How to track down the source of your user acquisition bottlenecks

For CEOs who have hacked through the bushes of idea validation, MVP building, and product-market fit, one of the next big challenges is how to measure success in customer acquisition.

At first glance, this is pretty straightforward. Count the number of customers or revenue every week, put them in a deck to show the board, crack open a beer, and you’re done!

But traction doesn’t go up on its own. That’s why the key to building a reliable customer acquisition machine is understanding all of the steps that come before the deal is closed – from the first time the customer interacts with a company all the way through to the point where they become a customer. This is what allows a growing company to identify where user acquisition bottlenecks exist, refine their go-to-market model, and understand what factors lead to strong performance.

Photo credit: Antonio Tajuelo

At this stage, the concept of a customer acquisition funnel should be quite familiar (if not, here’s a helpful primer for both business-to-business and business-to-consumer firms). So I will dive directly into how to measure success.

A caveat: Once CEOs discover that measuring outcomes like revenue or customers isn’t enough, the temptation might be to try and measure everything. After all, data is good. The risk here is that they end up in a sea of metrics, and it’s tough to draw any real insight out of it.

Founders may be able to relate to the following scene, for instance:

CEO: “We need to understand why we missed our revenue target last week. Our progress recently has been good, but this is a big setback in our quarterly plan.”

Head of sales: “The reason we missed it is because our head of growth didn’t deliver on the demand generation numbers. They were down 10% last month!”

Head of growth: “I saw on our dashboard that the number of demos the sales reps were running was down 25% from last month. The demand was there but the sales team just didn’t put the work in.”

Head of sales: “Our reps were just being more selective. If you take a closer look at the dashboard, you’ll see that our discount rate was down. I don’t trust the data in that dashboard anyway, my reps are working as hard as they can.”

CEO: ?!?!?!

There really isn’t anything surprising here, and we see this kind of behavior in all walks of life, from parenting to politics. In a world lacking clear structure, we tend to gravitate toward evidence that allows us to confirm our existing beliefs.

So how do you avoid this kind of scene? The key is structure – having a framework for how your business works from a numbers perspective is crucial.