Aligning Full-Funnel Marketing to CX for Reliable Growth

David on LinkedIn for a while now. And, one of the reasons I mentioned why I was excited about having him here is because I think there is not enough good content around growth, about taking your product to the market or building reliable strategies that are exclusively designed for Asia. David is an expert in that.

Right? So I’ll just allow him to introduce himself now. And if you guys have any questions about anything through the course of it, just you can raise your hand and we can speak at the end of the session, or you can always get in touch with me after. Hey, David. Please take it away.

 

David:

Hi, everybody. Thank you, Muthulakshmi, for a very kind introduction. Thank you, everybody, for making the time to be with us here today. It’s definitely a pleasure to be hosting any kind of content and seeing anybody benefit from the content that we share, which we work very hard to acquire. Today, I would like to share a little bit about myself before we start.

So, I’m a management consultant or a corporate strategist, but throughout my career, I have mainly been launching new business models and businesses. I have been launching e-commerce start-ups and multi-sided marketplaces. So, I hope to share some of the things that I’ve learned and how we strongly feel that growth is a cross-functional team sport today. I’m going to be sharing my screen, and I hope it comes up. Here we go. So, of course, today’s topic is how CMOs can align.

We’re working very hard at making sure that teams work together and that CMOs lead the data conversation and become a very core element of the C-suite in the company. So let’s start up whether it’s a corporate venture or a prize. The key objective of growth is the same, and the whole company should be aligned around that. The thing is that we’re trying to make that actionable today, and the value in making that real is that we can increase stickiness, scale, and, therefore, retention, which are the keywords for our startups to grow and thrive.

We’ve covered a little bit about my introduction. So today, 3 short chapters. This should be a 3 or 4-hour seminar, but we’re gonna try and get this done in 35 or 40 minutes today. So, Growth as a system, the cross-functional relationship between customer experience, marketing, and how that drives revenue should be the end goal. How we can use real-time data for strategy and revenue advantage and how CMOs can influence the company’s strategy and prove the growth trajectory of the companies, in particular, finding product-market fit or growing after product-market fit has been found.

So today growth is a system. Michael Porter, he has a lot of quotes. He has one of the most illustrious careers in management and strategy, a fantastic fellow. Even decades ago, he was already talking about unique selling propositions, how to be distinctive, how to be profitable, and most importantly, a customer-centric point of view, and how the company can actually increase retention through experience in different words and words that haven’t been invented at the time. We’re gonna show you growth as a system and how product strategy, marketing strategy, business model, design, and business strategy all come together to achieve what we want, which is stickiness, long-term customer retention, and company growth.

So, even as far back as 1958, disruptors appeared on the scene, right? In this case, Braun, designed by a real icon, Dieter Rams, launched the T3 Pocket Radio in 1958. You can see this became an iconic product with a very emotional design and intuitive use.

In terms of the customer experience, this was mainly a product with no digital component, but the experience of using this product was intuitive. They also leveraged a technological advantage by using micro transistors compared to large cathode tubes, shrinking it into a portable and battery-powered device in a time when, in 1958, if you can imagine, things looked quite different. In terms of retention, stickiness, and long-lasting value that we’re all trying to create across all business teams, one sign of how lasting and effective this strategy was is that Steve Jobs went on record saying how deeply he was inspired by the T3 in the design of the Apple iPad. There was a central user interface and a central value element.

The whole point of having portable music was very inspiring. Let’s put this into the context of 1958. This was what the competition looked like, the Phillips Radio, and this is what the T3 was actually going up against. It used tubes, so it was large, heavy, and quite fragile with a lot of glass inside. You can see the electric power wire in the background. This is what it looked like.

Imagine how disruptive it was to really think and be customer-centric, understanding that the customer perhaps wanted something beautiful yet unobtrusive to enjoy music at good quality. That was the product strategy. If we move on to other types of product strategy, the Eames family figured out how to form wood like this, solving the job of having economical yet designer-quality items in the home at a relatively affordable price. They created a technique allowing mass production of this iconic chair, still available for sale in exactly this look and design today, with some additional colors from the original launch. That’s the staying power of understanding the job to be done and having product, marketing, sales, and business teams all working together to ensure the right customer experience and fit with the customer’s job to be done. 

Moving forward into the 1980s…

And then, how did some people innovate around the business model, right? In the era where individual albums, occasionally singles of individual songs were the norm, the disruptive idea emerged to combine the entire record sections of Virgin Records and EMI Records to create an industry-first partnership and a compilation series that proved highly effective. This innovative approach was so bright and disruptive that it lasted for 110 volumes over decades, with each volume achieving multi-platinum status, up to 7x platinum for some of the year’s records. This creation of an ecosystem edge, a term we use today, reflects the achievement and speed of value for users who only had to purchase one product to enjoy all the music they loved. This was groundbreaking in a time when cassette tapes and their limited songs were the competition.

From a business design perspective, this strategy was focused on getting the job done – storing and listening to music. It outperformed cassette tapes by providing more storage and allowing on-the-go listening, but it took time before users had full control of their music with the introduction of MP3s. Streaming services, like Spotify, then came in, addressing the entire job, including finding, buying, sharing, and organizing music. Spotify’s success can be attributed to absorbing the revenue streams of various sub-industries involved in music consumption, leading to its groundbreaking market capitalization.

Clayton Christensen, the pioneer of disruptive innovation, emphasized the strategic goal of gaining market share by creating more value at a lower cost, effectively reinventing businesses. Spotify continued to augment the experience by allowing users to see value even before creating an account, disrupting the pre-login experience on the web. In the journey of growth, the goal is to acquire, engage, and retain users, followed by effective monetization. The flywheel effect, moving users from monetization to cross-sell, upsell, and long-term retention, requires careful engineering and prioritization to avoid churn or drop-offs at any stage. We’ll delve into more detail on this to achieve effective monetization and post-monetization strategies for user retention and scalability.

In terms of customer experience, let’s tie everything from product to marketing, to business strategy, to customer experience as a whole. There are three essential steps in customer experience, especially when it comes to onboarding. The first step is getting a customer to perceive value. Here, branding, marketing, product marketing, and advertising all play a crucial role. The entire job in this part of the industry is to get somebody to see that there is value, encouraging them to consider moving from their existing product, such as Tidal, to try a different one. Perceiving value is a prerequisite before giving it any consideration. Once the consideration is set, the competition is on to persuade users to take the next step.

Then comes the moment of experiencing value, a later step where Spotify excels with its pre-login experience, allowing users to see and experience value more deeply and quickly. The freemium login enables users to start listening immediately on any platform, from desktop to phone, shortening the time it takes for users to progress through the label. By doing so, Spotify increases the chances that users move from one part of the label to the next. This is the Holy Grail, the moment of adopting the value, leading to long-term adoption, habit formation, and the creation of a long-lasting, sticky customer and revenue stream.

And from there, adding more value to our platform to be even more sticky and disruptive, creating this flywheel again. This is from the customer experience, and it forms a customer experience model. In business, customer journeys, and marketing, we often talk about the funnel. It’s challenging to connect full-funnel marketing to the growth driver or customer experience because teams use different models. From awareness, acquisition, activation, revenue, referral, and retention, all these steps can be combined. The teams should align to ensure effectiveness and cohesion, especially as startups grow and teams may start to silo.

Operationally, we need to dovetail again. Activation, at this step, is crucial as it’s a great point to improve conversion and enhance the performance of all other phases. As you see the funnel shrink, representing the number of customers progressing through each stage, it’s an opportunity for teams to come together and ensure a smooth transition from awareness to registration, download, or product input. This is particularly critical in the acquisition phase, ensuring users take initial steps before monetizing, even in premium products. This top, middle, and bottom-of-the-funnel approach emphasizes the importance of making a positive first impression at every stage.

Activation, or the moment of value perception, is key. How quickly can we get users to activate as soon as they’re aware or acquired? A fantastic example from Kendar and the previously discussed Spotify case illustrates this well. Resurrection is another vital stage within the funnel. Some users may go dormant after activation, whether they are paid or freemium. The challenge is for marketing, product, business, and sales teams to work collaboratively on strategies to resurrect these users.

So, connecting these elements, our vision for the future of Southeast Asian growth or APAC growth revolves around how marketing and product integrate along with customer experience to drive the key metrics of acquisition, engagement, resurrection, and monetization. While acquisition and engagement are relatively easy to map to activation, as teams mature, especially transitioning from seed to A and B rounds or entering new markets as corporate ventures, the key to scaling lies in clear understanding and addressing the churn between these stages.

To achieve this, we strive to comprehend the reasons for churn and utilize product and marketing strategies to enhance retention and increase conversion between stages. This necessitates the collaboration of experimentation, tools like VWO, data analytics, and other marketing and product tools to provide a comprehensive view of the customer. A unified customer view enables us to improve their experience, transforming them into long-term, adopted users, which is crucial for sustainable scaling. Otherwise, the effort, time, and resources invested in acquiring customers won’t translate into scalable growth if retention is not efficient.

The relationship between these three teams—customer experience, marketing, and retention—extends into the product experience as well. Helping users experience value better is vital for companies like Ring, a disruptive video doorbell company with a significant valuation, acquired by top-tier companies. Even after a user has purchased the product, Ring continues to interact to maximize the customer experience. An example is sending an EDM and a screen capture indicating low battery levels, prompting users to charge it in time for continued enjoyment of their purchase. Ring’s focus on safety, monitoring deliveries, unlocking doors, and recording visitors align to ensure customers fully benefit from their product, fostering long-term satisfaction and loyalty.

Ensuring users can have full enjoyment, Ring goes beyond just sending an EDM about low battery levels. They provide support on how to remove the doorbell, pick up the battery, charge it, and swap it at the right time and place. The messages are personalized, removing friction from the process and significantly improving the product experience.

When it comes to growing revenue, the focus must go deep into the flywheel beyond acquisition. After acquisition or even monetization, emphasis should be on retention. Strong retention allows understanding what works, leading to gains in other key performance indicators (KPIs). A QR code is provided for further deep dives into round table events, offering meaningful discussions on designing growth programs with the C-suite for strategic impact.

Moving on to chapter 2, real-time data for strategy and revenue advantage. Data, with the right mindset, is not just for reporting but is actionable, empowering teams to enhance marketing, personalization, strategy, product roadmaps, and revenue. Emphasizing data’s role in providing a revenue advantage, the discussion explores how studying retention is essential for meaningful optimization in targeting. Understanding the propensity of different segments to convert from freemium to paid is critical. Acquiring freemium users may be effective, but without data insights, it’s challenging to identify high-converting sub-segments, which could be integral to the company’s strategy.

To truly understand the best-fit customers in retention, real-time marketing becomes essential. Business outcomes often act as lagging indicators, necessitating reliance on real-time marketing for more immediate insights and even leading indicators. This allows us to identify gaps in strategy, whether it’s targeting the wrong customer, using the wrong product marketing message, or selecting the wrong channel. Experimentation with various channels and routes to market is possible only with closed data loops, measuring the impact of different approaches as hypotheses and assessing correlation, and hopefully causation.

Improving customer experience reliably involves capturing the voice of the customer, not just through surveys but through real-time observation of customer behavior. These insights then empower rapid implementation and testing, aligning marketing with product and sales teams to enhance effectiveness and create value for customers. The funnel serves as the source of truth, measuring customer behavior in response to the value provided. Rewiring the operating model is essential to enable data-driven insights, testing, and learning.

Deeper discussions about data should involve exploring segments and their needs, identifying frictions and touchpoints, and understanding the best channels. Insights gained help determine whether the focus is on profit or growth, influenced by business cycles, company goals, and industry dynamics. For instance, in the face of an imminent recession, the strategy might shift towards more profitable customer segments, altering the marketing, product, and sales approach.

And then we had to understand the insights of how they give us, you know, next best steps to improve our value proposition of VP and the focus of our journey in the road map prioritization and how we do the onboarding. And then we do the research, we iterate, we validate the steps in our future roadmap, and then you have a more integrated product than the marketing and sales team, and then you can build it, and then you can go to market with it. So this implementation is a joint effort between marketing and product and some interesting things to think about, right, off platform restrictions. So it’s not just popping up within your app. How does marketing go deep into the customer’s, you know, experience on and off platform to resurrect and engage and retain and then just like going, aren’t they going far off the platform of this physical product?

In terms of product, our discussion will encompass features, nudges, UX copywriting, and the impact these elements have. This iterative process forms the flywheel of learning that transforms us into data-driven marketers, product teams, and businesses. We refer to this as the digital operating model, where real-time technology and a single customer view bring everyone together for operational enhancements. This model allows us to sequence the most important tasks, scale revenue, and improve customer experience at a lower cost. Solving churn points with collaborative team efforts ensures the elimination of silos, enabling a rapid data-driven testing and implementation process. Companies lacking this advantage may suffer in competitiveness due to slower learning.

The maturity of our digital operating model is a crucial aspect. Aspirationally, we aim to be the best, but even being good involves some automation and deep data, yet to be prescriptive. Better stages involve regular automation bringing design back to desired metrics. In the ideal scenario, numerous experiments continually improve, and democratized data is available to every team, guiding them on what to do, in what sequence, and with what emphasis, resulting in significant revenue impact and speed.

According to Capgemini, 79% of leading marketers claim they can deliver content based on real-time understanding. This statistic stands in stark contrast to less than 40% among other marketers. Whether it’s correlation or causation, there is a valuable lesson to learn about delivering content based on a real-time understanding of customer needs.

Examining the funnel and the flywheel, marketing plays a crucial role in addressing churn points. Marketing can focus on maintaining sufficient velocity for marketing-qualified leads and assisting them in the conversion process. The concept of resurrection can be applied at various stages of the flywheel, from awareness to acquisition, activation, and deeper engagement.

And this is what we want to do. We want that conversion so it depends on your product. Right? So if we look at dormant users, you know, you must be able to identify them that they have gone dormant, and your product can’t be infrequent, so it can’t be a once-a-year subscription, but can you understand their behavior throughout the in-between monetization moments or upsell moments and understand, you know, is it post revenue they’ve gone dormant, right, and then you can start to hypothesize. Is it because they haven’t gotten the value they thought you know, that they were expecting, or in some cases, you know, they’ve gotten a new phone and they haven’t reinstalled your app and they just suddenly have just stopped using your features?

Another aspect to consider is pre-revenue dormancy, where users have registered but forgotten about the product. This often happens because they haven’t reached the moment of value experience, let alone the moment of value adoption. These users lack behavioral internal triggers prompting them to return to the product. It becomes crucial to assist them in reaching these vital moments in their journey.

The focus then shifts towards improving activation and engagement, emphasizing habit formation and internal triggers. However, it’s essential to approach this strategically. Beginning with resurrecting cohorts that never reached the moment of value experience is a post-product market fit conversation. If there’s uncertainty about a good product-market fit, the focus should be on awareness and acquisition before delving into resurrection strategies.

Take monday.com as an example. While it is a powerful tool, it can be complex, particularly for larger teams in terms of project management. The goal is to introduce triggers to guide users along the path so that they can reach the point of experiencing value, not just perceiving it. For instance, if a user registers but doesn’t complete the setup, monday.com sends an urgent trigger, notifying them about essential tasks and offering a 14-day free trial. This urgent trigger encourages users to input sufficient data and engage with the product to ultimately experience its value and potentially become long-term customers.

Lock-in is crucial for a product or project management tool like monday.com. Advanced and successful companies leverage the funnel for targeted skip growth, focusing on retention from acquisition. Retention analysis, particularly through retention analysis, helps execute strategies effectively. Identifying churn points and addressing drop-offs and frictions are essential, especially when done on a segment and product-specific basis.

It’s crucial to look at data per segment and per product, avoiding reliance on averages that may be significantly skewed, especially when dealing with different product tiers or a mix of freemium and premium products. The goal is to improve the acquisition rate relative to the churn rate for greater efficiency. If churn outpaces acquisition, growth rates will stall. Achieving high retention rates, such as 105%, 110%, or even 120%, is possible when a company is growing positively.

The analysis also delves into product fit and business model fit, representing the voice of the business. This analysis aligns with cohort-based assessments and monetization analysis, prioritizing efforts based on net value and lifetime value for each segment and product.

Return on investment (ROI) is critical, especially when considering revenue in relation to acquisition. Real-time data plays a crucial role in providing immediate notifications and higher-quality data. When calculating customer lifetime value divided by customer acquisition cost (CLTV:CAC), positive ratios, such as 1.5, 3, or 6 times, indicate the profitability of scaling paid acquisition strategies. However, if CLTV:CAC for a specific segment or key channel is not high enough, and paid acquisition isn’t a primary growth mechanism, alternative scaling methods must be explored.

Building virality as a key growth driver becomes essential in such cases, focusing on referral rather than paid acquisition. Referral mechanisms may seem less powerful to some, but the example of Nextdoor, a private social network in 11 countries, demonstrates the success of hyperlocal network effects, organic activation, and a strong focus on referral. In 2020, Nextdoor achieved a 50% year-on-year growth in daily active users through entirely viral mechanisms within the app and user experience.

With its viral and organic strategy, Nextdoor has achieved higher weekly engagement than YouTube, Spotify, Pinterest, and Netflix. This success validates the effectiveness of virality in building a strong customer experience. To maximize utility, design, and value exchange, achieving stickiness and scale is crucial.

Examining the customer journey and understanding the job to be done is exemplified by Canva, a Silicon Valley success story. Canva allows users to experience value pre-login by enabling immediate design capabilities on their landing page. Effective onboarding ensures users maximize the likelihood of experiencing value, creating a lasting customer.

LinkedIn, transitioning from a B2C to a B2B company, identified gaps in the user experience and took steps to reduce the 1-3 day gap between a user’s campaign ending and realizing it. By triggering actions to extend campaigns and ensuring continuous engagement after initial adoption, LinkedIn increased flywheel velocity and focused on long-term adoption rather than single-use scenarios.

These users with personalized and relevant content. This personalized approach helps in creating engagement, increasing the chances of habit formation, and retaining users for the long term.

In the next example, Apple continues to provide personalized experiences by offering users personalized suggestions for app usage based on their usage patterns. By understanding the user’s behavior and preferences, Apple enhances the user experience, making it more likely for users to adopt and maintain long-term habits.

Additionally, Apple leverages external triggers, such as push notifications, to remind users about features or functionalities they might not be fully utilizing. These triggers serve as prompts to re-engage users and encourage ongoing interaction with the product.

In summary, applying behavioral psychology, utilizing triggers, providing variable rewards, and optimizing the user’s investment can contribute to habit formation, long-term adoption, and improved customer experience. This comprehensive approach, coupled with personalized communication and external triggers, helps in creating a seamless and sticky user experience.

These principles are foundational in crafting an effective growth strategy, enhancing user retention, and ensuring that the customer journey aligns with the overall business objectives.

Right? So, in between having an iPhone 10 and upgrading to an iPhone 13, I didn’t receive emails like “Here’s how to use your new iPhone.” Instead, I got more emails about buying a new iPhone. Right? So, they personalized it, and given that I was not an iPhone user initially, it wouldn’t make sense to receive instructions like “Here’s how to get the best out of your iPhone.” They focused on highlighting how easy it is to upgrade. Right? I’m sure if I were not a previous iPhone user, they would have sent me an email saying, “It’s easy to migrate to a new iPhone” or something similar. They personalized the journey, ensuring that the onboarding, value perception, and value experience are seamless and have very low friction. This is where cross-functional teams really come together, bringing in expertise from finance and legal, and incorporating higher purchase installment plans

They offer discounts and ensure that trade-ins play a significant role. Trading in your old device towards a new one with Apple is highlighted seamlessly, ensuring a higher percentage of customers are aware of this and making it easier to purchase this expensive product. 

Now, moving on to chapter 3.

At this point, we’ll discuss the role of the CMO, which can be any leadership position, including the Chief Product Officer, responsible for strategy. How can we help the company improve product-market fit? It’s a slippery concept, changing with competitors, customer needs, features, and the marketing environment. To delve further into understanding product-market fit, Peter Drucker, one of the godfathers of strategy, stated that the aim of marketing is to know and understand the customer so well that the product or service fits in and sells itself. Easier said than done.

If we look at the definition of product-market fit, as succinctly put by Marc Andreessen, being in a good market with a product that can satisfy that market is great. Let’s make it more actionable by breaking it down. Being in a good market involves developing access to the target customer segment. This means having efficient channels to acquire customers and display value for them to perceive. A good map should outline the size and revenue potential of the segment, considering different products with varying revenue streams, price points, costs of acquisition, and competitors pursuing them.

Now, when it comes to your product, have you aligned your initial feature set, MVP feature set, or go-to-market feature set with the ideal launch customer segment?

And are you marketing it correctly? Are you messaging it correctly? Are you on the right channel to acquire them? Is it a cost-effective channel? And do they have predictable buying or usage behavior, and how well can you understand it so you can continue to improve and become competitive to solve that need for a customer against your competitors?

And so this comes full circle, right? From your mission and your vision in company strategy being your company objectives. You have to combine the tools of product and marketing, and you have to be the voice within the company saying we need to close the loop with data. We need to be data-driven, and that will allow us to improve our implementation. Of course, the metrics that we have at a gold level, but making sure that we’re using all the advantages that we have within the company, all capabilities, and all the resources within the company to improve the metrics at a goal level.

If you can understand segment lifetime value and their propensity to buy or churn, you can optimize the roadmap, and that is a tremendous business advantage and speed. This is a bit about positioning. We’ve covered it. To speed this up, we’ll talk about marketing not as averages and how real-time data is really a guide. We go through clients, workshops, and experimentation to explore the balance of brand marketing and product marketing required to achieve a certain stage in the funnel. We have a customer experience team that helps us identify frictions from a design perspective as well as a strategy perspective. We work very hard to get to retention. We talk about certain challenges here, and you can sign up to get our key takeaways from our newsletter.

And here also, this goes in our newsletter. So you don’t have to write this down, but there are different typical scenarios, and then we’ll figure out if retention is poor, what is marketing doing? How are we examining dormant cohorts, or do we have to find any target market or use drip marketing to push through the noise? If it’s a product, let’s analyze how customer attention can really increase revenue at scale because it’s a statistic that just a 5% increase in customer retention can increase revenue by 25 to 90%, because it’s a scaled effect. It’s a flywheel compounding interest effect, and that’s fantastic.

In terms of profitability, is it an issue of that average revenue per user over a cap ratio? Are we looking at payback periods and strategies around payback periods and what metrics and what loss our metric to use? In product, we can also help you adapt product-market fit, but then the progress is slow. That’s a challenge. With the digital upbringing model, do you have one? You know, you’re good, better, best. Are you using a shared North symmetric? We have a great North Symmetric workshop. And how are you really understanding what is the leading indicator? So again, one more chance to scan the QR code here and join us for this next invite-only round table. And we’re having it in two sessions and two time zones, so we hope that you can make it.