R.I.P. “Growth at all cost”
How to create a growth strategy for today’s market.
Imagine you’re a captain steering a ship through what was, until recently, calm and prosperous waters. The sun was shining, the wind was at your back, and growth was the name of the game. Investors were eager to fund your journey, and the focus was on moving forward as fast as possible—full steam ahead.
But then, the skies darkened. The economic seas turned choppy, and the once-predictable winds became erratic. Suddenly, the priority wasn’t just about how fast you could go—it was about survival, efficiency, and navigating these uncharted waters without going overboard. This is the reality facing startups today as the industry moves from a bull market to a bear market.
In the exuberant days of a bull market, the emphasis is on top-line growth. Relentlessly focused on expanding your customer base. Back then, burning cash was almost a badge of honour. Investors cheered as companies poured money into paid marketing, partnerships, and hiring sprees. If you needed to spend millions to acquire customers, so be it. Growth at all costs was the mantra because, after all, there was always another funding round just around the corner.
But the tides have turned. In a bear market, raising that next round isn’t just harder—it might be impossible. Suddenly, the mindset has shifted from "growth at all costs" to "survival at all costs." This means that the strategy for user growth has gone through a seismic shift. The new mantra? Efficient, profitable, and productive growth. But how?
1. CUT Your Marketing Spend
— But Protect Your Brand Equity
Before diving into how and where to cut marketing spend, it’s crucial to understand what you’re safeguarding in the process: your brand equity. Brand equity is the value and strength of your brand in the marketplace, reflected in how consumers perceive and interact with your products or services. It’s not just about awareness—it’s about trust, loyalty, and the premium that customers are willing to pay because of what your brand represents.
Think of brand equity as a reservoir of goodwill and credibility. When times are good, this reservoir helps fuel your growth, enabling you to command higher prices, drive customer loyalty, and maintain a competitive edge. In a downturn, it becomes even more vital, as it can be the difference between weathering the storm or being swept away by it.
Why Protecting Brand Equity Matters
Imagine you’re leading a high-growth startup that has steadily built up brand recognition and customer loyalty through consistent marketing efforts. Your brand stands for quality, innovation, or maybe even a certain lifestyle. But when the market shifts, and the pressure mounts to cut costs, the instinct might be to slash marketing budgets indiscriminately.
However, here’s the catch: Brand equity is much easier to erode than to rebuild. When you drastically cut back on marketing, you risk going silent, losing visibility, and ultimately allowing competitors to fill the void you leave behind. Once brand equity starts to decline, it’s incredibly expensive and time-consuming to regain. For example, consider how McDonald’s had to react after years of brand neglect in the early 2000s. They slashed their marketing budgets and let their brand drift, focusing too much on short-term cost-cutting. The result was a decline in customer loyalty and a tarnished brand image. It took years and a major reinvestment in marketing, product innovation, and brand repositioning—including the now-famous “I’m Lovin’ It” campaign—to restore McDonald’s to its former glory.
Strategically Cutting Marketing Spend
So, how do you cut marketing spend without sacrificing the brand equity that you’ve worked so hard to build? It starts with being strategic about where you trim.
First, identify and protect high-ROI channels—those that directly drive conversions and reinforce your brand’s core message. These might include organic search, word-of-mouth campaigns, or targeted email marketing, which bring in new customers and keep your existing ones engaged.
Next, look at the channels where the return is murkier or where the impact on brand equity is less significant. Broad-based brand marketing efforts, like large-scale events or untargeted display ads, often fall into this category. While these efforts can be valuable in a high-growth environment, they’re also easier to scale back during a downturn without immediately jeopardising your core brand equity and awareness amongst your target audience.
The lesson here is clear: The consequences of cutting too deeply into marketing spend can be severe. Once your brand equity is damaged, rebuilding it isn’t just a matter of flipping a switch and turning the marketing machine back on. It requires substantial investment, time, and often a complete overhaul of your brand strategy. So when considering what cuts to make to your marketing budget, be laser-focused with your target audience and have short-term and long-term strategies in mind.
2. Hone in on your highest LTV customers
Instead of chasing every possible customer who might want your product or service, your focus should shift to attaining the maximum value of your existing customers—particularly those who are highly engaged and have a high LTV. Then go out and find more of them.
Because in almost every product, there’s a core group of people who love what you’re offering—they’re the ones who use your product the most, generate the most revenue, and are the least likely to churn. These are your high-LTV users, and they’re your most valuable asset.
Rather than trying to force growth in segments where the product doesn’t naturally fit, double down on your core users. This strategy not only helps companies grow more efficiently but can also lay the foundation for global expansion.
3. Product is the backbone of growth
You can assemble the most brilliant marketing team on the planet—people who could sell ice to penguins or make tax software sound thrilling—but if your product doesn’t meet customer needs, all that marketing effort will be like trying to fill a leaky bucket.
Your product is the heart of your growth engine. It’s what keeps customers coming back, talking about you, and, most importantly, sticking around long enough to become high-LTV (Lifetime Value) customers. But if your product is riddled with pain points or fails to deliver on its promise, no amount of clever copywriting, targeted ads, or dazzling campaigns will save you.
Sure, marketing can get people through the door, but only a product that truly serves your customers will keep them there. High-LTV customers—the kind who drive sustainable growth—don’t stick around for a subpar experience. They’re savvy. They know what they need, and they expect your product to deliver. If it doesn’t, they’ll find one that does. And once they’re gone, no amount of retargeting will bring them back.
In essence, your product is the foundation upon which all growth is built. So, before you pour more money into marketing, ask yourself: Is the product solid? Is it solving real problems for real people? Because if not, growth will always be just out of reach, no matter how good your marketing team is.
What your growth strategy should look like today
The days of "growth at all costs" are well and truly behind us. Today’s market demands a more measured, strategic approach that prioritises efficiency and long-term sustainability over sheer speed. As you steer your company through these unpredictable waters, it’s vital to remember that growth is still possible—but it must be built on solid foundations.
By protecting your brand equity, focusing on your highest-LTV customers, and ensuring your product truly meets customer needs, you’ll not only survive this downturn but emerge stronger and more resilient. Yes, the journey might be slower and more challenging, but in the end, it will be far more rewarding. Sustainable growth isn’t just about getting bigger; it’s about getting better. And in today’s market, that’s what will keep your brand afloat—and thriving—for the long haul.
