Growth Marketing for Venture Backed Tech Companies

Right Side Up is a marketplace that helps VC-backed tech companies hit their goals by connecting them with best-in-class growth marketing specialists. We’ve put together a guide to growth marketing to help you rapidly grow your business. Here’s what you can expect to find in this article.

Table of Contents

1. What is Growth Marketing?
2. How to Identify Your Company’s Growth Stage
3. How to Build Your Growth Marketing Channel Strategy
4. Measuring Growth Marketing Success
5. Centralized vs. Decentralized Growth Teams
6. Hiring Strategy: Growth Marketing Consultants vs. FTEs vs. Agencies
7. Additional Growth Marketing Resources

What Is Growth Marketing?

Growth marketing can be defined in many ways, but at Right Side Up our top-level take is: it’s any activity whose primary purpose and measure of success is the increase of some customer behavior, most typically a sale of some sort.

“Growth refers to the strategies and tactics you employ to proactively direct the path of your company’s growth, rather than reactively hoping growth comes to you,” said Tyler Elliston, founder of Right Side Up. “It’s not, ‘If you build it, they will come.’ It’s, ‘Once you build it, go and get them.’”

There are two primary ways companies tend to approach “Growth.” There’s product-driven growth, which involves building referral loops into your core user flow so that someone who is using your service will, in the ordinary course of using it, promote the company to others. It goes viral. Then there’s marketing-oriented growth, which has historically been rooted in advertising, or performance marketing, to help grow your user base. There are also hybrid growth activities that are commonly claimed by both product and marketing, like SEO/content.

Before we fully dig into growth marketing, let’s break down how it differs from performance marketing. Though there are many similarities, the primary difference is that performance marketing is generally advertising-specific (though sometimes includes other highly data-driven tactics that allow you to measure concrete ROI, e.g. $1 spent to get $2 back), whereas growth marketing is broader includes not only advertising, but tactics that are not as data-driven or easily measured, such as strategic partnerships. But more on all of this later.

It’s important to note that while our definition of growth marketing captures its broadest aperture, other marketers or specific industries may have a different or more targeted definition, based on their needs and experiences.

How to Identify Your Company’s Growth Stage

Understanding which growth marketing strategies and tactics you should employ and when depends on your industry and growth stage. In general, there are three phases: incubation, iteration, and scale.

• Incubation phase refers to the time period in which you’re building your minimum viable product (MVP). This should be done in close partnership with your customers to ensure you are solving a real problem with a credible solution. The endpoint of this phase is a working MVP.
• Iteration phase is reached when you have customers using your MVP and you are rapidly improving the product. Success at this stage is rooted in customer insights—both qualitative and quantitative—not marketing excellence. The endpoint of the iteration phase is product/market fit.
• Scale phase happens when you have product/market fit and you’re actively trying to grow your customer base. The goal of this phase is to build a portfolio of tactics that maximize market penetration with minimal cost—or at least a cost that maintains profitability. Success is rooted in growing lifetime value through retention and margin, maximizing funnel conversion to efficiently convert leads to customers, and finding repeatable tactics to drive prospective buyersʼ awareness and consideration of your product. The endpoint of this phase is ultimately market saturation, leading to the incubation and iteration of new features, customer segments, and geographies.

Here’s a further breakdown of each phase:

One of the most common mistakes we see is a company leaving the iteration phase and attempting to scale before finding product-market fit. This often leads to inefficient growth strategies that can kill early-stage companies. The lesson here: know your growth stage! 

Crafting a Growth Marketing Channel Strategy

Once you’ve identified which growth stage your company is in, the next step is to develop your channel strategy. With so many different channels available to marketers today, it can be tricky to know where to start, so we created a marketing channel landscape chart that visually depicts which channels might make sense for your business depending on your target audience. 

We also find it helpful to group channels into buckets, such as paid, content, partnerships, and word-of-mouth referrals. 

Writing about all of these buckets at length would result in a novel, so for now, let’s focus on paid. Facebook ads and search engine marketing (SEM) are typically the two foundational performance marketing channels. They’re self-serve, conceptually simple, low cost to test, and can find the bottom of funnel prospects. Perhaps most importantly, they are the bellwethers of advertising performance; if a company can’t find success with paid search or Facebook ads, it’s unlikely they will find ROI positive results and scale in other channels.

Once these channels reliably provide good returns, they’re typically scaled as much as possible. But inevitably, companies reach a point where they want to diversify their paid acquisition efforts beyond these core channels. We often see these companies find success with podcast ads, SnapChat ads, YouTube, affiliate, and/or TikTok ads.

We’ve put together a channel diversification guide that further explores the benefits and challenges, the prerequisites, and our channel testing methodology, in addition to listing the pros and cons of a wide range of digital and offline channels. And finally, Faire Head of Strategy and growth expert Dan Hockenmaier did an excellent job of putting together a customer acquisition playbook for consumer startups that digs into not only performance marketing, but referrals and content as well.

Striking a Balance Between Long-Term and Short-Term

Depending on your growth stage, your funding situation, and the competitive landscape, it’s crucial to consider the balance of long-term and short-term investments in your growth marketing efforts. “Short-term” tactics typically refer to paid advertising. “Long-term” tactics typically refer to those whose impact could be significant but take a long time to develop, like content and SEO, referrals, and community building. The ultimate long-term investment is in a great product, which is the strongest lever any team has access to.

Although there’s often pressure on early-stage companies to focus on the short-term—raising funds and hitting acquisition targets on a fast timeline—it’s still worth spending time on longer-term investments, like the core value proposition and positioning, content, and driving organic referrals. 

“It’s a mistake to use short-term tactics to try to supercharge growth when the core business model has not been adequately developed and validated,” said Tyler. “In other words, ensure you have a differentiated and monetizable solution to a deeply and widely felt problem, validated by customers through referrals, content consumption, and engagement. With limited resources, a short-term focus can simply starve the long-term opportunity,”

Performance Marketing Attribution and Incrementality

Whether you’re just getting started with performance marketing or you’re spending $10M per year, it’s critical that you have a firm grasp of how to measure and report on performance. Your attribution methodology can and should evolve over time, becoming increasingly sophisticated as your revenue and ad spend continue to grow. We’ve identified four stages of this evolution:

• Stage 1: If you’re just getting started with advertising, you should have two goals: 1) to develop an informal attribution methodology and 2) to understand what each ad platform is actually measuring, since you likely won’t have other attribution tools at your disposal to start. When it comes to developing an attribution methodology, you’ll need to identify how you’ll measure performance for each channel (e.g. clicks vs. 1-day view/7-day click) and why you’ll be doing it that way. This rationalization should be based on your particular business. As for understanding what each ad platform is measuring, let’s use Facebook as an example. You initially need to rely on Facebook’s attributed conversions and return on ad spend (ROAS), and it’s critical to know what is counted, what a view-through conversion is, and how many of your conversions on Facebook are view-throughs.
• Stage 2: This stage involves everything you’re doing in Stage 1, plus you’ll also start reconciling different data sets. In other words, you should now be comparing the data you’re seeing in Facebook vs. Google Analytics vs. your first-party sales tables. In this stage, you’re adding URL parameters to your destination URLs so you can capture where each sale comes from. This allows you to understand, over any given time frame, how many sales you’re recording in your first-party sales tables vs. click-based conversions in Facebook and click-driven conversions from Google Analytics.
• Stage 3: You should be in this stage once you’re spending $100k per month in any channel. This stage introduces the idea of incrementality testing. In short, incrementality testing allows you to create a hold out group (i.e. people who don’t see an ad) and compare it with a group of people who do see an ad, and determine the incremental lift that the channel is driving. For example, say your hold out group has a conversion rate of 2%, and the group of people that did see the ad converted at 4%. This tells you that you’ve got an incremental conversion of 2%. Instead of calculating the cost per conversion, you’ll now calculate the cost per incremental conversion. In this case, Facebook is attributing at 4%, but you know that only 2% of that is incremental; you therefore cut the conversions in half, which doubles your CAC and cuts the ROAS in half. That’s your incremental number. You can stay in this stage for a really long time.
• Stage 4: If you’re spending over $10M per year on advertising, you should still be running incrementality tests at the channel level, but may also consider marketing mix modeling (MMM) and multi-touch attribution (MTA) tools to more fully understand the interplay between your various marketing efforts.

Centralized vs. Decentralized Growth Teams

Until recently, the vast majority of companies we’ve spoken with haven’t had dedicated growth teams. Instead, there were many individuals and sub-teams responsible for growth across marketing, product, and business strategy, and there were constraints that lived within finance. Different organizations also have different power structures, meaning sometimes the marketing team leads cross-functional growth efforts, while other times the CEO or the finance team is calling the shots. This decentralized approach comes with obvious challenges; it can take months to align on objectives, strategy, and attribution methodology.

Within the past decade, however, there’s been a lot of movement toward building more centralized growth teams. These SWAT teams often contain a mix of folks from product, marketing, engineering, analytics, and finance teams, and they’re able to overcome barriers much more efficiently than most decentralized teams.

Regardless of whether your organization has a centralized or decentralized team, it’s pivotal to:

1. Identify clear growth goals and gain cross-functional alignment up front
2. Staff your cross-functional team to achieve those goals (likely a combination of marketing, product, engineering, analytics, and finance)
3. Empower all team members to use their expertise

Hiring Strategy: Growth Marketing Consultants vs. FTEs vs. Agencies

Depending on your product/service offering, your industry, your company’s growth phase, and your growth goals, you’ll need to decide how best to resource your marketing team. Selecting the right mix of full-time employees, growth marketing consultants, and agencies can help you build out your team in a way that’s cost effective and results oriented. Every business is different, but we’ve put together a general framework to help you consider which configuration is right for you.

• Growth Marketing Consultants: Contractors are ideal when you’re looking for flexible, highly specialized, expert-level skill sets that drive growth. Consider them for short-term or part-time needs, temporary support, coverage during an extended search for an FTE, testing new channels intelligently, overcoming systematic recruiting challenges, and immediate needs when you’re unable to hire fast enough to meet revenue goals. (Note: This is our bread and butter. If you’re interested in learning more about hiring A+ growth marketing consultants, we’d love to chat.)
• Full-Time Employees: Though they require a high level of commitment and a steeper cost, FTEs greatly increase your organization's cross-functional capabilities. They’re also ideal for senior-level roles like VPs and CMOs, as well as building out core competencies that are essential to running your business.
• Agencies: Hiring an agency is often an expensive, long-term commitment, and agencies frequently rely on playbooks that can lead to rigid, inflexible solutions. But in some situations, partnering with the right agency can deliver highly effective, efficient work. Consider an agency if your project requires many individuals to execute against one shared objective (like a full rebrand or website build), you lack internal capacity to oversee and track progress on a multi-stakeholder project, or you want something “pre-packaged” and don’t have time for missteps.

While we hope you use this high-level framework as a guide, we’ve spoken with hundreds of fast-growing companies across industries and growth phases, and we know every marketing program requires a highly nuanced approach to resourcing. Feel free to reach out to growth@rightsideup.co if you’d like to discuss your company’s roadmap and growth goals—we’d be happy to help.

A Growing Pool of Talent

The good news is that there are more talented growth marketers out there than ever before. The field is becoming more accessible and attracting people from a wider variety of backgrounds. 

“It doesn’t require a degree, and any degree that’s out there doesn’t matter,” Tyler said. “It’s all about being able to understand the data, the levers, and how to apply them to drive outcomes.”

He continued, “Advertising used to be dominated by ‘trained marketers,’ but there’s been a (good) shift. Now people come from all backgrounds, most commonly from data-driven backgrounds like math, economics, and statistics. Interestingly, we have anecdotally noticed that many great growth marketers are talented musicians. The best often have a rare blend of analytical and creative thinking.”

Dive Deeper into Growth Marketing

We’ve just scratched the surface of growth marketing, but there are many layers and approaches to explore for your unique business needs, and Right Side Up is here to help.

Learn more about Right Side Up in our TechCrunch Verified Expert Growth Marketing Agency profile, The Beginning of Right Side Up article written by Tyler, and our interview on Greylock’s Building And Measuring Sustainable Growth Marketing Strategies podcast.

We’d love to discuss your growth marketing strategy and help you quickly scale your business. You can reach us at growth@rightsideup.co.