The book “Hacking Growth” by Sean Ellis and Morgan Brown, is all about hacks to achieve hyper-growth. The book covers nuances of the entire customer journey from acquisition to monetization. What makes this book different from others is that this book is built on real examples. Authors Sean and Morgan also give tones of a systematic approach to achieve hyper-growth which is also implemented for GrowthHackers.com.
I will start the summary with some of the gold standard hacks which have been successfully implemented. Post that I will touch some of the principles of growth. It is possible that, in some case, you may not get the entire context, as I can not reveal all the information. However, I am sure, after reading this summary, you will take out time to read this book. Highly recommended.
Amazon link: Hacking Growth by Sean and Morgan
Gold standard hacks based on the book: Hacking Growth by Sean and Morgan
In this section, i am listing the classical examples to learn hacks from. All the examples are taken from the book Hacking Growth by Sean and Morgan
Embeddable plugins for virality
Uproar (online game space) tried the popular way of acquiring customers via paid ads but they weren’t bringing in enough bang for the buck. Then the team came up with the idea of plugging in a snippet of code that could be added to any website: one of the first embeddable widgets. The site proprietors would become Uproar affiliates, was paid just $.50 for each new game player the company acquired through their sites. This brought explosive growth for Uproar. Soon they were live on more than 38000 sites and shot to the top of the online gaming world.
Youtube also followed the suit be coming up embeddable video player widget that turned the online video into a phenomenon.
Paypal: Similar Autolink, a tool that automatically added PayPal logo and link to sign up to their all active auction listing. This PayPal – eBay integration tripled the number of auctions on eBay and ignited its viral growth. And eBay they end up buying PayPal.
Small subtle changes on the homepage
LogMeIn adopted the freemium model to differentiate themselves from GoToMyPC. They started giving away few services for free. Using these services, users on the same network can share files with other users. Still, they were not able to scale as they wanted. They did the survey and found that users did not believe that such premium services can be free!
Based on these insight company added a link “Upgrade to paid services” prominently on the homepage. They also streamlined the installation process and the result was 700% uptake.
So sometimes, which is obvious to the company may not be obvious to the customers. Survey helps.
Achieve virality via simple message like P.S.
Hotmail: In order to tap into viral quality of web products, they added a simple tagline “P.S.: Get your free email at Hotmail” in all their communications. This simple P.S. message improved their matrix many-fold.
Highrise (customer relationship management product) changed the message from “Signup for free Trial” to “See Plans and Pricing”, netted 200% more signups.
Tickle (Photo sharing site) changed the communication from “Store your photos online” to “Share Your Photos Online”. This small change from “store” to “share” completely altered users perceptions and suddenly they started uploading pictures. In 6 months Tickle had 53 million users to service.
P&G‘s Febreze communication was changed from “Cleans bad smell out of fabrics for good” to “for freshness that surrounds you like never before”. This small change brought much-awaited success for Febreze
Bringing Network effects to skyrocket growth
LinkedIn – After struggling for quite some time to increase signups, in 2003, LinkedIn launched the feature to painlessly upload and invite email contacts saved in their outlook address book. This superior dash of programming kicked network effects which none of the traditional advertising could have done. We know the results.
Facebook acquired Octazen which had developed services for importing users, that fueled the growth story of Facebook.
Referral program – offer what users value
Airbnb: Referral works well when the overall experience of the people in that ecosystem becomes rich. This mode works well for “product/incentive fit” product. Second, the reward should be related to the core value of the product. Third, the important point is the language used in the referral message should be personalised. For example, Airbnb used “Your Friend <<Name of friend>> gave you $25 off your first trip on Airbnb, the best way to travel. Be sure to say thanks. CTA – Claim your credit.” The result is in front of us.
Paypal v/s Dropbox: Heavily funded, Paypal had spent $60-$70 million on the referral program. Others company tried to copy it but could not succeed. Then comes Dropbox. After experimenting with multiple offerings, they came up with giving away 250 MB of storage in exchange for referrals. It ended up going from 1 lakh to 40 lakh customers in 14 months.
So, apart from smooth referral procedure, giving away the rewards which are valued by the customers and are related to that ecosystem, bring virality. Food company giving away free meal would be valued more than a coupon of Rs. 50.
Crowd-Sourcing Model
Facebook: When Facebook wanted to go global, the daunting task was to translate the products into all conceivable language. This is how they managed.
”Growth was not about hiring 10 people per country and putting them in the 20 most important countries and expecting it to grow. Growth was about engineer[ing] systems of scale and enabling our users to grow the product for us.” Johns has called it one of the most significant levers in scaling Facebook to the massive reach it enjoys today. (p. 15 of the book).
Facebook enabled users to convert the platform in the language they want and got unprecedented growth.
Walmart: Another great case in point is the Savings Catcher mobile app by Walmart, which arose from assessing user behaviour around the company’s price matching policy. To capitalize on the boom in ad matching, a practice whereby retailers agree to match the lowest price on the market for an item, Walmart’s growth team enlisted the engineers to build an app that could allow customers to upload their receipts from shopping at Walmart via their phone’s camera and automatically receive cash refunds from the company if another chain had advertised any of their purchases for less. Besides, the engineering team realized that it could marry the data Walmart was collecting as part of its price-matching program with the ad campaigns being run by their paid search teams, leading to big savings in ad spend by only bidding aggressively on items where they were the clear price leader. (pp. 26-27 of the book)
Later Walmart used these insights on pricing gathered from the customers for varieties of a decision like bidding (if they are price leader) etc.
Engineering marvel for growth
Airbnb: Airbnb struggled for 2-3 years before they reverse engineered the way to list their products on Craiglist free of cost. Millions of users clicked over to Airbnb and their room booking skyrocketed. Later they were blocked for this unauthorized access but by then Airbnb growth had taken off.
This hack was not simple for Airbnb. The engineers had to match pixel by pixel functionality of that of Craiglist. As per Andrew Chen, who leads rider growth at Uber, commented when analyzing the hack, “Long story short, this kind of integration is not trivial. There are many little details to notice, and I wouldn’t be surprised if the initial integration took some very smart people a lot of time to perfect.”
Hacking Growth by Sean and Morgan (p. 16)
Mr Chen concluded, “Let’s be honest, a traditional marketer would not even be close to imagining the integration above—there’s too many technical details needed for it to happen. As a result, it could only have come out of the mind of an engineer tasked with the problem of acquiring more users from Craigslist.”
Power of Survey
BitTorrent: Answer of one of the questions of the survey stunned the team members. They had been trying to aggressively promote the paid version of the product. However, the survey revealed that the majority of the customers even the most active customers did not know that the pro version even existed. Immediately they placed a highly visible button “Upgrade to Pro” and this simple change brought instant 92% increase in revenue per day.
One of the surveys also revealed that users major pain points were around draining of the battery. In pro-version BitTorrent had the functionality to turn off the battery-draining background file transfer but not in the free version. Now they cleverly prompted users to upgrade when the battery falls below 35%. Another technological masterpiece. This resulted in a 47% increase in revenue.
Love hack
Bit Torrent: Another success came from love hack. Looking at the data, they identified a clear pattern in day to day downloads of the app. If the first several reviews were negative, daily installs saw the huge dip. In general, a larger portion of users leaves feedback when they experience something bad. Hence, they brainstormed and came up with flow to capture user feedback when the experience was good using pop-ups. Positive reviews started flowing in and converted into a 900% increase in four and five-star reviews.
Gamification
Adobe: LevelUp (Photoshop software of Adobe) converted boring tutorials into missions for trial users to complete. They saw a 4X increase in the trial to purchase conversion
Zappos: Sometimes gamification may backfire if the rewards are not suitable. Zappos launched VIP program and issued a badge to users. But users did not know what to do with that badge. There was no discounts or any value. And ultimately it was shut down
Loyalty program
4 elements for loyalty programs are
- should give status
- Should give access
- Should give power
- Should give stuff
The case in point is American Express Membership Rewards that deploy all these 4 elements. Similarly, Starbucks Reward program gives star for buying coffee and has a leaderboard concept. Now they have over $1 Billion user’s preloaded money.
What was the magic behind their successes?
Growth is not achieved via hunch or gut feeling. You need to have compelling products backed up by data-oriented cross-functional growth team. Once these two are in place, they will set up their north star matrix, hacking processes and bring customers as quickly as possible to Aha moment. Empower team with the backing of one of the CXO, they will surprise the company with the hacks.
Build the product that customers ‘actually’ need
Just think of Google Glass and Amazon’s Fire Phone—both innovative products … that nobody wanted. Or the infamous Microsoft Zune media player, launched in November 2006, which Microsoft reportedly spent at least $26 million to promote but which never generated more than a tepid response. The Zune was not a bad product; many critics considered it quite well designed. But it added no “wow factor” to make it more appealing than Apple’s already ubiquitous iPods. (p. 66)
So, focus on growth is always tempting but should be done only if you have identified the Wow Factor also known as Aha Moment.
Without the Aha Moment, both the products and efforts of the growth team will fall flat because of below two reasons.
- You will end up spending precious money and time on wrong efforts
- Rather than turning early adopters into a fan, you may end up making him disillusioned or even angry critics
BranchOut’s founder, Rick Marini, conceded in a 2012 talk that the company had erred in trying to rush user acquisition without delivering on the product experience. “Often people think there’s a silver bullet to getting traffic and going viral,” he said. “What we’ve learned is that there are times when you can get some spike of virality, but if you want that long-term major user growth it’s got to start with a good product. We realized, OK, we’ve got to really enhance the product and get users back every day. Don’t be an episodic utility, be a community. And now we’ve got to make that shift.” (p. 62 of the book)
Build a dream team – a cross-functional super powerful growth team
As highlighted by a McKinsey report, one of the most damaging effects of departmental silos is that they slow innovation that drives growth.
From the book: Hacking Growth by Sean and Morgan
Authors explain, “research shows that the ability to collaborate in networks is more important than raw individual talent to innovativeness,” a survey McKinsey conducted found that “only 25% of senior executives would describe their organisations as effective at sharing knowledge across boundaries, even though nearly 80% acknowledged such coordination was crucial to growth.”
So book suggests having cross-functional growth team including members from marketing, product, technology and one CXO level person. Ideal growth team comprises of
- Growth lead
- Product Manager
- Software Engineers
- Marketing Specialists
- Data Analyst
- Product Designers
In a company growth team can one or multiple. In LinkedIn and Pinterest there are many growth teams. In Facebook and Uber, there is a single growth team.
Growth team should also own the complete funnel, unlike the traditional version where the acquisition was managed by the marketing team and rest all (activation, retention and monetization) by product and engineering.
Follow below processes and growth precursors
The four steps are
- Analyze
- Ideate (Who, What, Where, When, Why and How + Expected outcome)
- Prioritize
- ICE Score – Average of Impact, Confidence, Ease of any idea
- TIR Score – Average of Time, impact and Resources of any idea
- PIE score – Average of Potential, Importance and Ease of any idea
- Test – 99% statistical confidence
Identification of channel is also important for the growth. Book elaborates it in detail. In nutshell, they are dependent on cost, targeting, control, input time, output time and scale
Bringing Virality is another important win for the growth team. It can be brought either via traditional word of mouth or instrumental (i.e. feature built-in product that hooks user). To achieve virality, its coefficient must be greater than 1.
VIRALITY = PAYLOAD × CONVERSION RATE × FREQUENCY
From the book: Hacking Growth by Sean and Morgan
Where
- Payload = No of people to whom a user is likely to send promotion
- Conversion rate = % of the payload forwarding it
- Frequency = Rate at which people will be exposed to this promotion
VIRAL COEFFICIENT (K) = INVITES SENT OUT BY CUSTOMERS × THE PERCENTAGE OF THOSE INVITED WHO ACCEPT THE INVITE
From the book: Hacking Growth by Sean and Morgan
In the end, the growth team must accept and enjoy
- Power of small gains
- Importance of Small wins
Identify growth Lever – Matrix that matters a.k.a North Star Matrix
There should be one matrix which entire organization should be obsessed with. This matrix is also known as North Star Matrix. Two companies in a similar space can have different north star based on their culture, ambition and objectives.
| Name of Company | Growth Lever/North Star | Reason |
| DAU | Ad based revenue | |
| Signups | Revenue from a job posting so they need profiles | |
| eBay | No of items listed for sale | Sets in the spiral loop for auction |
| Yelp | No of reviews in 15 days | Increases stickiness |
| No of messages sent/day | Here DAU is not important | |
| Airbnb | Night Booked |
Identify Aha Moment
Aha moment is the best experience that a user can get during the journey. Once a user experiences that aha moment, most likely they have become yours. Some of the classical aha moments of the successful companies summarised in below table.
| Name of Product | Known For | Aha Moment (Origin of developing Stickiness) | Follow Up |
| Yelp | City search | Post Reviews (which were earlier buried laughable deep in the site. Customers found and adopted it) | Yelp transformed itself to became a review site. #featureCreep removal |
| Uber | Cab aggregator | You push a button and a black car comes up | |
| Microblogging | Appreciate the value after following 30 people | Lure user to follow at least 30 people during signup | |
| Qualaroo | Survey site | The user gets more than 50 response | |
| Slack | Team chat | Sent and 2000 messages to each other | |
| Tinder | Dating site | But in reality, the platform for tightly networked group | So they targeted even married person as a married person will have friends who are bachelors |
| Netflix | Video Streaming | Binge-watching – Kevin Stacy films and Political drama | Launched House of Cards |
| RJ Matrix | Business intelligence company | If the user edited the two charts, they are more likely to stay | Made editing key step in user acquisition |
| Earlier known as Burbn (location-based social network) | Taking and sharing Photo | Removed all features but photo sharing and renamed as Instagram | |
| Originally Tote (mobile commerce app) | Collecting things, they coveted on the app | Removed all features but collections and renamed as Pinterest | |
| Youtube | Video dating site | People uploaded all types of video | Pivoted to the home of video online |
| Hubspot | Enterprise-level CRM | People stayed after training | Training cost was made mandatory and included in the cost |
| Social networking | Connected to at least 7 friends in first 10 days | NUX (New user experience) was updated to add more friends | |
| Text and Voice messaging app | Send an unlimited message to friends and families without worrying about the cost |
So what next? What steps to follow?
The book suggests to manage below four steps.
- Acquisition
- Activation
- Retention
- Monetization
Acquisition
Hacks we have read so far are primarily targeted towards customer acquisition. You may want to read it again keeping acquisition in mind 🙂
Conversion trinity: Bryan Eisenberg, who is widely considered the godfather of conversion optimization, refers to these three factors as the conversion trinity: communicate relevance, show the value of the product, and provide a clear call to action
Hacking Growth by Sean and Morgan (Page 183)
Other powerful and proven methods for improving NUX
- Single sign-on
- Flipping the funnel (let the customer enjoy the service before signup)
- Add positive friction (covered fully in the book “Influence – The psychology of persuasion”)
- Provisioning for Psychological reward (e.g. completed profile in Linkedin. It increases stored value (i.e. people put more information)
- Crafting a learn flow (Twitter – How to tweet, Pinterest – How to Pin, discover pinned content and create boards)
- Gamification (It should have the meaningful reward, creating surprise and delight the way it is presented and should provide instant gratification)
Activation
Activation is all about driving customers towards Aha Moment. This is the best and most suitable road to converting that customer into a loyal customer. Hence the team should analyze all the steps needed to reach Aha moment and if there is any unnecessary step, that should be immediately removed from the onboarding.
Another aspect is to reduce friction. Remember
DESIRE – FRICTION = CONVERSION RATE
Hacking Growth by Sean and Morgan
Book summaries activation in following three steps (page 181)
- Map all of the steps that get users to the aha moment;
- Create a funnel report that profiles the conversion rates for each of the steps and segments users by the channel through which they arrive;
- Conduct surveys and interviews both of users who progressed through each step where you’re seeing high drop-offs, and those who left at that point to understand the causes of drop-off. You can then use this information to create new, highly targeted, and high-impact ideas to experiment with to improve your results.
Retention
Retention is all about rewards, stored value building habit loops.
Rewards
If there is one case study to study on retention it will be of Amazon Prime membership. It is of the gold standard. They bank on rewards like 2-day delivery, free delivery, amazon prime video etc. Just look at the conversion rate.
- 73% converts from trial to paid customer for amazon prime
- 93% renew from the first year to the second year
- 96% renew from the second year to the third year
Stored Value
Another route of user retention is stored value. The more customer adds information, the more the company will have the data. And this will increase the switching cost of the customer. Case in point is Evernote. The more customer uses Evernote, more data is added on the platform and hence more sticky it becomes. This behaviour gives a smiley graph of retention.
Building a habit loop
Create a loop for the trigger, action, reward and habits. The entire book is written on this: Hooked: How to Build Habit-Forming Products by Nir Eyal
There are three stages of retention- Initial, medium and long. So crafting retention matrix is important for all stages. For example, Apple knows people will come back to buy an iPhone after 2-3 years. So to keep engaged by coming up additional services.
Other methods
- Continuous onboarding – there should a small but the interesting learning curve for users in the long term (ramp-up)
- Avoid feature bloat – In order to impress users, feature bloating should be avoided. Ex. Microsoft
Monetization
Last in the series is monetization. This step is not completely under the growth team as pricing has many stakeholders. However, the growth team can influence customer by below hacks.
- Map purchase funnel (identify pinch points: the stage where earning are lost)
- Build subscription Model
- Come up with a powerful recommendation engine
- Work on Pricing (Charm price: i.e. price ending with 9)
How to identify the right price (Page no 246) – “persona/pricing fit”
- At what price point does [your product] become too expensive that you’d never consider purchasing it?
- At what price point does [your product] start to become expensive, but you’d still consider purchasing it?
- At what price point does [your product] start to become a really good deal?
- At what price point does [your product] start to become too cheap that you’d question the quality of it?
Pricing Relativity
Pricing relativity is one of the best concepts in the book. Will urge you to read Page no 252 of the book. It’s about how to use a decoy package that helps in boosting the high priced package. The chapter also covers in details that, why less is not always more! Another good concept is understanding of penny Gap (large difference free and pro products at very less price). One fitness app got a 300% increase in revenue by implementing this penny gap.
Growth team should also keep an eye on following avoid the following
- Growth stall (Ex. Skype)
- A false sense of security (this leads to failure to innovate)
- Over resilient on one channel
- Swimming with shark
- Not taking moonshots
Good to learn: Principles affecting consumers behaviour
Following 6 principles were suggested by Robert Cialdini (More details on page no 258 of the book)
- Reciprocity—whereby people are more likely to do something in return of a favour, regardless of the favour done and the ask now presented to them
- Commitment and consistency—people who have taken one action are likely to take another, regardless of the size or difference in action (downloadable pdf, wish list)
- Social proof—in a state of uncertainty, people look to the actions of others to help them make their own decisions (testimonials)
- Authority—people look to those in the position of authority to decide which actions to take (Ex: I want an expert opinion, Sign me up!)
- Liking—people will do business more readily with people and companies they like over those they don’t or are indifferent to (Airbnb used Pic of the sender which was liked by the receiver in referral program)
- Scarcity—people will take action when they are worried that they will miss out on the opportunity in the future (FoMo)
My take on the book
While reading the book, it looked like growth hacking is easy if first principles are followed. Authors gave a lot of hacks and supported them by the number of real-life examples. At any point in time, while reading the book, I never felt as if the author was preaching. Both the authors are hand-on professionals of growth hacks and rather it looked like getting one on one session with the authors.
It took me 15 hours to read the book. I enjoyed it so much that I invested another few hours writing the summary. My eureka moments were understanding of Aha Moment, North star matrix, systematic approach for growth and the role of technology for growth. However, the most important learning was to believe that growth can be achieved systematically.
In nutshell, Growth hacking is a team effort. The greatest successes come from combining programming know-how with expertise in data analytics and strong marketing experience. Very few individuals are proficient in all of these skills. So, it’s a team game.
If you are serious for growth, you should read the book. Highly recommended.
Amazon link: Hacking Growth by Sean and Morgan
Disclaimer: Some of the words are directly taken from the book. Also, I am under Amazon affiliate so I earn a bit for qualified sale without adding any cost to the buyer.
1 comment
Thank you sharing the summary. I will surly read the book.
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