By specializing in helping companies lower customer acquisition costs (CAC), GrowthRabbit doubled its revenue in 12 months. Chintan Maisuria, founder and CEO, has been successful because he followed a deliberate plan for identifying and cultivating his agency’s focus.
“I was playing it safe,” he explained. “I don’t want it to be another traditional agency that sells everything and everyone. I wanted to hack the growth marketing side.”
He explored the industry as a freelance professional for seven years, investigating in depth the digital marketing needs of various clients, from international companies to small business incubators.
That helped him zero in on what many companies struggle with: creating a solid marketing strategy, a foundation on which to build.
Chintan Maisuria, founder and CEO of GrowthRabbit, took his time developing his business model, and it’s been growing like mad since the doors opened.
The GrowthRabbit approach has three basic steps:
- Work with a specific niche: seed, series A, and series B startups
- Help companies achieve breakeven and then reduce CAC
- Guide companies into profitability necessary to earn the next round of investments.
Out-of-control CAC and inadequate or nonexistent marketing infrastructure can kill early-stage startups before they have a chance to become viable. But a strategic growth marketing strategy is an essential tool for taking a company to the next level, according to Chintan.
He walked us through how his company helps clients hack their own growth marketing.
Bonus action list: Have 60 seconds to improve your agency? [sg_popup id=”210″ event=”click”] Get our 2-page PDF summary[/sg_popup] of action items you can take to grow your marketing or PR agency based on Chintan’s advice.
Choose Hard Metrics to Measure
Chintan saw plenty of agencies, big and small, willing to execute the technical side of marketing. They create banner ads and promise to boost clicks and page views.
What he didn’t see was strategy development for entrepreneurs who don’t know how to market their amazing products and services.
By combining his experience as a chemical engineer who designed processes and workflows with his MBA focused on business and marketing, Chintan developed a proprietary method for leveraging company data to guide a growth marketing strategy.
His process helps a company learn about, understand, and define the elements of successful marketing. Once established, GrowthRabbit can construct an effective marketing strategy and supporting infrastructure.
“Early stage startups have something like four to five months of runway where they need to do two important things,” Chintan explained. “The first is reducing their acquisition costs, which helps them to acquire more customers. The second is being able to show month-over-month growth (20-22%) for investors, angel investors, or VCs to see the startup as a worthwhile investment.”
The initial focus is on calculating the value proposition, followed by reducing CAC.
Calculating CAC: Aiming for a 1:3 Ratio of Spend vs. Value
Collecting and analyzing data to calculate customer acquisition cost takes time, something many founders don’t have.
“When most clients come to us, they don’t know what their client acquisition cost is, but they know that they are spending a lot of money,” said Chintan. “Most are randomly choosing a mix of Facebook ads and Google Adwords because ‘everybody is doing it.’”
He called this a spray-and-pray approach: Throw money at random advertising and pray it yields any results…
But this particular numbers game is critical for young companies.
“If your average order value is around £100, for example, and you’re spending around £120 or £130 to acquire one customer, that doesn’t make any sense,” he said.
Finding the breakeven point reveals how much money a company can spend without losing money.
“If a company will make £50 of that same £100 sale, then the maximum that can be spent to get one customer and break even is £50,” Chintan explained.
He advises his clients to keep spending at a 1:3 ratio. That means the ideal CAC on that £100 sale should be no more than £30.
The basic formula is simple. But breaking down where the money goes and the return on that investment requires quite a bit of data. That’s where GrowthRabbit excels.
Putting an End to Spray-and-Pray with Data
After a client consultation, GrowthRabbit collects digital marketing data for analysis.
Some of the information Chintan looks for includes:
- Amount spent per channel
- Customer acquisition cost
- Average order value.
“We calculate what’s happening, and what’s not happening,” said Chintan. “That’s where ReportGarden helps us a lot. All of those reports are created in seconds with just one click.”
He then applies his own metrics (what he called the “secret sauce”) to present a comprehensive view of the results for those ad expenditures.
All the data GrowthRabbit collects validate several critical elements of a marketing plan:
- The position of the product/service in the marketplace
- A target audience (primary and secondary)
- The effectiveness of existing marketing practices.
After quantifying those elements, it’s possible to build a sensible strategy to meet their client’s goals. The trick is blending the right mix of channels and activities to create a solid foundation for immediate and future growth.
This screenshot of a report GrowthRabbit created for a client provides a snapshot of the metrics Chintan and his team use to develop the cost of acquisition (CAC).
Because of his deep specialization in strategy development, Chintan uses workflows and data to pair opportunities with outcomes.
“You look for patterns using the trends with an early stage startup,” Chintan explained. “If you are at X amount of users, you will see similar trends, similar kinds of data.”
One client project required the analysis of more than 2 million data points. This kind of hands-on experience translates data into a practical understanding of how to get results.
“I understand what you need to be doing at various stages in the growth process. At a particular level, based either on the revenue or the number of users, there are certain things a business owner should be doing,” he said. “It may be increasing the sales or getting your branding in place, or it could be bringing on a new channel, pivoting an existing product, or adding something new.”
While Chintan didn’t share his proprietary model, he did say that it’s specifically designed “for growing startups from early to mid-scale.” He’ll only work with companies that fit within those parameters because he wants to give those companies a fighting chance in a highly competitive marketplace.
Part of this process is education. Once an owner understands the role marketing plays in the successful execution of a business plan, it’s possible to scale, to start opening new channels, and to add content marketing.
“We build the infrastructure that is going to help them reduce their initial acquisition cost and then keep it under control so they can scale to refine or expand the audience they’re looking for,” explained Chintan.
GrowthRabbit’s Approach Has More Than Doubled Revenue
GrowthRabbit is following the same advice it gives its clients, and Chintan is scaling the company to meet growing demand.
“I didn’t pursue exponential growth,” he said. “But I can see linear growth because the revenue is going up.”
GrowthRabbit, based in London, is actively involved in the local startup community. Chintan Maisuria, founder and CEO (left) is just as accessible as the rest of the team.
After hiring his first part-time employee in 2017, Chintan’s team is now a combination of four in-house staff and six contractors, with more being added daily. Chintan himself is a large part of how GrowthRabbit gets new clients.
Describing his focus on “business development and the technicalities,” he said he holds office hours with business accelerators, answering questions and sharing his expertise. He frequents Wayra by Telefonica, WeWork, TechItalia Lab, and Innovation Warehouse, to name a few.
He actively participates in Linkedin groups and contributes articles in addition to publishing his own blog.
Even though Chintan isn’t pursuing the kind of outside funding he helps his clients acquire, he has achieved the kind of results any startup would like to add to a pitch deck.
“I’m not going to be revealing the revenue at the moment, but by June this year, we had already doubled 2017 numbers,” he said. “If I don’t get another client until December, I still doubled last year in six months.”
Bonus action list: Have 60 seconds to improve your agency? [sg_popup id=”210″ event=”click”] Get our 2-page PDF summary[/sg_popup] of action items you can take to grow your marketing or PR agency based on Chintan’s advice.
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