Finding the step that is actually limiting your growth

"I'd rather have 50 people buying weekly than 500 people buying once."

That was the co-founder of NoWall, a bootstrapped brand selling natural protein bars online, answering our question about where she wanted the business to get to. Her answer was not a customer count or revenue number. She wants people obsessed with her product.

A few minutes earlier, she had told us that around half of their customers are returning customers.

So the thing she cares most about already works. People who buy once come back. What the business does not have is enough people taking the first step: paying for something they have never tasted.

The step you care about is not always the step that is limiting you

A founder has a picture of the business they want, and that picture has a feeling attached: a community, a product that lives in someone's cupboard, customers who come back without being asked. So it's normal that attention goes to the parts of the funnel that produce that feeling. Retention. Loyalty. Content that makes people feel part of something.

None of that is wrong. But it only matters if it is what currently stands between you and your goal. For NoWall, repeat purchase was already healthy. More work on it would make a good number slightly better, while the number that limits the business, new customers, would stay where it is.

Growth is a chain of steps:

Someone hears about you
They decide to try your product or service
They buy it
They use it
They come back

You lose people at every step, but not evenly. Usually, there is one step where a larger portion of people drop out, and that is the step holding your numbers down. Fixing it gets you more customers. Fixing a step that is already working well, like repeat purchase at NoWall, won't make that big of a difference.

Where this idea comes from

We borrowed this from Matt Lerner, who was on the early growth team at PayPal and wrote Growth Levers and How to Find Them. He calls it the rate-limiting step, an idea he says he borrowed from the theory of constraints in operations management.

In his First Round Review interview he puts it this way: in any process "there's a narrowest point in the throughput", so "you find that bottleneck and you address that", and "if you apply resources anywhere else, it's wasteful and inefficient."

The part we find most useful is his observation about where attention naturally goes. When customers are happy but growth is flat, product people reach for more features when the real issue is usually go-to-market. And teams often skip the fix that would work because they tried something like it before and dismissed it. In his words:

"You probably already have the right answer and you probably just don't like it."

Why a healthy percentage can still hide the problem

The returning-customer figure is a good example of how a step can look fine and still be where the problem sits. Here is an example with illustrative numbers.

Say 10,000 people see your brand in a month. 2% of them buy, so you get 200 first orders. Half of those people come back, so you end the month with 100 repeat customers.

Now compare two months of effort:

Metric	Baseline	Push repeat rate 50% to 60%	Push first purchase 2% to 3%
People reached	10,000	10,000	10,000
First orders	200	200	300
Repeat customers	100	120	150
New repeat customers gained		+20	+50

Lifting the repeat rate by ten points can mean a mix of things like: a loyalty scheme, a community, better follow-up after the first order. If you work on that, it adds 20 repeat customers. Lifting first purchase by a single point adds 100 first-time buyers and, at the same repeat rate, 50 more repeat customers.

The table shows two things. More first-time buyers also means more repeat buyers, because every repeat buyer started as a first-time buyer. And 50% returning is a good rate, but half of a small number is still a small number. The rate tells you the step works. It does not tell you enough people are reaching it.

Worth doing versus moving the number

Several good ideas were on the table in the session. Sampling at events and running clubs, so people can taste the product before they buy. Educational content, because some people assume protein bars are only for serious athletes. Building the community the founder wants. All three are sensible.

With limited money and time, the question we would ask of each one is: does this move the limiting step right now? When the returning-customer rate is already healthy, the ones that pass are the ones that get more first purchases. Sampling that leads to a first order counts. Content that makes a stranger comfortable enough to buy counts. Work that mainly makes existing customers feel closer to the brand can wait until acquisition is no longer the constraint. That means saying "not yet" to the work you find most appealing, which is the hard part.

How to find yours

This is how we do it, based on Matt Lerner's method.

Write down the five or six steps a stranger goes through to become the customer you want, from first hearing about you to whatever defines a "good" customer in your business.
Put a rough number against each step for last month. Rough is enough. If you have to guess one, guess it and mark it.
Ask of each step: if this doubled and nothing else changed, would the outcome I care about move?

Usually one step gives an obvious yes and the rest give a shrug. That is your limiting step. Be suspicious if it turns out to be the one you were already most excited about; that happens less often than you would hope.

One thing to watch for: the limiting step moves. Fix acquisition and another step becomes the constraint, so run the exercise again in a few months rather than treating the first answer as permanent.

You cannot find the limiting step without the goal

None of this works without a goal. "Limiting" only means something relative to a destination. The step that limits "double revenue in a year" is not necessarily the step that limits "triple revenue next month".

What to do this week

If you want to try this on your own business: list the steps someone goes through to become your customer, write a rough number from last month next to each one, and ask which step would change your result the most if it doubled. Then spend next month on that step.

If you want to see the whole conversation this came from, the recap of our first Growth Office Hour covers the other four themes from the session.