Building Your Growth Model

What Is a Growth Model?

A growth model is a structured way to answer the fundamental question: "How does our business grow?" It provides clarity on the processes, strategies and metrics that drive sustainable growth.

"A growth model is a predictable, sustainable, and defensible strategy that helps you achieve maximum distribution in the market." – Lenny Rachitsky

"At its core, a growth model boils down to a way to conceptualize and summarize your business in a simple equation, which allows you to think about growth in a holistic and structured way." – Hila Qu, GitLab

Why Is a Growth Model Important?

Having a clear growth model is essential for growth marketing teams, agencies and consultants. It ensures everyone in your organisation understands how growth happens and their role in achieving it.

A growth model helps you:

• Align your team around a clear growth strategy

• Set realistic goals and forecasts

• Identify the most effective customer acquisition channels

• Prioritise resources effectively (see our guide on prioritisation frameworks)

• Define and track key growth metrics

• Deepen your team's understanding of the business

With a robust growth model and historical data, you can run accurate growth simulations. For example, you can test different growth levers—such as investing in acquisition versus retention (see AARRR framework)—to identify the most impactful strategies. For a deeper dive into discovering and applying growth levers, see our full guide.

Visual vs Mathematical Growth Models

Growth models typically fall into two categories: visual (qualitative) and mathematical (quantitative).

A visual growth model illustrates how different parts of your marketing, product and customer journey interact to drive growth.

"A growth model is a visual representation of the acquisition model a business uses to grow and sustain its customer base." – Segment Grow Using Data Course

A mathematical growth model is quantitative, typically built in spreadsheets. It relies on accurate assumptions, such as conversion rates or paid traffic costs.

"A growth model is a mathematical representation of your users." – Jon Butterfield

North Star Metric

To build effective growth models, each team should define a core metric—often called a North Star metric. This metric helps teams clearly understand all inputs driving their primary goal.

Macro vs Micro Growth Models

Companies often create a high-level growth model describing how the entire system works. Individual teams then build smaller "mini models" detailing their specific activities and strategies.

These mini models frequently form the core of a team's strategy document, clearly outlining how their work contributes to overall growth.

Linear vs Non-Linear Growth Models

The primary difference between linear and non-linear growth models is how they predict growth over time:

• Linear models (funnels) assume a straightforward progression from acquisition to conversion.

• Non-linear models (loops) focus on cyclical processes, where outputs feed back into the system as inputs, creating compounding growth.

Growth Loops and Non-Linear Models

Historically, funnels dominated growth marketing thinking. However, modern growth marketers increasingly focus on growth loops.

The core idea behind growth loops is that the output of one cycle becomes the input for the next, creating sustainable, compounding growth.

"While linear tactics do help us gather our first users, they also require us to constantly put more into the funnel for one-directional input and output. In contrast, a growth loop creates an always-on process where one cohort of users feeds into the next." – Unsolicited Feedback Podcast

Tools for Building Growth Models

Depending on your needs, various tools can help you build and visualise your growth model:

• Paper and pen (ideal for rough sketches)

• Graphical tools: Miro, Figma, Canva, Lucidchart, Whimsical, PowerPoint, Google Slides

• Spreadsheets: Google Sheets, Excel (for rapid iteration and visualisation)

• Data tools: Airtable, Notion, Tableau (for dashboards)

• Custom apps: Python (Streamlit, Dash), R (Shiny), JavaScript (D3.js, React)

• AI tools: ChatGPT for initial model creation

Surprising Insights From Growth Models

Building and analysing growth models often reveals unexpected insights:

• Overall growth is highly sensitive to customer retention rates.

• Marketing teams frequently prioritise acquisition over cross-sell and upsell opportunities.

• Improving acquisition metrics is typically easier than improving retention metrics.

• Significant retention improvements often result from enhancing user onboarding experiences.

"Statistically speaking, a 1% improvement in the lowest number will yield the biggest uplift. Practically speaking, however, increasing the lowest conversion rate might be the hardest and most time-consuming thing to do." – Ross Nazarenko

How Growth Method Can Help

Growth Method is the only work management platform built specifically for growth marketers. It simplifies your growth marketing workflow by combining ideation, experimentation and analytics into one powerful platform.

With Growth Method, you can:

• Align growth ideas to team goals with intuitive ideation tools

• Accelerate experiment velocity using built-in best practices

• Generate professional, detailed reports effortlessly to demonstrate your team's value

"We are on-track to deliver a 43% increase in inbound leads this year. There is no doubt the adoption of Growth Method is the primary driver behind these results." – Laura Perrott, Colt Technology Services

Ready to implement a systematic approach to growth marketing? Book a call today to see how Growth Method can help your team.

Conclusion

No matter how effective your growth strategy is, aligning individuals, teams and the wider company around it is crucial. Incorporating a clear growth model into your growth marketing strategy is one of the best ways to achieve this alignment.

For more insights, explore our guide on growth marketing strategy.