Chapter 10: Grow

Chapter 10: Grow

1. 4 Types of Sustainable Growth

   • Word of mouth
     • caused by satisfied customer’s
   • As a side effect of products usage
     • influence of fashion
   • Through funded advertising
     • uses advertising to attract new customers
       • cost of acquiring a new customer < revenue that customers generates
         • marginal profit =
   • Through repeat purchase or use
     • acquired repeatedly
       • subscriptions

2. Sustainable

   • New customers come from the actions of past customers

3. Engines of growth

   • Focus on feedback and loop
     • The faster the loop turns, the faster the company will grow.
   • 3 Types
     • The sticky engine
       • churn rate
         • customers in any period who fail to remain engaged with the company´s product
       • engage and retain customers
     • The viral engine
       • Growth happens automatically as a side effect of customers using the product.
       • The viral loop => viral coefficient
         • how many new customers will use a product as a consequence of each new customer who signs up
       • Hotmail / Tupperware
     • The paid engine
       • customer lifetime value (LTV)
         • The margin determines how fast the paid engine of growth will be
           • reinvest in attracting customers
             • It costs more to reach affluent consumers
       • cost per acquisition (CPA)
   • Metrics to focus energy for each type of engine
     • Focus in one type of Engine

4. Has a Limit, its not infinite

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