically significant amount of money on each ad channel for every sub-audience. This can cost $1,000-$2,000 USD per channel or more, and it varies wildly based on your business.

All this said, there are two types of companies with a good chance of making paid work:

High margins — If you charge customers $2,000 for a mattress or $10,000/year for enterprise software, you have more wiggle room to experiment with ads until they work.

Products with a high word-of-mouth or referral rate — If new users refer many more paying users, then you may be able to tolerate an upfront loss on acquiring customers via ads.

Succeeding at unpaid channels

If you fail to make paid channels work, you'll instead rely on unpaid channels: content marketing, referrals, word-of-mouth, sales, PR, community, and more.

This is an acceptable outcome. Succeeding at paid acquisition isn't a necessity—it's just convenient because it scales quickly.

Unpaid channels benefit from not being at the mercy of ad channel volatility, ad audience risks, and CPM pressures. Unpaid growth is often more reliable and more in your control.

The tradeoff is that unpaid generally requires more skill to make work.

Here are the major unpaid channels:

‍Product-led growth — If your product grows virally from users inviting other users who use the app together, then you have the potential for product-led growth. This is one of the healthiest and fastest ways to grow. It's responsible for the success of Dropbox, Slack, Zoom, PayPal, and others. As one example, Slack's team chat experience necessitates that you invite colleagues to benefit from the full product experience. It's the same idea with Dropbox and sharing files with colleagues.

Content and SEO — Is your product something people are already Googling? Then SEO is potentially viable and you should consider hiring writers instead of ad managers. You can build distribution pipelines around your content—including webinars and newsletters—to share it beyond just Google. (See the

Content⁠

page.)

Word-of-mouth and referrals — Build an amazing product that people can't stop talking about. Then accelerate their word-of-mouth through low-friction and enticing referral programs. (See the

Onboarding⁠

page.)

Sales — Sales is appropriate for companies with significant profit margins (typically $1,000+) due to the costs of researching, pitching, and negotiating deals. You attract sales leads through ads, content, warm intros, conferences, cold emailing, and out-of-home marketing. (See the

Sales⁠

page.)

‍Everything else — The remaining unpaid channels are not commonly responsible for explosive growth. For example, public relations and

organic social media⁠

only work for businesses that can exploit trends, create viral content, and build communities. That's outside the scope of this handbook.

Which channel mixture should you use?

I have collected years' worth of growth data from running a community of 25,000 marketers. Plus, I've helped grow several hundred companies via

Demand Curve⁠

Based on my observations, here's what I broadly recommend each business focuses on first.

B2C companies

If you sell a product to consumers, these are the channels I suggest prioritizing:

B2C ecommerce companies — You'll most likely succeed with

Instagram/FB⁠

, organic social, influencers, sponsorships, and marketplaces. You might succeed with

Pinterest⁠

Google Ads⁠

, and

Google Shopping⁠

B2C mobile app — You'll most likely succeed with

Instagram/FB Ads ⁠

and

Apple Search⁠

. You might succeed with

Snapchat Ads⁠

TapJoy⁠

, and referrals.

B2C SaaS app — You'll most likely succeed with Facebook Ads,

Content⁠

, and product-led growth. You might succeed with

Google Ads⁠

and partnerships.

Brick and mortar — You'll most likely succeed with

Facebook Ads⁠

Instagram Ads⁠

Yelp Ads⁠

, and PR. You might succeed with

Snapchat Ads⁠

Google Ads⁠

Google Display Ads⁠

, and affiliate programs.

Don't be overwhelmed by these links. Ignore them for now. This handbook will walk you through many of these concepts on later pages.

B2B companies

If you sell to businesses:

Niche B2B with high average revenue per user (ARPU) — A startup in this category would be enterprise software charging $10,000+ per year. You'll most likely succeed with

Sales⁠

(outreach, inbound, and networking) and you'll likely generate leads through

content, ⁠

webinars, partnerships,

Facebook Ads,⁠

Google Ads,⁠

and

LinkedIn Ads⁠

. You might succeed with

Instagram Ads.⁠

⁠

Broad B2B with medium ARPU — A startup in this category would be small business software charging $150 per month to help run your accounting. The previous paragraph applies here—with one tweak: you'll likely place greater emphasis on ads and content over sales.

Niche B2B with low ARPU — For example, a software tool for app developers charging $25 per month. If this is you, perhaps rethink your business if you're trying to make more than $2mm USD per year, because you're facing an uphill battle. Niche B2B businesses with low ARPU can neither afford ads nor sales. They have to rely on breakout word-of-mouth, community building, product-led growth, and content. It'll likely be a slog.

Broad B2B with low ARPU — For example, a broadly applicable software product charging $25 per month. You'll most likely succeed with

Content Marketing,⁠

⁠

Google Ads⁠

, product-led growth, and

Apple Search Ads⁠

(if you're a mobile app). You might succeed with partnerships, integrations, and referrals.

If you want to be mentored in growth

If you'd like to be assisted through learning this material, my team will train you or your company in growth marketing. See the programs over at

Demand Curve⁠

. We also run the

Bell Curve ⁠

growth agency

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