Focus on the Fundamentals
“We need help with our marketing. We just don’t have a handle on if what we are doing is working.”
This is one of the most common introductory statements we hear from clients (or similar variants; e.g. "fix" eCommerce, "expand" acquisition, "increase" conversion, "improve" retention, etc.). It's common for operational leaders to focus on excelling at their objectives, but this most often results in creating local maximums, which is not the same as solving for comprehensive Growth.
Over the years, we've learned to start every problem-solving exercise by focusing on what we call the Formula to Revenue. To avoid solving for local maximums, you have to start with the end: the unit-level economics of the customer, then work your way backwards, through every customer and operational touchpoint, to the top of the funnel. Then, and only then, will you understand how and where you can drive scalable Growth.
The articles below are some of our recent favorites from around the web that help articulate this process. We'd love to hear your thoughts, so send an email our way to start the conversation.
—The Yield Group
A quantitative guide to product-market fit
• Author: Jonathan Hsu, Co-founder, Tribe Capital
What is this about?
Jonathan Hsu is a Co-Founder of Tribe Capital. He is a *really* smart dude (PhD in Physics from Stanford) with practical business experience (Managed Data Science team at Facebook). He shares the foundation of the diligence model he built that puts product-market fit on a spectrum (good-better-best) v. a binary outcome (have it, don’t have it)
Why does it matter?
One of Yield Group’s foundational values is to begin every engagement with the “Formula to Revenue” for the business, in order to align units (marketing, sales, customer success) to drive value. Jonathan’s use of cohort and unit-level economics is brilliant. No, you don’t need a PhD to understand it!
How can you apply it?
Cohorts and Unit-Level behavior. Although this article references the use of these tools to invest in start-ups, this can (and should) be applied to all businesses, regardless of industry or stage. There are no “average customers” and this level of insight brings you more clarity on where to invest.
Time
This is on the longer side (8-10 minutes) with some serious (but relatable) math. You may want to pour that 2nd cup of coffee before you dig in.
Create goals like the US Army does: do it backwards
• Author: Jessalyn Prins, Startup Writer
What is this about?
Jessalyn provides an honest assessment of why so many people fail at achieving (personal) goals. But the approach she recommends actually has application far beyond one's personal to-do list.
Why does it matter?
“In absence of clearly defined goals, we become strangely loyal to performing daily acts of trivia.”
– Author Unknown
How many times do you feel like your team is working on "daily acts of trivia?" Work is getting done, but is it accomplishing anything? This still happens even though there is a constant drumbeat around you about quarterly goals and objectives. Why is that?
How can you apply it?
The idea of beginning with the end objective is core to our work at Yield. We work with our clients to have them clearly articulate their goals for the quarter, year, etc., then work our way backwards based on the Formula to Revenue against the velocity required to move through the funnel (e.g. sales cycle), which tells everyone exactly where they should be spending their time.
Time Required
A short, easy read of 2-3 minutes.
Why onboarding is the most crucial part of your growth strategy
• Author: Casey Winters, Chief Product Officer at Eventbrite and Advisor at Greylock
What is this about?
Casey Winters has led or advised on growth for many companies that are household names: Eventbrite, Airbnb, Tinder, Prezi and Canva, just to name a few. In this post he shares his experience that, for consumer Internet companies, the bottle neck of growth is most often onboarding (activating) the consumers (leads) that come to the product.
Why does it matter?
Casey describes something we see frequently at Yield, and that is a company's "blind spots" to growth. We (marketing and sales) so often fixate on customers coming in to the funnel that we fail to focus on the part of the equation that delivers the ultimate value ... customers using your product.
How can you apply it?
You may be thinking that you are not solving for growth at a consumer Internet company, so this does not apply to you. You would be wrong. It doesn't matter if you sell professional consulting services or refurbished phones on eBay, how the customer "activates" your product or service is the last mile to creating value. If you, as a leader in marketing or sales, aren't working closely with your Product / service delivery / customer success team, then you may be running on a hamster wheel (lots of activity, no forward progress).
Time
You will need 4-5 minutes and slightly higher than average focus, especially if you aren't in software.
