Rocket GTM 🚀: Stop squeezing lemons 🍋
Avoid this fatal mistake if you want to scale revenue past $10M.
🍋 Growing vs Squeezing lemons
To make lemon juice, we need lemons. Lots of them. And at some point, we need to squeeze those lemons to extract all that beautiful juice.
As a marketer, we are in the business of growing, farming, and harvesting lemons. There are two key steps to making lemon juice:
Growing lemons - building brand awareness, increasing the size of your audience. In other words - value creation.
Squeezing lemons - converting our audience into Marketing Qualified Leads (MQLs) or paying customers. In other words - value extraction.
Scaling past $10M in ARR is easier when you optimize for growing lemons in the early stages of growth, all thanks to the power of compound growth.
📈 Compound growth
To make a lot of lemon juice, we need a big farm.
Let's take a look at the below chart which shows how compound growth increases our savings over time exponentially.
As you can see, saving regularly and reinvesting the interest you earn leads to exponential growth in wealth over time. But if you interrupt that growth by taking money out of the bank early, you interrupt the compound growth and limit the size of the pie later on (as seen with 'Tank Drain').
Compound growth takeaways:
Growth compounds over time and is extremely powerful
In the beginning it requires lot of effort and yields little results
The big results are always at the end
⭐️Short term value creation creates a bigger pie to extract value from in the long term⭐️
If we interrupt compound growth it significantly delays the time to reach a critical mass that's worth extracting from
Scaling up to $100M in ARR will put a lot of pressure on demand generation. How can you fuel such growth without an exponential increase in demand?
The answer: by focusing on value creation in the $0-$10M stage you'll have a significantly larger pie to extract value from during the $10-$100M stage.
🍋 Back to lemons
As we saw above, focusing on short term value extraction (squeezing lemons) is like taking money out of your savings account and will prevent you from having a large, engaged audience to extract value from when it matters most.
So, what are some examples of extracting value too early?
📩Email capture forms
You create a series of blogs aimed at establishing your company as a thought leader, reach your target audience, and bring leads to the top of funnel (growing lemons).
The content is awesome and attracts a lot of interest, it does a great job of elevating your brand but... you are judged on MQLs and so you gate your content to capture emails (squeezing the lemon).
Reach on your content tanks because 80% of people aren't prepared to give up their contact details.
However, you get a pat on the back because you generated 10 MQLs for the sales team (short term value extraction) even though 80% less people have now engaged with your brand (long term value destruction).
You've now interrupted compound growth. You may not see the negative impact now, but you've just delayed the time to reach critical mass. Every short term move like this hinders your long term prospects and what's even scarier is you'll only notice once it's too late.
Email capture forms are just one of many actions that interrupt compound growth. How many others can you think of?
💸 $0-$10M ARR - build your lemon farm
As we said above, the early stages require a lot of effort but yield little results. It is incredibly tempting to push for more MQLs to fuel growth, but the real rewards come when you have a big lemon farm, not when you're really good at squeezing lemons.
I'd rather have a smaller slice of a bigger pie.
Focusing on building your lemon farm does not mean that you should ignore converting MQLs however. Life is not black or white. They are not mutually exclusive events. It's important to think of MQLs as a consequence of good marketing, but not something to be optimized in itself. You can however still convert to MQLs but only if it's done in a way that doesn't destroy long term value.
🚀 Putting it all together
Your marketing team should focus on long term value creation over short term value extraction.
You can obviously enjoy short term value extraction, but not if such actions create long term value destruction, like email capture forms.
The biggest causes of long term value destruction are actions that reduce awareness, reach, or total future audience size.
So the next time your CEO asks you to pump out a ton of MQLs via paid ads instead of putting on a free event for your ideal customer that'd create long term brand value, you can send them this letter 💪.
🔎 More on Go-To-Market Design
📝 Read my blog Unleash the power of Go-To-Market Design.