Diagnosing Stalled Growth: A Founder's Framework for Sustainable Business Expansion
Unlock product growth with Jason Cohen's proven framework. Tackle churn, optimize pricing, diversify channels, and question 'growth at all costs' for lasting success.
Key Insights
-
Insight
Customer churn, or 'logo churn', acts as an exponential, hard ceiling on a company's potential size, as cancellations grow automatically with the customer base, unlike linear marketing efforts.
Impact
This insight highlights that fundamental customer retention issues must be addressed before or alongside acquisition, as ignoring churn can render all other growth efforts futile and cap long-term scalability.
-
Insight
Pricing is not just a cost-setting exercise but a strategic lever that shapes market perception and customer segment, with underpricing potentially signaling low quality and deterring higher-value clients.
Impact
Recognizing pricing as a positioning tool allows companies to intentionally attract desired market segments, command higher value, and avoid being trapped in a low-margin, high-churn market.
-
Insight
Net Revenue Retention (NRR) above 100% is crucial for the sustained growth of SaaS companies, indicating that existing customers are increasing their spend and contributing to growth, offsetting inevitable churn.
Impact
Focusing on NRR drives a customer-centric product development strategy, ensuring continuous value creation that encourages expansion and secures long-term revenue stability and company valuation.
-
Insight
Marketing channels experience an 'elephant curve' (initial S-curve growth followed by decline) due to audience saturation and competition, making continuous diversification and innovation in acquisition essential.
Impact
Businesses must proactively explore and invest in new or creative acquisition channels, as relying solely on existing successful channels will eventually lead to stalled growth and decline.
-
Insight
The ultimate question for stalled growth is existential: whether continuous growth is truly the right objective for the company and its founders, or if alternative goals like profit maximization or personal fulfillment are more appropriate.
Impact
This challenges the 'growth at all costs' mentality, allowing founders to pursue strategies aligned with their values, potentially leading to a more sustainable, fulfilling, and intentionally structured business, even if it doesn't always mean exponential revenue growth.
Key Quotes
"Your prices are way too low because you just guessed and you haven't changed them."
"If you're not growing, you're dying. Is that true, or is that the kind of thing that investors use to make founders try to grow even when they shouldn't?"
"The common thread throughout all this stuff about growth, it comes back to the customer getting value."
Summary
Unlocking Growth: A Strategic Framework for Founders
In the dynamic world of technology and entrepreneurship, growth is often seen as the ultimate measure of success. Yet, many promising products and companies hit a plateau, leaving founders and product teams grappling with stalled momentum. This isn't just a challenge; it's a critical juncture demanding a methodical and insightful approach. Drawing from decades of experience building and investing in successful ventures, four-time founder Jason Cohen offers a pragmatic framework to diagnose and re-ignite growth, or critically, to decide if endless growth is even the right path.
The Growth Diagnostic Gauntlet
Cohen's framework is a series of questions, designed to be tackled in a specific order, much like a funnel where issues at the top must be addressed first.
1. Are Customers Leaving (Logo Churn)?
This is the most critical starting point. When customers, who've navigated a complex acquisition funnel, choose to leave, it signals a fundamental product or promise misalignment. The math is stark: cancellations grow proportionally with your customer base, while marketing efforts yield linear returns. This creates an undeniable ceiling on your potential size. Ignoring high logo churn means your "leaky bucket" will eventually prevent any further growth, regardless of marketing spend.
Actionable Insight: Don't just ask "Why did you cancel?". Instead, ask "What made* you cancel?" to uncover deeper, actionable reasons beyond superficial excuses like "too expensive." Focus on understanding the true value gaps. Early intervention with at-risk customers, before they cancel, and meticulous attention to onboarding, where early churn is highest, are paramount.
2. Is Your Pricing Correct?
Many companies, especially early-stage ones, underprice their offerings. Pricing isn't merely a numerical value; it's a powerful signal that positions your product within the market. Low prices can communicate low quality, deterring larger, more valuable customers. Raising prices can open new market segments that perceive higher value and are willing to pay more, without necessarily reducing sign-ups.
* Actionable Insight: Re-evaluate your pricing, not just the number, but its structure and positioning. Consider how your price communicates value and to which market segment it appeals. Positioning your product to deliver on growth (e.g., "double your leads") rather than just cost savings ("half your costs") can dramatically increase perceived value and willingness to pay.
3. Are Existing Customers Growing (Net Revenue Retention - NRR)?
Beyond just retaining customers, a critical driver for sustainable growth is their expansion. Net Revenue Retention (NRR) measures how much revenue you retain from an existing cohort, accounting for upgrades, downgrades, and churn. For public SaaS companies, NRR above 100% is almost a mandate for sustained growth. While logo churn limits your customer base, NRR ensures that the customers you keep are becoming more valuable over time.
* Actionable Insight: Actively seek ways to increase the value customers derive from your product, enabling them to expand their usage or upgrade. This often involves new features, tiered offerings, or usage-based pricing models that align increased payment with increased perceived value. Critically, measure customer-perceived value, not just internal usage metrics.
4. Are Acquisition Channels Saturated?
Marketing channels, whether paid ads, SEO, or social media, eventually hit saturation points. Cohen refers to this phenomenon as the "elephant curve" – an initial S-curve of growth followed by a decline as the audience becomes saturated. Continuously flogging a saturated channel yields diminishing returns.
* Actionable Insight: Proactively assess the saturation levels of your current acquisition channels. Diversify into new or under-explored channels, or consider innovative approaches (e.g., educational workshops, agency partnerships). For businesses truly constrained, this might necessitate exploring new product lines or entirely new market segments, leveraging existing company assets.
5. Do You Need to Grow?
Finally, an existential question: Is continuous growth always the right goal? The mantra "if you're not growing, you're dying" is pervasive, especially among investors, but it might not align with every founder's vision or company's potential. For bootstrapped companies, maximizing profit or maintaining a fulfilling lifestyle might supersede aggressive revenue growth. Stagnation in a company can also reflect a lack of personal growth for founders and employees.
* Actionable Insight: Reflect on your personal and company's core values. Is relentless growth truly serving your long-term vision, or could focusing on profitability, innovation within a niche, or personal fulfillment be a more sustainable and desirable path? This internal audit can prevent forced, unnatural growth strategies that lead to regret.
The North Star: Customer Value
Underlying all these steps is a singular, powerful theme: customer value. Every aspect of growth, from retention to pricing and expansion, hinges on whether your product genuinely creates value in a way your customers understand and appreciate. By making "how are we actually creating value in the way the customer values it" your North Star, you lay the groundwork for a resilient and thriving business, whether you're chasing unicorn status or building a sustainable, profitable venture.
Action Items
Implement a structured diagnostic framework for stalled growth, starting with analyzing logo churn using the 'new customers / cancellation rate' formula to determine the theoretical maximum customer base.
Impact: This provides a clear, data-driven understanding of the severity of churn and its impact on growth limits, guiding resource allocation to the most impactful areas first.
Shift customer feedback inquiries from 'Why did you cancel?' to 'What *made* you cancel?' and delve deeper into root causes beyond superficial answers like 'too expensive'.
Impact: This approach yields more actionable insights into product deficiencies, unmet promises, or integration issues, enabling targeted improvements that genuinely reduce churn.
Re-evaluate product pricing and positioning, considering not only the numerical price but also its impact on market perception and the value proposition (e.g., selling 'growth' over 'cost savings').
Impact: Optimized pricing can attract higher-value customers, increase perceived quality, and unlock significantly higher revenue potential for the same product, broadening market access.
Focus on driving Net Revenue Retention (NRR) above 100% by continuously creating and measuring customer-perceived value, encouraging upgrades, and expanding existing customer relationships.
Impact: Improving NRR ensures that the existing customer base is a self-sustaining growth engine, providing resilience against churn and enabling compound revenue expansion without constant new customer acquisition.
Actively explore and diversify into new or unconventional marketing and acquisition channels before existing ones become saturated or decline, leveraging company strengths for expansion.
Impact: Proactive channel diversification ensures a continuous pipeline of new customers, mitigates risks associated with channel saturation, and can unlock significant new growth vectors for the business.
Mentioned Companies
Mentioned as a unicorn company co-founded by Jason Cohen, highlighting its success and strategic use of agency channels for growth.
HubSpot
3Cited as a successful example of utilizing agency partnerships as a significant growth channel, generating 50% of revenue.
Presented as an example of a company that restarted growth through creative, non-traditional marketing channels like in-person workshops.
Duolingo
3Used as an example of a consumer product that effectively implements strategies for Net Revenue Retention (NRR) growth.
Jason Cohen's long-standing blog, mentioned as a platform for sharing product wisdom and demonstrating long-term content strategy.