What we cover in Episode 17
If you've been on the internet at all, chances are you've used Spotify. They have over 83 million paying customers. Wow.
In this episode we catch up with Mayur Gupta, the VP of Marketing & Growth at Spotify to talk about:
Marketing and Growth are not different things.
The number of companies adopting a product-led growth strategy is on the rise. Openview has even put together a handy index that lists some of the best-known tech companies in this space along with many of their key valuation drivers.
As we shift more towards a product-led world, the role of growth becomes more important to that companies success. So, what does that mean for marketing?
Well, fortunately, great marketing teams are always motivated by growth:
"If you're not marketing to grow, then why are you doing marketing at all?"
But, what do we even mean by 'growth.'
"I think about growth across three core concentric circles.
1. The first is demand creation. How do you create a brand that has an emotional and cultural connection to a relevant audience? How do you generate enough awareness for the problems your product solves.
2. The second is demand capture. How do you capture the actual demand that's already there for your product? These users are searching for the things you solve; you need to make sure it's your product they find.
3. The third is creating a flywheel. How do you add more value to the user experience? How do you create loyal users, grow engagement and retention for your product?"
Growth is the partnership between marketing, product, and sales that achieve those outcomes. How you structure people around these outcomes matters far less than making sure you have agreement across teams on what the most important outcomes are.
"How you organize and structure the team is a function of the people and leaders you have. Whether you have a growth team that has marketers, product, data, etc., it's all dependent on the people you have. Growth is the outcome where every single team plays a role as an input."
Team collaboration is more important than team structure for scale-up growth.
A lot of time gets lost at companies trying to figure out what team owns what metric. However, at a particular company size, you realize success is more dependent upon collaboration than team structure.
"No one team in any organization can single-handedly make a huge impact on your main growth metrics. You can have some success. You can have a great product. You can figure out how to acquire users, get some viral loops working, but beyond a certain point what drives growth at scale is the cross-section of different teams collaborating to be successful."
Let's say you have a marketing team and their only goal is to generate new users for your product; they can be successful, but maybe those users don't activate or retain.
"Those users might not retain because the expectations you're setting for those users doesn't match the experience the product is providing."
On the other hand, you can be a product first company, with a fantastic product, but you need people to understand it's value, you need people to be on board with your mission.
"You can have the most incredible product, but without a message to inspire your audience, one that creates behaviors for your product you won't be able to drive real growth."
To be successful, I would think more about the outcomes you need to grow over the next X months and who are the groupings of people that can help you achieve these outcomes.
"Create cross-functional units in the forms of pods that are accountable to those common set of KPIs, because none of those KPIs can be moved by one functional team in isolation."
We talk a lot more about team structure in EP13 of the podcast "Setting up your growth team for success."
Your leading indicators are as important as the north star metric
The north star metric helps teams to focus on a single metric that shows if the growth of your product is moving in the right direction or not. However, it's a lagging indicator of success and shouldn't be your only focus.
"Your north star metric is a great way to bring teams together. They play a vital role in measuring the trajectory of your growth, are you trending in the correct direction?
But for north star metrics like monthly active users or annual recurring revenue, it can often be the things you did months prior that are affecting their current performance. They're not actionable.
Leading indicators are more immediate and actionable metrics to focus your current efforts on to see if they're having an impact or not."
Brian Balfour has a must-read article on the value of leading indicators.
You should spend a percentage of your budget on brand awareness, even if it's not measurable.
We're all so obsessed with data. We hate doing anything that's not measurable. We want to see a return on every dollar we spend.
How much marketing budget should I spend on raising awareness of my brand is a difficult one to answer. A lot of the things you would do are hard to measure.
In a world where the importance of your brand, and customer experience has never been higher, we need to get comfortable with not being able to measure every dollar we spend.
"I feel it's irrelevant to measure every single dollar spend on marketing because it gets you to the point of diminishing return. Marketing becomes too engineered. We lose the importance of creating both an emotional and cultural connection to our brand."
However, as much as that sounds like the right thing to do, CEO's want to see a return for the money they're spending :) So how can you take some of your budget for brand awareness initiatives?
"I think, if you have a hundred dollars, marketing should be held accountable to the ROI on 70% to 80% of that budget. For the remainder, you should spend it on raising the awareness of your brand, your product, your services."
The right answer for this is, of course, there is no single correct answer. Again, we need to be hyper-aware of the outcomes we're trying to create and ensure we're correctly spending the budget to achieve those outcomes.
"Marketing should be held accountable for outcomes and not output. When spending on the brand you need to ask, am I doing this because there is a lack of awareness for my brand among a particular audience? If most of the market is already aware of my brand, should I spend 100% of my budget on things that will capture that demand, things that will create more loyal customers?"
The podcast provides a more in-depth look at these topics, so if you enjoyed reading the above, please do give it a listen.
And until next time,
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