Growth Models on Mobile

Posted on July 24, 2017 by Eric Benjamin Seufert

One mistake I often see developers make in building the concept for a mobile product is to not actively and critically consider how they expect that product to grow. This planning mistake can take two forms:

  1. Simply ignoring growth altogether in the concept and design phase, kicking that can down the road under the assumption that a great product will inevitably attract an audience somehow. This "If you build it, they will come" mentality is most common to teams that are new to mobile and have a background in building consumer services for the web, where SEO plays an important role in early-stage user base growth;
  2. More problematically: assuming, apropos of nothing, that a specific model of growth (and the product's underlying monetization strategy) will work for their app without having any evidence -- either in the form of marketing campaign data or even a precedent in their space -- to validate that belief. This mistake is more problematic than the first because it actually involves the team building a growth plan and believing that they have a path to market share; the first mistake is (or should be) obviously disastrous and can be course-corrected at any point, but this second mistake lulls teams (and advisors, and investors, etc.) into a false sense of security around growth.

The dynamic between the product's monetization strategy and the growth model the team wishes to pursue is important to consider here, as a mismatch between these two forces (and a misunderstanding of how they interact) can create confusion around what levers an eventual growth team has at its disposal once the product is ready to be launched. If the team expects the product to grow primarily through viral network effects, then it needs to orient monetization around that: trying to throttle engagement via monetization could stifle growth and limit the product’s ability to scale (SoundCloud is probably a good example of this).

Likewise, if the product team expects to primarily monetize via advertising, then ARPU numbers might not be high enough to support LTV / Cost of Acquisition arbitrage and a paid acquisition-based growth model.

The important point here is that these decisions need to be made ahead of launch and jointly by the two parties: the product team, who will design monetization systems, and the growth team, who will largely be constrained by those monetization systems yet will be held responsible for the product’s growth.

If these two teams aren’t communicating at the design phase of the product development cycle -- at the very genesis of the systems that will generate the revenue that gets recycled back into marketing -- then it’s very easy for the dynamics between monetization and growth to break down. This breakdown happens often, and once it does -- once both teams to throw their hands up in the air in frustration at the product’s lack of traction -- then it’s usually a sign that the product requires a complete monetization overhaul in order to become commercially viable.