How healthy is your business? Is your growth engine humming or stalling? Often, even quickly growing companies can suffer from a sputtering growth engine. Without the right metrics, you may be close to stalling out without even knowing it.
Products/services designed to retain customers for the long term. Examples include subscription-based products such as QuickBooks and cable TV.
Person-to-person interactions drive growth as a side effect of usage. Hotmail and Facebook are examples of viral growth engines.
Profits from prior customers are oriented toward finding new customers. Many professional services businesses such as tax or legal services use the paid engine of growth.
Which growth engine drives your business? Depending on your answer, the metrics you should use to judge the health of your growth engine may be very different.
There are very different metrics in each case, to measure the health of very different growth engines.
Note, by the way, that a business may need to pivot to a new growth engine once the current engine stalls out. For example, based on this article and the graph in this article, it appears that Facebook's growth may already have changed from exponential to a more linear rate of increase as early as 2008-10, which suggest they may already have a viral ratio less than 1.0. If their viral model has reached the point of diminishing returns, they may need to pivot to a paid growth engine. In fact, you can see in their recent announcements an increasing focus on monetization, not only to reward its new shareholders but also to generate the funds required to invest heavily in paid growth.
Have you fine-tuned your business's growth engine? Would you recognize the need to pivot to a different growth engine? Tracking the right growth engine metrics is vital to answering these questions.
Which metrics are best for your business? How is your growth engine performing? Comment below or send us an email at email@example.com.