Customer Led Growth Defined
Here’s my definition of Customer Led Growth.
“Everything an organisation does to deliver measurable customer results that profitably win, satisfy, retain and grow your chosen customers better than the competition.”
Each part of this definition matters, so let me unpick it, piece by piece.
"Everything an organisation does" - CLG is not the work of one department, nor is it, as some suggest, just a post-sale strategy. CLG is about building your B2B SaaS business around the needs to improve the performance of the key roles you sell to and serve. It shapes all aspects of your business:
your value proposition,
your marketing messages and channels,
who you sell to and what you tell them,
how your product helps them in their job and
how you help and guide them to those improvements.
Making sure that all these pieces work together is the job of the CEO; the chief organisation designer. In a future blog, I will explore how `I have done this both with my own SaaS business and the companies I have worked with.
“deliver measurable results” - the measurable results that key roles expect, are promised and achieve drive acquisition, retention, growth and advocacy. This focus on customer results is the red thread that runs through a B2B SaaS company. It is the basis of a value proposition; what marketing communicates; what sales sell; what services enable and, most importantly, what the product delivers.
"to profitably" - a startup may not be profitable in the early years but investors and markets will expect to see profitability at some stage. Growth at all costs is not a viable, long-term strategy. This was reinforced in 2022 with the SaaS correction. Funding became very difficult causing many who had relied on a continuing stream of venture capital to massively cost back on spending. Some went out of business, many others laid off employees. The focus on growth at all costs shifted rapidly to profitable growth. CLG, done well, will help profitability by:
improving customer acquisition cost (CAC) through focused messaging, improved conversion rates and greater advocacy,
higher retention - a focus on improving measurable results for key customer roles strengthens the renewal business case,
greater productivity from alignment of messaging and activities across the customer lifecycle.
"win, satisfy, retain and grow" - CLG addresses the whole go-to-market and customer lifecycle, including product.
In my definition of CLG, satisfy has a very specific meaning. It is about delivering measurable improvements in the performance metrics that matter most to the key customer roles your product serves. It is the red thread that runs through everything customer facing. Yes, having happy customers is nice but research shows that improved measurable results in the areas of performance that matter most to key customer roles is the most significant driver of renewal intention.
"chosen customers" - few businesses can serve everybody. Clarity about the characteristics of the companies and key roles within them that can gain measurable results from your products and services is essential. Detailed Ideal Customer Profiles are a must have and should set out:
The companies you want to sell to,
Detailed profiles of the roles you sell to and serve; and I do mean detailed,
Situational factors: the circumstances that create a reason to buy, to buy more, or to churn.
A later blog will explore Ideal Customer Profiles
"better than the competition" - Its no good doing this if something else can deliver better. Being better than others who supply similar products is just one aspect of competition. The people you serve probably have many challenges and opportunities: pain and gain points. You have to be better, more important, more impactful than other things that demand time and money from your chosen customers.
So there’s my definition of Customer Led Growth. Let me know what you think.