Growth levers: what it is and what to do instead

The idea worth keeping

Not as boxes to fill, but as questions that fall out of the maths of the goal:

• What equation does this business grow by (for software, new plus expansion minus churn)?
• How much does each term add or take away each year?
• Which term is furthest from where it should be?

Why reaching for it fails in an interview

• It is generic. The same six levers can be read out for any company.
• It misses the driver that matters. For subscription software, customers lost each year can cancel out most new sales, and a list of levers does not show it.
• It sounds rehearsed. A list read in the same order every time sounds learned, especially without numbers.

What to do instead: a worked case

1. 1

   Pin the question

   Find how to add 10 million of ARR a year instead of the 5 million the business adds today.

2. 2

   Write the maths of the goal

   • ARR at year end = ARR at start + new customer ARR + expansion ARR minus churned ARR
   • Today, each year: +10 new, +2.5 expansion, minus 7.5 churn = +5 million, which reaches only 65 million in three years
3. 3

   Use what you know about the business

   • Small businesses cancel software often, because many close or switch, so churn is the term to watch.
   • Selling add-ons such as payroll to existing customers costs far less than winning new ones.
   • Software firms track net revenue retention: what existing customers pay this year compared with last year.

   The structure that falls out of it

   • New customer ARR (+10 a year)
     • Leads
     • Conversion
     • Price
   • Expansion ARR (+2.5 a year)
     • Add-ons sold to existing customers
   • Churned ARR (minus 7.5 a year)
     • Why customers leave
     • Which segments leave most

   Hypothesis: Churn is eating most of new sales, so cutting churn and selling add-ons will add more than chasing new customers.

4. 4

   Find the facts that decide it

   • Cutting churned ARR from 7.5 to 5 million a year (onboarding help and annual contracts) adds 2.5 million a year.
   • A payroll add-on doubling expansion from 2.5 to 5 million adds 2.5 million a year. Together: 10 + 5 minus 5 = +10 million a year, reaching 80 million in three years.
5. 5

   Say so what

   Reach 80 million mainly through existing customers: cut churn from 7.5 to 5 million a year and double add-on sales with payroll, which together lift growth from 5 to 10 million a year without spending more on winning customers. The risk is that payroll needs local tax rules, so launch it first in the biggest market.

Build the acumen behind it

The worked case used two things a list cannot give you: the five moves, and knowing how this kind of business makes money. These pages teach both.