At first when InnerTrends was built we thought companies that don't analyze data to drive growth ultimately didn't have growth insights. However, after doing a bit of industry research and working with hundreds of software companies we started to realize there are 4 ways to drive growth. This is where we came up with The Software Growth Opportunity Matrix.
In this article you will be able to see how your company drives growth and determine if it is the most optimal approach for your business model.
Breaking Down The Matrix
Every growth opportunity is only found in one of two places, within your product data or outside of your product data. Additionally, most companies don't assume an opportunity is valid until they do further research. So these opportunities can also be validated either by using data within your product or outside of your product.
So, the matrix is centered around where a growth opportunity has been found and validated and whether or not it is within your product data or outside of your product data. It looks like this:
As you can see it is color coded by whether or not something occurs within your product data, pink, or outside of your product data, blue. The left side of each quadrant represents finding the opportunity, where as, the right side represents the validation step.
Finding and validating your growth opportunities within your data is pretty straight forward at a high level. However, doing this exercise outside of the product shows many types of ways to find and validate opportunities.
Finding opportunities outside of the product can include:
Team meetings where someone mentions an opportunity they think is worth looking into.
Reviewing customer feedback and extracting and opportunity from it
Looking at your competition and seeing that they are doing something different or possibly something you think your company is missing
Taking the advice of a mentor or consultant based on their experience
Validating opportunities outside of the product can include:
Conducting customer interviews or research interviews to validate your opportunity
Building and sending customer or research surveys to validate your opportunity
Reviewing data from customer reviews to validate your opportunity
Reviewing data from support driven efforts such as ticket ratings to validate your opportunity
As you can see there are many ways in which companies already find and validate growth opportunities without even needing to leverage their product or customer analytics.
What is the problem with this? It's really just a factor of time and accuracy. Let me explain.
Plotting The Quadrants on a Graph
The matrix visual above is used to organize what types of practices happen within finding opportunities and validating them. However, there is some vital missing information within this matrix. We really need to understand how finding and validating growth opportunities within each of these quadrants effects how you grow.
We can break this down further by plotting each of these quadrants by the speed or time in which it takes to find a new growth opportunity, as well as the increased chance of making decisions based on false positives.
As you can see if you find and validate your growth opportunities outside of your product it simply takes much more time and can create a much higher chance of false positives. However, when you are just beginning this may be your only option.
As you product grows and user data becomes more relevant you should, however, start to consider a more data-influenced approach to growth. The natural next step is finding opportunities outside of your product but then trying to validating them within your product data. This is a bit more simple than the more advanced step of finding growth opportunities within your data and then validating them outside of your product, but not far behind.
At the end of the day, however, the companies that find and validate their growth opportunities within their product data grow the fastest and have the most accurate insights into making growth experiments.
That is truly Product-Led Growth!
If you think you are ready to take the next step with your data and need help finding and validating new growth opportunities, we would be happy to show you how.