When you want to grow fast
A core driver for many companies is revenue growth. For marketers, this means that you want to keep on optimizing all your activities. Can we model out conversion optimization? This would help in growing, because it helps in knowing where to focus our energy. Websites and landing pages should be conversion machines. I speak to Scott Tousley, one of the growth hackers at HubSpot, during his visit to The Netherlands.
Most B2B marketers know marketing automation company HubSpot as one of the most successful and fast-growing marketing companies. HubSpot was founded in 2005, they turned to a public company in 2016, and are currently employing 2200 employees worldwide. Content marketing was embraced fully by the HubSpot team from the early days. Nowadays they assigned several teams that have adopted a new growth hacking way of working.
How did HubSpot grow?
- Initial launching strategy
But, after the initial years, this didn’t work anymore, HubSpot needed higher volume and therefore more testing was required. That’s how HubSpot starting experimenting more and came to use growth hacking models.
Scott Tousley works at HubSpot as a growth hacker. He used to be one of the content marketers initially. In a SPOTONVISION team meeting in The Netherlands Scott explains more about successful growth hacking principles. His personal target is about getting as many users of the free HubSpot tools, so his daily job is mostly around lead generation:
“Owning our own channels is important for our lead gen. We don’t want to depend on SEO and SEA only, because then we are depending on the algorithms of others.”
When can’t you use growth hacking?
When you don’t have a high enough volume of contacts in your database to test on you cannot measure significant numbers. You can however use some of the ideas, such as smoke tests. This means that you test e.g. a fake initiative and see how people respond, you’re basically testing the market potential.
What’s growth hacking about
It’s all about having a strategy, and setting up and using frameworks. It’s about finding out what you can do to ‘move the needle’ or, in other words, to create real impact on results. Growth hacking is about experimenting, e.g. A/B testing. In other words, can we pick a metric that we experiment on to improve. How do we get to results quicker, smarter and cheaper? All experiments should be documented, so we can learn and look back. Scott: “It’s about what we learned this week, not what we did this week!”
“It’s a process of rapid experimentation across marketing, product, sales and customer service that move the most important metrics for the business. In experimenting you can use a significance calculator, e.g. the tool Kissmetrics offers an A/B significance test. Usually 70% to 80% of the experiments can fail, only 30% to 20% don’t. And we have to keep in mind: whilst working on experiments it is important to only focus on experiments that can scale.” (see image)
Growth hacking: what is it not?
Growth hacking is not blindly copying tactics of other companies without understanding the underlying principles, frameworks and strategy.
You will learn much faster
Scott: “Disagree on something in your marketing tactics? Test it! And, if you run a test and the test fails, it’s not a fail, but a lesson.” Documentation is key of course. You can test many things in marketing, website, design, landing pages, blogs, copy, emails etc.
How to ‘do’ growth hacking?
First you need to decide on an (annual) North Star metric. The North Star metric is a metric (or goal) that you can control and it influences your business. E.g. Someone who is listening to Spotify for one hour a week will eventually upgrade to a premium account. Very often ‘retention’ is a North Star metric, because it is influenced by a mix of a good product combined with good support as that is the biggest driver for growth.
Harvard Business Review: “A 5% increase in customer retention can increase profit by 25%.”
Once you decided on your North Star metric this is followed by quarterly zoom out metrics (e.g. quarterly metrics such as retention, activation, acquisition, or within a theme it could be smaller areas/goals etc.), experiment weekly during zoom in sprints. At HubSpot ‘Weekly Active Teams’ (WATs) are used as a metric. It is all about getting active users (teams) of the free software version. This metric will identify success rates of someone turning into a paying customer in the end. This worked for HubSpot, and not necessarily for other companies.
“Usually you base your strategy on the data, on your analysis of your data, your lessons learned. As you’re working on the various experiments, you keep on checking and predicting the effect on how to move the bigger needle, the North Star metric”, so says Scott.
How should you look at your funnel?
For many software companies it’s not about acquisition of new customers, Especially when the initial software version is a free (limited) version, it is about activating these new customers. There is no use to a Facebook, HubSpot or Spotify user if they don’t use the product. You need to activate them and next challenge will be to retain them.
How do you run experiments?
- Identify the metric
(e.g. #upgrades from free to paid user)
- Ideate list of experiment ideas to improve metric
(e.g. change subject line of an email, changes copy, design, segmentation, response time).
(e.g. by upvoting ideas from a long list, based on a 1 to 5 score scale on Potential, Importance and Ease, and pick up the top 1 or 2 ideas – ideas with the highest P.I.E. score – after the exercise).
- Write an experiment document and turn the experiment live
(e.g. a Word document or Powerpoint presentation where we describe the experiment from problem to learning objective to hypothesis to prediction to experiment design to success and results).
- Analyze results in experiment document
(or, if you’re not sure yet and the experiment will be very time-budget consuming, you can run an ‘ugly’ test, before you go ahead).
- Share results with team
(what have we learned this week’ is the main topic of discussion in a weekly team meeting).
- Many times ‘retention’ is a key metric, whatever solution you offer.
- It helps when you somehow train a customer, so that they embrace your world. This can be done by educating a customer on your software tool or educating a customer about your way of working/thinking, and making them your ambassador.
- Always define in advance what your metric will be for success, so that you can measure and learn.
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