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Next Generation Growth Marketing: The Evolution Towards Strategic Demand

‘First generation’ Growth Marketing has hit a wall. It’s time for the discipline to mature.

Adam B. Needles
9 min read
Next Generation Growth Marketing: The Evolution Towards Strategic Demand

The Growth Marketing movement (aka growth hacking) – now nearly ten years old – has had a significant and positive impact on the efficacy of demand marketing.  It has brought focus to both customer experience and revenue outcomes – and the relationship between the two – and resulted in growing attention to the science of optimizing conversion.

Yet ‘first generation’ Growth Marketing has hit a wall.  It is increasingly constrained by many of the attributes of the growth hacking mindset.  In particular, it largely remains a ‘tactician-level’ activity that has not risen to the level of a holistic approach to sustainable business growth, nor is it largely embraced by senior executives, particularly at larger enterprises.

It is time for Growth Marketing as a discipline to mature.  It’s time for Next Generation Growth Marketing.

Growth Marketing must evolve past optimizing individual tactics and become a discipline of orchestrating the entire marketing, sales and product ecosystem – driving and optimizing enterprise demand – and thus growth. Such a holistic view takes into account every touchpoint a buyer has along his/her journey – both pre- and post-sale – and brings focus to improving that end-to-end experience so ultimately the entire customer lifetime value increases. This is how (tactical) growth hacking for a product evolves into (strategic) growth marketing for the enterprise.

At ANNUITAS, we refer to this evolution of Growth Marketing as the shift to Strategic Demand – i.e., a state where true enterprise ‘demand chain management,’ optimization and predictable demand planning becomes possible.  In a Strategic Demand state, business growth is built around and adaptive to customer critical path, not interruptive tactics.  Most importantly, this shift brings with it a significant – often 4-10X – improvement in the return on demand marketing investments.

Growth Marketing – and specifically growth hacking – continues to be an area of active interest.  So how did the discipline hit a wall?  Let’s take a look at some of the background on Growth Marketing and its challenges today.

The State of Growth Marketing

Ten years after Sean Ellis coined the term “growth hacking,” interest in Growth Marketing certainly has not waned – especially in VC-backed software/SaaS circles.

In fact, the team at the Growth Marketing Conference is still packing people in each year anticipating more than 2,000 attendees this year, according to the latest Sponsorship Prospectus.

The vision of customer-centric and lifecycle-aware demand marketing remains solid.  Matt Bilotti with Drift captures this POV in a great post:

Over the last few years, Growth Marketing has helped re-define the goal of marketing.

Successful marketing is no longer only about the top of the funnel and acquiring customers – it’s about acquiring customers who are going to stick around.

Growth without retention isn’t growth after all. And growth is more important than ever.

So true.

Yet the reality has lost some steam.

Too often Growth Marketing in practice is just an evolution of a tactical lead generation mindset – where the ‘value’ seems to get lost in translation.  Maria Pergolino — a seasoned software CMO and Marketo alumna notes in a LinkedIn post:

Some have said demand generation is different from Growth Marketing because demand generation only focuses on top of funnel and Growth Marketing or growth hacking covers the entire funnel including their time as a customer. Essentially, Growth Marketing is often defined as marketing for customer acquisition + customer retention. And demand generation is often tied to creating a new customer only. …

I would … argue that many growth marketers are only working on top of funnel campaigns, simply based on my knowledge of those with the title (regardless of some saying that it implies focus on customers and retention).

The Challenges Facing the Evolution of Growth Marketing

Today Growth Marketing is somewhat of a victim of its own practice.  The attributes that are the cornerstone of Growth Marketing are also why it has been challenged to mature as a holistic and strategic practice and to scale.

Some of these challenges include:

  • Short-term and tactical focus.  Too often Growth Marketers are focused on “… unconventional tactics used by companies to achieve explosive growth in a short amount of time.  …. People often perceive it as a one-stop shop.  A get-rich-quick scheme if you will,” comments blogger Neil Patel.  Not coincidentally this short time frame aligns with the time period during which many VCs want to rapidly increase value before a liquidity moment; unfortunately, it is not a frame focused on building longer-term, sustainable growth – whether for sales or in the overall business.
  • Upper funnel focused.  The charter of Growth Marketing – as Maria Pergolino highlights above – is to drive demand both pre-sale and post-sale and to optimize customer lifetime value.  Yet too often the tactics of Growth Marketing – given the reality that many growth-stage companies (and their VCs) are more focused on customer acquisition than growth – cause the Growth Marketers’ time and resources to be over-focused on the upper funnel – and not on post-sale demand.  Ironic.
  • ‘Testing and tinkering’ on portions of the funnel without a true vision for optimizing the funnel end-to-end – or for the overall customer experience.  Also, at odds with the charter of Growth Marketing, the discipline’s tactics lead to a focus on “making seemingly small, carefully tested changes on a huge or rapidly growing base,” according to VentureBeat.  The result is a perpetual cadence of testing and tinkering – without ever developing a broader vision for the buyer journey, the brand experience and the critical path that Growth Marketing should be driving.
  • Random acts.  In the worst-case scenario, constant experimentation leads to a string of random acts with immediate benefit but that in total do not lead to a finely tuned, highly repeatable, highly predictable model for generating demand and for closing business.  I.e., Growth Marketing efforts fail to build a demand engine for the business, and so the result is a perpetual state of random acts of sales and marketing.
  • Tactician-level execution vs. executive-level vision.  The Growth Marketer of recent years often has been a ‘one-man-band,’ essentially engaged in digital arbitrage.  Identifying and exploiting marketplace gaps to increase sales and customer retention are a far cry from an overall brand and customer-journey vision that demands and then enables marketing.
    • The same VentureBeat piece from above notes that the profile of a growth marketer often is “a talented person focused religiously on growth, with the right analytical skills to tightly track that growth, [who] can scale a company very quickly. These new marketers are statisticians and experimenters and technical product people before they are brand people.”  But that’s also part of the challenge, the Growth Marketing cohort too often is not operating strategically.
  • Cannot scale and operationalize growth tactics.  Too much of the experience and focus of Growth Marketing has been applied to ‘growth-stage’ companies, but on a larger scale, growth marketers have struggled.  Ayushman Jain at Microsoft notes:

[T]he more you dig into it, the more you’d observe the examples, best practices and thought leadership to be focused on companies or platforms with small to medium scale — from Stage B to just over post-IPO scale.  …  As a growth marketer at Microsoft, I constantly grapple with problems similar in nature to the ones growth marketers in the valley are trying to solve. However, I constantly learn the hard way that the same solutions are not effective at enterprise scale, irrespective of how much product innovation your company may be driving.

The Evolution from Growth Marketing to Strategic Demand

How can we tackle the challenges of modern Growth Marketing and help the discipline to evolve and mature?  How do we transition to a Strategic Demand state?

There are four core shifts we must make in our Growth Marketing approach in order for the discipline to become more strategic:

  • Operationalizing every element of go‑to‑market around buyer/customer journey — both pre-sale and post-sale:  The irony is that this concept is a cornerstone of Growth Marketing, but too many adherents spend all of their time optimizing small portions of the top and bottom of the funnel – skipping over much of what is involved in a buyer going from pain point to solution.  Success – and a shift to Strategic Demand – requires expanding Growth Marketing beyond marketing. The ‘growth’ motion must be a complete orchestration of every sales and marketing interaction.  Moreover, go-to-market requires that all elements — people, process, content, technology and data – be rationalized around buyer/customer journey – not just the content and campaigns.

Of note, it is encouraging to see the Revenue Operations (RevOps) movement come to the forefront as a step in this direction of full orchestration of sales and marketing – especially at a people level – around a lead-to-revenue cycle.

  • Orchestrating buyer/customer interactions multi-channel:  Too often Growth Marketers focus in on social and web channels.  Optimization must engage every touchpoint, including areas such as field marketing and downstream sales interactions.  Just ‘hacking’ some social posts and/or optimizing web UX is not enough.  We’ve got to ‘hack’ the entire buyer/customer experience.
  • Sustainability of growth efforts:  Growth Marketing was never intended to be a quick win, but too often ‘growth hackers’ are focused on the short term.  If Growth Marketing is going to become a more strategic element of enterprise demand, it requires a focus on optimizing the sustainability of growth.
  • Optimizing customer lifetime value:  Acquiring a customer via a Freemium offering and then ‘converting’ them to a paid customer is hardly optimizing customer lifetime value.  Yet for some Growth Marketers such an ‘arc’ is fully compliant with a Growth Marketing mindset.  Customer lifetime occurs over years, not weeks and months.  And so Growth Marketers must be closing the loop on longer-term data and optimizing sales and marketing interactions against long-term, profitable CLV.

Transforming Growth Marketing

Shifting our perspective on Growth Marketing is critical to our taking a stair step towards a more holistic and substantial ability to optimize the sales and marketing motion – towards a next-generation discipline for driving sustainable enterprise growth.

That eventual frame is a Strategic Demand state, but getting there does not happen overnight.

How can you drive transformation towards Next Generation Growth Marketing aka Strategic Demand?  Here are two resources I believe will be helpful: