🎯 The Art of Scaling Profitably...

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From the best approaches to avoid false positives in customer validation to knowing where to spend your first R1,000 for growth and which processes to automate before hiring more staff, we’re here to add value at every stage of your innovation journey:

1. Startup Phase

2. Growth Phase

3. Scale/Sale Phase

The Metrics That Prove Product-Marker Fit

Earlier in 2024, partner at the US VC First Round Capital, Todd Jackson, was on this episode of Lenny’s Podcast to share their product-market fit framework, measured across four levels, each emphasising three key dimensions: demand, satisfaction, and efficiency. Key metrics include: 1) retention rates to assess satisfaction, 2) sales conversion rates to measure demand, and 3) the "magic number" (new ARR divided by CAC) to gauge efficiency. At advanced levels, Net Revenue Retention (NRR) and organic inbound inquiries also become vital indicators of success.

How to Avoid False Positives in Customer Feedback and Validation

US HealthTech and SecureTech (B2B) specialist investment firm Dreamit’s founder Steve Barsh explains in this video the critical step to avoiding false positives: ensure honesty from customer feedback. To do this, his approach is to: 1) Engage three groups – those who benefit, approve, and pay for your solution, ensuring you de-risk all perspectives. 2) Set a ground rule: “You can’t hurt my feelings,” explicitly inviting criticism. 3) Validate rigorously by asking, “Would you really use this?” and “Does it solve an urgent need?”

When to Pivot vs Persevere

When it feels like you’ve hit a wall, internet privacy company Anonymizer’s exited founder, Lance Cottrell, outlines in this video how to decide whether to pivot or persevere: 1) Evaluate traction – if your business lacks clear growth signals or customer demand, a pivot may be needed. 2) Test a new direction with quick, low-cost validation experiments to gauge viability. 3) Set strict milestones – if your current path can’t meet defined benchmarks in time, it’s likely time to pivot. Always ensure your decision is based on measurable progress, not sunk cost fallacies. And 4) if you need to persevere, switch to a “cockroach strategy” by minimising costs and focusing on survival until the market catches up.

Are you in the start phase? Have questions? Hit reply and let us know how we can help.

Personalisation vs Automation: What Really Works?

Frobes’ council of CEOs and CTOs provides some guidance in this article: 1) Automate routine, repetitive tasks like appointment scheduling or FAQs to improve efficiency while lowering costs. 2) Use personalisation for more complex interactions, tailoring responses to individual needs, such as personalised recommendations or names. 3) Map the customer journey to decide where automation supports personalisation best – this ensures customers feel valued without overwhelming resources. Test and refine your approach, plus: check out our post on how to use machine learning for personalisation.

The One Metric That Predicts Retention Success

There are most certainly a lot of complex ways to measure retention – see a good few of the most famous ones here. But they are all reactive (after the fact), so is there another seemingly unrelated metric that could proactively help predict retention? According to this research, yes, your Time to Value (TTV) seems to be the most accurate predictor of retention: the better your TTV, the better your retention is likely to be. Wes Bush from ProductLed on YouTube offers this video with actionable tips on optimising your TTV.

Growth Marketing: Where to Spend Your First R1,000

If you haven’t tried it yet, the absolute first place any business should try spending to get customers is Google Ads for 2 important reasons: 1) search ads are triggered by people actively searching for your product/service (they have buying intent), meaning they’re easier to convert. 2) You don’t need production value, it’s just text, no fancy video or images required – making it cheaper and faster to start learning. The only thing is that Google is so famous that competition is fierce. But it’s still worth trying, you might just get lucky and find a gap no one noticed yet. Affiliate marketer Ivan Mana does decent Google Ads guides.

Need help growing faster? Maybe it's augmenting your team, or perhaps coffee with one of our growth experts — either way, hit reply and let’s find your solution.

Processes to Automate Before Hiring More Staff

Scaling your team is necessary but expensive, so automating key processes first can save time and money. Focus on areas where efficiency matters most: 1) augment customer support with chatbots or self-service tools, 2) streamline invoicing and payment workflows, and 3) systemise lead generation and sales outreach with CRMs. But note: It’s hard to automate parts of your business if you don’t know and can detail every step in the process. So if you didn’t do it during earlier stages, here’s a guide to system discovery and systemising your business. 

Metrics That Show You’re Scaling Profitably

Scaling profitably means keeping your growth sustainable while ensuring healthy business fundamentals. Three essential metrics help guide this: 1) Net Revenue Retention (NRR) shows how much revenue you retain and grow from existing customers, ensuring your foundation is strong (see how to calculate NRR here). 2) Burn Rate/Burn Multiple keeps your spending in check, ensuring you don’t outgrow your runway (learn more here). 3) Gross Margin reveals if your underlying economics can support long-term profitability at scale (calculate it here).

How Great Leaders Scale Teams Effectively

Although the “Scaling Leadership” book is 5 years old already, the core steps authors Robert J. Anderson and William A. Adams outlined in this article still apply: 1) Start with yourself: Know your own strengths and liabilities. 2) Actively create new leaders: Develop leadership teams within your organisation by finding those who align with your purpose, strategy, and goals. 3) Build a leadership network: Teach those leaders how to school others and entrench it with feedback loops, developmental processes, and a culture of leadership growth throughout the organisation.

Want to scale faster? We have people that are comfortable with the discomfort of the scale phase. Hit reply and let us know how we can augment your team.

Have your say…

Hit reply if you think we’ve hit or missed the mark, tell us what you’d like to see or hear more of and, just in general, what would really add value to your journey…

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