Consider a scenario - B2B SaaS founders see a massive gap in the market, assemble a crack team, raise funds from elite investors, and launch a stellar product. They get early traction, and lots of users sign-up for the freemium plan/free trial, but then the founders hit a wall. They can’t get enough sign-ups to upgrade to paying customers with leakages throughout the funnel.
Blume portfolio company LambdaTest’s founders, Asad Khan and Jay Singh, found themselves in a similar situation when they launched. LambdaTest offers a unified digital experience testing cloud for web and mobile testing. During its zero-to-one journey, LambdaTest found early traction and gathered a lot of signups through its PLG sales motion (check out Blume's primer on PLG-led GTM here). The sales team was looking into inbound leads, and marketing was generating more leads — but there was also leakage in the process, especially after crossing $1M to $2M in revenue, where even with 100 to 200 daily signups, the conversion remained low. Thus, even though LambdaTest was riding the tailwinds of having nailed the customer’s pain point, the leakage compounded over time and became a major issue, with conversion stagnating to just 6000 paying customers out of 200,000 to 500,000 signups. This was when Asad realized they needed a growth role in the company.
The growth marketer or growth manager is a dedicated resource who sits between the marketing and sales teams while also working closely with the product team. Their primary responsibility is to optimize the funnel — both bottom-up and top-down, look into performance marketing data, and run targeted marketing campaigns to promote new product features and capabilities — all of which are likely to lead to greater conversion.
This person can help figure out the number of channels to focus on, create sales projections, optimize for discovery, identify missing data points, and deep dive into data for insights. Typically, existing roles in Sales, Marketing, and Product don’t have the time to go in-depth into fixing the funnel — this is where the growth role comes in.
There’s no fixed growth playbook for companies below $1M to $2M in annual recurring revenue (ARR), so housing this function within marketing is ideal. With more signups, data, and segmentation of the funnel, the target audience will become clearer, and then you could create a separate growth org. There also has to be a clear division of labor between marketing and growth - while the marketing team focuses on creating more product awareness and getting signups, the growth marketer optimizes the funnel, increases product engagement, and improves conversions.
Should it be a senior growth individual who reports to the CEO or a growth manager? Should it be a team or an individual? In the case of a team, would each person focus on a specific part of the funnel?
Like all things sales, in the early stages, founders should drive it personally as they are perhaps the only ones in the company with a full 360 degrees view of their sales funnel. But once you hit $5M ARR, you should strongly consider carving out a growth role in the org structure. The role can initially report to the founder/CEO and then can become a full-fledged function on its own. We’ve seen this role or function report to CMOs in early to mid-stage companies.
The ideal persona for the growth role is a person with a background in performance marketing for B2B companies with a deep understanding of data analysis, sales funnels, and using tools like Hubspot, Segment, etc. Alternatively, one can also look for an ex-founder who can bring a fresh perspective and deep dive into the data to understand bottlenecks impeding growth.
At LambdaTest, Asad initially planned to hire for growth when they hit $10 million-$20 million ARR, as one can’t solve everything in the early stages. But when he realized that their conversion rate was dragging down their ARR because of the leakage in their funnel, he decided to hire immediately.
The role has three fundamental key responsibility areas:
Lifecycle management (for instance, keeping existing users active and updating them about new features), and
Funnel optimization (to increase/optimize funnel before and after sign-up).
Their biggest task is to identify where the funnel is stuck and to unlock growth by optimizing everything from the top-of-the-funnel to the bottom-of-the-funnel. For example, Beaconstac, Blume’s portfolio company, engaged in limited lifecycle management, and had some marketing automations in place. While each of these levers can be improved, performance marketing — which is the top of the funnel — is where they found maximum headroom for growth, according to Sharat, co-founder & CEO of Beaconstac. Based on their initial experiments around performance marketing (such as Google campaigns), there was scope to scale top of the funnel by 10x or 20x, so they decided it would be best for the growth role to double down on performance marketing if they do hire.
Setting the right Objectives and Key Results (OKRs) for the role would be beneficial and directly connected with the Marketing and Sales OKRs. The growth role is not directly responsible for generating revenue, but it’s cross-functional with dependencies on marketing and sales roles. This role can succeed only with the support of the different part-owners of the funnel, the right data, transparency, and proper OKRs, believes Asad.
Sharat suggests creating a true north metric for this role which they should optimize. This metric could pertain to increasing trial conversion, in which case they have to use a combination of product design and marketing to be able to do it, or it could pertain to performance marketing, such as decreasing the customer-acquisition costs. The idea is to be able to identify that one metric that will help unlock growth and then provide the necessary resources to the growth role to make it happen.
The Growth role is likely to become a standard and integral part of most organizations in the years to come. Thinking about it early on is likely to be very beneficial for startups as they grow their business.
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