Inside "Hacking Growth," a New Book by Sean Ellis and Morgan Brown

Speaker A: You're listening to Call to Action, a podcast produced by Unbounce. I'm Stephanie Sretsky. Even though we've taken a break to focus on our first season, due later this year, I've got a special episode for you today. When I got an email from the Growth Hackers team asking if we'd like to preview Sean Ellis and Morgan Brown's new book for Call to Action, it was a no brainer. We've always wanted to get Sean and Morgan on the podcast. Their new book is called Hacking Growth. And let me tell you, it's chock full of interesting stories about businesses you know and love that will make you excited to get back to work and try it out for yourself. I'm an AV producer, and as I was reading it, I was even thinking that I could be a growth hacker. Here's our content director, Dan Levy with the interview.

Speaker B: Sean, you, um, famously coined the term growth hacking not long ago, for better or worse. Yeah. Yep. Uh, and Morgan, you're one of its, uh, foremost practitioners and evangelists. So now you've got your book, not growth Hacking, but Hacking Growth. I see what you did there.

Speaker C: Exactly.

Speaker B: In all seriousness, though, um, is there a difference between growth hacking and hacking growth? Is hacking growth like the next generation of growth hacking?

Speaker D: Yeah, it's funny you should ask. I, um, spoke to some executives from l' Oreal recently, and they explained to me how hacking growth was very different than growth hacking, but to me it's the same thing. I never quite grasped the difference, but to me it's really about this experimentation across the full customer journey and with the intent of revenue growth. I think growth hacking explains it well. And Hacking Growth was just the title we decided for the book. But, Morgan, you might feel differently. Do you feel like there's a difference?

Speaker C: No, I don't think there's any difference. I think trying to come up with the title of the book, we wanted, uh, a play on the term growth hacking. The word growth hacking has been applied to everything. Uh, but we really see it as a process, collaborative structure, a way of thinking about growing your business. And so we wanted the term in the title, but we wanted to play with it a little bit. So that's where we came up with it. Nothing beyond that, though. I think it's the same thing.

Speaker B: All right. Uh, yeah, you alluded to the fact that growth hacking does have a bit of a negative reputation in some circles. I get the growth part. Is it the hacking part that you think turns some people off?

Speaker D: Uh, you know what I think turns people off is that a lot of people just define it as these super creative, tricky ways to drive growth. I think ultimately it's gotten sometimes a bad name when people are talking about it that way and standing up and giving you 101 growth hacks for growing your business. Um, I think people missed the point when I coined the term that it should really be about a process for uncovering effective, creative ways to grow your business. But it's not about necessarily having totally uh, transferable tricks that work all the time in every business.

Speaker B: Yeah, it's funny, I do think people tend to associate growth hacking with like quick and dirty easy tricks. Uh, but you know, the way you lay it out in this book is actually a, ah, pretty involved process. It's not necessarily simple at all normal. It's supposed to be.

Speaker D: Go ahead, Morgan.

Speaker C: Yeah, I think a lot of people look at the ends. They look at um, some hack like Airbnb's Craigslist hack, and they kind of look at the end result and say, oh, that's growth hacking. Where we kind of try to step back and say, actually it's a rapid experimentation process of trying to figure out the best way to, to grow your product that ultimately led them down that path. But the process and how you do the iterative testing and experimentation to find those wins and compound growth, not just on acquisition but across the customer lifecycle is really the thing. And people tend to miss that because they just look at these one off uh, things and try to put them in a basket of hacks. And that's not really what's happening at these companies.

Speaker D: The truth is that a lot of uh, the wins that you get are not nearly as sexy as that Airbnb win. They're putting an email collector at this part of the page instead of that part of the page. Or repositioning the product this way in messaging versus that way. Uh, they are not nearly as exciting in stories. But when you get a lot of wins together that are incremental like that, they add up to uh, an important engine of growth in a business.

Speaker B: Right. Some of this stuff seems simple or obvious in hindsight, putting a PS in an email or whatnot. But that maybe detracts from all the experiments, the failed experiments, uh, that went into it, the whole process that led them there.

Speaker D: Right.

Speaker B: Uh, you guys say that growth hacking involves, um, high speed, cross functional experimentation. I get the high speed part. Can you unpack the cross functional part? Why is that so important?

Speaker C: When you look at how companies grow and where their best opportunities to grow are they're often not in customer acquisition, which is typically where marketing has been either responsible for or siloed into. Um, when you look at where these companies have found uh, the most growth, it's actually been deeper in the customer experience, um, in the activation steps, uh, the new user experience, um, product, uh, hooks and um, re engagement loops. These are outside the purview of your traditional marketing team and the old business structure, um, bringing together people from product engineering. Marketing design is really the best way to run experiments and find new growth opportunities in the most impactful parts of the user experience which often lie in the product itself.

Speaker D: Just to add one thing to that, it's those same people then who control the product that tend to be pretty sensitive when outside teams get in there and start uh, changing the product experience. Especially if it's marketing who might have a uh, spammy reputation inside the company. I think that's really where the heart of the challenge of growth hacking in a larger company is just that being able to drive that cross functional cooperation is tough.

Speaker B: Yeah. And building a cross functional growth team from the ground up seems relatively straightforward when you're just a small startup. But once you're an established company, um, with different departments that operate separately, um, that could be pretty tricky. Can you talk about some of the obstacles that you've seen in building those sorts of cross functional growth teams and how larger organizations have overcome them?

Speaker D: Uh, yeah, I'll take that one really hard. In later stage companies, I don't think very many companies have effectively made the transition. If you look at Facebook or Uber or some of these really valuable companies today, they implemented a lot of the team and tracking and just culture in the business in the early days. So I don't claim to have the answers of how you do it in a, in a really large company, but I think there's a few things that can be helpful. One, being able to establish a metric that everyone within the organization is working toward can be really helpful. Otherwise what you have is let's say a product or an activation team is focused on conversion rate to usage and then uh, marketing team sends in a flock of slightly lower quality leads but profitable, profitable customers and they bring that one number down, but they help their metric. It's one of those things that if there's not a common language of the metric that really matters for everybody, then that creates a lot of conflict within an organization. A great starting point is defining what growth hackers tend to call a North Star metric, which is something that reflects not just growth but actual an expansion of value within the customer base. Um, as you get more customers experiencing the product in the right way, that's what leads to sustainable growth. And that's the purpose of all of this, is to drive sustainable growth. And once you've defined that as a team it's a lot easier to get everybody on the same page.

Speaker B: So it's not enough to just be working together. Uh, you actually have to be pulling in the same direction towards the same.

Speaker D: Yeah, ah, as a starting point there's a lot more challenges to it and we cover a lot of the challenges and solutions in the book but I think that's a good starting point. What were you going to say Morgan?

Speaker C: Yeah, I was going to just add that I think the nice part about the growth hacking process that we outline in the book is that it scales up and down the structure and the process can be run by an entire company like at the Facebooks and the linkedins of the world. But uh, it can also be run on a very small scale. It could be run just around say your blog or your content marketing or it could be you could bring together a growth team to work on a product launch or um, something at a smaller scale. Your email marketing team could work on um, running the rapid experimentation process. I think um, in larger companies nothing turns heads um, or gets attention faster than success except maybe for a major failure. Um, but success tends to breed interest. One of the stories we tell in the book is the story of the BitTorrent mobile team, uh, which ran this growth process to rapidly drive downloads. I think the moral of the story is not so much the hacks and tactics that they use but that their way of doing things quickly caught on across the company because people saw it as being a data driven way of doing things in the right way of experimenting and growing. I think um, even in large companies small teams can start to do this process uh, which can create these compounding wins that get attention and it can uh, spread that way. I think the last piece of uh, the last ingredient is you need executive buy in. You really need someone to say hey we need a team or we need someone that owns these core metrics, this North Star metric and to make it an organizational priority um, because uh, if you try to implement this at wide scale without that executive buy in there's a lot of friction and um, people have their way of doing things and sometimes the marketing department's not even in the same country or building as these other teams. So breaking down those barriers is a big part of It, I, uh, want

Speaker B: to jump into the meat of the book a little bit. Um, you talk about something that you call the must have factor. How do you, you know, I think anybody who maybe launches a new product, uh, feels passionate about it. But how do you know, um, how can you be sure that it's really a must have?

Speaker D: Yeah. So I'll take this one. Uh, you don't know it's a must have until you have people experience it. Right? Like if, if you, otherwise you can look at it and say, oh, we've made our must have. But again, you're looking at through the lens of a, uh, of an entrepr that really wants it to be a must have. The scariest question to ask your early customer base is the most important question, which is, how would you feel if you couldn't use this product anymore? Would you care if we took this product away from you? Some kind of wording like that and being able to look at what their reaction is. What you're looking for is not a reaction of. I'd be kind of bummed out. That's not enough. You're not going to be able to build a strong, sustainable customer base on that. You're looking for the people have a visceral reaction. Something like, I would be very disappointed if you took this product away. Uh, at the end of the day, it's even more important to look at your long term retention of customers. That's going to be the best signal, but it takes a long time to get there. Being able to ask it as a survey question and looking at the people who say they would be very disappointed, they really give you that signal of do we have something that matters to these people or not?

Speaker B: You say that disappointment is actually a better gauge of product loyalty than satisfaction. I thought that was super interesting. Why do you think that is?

Speaker D: Uh, I just think, um, it's easy for people to say, oh yeah, I'm satisfied, and then the next week they disappear. But being able to ask the question the way that I just described and looking for that visceral reaction, um, I think you're going to get a much more honest answer. Ah. Back from them. What's interesting is the way that I word the question is I would be very disappointed, somewhat disappointed, not disappointed. I even still have a lot of entrepreneurs when they run that question, come back to me and say, this is awesome. 80% of the people said they'd be somewhat disappointed. I tell them, just ignore those people. Those people are gone. They're with you temporarily. You got to focus on that last 20% or 10% that say that they'd be very disappointed. They hold the keys to figuring out how to get more people like them using the product like them. Really understanding those people are going to tell you what you need to do to start to build a sustainable customer base.

Speaker B: M Asking the question that way actually provokes a real emotional reaction. It's like people have some skin in the game. Uh, yeah.

Speaker D: To the point where sometimes I actually see people say, no, please do not tell me you're going away. And uh, as a company, you don't want to send that signal to your customers, but knowing that they make that interpretation and panic, that's a really good signal. It's not that hard to then reassure them that no, we're just gauging your interest and uh, looks like you care a lot, which is great news for us. Don't worry, we're not going anywhere. You can deal with it afterwards. But you really want to find that pulse to let you know if you have something that will actually scale.

Speaker B: Mhm. Yeah. Like you said, that could be a scary thing to ask your customers, especially so early on.

Speaker D: Yeah, I mean, I'll be honest, I hate asking my customers the question because you got to look at the brutal truth in the face when you get those answers. But um, that's really the only way to operate here. And that's why testing and data, there's just, uh, not a lot of room for guessing when you're doing that. Either it works or it doesn't work. Um, it starts with that reaction and then you're basically running tests to get more people to a similar state where they can't live without your product.

Speaker C: M the good news is as you get bigger, you can use metrics like your retention rate and whether it's stable or improving and some other indicators so you don't have to constantly scare everyone to death. But it's definitely a great early stage, uh, indicator.

Speaker B: Totally. Although even later on, there's no substitute sometimes for just asking your customers questions. Right. You can look at all the data that you want, but if you're not constantly talking to your customers and asking them the tough questions, then you're maybe missing out on some real hard truth.

Speaker D: My follow on question to that is always why I would be somewhat disappointed.

Speaker C: Why?

Speaker D: Usually what they say is because I would just use product X instead. That gives you the signal that your product isn't differentiated enough, which is uh, a scary thing. If you're a newcomer in a market,

Speaker C: it shouldn't come as a surprise, Sean used to own Qualaroo, which was a qualitative feedback tool. And that's where I worked. The two of us are big believers in getting real customer feedback, which you can have all the data in the world that really just tells you what's happening. Um, the qualitative feedback gives you the why behind it so you can make sense of what you're seeing in your analytics, which is, we think, essential.

Speaker B: Yeah, I think you guys mentioned in the book, this stuff seems obvious now, but people weren't really doing that before tools like Qualaroo and methodologies like this came about.

Speaker D: Yeah, I mean I even had a venture capitalist have to push me into qualitative. And I at the time told him, I don't care what people say, I care what people do. And uh, as the guy with the money, he said, you need to care what they say as well. And so based on him making me do it, I actually started running surveys and realized that the insights I was gaining from those surveys made me a lot better at running the test that led to better results.

Speaker B: There's so much, uh, I want to dig into here, but, ah, there's a lot in this book. So, um, moving on. Um, you say that after figuring out if your product is a must have, uh, it's time to consider hacking your customer acquisition as well. Um, can you tell us the story of how photo sharing startup Tickle's website copy experiment led to, I think it was a 53 million. 53 million new users in just six months?

Speaker C: Yeah, sure. Uh, TCL, which is a startup, uh, founded by James Currier who now runs NFX Guild, which is a startup accelerator for network effects businesses, um, launched TCL and one of the products they built several products, but one of the products that they built was a way to store your photos online. Um, this is before Facebook, this is before, um, even Flickr. Uh, so the idea of putting your photos online at this time was really a new concept. They started with the tagline, uh, store your photos online. Um, essentially a place for you to put your photos online. The functionality to share them and that type of thing was there, but the real messaging that they were using was here's a great way to keep your photos in one place online. What they found is that the growth was really anemic. Um, there was no word of mouth growth around the product because most people didn't really talk about storage space. It wasn't, um, incredibly noteworthy, uh, to talk about, um, in terms of viral word of Mouth sharing, um, they knew that, uh, they needed to ignite growth somehow. Um, they started playing around with the language that they used to describe the product. One of their experiments was to simply change the word store to share. Instead of store your photos online, it was now share your photos online. This one word change totally changed the perception of people who were using the product about what they were supposed to do with it. Rather than store storage, vault, security, backup, all of the things that go along with that word. Now, share is obviously, hey, put them online, send the links to friends, send emails to friends. It rapidly kicked in, this word of mouth growth because people suddenly knew that this service was meant as a way to share photos with one another. It just really shows how powerful the language that you use can be. The good news is that it's really easy to test language tools, uh, like unbounce and other ab. Testing, testing headlines is one of the easiest things you can do. You shouldn't underestimate, uh, the impact that that language has. I think maybe one of the less appreciated parts of that change though, isn't just the user growth that it helped drive, but it really changed the perception of the team internally into what the core value of the product was like, what the must have value of the product was. Instead of thinking about things like storage capacity and that type of thing, the product team, the internal team, started really focusing on how do we make this the best way to share photos, uh, online. In those early days, uh, it had multiple benefits. And it's really kind of an incredible story around the power of language.

Speaker B: I love that. And it's such a good illustration of how intimately tied things like copywriting or marketing is to, uh, product development and how you can't really separate these two things.

Speaker C: Yeah, absolutely. I love the internal perception change as much as I love the story of the consumer behavior change.

Speaker B: All right, so the next step in the customer journey after acquisition is customer, uh, activation. You suggest mapping the route to your customer's aha, ah moment, uh, and then pinpointing the stumbling blocks to that moment. Can you talk a little bit about that and how you use data to help through that process?

Speaker D: I'm happy to take this one. So data is the starting point. Data tells you what's happening. That's something that people have been doing for a while where they map out the funnel. And you can see at every step in the funnel you're going to lose some people. You will always lose people at every step in the funnel. What the data doesn't tell you is why you're losing those people. Um, for activation. I think one of the really, uh, probably Facebook did a lot of the pioneering here, but they were really smart about defining what the long term experience was and figuring out what they could get someone, the experience that they could get someone to that led to long term retention. Uh, what was it, ten friends in seven days or seven friends in ten days? Which one, Morgan?

Speaker C: I think it was ten, uh, and seven. But yeah, double check the book.

Speaker D: But essentially being able to define once they had a sufficient number of friends within a short enough time period that they haven't given up on the service, then they knew they could retain people long term. In that case, that aha moment of that number of friends, they could optimize everything that they're doing in the beginning to get people to that number of friends. And it really becomes a good, uh, focusing force in the business where everybody can prioritize what they're promoting people to do. Uh, the order in which you introduce features, some of the things that we just talked about with Tickle, how the promise of the product, everything can really get people to that experience. Then the friction part, what you want to be able to do is understand when people are dropping out of the funnel on their way to that aha moment, why are they dropping out? Just surveying them can be a big part of understanding why they're dropping out. And then that can feed back into the experimentation to get more and more people all the way to that aha experience.

Speaker B: So I want to ask you about, uh, what a lot of people think of the last point in the customer journey, which is retention. Can you tell us the story of Amazon Prime's successful retention hack and why you think it was successful? So successful?

Speaker C: Yeah, I think obviously Amazon prime is the subscription service that Amazon provides where you pay. I think now it's $99, but it was $79 when it first launched to essentially get free two day delivery. And then over time they've piled on a bunch of added benefits. Amazon is kind of the gold standard when it comes to retention rates. They have high 90% renewal rates year after year. I think even more impressive is that the people who are Amazon prime subscribers spend two to three times as much as non prime subscribers. Um, the program itself is really a huge part of Amazon's profitability. I think the hack, if you will, is twofold. One is that they charged you to get it. Um, marketers love to talk a lot about, uh, Cialdini and principles of influence and consistency and commitment is certainly a big one. Um, when you plunk down that $100, uh, you essentially want to make sure that you're getting your money's worth. Um, it's similar to uh, paying for uh, a membership at Costco or Sam's Club, which are some of the biggest warehouse clubs down here. Um, that when you've paid something in, you want to make sure that you extract the value of that investment. I think that's one then I think the other one is that they continue to stack new benefits onto it. Essentially create a habit. Most people start looking for retail goods online, not at Google, but on Amazon. The more habit forming engagement loops that they're able to build into your life. Whether it's prime now or Amazon Fresh or Prime Music or Prime Video, uh, it kind of reinforces that loop which makes their retention one of the best out there.

Speaker B: Yeah, I guess prime subscribers get access to TV shows now, right. And they could vote on which pilot they want to move forward. Like all this stuff that's so far away from maybe why somebody originally signed up, but it just keeps piling on value to their initial investment, right?

Speaker C: Absolutely. And now Amazon's winning Academy Awards for their prime programming and movies and all sorts of stuff. So it continues. It's kind of this virtuous cycle that uh, feeds itself. It's pretty amazing story.

Speaker B: So you finish off the book with a story about how growth is really a constant process. What can we learn from Skype about the dangers of complacency when it comes to hacking growth?

Speaker C: Yeah, I'll take that one Sean. I think one of the things we talk about is, is whether it's Skype or um, Levi's or we even experienced it um, a bit at Growth Hackers, uh, when I was there is that um, whether it's just organizational inertia, people getting too busy, um, maybe uh, taking their eyes off the ball a bit that companies can experience growth stalls. Um, these stalls tend to affect every company. Uh, but it really happens when the focus shifts away from growth. From keeping your eye on the core metrics and continuing to think about how you deliver value uh, to customers and how that changes over time. I think specifically with Skype, um, where they miss the boat was that a lot of the peer to peer communication that they facilitate was moving to mobile. You have these uh, apps such as Viber and then WhatsApp and Facebook Messenger. Skype really was a desktop experience and they didn't quickly grasp that consumer behavior was changing, uh, and move fast enough and iterate fast enough uh, to deliver that core Product value as consumer behavior changed. I think at Growth Hackers, what we saw when we experienced our stall for a couple of months is that we had stopped running experiments. We had slowed down in our experimentation process. Almost unknowingly when Shawn pointed that out and said, hey, we've lost our experimental velocity, um, as soon as we picked it back up, we dramatically restarted, kick started, uh, our traffic growth again because we were refocused and, um, rapidly learning, uh, what would drive new traffic. Um, I think all companies can experience growth stalls, and it's really about refocusing and then reigniting the experimental loop, um, to find new wins.

Speaker B: That's really interesting. It sounds like it's not even a question of the results of these experiments, but there's something, there's something to having a culture of constant experimentation that, uh, keeps companies from being complacent, that there's value in the experimentation itself.

Speaker D: Yeah, I think that experimentation is just another word for that is just adapting or another. And the marketplace that we're in is constantly changing. So it's not just the channels through which we acquire customers. It's the competitive landscape. It's the device through which someone is accessing our websites. And if we're not constantly experimenting based on ultimately trying to increase that North Star metric or that indicator of value that customers are getting, we're not going to be adapting to a changing situation. And so it's not just with growth, but it's even with core product that you can start to miss the mark.

Speaker B: Right. The landscape around you is changing no matter what. So you might as well change with

Speaker C: it and faster and faster every day. Um, it's almost hard to fathom from sitting inside an organization. Most experiments will fail. Uh, but it is that continual learning process continuing to try to learn and figure out what does work. Uh, the Facebook growth team is 10 years old this year. Um, uh, LinkedIn will turn 10. So growth is really never done.

Speaker B: Awesome. Well, I think that's a great note to end on. It's an awesome book. Everybody should read it. And, uh, I can't wait for it to come out. Thank you so much, guys, for taking, uh, the time to chat.

Speaker D: Yeah, thank you. And they can pick up the book@growthhacker.com so, like Growth hackers, but without the

Speaker C: S. All right, thanks for having us, Dan.

Speaker B: Thank you.

Speaker A: That was Sean Ellis and Morgan Brown talking about their new book, Hacking Growth, that came out yesterday, April 25th. If this interview got you excited about reading the full book, you can visit growthhacker.com for more info on where to get a copy for yourself. That's growth hacker without, uh, the S. And just a reminder for while we're on hiatus, make sure to subscribe to this feed in itunes or in Google Play, if you haven't already, as we'll be trickling out some exclusive goodies like this episode that you won't want to miss. That's your call to action. Thanks for listening.