As the organization grows, there is an increased need for a clear direction for teams to focus on. Providing strategy can often be paralyzing, especially if you haven't done it before.
In this post, I'll show you how to create a strategy by defining and ranking your four pillars—growth, engagement, retention, and monetization (GERM, in short).
You'll learn how other companies like LinkedIn or Netflix use GERM ranking to align their teams.
📩 In this issue, you'll find:
7️⃣-step guide on how to define and rank GERM in your company
Workshop recipe with free companion tool to walk you through GERM workshop step-by-step
Free pre-formatted slide deck to communicate your GERM rank to the team
You can preview slides here:
Now grab your favorite drink ☕️, catch a high five from me for trying to leave the world better than you found it 🙌, and let's rock&roll 🤘.
Are you missing a strategy?
Take a moment and answer these questions:
How do you define Growth, Engagement, Retention, and Monetization in your company?
What are the success metrics of those pillars in your company?
Which pillar is the most important one for your company currently?
Would your team know the answers to the questions above?
Would their answers be the same as yours?
If your answer to any of these looks like "no", you may suffer from a lack of strategy. It means your teams may be all over the place without a clear focus. And it's your job as a leader to provide the strategic context for your teams. So let's fix that by applying a simple framework that should provide the direction you need - the GERM model.
What are GERM pillars?
Every company has four strategic pillars:
📈 Growth - defining how you're gettingnew users,
🎮 Engagement - defining how your users are using your product,
↩️ Retention - defining how many users come back to use your product,
💰 Monetization - defining how you make a profit
These pillars form a customer lifecycle loop:
Know your success
You should know when you're happy about your progress on certain pillars. Every pillar should have its success metric.
Here are some example success metrics for each pillar:
📈 Growth (defining how you're getting new users):
Signups over a period of time
Number of registrations
🎮 Engagement (defining how users are using your product):
Number of articles read
Number of posts liked
Number of products added to wishlist or cart
Number of transactions
Search phrases used
↩️ Retention (describing how many users come back to use your product):
Number of users coming back in the next X hours/days/months
Daily active users / weekly active users rate
💰 Monetization (describing how you make money):
Customer Lifetime Value
The average revenue per purchase
Here are some examples of how specific companies define their success metrics:
Success metric (Netflix)
Success metric (Facebook)
Year-over-year member growth
Active user growth YOY
Number of content watched weekly
Number of posts liked
Daily active users
Gross margin, LTV, revenue
Ranking GERM pillars
Your teams should be working on all four pillars, but not equally. Product or marketing teams can easily focus on any of these pillars. If you don't point to a single source of focus explicitly, teams can be all around the place.
A good strategy is about making hard choices, so you must prioritize your company pillars to create that much-needed focus that will hopefully help you achieve better results.
Which pillar should you prioritize?
I wish I had a better answer: it depends. Ranking GERM pillars depends on many factors, and can priorities you'll set will bring different effects.
Prioritizing the 📈 growth of new customers can increase company economies of scale, create a stronger brand, and give you customer data that you can then use in your recommendations engine or customer re-targeting.
On the other hand, prioritizing 💰 monetization over growth can lead to higher profits year-over-year that can be re-invested into growth in the following year.
Don't be tempted to say two pillars are equally important. When you do, you will create confusion, not focus.
If two things are equally important, then nothing is important.
When it comes to 💌 Product Blocks newsletter, at launch, my GERM rank would be as follows:
Number of subscribers month-over-month
Important in the beginning to reach as many people as possible to inspire them to make the change
Important as I want to keep the quality of content high
Newsletter open rate
Not critical to me right now as I have a full-time job and other sources of steady income
That's it. This table represents a GERM ranking.
GERM ranking is a first-class citizen in your company strategy. It provides a simple but powerful message to focus and align your teams.
When to change your GERM rank?
GERM rank is a mid-to-long-term commitment. Update your GERM rank yearly or when something significant happens to your company, industry, or competitor landscape.
To help you run the workshop exercise, I've prepared a document in Coda. Coda is a flexible document-based platform to connect, document, and visualize your data. Think Notion + Confluence + Airtable on steroids.
If you use it in the workshop, by the end of it, it will connect all the steps and give you a one-pager summary:
If you want to use Coda…
1. Go to this page and click "Duplicate this doc".
If you're new to Coda and want to learn more, click here.
PS: I like Coda, but you don't have to use it—you can use Miro, Excel, Google Slides, or a simple whiteboard and post-it notes. Whatever tool you use, follow the steps below.
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