Hacking Growth uncovers the methods of how some of the big companies compound wins over time. It focuses on customers—How to acquire, activate, retain monetize them. It is a practical method for growth, involving close working of the cross-functional teams, data-mining for insights, and continuous testing to achieve more consistent, replicable, and data-driven results
The 4 Steps to Driving Growth
- Build Growth Teams
It’s a cross-functional team
- Managed by a Growth Lead: Part Manager, Part Product-owner, Part Scientist. Lead needs to have fluency in data analysis; expertise or fluency in product management and an understanding of how to design and run experiments
- Other Team-members: Product Manager, Marketing Specialists, Software Developer(s), Data analyst(s), Product Designer(s)
- Make sure your Product is a ‘Must-Have’. Identify an aha moment that users love
- Creating a must-have product is the baseline requirement for rapid and sustainable growth— a product that people absolutely love; ‘can’t live without’ (vs. just ‘good enough’)
- One must not move into the high-tempo growth experimentation push until one know one’s product is must-have, why it’s must-have, & to whom (what’s the core value, to which customers, why)
- Two-part assessment to find out if your product is a Must-Have
- Must-Have Survey: How disappointed would you be if this product no longer existed tomorrow? Options—(a) Very disappointed (b) Somewhat disappointed (c) Not disappointed (it really isn’t that useful) (d) N/A—I no longer use it. Get at least a few hundred responses. If ‘very disappointed’ ≥ 40%, then the product is a ‘Must-have’. If not many Beta users, then better do Customer Interviews
- Assess the product’s retention rate: Tracking the no. of users who churn (weekly/monthly basis). Shorter time horizon helps deduce how many users are making the use of the product a habit
- Get out of the building to find out what your customers really want from you and your product, what the true objections and barriers are to your product’s success. Be dispassionate about your product. Listen and observe, don’t pitch
- Track the complete path of what a customer does—from first visit to making first purchase and then subsequent ones. Look for the behaviours that differentiate those customers who find your product ‘Must-have’ from those who don’t
- Remember sometimes, “You often don’t know what you’re looking for until you find it”
- Identify your Growth Levers –
- Focus on the right levers of growth at the right time. Be rigorously scientific in identifying the kind of growth you need and the levers that will drive it
- Understand which metrics matter most for your product’s growth. Develop your ‘fundamental growth equation’. To find out essential metrics, identify the actions that correlate most directly to users experiencing the core value of your product. E.g. Uber—essential metric, no. of rides completed. So in addition to the no. of new people downloading the app, Uber would want to track in the no. of rides being booked, the no. of riders who return and rebook, and the frequency with which they are booking new rides
- Develop dashboards to report only the most important metrics that map to your growth levers. Present information in a way that is actionable. Use ratios
- Do Cohort analysis for deeper insights: Divide your customers or users into distinctive groups by a common trait
- Testing at High Tempo – Learning more by learning faster. More experiments, the more you learn
- Generally, big successes come from a series of small wins, compounded over time
- The Growth Hacking process is a continuous cycle comprising four key steps:
- Analyse—Do set of user surveys and a set of interviews, Analyse data and gather insights
What are my best customers’ behaviors? What are the characteristics of my best customers? What events cause users to abandon the app/product?
- Ideate—Create Idea Pipeline, ‘The best way to have a good idea is to have lots of ideas’. Discourage Self-censorship
- Idea Template: Idea Name, Idea Description (Who, What, Where, When, Why How), Hypothesis (cause & effect), Metrics to be measured (more than one, improvements in one metric come at the expense of others)
- Prioritise—Prioritise experiments (‘Hacks’) on the basis of hard data rather than assumptions. Make experiment selection a collaborative process
- ICE score system: Impact— the degree to which the ideas will improve the metric, Confidence— how strongly the idea generator believes the idea will produce the expected impact, and Ease— the time and resources needed to run the experiment.
- Other Score Systems: TIR—Time, Impact, & Resources, PIE— Potential, Importance, & Ease
- Test—Run the experiments & review results. Prerequisite—ability to both gather data on customer behaviour and measure product performance and the results of experiments
- Keep the experiment velocity high. Design Minimum Viable Test, then invest in more robust follow-on test
- Identify both the experiment group & the Control group—Not exposed to the experiment
- It’s critical that every experiment be designed to produce statistically valid results
- Analysis can only tell ‘what users are doing’, See patterns to know ‘why they’re behaving that way’
- When results are inconclusive, the best course is to stick with the original, or control, version.
- Do a growth meeting of 60 Minutes: Metrics review and update focus area (15 mins), Review last week’s testing activity (10 mins), key lessons learned from analyzed experiments (15 mins), Select growth tests for current cycle (15), check growth of ideapipeline (5 mins)
- US World War II commander General George Patton— “A good plan violently executed now is better than a perfect plan tomorrow.”
After the cycle, circle back to the ‘Analyse’ and decide the next steps. Look for early winners and invest. Quickly abandon those that show lacklustre results
Hacking the Customer Funnel
Use the above for different stages in the Customer Funnel: Acquisition Ò Activation Ò Retention Ò Monetisation. I haven’t summarised this section, as it is a set of ideas and examples. It’s best to read these
Avoid Growth Stalls:
Stalls are also often caused by companies
- Becoming overconfident of having secured a premium position in the marketplace
- Lose focus on their core products or services due to newly launched products
- Being complacent and failing to innovate in marketing efforts. This can happen by wrongly assuming, reached the limit of the results from their growth levers or potential of the pool of data
- Overlooking or disregarding organic channels of growth
One of the biggest challenges is breaking out of the bounds of currently successful ways of operating: the “if it ain’t broke, don’t fix it” mentality. Find ways to go beyond what’s “not broke” to in fact find something that works better
Other Key Points from the Book
- Bain & Company and Harvard Business School discovered— a 5% increase in retention leads to an increase in profits of between 25 and 95%, because just small gains in retention lead to compounding revenue growth the longer customers stick around
- 6 principles of persuasion from Robert Cialdini’s book ‘Influence’
- Reciprocity—People are more likely to do something in return of a favour
- Commitment and consistency—People who have taken one action are likely to take another
- Social proof—People look to the actions of others to help them make their own decisions
- Authority—People look to those in the position of authority to decide which actions to take
- Liking—People will do business more readily with people and companies they like
- Scarcity—People will take action when they are worried about missing an opportunity
- 7 core factors that make reviews and testimonials effective—CRAVENS: Credible, Relevant, Attractive, Visual, Enumerated, Nearby purchase points, and Specific
- Language/market fit: how well the language, you use to describe& market your product to potential Users, resonates with them & motivates them to give it a try. E.g. iPod: 1,000 Songs in Your Pocket
- attention span (the time one focuses on information online) is now 8 seconds (12 seconds in 2000)
- Effective rewards come in the form of status, access, power, and stuff (stuff being financial incentives or physical gifts). Good strategy is to blend tangible rewards, experiential and social ones
- To know how much to charge for a SaaS (software as a service), do a survey:
- At what price point does [product] become too expensive that you’d never consider purchasing it?
- At what price point does [product] start to become expensive, but you’d still consider purchasing it?
- At what price point does [product] start to become a really good deal?
- At what price point does [product] start to become too cheap that you’d question the quality of it?
Map the responses, and it would look like the below graph