Definition:
Tests how new customers will discover a product or service. Your growth hypothesis needs to explain your business’s strategy in obtaining and retaining customers, so it can eventually transform those customers into a sustainable source of cash flow.
Ries lays out three separate engines of growth for a startup to determine how customers are going to buy their product:
- The Sticky Engine of Growth. This concept is maintaining a greater organic customer growth rate than your customer churn. Basically, customers gained > customers lost, therefore net new customers increases.
- The Viral Engine of Growth. Here we have relying on existing customers and word of mouth to spread news of your product and essentially carry out your advertising for you.
- The Paid Engine of Growth. Lastly, we have paid advertising. TV commercials, billboards, magazine ads, etc. Enough said.
Further Reading:
Book: The Lean Startup by Eric Ries