Slow growth and churn can shrink ARR unless you hit the Growth Inflect

Read time: 4 minutes.

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Happy Monday!

Slow growth and churn can shrink ARR unless you hit the Growth Inflection Point(s).

1. Growth inflection points are critical milestones in a product’s journey.

2. They mark the transition from gradual or slow progress to exponential growth.

3. These points can derive from various factors, both internal and external.

𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐥 𝐅𝐚𝐜𝐭𝐨𝐫𝐬

1. Product Improvements

2. User Experience Refinements

3. Pricing Strategy

4. CAC Reduction

𝐄𝐱𝐭𝐞𝐫𝐧𝐚𝐥 𝐅𝐚𝐜𝐭𝐨𝐫𝐬

1. Market Trends

2. Industry Events

3. Competitor Movements

4. Cost of Capital

𝐒𝐨𝐦𝐞 𝐈𝐧𝐬𝐢𝐠𝐡𝐭𝐬 𝐟𝐫𝐨𝐦 𝐬𝐮𝐜𝐜𝐞𝐬𝐬𝐟𝐮𝐥 𝐬𝐭𝐚𝐫𝐭𝐮𝐩𝐬

[1] The majority of growth inflections come from a product improvement

[2] Decent number of growth inflections came from an unexpected external event without the product changing at all

[3] Many of the most durable inflections came from the company leaning into its primary growth model, predictable customer acquisition strategies and scaling it.

𝐅𝐢𝐧𝐚𝐥 𝐰𝐨𝐫𝐝𝐬

It’s important to note that long-term sustainable growth is never as simple as just one thing.

To build a sustainable business, you’ll eventually need to get these three pieces right:

[1] Ongoing product improvements to build something people want and need.

[2] Ongoing events that get the word out. It is important to capitalise on it faster.

[3] Predictable growth model that generates scenarios and simulation around CAC, Churn, and Growth capital to derive a Net Growth Rate.

That's it for today's article! I hope you found this essay insightful.

Wishing you a productive week ahead!

I always appreciate you reading.

Thanks,
Chintankumar Maisuria