Finding true north: how to define your growth compass.

screen-shot-2016-09-19-at-4-42-34-pmLessons on growth from Envato’s Ben Chan

It’s always a great learning opportunity when the founders in our startup accelerator gather together for their weekly workshop. When the guest presenter happens to be a General Manager from one of Australia’s most successful startups, the excitement and engagement step up another level. Ben Chan, General Manager of Envato Market, captivated our startup founders last week as he shared some key pointers on how to measure and pursue growth. Since its launch in Melbourne in 2006, Envato has grown its community to over 6 million users, making it the world’s leading market place for creative assets.

With a background in investment and management consulting, Ben has an incredible wealth of knowledge and experience from which to draw. After completing his undergraduate studies in Commerce and Engineering at the University of Melbourne, Ben worked in Investment Banking in Melbourne, before moving to Goldman Sachs in New York. While based in the US, Ben completed his MBA at Stanford University. In 2010 Ben returned to Australia to work in management consulting for McKinsey & Company, later moving to Envato as Director of Growth and Revenue in 2013.

“Growth should serve as a compass for startups, helping to guide your movements at every critical decision”, Ben revealed. If you’re making decisions that do not clearly link back to your growth objectives, you’re missing out. Ben shared the four key pillars of Envato’s impressive growth with our founders, who were keen to learn from his wealth of experience. For Envato, growth comes down to: a strong user focus; delivering products that address those users’ needs; having the right team to deliver the product; and ensuring the right processes are in place to assist your team. This last step is critical for startups struggling to scale their business.

Envato’s stellar growth is fascinating to consider, given the challenges that typically face online marketplaces. While trying to grow both the supply side (their authors) and the demand side (their customers), Ben explained how crucial it was to understand what is important to each. He admitted that, at times, one side of a market place can be easier to develop than the other, but that in order to grow, you need to double your efforts to invest in the side that proves to be a greater challenge.

Through Envato’s careful market analysis they discovered that authors of digital assets wanted to earn a living through freelancing, but that they also were desperately seeking a sense of belonging and a community where they felt cared for. On the other side of the equation, buyers of digital assets wanted good value, trust, high quality and diversity of product. Ben and the team at Envato provide proof that both suppliers and customers in a marketplace can be satisfied simultaneously, and have continued to expand their marketplace tailored to the specific needs of each group.

Taking this advice on board, our founders were keen to learn more about how Envato have grown their customer base. Approaching digital marketing by channel, Ben was quick to stress the importance of Search Engine Optimisation (SEO). “Search Engine Optimisation is critical. It doesn’t matter if you have the best product in the world, if Google and your customers can’t find you, that’s the end.” Paid acquisition can be used to bolster your audience, but, as Ben stressed, it is often costly and only generates small volumes. “Affiliate marketing is a huge industry and can be a great way to encourage a virtual sales team – but you need to make it worth their while” said Ben. Our founders had plenty of questions on this topic, discussing how best to select and engage with affiliates. Email marketing was also discussed as a key tool in pursuing growth. The founders were challenged to think beyond the use of email for existing customers, instead using it for new customer acquisition by collaborating with complimentary organisations, where benefits can be realised for both user-bases through joint marketing campaigns.

As the discussion turned to focus on the processes needed for growth, Ben shared the value in iterating fast and gathering customer feedback at every stage of the sales funnel. Laying down the challenge, Ben encouraged the startups to push out at least one market or customer ‘experiment’ per week in order to gain valuable feedback which can then be used to make data driven decisions. “While focus groups are useful, even the best focus groups can only give you a few voices. Some of those voices may be louder than others but not necessarily point in the right direction”, shared Ben. “Real data should always trump anecdotes”.

Ben concluded the workshop by covering the two key growth metrics that Envato consider the most valuable: conversion rate and value by cohort. While most people think of conversion rates from a ‘visit to action’ point of view, Ben suggested our startups break this down even further to gain a more comprehensive understanding of their sales funnel. Each step in the sales funnel from should be tracked, in order to minimise leakage. Looking not only at page visit to purchase, but also at customer lead to face-to-face interaction, or event view to event registration, can provide useful insights that can be used to improve your offering overall.

Value by cohort groups users and customers by common factors, including but not limited to the channel that brought them to you, the geography they’re from, the product they’re interested in, the campaign that won them over, and when they engaged with your business. This data can then be used to understand the revenue generated by a cohort, in comparison to their cost of acquisition. Particularly valuable for startups to identify where traction and revenue is being generated, and consequently, where marketing efforts should be focused.

Ben was incredibly generous with his advice and time, staying behind to talk to our founders after his workshop. We are very grateful to Ben for sharing his wisdom and advice, and we look forward to having him back at MAP again soon.