So you’ve implemented a growth-oriented marketing strategy aimed at getting your product in front of more of the right people and in turn, boosting sales, but you’re not sure if it’s working?
You’re far from alone.
According to HubSpot’s 2017 State of Inbound report, “69% of executives believe their organization’s marketing strategy is effective, but only 55% of individual contributors in marketing agree.”
Clearly there’s some discrepancy between what different members of an organization believe a successful growth strategy looks like.
Thankfully, by gaining a better understanding of the signs of a failed growth strategy – and why we miss them – we can start to turn things around (and be in a better position to convince the C-suite why these changes need to happen).
While this won’t be an exhaustive list, these are (in my experience) the most common reasons companies miss the signs that their growth strategy isn’t working.
They’re looking at the wrong data or focusing on the wrong metrics
It might sound hard to believe, but I’ve worked with an online retailer who, despite generating hundreds of thousands of dollars in monthly revenue, hadn’t set up e-commerce tracking.
Sure, they knew what they were selling and how much of it, but they weren’t able to link those sales to their marketing efforts, and consequently, they were unable to understand how their marketing strategies and site usage were impacting their bottom line.
This isn’t to imply that increasing traffic to your site and boosting general brand awareness shouldn’t be on the agenda, but in isolation those metrics mean very little. You could see month-over-month organic traffic to your site increase 1000%, but if those visitors aren’t converting, what value are they really offering you?
If the data you’re looking at isn’t telling the full story, you’re unlikely to spot the signs that your growth strategy isn’t working.
Focus on actionable metrics that allow you to make educated decisions in terms of how and where your marketing budget is spent, instead of on vanity metrics that look good on paper but offer very little insight into the real impact of your growth strategy.
They’re looking at the right data, but interpreting it incorrectly
This might mean seeing unexpected growth or declines, but failing to account for seasonal changes. E-commerce stores, for one, will often see sales go up or down in line with how sunshine, rain, or snow impact customer behavior.
Here’s a brief example of how online sales are negatively impacted by sunny weather (bearing in mind that this doesn’t account for the disproportionate increase in the sales of goods like barbecue grills, sunglasses, and garden furniture that will be seen during this time).
Alternatively, incorrectly interpreting data might mean attributing a spike in traffic or sales to your growth strategy, when in fact interest in your industry has surged, and your competitors are seeing similar growth (Google Trends is a great tool for quickly checking if this is the case).
It could be as simple as seeing sales increase but failing to dig into their source, and using that information to redirect your marketing spend accordingly.
There are countless ways the right data can be used in the wrong way, but that’s a discussion for another time. The key lesson here is to audit the data you’re currently using, and figure out whether the stories it’s telling you are accurate, useful, and actionable.
Those directly responsible for growth know their current strategy isn’t working, but they’re unable to make changes without the buy-in of executives who are disconnected from the process
This is a common problem in big corporations where there’s a significant separation between those responsible for creating and executing a growth strategy, and the decision makers up top.
If those “up top” have little to no understanding of what the company’s growth strategy entails and why, there’s a good chance its failures will fall under the radar.
How to Know Your Growth Strategy Isn’t Working
So now that we know why companies miss the signs that their growth strategy isn’t working, let’s take a look at some of the most common signals you should be looking out for if you want to make sure you’re not missing these signs yourself.
Your Churn Rate is Unsustainable
As you know, a churned customer is simply a customer who has cut ties with a brand. So understanding churn rate is essential for SaaS companies, as well as any other business that generates revenue via recurring payments.
This is because if you’re losing customers at a higher rate than you’re gaining them, you may well be in the negative, and this puts you and your business in dangerous position.
Of course, it’s not that simple.
Few companies charge every customer the same fee; there are generally many variables affecting this, such as number of users on an account and the features customers want to access.
We also have to consider how long it takes before a customer becomes profitable – for example, how long they have to stick around before their spend exceeds the cost of acquisition – and what the average lifetime value of each customer is.
If you’re gaining more customers than you’re losing, but those new customers have a lower LTV than the ones that are saying goodbye, then your churn rate is unsustainable – despite being in the positive.
On the other hand, as the diagrams below show (thanks to Tomasz Tunguz for featuring them in this post), if you’re losing more customers than you’re gaining, but those new customers are more profitable than your old customers, or your current customer spend is increasing, a negative churn rate can actually be a good thing.
In other words calculating churn isn’t as simple as customers lost/current customers, but if you want to know more, there’s an excellent post from Steli Efti here that explains churn rate in more detail.
Regardless, if you’ve calculated your churn rate and concluded that it’s not sustainable, chances are that you’ve got one (or more) of the following problems at play that you need to fix:
- You’re targeting the wrong type of customer
- You’re not doing enough to onboard new customers
- Your product doesn’t live up to the claims
- You suck at customer service
You’re Getting Leads, But Not Converting Them
So your marketing and sales teams are doing a great job of bringing in leads. Traffic to your website is increasing, and you’re getting more phone calls, emails, and website inquiries.
That’s great… right?
It might be, but only if those leads are qualified and converting.
I’ve spoken with countless highly-unqualified leads in my time. They’re generally from one-person startups and know they need marketing, but have little to no understanding of what they’re looking for or how much it typically costs. Sometimes it’s people that have no more than an idea.
While I’ll do what I can to help them out – give them some advice if I’ve got the time, or point them to some resources I think they could learn from – the odds are well against me selling to these people, now or ever.
Every service-based company will get some leads like this; it’s unavoidable. However, if you find that you’re spending more time politely brushing away false leads than talking to people who are actually in a position to buy, there’s a good chance, again, that one of the following problems is at play:
- You’re targeting the wrong type of customer
- You’re not focusing on the whole funnel
- Your sales team needs more training
- You’re just not doing enough to convert leads/you’re giving up too easily
You’re Just Not Getting Results
Now, I know what you’re thinking – if there’s any definite sign that your growth strategy isn’t working, it’s that it just isn’t getting results.
But bear with me.
For various reasons, the fact that a strategy isn’t getting results can be, and often is, easily overlooked or missed altogether – and this can go on for far too long.
This most often happens because of what’s commonly called the IKEA effect.
For those who are unfamiliar with the IKEA effect, it’s a cognitive bias in which we place far too much value on things we create ourselves. In other words, we think they’re better than they are, and we love them more, because we made them.
While this psychological phenomenon has arguably helped turn IKEA into one of the world’s best-known brands, it’s not been so great for marketers.
Companies get so excited about what they’re creating – whether it’s a piece of blog content, a social media post, an email campaign… whatever it may be – that they completely overlook the fact that no one except them cares, and their work is getting zero results.
If this feels familiar, it might be time for an overhaul of your growth strategy from the ground up (and it’s a good idea to seek the help of marketers who have a proven track record of devising strategies that drive real, tangible results).
Have you got any thoughts to add? Have you ever spotted a gap in the effectiveness of your growth strategy and made changes to fill it and help your company become bigger and more profitable as a result? As always, if you’d like to share your thoughts or experiences, it’d be great if you could leave a comment below: