Hi there -
Here is this week’s “1 principle, 2 strategies, and 3 actionable tactics” for running lean…
1 Universal Principle
“Make Happy Customers.”
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The universal job of every business is to make happy customers.
Years ago, I drew inspiration from Dave Mcclure’s Pirate metrics (AARRR) model and redrew it as a customer factory, which is one of three pillar mental models in the Continuous Innovation Framework:
Not only did the Customer Factory provide a better visualization over funnels, but it also opened the door to systems thinking — specifically constraints-driven risk prioritization.
But over the years, new questions emerged, such as:
- How do you model products with more complex sales and customer success motions?
- How do you visualize growth loops?
- How do you distinguish prospect vs. user vs. customer referrals?
So, I redrew or extended the model while ensuring it still passed the 1-page test.
2 Underlying Strategies at Play
I. The Dual-System Customer Factory.
The current Customer Factory visualization captures the journey from unaware visitors to happy customers as a single system.
But as attention and trust have become increasingly harder to earn across every type of business, I believe that most products today should model their Customer Factories as a dual-system factory made up of:
- A Customer Acquisition Factory whose job is to turn unaware visitors into committed customers, i.e., they’ve “bought” your offer.
- A Customer Success Factory whose job is to onboard the customer, get them to value, and potentially upsell/expand further.
A Dual-system Customer Factory model maps perfectly to the bowtie funnel concept popularized by Jacco van der Kooij (Winning by Design), sometimes also described as the land and expand model:
As I stated above, I don’t believe this is limited to just complex B2B:
In B2B:
- The Customer Acquisition Factory captures the journey from marketing to sales to a closed deal waiting for the pilot to start.
- The Customer Success Factory is the handoff from sales to the product team, which then onboards and drives the customer to first- and repeated-value.
In B2C:
- The Customer Acquisition Factory captures the journey from visitors (e.g., on Instagram) to leads (e.g., engaged with post/ad) ordering a product online.
- The Customer Success Factory is what happens from unboxing the product to the first-use and value moments.
II. Growth loops are feedback loops from output to input.
Sustainable growth comes from reinvesting byproducts of happy customers towards the acquisition of new customers.
This can be simply visualized as a feedback loop from the Customer Success Factory to the Customer Acquisition Factory:
The simplest byproduct of happy customers to recognize is a referral, but two other categories of byproducts can also be used to create a growth loop:
- Revenue: As you optimize the lifetime value of existing customers, you can reinvest profits toward paid customer acquisition campaigns like performance marketing (ads), SEO, or hiring salespeople.
- User-generated Content/Data: If your customers generate valuable and shareable content or data, you can leverage it for new customer acquisition. Examples here are review sites, YouTube, Pinterest, etc., where the value of the business model benefits from network effects.
Growth loops are a big topic I’ll cover in more depth in future issues.
So what does this 2-stage Customer Factory look like? Without further ado:
3 Actionable Tactics
I. Map out all the steps into measurable user actions.
There are many more steps than before, but they should all be as easily accessible as before.
It’s critical to map these into specific user actions you can measure and turn into a company-wide dashboard.
Here's an example:
CLICK HERE to download this template
II. Baseline weekly.
I recommend a weekly measurement cadence for most products. A steady state quickly sets in, helping you confront your current reality.
This is a necessary precondition for growth.
III. Optimize systematically.
With a habit of measurement established, you’ll be in the best position to systematically focus on what matters versus throwing darts everywhere.
This is another big topic that is worthy of future issues. My goal today was to introduce you to the new Dual-system Customer Factory update.
I’d love to get your feedback. Reply and let me know if you found it helpful.
That's all for today. See you next week.
Ash
Author of Running Lean and creator of Lean Canvas
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P.S.
If you’re still new to the Customer Factory model, here’s a little primer: