How to set product growth goals?
And not kill growth prematurely
I’ve been asked this question so many times that I had to write about it.
I don’t need to emphasize how the growth goals should align with the business’s overall north star.
However, whatever the company goals are, they translate into product growth goals as either acquiring more customers, retaining existing ones, or monetizing better.
Once the broader direction is set, some clear levers can be pulled. I like to view these levers as an outcome metric that can be optimized through some input funnel metrics. This is how I like to visualize it:
Acquire:
Output: Activation
Input Metrics: onboarding completion rate, completion of aha and habit moments on trial, team activation rate on trial
Retain:
Output: Adoption
Input Metrics: feature usage and frequency, the adoption rate of features correlated with retention
Output: Reducing Churn
Input Metrics: Churn rate, churn rate by timeframe, churn rate by customer segment
Monetize:
Output: Conversion
Input metrics: paid and unpaid conversion rate
Output: Upgrades
Input metrics: trial and conversion rate to higher plans
Output: Expansion
Input metric: number of product-qualified accounts (identifying high intent product usage + ICP fit accounts)
How not to kill growth prematurely:
It's important that growth teams are agile, and this means that north stars, output metrics, and the input metrics of focus will change. I favor picking up one output metric to optimize at a time, seeing what input metrics can be impacted, and finding the biggest opportunities to improve that metric. If you see a sizeable impact from your efforts in that metric, move on to the next one. But I'd continue down that path if work is still to be done. If this means you keep the same focus for 2-3 quarters in a row, that should be okay - till you are not being inefficient about it as well as not breaking the learning momentum.
E.g., if you impacted the onboarding wizard completion rate in a quarter but know there is still much opportunity in the team activation journey, I'd continue to focus on that.
Similarly, if activation looks healthy since you put in much work, I'd move to something else that could drive long-term retention.
Note: Sometimes, it is also okay to identify the gaps in your funnel metrics to decide what output metric you'd be working on in a quarter. E.g., if the funnel metrics indicate that the team invitation rate has dropped, I'd switch my focus back to activation to get that number up.
The idea is to be agile and focus on the area with the biggest opportunity to drive your growth goals.
How do you set your quarterly goals? Let me know in the comments below:
#growth #plg #b2b #startup
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