Building a growth engine

Every three months, I do a recap of where my marketing team — the Buffer marketing team — is at and where we’re headed for the next three months. This time, for the first time, I put my quarterly recap into podcast form. You can listen below and subscribe to the podcast to get future episodes and musings.

Here’s the full script and a slideshow that goes along with the notes.


Outline

  • Why goals are important to us
  • How to break down a goal
  • What our growth machine looks like
  • Defensibility with a capital D!
  • What our brand machine looks like
  • So … what does this all mean to me, today?
  • Growth models

Let’s talk about our marketing machine …

We have two engines that make us run:

  1. Growth engine
  2. Brand engine

The way we’ve built these engines is unique to Buffer, though you’re likely to see variations of engines like these no matter where you look in marketing. Other companies might have more engines, depending on the size of their team, or they might have different engines, like a demand gen engine or an awareness engine.

We have a growth engine and a brand engine, and together these engines help Buffer grow and make us defensible. More on that in a bit.

btw, fun fact: if you rearrange the letters of “engine,” you get the word “genie” … oh, plus an extra “n.”

Ok, let’s dive into how these engines work.

Here’s what our growth engine looks like

The Buffer growth engine

Let’s start with the basics:

The goal of the growth engine is revenue.

Marketing is accountable for revenue growth, just as all the product leaders at Buffer are accountable for revenue growth. We work together with product to make it happen.

Now, in order to get revenue growth, our product needs to be growing.

Which raises the question …

How do products grow?

We’re zoomed way, way, way out now, but I think it’s important to see things from this level and to constantly be coming back to these first principles. How do products grow? You’ll hear lots of different answers to this question. At Buffer, we grow because we have a growth engine made up of loops.

Let’s break this down, practically-speaking.

We have an ARR goal, an Annual Recurring Revenue goal.


Quick sidebar: It’s important to understand what a revenue goal means to us at Buffer. We’re not after revenue for revenue’s sake. We don’t want to grow just because.

Why goals are important to us

We want to grow for these reasons …

  • We want to see at least a 1% MRR growth rate because it shows we’re keeping up with the market. Now, one percent might seem tiny, but when you get to big revenue numbers, huge percentage growth gets harder. Growth is not exponential. One percent revenue growth at $20 million ARR is $200,000. By contrast, we’d need 520% monthly growth for Analyze to reach $200,000 per month.
  • We want to increase our net profit YoY because it means we’ll be able to do a bigger profit share at the end of the year and be able to hire
  • We want a healthy profit margin / EBITDA because this signifies we are growing efficiently

Ok, sidebar over.


Back to the growth engine …

So we have a goal to increase our ARR. Let’s break this number down.

Annual recurring revenue is monthly recurring revenue times 12.

The calculation for MRR is

what is mrr calculation saas metrics
How to calculate SaaS MRR

What we’re looking for here is levers. So let’s go deeper to see what levers we can pull.

  • Existing MRR is the MRR that we got last month.
  • New MRR comes from new customers, either people who used to be on a Free plan and upgraded to paid, or people whom we acquired brand new.
  • Reactivation is people who used to pay us, stopped paying, and now are paying us again.
  • Expansion is people who were paying us something and now they’re paying us more.
  • Churn is people who were paying and then stopped paying.
  • Contraction is people who went from paying us a lot to paying us less.

In theory, we can pull all of these levers, right? And we have pulled most of these in the past.

The great thing about a quality marketing team like ours is that we can and do affect every single one of these levers. The results could be directly attributable to a reactivation email campaign, for instance; or the results could be indirectly attributable from community-building that convinced someone to stay and not churn.

This is the flywheel effect of our growth engine in action.

But it’s really hard to focus and prioritize when your levers are all the levers.

Specifically, we’re focusing our marketing efforts today on New MRR and Expansion MRR.

  • New MRR will come from acquiring new customers and helping free users mature onto paid plans.
  • Expansion MRR will come from helping customers move to the next subscription tier and from getting more customers to use multiple Buffer products.

It’s both that simple and that complicated. Let’s see if we can make it even simpler.

The Growth Engine in action

If you can picture the inside of a machine with gears and cogs and wheels spinning, you see how everything is intertwined. This cog turns that cog, which turns that wheel, which makes this gear go.

And once it’s all in motion, then inertia keeps it spinning.

(This is the same concept as the flywheel. Just a different metaphor.)

We have a series of levers that we can pull in order to make the machine hum. These levers might be part of sustainable loops like SEO within a content loop, or they might be one-off levers like email marketing.

The list of levers includes:

  1. SEO
  2. Word of mouth
  3. A high-converting website
  4. Email marketing and in-app communications
  5. Product launches
  6. Network effects

We do more things, too, but this is the core of the engine.

SEO

In the past three months, Buffer has shown up in more than 188 million Google searches. Many, many, many people come to Buffer from search, and they come to Buffer at various stages: they discover Buffer when they get answers on the blog, they find Buffer when searching for social media tools, and they arrive at Buffer with high intent — having heard about us in the press or from a friend.

Word of mouth

Word of mouth and SEO are highly connected. When people hear about Buffer, they search for Buffer. Moreso, when people hear positive things about Buffer and then come to find us, they are already primed to expect great things.

It can sometimes feel like word of mouth is out of our hands, and it is to a degree. For word of mouth to work best, the product has to 10x someone’s expectations and then that person has to have an outlet and a reason for sharing.

G2Crowd and App Store reviews are a couple of places where word of mouth happens for us.

A high-converting website

It’s SEO and word of mouth that brings new people to Buffer. It’s the website that gets people to convert.

Our best-converting pages are the home page, pricing page, and Buffer for Business page, and we spend a lot of time refining the user experience and experimenting with ways to help these pages tell a cohesive story and convert better.

Email marketing and in-app communications

Once someone signs up for Buffer, we have the opportunity to help them get the most out of the product. We have 20,000-plus people every week we get to help. Wow noise!

There are few different components to our email lever:

  • Onboarding series (drip campaigns). These are broken up by plan and by product
  • Triggered emails that get sent when someone does or doesn’t take a certain action within the app
  • Newsletters
  • Campaigns

Product launches

I think we all know what these are! Launches fit our growth machine because they help with acquiring new customers who might want what we have, and they help with expansion revenue — encouraging people to upgrade to new plans or try new Buffer products.

Network effects

You might see “network effects” abbreviated as NFX. No, not the American punk rock band NOFX. 🎵Linoleum … 🎵

A network effect occurs when you achieve a certain scale of users or audience who then add value and utility for even more people to join. Basically, the more people, the more value, which brings in more people, which creates more value.

We have this in a way with team collaboration in Buffer and with the Buffer community.


Now, you may have noticed that there are hints of brand throughout the growth engine in places like the website and SEO and word of mouth. This is for good reason. Brand and growth at Buffer are highly related. We talk about them as two separate things because our team has naturally moved in these directions and because traditionally in marketing you place each in its own bucket. For us, the growth engine and the brand engine are in the same Buffer vehicle, making it run.

And this is where defensibility comes in …

So, what is defensibility? Good question.

Defensibility is big-word lingo for untouchableness. Basically, you’re defensible when people can’t easily beat you at your own game.

In the case of defensibility in SaaS, people can’t beat you at your own game because your own game is a beautiful machine with so many moving parts that are all operating at high levels. 

It’s easy to reverse-engineer and duplicate a content marketing strategy, for instance.

It’s impossible to reverse-engineer and duplicate a content marketing strategy that’s part of an SEO strategy that leads to a CRO strategy that’s supported by email, word-of-mouth, and community programs.

When your levers are operating at their best, there’s no beating you. 


Ok, so we’ve talked about the loops of our growth engine. Now let’s switch over to the brand engine.

Inside the Buffer brand engine

Every good brand engine begins with a question:

What story are we telling?

The story must speak the truth about your company and speak to the needs of your customers. The story is the core of the brand engine.

Essentially, the brand engine drives positioning. 

For Buffer, we want to be the go-to place for online businesses to build a remarkable brand. Simple, right?

Well yes, if we were to leave it there.

But how do you act on that?

Just like with the growth engine, we need to point the brand engine in a particular direction, and the direction we’re choosing is brand positioning. Like ARR, positioning is a big goal: We want to change the positioning of Buffer from a social media scheduling tool to a suite of products to help brands with their online presence.

In terms of lagging metrics versus leading metrics, positioning is a suuuper lagging metric. We can’t directly influence it.

We can measure positioning via survey responses. So that’s a start.

Our latest survey from a Hotjar poll

But ultimately, if we’re going to move the needle on positioning, we need to understand the levers that we have at our disposal. Just as we needed to understand them with growth.

Here’s the list of brand levers:

  • Content marketing
  • Social media
  • Podcasting
  • Website
  • Press

Content marketing

Ah, content marketing. The Yellow Submarine of Buffer’s marketing discography. The Roaring 20’s of Buffer history. Content has been our bread and butter channel for the past seven years.

We have three blogs: the main blog, the library, and the Open blog, plus satellite blogs for engineering, advocacy, and data. Each blog has its own focus, but at the end of the day, they all tie back to brand.

The way we talk about ourselves on the blogs is the way that we’re perceived by others. The goal is to be perceived as knowledgeable social media marketers on the library and the hub, which brings us more search traffic and clicks, further feeding the SEO loop that drives the growth engine.

See how these things overlap?

The history of the blog is an interesting case study in positioning. In the early days, the blog was one of the best sources of lifehacking and productivity content on the web. That was great and all, but it wasn’t what Buffer wanted to be. We wanted to be known for our authority in the social media space. So we pivoted, we added a super strong SEO component to blog growth, and here we are today — one of the best social media blogs around.

It’s through this lens that content marketing is both an SEO loop that drives growth and a powerful brand driver of positioning. The more we cover DTC topics and DTC companies on the blog, the faster we’ll be able to turn perception again.

Social media

There are lots of different ways to view social media on the spectrum from brand channel to sales channel. We fall more on the side of a brand channel. We don’t use social media to sell directly; we don’t optimize for clicks and dollars-and-cents ROI. Especially as we’re changing positioning, it’s important for us to get the message out about who Buffer is today — via Stories and posts and photos and more.

Podcasting

We have the weekly Science of Social Media podcast, which has helped us further establish our authority in the social media space. And we’re exploring one-off narrative podcasts to tell stories of DTC brands. Podcasting can have one of the most powerful influences on positioning … and it can be one of the toughest to measure.

One way we’re hoping to learn more is with the “how did you hear about us” surveys that customers answer.

Website

Again, here’s a case of overlap with growth. Yes, the website converts great. AND the website tells a compelling story about who Buffer is.

Press

We’re lucky to get so. much. press. from people and places that love talking about us. We want that to continue, whether it’s for our culture or for our product; ideally, we’ll be able to insert the new positioning into as many places as possible.


So … what does this mean for Q3?

Well, the marketing machine is in high gear. We just need to point it in a particular direction by choosing a focus.

Drumroll … 🥁

The theme for product marketing and growth in Q3 is trials. 

  1. We want to get more people onto trials
  2. And we want to help those people convert to customers at a higher rate

Moving the needle on trials will be a leading indicator for the bigger goals we have around revenue. It’s daunting to face a giant revenue goal without knowing what parts you want to move. We want to move trials, which will move revenue, which goes all the way back to the original “why:” We want to feel like we’re keeping up with the market, that we’re able to grow the team and share revenue, and that we’re building a sustainable company.

We can do this by making bets on:

  • Launching new value to customers at a regular cadence
  • Improving our comms with customers throughout their lifecycle — onboarding, email, and in-app messaging
  • Optimizing the website and experimenting

And on the brand side, we want to push even further into solid positioning. This means that the theme for brand will be delivery.

Dream it, deliver it, :dancing_pizza: emoji.

Delivery will accomplish two bigger objectives:

  1. It will tell our story more often
  2. It will create distribution opportunities and new traffic

Because of this, you’ll see us measuring it in a couple different ways: Yes, we’ll measure the cadence we can deliver on via publishing content, ideally 2-3 times per week on the blog, plus a new podcast, plus regular social content, plus placements for product launches. We have playbooks for ongoing social, press, and content, so we’re looking for deliverables that go above and beyond or are new and notable.

But we can also measure the effectiveness of all that shipping: 1) What were our brand survey results at the end of the quarter? and 2) What was our engagement rate and traffic from the new content?


Tying it all together into a growth model

Phew. Is your brain about busted yet? Mine is.

Last thing … it’s time to pull back the curtain on what these engines look like under the hood.

First, the growth engine.

We can take our revenue goals and back them all the way out to see exactly what we need to do in order to reach them. We already talked about how to take a big number like ARR and break it down into a manageable goal. The model helps us add real, achievable numbers to that goal and to track our progress.

So, remember the different levers of MRR?

Well, when we plug these into our model, we can see how much in any given month we’re influenced by things like new MRR or churn or expansion.

For Buffer Publish, those percentages are:

  • Reactivation – 0.64%
  • Expansion – 5.56%
  • New – 94.44%
  • Churn – -5.60%
  • Contraction – -0.28%

This means that 94% of the net change to MRR in any given month is due to new MRR.

Now, when we’re making the model, we have to make some projections, a.k.a. guesses.

One of those guesses is that these percentages will stay the same.

Of course, we could set goals to change these percentages. Let’s say that the Customer Engagement team wants to make expansion revenue 25% of net MRR increase every month. Great! But that’s something we’d need to decide together. For now, we’re leaving it as-is.

So knowing these percentages means we know how much new MRR we need each month.

And if we know how much new MRR we need, and if we know how much our Average Revenue Per User (ARPU) is, and if we know our conversion rate, then figuring out trials is simply a matter of math.

Let’s calculate …

To get $50,000 in new MRR from business customers, with an ARPU of $99, we need 500 new customers. If customers convert their trials at a 10% rate, then we need to get 5,000 trial starts.

The growth model goes deep into all the different plans and terms, so the full model is a bit of a brainbender. Annual plans convert differently than monthly plans, higher priced plans convert differently than lower-priced plans, etcetera. We can get pretty specific about it all.

There’s a point where the model stops being useful for goal-setting, and that’s when we can just say generally here’s where we need to be.

So generally, here’s where we need to be: gaining $40,000 to $50,000 in net new MRR each month for Q3.

We can use the model and talk to the product teams to see exactly how we want this all to breakdown.


The brand engine works on a very different model — almost not a model at all. Its foundation is our marketing metrics spreadsheet, which collects target numbers for things like reach, engagement, and survey results.

We used to have all our marketing numbers here, but I think it makes sense to break it out. Growth numbers live in tools like Mixpanel and Chartmogul. Brand numbers live in a million different places like Meltwater, Google Analytics, Anchor, Buffer, and native social. A spreadsheet is our best bet at keeping it all together.


Final summary

Q3 Goals

Drive $40k to $50k in net new MRR each month

Deliver 75 new content pieces that exceed engagement and reach baselines

Themes to guide your work

Product marketing = trials

Brand marketing = deliver

Bets we’re making

Feature launches – trial starts

Website experiments – trial starts

Lifecycle communication – trial conversion

Content marketing – brand positioning

Podcasting – brand positioning

Community – retention

Loops we’re loving

Loop – SEO

Loop – Word of mouth