5 questions to ask when your product stops growing | Jason Cohen (2x unicorn founder) · Lenny's Podcast: Product | Career | Growth summary

Key takeaways

Stalled growth can often be diagnosed by evaluating customer retention, pricing, and marketing strategies.
Logo churn, or customer retention, is critical to understanding growth potential and must be closely monitored.
Pricing and positioning are vital; businesses often underprice their products without realizing it.
Net Revenue Retention (NRR) sheds light on existing customer success and should be actively managed to encourage growth.
Understanding and identifying saturated marketing channels can help in developing new strategies for customer acquisition.
It’s essential to regularly question the necessity of growth and align it with the company’s values and goals.

Summary

Diagnosing Stalled Growth

Jason Cohen outlines a five-step framework for diagnosing why product growth stalls. He emphasizes the importance of asking the right questions related to customer retention, pricing, revenue from existing customers, marketing channels, and the necessity of growth itself. Understanding these aspects helps teams pinpoint their growth issues.

Customer Retention: Logo Churn

The first question to ask is whether customers are leaving. Cohen stresses tracking logo churn because lost customers can seriously impede growth. He introduces a model for estimating the ceiling of potential customers based on churn rates and advises on effective cancellation surveys to extract real feedback.

Pricing and Positioning Strategies

Cohen discusses how incorrect pricing can limit growth. Many startups set prices based on assumptions rather than data. He encourages founders to constantly evaluate and reposition their offerings based on customer perceptions and market needs.

Net Revenue Retention (NRR) and Activation

Cohen highlights the importance of NRR in assessing the strength of existing customer relationships. He advocates focusing on customer activation and value delivery to help existing customers grow, as well as creating strategies to encourage upgrades.

Marketing Channel Saturation

Cohen explains that marketing channels can reach saturation points where growth stalls. He advises businesses to evaluate their channels' effectiveness critically and to explore new strategies or channels for customer acquisition.

Do You Need to Grow?

The final question in Cohen's framework prompts leaders to reconsider the necessity of growth itself. He advocates for a thoughtful assessment of whether a product or business should prioritize growth or focus on sustainability and customer satisfaction instead.

Show notes

Jason Cohen is a four-time founder (including two unicorns, one being WP Engine) and an investor in over 60 startups, and has been sharing his lessons on company building at A Smart Bear for nearly 20 years. In this episode, Jason shares his methodical five-step framework for diagnosing stalled growth—a problem that faces almost every team.

We discuss:

1. Jason’s five-step framework: logo retention, pricing, NRR, marketing channels, target market

2. A small tweak that’ll double response rates on your cancellation surveys

3. Why “it’s too expensive” is almost never the real reason customers cancel

4. The “elephant curve” of growth

5. How repositioning the same product can increase revenue 8x

6. When to reconsider if growth is even the right goal for your business

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Episode transcript: https://www.lennysnewsletter.com/p/why-your-product-stopped-growing

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Archive of all Lenny's Podcast transcripts: https://www.dropbox.com/scl/fo/yxi4s2w998p1gvtpu4193/AMdNPR8AOw0lMklwtnC0TrQ?rlkey=j06x0nipoti519e0xgm23zsn9&st=ahz0fj11&dl=0

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Where to find Jason Cohen:

• Preorder Jason’s book: https://preorder.hiddenmultipliers.com/

• X: https://x.com/asmartbear

• LinkedIn: https://www.linkedin.com/in/jasoncohen

• Blog: https://longform.asmartbear.com

• Website: https://wpengine.com

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Where to find Lenny:

• Newsletter: https://www.lennysnewsletter.com

• X: https://twitter.com/lennysan

• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/

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In this episode, we cover:

(00:00) Introduction to Jason Cohen

(05:19) Jason’s writing journey

(08:25) Questions to ask when your product stops growing

(18:17) Getting real customer feedback

(20:27) Analyzing cancellation reasons

(26:54) Onboarding and activation

(29:35) Quick summary

(35:46) Revisiting pricing strategies

(41:46) Positioning strategies

(47:52) Why pricing is inseparable from your strategy

(52:06) The importance of net revenue retention (NRR)

(01:00:25) Asking whether or not this is good for the customer

(01:04:34) Leveraging existing customers

(01:06:42) Are your acquisition channels saturated? The “elephant curve”

(1:09:41) Why all marketing channels eventually decline

(01:12:04) Direct vs. indirect marketing channels

(1:13:36) Getting creative with new channels

(01:19:04) Do you actually need to grow?

(01:25:57) Deciding when to quit

(01:29:27) Book announcement

(01:33:21) AI corner

(01:34:35) Contrarian corner

(01:37:43) Lightning round and final thoughts

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Referenced:

• Tyler Cowen’s website: https://tylercowen.com

• How to Perform a Customer Churn Analysis (and Why You Should): https://www.groovehq.com/blog/learn-from-customer-churn

• Linear: https://linear.app

• Jira: https://www.atlassian.com/software/jira

• Patrick Campbell’s post on X about pricing: https://x.com/Patticus/status/1702313260547006942

• The art and science of pricing | Madhavan Ramanujam (Monetizing Innovation, Simon-Kucher): https://www.lennysnewsletter.com/p/the-art-and-science-of-pricing-madhavan

• Pricing your AI product: Lessons from 400+ companies and 50 unicorns | Madhavan Ramanujam: https://www.lennysnewsletter.com/p/pricing-and-scaling-your-ai-product-madhavan-ramanujam

• Pricing your SaaS product: https://www.lennysnewsletter.com/p/saas-pricing-strategy

• M&A, competition, pricing, and investing | Julia Schottenstein (dbt Labs): https://www.lennysnewsletter.com/p/m-and-a-competition-pricing-and-investing

• “Sell the alpha, not the feature”: The enterprise sales playbook for $1M to $10M ARR | Jen Abel: https://www.lennysnewsletter.com/p/the-enterprise-sales-playbook-1m-to-10m-arr

• Buffer: https://buffer.com

• AG1: https://drinkag1.com

• How to find hidden growth opportunities in your product | Albert Cheng (Duolingo, Grammarly, Chess.com): https://www.lennysnewsletter.com/p/how-to-find-hidden-growth-opportunities-albert-cheng

• How Duolingo reignited user growth: https://www.lennysnewsletter.com/p/how-duolingo-reignited-user-growth

• The Elephant in the room: The myth of exponential hypergrowth: https://longform.asmartbear.com/exponential-growth

• HubSpot: https://www.hubspot.com

• Zigging vs. zagging: How HubSpot built a $30B company | Dharmesh Shah (co-founder/CTO): https://www.lennysnewsletter.com/p/lessons-from-30-years-of-building

• Adjacency Matrix: How to expand after PMF: https://longform.asmartbear.com/adjacency/

• Ecosystem is the next big growth channel: https://www.lennysnewsletter.com/p/ecosystem-is-the-next-big-growth

• ChatGPT apps are about to be the next big distribution channel: Here’s how to build one: https://www.lennysnewsletter.com/p/chatgpt-apps-are-about-to-be-the

• 10 contrarian leadership truths every leader needs to hear | Matt MacInnis (Rippling): https://www.lennysnewsletter.com/p/10-contrarian-leadership-truths

• Breaking the rules of growth: Why Shopify bans KPIs, optimizes for churn, prioritizes intuition, and builds toward a 100-year vision | Archie Abrams (VP Product, Head of Growth at Shopify): https://www.lennysnewsletter.com/p/shopifys-growth-archie-abrams

• Geoffrey Moore on finding your beachhead, crossing the chasm, and dominating a market: https://www.lennysnewsletter.com/p/geoffrey-moore-on-finding-your-beachhead

• ER on Prime Video: https://www.amazon.com/ER-Season-1/dp/B0FWK5WJQ4

• The Pitt on Prime Video: https://www.amazon.com/The-Pitt-Season-1/dp/B0DNRR8QWD

• Wispr Flow: https://wisprflow.ai

• Anker: https://www.anker.com

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Recommended books:

• Will: https://www.amazon.com/Will-Smith/dp/1984877925

• Monetizing Innovation: How Smart Companies Design the Product Around the Price: https://www.amazon.com/Monetizing-Innovation-Companies-Design-Product/dp/1119240867

• Hidden Multipliers: Small Things That Accelerate Growth: https://preorder.hiddenmultipliers.com

• On Writing Well: The Essential Guide to Mastering Nonfiction Writing and Effective Communication: https://www.amazon.com/Writing-Well-Classic-Guide-Nonfiction/dp/0060891548

• Crossing the Chasm, 3rd Edition: The Updated Version of the Insightful Guide on Bringing Cutting-Edge Products to the Mainstream: https://www.amazon.com/Crossing-Chasm-3rd-Disruptive-Mainstream/dp/0062292986

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Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email [email protected].

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Lenny may be an investor in the companies discussed.

To hear more, visit www.lennysnewsletter.com

5 questions to ask when your product stops growing | Jason Cohen (2x unicorn founder)