February 7, 2022
Growth modelling is an indispensable scaling tool for Ladder. Its ability to accurately predict outcomes allows us greater control of our investments, people improvement and development, and client portfolio growth.
It can be applied to any business to achieve remarkable benefits, which we have written a detailed article about recently. Shortly after it was published, a reader commented with some very interesting questions: “I am just wondering how you developed and use your growth model in practice? Has it been developed by coders and data scientists or with no-code tools? Which tools have you used? Does it have a no-code interface to enter the parameters and see the results?”
We at Ladder appreciate nothing more than an opportunity to engage with our audience, and show them that we listen - so here’s a follow-up in which we’ll explain what our process looks like in practice!
There are two slightly different approaches here, one for our clients, and the other one for Ladder Digital itself:
On the client side, the first step is benchmarking the KPIs and metrics for the specific client based on industry, business model, geographical location, budget amount etc. To do this, we use our proprietary platform called GrowthBenchmarks.
Then, we build the model in an app called Causal or with Google Sheets:
For Ladder’s in-house solution, our CFO (which would be me) uses Excel to build a regression model. Yes, various econometrics tools do exist out there, but Excel does the job quite well.
Same as for our clients, we create dedicated cells as inputs. The inputs we use are the variables that provide a high significance in our model and have a P-value of less than 0.05.
As we change the inputs that contribute to our website traffic (high correlation between the variables and website traffic established), we can see how it affects the total traffic, leads, qualified leads, calls scheduled, and ultimately, closed deals won.
Once we have the closed deals won (Predicted fairly accurately, through our regression analysis model and the conversion rates), the revenue is automatically updated, and all the costs are updated automatically with each $ of revenue.
We can then use this data to understand if there is a need to hire people or if we can utilize the existing capacity to accommodate demand, overheads, etc.
For both of these approaches, the principles remain the same:
All the models we’ve built for 2022-2025 at Ladder are the base of our 5-year plan. Growth modelling has allowed both us and our clients to scale and grow by accurately predicting revenue and planning investments, as well as hiring.
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