When it comes to growing a business, every dollar spent is critical to have an impact at generating a return on investment. How the money is spent, where it is spent, and how much of a return a company will receive is up to the growth department.

Often it is typical to think of growth as running tests, iterating and running more tests. However, growth should be implemented holistically at any organization in order to maximize user acquisition.

To help structure the multifaceted approach across single, multi or omni-channel, the L.A.E.R.R acronym (pronounced layer) is utilized for for landing customers, activating customers, expansion revenue, renewals and referrals.

The layer strategy is a holistic approach to implementing the 4 pillars of growth company-wide (acquiring new users/customers, getting them to spend more money with your company, getting these users/customers to buy more often, and having users/customers bring new users to the business).

Landing New Customers and Users

The first step to landing new customers is to identify who the existing customers are. Who are the customers? To know this, growth will need to create detailed customer identification lists from historical purchase data (if available).

After growth has identified the target audience (TA) and various segments, the next step is to locate where the TA can be reached both offline and online. Where can we find the customers? This step takes research, and growth will need to compile a detailed list of where/how the target audience spends their time.

After growth has identified who the target audience is and where/how they spend their time, the next step is to get some form of advertisement/messaging/branding/tactic/call-to-action in front of them. How can we reach the target audience? For this step, growth will compile a list of possible ways to reach the TA. An example for the online growth hacker, this step can involve displaying web properties with SEO for keywords that have a strong commerciality value related TA interests & hobbies.

After growth has identified who the target audience is, where they can be found, how to reach them, then the next step is to execute growth experiments. In order to execute experiments, this step requires growth to create a execution list for experiential testing. In the list it displays the experiments, they hypothesis, the requirements, how it will be done, the cost, the expected results and when it will be executed.

Activating New Customers and Users

Typical customer/user activation occurs when a customer performs a certain action for the company.

In the software as a service (SaaS) world, like with Cheqbook.com, this is when a customer would connect their bank account to the accounting software after they have entered in their billing information.

The user took action and did something the company needed/wanted them to do and at that moment, they became an activated user.

During this moment is also when the user should experience the “wow” moment for the product/service/SaaS/app.

In the example of Cheqbook, at this activation “wow” moment, the bank transactions would be automatically sorted and categorized for deductions which instantly saves the user dozens of hours of manual entry.

It is okay for user activation to have more than one step. Notice the subtle difference here, the user was not considered activated when they entered payment, they needed to enter both payment and connect to their bank account.

Why is proper activation important? Because growth is responsible for customer lifetime value (CLTV)! If growth is finding channels that are satisfying the previous “landing customers” step, that is great. But if those customers are not becoming activated, there will be a very high probability they will churn out of the software and negatively impact CLTV. Making sure users are properly activated ensures optimal CLTV and reduces the risk of paid user churn.

If customers are paying but they are not activating, it is up to several departments (including growth) to solve this issue.

Start by asking: Has the proper activation moment been identified?

Often, retracing the steps of the customer journey will lead you to discover when the “wow” moment occurs and then you can more accurately assess the proper activation moment.

Next ask: How easy is it for users to activate?

In this step, retrace the activation flow and count the number of friction points that a user will encounter along the way. A friction point is any time a user has to enter any data, scroll, change pages, or interact with your webpage/app/company.

Now, try to reduce the number of friction points in half or better yet by 75%. To do this, reduce what you need to collect and get the user to the “wow” moment as fast as possible. Often this can include creating helpful tutorials and videos for users to easily follow.

If users are still not activating like they should, try a more direct method to save time and resources. In your signup flow/onboarding/checkout collect their phone number. If they do not activate after a certain period of time, send them a SMS text message. An example of the body of the message can be as simple as: “We noticed you started a trial, but you haven’t done XYZ. What’s keeping you from doing XYZ?”

Perhaps only 3 out of 10 not activated users will respond. Record all the responses and over time, these individuals will supply you with the data you need to fix your user activation.

Expansion Revenue

The goal of expansion revenue is to increase the dollar amount that the average customer spends with the company.

For a random example of a product addon: if you sell $25 subscriptions, your customers should also be purchasing a $5 upgrade to go with it. The $5 is the expansion revenue on that customer’s ticket.

It is up to growth to figure out how to optimize the addons. Examples of website additions could be a section “customers also purchased”. If you have ever purchased from Godaddy or Vistaprint, then you have seen the add ons pages before you are able to enter the checkout.

It’s also up to growth to do more than just offer addons. Creating sustainable growth is ideal and important for long-term growth.

Monthly recurring subscriptions can create sustainable growth. Continue the process, iterate, and think outside of the box. Keep in mind, expansion revenue comes from your existing customer base. Make sure the expansion offers are indeed worthwhile to send to that customer.

In order to maximize the expansion revenue from your existing customer database, make use of smart databases, machine learning, predictive analytics and artificial intelligence to help with the tasks required to leverage content management system (CMS) databases.

Renewals

For customers who become members, they will have a credit card on file and a monthly payment that is automatically charged by the (Stripe) credit card processor.

The issue is that credit cards expire, become deactivated, and customer payments lapse. Renewing customers is designed to retain the customer revenue and reduce churn due to billing issues.

Preventive Measures:

The credit card processor (Stripe) has email communications when credit cards stop working for any reason. Turn these features on.

Test sending a notification of billing. Some companies implement these notifications in order to decrease the number of failed charged for expired/deactivated accounts. The downside to activating billing notifications is that for customers who locked in the subscription, they will receive an email that gives them the chance to deactivate their billing which can lead to higher churn then sending no notification. Test it with small segments from different channels and markets..

Responsive Actions:

Call customers after the payment processor has attempted but failed to collect new billing information.

To make sure responsive actions to billing issues are handled properly, this task is often handled by customer success/service department.

Unpaid users impact CLTV and increase churn. It is important to collect exit information unpaid/churned users. This data can be used to decrease paid user churn in the future.

Referrals

Going viral is not just a marketing phrase, it is a mathematical equation. The total of the equation is called the viral coefficient.

How to calculate it:

• Current number of customers
• Multiplied by the average number of referrals each customer makes.
• Multiplied by the conversion rate (% of people who accept the referral).
• Then divide that total by the current number of customers

Example:

• You have 100 customers
• Each customer tries an average of 10 referrals
• 15% of the referrals try the service or become a nanny
• ((100 x 10) x .15) = 150
• 150 / 100 = 1.5
• Your viral coefficient is 1.5

What this means:

• Anything above 1 means you have created a viral loop that with every cycle will continuously bring new customers to the company without incurring customer acquisition costs (CAC) (unless the viral program is incentivized, then that will be CAC).
• In our example, the V.C is 1.5.
• A cycle is 1 month

When leveraged properly, a referral program can easily add 100,000 or more users to a list in 7 days.

However, the technology required to have the appropriate mechanisms in place is often a barrier to entry since it requires architecture, engineering, development, and design before it can be put into production.

Growth is responsible for facilitating the referral plan and overseeing its implementation company-wide.

Do you have any questions related to the L.A.E.R.R growth strategy? Would you like me to help you with this process? You can send me a message using the link in the menu and I will be happy to help.