In this article, we’re going to dig into five big mistakes that startups often make when it comes to investing in growth.
Mistake #1: Not first testing things themselves.
If you haven’t validated a particular growth channel yet for your company, then it means that you probably shouldn’t be hiring somebody to validate it for you.
What I mean by this is hiring, for example, a consultancy or a solo consultant to tackle a particular problem that you want to get answered. The reason why I say this is because, in most situations, consultants do not have their incentives aligned to your business. So even though they might market that they can take care of your case studies and things like that, they ultimately won’t care about your business as deeply as you do.
And so what they might do is provide a bandage solution, but it’s not actually the best outcome for you in the long term for your business or brand. A perfect example of this is recently we validated that paid advertising was something we wanted to invest more in. And so we hired a consultant to do some of our day-to-day Google ads management.
And over time we got results, but we also saw a tapering of our results. And through working with our consultant, what I realized was that regardless of what I would tell him, in terms of what we, where we want it to be, and where we were today, he wasn’t going to really be able to get there. And he was still telling me that we would be able to based off of X, Y, Z reasons.
And so we had this situation where I was paying this consultant and he just had this incentive to keep this retainer in place because it meant that he had money for ongoing with a long-term client. And so ultimately it really gets back to that point that I was making which is consultants don’t have your best interest in mind.
So this all comes back to the point of always test things out yourself and get into the habit of validating something for yourself before you go ahead and task it out somewhere else. It’s fine for you to bring on additional help if you need that bandwidth, but be fairly confident that this is actually going to drive growth for your business.
Another example of the common ways I’ve seen this from consultancies is there’s a lot of cold email marketing agencies that will tell you and promise you a certain number of meetings if you engage with them and pay them some sort of retainer. Again, it might work in the short term, but it’s not something that’s actually going to build sustainable growth for your organization in the long term.
Misktake #2: Adopting a growth hacking mindset
The second mistake that I see a lot of startups make is that they adopt a growth hacking mindset. Personally, I hate the term growth hacking because it really focuses on short-term outcomes as opposed to long-term results. What I mean by that is growth hacking is just inherently use the word hack, which means that you’re cutting corners in some sort of way.
And what that means is that you might have some sort of one-off campaign that works, but you can’t keep on using that in a repeatable fashion, which means that you don’t have growth that’s actually going to sustain over the course of a year or many years for your company.
A perfect example of this is you might do some sort of flash fire sale or something. And it works really well in terms of getting conversions. And so you might get into this hedonic treadmill where you think that that’s going to be the one thing that you can keep growth hacking, but over time, what ultimately happens is your customers get used to the fact that you’re always doing this. And so you degrade the value of your brand.
And as a result of that, you lose out on future customers because the quality of your brand has gone down. So when it comes to approach and growth, you want to make sure that you’re finding things that are actually going to work more than once, or it won’t be a flash in the pan. I think in general, in the marketing world, there was a lot of growth hacking trendiness in the industry throughout the 2010’s. But it’s something that has really led to some short-term thinking across a few different companies in the past.
Mistake #3: Not pushing assumptions and outcomes.
The third mistake that I see that starts to make when it comes to tackling growth, is that they’re not pushing on their assumptions and their outcomes. What I mean by that is that they get complacent with their understanding of their customers.
The reality is that if you’re not continuously doing customer development, in terms of figuring out what your customers need next or anticipating what your customers need next, then you’re ultimately going to come up with a tapering effect in terms of whatever growth effort that you’re working on is going to have in terms of outcomes.
As long as you are consistently running new tests and growth, you will be able to unlock a new learning that is then going to be the basis of the next growth engine that you’re going to build for your organization. An example for this would be, let’s say that you’ve actually gone ahead and realized that community is a big area of opportunity in your particular industry.
And you go ahead and actually build a slack community that’s truly engaged. People are talking every single day, they’re connecting with other people in their space and they’re really enjoying their experience. Well, you could definitely continue to run this group just as it is, and assume that things are going to be awesome over time.
But the other thing that you might realize is that you could invest even further in this growth channel that’s working and creating even more opportunities for people to connect. Maybe it’s something where you schedule 15-minute coffee chats between different folks in the community or small groups for people to collaborate with one another beyond the general structure of, “Hey, if you want to talk to me, you can DM me on Slack.”
By taking that extra effort of testing the upper bound of the particular channel, we can really realize what actually is this thing for us in our business. And then taking this a step further, maybe this becomes something where it’s a bi-annual event and people are actually flying to a central location to come meet each other, who they’ve met only virtually in the past.
You can see how much more powerful this becomes in terms of your growth engine and building sustainable growth engine. You’ve taken something that is already validated and continued to push the upper limits in terms of your assumptions, as well as the outcomes to really optimize the channel that has already been validated.
Another example that I thought about with this Slack community is maybe you can even sell a productized service that your company doesn’t currently provide and its core product. And that could introduce a whole new revenue stream, which would then introduce a whole new growth channel for your company.
Step #4: Not holding their growth team accountable
The fourth mistake that I see that growth teams often make is that they don’t hold their growth teams accountable to having clear smart outcomes. Specific, measurable, attainable, realistic, and time-sensitive. If you have something where your general goal is to, for example, increase social media presence, you’ve already failed.
There is no clear outcome as to whether or not you guys were successful in achieving the increase of social media presence. Aside from some anecdotal evidence, you’re not going to have a clear yes or no answer. Growth can mean a lot of different things at startups, but ultimately typically we’ll go back to one of your north stars as a business.
It might be something like the number of new customers you’re adding on, or the number of customers that are moving to multi-year accounts. Or the churn going down for your business. Whatever it is, there’s some sort of clear north star that your growth team should be focused on tackling at any point in time when they’re working through their different tests.
For many companies, growth is simply going to be something as simple as prioritizing the number of qualified leads for the business. The reason why is because more qualified leads means more qualified opportunities for their sales team, which means more opportunities at bat to generate revenue for the organization. But there should be a clear understanding of exactly how the growth team is being held accountable to the outcomes and the growth of the overall business.
Mistake #5: Not hiring for experience
If you’re a startup, that’s listing one of those job descriptions, talking about wanting a growth lead with only two or three years of experience and your budget for that is half of the market, then you’re not approaching this from the right lens.
Sure. You might have the chance of hitting the gem or the diamond in the rough, in terms of somebody who’s a young whippersnapper marketer and wants to just become really good and test out different things and there’ll be successful just because they’re intrinsically motivated enough to do so.
But in most situations, what I found is that growth comes from actual experience of being in the trenches and knowing enough different strategies to drive growth itself. And what that means is that too often, I see that startups under invest in their budget for the growth team. They’ll set aside a budget where they have decided that they want to invest in growth, but they’re not actually investing in ample enough into the experience level that they want for leading growth. And as a result, they get disappointed with their outcomes in six to 12 months. And they scrap the idea of a growth team altogether.
Now, that’s not to say that this cannot work. You might come across like I said, somebody who’s an absolute rock star that just needs their shot but in most situations, you will find that experience pays, especially in this world, because what an experienced growth hire is able to do is just pull from their past playbook of what they’ve already tested in an adjacent industry, and then transfer it over into your industry.
And that’ll allow you to cut corners in a very productive and healthy way as opposed to having to figure everything out and discover every learning through every literal experiment. Even if you can’t find somebody with exact growth experience, what you want to look for is transferable experience to the channel that you want to be investing in next.
If for example, you’re really trying to expand out your cold email approach, well, then that might be a situation where you’ll look for folks in the candidate pool that come from an extensive account executive background, where they cold emailed a ton of their prospects and built up their own pipelines. I cannot emphasize this point enough. Once you have enough budget for experienced hires, make sure you do so.
I’ve been in startups that both have not invested in growth in this way, as well as startups that have. And it makes all the difference.
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