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:

  1. 7️⃣-step guide on how to define and rank GERM in your company
  2. Workshop recipe with free companion tool to walk you through GERM workshop step-by-step
  3. 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:

  1. How do you define Growth, Engagement, Retention, and Monetization in your company?
  2. What are the success metrics of those pillars in your company?
  3. Which pillar is the most important one for your company currently?
  4. Would your team know the answers to the questions above?
  5. 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 getting new 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:

GERM as 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):

  • Gross margin
  • Customer Lifetime Value
  • The average revenue per purchase

Here are some examples of how specific companies define their success metrics:

PillarSuccess metric (Netflix)Success metric (Facebook)
GrowthYear-over-year member growthActive user growth YOY
EngagementNumber of content watched weeklyNumber of posts liked
RetentionMonthly retentionDaily active users
MonetizationGross margin, LTV, revenueRevenue

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.

For example:

  • 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:

Rank Pillar Success metric Comment
1. Growth Number of subscribers month-over-month Important in the beginning to reach as many people as possible to inspire them to make the change
2. Engagement Subscribers retention Important as I want to keep the quality of content high
3. Retention Newsletter open rate
4. Monetization Revenue generated 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.

How to create GERM ranking step-by-step?

Product blocks newsletter is all about practical advice you can apply the next day. Below you will find a workshop recipe you can apply to your company that will result in your GERM ranking. I will also provide you with free slides you can use when you are communicating your GERM ranking.

Step 0️⃣ Use a companion document (optional)

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:

GEM model one-pager generated in Coda.
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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