Most startup growth advice comes from behemoths like Uber, Dropbox, and Casper. It’s easy to come away thinking the recipe for growth is to hire Red Antler to design your brand, carpet-bomb Instagram with paid ads, then start advertising on podcasts, and finish-up with an incentivized refer-a-friend program so you can talk about “organic growth” in the next fundraise. Even before the pandemic-recession began, this acquisition-at-all-costs approach had started to fray. Today, businesses with unsustainably high customer acquisition costs are facing a reckoning.

Startup leaders are focusing on becoming profitable, extending their runways, but we can’t stop focusing on growth either. According to Tomasz Tunguz’s May 2020 analysis, it’s getting harder to raise a Series B or C and growth is a deciding factor:

Investors continue to concentrate capital in a smaller number of companies. The coronavirus reinforces the flight to growth dynamics we observed last year. The fastest-growing companies continue to raise massive rounds. If a startup’s growth isn’t sensational, then it’s a much more challenging fundraising market. That’s why the median rounds are constant or flat.

His July 2020 analysis goes even further, arguing that round sizes are increasing but the quantity of rounds is plummeting, with “seed rounds down from 1400 to about 400” while series As and beyond “have fallen 30%.”

This puts even more pressure on growth, and growth with capital-efficiency. There is one lever for capital-efficient growth that I consistently see growth-stage startups overlook. An unsung hero that’s been critical to the success of Segment and Codecademy. A behind-the-scenes player that enables the success of other marketing functions and channel. If deployed adeptly, this lever can be a bulwark in these turbulent times, and an offensive weapon to play in channels your competitors can’t crack.  So who is this knight in shining armor? 

Growth Ops.

What is Growth Ops?

Growth Ops is the role that owns tools, processes, and data flows related to growth. Growth ops teams mold tools and systems to reduce friction and funnel data up-funnel to improve efficiency. They’re part of a growth team that’s measured on achieving CXO-level growth metrics.

For example, growth ops might ensure ad campaign, audience, and creative variant data gets pushed through all our down-funnel marketing automation and CRM systems, and that offline conversion data back into our ad platforms, enabling smarter optimization that reduces Cost per Lead. (I’m still amazed at how few businesses expend the effort to pull the needle all the way through). Or they might configure and optimize the prospect experience across website, chat, email, retargeting, webinars, and SMS to create a seamless experience that maximizes MQL to SQL conversion.

What Opportunity Does Growth Ops Unlocks?

Growth Ops Enables Us to Engage With Leads Earlier in their Decision Funnel

Attention, Interest, Decision, Action. Prospects today prefer to educate themselves about products asynchronously, and often won’t engage with sales until they’re at Decision phase of the journey. In an interview with Drift, Cloudera’s Marketing Ops Manager Sara McNamara puts this well:

"What used to be a phone call or a drive to a store is now a form or chatbot on a website, or a social media interaction. Sales reps are being pushed to the end of the journey, and marketing touches are taking up much more of the map.”

Growth ops allows us to offer lower-commitment channels for prospects to engage with us, which allows us an opportunity to persuade. Examples include triggering emails and retargeting ads when leads engage with products and content, hosting webinars, and live chat with humans and bots. All of these actions are lower-commitment ways for our lead to engage but they open the door.

Growth Ops Drives Lower CAC

As the IPOs of unicorn-darlings like Casper showed us even before the pandemic, an out-of-whack CAC to LTV will no longer be tolerated. Growth ops is a way for us to advertise more efficiently (Fair.com example below) and make every lead convert better (Prasid’s example). Every founder I talk to wants to be data-driven, and CTOs are happy to stand-up data warehouses and buy Tableau licenses. But growth ops is the function that can operationalize that data. Quick illustration:

1. Wouldn’t it be great if we knew which of our customers are most likely to churn in the first 90 days? Tech teams can make sure we have the data, and data science teams can build the analysis engine.

2. Wouldn’t it be better if we were piping that data back into our digital advertising so that we spend less on segments with high churn and lower-LTVs?

3. Now, wouldn’t it be better still if we were piping that data back into our marketing automation so we give at-risk customers a different onboarding experience? 

Growth ops is the role that would handle #2 and #3.

After advising 6 well-funded, growth-stage startups backed by great investors over the past two years, I am no longer surprised by how few businesses are operating this way. And as someone who has personally laid the pipe to enable these optimizations at (coming up on) 5 growth-stage startups, I know how much effort it takes.

Growth Ops Enables Us to Build a Defensible Moat by Having Better Acquisition Costs

The most interesting application of growth ops comes from this presentation by “G,” formerly the head of growth at Segment and Drift. It’s the best explanation I’ve seen for how growth ops can be a strategic weapon.

First, G argues that if we can predict which leads will become high LTV customers and which will become low LTV customers, we can segment them and give them different conversion experiences. He shares an example from his time at Segment where, through an integration with Postmates, they sent a free cup of coffee to high value leads in San Francisco. This is a remarkable example of a delighting customers.

He shares another example which is much more common: live chat with a salesperson. We actually don’t want to offer this to every lead visiting the website, but if we can predict that the LTV of a particular lead is high enough, we can offer them a better experience, and therefore achieve a higher conversion rate than competitors. 

Second, he argues that if we invest in conversion optimization, we can achieve a dramatically better CAC, and he shows an example of doing just that through multi-variate landing page testing. Taking this logic one step further, G argues that if our CACs are dramatically better than our competitors, we can outbid competitors for the best customers, effectively forcing them out of the best channels. That is how Growth Ops becomes a strategic weapon. 

What’s Growth Ops Responsible For?

I decided to take a look at job descriptions to see what growth ops is responsible for across the industry.

• This Growth Ops Lead at Unity supports digital advertising through cross-functional projects spanning marketing, product, sales.

• This Growth Ops Associate at Toast reads like it’s primarily focused on sales ops, working on territory management and sales processes.

• This Growth Ops Manager at Snowflake appears to be reporting into Sales Ops, and focuses on sales enablement.

How Is Growth Ops Different from Sales Ops?

I like this explanation from Dharmesh Singh, co-founder of Fullcast.io:

"The mission of a sales operations team is to make the running of sales teams smooth. They are focused on driving efficiency in the process. Growth Operations is about tying the pre-sales, sales, and post-sales function to top-line CXO growth objectives. It’s about making the process efficient in the context of shifting CXO priorities. Sales Operations is about execution, Growth Operations is about transformation” 

To take this even further, I’d argue that the mandate of sales ops is primarily focused on the sales team. Whereas the mandate of growth ops is to cut across layers of the funnel, pushing leads downward from acquisition to engagement to conversion and plugging leaks, while pushing data upward to enable smarter targeting, messaging, and timing. Interestingly, savvy VPs of Sales tend to agree. Dhiraj Singh, VP of Sales at Canary, says he “constantly pushes this point.” An integrated approach to ops that focuses on CXO level metrics gets better results, which is what we need right now.

How is Growth Ops Different from Lifecycle Marketing?

I’ll get into this more below in the evolution of growth ops. Lifecycle marketers often ends up being a service provider, splitting their time across acquisition, engagement, conversion, and retention, supporting stakeholders across marketing, sales, product, and customer success, meaning they might find it difficult to have one single CXO-level north star metric they can focus on for entire quarters. That’s simply not a recipe for transformative growth.

Lifecycle marketers are also being asked to play too many roles:

1. They must be technical enough to stitch together numerous technologies

2. data-driven enough to design experiments with actionable results

3. and creative enough to write compelling copy.

You probably have a talented generalist who indexes high on two out of three. When you hire for growth ops, you’re explicitly hiring for #1 and #2, and explicitly pairing them with a designer and content marketer to support #3. In fact, at Codecademy we sourced a dedicated freelance writer who exclusively supported growth ops.

How is Growth Ops Different from Product Ops?

I think of Product Ops as a function that’s here to enable the product team to ship faster or to enable the broader organization. Here’s a definition from Pendo:

Product ops is an operational function that optimizes the intersection of product, engineering, and customer success. It supports the R&D team and their go-to-market counterparts to improve alignment, communications, and processes around the product. Effective product ops teams accelerate feedback loops, increase efficiencies, and improve feature adoption.

Much like sales ops, product ops sounds like it’s an enabling role. If we want to drive growth and improve CAC, we need a growth ops function that’s not an enabler but a leader out in front, being measured by impact on CXO-level growth priorities. Growth ops should be managed on what they’ve shipped each week. And they should be measured on week-over-week gains rather than quarter-over-quarter.

Where Should Growth Ops Sit in the Organization?

Growth ops should sit with the rest of their growth squad. In a smaller business (less than 50 people) there might be just one growth squad. As the organization grows you want one squad for each CXO-level growth KPI. Each squad’s composition will differ depending on the talents required to move that KPI. At one company where I lead marketing, we had two growth squads: one optimizing for Cost/MQL (composed of direct response channel managers, PM for landing pages, data analyst, and designer) and a second growth pod focused on our MQL to Opportunity conversion rate (composed of growth ops, sales ops, a product marketer, and inside sales manager).

In my experience sales leaders tend to index higher on motivating a team and communication and index lower on systems and tools. Remember, sales ops often sees their role as supporting the sales team, whereas we want growth ops to be out in front of the organization pulling us forward.

If you have a marketing-lead-growth organization (which is the vast majority of startups), I recommend growth ops roll-up into marketing. And in any case, that’s where ownership has typically sat for many of the systems that growth ops should own: marketing automation, live-chat, landing pages, ad-tech, mobile messaging, etc. However if your business is one where growth is lead by the product team, growth ops could just as easily sit within product. No matter what the reporting relationship, a growth squad should likely include members from both marketing and product.

The Evolution of Growth Ops

We’ve always had a need in this problem area. But the profile and title for the owner has evolved considerably. As has the way we measure their success.

• Ten years ago this problem area might have been owned by an email marketing manager. She might have been expected to choose the tools, design emails, and write copy. Her talents might have leaned more toward copywriting and web design. And she might have been measured on Open Rates and CTRs. 

• Five years ago this problem area might have been handled by a lifecycle marketing manager specializing. Her talents might have been in project management, copywriting, event marketing, or web design. She might be measured on various metrics depending on the point in the funnel, including conversion, activation, and retention.

• Today this problem area is becoming the domain of growth ops. Those who excel at growth ops tend to be athletes who are technical enough to understand and connect tools together, and data-driven enough to measure their work holistically, on end-to-end conversion rates such as from Lead to Opportunity, or from trial signup to paid subscriber. Their talents are technical and analytical, and they should be paired with talented writers, designers, and product marketers. In some business cases, as I’ll share below, marketing ops might even be measured on CAC, right alongside your direct response marketers. 

The other shift that serves as a backdrop to the rise of growth ops is the consumerization of IT and the explosion of niche solutions that can be combined.

• 10 years ago we employed an Email Service Provider (ESP) in isolation.

• 5 years ago we purchased a monolithic marketing-automation platform like Marketo that could handle landing pages, referral programs, workflow emails, and blast emails. 

• Today we have thousands of niche solutions to choose from that allow us to carve a unique and personalized omni-channel customer journey.

At one of the current startups I advise, we use Hubspot for marketing automation, SalesMessage for SMS, Salesforce CRM, Unbounce landing pages, and Drift chatbots. Other businesses might add Outreach for sales automation, Optimizely for personalization, Airship for mobile messaging, and Zendesk for support. Growth ops must constantly be evaluating and implementing new tools that help us better communicate with our customers, not just pulling data out to analyze in a BI tool, but pushing intelligence back into the funnel so we engage more intelligently in real-time.  

Example #1: How Shaan Used Growth Ops to Reduce Fair’s CAC by 90%

I recently interviewed Shaan Rupani who led growth ops at Fair.com, a car-leasing startup that experienced meteoric growth. In our soon-to-be-released podcast episode, Shaan shared how he started out in performance marketing at Dropbox, Oscar Health, and then Fair. Over the course of that first year at Fair he increased direct response media spend significantly, and quickly hit a point of diminishing marginal returns.

Fair’s model is to offer potential buyers a risk-adjusted lease price, and then turn around and buy the car after a customer signs the lease. The first challenge Shaan faced was that Fair’s third party inventory was changing minute by minute. The second was that because the product catalog was changing underfoot each day, there was no way to build a library of branded product photos. Finally, Fair wanted to take leads directly from a Facebook dynamic product ad to a product details page for the specific car within the app. But since the product catalog was changing underfoot, each deep-link would need to be constructed dynamically as well.

When this was all stitched together, the result was a dramatically better car-leasing experience than customers had ever experienced previously. That was Fair’s brand promise, and that’s what Shaan was able to accomplish. When completed, this seamless car shopping experience netted Fair a whopping 90% reduction in CAC. 

The take-away is something that will resonate with many growth marketers: increasingly our biggest CAC gains are rarely achieved by optimizing within the ad platform layer in isolation. Instead, they come from marrying upper-funnel and lower-funnel data and then by crafting a seamless full-funnel experience.

Example #2: How I Doubled Customers While Reducing CAC in 6 Months

Most of the time paid spend and customer volume do not grow linearly. As you increase your spend into the mid-six-figures, you’re likely to reach a point of diminishing marginal returns beyond which your CAC becomes less efficient. In my first six months in a recent role (early stage, ~50 employees), we were able to double customers, and reduce CAC at the same time. A big part of that was attributable not to smarter advertising (though we made many optimizations) but to the growth ops team’s efforts to improve mid-funnel conversion. Here are some of the projects the growth ops pod shipped:

• Driving-down our inbound lead call-back time from days to hours to minutes

• Reconfiguring the auto-dialer so that instead of calling-back inbound leads first thing in the morning, we called in the same day-part as when they completed the lead-form, when they’re more likely to be available

• Adding a Calendly form after the completed lead form so qualified prospects could book time immediately

• Discovering data showing a drop in conversion on nights and weekends when inside sales team’s were offline, which resulted in sales expanding coverage on nights and weekends

• Facebook retargeting campaigns for disengaged SQLs

• Automated personalized SMS follow-ups

As we implemented changes, we saw our conversion rates improve which allowed us to spend even more. In search, for example, we found lower-intent paid search ad groups which had previously underperformed that were now achieving the CAC target we needed, allowing us to increase our spend every month without sacrificing efficiency. This type of optimization wouldn’t have been possible without a holistic approach that brought the sales ops, growth ops, and channel marketing together.

Should You Specialize in Growth Ops?

If you’re early in your career, growth ops might be a strong career path. Growth ops is a good fit if you who enjoy being a generalist and a builder, have a talent for picking-up new tools on your own, think like a founder, and have a bias for action. Growth ops is not a good fit for folks who enjoy building quarterly and annual roadmaps. We need to operate in an agile way and ship solutions in days not quarters. Growth ops does require an attention to detail, because you’re often building systems that touch sales people and customers. Paul Graham talks about the maker’s schedule vs. the manager’s schedule. If you thrive as a maker who focuses on one problem for multiple days, growth ops could be for you. If you, on the other hand, strongly prefer being a project-manager who is paired with other people who execute, please look elsewhere. Finally, if you’re not the best at communicating, you can still succeed in growth ops. Welcome. However, as with all business endeavors, you’ll be more successful if you learn to communicate well.

Conclusion: How Will Growth Ops Evolve in the Future

So what will we see as companies invest in the growth ops function?

• The no code and low code movement, as well as business automation software, are the next two waves that will likely supercharge growth ops. Much of the work that might have required engineers will become the domain of growth operations folks, which will help businesses move faster.

• As we build more sophisticated mar-tech engines that pass data across platforms, there’s increased risk of data privacy issues. Sara at Cloudera puts this well: "I predict a few companies are going to feel the pain of stack chaos and data lawsuits, and then we will see a major shift.” Interestingly, Shaan brought up the same concern in our interview, sharing a growth ops project where, in an effort to protect privacy, they wanted to avoid passing customer address data directly from one system to another, and instead went the extra step of building their own API to collect data from one platform, and pass just the relevant addresses to the right tool.

• Growth ops began as a problem area tackled by a variety of other marketing roles. Paid acquisition folks like Shaan found their way into the problem space through sheer necessity and opportunity. As growth ops gains broader recognition, and as leaders start to realize how it can enable other marketing functions, I expect teams to start hiring for growth ops earlier in the startup lifecycle. In one of my recent Head of Marketing roles, growth ops was one of the first hires I added to the team, and I might argue growth ops should be among the first three hires on any marketing team.

• AI is everyone’s favorite current buzz word. Most of the use cases I’m pitched feel like nice-to-haves that won’t drive key business metrics in substantial ways. But if we are to operationalize AI in a way that does impact the bottom-line, growth operations is the most likely place for that to happen, and I’d encourage startups leaders to evaluate vendors hawking AI solutions through a growth framework.

That’s all I’ve got. Good luck out there, and if you liked what you read subscribe or message me: I thrive on the public adoration.