Hacking Growth - Key Takeaways

So… How to hack growth?

It’s pretty hard, actually. This book is not a secret formula to success, not a “silver bullet”, not a tool, not even a business strategy or ongoing process.

It’s a philosophy, a way of thinking that has driven the success of the fastest-growing Silicon Valley “unicorns” like Facebook, Uber, Airbnb, LinkedIn, Twitter, Dropbox, PayPal, Pinterest, BitTorrent and many more.

Those companies haven’t achieved this growth with an idea so brilliant that took the market by storm, far from it. “In reality, their success was driven by the methodical, rapidfire generation and testing of new ideas for product development and marketing, and the use of data on user behavior to find the winning ideas that drove growth.”1

What these companies have in common are the following three core elements: cross-functional team, use of qualitative research and quantitative data analysis, rapid generation and testing of ideas.

Sean, like Russell, mentions the importance of marketing. The “Field of Dreams” fallacy, which is still too popular in the start-up community, is that if you have a standout product the customers will come. It’s not true.

The book is divided into two parts:

1- The Method: general introduction to the process.

2- The Growth Hacking Playbook: detailed set of tactics for how exactly to implement the method.

Part I: The Method

Building Growth teams

We often see companies working in silos. For example, Marketing being responsible for acquisition, and Product & Engineering working on activation and retention. These structures rarely collaborate, resulting in knowledge being locked in groups.

The result is that even though engineers and product designers are capable of finding outstanding ways to satisfy customers’ needs, they simply don't know what those needs are.

To break these barriers, it’s essential to have a cross-functional team to accelerate collaboration and motivate team members to appreciate and learn more about the perspectives of the others.

Who needs to be in the team:

Growth lead: a growth team needs a leader, who is like a battalion commander.

Product manager (Optional): a good product manager is the CEO of the product. His role in the growth team is to break down the silos between departments, and to contribute to the idea generation process.

It’s optional because this role varies from organization to organization.

Software engineers: they will write the code of the experiments and features, they will also contribute to the idea generation process.

Marketing specialist (Optional): the marketing expertise will vary according to companies preferred channel of communication.

Growth team can operate without one, but is highly recommended for optimal results.

Data analysts: which is not an intern that knows Google Analytics, the team needs a person that understands how to collect, organize, and then perform sophisticated analysis on customer data.

Doesn’t have to be full-time, but if the company can afford it, it’s ideal.

Product designer: responsible for developing the screens and sequences that users experience with the software. They can also help to generate ideas for testing.

The size and scope of growth teams varies from company to company. It could be as general as growing the entire business with hundreds of employees, or just a specific part of the product with only one staff.

What the growth team should do. It’s a continuous cycle of four steps:

(The Growth Hacking Cycle)

1- Data analysis and insight gathering

2- Idea generation

3- Experiment prioritization

4- Running the experiments

It’s imperative that a high-level executive supports the team, to assure the team the authority to cross the bonds of the established departmental responsibilities.

There are two common reporting structures: to the CEO and to the VP of Product.

A growth hack to start growth hacking: start small, a small team focused on one product, or a sign-up page. And then scale from that.

Determining if your product is a must-have

If your product is not a must-have, do not start growing it, because it will not be sustainable.

The aha moment: the moment that the utility of the product really clicks for the users, when they discover why that product is a “must-have”.

How to know if your product is a must-have: two steps.

1- Run this multiple question survey for you active users:

“How disappointed would you be if this product no longer existed tomorrow?

a) Very disappointed

b) Somewhat disappointed

c) Not disappointed (it really isn’t that useful)

d) N/A–I no longer use it”

If 40% or more responses are “very disappointed”, you achieved the must-have status.

If 25%–40% responses are “very disappointed”, some tweaks in the product often is enough for you to get in the 40% mark.

If less than 25% answer “very disappointed”, you have a wrong audience or you need more substantial development before a growth push.

Important note: once growth has taken off, it’s not a good idea to even suggest to your customer that the product might be discontinued. So in this case, do not run this survey.

2- Measure retention

You need to know your retention rate, which is simply the number of people who continue to use your product over a given time.

It’s critical that you have at least seen the retention rate stabilize, which indicates that you have a set of users who sees the product as worthy of continuous use.

If you hasn’t achieved the must-have grade, you should do three things:

1- Additional customer surveying

2- Efficient experimental testing

3- A deep plunge into analysis of your user data

Identifying your Growth Levers

Having a must-have product is prerequisite for fast and sustainable growth, but not sufficient.

You want to focus your experiments on areas that will have the greatest impact in the last amount of time.

To focus on the metrics that matter, you need a fundamental growth equation. An example from Amazon:

Vertical Expansion ? Product Inventory Per Vertical ? Traffic Per Product Page ? Conversion To Purchase ? Average Purchase Value ? Repeat Purchase Behavior = Revenue Growth

The way to determine your essential metrics? is to identify the actions that correlate most directly to users experiencing the core value of your product.

On top of that it’s important to pick a North Star Metrics, which is the metrics that most accurately captures the core value you create for your customers.

But it’s not all about the numbers, because data tells you what users are doing, not why they’re doing it. Therefore it’s important to conduct user surveys or interviews, or both.

Testing at High Tempo

The companies that grow fastest are the ones that learn the fastest. The more experiments you run, the more you learn.

To maximize the number of experiments, it’s essential to follow a disciplined process that allows you to create a pipeline of good ideas and efficiently prioritize them. This assures continuous maximum testing speed without getting sloppy in your execution.

The Growth Hacking Cycle

Before launching it, you need:

1- Hold an initial meeting to explain to everyone on the team how the process will work

2- Set up the proper analytics instrumentation

3- Set a goal for the volume and tempo of experiments to launch each week

4- Discover the aha moment

5- Formulate the growth equation

6- Determine the North Star Metric

7- Kick off the high-tempo growth hacking process

Stage 1: Analyze

1- Analyze the data and survey users

2- Prepare for the Growth Meeting

Stage 2: Ideate

1- All members should submit as many ideas as possible for hacks to try to improve the metrics

2- Get ideas from people outside the team and company if possible

Stage 3: Prioritize

Plenty of different ways of doing it. Some to consider:

1- ICE score system: Impact, Confidence, and Ease

2- TIR system: Time, Impact, Resources

3- PIE: Potential, Importance, Ease?

Scoring system is not fail-safe, because expectations for the result of ideas aren’t foolproof.

Stage 4: Test

Use 99 percent statistical confidence level.

In case of a tie, control always wins.

Part II: The Growth Hacking Playbook

Hacking acquisition

Work on two additional types of fit:

1- Language/market fit: how well the way you describe the benefits of your product resonates with your target audience.

2- Channel/product fit: how effective the marketing channels are that you’ve selected to reach your intended audience with your product.

Hacking activation

Three essential steps every growth team must take in order to identify the highest-impact activation experiments to run.

1- Identify each point in your customers’ journey to the aha moment.

2- List all the steps that new users must take in order to have the aha moment.

3- Calculate the conversion rates for each step on the way to the aha moment.

Hacking retention

5 percent increase in customer retention rates increase profits by anywhere from 25 to 95 percent.

Retaining customers most fundamentally depends upon providing them a must-have experience.

The retention breaks down into three phases of retention: initial, medium, and long-term.

1- Initial retention period: the critical time during which a new user either becomes convinced to keep using or goes dormant after one or a few visits.

2- Medium retention phase: period when the interest in a product’s novelty often fades.

3- Long-term retention: assuring that a product keeps offering customers more value.

Hacking Monetization

The basics of increasing revenue per customer vary according to a company’s business model.

First step: perform data analysis that will help you find the highest-potential experiments.

Second step: Analyze where the company is making the most money, and where there seem to be pinch points, steps where potential earnings are lost.

A Virtuous Growth Cycle

Driving growth is a job that is never truly done.

One of the greatest threats to long-term success is when companies aren’t vigilant enough about responding to the changes in their market. Such lapses often lead to a company experiencing a growth stall.

Certain species of sharks must always keep moving to survive. Growth teams are like those sharks.

Growth hacking is a philosophy that can be adopted in any team or company, big or small.

Conclusion

If you are reading this phrase, thank you for getting here!

I hope this helps you become a better marketer.

This article is a quick 1,500+ words overview of a ~280-page book.

Even though it touches on the main parts of the book, I’ve omitted several important topics.

In this review, I gave more focus on “Part 1: the method”, so to see all the tactics of part 2 I highly recommend you to read the book.

Actually, if you are a marketer, you should definitely buy it.

Index

1- Hacking Growth. Page 11,12