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The New ROI is ROE: Return on Energy

Energy ImagePhoto by Micah Hallahan

Our last blog introduced how we help businesses find clarity and achieve team alignment. Here we demonstrate how to operationalize clarity in a way that accelerates growth. The type of growth that delivers a greater return on both investment and energy.

Comparable to energy economics, return on energy is (roughly) the ratio of results ($$, customers, positive vibes, energized team, etc.) to the amount of energy to obtain them (research, content development, ad spend, team’s time and effort).

For years our Growth Studio has been refining the art and science of maximizing return on energy. Here’s how you can apply what we’ve learned to your growth strategy.

Focus Your Energy on Your Core Customer

Get comically narrow on who your core customers are. Hone in on the progress they are trying to make with your product to retain them for the long term. And find off-shoot interest groups within the core (“growth clusters”) to become new customers.

Andy was formerly in growth at Facebook, Twitter, Quora, and Wealthfront

Andy was formerly in growth at Facebook, Twitter, Quora, and Wealthfront

Typical traps that take your eye off the core customer:

      • spending time bogged down attempting to make sense of data
      • betting big on flashy creative as a savior
      • focusing on the competitor instead of the customer
      • leaping haphazardly into new markets

As one Harvard Business Review article points out:

“[Most companies] succumb to intense pressure for top-line growth and chase business in markets where they don’t have the capabilities to sustain success. Their growth emanates not from the core but from the acquisition of apparent ‘adjacencies’ that are often anything but and the exploration of ‘blue oceans’ that turn out to be unswimmable.”

Marketing to the core customer should be the most sophisticated part of your overall marketing strategy. You are never wasting time, energy, and effort investing in your relationship with core customers.

Create Regenerative, Renewable Energy

Core customers who love your product provide the regenerative and renewable energy you need for exponential growth.

To start, an energized base may expand your core through organic (and free) word-of-mouth. Plus, customers acquired through word of mouth spend 200% more than the average customer & make 2x as many referrals themselves (Source). Now that’s a great return.

Within your core customer group is another fruitful opportunity. The growth cluster — groups who share motivations or needs with your core. By paying close attention to your core customer and recognizing growth clusters, you lower the energy, cost, and risk of new customer acquisition programs.

Example from our work with the Travel Channel

Core Customer: Viewers of Anthony Bourdain’s No Reservations

Growth Cluster: Bourdain’s viewers were — surprisingly more interested in a newer show Ghost Adventures than in the show the network had expected: Bizarre Foods with Andrew Zimmern.

Outcome: Acting on this insight, Travel Channel changed the scheduling. Instead of Zimmern’s show coming right after Bourdain’s, they rescheduled it with Ghost Adventures. And it worked. Zimmern viewership remained strong, and the net effect was an overall increase in Travel Channel fans.

Growth cluster marketing has a fail-fast-to-find-traction approach. That means a relatively small percentage of your efforts go there. But they must always be there — tested and pursued to find bright spots. The growth clusters bring new core customers. And newly inspired customers bring vitality to every organization.

What’s the risk of not understanding your core customers? Consider your return on energy from the following choice: $100k put to advertising that targets new customers OR 100 hours spent talking to your customers. Which one do you think better informs the other?

This blog was also published on Medium

James Clark

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