Common growth mistakes that SEA startups make and how to fix them

Picture this: Your startup is growing like wildfire, and you feel certain it will dominate Southeast Asian markets in no time.

But then, your growth stalls and panic ensues. Now what?

While this is a hypothetical scenario, many regional founders and operators I speak to have been in similar situations. I’ve been there too and learned some key lessons from the mistakes I made in handling that situation.

A lot can get lost in the cracks when you’re moving fast. So when I work with startups today as a product and growth advisor, we first diagnose the top impediments to their growth.

Here are a few common mistakes I observe:

1. Weak retention

The startup’s cohort-based retention curves are declining instead of flattening or smiling.

In this case, there’s no point in growing the top of the funnel if there’s a “leaky bucket” further downstream. New customers you attract won’t stick around, anyway.

Other symptoms include poor word-of-mouth traffic and low customer satisfaction.

I once worked with a startup that was rolling out a product to reach a new customer segment. Despite a splashy marketing launch, it became obvious after a couple of months that customer churn was too high.

In response, the product team immediately went to work on closing gaps while the growth team paused their efforts to scale adoption.

Solution steps:

• Identify gaps between your customer needs and product value proposition.
• Fix these gaps quickly before scaling up customer acquisition.

2. Repeating ineffective tactics

It’s easy to fall into the trap of using the same growth tactics that have worked before. However, the reality is that what got you to this point won’t get you to the next milestone.

This is especially true when you’re going after a new growth channel, customer segment, market, or business model.

I’ve seen growth teams lean on familiarity, applying the same tried-and-true tactics when expanding to a new customer segment. However, they didn’t realize how the unit economics no longer made sense, which hurt the ability to scale.

Solution steps:

• Identify the new channels, segments, markets, and/or business models you plan to expand to.
• Adjust your growth strategies and tactics to fit your new targets. Will the same tactics work or do you need to adapt?

3. Vague customer segmentation

Conway’s Law says an organization’s output directly relates to how it communicates internally. In my experience, rapidly scaling startups struggle with this principle.

For example, product and go-to-market teams need to collaborate closely. Yet I frequently see these teams come up with totally different interpretations of these simple questions:

• Who are the buyers and users?
• What are their needs and pain points?
• Why do they choose our product vs. other solutions?

As a result, the two teams struggle to align on solution design and go-to-market efforts. Customers, in turn, find it difficult to navigate a Frankenstein system littered with inconsistencies.

Solution steps:

• Create a distinctive customer profile with specific needs, value propositions, and willingness to pay.
• The most crucial part: Get buy-in from both product and go-to-market teams before product development begins.
• You can then use the same parameters to inform your go-to-market plans.

4. Overreliance on one customer acquisition channel

Paid acquisition may be easier to scale, but it’s also addictive.

What ends up happening is that executives want to see something measurable, which tends to be paid. Organic channels get neglected because they’re less measurable.

Customer acquisition costs eventually increase because of higher channel competition. All of a sudden, the unit economics look poor.

Consequently, the startup digs itself a deep hole. It will inevitably need to fix its organic channels, anyway – something that it could have done many months ago.

Solution steps:

• Make sure you invest in at least one organic channel for long-term growth.
• You should also prioritize growth activities that you could execute without a paid acquisition budget.

5. Underinvesting in the next S-curve

Market adoption over time follows an S-curve pattern.

Sometimes growth stalls because you have picked all the low-hanging fruit, saturating the existing market segment. In such cases, you must find a new S-curve or risk falling behind.

The S-curve / Image credit: Dries Buytaert

Let’s take the Vietnam unit of Traveloka as an example.

One secret to Indonesia-based Traveloka’s early growth from 2014 to 2017 was “honest pricing.”

This unique feature differentiated Traveloka from its competitors until other online travel agencies copied it. Then the company’s growth slowed.

Fortunately, through iterative experimentation, Traveloka’s Vietnam unit discovered a new S-curve by investing in product expansion (hotels) and channel expansion (influencers). As a result, the business was able to grow multiple times over.

Presumably, this S-curve will plateau at some point too, forcing the Traveloka team to find another growth engine.

Solution steps:

• Timing is critical, so invest resources towards growth experimentation before your S-curve reaches its plateau.
• Figure out how you’ll unlock the next S-curve, whether it be customer segment, geography, channel, or product expansion.
• Execute quickly to build the next growth engine before your current one erodes.

Image credit: Timmy Leon

This article originally appeared on Tech In Asia and was based on this LinkedIn post.