How to grow your start-up, product or company – what you could learn from ‘Hacking Growth’ by Sean Ellis (2017, 276 pages)
How did companies like DropBox, Airbnb and Facebook attract many more customers than their competitors?
In their book, ‘Hacking Growth’ Sean Ellis and Morgan Brown argue that successful high growth companies keep running bold experiments which focus on delivering additional value for the customer and find ways to use these insights to achieve an ambitious, and specific, goal (frequently number of active users or revenue).
The book argues that successful growth hackers do three things:
- Create cross-functional teams the breakdown marketing and product development silos
- Use qualitative research and quantitative data analysis to gain profound insights into customers behaviour and preferences
- Rapid generation and testing of ideas, and use of rigorous metrics to evaluate, and then act
Build the team
Building a team that has the expertise and can execute across the entire funnel (see below). Communicating in networks is also more important than raw talent, so prioritise communication and interpersonal skill over ability.
Research to identify key growth levers
Understanding what features your customer’s use and value, will allow you to expose these features to more customers or use them to drive higher referrals (by offering more), or higher revenue (by charging for these specific features). To do this well, you will need the right monitoring, reporting and metrics, and also a large enough volume to make any experiments statistically significant (aim for 99% confidence interval). To make growth hacking easier, you will need to identify a master matric or North Start to focus your experimentation, this could be revenue, market penetration or the number of users.
Test, test, test
Create a backlog of bold hypotheses for your best and worst customers main behaviours. Prioritise using a set of criteria (usually impact, confidence, ease). Start with the highest priority and then go from there. At first, minimise the number of things that are being tested, but always use a control.
Types of hacking
How you approach growth hacking, will depend on your north star matric that you want to improve, acquisition, activation, retention or monetisation.
- Craft a compelling message. The right message will help you communicate your value and identity to potential customers.
- Start small. Find the customers where you solve a problem better than anyone else, then, use these customers to grow your user base.
- Find the right channel. Analyse your key customers to determine how best to find and interact with your key customers.
- Find the minimum awesome features. Start with a few features, and test and experiment how adding features impact growth. This way you do not create unnecessary complexity.
- Make referrals benefit everyone.
- Find the aha moment. What is the feature makes users come back again and again?
- Make the funnel visual. Map out the conversion funnel, get accurate metrics, and focus on those that convert.
- Have the right amount of friction. Minimise any friction that does not add value to the customer, but positive friction may increase conversion.
- Experiment with possible triggers. Experiment with prompts to encourage users to activate or return. Vary time, content and offer to see how these impact activation.
- Separate initial (used the product a few times), medium (used the product a lot) and long-term (at a natural break, i.e., after a year) retention. Focus on these as three separate problems.
- Benchmark against your peers. Find research or speak to similar companies about their conversions.
- Analyse based on cohorts. Break down your customers into separate groups (you can use time, demographic, product, origin) and understand how and why these groups may have different retention rates.
- Optimize for lifetime value (LTV). Move away from focusing on transactional value, LTV will be much higher.
- Map the monetisation funnel. Showing where customers drop-off or spend more, will allow you to better understand what is valuable to your customers.
- Analyse based on cohorts. Gain, ensure that your analysis is granular enough to provide meaningful insights.
- Use algorithms to cross-sell, up-sell. Next product to buy algorithms (e.g., using a Jaccard Index), is a great way to expose the right product to customers.
Hacking Growth is a compelling guide to help your product grow. Using several well-known case studies, the book analyses why AirBnB, Facebook and others are so successful, and provide simple frameworks and tips for you to use. Read this book, to help you grow your business.
You can access the Growth Hackers website here.
You can get the book here on Amazon UK.