Growth Models

Four example growth models (there are probably more)

• Sticky Engine of Growth
  • Comes from retention of existing custmers
  • Subscription model
  • Attrition, retention or churn rate: fraction of customers in period n who don’t renew in period n+1
  • New customers in period(n+1) must exceed number who dropped it
  • Focus on either attracting more or getting the ones you have to renew
• Viral Engine of Growth
  • When your growth comes when simple normal use of the product inherently leads to new signups
  • “Viral Coefficient” - how many new customers a single customer brings in, and over what period
  • Viral coefficient should be > 1 to get exponential growth
• Paid Engine of Growth
  • When your growth depends on the simple ratio of customer acquisition cost vs. per customer earnings
  • Simply add more money to customer acquisition and you get a predictable amount of earnings from that.
  • LTV of a customer rells you how much you can spendn on customer acquisition.
  • Discussion: what are examples of customer aquisition costs?
• Accessory Model of Growth
  • Core product is cheap or free
  • User is enticed somehow to buy accessories which produce revenue
  • “Razorblade/Razer”
  • Discussion: what are some examples of ‘accessory revenue?