How did you feel the first time you were tasked with growing a business you didn’t know much about?
I bet you felt like the task was huge and you didn’t know where to start. Don’t worry… I felt the same way…
Over the years, I have developed a model to help you audit and analyze business growth. The main goal is to give you all the keys you need to develop a cohesive strategy and make sure you don’t miss anything.
You’ve been in business for a while and there are millions of data points that you could look at. The aim of this audit is to point you in the right direction so that you don’t waste much time.
Building an audit can be a complicated process. I’ve designed a comprehensive workbook to help you out. Click here to download it.
Should we Start Growing?
Depending on your stage, the right question to ask at first is “Should we invest into Growth?”.
Not all products and companies should invest into growth. You need to verify that you’ve achieved Product / Market Fit and that your business is ready for showtime.
If you haven’t yet reached the PMF, take a step back and work on your product before you start investing in growth.
Without an awesome product (and the market’s attention), you’ll waste time and you won’t be able to achieve desirable results in your experiments.
Why & When an Audit is Necessary
You did some reality checks and you really achieved Product / Market Fit? Congrats! You can now invest in Growth.
Here are the questions I hear every day: “Where do I start?”, “I don’t even understand where the business is going”, “They have been doing plenty of stuff but data is scattered everywhere”.
These are all questions that should be answered by the growth audit. At the end of this audit, you should be able to understand:
- Where the business is going
- How the Analytics was set up and the metrics you should follow
- What are the different tools you need to use
- What are your Growth levers & Areas of Growth
Ask some questions
Finally, this audit will allow you to take a step back and reflect on the business. This is the perfect time to ask questions like:
- Why do you have a Freemium?
- Why are your plans priced so low?
You aren’t looking to shake things up. You just want to make sure that the company took deliberate decisions. The last thing you want is to build your strategy on some random tactics.
To give you an example, I ran an audit for a company with an-ACV of 10k€/year. They had a free plan in order to get customers through the door.
Questioning this model allowed me to ask questions like:
- Is this plan targeting the right kind of users?
- Does your freemium show value? Does it naturally lead to the paid offer?
- Can this create some sort of virality? (Freemium as an Acquisition channel)
- Could you have enough free users so that a small number decide to pay?
That decision wasn’t deliberate. It appears the founders just “liked the idea”. Did it make sense? Not really.
This is the perfect moment to ask questions and uncover any potential issue.
Are Audits helpful?
What most people dislike about audits is that they’re one time piece of work. You work on them for a while and throw them away.
Remember that the goal of this audit is not about creating a document that will be useful every day, it’s about making sure you understand every aspect of the business.
Once you have that audit at hand (and all the knowledge that comes with it), you’ll be able to get started with your Strategy.
In other words… Building an audit will empower you to design a winning strategy (which is the long-lasting piece of work needed to effectively grow your business).
It’s not because it’s called an audit that it has to look like a 120-page document from McKinsey. You’re the only user so keep it lean and use bullet points.
Context goes first
Hiten Shah wrote an article titled Advice is Cheap – Context is Priceless. Although you’re not really giving advice, context is necessary to make sure you understand the big picture.
If you’re starting a new growth role, you likely understand the product and the customers.
However, before diving into the numbers, take some time to speak with a few key people. These people might include:
- Product Team
- Marketing Team
- Support Team
You don’t have to spend weeks running formal interviews. You could just have coffee or Skype calls with these people.
Talking with them will allow you to build a representation of your company and the people around it.
Quantitative data is awesome but never forget about other sources of insights.
Content of the Growth Audit
Creating a Growth Audit should encompass every aspect of the business and how you’ve been growing since the beginning.
Let’s dive in. You’ll find below some information about all the parts within the Growth Audit.
- This audit is a work in progress. My processes and methodologies constantly evolve.
- Adapt your audit to the business in question (e.g. you won’t analyze a freemium the same way you analyze a two-sided marketplace).
Before you get started, make sure you download the workbook.
How can you work on growth if you don’t understand what’s going on within the business?
Revenue and Customer Growth
Right now, your aim is to understand how the company is doing from a revenue standpoint. You want to understand how the company is growing.
By looking at this graph, it’s easy to understand that:
- The company has been growing quickly
- They were booking a significant amount of new MRR (which recently decreased, why?)
- Churn quickly started to rise therefore slowing down the Growth
You could do the same analysis for User & Customer Growth. However, as my main focus is B2B SaaS, these analyses don’t always make sense.
When building any kind of business, retaining customers is even more important than acquiring new ones.
In this example, Company A acquires twice as many users as Company B. However, Company B will win in the long haul because they retain users much better.
The same applies to revenue and customer retention. Why would you spend thousands to acquire new customers if you’re not able to retain them in the long term?
Start by analyzing monthly cohorts. You want to get a sense of what’s going on and start noticing trends and patterns.
This should normally give you a rough idea of what’s going on. Don’t start building automated reporting at this phase (you’ll waste time). You’ll do that after creating the strategy.
Some businesses are highly seasonal. Even in B2B. Have you ever felt like you should be in vacation instead of being in the office? That’s what I’m talking about.
Even if you’re growing an online business, never forget that you’re dealing with people. How do you feel about getting an ice cream in winter?
Well. People might feel the same about your software at different times of the year…
It’s important to understand seasonality so that you can factor that in your analysis. If your Marketing team released major pieces of content about ice cream during winter, you might be able to guess why it didn’t work…
Looking at this graph, you can see a few things:
- Summer doesn’t impact the company so much
- One month appears to be extremely bad: September
The next question is to ask yourself: Did we do something specific or is it related to our customers and industry?
You should also pay attention to how old your company is. If you started 20 months ago, you may not have enough data to analyze seasonality (also consider Marketing and Product ramp up).
If you aren’t old enough or you can’t see any seasonality patterns, it’s perfectly fine, so don’t worry. You’ll get there soon.
Finally, if you realize your business is highly seasonal, you might want to work on that with Growth (e.g. offer huge discounts on ice cream during winter).
Your experiments are as good as the results you measure. If you can’t measure results, you can’t properly experiment.
There is no way you can create growth experiments if you don’t have a proper analytics stack.
Without trust and confidence about your numbers, you won’t be able to measure your results and you will do more harm than good.
Here are a few questions to ask yourself:
- What are the different analytics tools?
- Were they implemented correctly?
- Are there any signs of data discrepancy?
- What are the metrics being followed internally? (e.g. MRR, Churn)
- Are these metrics reflecting on the growth?
- Are they good metrics?
- What could be done better?
Don’t try to revolutionize everything you’ve been doing in terms of Analytics but just make sure you have the right tools to experiment.
Your team has been doing Marketing for a while and you want to know what they have already implemented.
The goal here is to give you a rough idea of the toolkit at your disposal.
- What are the tools?
- Are they well integrated together?
- Are they being used efficiently?
Think about Intercom, HubSpot and any other tools that might be used throughout the customer lifecycle.
This is where the fun really begins… We really have two different goals in this phase:
- Understand the different areas and levers of the business
- Work backwards to documents previous experiments.
Think about the main levers in terms of AARRR:
For each of them
- What are the tactics?
- What are the metrics?
- What are the steps involved in each step?
- What are the behaviors within each step?
- What could be done better?
Now that you have a rough idea of what’s going on within the “funnel”, you want to work backwards in order to find and document previous experiments.
Often times, you’ll realize that the team didn’t measure results properly and you won’t be able to extract learnings. If you think they can really move the needle, you might want to put them into the backlog.
Feeling overwhelmed? Make sure you download the workbook.
Trust me. I’ve been there. I’ve seen so many companies launch plenty of things and fail to generate results because they were experimenting in each and every direction.
Startups are often so eager to move the needle that they hate doing this kind of work. They hate audits and strategies. However, without them, you’ll struggle to implement tactics that can move the needle…
Working ahead of time can clearly save countless hours. You can’t experiment (let alone build a strategy) if you’ve no idea of what you’re doing…
Done with the audit? It’s finally time to get to work on your Growth Strategy. The strategy is the next big piece of work that will enable you to deliver results.
By now, you should know the business’ ins and out and this audit will give you everything you need in order to start thinking about growth in the right direction.