Growth Models – what are they & why choosing the right one matters?

In my 20+ years of working with brands and businesses, I’ve noticed that most companies are focusing on tactical growth activities without spending enough time figuring out whether they are the right activities or not. And by “tactical growth activities” I often see tactics connected to marketing and generally customer acquisition.

But, in order to figure out what actually works for you, you need to define your growth model. Let’s discuss:

  • What’s a growth model?
  • Why does it matter?
  • What’s my favorite (in case you’re lost and need some advice)

Let’s dig in!

Modern Growth Models – Basis For Your growth Strategy

When you put together your growth strategy, you need to take into consideration what kind of Growth Model you are using for your business. Here’s a list of the typical growth models and a brief explanation of how that particular model works:

Content-Led Growth

This strategy focuses on using valuable, relevant content to attract, engage, and retain an audience. It helps establish authority, improve SEO, and drive inbound traffic that can be converted into leads and customers.

This Makes Sense If:

  1. You Have Expertise to Share: If your business has specialized knowledge or insights that can add value for your audience, content-led growth can be an excellent way to demonstrate expertise, build trust, and engage potential customers.
  2. Your Audience Seeks Education: This approach is effective if your target customers actively seek information, education, or inspiration related to your industry or products. It works well when there is a clear opportunity to influence purchasing decisions through informative or engaging content.

Skip This If:

  1. Immediate ROI is a Priority: Content-led growth often requires a long-term commitment and may not yield immediate results. If your business needs quick conversions or has short-term financial goals, this strategy might not be the best fit.
  2. You Lack Content Creation Resources: Effective content-led growth requires consistent production of high-quality, relevant content. If you do not have the resources, skills, or capacity to create and distribute content regularly, it might be challenging to sustain or succeed with this strategy.

Read: Content-Led Growth – How to Accelerate Business Success with Content as The Main Driver

Product-Led Growth

A model where the product itself is the primary driver of customer acquisition, conversion, and expansion. It relies on the product offering a compelling user experience, often with a freemium model or free trial, to encourage adoption and virality.

This Makes Sense If:

  1. You Have a Strong Product: If your product is intuitive, provides immediate value, and has a low barrier to entry, it’s well-suited for PLG. The product should be able to ‘sell itself’ through its features, user experience, and the value it delivers.
  2. Scalability is Key: PLG is a great fit if you’re aiming to scale quickly and efficiently. It allows you to leverage your product as the main vehicle for growth, reducing reliance on large sales teams and enabling faster user acquisition and expansion.

Skip This If:

  1. Your Product Requires Significant Customization or Explanation: If your product is complex, requires extensive customization, or is difficult to understand without significant training or support, PLG might not be the best approach. The effectiveness of PLG diminishes if users cannot easily discover and experience the core value of the product on their own.
  2. Your Market Isn’t Tech-Savvy: PLG often relies on users being comfortable with adopting and exploring new software independently. If your target market is not tech-savvy or prefers a high-touch sales process, a product-led approach may not resonate well or achieve the desired growth.

Community-Led Growth

This approach leverages the power of community to fuel growth. By building and engaging with a community around a product or brand, companies can increase loyalty, customer retention, and word-of-mouth referrals.

This Makes Sense If:

  1. Your Product Benefits from Network Effects: Community-led growth is particularly effective for products that become more valuable as more people use them. If your product or service benefits from user interactions, shared experiences, or collective knowledge, leveraging a community can amplify its value and appeal.
  2. Engagement and Retention Are Key: If your business model relies on high user engagement and long-term retention, fostering a community can be a powerful strategy. A strong community enhances user loyalty, increases retention rates, and can drive word-of-mouth referrals.

Skip This If:

  1. Your Product Is Highly Niche with Limited Appeal: If your product serves a very narrow market or doesn’t naturally encourage user interaction or shared experience, building a community might not provide significant returns or could be challenging to scale.
  2. You Lack the Resources to Cultivate and Manage a Community: Building and maintaining a vibrant community requires time, effort, and resources. If you cannot commit to actively engaging with and moderating the community, or if you lack the personnel to do so, it might be difficult to harness the benefits of community-led growth effectively.

Sales-Led Growth

Focuses on using a direct sales force to engage potential customers. It’s common in B2B sectors with complex products, where personalized outreach and demonstrations are key to converting prospects.

This Makes Sense If:

  1. You Target Enterprise or High-Value Customers: If your primary market is enterprises or organizations that expect personalized engagement and tailored solutions, a sales-led approach can be crucial. These customers often require detailed discussions, custom demos, and negotiated contracts that a dedicated sales team can best provide.
  2. Your Product Is Complex or High-Cost: Products that are complex, require significant investment, or have a steep learning curve can benefit from a sales-led approach. A sales team can effectively communicate the value proposition, provide detailed product demonstrations, and address specific customer queries or objections.

Skip This If:

  1. Your Market Prefers Self-Service: If your target customers are small businesses or individual consumers who prefer quick, autonomous purchasing processes, a sales-led approach might be too invasive or slow. These segments often value the speed and convenience of a self-service model.
  2. You Lack the Resources for a Sales Team: Implementing a sales-led growth strategy requires investment in a skilled sales force, including salaries, training, and possibly travel expenses. If your business doesn’t have the resources to build and maintain an effective sales team, this strategy might not be viable.

Marketplace-Led Growth

Relies on creating a platform that connects buyers and sellers, growing by increasing the number of participants and transactions on the platform. This model is common in peer-to-peer and service marketplace businesses.

This Makes Sense If:

  1. Your Business Model Involves Connecting Different User Groups: If your business naturally aligns with connecting buyers and sellers, creators and consumers, or any two distinct user groups, a marketplace-led growth strategy can be effective. This model is ideal when your value proposition lies in facilitating these connections and transactions.
  2. You Can Leverage Network Effects: Marketplace-led growth is particularly powerful when each additional user increases the value of the marketplace for other users. If your platform benefits from network effects—where it becomes more attractive as more participants join—this strategy can help scale your business rapidly.

Skip This If:

  1. You Cannot Sustain Value for All Parties: If you’re unable to continuously provide value and ensure trust and quality transactions for all participants (buyers, sellers, etc.), then a marketplace model might struggle. The success of a marketplace relies on balancing and sustaining value for every user type.
  2. You Lack the Resources to Manage and Scale a Marketplace: Operating a marketplace requires managing a complex ecosystem, ensuring user satisfaction on all sides, and dealing with issues like payment processing, dispute resolution, and quality control. If you’re not prepared to invest in these areas, the marketplace-led growth might not be suitable.

Platform-Led Growth

Involves building a base platform that other companies or developers can extend through APIs, SDKs, or apps. Growth is driven by the ecosystem of third-party products and services built on top of the platform.

This Makes Sense If:

  1. Scalability Through Third-Party Innovation: If your business model can support and benefit from third-party developers or businesses building on your platform, this approach can significantly expand your offering and reach without proportional increases in your costs.
  2. Ecosystem Network Effects: A platform-led strategy is powerful if your platform becomes more valuable as more users and developers join and contribute. This creates a virtuous cycle where the platform’s increasing utility attracts even more participants.

Skip This If:

  1. Lack of a Core Product Appeal: If the core platform itself does not offer sufficient value or appeal to a broad user base, it may be challenging to attract third-party developers or businesses to invest in building on your platform.
  2. Resource and Capability Constraints: Developing and maintaining a platform that others can build upon requires significant resources and a specific set of capabilities, including providing developer tools, documentation, support, and possibly an API. If you cannot commit to these, platform-led growth may not be the right strategy.

Partner-Led Growth

Growth achieved through strategic partnerships, such as integrations with other products, co-marketing efforts, or distribution partnerships. It allows companies to tap into their partners’ customer bases and resources.

This Makes Sense If:

  1. Leveraging Complementary Strengths: If your business can significantly benefit from the strengths, market presence, or customer base of another company, a partner-led growth approach is ideal. Partnering with companies that offer complementary products or services can help you reach new customers, enhance your product offerings, or enter new markets more effectively.
  2. Scalability Through Partnerships: If scaling your sales or distribution capabilities internally is challenging or resource-intensive, leveraging partners can be a more efficient way to grow. Partners can extend your market reach, share the burden of marketing and sales efforts, and provide localized support where necessary.

Skip This If:

  1. Misaligned Goals or Values: If potential partners have business practices, market goals, or company cultures that don’t align with yours, partnering might lead to conflicts or diluted brand value. It’s crucial that partners share a mutual understanding and commitment to common objectives.
  2. Over-Reliance on Partners: If the success of your growth strategy is too heavily dependent on partners, there’s a risk of losing control over your market positioning, customer relationships, or product direction. Avoid situations where your growth is predominantly dictated by the performance or strategies of your partners.

Customer-Led Growth

Centers on creating outstanding customer experiences that lead to high satisfaction and advocacy. It focuses on delighting existing customers to the extent that they become promoters of the product or service, driving referrals and word-of-mouth growth.

This Makes Sense If:

  1. High Customer Satisfaction and Advocacy: If your customers are highly satisfied and willing to advocate for your product or service, leveraging this enthusiasm through a customer-led growth strategy can be highly effective. It involves encouraging and facilitating customers to share their positive experiences and recommend your offerings to others.
  2. Product or Service with Visible Value: If your product or service delivers clear, tangible benefits that customers can easily share or demonstrate to others, a customer-led growth approach can harness these success stories to attract new customers organically.

Skip This If:

  1. Low Customer Engagement or Satisfaction: If your current customer base is not highly engaged or satisfied, or if there are significant issues with your product or service, focusing on a customer-led growth strategy may not be effective and could even backfire. It’s essential to address any underlying issues before leveraging customers as growth drivers.
  2. Market with Low Word-of-Mouth Impact: In markets where purchasing decisions are less influenced by peer recommendations or where your product or service is less visible to potential new customers, relying on customer-led growth might not be the best strategy. In such cases, other growth strategies might yield better results.

What’s The best Growth Model?

Frankly – there’s no such. It depends on your business, your product, and what resources you have available. However, I have some recommendations that you can use as a guiding principle:

my Favorite Models

All brands and businesses that want to become known as #1 players AND have time to invest in it benefit from content-led growth. This means that you actively invest in building your content strategy so that starts to attract an audience of the right people.

This often leads to community, which you can leverage to offer products & services they want to buy. Then, your growth plan consists of Content + Community, which will be your two main strategies for growth.

My other favorite is customer-led growth, because it makes your service quality the center of your growth strategy. This means that every person in your company is actively participating in creating a supreme experience that your customers and clients can’t get enough of, and happily refer to their friends, too.

How Do You Decide Which Model Works For You?

To figure out your growth model, you need to answer this:

  • What is your product? What do you sell?
  • What is your business model? How do you make money?

If you need help with figuring that out, read this:

Design Your Signature Business Model