Growth Hacking: What Lean Startup Principles Bring to Marketing

A talk prepared for Bend WebCAM, a creativity and marketing conference in Bend, Oregon. Presented on October 13, 2014

Transcript

1. Hi, I’m
   @farrahbostic
4. Growth Hacking! What Lean Startup Principles Bring to Marketing
5. 3 things What is Lean & why should it matter to marketers? What’s all that got to do with “growth hacking”? How do we do it?
6. #1
7. What is ‘lean’?
8. It’s a reaction to waste, superstition, and bias.
9. what is the purpose of
   a lean organization? 1. To specify customer value. 2. To identify & implement the actions that create value. 3. To remove anything that doesn’t create value. 4. To analyze the results (and repeat).
10. Requirements Design Implementation Testing Maintenance The traditional software 
 development model
11. The problem with waterfall Full management teams Assuming the customer is known Assuming the features are known Assuming growth happens by execution High burn rate Swinging for the fences The results for start-ups:
12. Principles of Lean Start-ups Assume customer and features are unknowns Continuous customer interaction Revenue goals from day one No scaling until revenue Low burn by design, not crisis
13. iteration is for learning, empathy & intuition
14. startups do experiments!! Build Measure Learn
15. “A start-up is designed to grow fast” Which begs the question, can larger, more established companies grow fast?
16. why should this matter to marketers?
17. i come from advertising.
18. creative We expect this guy to be a genius. 
 Every time.
21. http://www.rswus.com/survey/2011-survey-clients-look-ahead-at-agencies how marketers choose their partners
22. why marketers fire their partners Bad strategy, bad creative, bad service. http://www.rswus.com/survey/2011-survey-clients-look-ahead-at-agencies
23. we have a product-market fit problem http://www.rswus.com/images_and_uploads/2014-RSWUS-Agency-Client-New-Business-Report1.pdf
24. how (a lot of) 
 marketing people deal with data
25. marketers want roi, 
 but avoid defining what that is. You’d think it might be cost per acquisition, or customer lifetime value, or revenue. But often, KPIs are less about business results, and more about media performance.
26. exhibit A: 
 “passion” is a kpi. http://www.cmo.com/content/cmo-com/home/articles/2013/9/26/KPIs_CWTK.html
27. agencies hate testing. ! and marketers test the wrong stuff.
28. http://apgsweden.typepad.com/apgsweden/files/TESTINGTODESTRUCTION.PDF
29. IT’S EASY TO FOCUS ON VANITY METRICS “Numbers that make us look good but don’t really help make decisions.” 
 Eric Ries, 
 The Lean Start-up
30. marketers rely heavily on vanity metrics * *
31. this is not a new problem. “What do you want from me? Fine writing? Or do you want to see the goddamned sales curve stop moving down and start moving up?” 
 - Rosser Reeves
32. thinking like this 
 shows how marketing 
 is not like growth hacking. http://smithery.co/making/make-things-people-want-or-make-people-want-things-my-slides-from-idejax/
33. the product trap
34. building something people want isn’t enough.
35. Build something people want, but… Sometimes there’s no market. Sometimes the market is too small. Sometimes the market is too hard to reach. Sometimes the market is too competitive.
36. “Poor distribution - not product - is the number one cause of failure.” — Peter Thiel
37. true story.
38. the moral of the story… Most failed startups had a product. But ALL failed startups didn’t have enough customers. Same goes for big companies, too.
39. Principles of Lean marketing Assume marketing strategies are hypotheses to be tested. ! Continuous customer interaction - with both client & consumer. ! Establish clear goals for marketing from day one. ! Start simple, iterate on successes and learn from failures. ! Create right-sized, integrated teams, 
 and use the right resources & tools as they are needed. ! Keep score with clients, vendors & partners.
40. #2
41. what is growth hacking?
42. Growth hacking is a marketing technique developed by technology startups which uses creativity, analytical thinking, and social metrics to sell products and gain exposure. It can be seen as part of the online marketing ecosystem, as in many cases growth hackers are simply good at using techniques such as search engine optimization, website analytics, content marketing and A/B testing which are already mainstream. Growth hackers focus on low-cost and innovative alternatives to traditional marketing, e.g. utilizing social media and viral marketing instead of buying advertising through more traditional media such as radio, newspaper, and television. Growth hacking is particularly important for startups, as it allows for a "lean" launch that focuses on "growth first, budgets second."
43. growth hacking is hawt
46. Growth hacking is about distributing the product, 
 not marketing the brand.
47. startups look for evidence 
 of customer demand Startups (should) focus on how many people are using and/or paying for their product. ! Marketers often assume demand already exists 
 - and focus instead on preference, loyalty, enthusiasm, participation, etc.
48. growth hackers experiment with channels and messages Like many marketers, some founders spend most of their effort on channels they are familiar with, or think they should be using. Which means marketers in a sector tend to use the same channels & methods.
49. the law of shitty click throughs “Over time, all marketing strategies result in shitty click- through rates.” 
 - Andrew Chen That is, all marketing channels eventually become saturated.
50. don’t go chasing customers. Growth hackers start by asking… Does this channel have enough users to be meaningful?
51. true story.
52. facebook • youtube • linkedin • instagram • slideshare • Pinterest • snapchat • tinder • oculus rift • buzzfeed • upworthy • twitch • soundcloud • smart tv • yahoo! • gmail • seo • sem • adwords • atlas • twitter
53. I blame hockey-sticks
54. creative and this guy.
55. he is the mascot for all the things we think are true about marketing 
 because tradition.
57. read this book.
58. Buyer behavior varies.
59. Your customers are pretty much the same as your competitors’ customers.
60. The lower your market share, the less ‘loyal’ your customers.
61. Loyalty is mostly habit.
62. to consumers, 
 you and the rest of the category are mostly indistinguishable.
63. People know and talk about brands they use and ignore the rest.
64. People like 
 what they buy (rather than buying what they like).
65. so…
66. the only thing that matters is growth.
67. the path to growth Attain Sustain Gain Make something people want Find product/ market fit & fine-tune the product Get the product into people’s hands (aka, “scale”)!
68. #3
69. how do we get started?
70. growth hacking & product development can not be silo-ed.
71. beta test ideas & products simultaneously Product Development Product Distribution =
72. Why? 
 Because growth hacking gets customers, 
 and product keeps them.
73. What matters is value creation CONVERSION ENGAGEMENT To your 
 BUSINESS To your 
 CUSTOMER
74. CONVERSION = business value Acquisition - drawing people into the brand experience Revenue - converting visitors into customers Referral - converting customers into advocates
75. engagement = customer value Activation - people enjoying the experience... Retention - enough to come back often... Referral - and recommend the experience to others
76. so, um, yeah.
 big data.
77. “The Data Will Tell Us What to Do”
78. theory v. information “Who needs theory when you have so much information? But this is categorically the wrong attitude to take toward forecasting, especially… where the data is so noisy. Statistical inferences are much stronger when backed up by theory or at least some deeper thinking about their root causes.”
79. How to Hypothesize
80. What’s a hypothesis? ὑπόθεσις “to suppose” ! It’s a proposed explanation for something. You have to be able to test it. The simplest explanation should (usually) be the best. It should apply to more than one instance of the thing happening. It should help explain other things in the future. It should fit with the evidence.
81. The main flaw in marketing hypotheses: We’re usually focused on explaining the brand, 
 not understanding the customer.
82. We should explain what creates value for customers We test hypotheses that: Help us make decisions Help us create value for our customers Help us develop empathy for people so deep we can anticipate solutions to problems they can’t yet express * with apologies to Arthur C. Clarke
83. Cool story, bro.
84. We need to understand 
 people and behavior 
 to make better predictions 
 and measure outcomes more effectively.
85. how do we know if it’s working?
86. metrics!!
87. awesome!!
88. metrics are awesome because… 1. Metrics reduce arguments based on opinion. 2. Metrics give you answers about what really works. 3. Metrics show you where you’re strong. 4. Metrics allow you to test anything you want. 5. Clients love metrics. http://bokardo.com/talks/metrics-driven-design-sxsw.pdf
89. which metrics matter? Acquisition Activation Retention Referral revenue Users from channels come to site, 
 landing page, etc. Users have a successful first experience. Users re-visit multiple times. Users refer others via email, links, blogs, widgets, word of mouth, etc. Users buy, download, register, etc.
90. What should you test for? What is the cost to acquire a customer? How many customers are available here? How well do they convert? How long does it take to convert?
91. tests should be specific First, you’re testing to assess the potential of the strategy (the context + the content). Optimization comes later. Too often, marketers skip to optimization metrics before we’ve properly assessed the potential of the strategy.
92. tests should be continuous & evolving A ‘law’ of growth hacking: Which tactics move the needle tend to evolve, 
 as your customer base evolves.
94. BUT WHAT DO YOU DO
    WITH WHAT YOU MEASURE?
95. FIND EVIDENCE OF CUSTOMER DESIRE ! MAKE DECISIONS ABOUT WHAT TO CHANGE
    ! LEARN WHAT TO DO NEXT ! GROW