Hacking Growth - Vignesh Prasad

- I had found that companies where more than 40 percent of respondents said they would be “very disappointed” if they could no longer use the product had very strong growth potential, where those that fell under that 40 percent threshold tended to face a much harder path in growing the business (due to user apathy). - This was a striking example of the Field of Dreams fallacy, still too popular in the start-up community; that is, the belief that all that’s needed is to build a standout product and “they the customers will come.” - “Growth was not about hiring 10 people per country and putting them in the 20 most important countries and expecting it to grow. Growth was about engineering systems of scale and enabling our users to grow the product for us.” - the creation of a cross-functional team, or a set of teams that break down the traditional silos of marketing and product development and combine talents; • the use of qualitative research and quantitative data analysis to gain deep insights into user behavior and preferences; and • the rapid generation and testing of ideas, and the use of rigorous metrics to evaluate—and then act on—those results. - Facebook’s vice president of growth Alex Schultz puts it: “If you’re pushing code once every two weeks and your competitor is pushing code every week, just after two months that competitor will have done 10 times as many tests as you. That competitor will have learned 10 times, an order of magnitude more about their product than you.” - increasingly tech-savvy consumers are tuning out. In fact, 69.8 million Internet users in the US (up 34 percent year over year), including nearly two out of three millennials, report using ad blocking software. - How bad has the crisis of traditional marketing become? A recent McKinsey study of publicly traded software companies showed absolutely no correlation between marketing investment and growth rates. Zero. - Growth hacking is also too often thought to be all about devising clever work-arounds that break the rules of existing websites and social platforms. But despite what the well-publicized story of Airbnb’s Craigslist hack would have you believe, flouting rules is by no means required and in fact plays no part in most growth success. That was a stroke of genius, but such “backdoor” tactics are not core to the method; and most growth professionals groan at the mention of the case. - This collaborative approach is unfortunately the exception, rather than the rule, at companies of all types and sizes. The all too common practice of siloing business units into isolated groups that rarely talk, share information, or, God forbid, actually collaborate, has been a widely acknowledged organizational Achilles’ heel at many companies for many years. As highlighted by a McKinsey report, one of the most damaging effects of departmental silos is that they slow innovation that drives growth. - a growth team needs a leader, who is like a battalion commander, with her boots on the ground, both managing the team and participating actively in the idea generation and experimentation process. The growth lead sets the course for experimentation as well as the tempo of experiments to be run, and monitors whether or not the team is meeting their goals. Growth teams should generally convene once a week, and the growth lead should run those meetings - The people who write the code for the product features, mobile screens, and webpages that teams experiment with making changes to are cornerstone members of a growth team. - While we should be clear that some growth teams operate without a dedicated member who is a marketing professional, we advocate including a marketing specialist for optimal results. The cross-pollination of expertise between engineering and marketing can be particularly fruitful in generating ideas for hacks to try. - The process is a continuous cycle comprising four key steps: (1) data analysis and insight gathering; (2) idea generation; (3) experiment prioritization; and (4) running the experiments, and then circles back to the analyze step to review results and decide the next steps. - Growth cannot be a side project. Without clear and forceful commitment from leadership, growth teams will find themselves battling bureaucracy, turf wars, inefficiency, and inertia. At start-ups, if the founder or CEO isn’t personally leading the growth efforts directly, then the team or teams should report directly to him or her. - Engineers tend to be most interested in working on the most technically challenging jobs, whether or not the solutions they come up with will have a meaningful impact on growth. Product managers are typically obsessed with product development and launches and can be infuriated by marketing and sales teams making last-minute requests for changes with poor business rationales. User experience designers often resist the introduction of experimental features for testing because they don’t want to upset happy users with annoyances. Marketers can become focused on vanity metrics such as the number of website visitors or leads and lose sight of the need to drive up the performance indicators in other parts of the funnel (such as user retention). - It’s just as important that the growth team machine not be put into drive too early. Because all the rapid experimentation in the world won’t ignite lasting growth if the product isn’t loved by the people who use it. While plenty of companies manage to eke out enough sales or user loyalty to stay alive with products that are merely satisfactory, or even sometimes clearly inferior, they’re on a trajectory to fail sooner or later. - One of the cardinal rules of growth hacking is that you must not move into the high-tempo growth experimentation push until you know your product is must-have, why it’s must-have, and to whom it is a must-have: in other words, what is its core value, to which customers, and why. (The exception to this rule being businesses such as social networks, where the core value is the people on the platform.) - This may sound blindingly obvious, but the fact is that it can sometimes take enormous patience, because the pressure to start pushing for growth is intense. For start-ups, that’s often due to demands from taking venture capital or, on the flip side, because the company needs to prove itself in order to raise capital, or generate revenue to keep the lights on. - “Often people think there’s a silver bullet to getting traffic and going viral,” he said. “What we’ve learned is that there are times when you can get some spike of virality, but if you really want that long-term major user growth it’s got to start with a good product. We realized, OK, we’ve got to really enhance the product and get users back every day. Don’t be an episodic utility, be a community. And now we’ve got to make that shift.” - If you’ve determined the product hasn’t made the grade, the first thing to do is to stop yourself from doing something that feels all too natural: guessing at what the elusive feature might be that may make your product more appealing to your customers. Sitting in an office with your smartest lieutenants and a whiteboard to hash out ideas for improvements may feel like exactly the right way to solve the problem, but trust us, that instinct is a head fake. It’s essential that you instead talk to users (on a deeper level than achieved through the aforementioned survey) to understand what the true objections and barriers are to your product’s success. - Josh Elman, for example, highlighted just four questions that the Twitter team asked users who had gone dormant and subsequently returned: (1) Can you tell us why you signed up in the first place?; (2) What didn’t work for you? Why’d you bail?; (3) What caused you to come back and try it again?; and (4) What worked this time? - James Currier, a successful entrepreneur and growth expert turned venture capitalist, suggests that one-third of a company’s engineering time goes to getting the new user experience down just right. Facebook, Twitter, and Pinterest even treat these new user experiences as different products from their main product offering, and have dedicated teams of designers, product managers, engineers, and growth leads just to perfect this one user experience. - Running lots and lots of tests of small changes, like button colors, isn’t the way to start practicing the growth hacking process. Instead, small teams must focus on those tests that promise to have the highest potential for impact first. Johns is emphatic on this point: “Seriously. Be dramatic. Don’t just move a button on a page. You may run that experiment, given that you have small traffic sizes, and because of the small lift, you may run that test for months or years. Produce dramatic lifts if you’re a young start-up.” - “If you can’t be extremely clinical and extremely unemotionally detached from the thing that you’re building, you will make these massive mistakes and things won’t grow because you don’t understand what’s happened.” - At GrowthHackers, Sean developed the ICE score system, with ICE standing for Impact, Confidence, and Ease, as a way to organize all the ideas generated in the ideation process of the cycle. Here’s how it works. - Reaching consensus is dicier when the results of a test are neither clearly positive nor negative, especially if running it involved a good deal of time and effort. No one likes to have wasted good work, and team members may want to let a test run much longer than is cost effective in the hopes that a larger sample size will change the current trend. While we understand why this is tempting, when results are inconclusive, the best course is to stick with the original, or control, version. - spending on online ads in the US has doubled since 2010,1 and what’s more, in the US, Canada, and Western Europe at least, the growth of the Web audience is slowing, which essentially means companies are spending (and will continue to spend) more money to chase fewer potential customers. - for network effect businesses the push for user acquisition typically must go hand in hand with product development.) - Website copy can be swapped out and tested relatively easily with tools like Optimizely and Visual Website Optimizer, which install a small piece of code on your website or app that randomly displays different versions of copy to your visitors and then measures and compares their responses. - Procter & Gamble’s Febreze, for example, was an honest-to-goodness breakthrough product: a chemical mixture that truly eliminates odors rather than just masking them with a pleasant scent. So when P&G launched it, they understandably touted this unique feature in their messaging, with the line “Febreze cleans bad smells out of fabrics for good.” Yet sales remained sluggish until P&G realized, through market research that included videotaping how avid buyers use the product, that the better positioning was as another product to use as part of your regular cleaning routine, in part to fill a freshly cleaned room with a pleasing scent. So P&G added scent and then repositioned the product in a major ad campaign showing women loving the way it smelled, and using language such as “for freshness that surrounds you like never before.” - you can come up with a helpful assessment of the degree of virality you’re much more likely to be able to achieve by using a very simple formula devised by Sean Parker, cofounder of Napster and former president of Facebook. He taught early employees at the social network that the virality of any product is controlled by three factors: payload, conversion rate, and frequency, which can be expressed by the simple rule: VIRALITY = PAYLOAD × CONVERSION RATE × FREQUENCY - in growth hacking, it’s crucial that you never assume why users are behaving as they are; rather, you’ve always got to study hard data about their behavior and then query them on the basis of observations you’ve made in order to focus your experimentation efforts most efficiently on changes that will have the greatest potential impact. Even if you think you understand what the barriers to activation are, the true story can be quite surprising. - For those who’ve browsed and bounced without giving you any contact info, a survey can be programmed to pop up right as browsing patterns indicate that they’re about to leave a page or screen (companies like Bounce Exchange, Qualaroo, Qualtrics, and others offer tools that can do this). - Is there anything preventing you from signing up at this point? • What concerns are keeping you from completing your order? • If you did not make a purchase today, can you tell us why not? • What information would you need to feel comfortable signing up today? - As former head of growth for Twitter Josh Elman, who we met earlier, says about the new user experience, “This is your moment. You have more attention than you ever will have again, from that user, to try to teach them what your product is really about. To really help them learn the product in a meaningful way.” Elman’s team designed something he dubbed the learn flow to enable Twitter to take advantage of this attention. Learn flow is Elman’s definition of a new user experience that’s designed to more than just sign people up, but rather purposefully educates new users about the product, its benefits and value, and how to use it in the process. - In a 2005 study, researchers for the Marketing Science Institute, Debora Viana Thompson, Rebecca Hamilton, and Roland Rust, found that companies routinely hurt long-term retention by packing too many features into a product, explaining “that choosing the number of features that maximizes initial choice results in the inclusion of too many features, potentially decreasing customer lifetime value.” - the power of using “charm prices,” those that purposefully end with a 9 or 99 or 98 or 95 instead of the full round dollar amount. Hard as it may be to believe, those pricing strategies actually work; Poundstone writes, “ In 8 studies published from 1987 to 2004, charm prices were reported to boost sales by an average of 24 percent relative to nearby prices.” - Too many companies set a price and then treat it as if it’s set in stone, when in reality the team should be continually experimenting with it just as they do with other elements of the business. - Unbounce charges for the number of visitors that come to the landing pages created through the software, and SurveyMonkey charges for the number of responses collected through their survey software; both are metrics directly tied to the value users are getting from the services. These metrics on which charges to customers are based are called value metrics. - Conversion expert Angie Schottmuller identifies seven core factors that make reviews and testimonials effective, for which she coined the acronym CRAVENS, which stands for Credible, Relevant, Attractive, Visual, Enumerated, Nearby purchase points, and Specific. - Facebook growth team ceased all experimentation and for a full month, January of 2009, invested in improving their analytics tracking, which allowed them to perform more refined and powerful data analyses. That was done in specific response to the dwindling number of ideas the team was coming up with for driving growth. By investing in deeper analytics insights, the team was able to better track and measure how Facebook users moved from page to page on the site. The new data unearthed a rich new vein of potential experiments for the team to try, fueling growth that propelled the company ever higher.