Understand channel-model fit and its impact on growth

Understand channel-model fit and its impact on growth

As a startup founder, achieving sustainable growth is crucial for the success of your business. One key factor in driving growth is Channel Model Fit, which refers to the alignment between your pricing model, average annual revenue per user (ARPU), and the marketing channels you choose. In this exercise, you will explore the concept of Channel Model Fit and gain insights into how it can impact your startup's growth trajectory.

Get Out of the ARPU-CAC Danger Zone with Channel Model Fit


Assess Your Pricing Model

  • Review your current pricing model or explore potential pricing options for your product or service.
  • Consider factors such as free vs. paid, freemium, transactional, subscription-based, or other monetisation strategies.
  • Reflect on how your pricing model aligns with your target market, value proposition, and overall business objectives.

Evaluate Average Annual Revenue Per User (ARPU)

  • Calculate or estimate your startup's average revenue per user (ARPU) by dividing your total revenue by the number of active users or customers.
  • Analyse your ARPU in relation to your pricing model and evaluate whether it adequately supports your business goals.
  • Consider if your ARPU falls within the low, medium, or high range compared to other businesses in your industry.

Explore Marketing Channel Options

  • Identify the marketing channels available to reach your target audience.
  • Evaluate the suitability of each channel based on your pricing model, ARPU, and target market characteristics.
  • Consider channels such as organic/paid search, social media, content marketing, partnerships, referrals, email marketing, events, or others relevant to your industry.

Assess Channel Model Fit

  • Determine the compatibility between your pricing model, ARPU, and the selected marketing channels.
  • Consider how your pricing model supports the cost-effectiveness and scalability of each channel.
  • Evaluate whether your ARPU can sustain the acquisition costs associated with the chosen marketing channels.

Adjustments and Iteration

  • Reflect on the findings of your Channel Model Fit assessment.
  • Determine if any adjustments are necessary for your pricing model, ARPU, or marketing channel selection.
  • Iterate your strategies to achieve better alignment and optimise growth potential.

Action Plan

  • Develop an action plan based on your assessment and findings.
  • Outline specific steps to optimise your pricing model, improve ARPU, and leverage the most suitable marketing channels.
  • Set measurable goals and milestones to track your progress.

Note: This exercise is designed to empower startup founders to independently assess and optimise their Channel Model Fit. Throughout the exercise, make sure to take notes, document your insights, and refer back to your findings as you refine your growth strategies. Remember, finding the right fit between your pricing model, ARPU, and marketing channels is key to driving sustainable growth for your startup.

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