Hacking Growth: How Today's Fastest-Growing Companies Drive Breakout Success

ISBN-13: 9780451497215

Media Type: Hardcover

Publisher: Crown Publishing Group

Publication Date: 04-25-2017

Pages: 320

Product Dimensions: 6.20(w) x 9.30(h) x 1.20(d)

Sean Ellis is CEO and cofounder of GrowthHackers.com, the number one online community built for growth hackers, with 1.8 million global users and over 350,000 new monthly visitors. Sean coined the term "growth hacker" in 2010, and is the producer of the Growth Hackers Conference. He regularly speaks to start-ups and Fortune 100s and has been featured in the New York Times, the Wall Street Journal, WIRED, Fast Company, Inc.com, and TechCrunch. Morgan Brown is the COO of Inman News, the leading business intelligence source for real estate. A digital marketing veteran with 17 years helping early stage companies find traction and breakout growth, he launched GrowthHackers.com with Sean. Both speak regularly at major conferences such as SXSW, CTA, HubSpot, and more.

Read an Excerpt

Part I:

The Method

Chapter One

Building Growth Teams

When Pramod Sokke joined BitTorrent as the new senior director of product management in 2012, the once-­red-­hot start-­up was at a crossroads. Growth of their popular desktop software, which lets users find and download files from all around the Web, had stalled. More worrisome was the fact that the company had no mobile version of the product—a huge disadvantage at a time where people were rapidly migrating away from their desktops to their smartphones. Making matters worse, YouTube, Netflix, and other streaming services were gobbling up users’ time and attention both on their phones and across other devices, leaving BitTorrent behind. Pramod was brought in to build the mobile product and reignite growth.

The 50-­person company was organized around the traditional silos of marketing, product management, engineering, and data science. The product team and engineers were divided up into subgroups dedicated to different products, such as the desktop versions for Mac and Windows, and now the newly minted mobile team. Both the data team and the marketing group served all of these product groups, and as is typical at all kinds of businesses, the process of product development was completely separated from marketing. The product managers would inform the marketers about upcoming launches or releases and all marketing efforts were then conducted by the marketing group—with no collaboration from those actually making the product.

The Customer Funnel & Typical Department Ownership

As is also typical for many companies, the BitTorrent marketing team was focused on efforts exclusively at the “top of the funnel” (depicted above), meaning raising customer awareness and bringing users to the products through branding, advertising, and digital marketing with the goal of acquiring new customers. At most software or Web-­based companies, the work of increasing the activation and retention of those who’ve visited a website or app is done not by marketers, but by the product and engineering teams, who focus on building features to make users fall in love with the products. The two groups rarely collaborate with each other, with each focused on their own priorities and often having little or no interaction. Sometimes they’re not even located in the same building—or even the same country.

Per this standard organizational playbook, once the BitTorrent mobile app was ready for launch, the marketing group crafted a launch plan, which, as usual, included a range of traditional marketing activities, with an emphasis on social media, public relations, and paid customer acquisition campaigns. The app was solid, the plan was strong, and yet, adoption was still sluggish.

Pramod decided to ask the marketing group to hire a dedicated product marketing manager (PMM) to help stoke acquisitions. These marketing specialists are often described as being the “voice of the customer” inside the company, working to gain insights into customers’ needs and desires, often conducting interviews, surveys, or focus groups, and helping to craft the messaging in order to make the marketing efforts more alluring and ensure they are conveying the value of the product most effectively. At some companies, these specialists might also be tasked with contributing to the product development, for example by conducting competitive research to identify new features to consider, or assisting with product testing.

An experienced PMM, Annabell Satterfield, joined the BitTorrent marketing team to assist in boosting adoption of the newly minted mobile product. In addition to focusing on the awareness and acquisition efforts she was charged with, she requested that she be allowed to work with the product team on driving growth throughout the rest of the funnel, including user retention and monetization strategies, rather than being restricted to just efforts at the very top of the funnel. The head of marketing granted her permission to do so, but only after she first focused on user acquisition programs and only once they’d achieved their marketing team objectives.

Yet upon conducting some customer research—which included both customer surveys and analysis of the company’s data on user ­behavior— ­in order to generate ideas for new marketing campaigns, she discovered something that seemed directly at odds with her boss’s instructions: many of the best growth opportunities appeared to lie farther down the funnel. For example, she knew that many users of the mobile app, which was a free product, had not chosen to upgrade to a paid Pro version, so she conducted a survey to ask those who had not upgraded why that was. If the team could get more users to do so, she knew that would be a big revenue generator, which could be as important—if not more so—than getting more people to download the app. As the results rolled in, it became clear to her that the most promising strategy for growth wasn’t to focus exclusively on building the company’s customer base, but also on making the most of the customers they already had.

She took the insights she’d uncovered to the product team, thinking they could work together to find ways to improve the app. In doing so, she caught the product team a bit off guard; this was the first time a marketing person at the company had ever come to them with such input. But Pramod, who believed in a data-­driven approach to product development, was impressed, and he quickly gave her free rein to continue mining the user research for product insights, and to keep communicating those insights across the divisional sand lines of the then-­siloed company.

One of the discoveries from Annabell’s surveying stunned the product team, and led to a rapid increase in revenue. The team had lots of theories about why many users hadn’t upgraded to the paid, Pro version of the app, but the most frequent response to the question of why a customer hadn’t purchased the paid version took them completely by surprise. The number one answer? The users had no idea there was a paid version. The team couldn’t believe it. They thought they had been aggressively promoting the Pro version to those using the free app, but apparently they were missing the mark. Even their most active users hadn’t noticed the attempts to get them to upgrade. So the team prioritized adding a highly visual button to the app’s home screen encouraging users to upgrade, and, almost incredibly, that one simple change resulted in an instant 92 percent increase in revenue per day from upgrades. It cost virtually nothing, took virtually no time to execute (the time from the discussion of the survey data to deployment of the button was just days), and resulted in immediate, significant gains. And all from an idea they likely would never have come up with if not from the input and feedback from their customers.

Another success came from what Annabell and Pramod called their “love hack.” Looking into user data to try to identify the drivers of increases and decreases in the number of downloads of the app day to day, Annabell noticed a clear pattern. The app was only available from the Google Play store, and she noticed that whenever the first several reviews of the app in the store were negative, the daily installs of the app would dip. She experimented with pushing up positive reviews into those top positions, and found that it instantly improved the number of installs. So she and Pramod decided to encourage users to write reviews, right after they had downloaded their first torrent, when they had seen how easy the app was to use. They expected that this would be a moment when users would be most happy with the app and most inclined to write a favorable review, if asked. They ran an experiment to test the hypothesis, having the engineers program a request that would pop onto the user’s screen right after the first torrent was downloaded. Sure enough, positive reviews came flooding in. They went ahead and deployed the prompt to all new users based on the initial strong results, and that led to a 900 percent increase in four-­ and five-­star reviews, followed by a huge boost of installs. Her credibility officially established, it wasn’t long before one engineer came to her and said, “Do you have any more ideas? What else can we do?”

This kind of collaboration between marketing and product teams is woefully uncommon. Generally, the product team is in charge of the process of building the product, as well as of making updates, such as improving the sign-­up experience or adding a new feature, and the team establishes a schedule, commonly referred to as a roadmap, for making those improvements. Often, ideas for changes that aren’t part of the preestablished roadmap are met with resistance. Sometimes it’s because timing is already tight for making the planned enhancements, and sometimes because the changes being asked for are poorly conceived, much more difficult, time-­consuming, and therefore costly, to enact than the person making the requests is aware of. Yet other times the product team might also determine that a request isn’t aligned with the strategic vision for the product (or some combination of all these factors and others).

Even if you don’t work for a tech company, you may be familiar with this kind of tension between departments, maybe with marketing teams pushing back on suggestions from sales, or the R&D team resisting a request to build a prototype for a new product that marketing has recommended. This is one of the chief problems with the practice of siloing responsibilities by departments, and it’s primarily why, as you’ll learn more about in a minute, growth teams must necessarily include members across a range of specialties and departments. As the BitTorrent team soon realized, often the best ideas come from this type of cross-­functional collaboration, which, again, is why it’s a fundamental feature of the growth hacking process.

Silos Breached at Last

Buoyed by the successes they were seeing, everyone on the BitTorrent mobile team eagerly began brainstorming about more hacks to try. One hack they tested could only have been thought up by a bona fide techie: stopping the app automatically to save the phone’s battery life. The team discovered this opportunity through another survey targeted specifically at the power users of the free app—ones who were using it all the time but who had yet to upgrade to the paid Pro version. The survey revealed that these users had a major pain point around the drain of the phone’s battery power from their heavy use of the app. So the engineers quickly proposed they build a feature for just the Pro version, one that would turn off battery-­draining background file transfers when the app detected that the user’s battery had less than 35 percent charge remaining. They cleverly promoted the feature in the app to free users when their phone battery started to dwindle, enticing them to upgrade on the spot. The feature proved so popular that it resulted in a 47 percent increase in revenue.

This string of hits didn’t go unnoticed around the rest of the company. For one thing, Annabell was officially moved from marketing to the mobile team, reporting to Pramod, and eventually her title was changed to Senior Product Manager for Growth. At the same time, other engineers working on other projects were fascinated by how the team continued to churn out big wins, leading two of the more senior engineers on other product teams to leave their posts just for the chance of working on a high-­performing, growth-­oriented team. Annabell explains that ­“­[­f­]­rom speaking to our engineers this was because, besides the fact that we seemed to be having fun and enjoying each other so much, they saw us as ‘doing things right,’ being ‘data-­driven.’ ”

As the team continued to hack their way to growth, they leaned more and more heavily on data analysis (provided by a member of the data group), to both set up and evaluate the results of their experiments. The data analyst worked with the engineers to ensure that they were tracking the right data about customers’ response to their experiments—and providing the most useful reports on that information as it rolled in. The analyst had the expertise to know when they had enough data to call the experiments either winners or losers, and worked with the team to review results and to help plot their next steps for follow-­up experiments. The team relied so heavily on the analysis that eventually the analyst was also moved over full-­time to the team, just as Annabell had been.

The success of this data-­driven approach to growth and product development prompted the BitTorrent executives to invest more heavily in data science and staff up its analytics team. At the same time, word of how the mobile team was growing prompted other product teams to start tapping the data analysts more frequently, and collaborate with them more closely to develop experiments and insights of their own.

The mobile team went on to discover dozens of other high-­impact improvements that rocketed the product to 100 million installs through its two and a half years of rapid-­fire growth hacking. With that mission accomplished, the team was reorganized and put to work on other company product priorities. It’s hard to understate the impact that this small team had on the previously growth-­challenged company. It wasn’t just that their efforts boosted BitTorrent’s overall revenue by 300 percent in a single year, but also, and perhaps more important, that the team fundamentally altered the culture at BitTorrent from one constricted by traditional marketing and product silos, to an open and collaborative one in which everyone, from marketers, to data analysts, to engineers and executives, was aligned around the fast-­paced, collaborative growth hacking process. Annabell fondly recalls how faith in the growth process rippled out across the organization, describing how “two of my favorite moments were seeing our old tech lead present a growth experiment at Palooza [which is BitTorrent’s term for regular hackathons it holds], and meeting with an old engineering colleague who wanted to dive into the process with me. He’s an ambassador for the approach now.”

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. But while, as the authors explain, “research shows that the ability to collaborate in networks is more important than raw individual talent to innovativeness,” a survey McKinsey conducted found that “only 25 percent of senior executives would describe their organizations as effective at sharing knowledge across boundaries, even though nearly 80 percent acknowledged such coordination was crucial to growth.”1

Similarly, a team of Harvard Business School professors who conducted a study of communication across business units reported that they were “taken aback” by how little interaction there was among units they uncovered. Even more shocking: they reported that “two people who are in the same SBU [strategic business unit], function, and office interact about 1,000 times more frequently than two people at the company who are in different business units, functions, and offices, but are otherwise similar. Practically speaking, this means that there is very little inter­action across these boundaries.”2

One specialist on the silo problem, Professor Ranjay Gulati of Northwestern University’s Kellogg School of Management, notes that this lack of cross-­departmental communication impedes efforts to make product development and marketing more customer focused—an increasingly important mandate as technology and social media facilitate, even demand, ever more substantive and continuous interaction with customers. Put simply, engineers and product designers are quite capable of coming up with marvelous ways to satisfy customers’ needs and desires, but they most often are simply not privy to what those needs and desires are. Gulati reports that in a survey of executives he conducted, over two-­thirds of them identified the need to make product development more customer-­centric as a priority in the coming decade, but he also writes that his research shows that companies’ “knowledge and expertise are housed within organizational silos, and they have trouble harnessing their resources across those internal boundaries in a way that customers truly value and are willing to pay for.”3

Creating cross-­functional growth teams is a way to break down these barriers. Cross-­functional teams not only smooth and accelerate collaboration between the product, engineering, data and marketing groups; they motivate team members to appreciate and learn more about the perspectives of the others and the work they do. So how, exactly, does one set up a growth team to meet the strategic needs and priorities of a specific project or initiative? We’ll address the key steps in the pages that follow.

The Who

Growth teams should bring together staff who have a deep understanding of the strategy and business goals, those with the expertise to conduct data analysis, and those with the engineering chops to implement changes in the design, functionality, or marketing of the product and program experiments to test those changes. Of course, the specific makeup of growth teams varies from company to company and product to product. The size of teams also varies widely, as does how narrow or broad-­ranging the scope of their work is. They can be as small as four or five members, or as large as one hundred or more, as is true at LinkedIn. Regardless of size, the personnel they comprise should include many, if not all, of the following roles.

The Growth Lead

In every case, 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 (which we’ll offer guidance on how to do shortly).

Regardless of specialty or background, he or she plays a role that is part manager, part product owner, and part scientist. A key responsibility for the growth lead is choosing the core focus area and objectives for the team to work on and for what period of time. As we’ll explore more fully in subsequent chapters, focusing experiments on a main goal is vital to optimizing results. A growth lead might establish a monthly, quarterly, or even annual focus area, such as to get more users to upgrade from a free version of a product to a premium version, or to determine which would be the best new marketing channel for a product. The growth lead then ensures that the team is not derailed by pursuing ideas that don’t contribute to their stated goal, tabling those for when the focus changes and those ideas will serve the new objective.

The growth lead also ensures that the specific metrics the team has chosen to measure and work to improve are appropriate to the growth goals established. Often, marketing and product teams are not systematically tracking data on key user behavior that can lead to discoveries of improvements to make or can be early warning signals that users are becoming less active or defecting from the product altogether. Too many companies focus lots of attention on vanity metrics that might look good on paper (like number of eyeballs to a website), but ultimately do not indicate actual growth, whether in product use or revenue generated. We go into detail about how to choose the right metrics to measure in Chapter Three.

All growth leads require a basic set of skills: fluency in data analysis; expertise or fluency in product management (meaning the process of developing and launching a product); and an understanding of how to design and run experiments. Every lead must also have familiarity with the methods for growing adoption and use of the type of product or service the team is working on. A social network, for example, should have a growth lead who understands the dynamics of viral word of mouth and of network effects—that is, how the value of the network keeps improving as more people join it—which are key mechanisms by which many (though of course not all) social products grow. He or she should also have the relevant industry or product expertise: a growth lead for an online retailer, for example, should have a keen grasp on shopping cart optimization, merchandising, and pricing and marketing strategy. Strong leadership skills are also needed to keep a team focused and to push to accelerate the tempo of experimentation moving forward, even in the face of the (entirely to be expected) regular failure of growth experiments. Dead ends, inconclusive tests, and abject duds are a part of the reality of growth experimentation. A strong growth lead keeps enthusiasm going, while providing air cover for the team to be experimental and fail without undue scrutiny and pressure from management to deliver more wins.

There is no one best career background for a growth lead. Some people are now specializing in the role, most of whom have moved into the job from some other area of specialty, such as engineering, product management, data science, or marketing. People with expertise in each of these areas are good candidates for the role, because they each bring strengths key to the growth hacking process. For start-­ups, especially in the early stage of growth, often the founder should play the role of growth lead. Or, if not to run the team, the founder should appoint the growth lead and make him or her a direct report. At larger companies, which may have one growth team or multiple teams, the growth leads should be appointed by an executive with authority over the work of the team, to whom the growth lead should report.

The role may sound daunting, and simply too much for one person to manage, but with the tools and formal methods for prioritizing experiments, tracking, and sharing results that we will introduce in the following chapters, the process can be managed with great efficiency.

Product Manager

The ways in which businesses organize product development teams vary, and this will affect the personnel who are assigned to work on a growth team, and may also determine how the team fits into the organizational structure of a company, which we’ll discuss more later in the chapter. In general product managers oversee how the product and its various features are brought to life. As venture capitalist Ben Horowitz put it simply, “A good product manager is the CEO of the product.”4

In most types of company, the role is well suited to assisting in the growth hacking mission of breaking down the silos between departments and identifying good candidates in engineering and marketing to help start the growth team. This is in large part because product managers’ experience with customer surveying and interviewing, as well as with product development, allow them to make vital contributions to the idea generation and experimentation process. If you have this role at your company, this person should absolutely be on your growth team.

Depending on the size of a company, the functions of product management may be filled by other staff, and at start-­ups, especially in the early stages of growth, the role may be played by the founder. But at larger companies, there may be multiple levels of staff within product management, from product manager, director of product management, VP of product management, or chief product officer. The level of product management staff appointed to a growth team can vary, but as we’ll discuss more fully in a moment, at many software companies, the product manager who oversees the particular product that a growth team is formed to work on should be assigned to the team and reports to the head of the product group, often a VP of product management.

Software Engineers

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. Yet all too often they are left out of the ideation process as companies work to plan new products and features, or are relegated to simply taking orders, implementing whatever product and business teams have come up with. Not only does this sap morale of some of your most highly skilled and precious staff, it also stunts the ideation process by failing to tap into the creativity engineers can bring as well as their expertise about new technologies that might drive growth. Recall that at BitTorrent, the engineers were invaluable in recommending the development of the lucrative battery saver feature. The very essence of growth hacking is the hacker spirit that emerged out of software development and design of solving problems with novel engineering approaches. Growth teams simply don’t work without software engineers being a part of them.

Marketing Specialists

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 type of marketing expertise the team needs may vary depending on the type of company or product. For example, a content growth team, working to build readership, would clearly benefit from having a content marketing specialist onboard. For example, at Inman News, a trade journal for real estate professionals, where Morgan is COO, the growth team includes the email marketing director, because the company’s growth is heavily reliant on email as a channel for acquiring, monetizing, and retaining customers. Other companies may rely heavily on search engine optimization and elect to have a specialist in that field on the team. Teams might also include several marketing specialists, to cover a wide range of expertise. Marketers can also be brought in for stints focusing on an area of their expertise and then leave the growth team once the goal is achieved.

Data Analysts

Understanding how to collect, organize, and then perform sophisticated analysis on customer data to gain insights that lead to ideas for experiments, is another of the cornerstone requirements for teams. A growth team might not include an analyst as a full-­time member, but rather have an analyst assigned to it who collaborates with the team but performs other work for the company as well. That was the case in the beginning for the BitTorrent team. But if a company can afford to appoint an analyst full-­time to the team, that’s ideal.

A team’s data representative needs to understand how to design experiments in a rigorous and statistically valid way; how to access your various customer and business data sources and connect them to one another in order to draw insights into user behavior; and how to quickly compile the results of experiments and provide insights into them. Depending on the degree of sophistication of the experiments a team is running, it might be possible for the marketing or engineering team member to play this role, as in both of those fields, a certain level of data analytics aptitude has become important. At more technically advanced companies, analysts with expertise in reporting of experiments as well as data scientists, who are mining for deep insight, should both play a role.

What is essential is that data analysis not be farmed out to the intern who knows how to use Google Analytics or to a digital agency, to cite extreme but all too frequent realities. As we will discuss in detail coming up in Chapter Three, too many companies do not place enough emphasis on data analysis, and rely too heavily on prepackaged programs, such as Google Analytics, with limited capacity for combining various pools of data, such as from sales and from customer service, and limited