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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. 1. Holler Australia. Big reactions, Simple Interactions. Growth marketing August 2015
  2. 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. 3. Holler Australia. Big reactions, Simple Interactions. Why should I care?
  4. 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. 5. Holler Australia. Big reactions, Simple Interactions. Withouttraditionalmarketing
  6. 6. Holler Australia. Big reactions, Simple Interactions. What is “growth”
  7. 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. 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. 9. Holler Australia. Big reactions, Simple Interactions. Growthmarketingisasynergyofseveralimportantdisciplines Loop optimisation Product development Virality Channel development Analytics
  10. 10. Holler Australia. Big reactions, Simple Interactions. Virality
  11. 11. Holler Australia. Big reactions, Simple Interactions. Understanding“virus”originsallowustounderstandmechanics 1.Virusentershost 2.Virususeshost’s nucleolustoreproduce 3.Newviralcellsfind newhost
  12. 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. 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. 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. 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. 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. 17. Holler Australia. Big reactions, Simple Interactions. Everychannelhasaceiling You can’t continually reach new people for ever Ceiling
  18. 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. 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. 20. Holler Australia. Big reactions, Simple Interactions. Loop optimisation
  21. 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. 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. 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. 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. 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. 26. Holler Australia. Big reactions, Simple Interactions. Product development
  27. 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. 28. Holler Australia. Big reactions, Simple Interactions. Thenextfeaturefallacyinaction
  29. 29. Holler Australia. Big reactions, Simple Interactions. Dropboxbuiltviralityintoit’sproductfromdayone And encouraged it with additional storage
  30. 30. Holler Australia. Big reactions, Simple Interactions. Channel development
  31. 31. Holler Australia. Big reactions, Simple Interactions. Growthchannelsaredifferenttotraditionalmarketingchannels AirBnb’s Craiglist integration drove 10s millions of users prior to automated services
  32. 32. Holler Australia. Big reactions, Simple Interactions. Diffusionofinnovation –channelsexistonans-curve
  33. 33. Holler Australia. Big reactions, Simple Interactions. 1.Earlychannel Small but inefficient, good ROI because low competition Example niche blog, mailing list
  34. 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. 35. Holler Australia. Big reactions, Simple Interactions. 3.Saturated Low ROI, mature marketing platforms and practices established Example AdWords
  36. 36. Holler Australia. Big reactions, Simple Interactions. 4.Relic Very low ROI, in decline Example TV and print
  37. 37. Holler Australia. Big reactions, Simple Interactions. “Channels are the other 50% of your product UX” AndrewChen Takeaphoto Newchannelsharingfeature
  38. 38. Holler Australia. Big reactions, Simple Interactions. Analytics
  39. 39. Holler Australia. Big reactions, Simple Interactions. Discoveryandcommunication ofmeaningfuldatainsights
  40. 40. Holler Australia. Big reactions, Simple Interactions. Notallmetricsarecreatedequally Key metrics One metric that matters Vanity metrics Meaning Easetoid/collect
  41. 41. Holler Australia. Big reactions, Simple Interactions. Theonemetricthatmatters Causal, clear and actionable Averagetimeacustomer’s invoiceispaid. 26daysvs41daysfornoncustomer. 7friendsin10days. Timewatchedperday.
  42. 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. 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. 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. 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. 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. 47. Holler Australia. Big reactions, Simple Interactions. What does this mean for a traditional marketer?
  48. 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. 49. Holler Australia. Big reactions, Simple Interactions. Thecoreelementsthatneedtobeinplace Growth Product Analytics RetainerProcess
  50. 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. 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

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