Growth with a Capital “G”: What It Is and How to Get Started
Everyone is talking about Growth with a capital G these days, but few people fully grasp what that really is. More often than people would like to admit, organizations treat growth like some kind of black box. They know it’s important, but they aren’t exactly sure how it works.
At its core, growth is really an experimentation framework. It’s a structured way to develop a set of hypotheses across marketing & product experiences that are informed by what you know about your customer and your business. And, once you have established those hypotheses, you prioritize them, test them and discover what works and what doesn’t so you can rally your resources around the most viable opportunities.
For organizations unfamiliar with the inner workings of an effective growth strategy, integrating this function can be difficult. Having spent eight years at SurveyMonkey—most recently as the SVP of Growth—and now taking on the role of SVP of Product and Growth at Malwarebytes, I have first-hand experience dealing with the challenges of bringing growth into the mix from the ground up. To be successful, you need a few key elements:
- A certain level of organizational scale and maturity
- Access to data and a certain amount of expertise in working with it
- A way to determine which experiments to run and which metrics to track
- The ability to communicate with and collaborate with other teams in the organization (especially product & marketing)
- Buy-in from the executive team
It isn’t as hard as people imagine to get started with a solid growth strategy, but it really helps if you can get your head around these basic requirements.
First Things First: What You Need Before You Start
When thinking about starting a growth team, the first thing a company needs to look at is whether they have the scale for the effort to be worthwhile. If your company is still trying to find product-market fit, this isn’t the right time to launch a growth team. At this stage, your entire company should be in the growth mode with resources consumed on getting customers through the door so you can demonstrate the value of your product and establish yourself in the marketplace. The time to think about implementing a growth team is when you are ready for your second growth curve (post initial product market fit growth event) and have scaled to a point at which optimizing customer experiences can yield huge benefits.
You can’t skimp on the data.
The next piece of the growth puzzle is a solid analytics platform. Without this, you’ll never know which experiment to run. For your growth efforts to be effective, you need to be able to dig deep into customer behaviors and how they relate to your product. You need to be able to analyze what’s happening at each stage of the customer flow so that you can understand your KPIs and what actually drives revenue outcomes. Without this critical insight, your efforts will just be shotgunning all over the place.
When it comes to metrics, my playbook is fairly standard. Even though it can be a vanity metric that can usually only be affected by marketing, you still want to look at traffic in case there are opportunities to experiment. From there, you just move down the funnel and look at signups, installs and activation moments. This is all about identifying the “a-ha moment” at which users realize your product’s value. After that, you’re able to look at conversion (how many of the people who hit the “a-ha moment” convert into paid users) and retention (both engagement-based and monetary-based retention).
These core metrics are the base levers we’re trying to pull with growth experimentation, but underneath them there is a slew of smaller metrics, and those smaller metrics are the ones we’re actually trying to impact. Activation is the high-level metric, but what is activation? Activation is a successful sign-up and effective onboarding that gets the user to that “a-ha moment.” Throughout this process, there are multiple levers to pull and metrics to look at so you can start to see cause and effect patterns. You’re working with a waterfall of metrics with bookings at the top, levers on the second level and then diving deeper into each individual KPI to impact and test its causation to a lever.
That said, data isn’t the whole story.
The right data and analytics are mandatory. They are the absolute foundational block to understanding how and where to focus your growth efforts. That said, there is no one-size-fits-all method for determining which test is the “right” test to run. The answer to that million-dollar question is equal parts expertise and gut feelings. On the expertise side of things, you need to have a good handle on benchmarks. What’s the usual sign-up rate on the homepage? What is the usual activation rate in the premium model versus the trial? What is the conversion rate of the trial versus the conversion rate of just true freemium without a trial? You can look at your own data as well as from other organizations with a similar business model.
While it’s important to do your due diligence and collect all those numbers, determining which test to run is still a bit of a guessing game. Know your customers. Know your business. Know your market and industry trends. Make sure your team delivers awesome customer experiences. From there, you have to just jump in and start forming hypotheses so you have something to test. The good news is that wins come from learning, but learning doesn’t only come as a result of success. Some of your most insightful learning (and, therefore, biggest wins) will come from failing. Don’t optimize around winning, optimize around learning. Make sure your team is enabled to fail because failing equals learning.
At SurveyMonkey, we had an amazing win when we implemented a try-before-you-buy mode. Instead of a limited trial that included all the features, try-before-you-buy made it possible for users to add paid features to their surveys; they just couldn’t send the survey with paid features unless they opted for a paid plan. The idea was to help users reach that a-ha moment of understanding the value of the paid product, and it worked, delivering double-digit improvements in the conversion rate.
Just as important, however, were all the “failures” we’d had on other growth experiments around the homepage and pricing page. While those experiments didn’t yield the kinds of results we were hoping for, we learned a great deal about which kinds of optimizations matter (and don’t) to our user base. And that deeper understanding of user flows and behaviors empowered us to make bigger bets on other experiments, like try-before-you-buy.
The bottom line: there is no magic formula for selecting the “right” growth tests to run. Your best bet is to try and strike a balance between impact and efficiency. You want to choose an optimization that will actually make a difference, but you also want something that will be fairly easy to implement. Pick something that changes your business model entirely, and your infrastructure might not be able to support it. Pick something too subtle, and you won’t be able to move the needle to make it worth your time. In other words, do your homework and then pick your battles carefully.
Playing Well with Others: How to Integrate Growth with Other Teams
Apart from the data and customer insights and hypotheses, there’s another very important part of a growth team’s success that cannot be overlooked: learning how to integrate well with other functions in the organization. There’s a lot of talking you need to do when you’re working to launch a growth effort. In fact, a lot of Growth is about selling growth concepts within the company—creating alignment and finding allies. But in the end, growth concepts are all about connecting your customer with your product, delivering positive outcomes for both. Growth should be positioned as something that can help other departments meet their goals of growing the product, driving feature adoption and monetizing more successfully. All while improving customer interaction with your business. All of this becomes part of a single, aligned mission in a company with strong growth culture.
If I had to describe the relationship between growth and product, I’d have to go with, “It’s complicated.” Apart from the fact that a growth team is fundamentally supposed to challenge existing concepts and beliefs (which are typically predicated on the product), there’s the fact that these two groups are incentivized very differently. Product teams are rewarded for the process of releasing, so that’s what’s most important to them. Growth teams, on the other, are incentivized on improving the metrics. While a product team is focused on engineering new features, a growth team is focused on landing those features successfully with the customers to drive engagement & monetization. So, growth is just an extension of product. You can argue that growth is a way to have an outcome-driven product. But with misalignment of incentives, it can be difficult to prioritize what’s actually going to be developed for a production-ready experiment and what can instead be hacked to get a dirty read on customer response to a new feature or flow. Again, it’s all about striking a balance.
SALES & MARKETING
A lot of growth teams evolve out of marketing groups because marketers are already working on how to hack the acquisition flow, optimize and drive acquisition into the product. Making the transition from marketing to growth is a lot more difficult in a product-led company because optimizations change the product experience rather than elements outside the product. They key is to make sure everyone—no matter which team they are on—looks at every situation and scenario through the eyes of the customer. After all, it’s the customer who is interacting with your acquisition strategies and your product strategy. I’m a firm believer in having the growth team overlap with marketing and product as a way to ensure a seamless and cohesive customer experience.
This applies even on the B2B side, which is a little more challenging, especially for enterprise businesses. The more complex sales cycle—with longer lead times, sales team interactions, demos and multiple funnel steps—creates an environment over which a growth team has little control. Even so, I’ve seen some organizations start very successful growth hacking teams by looking at the acquisition challenge in a data-driven, quantitative way.
Customer success is another area that can pose some unique challenges for a growth team. We’re entering an age in which enterprises are demanding products with consumer-grade usability and enterprise-grade functionality. Organizations delivering this kind of product can only achieve efficiencies of scale in customer success when they can accurately apply their customer success resources only to the accounts that truly need their support. You want to be able to rely on the product to solve customer problems so that you can reduce the overall demand on your customer success team as much as possible. This can be especially challenging in some industries, like cybersecurity, which requires complex deployment across multiple endpoints. But, in general, I like to put pressure back on the product by exploring how to solve customer challenges with UX, UI and very high usability interfaces.
Easier than You Might Think: How to Get Started
Getting started with growth doesn’t need to be that complicated. Before you run out and hire a growth team, take some time to do some testing internally. There are only two things you need to begin. First, you need data and you need to know what to do with it. Do everything you can to build and sustain a data-driven culture within your organization—capturing it and ensuring data hygiene. Second, you need the ability to execute on an A/B test—knowing how to track it and understand the outcomes in terms of how they relate to the original hypotheses.
If you have these two things—data and the ability to run an A/B test—you have what you need to empower someone to run some experiments. Some of the best growth I’ve seen came out of teams like FP&A, engineering, product management and even analytics and marketing. That’s because these teams already understand the connection between the customer’s journey and business outcomes. You might be pleasantly surprised at what you can learn with some internal tests.
And then, once you’ve achieved some traction and gained some internal buy-in from other functions, you can start building a more formal growth team. Taking a gradual approach that involves existing team members will help ensure a smoother integration of growth into your organization, better internal adoption and more effective collaborations.
On top of this, you need to secure support from the CEO and executive team. They will play an important role in driving alignment across the entire organization and ensuring that the growth team has all the resources it needs—engineering and otherwise—to make a difference. All of this will reduce the risk of having a growth team that’s just spinning its wheels, wasting time on tests and small tweaks that don’t make enough of a difference in the bottom line. Instead, you’ll have an empowered team that is embraced by the whole organization, ready to take your organization to new heights.
Kyle chatted with the brains behind Pluralsight’s pricing rebuild about what really went on behind the scenes and how they set the rest of the org up for success for future changes.
Nailing your pricing and packaging strategy requires collaboration both internally and with your customers. Find out what you need to know to get it right.