Each organisation evolves its structure differently with different teams responsible for KPIs, however having the growth culture is important to drive scale swiftly and efficiently.
At startups, growth is of the utmost importance (besides Product-Market-Fit and the business model and funding and teams). One of the big questions on every entrepreneur’s mind is when does the growth team kick in.
But first, let’s clear out some questions I hear often.
What’s the difference between growth and marketing?
Marketers are mostly seen as folks who look at top of the funnel metrics like awareness and customer acquisition. A typical marketing team I have seen include creatives, content and media buyers across online and offline channels. The teams works to deliver on KPIs like SOV, leads, downloads, signups etc.
Product usually owns activation, retention and referral while the sales team owns revenue.
Growth teams look at the entire funnel to see how to improve the overall growth by influencing each part of the funnel. The KPIs they work towards are leads, signups, daily active users (DAU), conversion rate, LTV, etc – focusing on the growth and improvement of these metrics one at a time or in parallel. The team not only has marketers but also designers, product managers and engineers and data analysts.
Something I’ve often seen in startups is that marketing team’s requirements are deprioritised to the next sprint, and then the next sprint. While many leaders counter that marketing is responsible for the bottom of the funnel too, however their sphere of influence is usually relegated to top of the funnel.
What does a product team do and where does the growth team’s work start?
Simply, product teams build the core product. Growth teams ensure that the core product is experienced by the users using the most efficient path. Both the teams work closely to drive repeat usage.
Each organisation evolves its structure differently with different teams responsible for KPIs, however having the growth culture is important to drive scale swiftly and efficiently.
Building a Growth Marketing Team
1. The Team
Practically everyone works on growth in the early days while the team is still finding the Product- Market Fit (PMF). A growth team solidifies typically after some traction is seen on the PMF though that shouldn’t always be the case. At steady state, a growth team typically has these team members.
Growth Manager: Has the overall responsibility for driving growth across KPIs. Sets the agenda for driving the pace of growth experiments
Product Manager: Drive product features for growth. Brings marketing, engineering and design together
Engineer: Coding for feature development and running experiments efficiently
Marketing Specialist: Brings in specific skills on attribution, SEO, content or a particular channel like Google, Facebook or affiliates
Data Analyst: Provides insights and analysis. Makes new discoveries on user journeys and behaviour
Designer: Designs experiences and offers UX insights. Uses psychological triggers to drive transactions and engagement
2. Team Size
There are multiple ways in which companies model the headcount for a growth team.
Some startups make their first growth hire after they have 15-20 employees. If retention metrics are strong, then startups tend to hire a growth PM sooner than later. I have often seen companies make the mistake of waiting too long before they make their first growth hire. The current trend is to start building a dedicated growth team once there is an inkling of PMF. Additionally, if one channel becomes the primary source of transacting users then it helps to allocate a dedicated expert to handle just that channel.
The early hires will set the tone of the growth culture at the company and how well they work with the other departments. Typically, a growth team at the end of the first year has a full stack engineer, a data analyst, a user acquisition expert and a product manager.
Andrew Chen suggests startups should add to their growth team using the 1:5 ratio. i.e. for every five new employees coming into the startup, one should be a new growth team member.
The growth team will evolve over time. Start small with shared resources around the growth lead. As the startup sees traction have a dedicated growth PM. Moving on, focus on each part of the funnel with a dedicated growth team to develop a robust growth engine.
Early Days
After Seeing Some Traction
Steady State
Some bigger startups focus on marketing budgets and apply a people to spend ratio. If a company is spending $1 million on performance marketing then it makes sense to at least allocate $100K on the team’s salaries. Use a benchmark ranging from 1:10 to 1:5 allocate budgets for the headcount. Marketing budgets for companies is different. The team strength can be built accordingly.
Finally, you will need to layer this with the money that you can burn given the cash in bank, the funnel metrics and the speed with which you want to grow. It is not a simple answer which can be expressed in an equation.
3. Team Success
For the growth team to succeed there needs to be a culture of experimentation and no fear of failure. Nearly 80% of experiments will fail, what is important is the pace of experimentation, experiment design and objectivity in looking at the results.
The team will also need to create a product roadmap for growth to allocate resources for improving customer lifecycle, reduce friction and improve UX. Finally, the team will need to design and own the growth tech stack across the customer lifecycle - this includes identifying and deploying tech for attribution, analytics, automation, data visualisation, push notifications, email and much more.
Growth Teams have evolved into their own due to 2 primary shifts:
Platforms and Data
Access to users on platforms like Facebook, Twitter, Snap, Playstore, etc has become easier every year. Every year new platforms come to the fore (Tiktok, OTAs, messaging apps) and companies can target these users more efficiently to drive retention and revenue. Coupled with this, categorisation and visualisation of data has become easy courtesy tools like mixpanel, appsflyer , etc.
Marketing and Technology
With tools like Clevertap and Webengage it is now very easy for a marketer to execute campaigns in minutes. The heavy lifting of identifying a segment, sending a notification and deliverability is handled easily by an out of the box tool and the marketer doesn’t have to line up in front of engineering to execute a campaign.
These shifts have ensured that the growth marketing teams can readily visualise the whole funnel and influence KPIs at each stage to drive growth. Building a growth team creates an environment that encourages creativity, innovation, and scale.
In conclusion, earlier marketing teams focused primarily on the top-of-the-funnel. Growth teams look at the entire funnel largely overlapping with product, engineering and design as well. A growth team is made up of many different skillsets and can easily push through ideas and experimentation that crosses traditional silos and boundaries.
More on building growth teams:
All the best in building growth teams and driving the growth culture at your startup. Reach out to me if you need help.