Growth Engines and Social Media (Part 1)
This is part of a series about growth engines. This builds on the work of others, so at the end of the series I will provide a list of books and blogs I suggest reading for more info…
For the sake of simplicity I am going to focus on business. Other types of organizations can apply the ideas laid out here but they may need some translation.
Q1: What are growth engines?
Growth engines result in reoccurring sustained growth for an organization. Each organization has a somewhat unique way in which their engine operates, but the components themselves are not unique. Organizations have generic classes of growth engines that operate in a consistent way across the board.
Q2: Why do I need to understand growth engines?
Understanding growth engines helps a product team understand direction, and iterative speed. Growth engines also give a marketing team insights into opportunities and strategies that maximize growth. In short understanding how your business grows will provide substantive insights into how you should market, develop and cultivate the organization you are working for.
Q3: How many classes of Growth Engines are there?
There are 4 ways businesses grow and with rare exception these are inclusive for all. On the surface this may seem unlikely, since most businesses are looking to cut through noise with a legitimate differentiator from other competitors. However these differences don’t change the underlying growth engines in any meaningful way.
#1: Pass along… Pass Along growth happens when a product is worthy of talking about. Generally the value is established so strongly that users feel it must be shared. This often happens with “Cool” products and products that are particularly cost efficient. Most PR activities are devoted toward some form of pass along. Online we call this viral marketing…
#2: Growth through use- Usage growth happens anytime using the product directly generates a branded impression. Cars are a great example of this in the real world. Facebook’s frictionless sharing is another great example, and it is how spotify grew so successfully.
#3 Through Paid Advertising: This is a relatively straight-forward equation, every 1,000 impressions (CPM) = x amount of revenue. If that amount is 1+ a % it makes sense to use advertising as a growth engine. Put it simply if I spend $1 in advertising and get a return of $1.15 I am going to advertise. This actually doesn’t work for every business, and it explains why Return on Investment is so stressed with in social media.
#4 Through repeat use: The idea here is that increased user frequency will result in higher revenues, normally mature and well known about products fall in this class. I don’t want new customers I just want customers to spend more.
That concludes part 1… Stick with me next week’s blog will have a little more forward momentum.
Up Next: How Growth engines work with Social Media…
- KPI’s for Each type of growth Engine
- Generic Strategies That Leverage KPI’s
- The Resources