Growth Marketing: Know Where to Grow
The way goal-setting typically works in large companies often goes something like this: senior leaders agree on a target revenue number — X% growth over last year. That number gets divided among the teams below, who divide it further. As an illustrative example, a brand such as PepsiCo divides money until it reaches the Gatorade team; the Gatorade team is charged with generating $20 million in growth next year.*
The Gatorade team is likely to run a series of planning meetings that produce a series of initiatives: one on cost savings, one on distribution, one on a new flavor, one on advertising. Advertising is expected to account for $5 million of that growth. So everyone gets together and says, "Let's optimize — squeeze another $5 million out of roughly the same budget as last year." Everyone nods, because optimizing sounds smart. Then we end up doing roughly what we did last year, and luck determines all too much of the outcome.
One of the scariest — and most powerful — things we can do in goal-setting is commit to specificity. And we don't just mean "$5.6 million in net profit by December." We mean instead of following best practices and hoping for favorable outcomes, we identify the specific source of growth and design specific activities to achieve it.
It starts with knowing exactly which group of people you want to grow with. This isn't a critique of broad-reach masterbrand campaigns — it's about sharpening focus to deliver against a specific task. Generally, there are two groups to start with: people who already use your product, and people who don't. You want existing users to use you more, and new people to start. The next question is: why aren't they?
Behavioral psychologist and Nobel Prize-winning economist Daniel Kahneman framed it well: "Instead of asking how can I get him or her to do it, start with the question of why isn't she doing it already?" This forces us to identify the key impediment — the one barrier that, if we focused our efforts on it, we could overcome to drive growth.
Here's an example. We worked with a condiment company looking to grow in a flat category. They were one of two dominant competitors, with high loyalty, low switching, and already very high market penetration — most households had one of the two brands in the fridge. The only viable path to growth was through existing users. In research, we found that consumers had a limited view of how to use the product, which was constraining purchase frequency. (A finding we later encountered again, in both tequila and avocados.) When we got specific about what success would look like, we found that just one additional usage occasion per month across their existing base would translate to one more unit purchased annually — and $128 million in net sales. When you're trying to drive $5 million in growth, that kind of opportunity is hard to ignore. The resulting campaign, now in its tenth year, uses tactics across channels to expand consumers' ideas for how to use the product.
So when the CEO asks, "Why are we doing X?" the answer shouldn't be "best practices." It shouldn't be "because consumers said flavor was important." It should be: our most attractive path to growth was through existing users, whose purchase behavior was constrained by limited awareness of use cases — so we targeted that impediment directly.
Want to pursue a different path to growth? Go for it, if you have the resources. Just treat it as a separate initiative, with tactics driven by its own specific audience and barrier. The best tactics for one growth path are rarely the best tactics for another.
*We reference Gatorade as an example for concreteness. We have not asked the Gatorade team how they do it, but the train of thought tracks brands we have worked for or interacted with.