Growth marketing 101
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An agency guys attempt to understand startup growth marketing. 1/ What is growth marketing? 2/ Understanding virality 3/ Loop optimisation 4/ Product and channel development 5/ Analytics 6/ What does this mean for the traditional marketer
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Growth marketing 101
- 1. Holler Australia. Big reactions, Simple Interactions. Growth marketing August 2015
- 2. Holler Australia. Big reactions, Simple Interactions. Key references • @andrewchen growth course: svbr.com • leananalyticsbook.com • tractionbook.com • Viral Loop: www.amazon.com/Viral-Loop-Facebook-Businesses-Themselves/dp/1401323499 • growthhackers.com
- 3. Holler Australia. Big reactions, Simple Interactions. Why should I care?
- 4. Holler Australia. Big reactions, Simple Interactions. 100sofmillionsofusersinashorttime 0 500 1,000 1,500 2,000 Q3 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Facebook – millions of monthly users
- 5. Holler Australia. Big reactions, Simple Interactions. Withouttraditionalmarketing
- 6. Holler Australia. Big reactions, Simple Interactions. What is “growth”
- 7. Holler Australia. Big reactions, Simple Interactions. Product-focusedmarketing Which combines creativity and analytics to drive distribution 1996: “ps I love you, get your free email at hotmail.com” led to Hotmail going from 0 to 30m users in 30 months
- 8. Holler Australia. Big reactions, Simple Interactions. Growthhackinghasbecomesynonymouswithtipsandtricks VersionA:original Versionb:lessinput Versionc:noinput +30%! +75%!! Email Password Sign up Sign up Email Sign up
- 9. Holler Australia. Big reactions, Simple Interactions. Growthmarketingisasynergyofseveralimportantdisciplines Loop optimisation Product development Virality Channel development Analytics
- 10. Holler Australia. Big reactions, Simple Interactions. Virality
- 11. Holler Australia. Big reactions, Simple Interactions. Understanding“virus”originsallowustounderstandmechanics 1.Virusentershost 2.Virususeshost’s nucleolustoreproduce 3.Newviralcellsfind newhost
- 12. Holler Australia. Big reactions, Simple Interactions. Chainletter–theoriginalviralmechanic 1935 the first money chain letter appeared, the infamous “send-a-dime” It flooded the world w/in a few months Virus(product)-letter Host(channel)-post
- 13. Holler Australia. Big reactions, Simple Interactions. PaypalwasbuiltoneBay Paypal understood growth early and their key employees applied it to: Tesla Motors, LinkedIn, SpaceX, YouTube, Yelp, Yammer, Palantir Technologies Virus(product)–PayPal Host(channel)–eBay
- 14. Holler Australia. Big reactions, Simple Interactions. Viralityistheprocessofsiphoningachannelsinhabitantstoyou NOTE: Your product needs to be good! We pass on interesting products or memes to our personal social networks. 1.Preintegration Product Channel 2.Integration Product Channel 3.Postintegration Product Channel
- 15. Holler Australia. Big reactions, Simple Interactions. Viralcoefficient–themeasureofvirality K = i * conv% K is viral coefficient, i is the number of invites sent out by each new customer, conv% is the conversion rate 100 20,100 40,100 60,100 80,100 100,100 120,100 1 2 3 4 5 6 7 8 9 10 11 12 0.2 0.5 0.75 1.1 Viral coefficientMust be greater than 1 to have viral growth
- 16. Holler Australia. Big reactions, Simple Interactions. Shortercycletimesmeanhighervirality Custs(t) = Custs(0) * (K ^ (t/ct +1) - 1) / (K-1) 100 20100 40100 60100 80100 100100 120100 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 Cycle time
- 17. Holler Australia. Big reactions, Simple Interactions. Everychannelhasaceiling You can’t continually reach new people for ever Ceiling
- 18. Holler Australia. Big reactions, Simple Interactions. Retentionmatters When your retention sucks going viral is bad for business 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 100000 50% 99%
- 19. Holler Australia. Big reactions, Simple Interactions. Therearedifferenttypesofvirality Businesses with all three are the ones with Silicon Valley Unicorn user adoption Engineered viral loops Analytically-driven optimisations Viral product category Social, chat, email, photos etc Great product High net promoter score
- 20. Holler Australia. Big reactions, Simple Interactions. Loop optimisation
- 21. Holler Australia. Big reactions, Simple Interactions. Understandcompoundinteresttounderstandloops Any quantity multiplied frequently by an amount slightly greater than one can become immeasurably large Take a cent and double it every day… $100 $150 $200 $250 $300 $350 $50 $50 $50 $50 $50 $100 $150 $225 $337.5 $506.25 $759.375 $50 $75 $112.5 $168.75 $253.125
- 22. Holler Australia. Big reactions, Simple Interactions. Aproductloopismorecomplicatedthanthecompoundinterestloop The aim is to design a system where the output is bigger than the input, far different to a linear channel e.g. PR This example is a search loop, other loops: paid marketing, viral loop etc 1. Visit Seller’s product page 2. CTR % click on PayPal badge 3. Sign up % sign up, visitor and seller get $5 4. Share The person who signed up puts the badge on their listings eBay’s loop
- 23. Holler Australia. Big reactions, Simple Interactions. Modelyourexpectations Example viral loop with 30% inviter rate, 100 invites per inviter and 10% invitation CTR > Sign Up rate In this example we gain 1,486 signups for every 1,000 signups Cycle Signups Inviters Invites Clicks 1 1000 300 30000 3000 2 600 180 18000 1800 3 360 108 10800 1080 4 216 65 6480 648 5 130 39 3888 389 6 78 23 2333 233 7 47 14 1400 140 8 28 8 840 84 9 17 5 504 50 10 10 3 302 30
- 24. Holler Australia. Big reactions, Simple Interactions. Modelyourexpectations Example viral loop with 30% inviter rate, 100 invites per inviter and 10% invitation CTR > Sign Up rate Cycle Signups Inviters Invites Clicks 1 1000 300 30000 3000 2 600 180 18000 1800 3 360 108 10800 1080 4 216 65 6480 648 5 130 39 3888 389 6 78 23 2333 233 7 47 14 1400 140 8 28 8 840 84 9 17 5 504 50 10 10 3 302 30
- 25. Holler Australia. Big reactions, Simple Interactions. Growthmultipliersshowtheinput/outputofyourloop Given 1k input in the example above, our output goes from 5k to 8.3k GM = 1 / (1 - r) 5X = 1 / (1 – 0.8) 8.3X = 1 / (1 – 0.88) 10% ratio increase = 66% increase in GM
- 26. Holler Australia. Big reactions, Simple Interactions. Product development
- 27. Holler Australia. Big reactions, Simple Interactions. It’seasytoconvinceyourself ofthe“nextfeaturefallacy” A “better product” doesn’t necessitate growth Random features lead to random results
- 28. Holler Australia. Big reactions, Simple Interactions. Thenextfeaturefallacyinaction
- 29. Holler Australia. Big reactions, Simple Interactions. Dropboxbuiltviralityintoit’sproductfromdayone And encouraged it with additional storage
- 30. Holler Australia. Big reactions, Simple Interactions. Channel development
- 31. Holler Australia. Big reactions, Simple Interactions. Growthchannelsaredifferenttotraditionalmarketingchannels AirBnb’s Craiglist integration drove 10s millions of users prior to automated services
- 32. Holler Australia. Big reactions, Simple Interactions. Diffusionofinnovation –channelsexistonans-curve
- 33. Holler Australia. Big reactions, Simple Interactions. 1.Earlychannel Small but inefficient, good ROI because low competition Example niche blog, mailing list
- 34. Holler Australia. Big reactions, Simple Interactions. 2.Goldenage Still novel and a big market, people don’t know how best to take advantage Example Google Chrome, Periscope?
- 35. Holler Australia. Big reactions, Simple Interactions. 3.Saturated Low ROI, mature marketing platforms and practices established Example AdWords
- 36. Holler Australia. Big reactions, Simple Interactions. 4.Relic Very low ROI, in decline Example TV and print
- 37. Holler Australia. Big reactions, Simple Interactions. “Channels are the other 50% of your product UX” AndrewChen Takeaphoto Newchannelsharingfeature
- 38. Holler Australia. Big reactions, Simple Interactions. Analytics
- 39. Holler Australia. Big reactions, Simple Interactions. Discoveryandcommunication ofmeaningfuldatainsights
- 40. Holler Australia. Big reactions, Simple Interactions. Notallmetricsarecreatedequally Key metrics One metric that matters Vanity metrics Meaning Easetoid/collect
- 41. Holler Australia. Big reactions, Simple Interactions. Theonemetricthatmatters Causal, clear and actionable Averagetimeacustomer’s invoiceispaid. 26daysvs41daysfornoncustomer. 7friendsin10days. Timewatchedperday.
- 42. Holler Australia. Big reactions, Simple Interactions. Keymetrics Give you guidance on your business performance Tell you how effective your efforts are and how you’re driving value back to the business Customer Acquisition Cost (CAC) Customer Lifetime Value (CLV)
- 43. Holler Australia. Big reactions, Simple Interactions. Vanitymetrics Pretty to look at and distract you from driving value by focusing on a number, not a business outcome Uniquevisitors #offriends,likes Pageviews Timeonsite Downloads Sessions
- 44. Holler Australia. Big reactions, Simple Interactions. Keymetricsneedtocoverthecustomerlifecycle How do users become aware of you? SEO, SEM, widgets, email, PR, campaigns etc Do drive-by visitors subscribe, use, etc? Features, design, tone, compensation, affirmation Does a one-time user become engaged? Notifications, alerts, reminders, emails, updates… Do you make money from user activity? Transactions, CLV, subscriptions etc Do users promote your product? Email, widgets, NPS, virality etc Acquisition Activation Retention Revenue Referral Pirate metrics is way of categorizing key metrics based on the customer context
- 45. Holler Australia. Big reactions, Simple Interactions. Tractiongraphs:theteam’sfocusmetric Sign ups per day -3 -2 -1 0 1 2 3 4 Conversion rate Viral coefficient Prioritizing and learning from the one-metric that matters ensures focus, discipline and accountability to something that will have a real business impact
- 46. Holler Australia. Big reactions, Simple Interactions. Thegrowthmetricsstack -4 -2 0 2 4 1. Traction graphs Focused action 2. Key metrics dashboard Correlation and context 6% Churn rate 20% Active after 30 days 3% 1st visit sign up rate 30% MAU 3. Key metrics dimensions Understanding 0% 20% 40% 60% 80% Churn rate Facebook Blog SEM
- 47. Holler Australia. Big reactions, Simple Interactions. What does this mean for a traditional marketer?
- 48. Holler Australia. Big reactions, Simple Interactions. “None of our competitors has its own data business, which gives us a huge advantage.” SirMartinSorrell, WPPAnnualReport2014
- 49. Holler Australia. Big reactions, Simple Interactions. Thecoreelementsthatneedtobeinplace Growth Product Analytics RetainerProcess
- 50. Holler Australia. Big reactions, Simple Interactions. 1. Traction Key metrics defined, tracked and used to make decisions Operationalized multivariate testing: channel + site Documentation of test results and lessons learnt Automation of findings Growth maturity 2. Scale Owned / earned channel scale Cross-channel analytics Creative engine (test platform + dry powder) 3. Growth Product development Growth methodologies: product and channel integration
- 51. Holler Australia. Big reactions, Simple Interactions. Thank you Vlad Mehakovic Head of CX Office +61 2 9469 5954 Suite 5, 30 Boronia Street Redfern NSW 2016 @vladiim
Notas do Editor
- This is hotmail in 1998 Got to 12m users in 1.5 years B.C on every email sent, there was a note that said: “ps I love you, get your free email at hotmail.com”
- This is hotmail in 1998 Got to 12m users in 1.5 years B.C on every email sent, there was a note that said: “ps I love you, get your free email at hotmail.com”
- This is hotmail in 1998 Got to 12m users in 1.5 years B.C on every email sent, there was a note that said: “ps I love you, get your free email at hotmail.com”
- 1935 the first money chain letter appeared, the infamous “send-a-dime”, which flooded the world w/in a few months
- 1935 the first money chain letter appeared, the infamous “send-a-dime”, which flooded the world w/in a few months
- Started millions of users on Palm Pilots to pay each other but the users were so diverse no one needed the service Then focused on top few thousand eBay sellers. Needed the product and mich smaller Before paypal, could only order on eBay w/ a check $10 to every new user signed up 7% daily. Double every 10 days eBay tried to start a PayPal competitor and gave incentives to use Billpoint instead of PayPal
- Started millions of users on Palm Pilots to pay each other but the users were so diverse no one needed the service Then focused on top few thousand eBay sellers. Needed the product and mich smaller Before paypal, could only order on eBay w/ a check $10 to every new user signed up 7% daily. Double every 10 days eBay tried to start a PayPal competitor and gave incentives to use Billpoint instead of PayPal
- Time matters – look up https://docs.zoho.com/sheet/published.do?rid=y0e29704d6b6ede984e5d8b7209cd37ae3eb9
- https://docs.zoho.com/sheet/published.do?rid=y0e29704d6b6ede984e5d8b7209cd37ae3eb9
- Draw something is a perfect example – fastest app to get to 50 million users (x days) then died both retention and virality are critical important to understand what's good for your category and to use that to understand if you've got protraction or not
- * To super charge need to integrate with channel * Level above is engineered and optimised loops * PayPal early days would sample eBay listings and figure out how many had PayPal badges and try to increase
- Take a cent and double it every day In a week you'd have 64 cents in 2 you'd have 83.92 in 30 days you'd have $5.4 million
- > - @ the centre of every growth strategy is a loop > - PR = linear channel, output = input > - We're aiming for something bigger, output > input > - Every growth loop touches a channel, ask how you pull audience from the channel > - High ceiling of saturation 100s of millions – each loop cycle gives you momentum into the next cycle Example is SEO loop Examples: Stack Exchange, Rap Genius, Trip Advisor etc Others: * Paid marketing loop: New users click on ad > % sign up for free trial > % convert to paid features > budget used to buy more ads > end loop * Viral loop: New users sign up > % import their address books > % send invites > % click on links & sign up > end loop V powerful when you have multiple loops e.g. LinkedIn w/ SEO & social
- * Incremental improvements are amplified with loop * Growth models help id highest value projects * Using prev e.g. let's say there's a +10%:
- * Qual/quant * Needs predictive values; existing data as baseline * Focus on the loop with steady, inc improvements * Great product features have very fuzzy correlation with growth
- Drove 10s millions of users prior to automated services Powerful but any external channel integration is inherently risky as you loose 50% of your Growth Multiplier if an integration causes a viral factor drop from 0.9 to 0.8\ Similar – YouTube was built on MySpace
- * Bet on channels that are growing and healthy * Spam detection happens as channel matures Conquest: your channel strategy has worked so well that there's no one left to acquire
- * Every channel decays until no one's making any money * E.g. Adwords for search, everyone with experience for keywords is optimising to full extent
- * Go after Golden Age channel * Once consensus hits - it's over * Adding or switching to a new channel is hard * Developing the right product is hard
- Actionable data insights is a competitive advantage Causal data is hugely powerful