How to set user growth goals? Here are 6 lessons learned!

Setting growth targets is difficult, but the benefits are significant. It not only allows the growth team to focus in the right direction, but also helps you better understand the company's business model and development philosophy.

The process of setting growth goals is painful, but in the early days of a company, it is a good test to see if we are deviating from the right direction. I learned a lot while working at Thumbtack, and I summarized it into the following 6 lessons.

01. Focus on the North Star Metric First

So, what kind of indicator can be used as the North Star indicator?

The North Star Metric should clearly measure the primary work and results that the growth team is doing to drive and scale the entire user funnel, from acquisition to retention . The most common example is Weekly Active Users (WAU) or Daily Active Users (DAU). For markets, the North Star Metric often measures the conversion effect of both supply and demand, such as taking a ride (Lyft), booking a hotel (Airbnb), or project completion rate (Thumbtack).

An effective North Star Metric will often prioritize the value you provide to your users before measuring the value you provide to the business. For example, in a subscription model, "monthly active subscribers " is a better metric than "monthly paying subscribers" because without active subscribers you won't have any revenue.

At present, the industry generally advocates using a growth indicator as the North Star indicator to drive the efficient operation of the entire growth system. But I don't quite agree with this view. If this growth indicator ignores important details, I will go beyond this limitation. For example, at Thumbtack, we effectively use both a demand-side metric (number of projects) and a supply-side metric (number of weekly active professionals).

02. Find the breakthrough with the highest ROI

Taking Airbnb as an example, the "number of nights booked by users" indicator can be broken down into visit traffic , order conversion rate , average number of orders per user and average number of nights agreed for an order.

Of course, this is a simplified case. But even starting from the basics, this growth model will guide your team’s focus on deep-funnel conversions rather than acquiring new users.

This growth model allows you to avoid over-optimizing short-term projects in the long run. For example, if paid advertising accounts for 50% of your website traffic, it will be difficult to increase it by 20%. Most of the time, you are more likely to invest resources in other ways to acquire users, such as virality or SEO , where the effect of resource investment will be more significant.

03. Growth goals lead the team forward

I don’t recommend that every small growth team have multiple goals, because in the early stages of a growth team, it is most effective to focus on one or two areas with high ROI. For example, if it’s conversion rate optimization or customer recommendations, you can see the results quickly.

If multiple teams have the same goals, they can be merged into one. This happens often with product and marketing, such as marketing teams that work on user retention through email and push notifications, and product teams that work on user retention through recommendation algorithms and product up-selling. These two teams acting independently can lead to poor resource allocation and a disjointed customer experience. The most effective growth teams are those that leverage all available resources to solve core problems.

Fred Brooks mentioned the concept of "conceptual integrity" in "The Mythical Man-Month". This idea that good design comes from a consensus of ideas among one or a few people is a very useful concept to me as it relates to the design of organizational structures: one "mind", one goal.

04. Metrics are more important than milestones

Milestones are necessary to some extent.

• First, they are useful for new initiatives that have no baseline against which to compare, especially when it will take some time for the initiative to have a visible impact. For example, when launching a search engine optimization (SEO) program in a competitive incentive category, where results may not be apparent for several months, milestones can be a better early goal than clear, measurable metrics.
• Second, milestones are also helpful for infrastructure projects because most projects focus on short-term indicators and these infrastructure projects were previously difficult to prioritize.

Except for the above two cases, clear indicators are better than milestone goals.

Clearly defined measurable outcome indicators better reflect results rather than the means to achieve them, and allow team members to have more flexible execution strategies. Even better, having clear, measurable outcomes gives team members a better understanding of the product and its growth, since a lack of metrics is often a sign of a lack of understanding of the problem.

Measurables are also often harder to accomplish. At Thumbtack (a team full of ideas and good intentions), I found that 80% of our milestones were completed, but only 55% of the measurables were completed.

05. Don’t ignore the pitfalls in indicator definitions

1. Low measurability

Whether an indicator can measure your work results well is different from whether it is easy to measure. At Thumbtack, for example, “the number of times a customer hires a professional” is a better measure of market value than “the number of projects launched.” However, since transactions occur outside the platform, we cannot directly track which clients hire professionals. So we choose upstream indicators of the project to get cleaner measurement results and faster feedback.

So, when core indicators cannot be measured in the short term, you should think about how to predict or choose alternative indicators.

2. Unclear baseline

On average, how often do you see goals that are simply unattainable, or that can be achieved without much effort? This problem usually occurs because the comparison baseline is unclear.

One common form is based on seasons: for example, Q4 goals in an e-commerce business should be distinguished from other times. Another case is splitting dimensions: if the paid marketing team plans to test a new low-intent channel , this will cause headaches for the conversion rate optimization team, so they must adjust or completely exclude the measured traffic.

06. Don’t ignore customer experience when growing

For every metric, there should be another “paired” metric that addresses the adverse consequences of the first.

Customer experience is critical to growth because by optimizing for highly measurable metrics, growth teams risk short-term gains while eroding long-term customer satisfaction or brand value.

I have a narrow, short-term use case for this problem. For example, ensuring that the number of sign-ups from paid marketing increases while keeping the customer acquisition cost constant. Because the increase in conversion rate may lead to low-quality customer conversion and thus reduce the activation rate. However, what is more important is its wide application.

Here’s an example of a screw-up I had at Thumbtack: growing the number of projects a client had through email marketing (not a bad idea) without prioritizing the customer experience (bad idea). Incremental emails will certainly generate some engagement, but too many emails can damage long-term customer relationships. So we ended up balancing this by putting guardrails around “Email Quality NPS,” or the email engagement ratio for a particular campaign as a measure of how good an email is.

One of the best long-term customer experience guardrails I’ve found for growth teams is the Net Promoter Score (NPS), a clear and powerful metric for customer satisfaction. Long-term monitoring can ensure that you are moving in the right direction and avoid becoming a short-term star and then quickly falling.

Summarize

Correct goal setting is very difficult, but goal setting alone is not enough, you also have to go back to the execution stage, so this is a valuable complete closed loop.