How Does Growth Marketing Work

By marco ·  September 25, 2020


Growth marketing is data-driven marketing that targets customers in every stage of the customer funnel through rapid experimentation.

Growth Marketing

Growth marketing is what happens when you combine marketing with science. 
Instead of relying on your gut feeling, growth marketers take a data-driven approach to everything they do and measure the impact of small experiments on macro-environments.

This can range from a simple test (also known as a “minimum viable test”) to extremely in-depth series or combinations of experiments or campaigns.

Whereas traditional marketing focuses strongly on acquiring new users, growth marketers focus on the big picture. Yes, acquiring users is important. But so is activating users and retaining them.

Typically, a growth marketer will rely on a number of tools in order to plan, track, attribute, and measure the success of individual experiments.

Not only Tech companies such as Amazon or Facebook test thousands of experiments each year. Many software companies in the world have adopted a similar approach. The reason: it makes marketing more predictable. 

The higher the amount of data-driven experiments that are run, the higher the chances of finding out what works and what doesn’t. That’s science.

Brian Balfour, Founder of Reforge and former VP of Growth at HubSpot says:

“Growth is the sum of lots of small parts. There isn’t a silver bullet.”

Brian says this because when growth marketers often start out, they focus their time and energy on finding a golden nugget. 

However, it’s not the golden nuggets that lead to extreme growth, but rather the small wins that are being built on top of each other. 

This is where the term “Growth-Marketing Mindset” comes from.

It’s not so much about the specific experiment, but rather about adopting a data-driven mindset within your organization that allows you to build small wins continuously, without falling for the idea of one specific golden formula.

What is Growth Marketing Used for?

In modern-day marketing, marketers use “funnels” to describe specific stages where customers are at in their products. Typically these stages are called:

1. Acquisition
2. Activation
3. Retention 

The acquisition stage for example simply refers to the customer stage of “acquiring” customers. This includes all the marketing methods and experiments being used to find customers online and to inspire/persuade them to sign up.

Customers who have already signed up (i.e. been “acquired) now need to be activated.
There are many users who sign up to a software but who never actually use the product. 

Marketers know this, so they try to make it as easy as possible for users to understand and adopt the software so they keep on using it. The series of experiments here is happening in the “activation” phase.

When users get activated, now the hardest job of all is to make them keep on coming back. This is usually done by making sure that users extract the value they are looking for.

The series of experiments to find out “how to keep people” are happening in the retention stage. 

All in all, growth marketing is the all-encompassing view of your product and the way you market to customers in those stages using data. 

Setting Outcomes

One of the most important elements of growth marketing and individual experimentation is setting the correct outcomes.

Basically asking yourself the question: what do you want to achieve? Most marketing-sales units are constructed in the following way:

Marketing is responsible for delivering MQLs.Sales is responsible for closing deals.

In the era of growth marketing, more and more marketing-sales teams are starting to become one single unit in which both of them have unified KPI such as “revenue”.

In the example above, let’s take a marketing team Team A that has a goal of generating MQLs.
And let’s take a marketing team B that has as a goal generating Revenue.

Team A runs LinkedIn Ads and generates 50 MQLs, but zero revenue.
Team B runs a landing page experiment and generates 10 MQLs but 10,000$ in revenue.

Depending on which “outcome” is being measured, either one of the teams would be considered successful. Hence, setting the specific outcome, which I recommend to keep as close as possible to tangible success, such as revenue, can change many things for a company.

Considering the Funnel

However, this is not all. As mentioned, growth marketing is the holistic approach – considering the entire customer funnel.

In another example, let’s take company X who manages to generate leads at 200$ per lead via Adwords. And company Y that manages to generate them at 1000$ per lead via ABM (Account-Based Marketing).

Company X closes 5% of their leads and Company Y also closes 5% of their leads.

You would say that company X does much better as they spent much less money per lead and thus are retaining more profits.

However, after a deep-dive, Company X finds out that all the customers generated jump off the ship by month 6. While the customers generated by company Y stay on average for 3,5 years.

Suddenly company Y became much more successful. And so did their campaign, even though initially it may have seemed to perform worse. 

This is the importance of setting the right outcomes and of how thorough and scientific growth marketers need to be in their evaluation.

How to Prioritize Experiments

What most companies do is they create a big list full of ideas and experiments to be tested: the backlog.

Here you note down anything that comes to mind that you want to test in the upcoming period. After that, you want to prioritize your experiments. You do this by the following criteria: 

  1. Quantitative predictions based on past data
  2. Qualitative predictions based on surveys, expert opinions, consultancies, etc.

After that, most of the experiments can be prioritized by: 

  • Predicted KPI increase (for example, MQLs)
  • Probability of outcome (usually ranked 1-10)
  • Human resources required (hours from various stakeholders or departments)
  • Costs required

To learn more, check our comprehensive step-by-step guide on how to create a data-driven organization from scratch. 

Quotes from Famous Growth Marketers:

“If your retention is poor, nothing else matters”.  – Brian Balfour

“In General, growth is about building and optimizing mechanisms that drive a product’s discovery, adoption and usage” – Andrew Chen

“According to Bain & Company, a 5 percent increase in customer retention can mean a 30 percent increase in profitability for a company.” – Ryan Holiday

“Growth came from product innovations, unique acquisition channels that their competition hadn’t considered, and rigorous optimization driven by analytics and a deep understanding of their customers.” – Sean Ellis

Helpful Resources & Examples of Growth Marketing

Example 1 –

Example 2 –

Example 3 –

Need to hire a team of growth marketing specialists to run marketing operations for you?


About the author

Marco Van Bree Marco is the Founder and CEO of Zengrowth. He loves marketing, distribution and growth and has been helping SaaS companies achieve better results for the last 5 years. You can wake him up for pizza and pick his brains about anything chess related. He is also into self-development and loves sharing his learnings in business.
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