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Sean Ellis: 'For me the most important thing was to get people to rethink how growth works'


Growth hacking has been the basis of success for many startups. But not only the marketing team, the whole company needs to be involved. Bring your teams together, create a valuable product and choose the right North Star Metric. "You are doing this across all touch points in the product," says Sean Ellis, author of the bestseller Hacking Growth.

Imagine you have a thousand clients and then ask them this important question: can you live without this product? Maybe 10 of them say they can't live without it. Now it is time to find out who these people are. "Just learn everything about how they use the product, why it is important to them and then use that information to go out and acquire the next thousand or ten thousand people. It all starts with finding not just your first ten customers, but your first ten customers who say they can't live without the product."

Growth hacking is about redefining growth and finding the most effective way. "For me the most important thing was to get people to rethink how growth works," Sean Ellis recounts in a video interview. "It is essentially taking the scientific method that has been around for hundreds of years and applying it in a test: learn, analyze, figure out how to more effectively drive growth in a business." In his book Hacking Growth (co-authored with Morgan Brown) he explains how to build a growth hacking system that includes four elements: a growth team (marketers, data analysts, and people from other departments of a company), a must-have product, the North Star Metric and high-speed experimentation.

Growth hacking is the reason we see a few companies every year with a ridiculous growth rate. It starts with a product people want, and to find out if it will work you need to get feedback as early as possible. One of the ideas is to make small continuous changes to your product to create the biggest possible impact. So, experimentation is the way to go. Marketers can't be on an island, they need to collaborate with others, including the product team.

North Star Metric
Revenue is not always the most important metric. "Revenue of course is what keeps us in business. But a lot of times you find companies can be growing revenue at a really steep growth trajectory, but value to customers is not growing at that same trajectory. So, what happens over time is that revenue eventually crashes, because there is not value moving in the same direction," Ellis explains in a video talk with Mark Coopersmith. "In the growth hacking world, we talk about a North Star Metric as a metric that reflects how customers get value from the product."

Which North Star Metric you choose, depends on the company. Let's take the example of Netflix. "If someone signs up for Netflix and they watch one show a month then revenue looks pretty good there. But if they are watching one show a month, there is a good chance they're going to cancel the service, because they are not getting their money's worth on it. What Netflix is doing is trying to maximize watching hours, so that's the metric they are optimizing on. They know if they grow watching hours year by year, that revenue growth is likely to be sustained. One of the real principles of growth is figuring out a metric that really reflects value delivered to customers."

How Dropbox reached 700 million users
Sean Ellis coined the term 'growth hacking'. But already before that he implemented the principles when he was the first marketer at Dropbox. "The first thirty days I was there I ran a survey every single day. I divided the total number of users in tiny little groups and tried to figure out things like motivations. (…) One of the questions that I have surveyed for years has become more popular. A lot of people use this question: how would you feel if you could no longer use this product? When I found the users who said they would be very disappointed, then I tried to learn everything about them."

The surveys and data gave the necessary insights. One of the things the team found was that word of mouth was really strong. It was one of the reasons for Dropbox to go for a freemium model (with a basic version for free). "It is such an amazing value proposition on the free product that people can't help but talk about it. They get really excited and spread the word. So, instead of having a lot of margin to pay to acquire customers, you are using the word of mouth to create a steep enough growth trajectory. That steep growth trajectory of the free users makes the business work." Today Dropbox has over 700 million registered users around the world. Over 15 million Dropbox users pay for its premium services.

Teams together create growth
The book offers practical tips on growth hacking, but not all companies succeed in making it work. "I learned from feedback where the book was falling short in a couple of places. Maybe one person got excited about it and then they tried to implement it, but if the rest of the team wasn't on board they often failed." There is a deeper reason behind it. "The truth is that very few companies are working cross-functionally. They have been siloed by functional silos especially. Marketing teams are constrained because the rest of the company is not testing effectively. It is not coordinated very well."

Keys to make growth hacking a success are a shared metric and teams that work together. When Ellis experimented with a product of one of his earlier startups, he realized how it could work. "I really discovered that to effectively grow that business I actually had to work with the product team to experiment how to approach new customers."

Optimizing your customer experience
When your company is in an early stage, what is the best way to get into the spotlights? It all comes down to experiences. "Optimizing on how do I get people to an experience is where I start from. Increase desire and reduce friction, that's going to get more people to that first experience. And then a key concept in growth becomes speed to value: how quickly can I get someone to a valuable experience so that they are going to want come back. The longer the delay is, the more people you are going to lose along the way," Ellis says in a podcast with Robert Katai.

In the future growth hacking will include more artificial intelligence and some automatic testing. "Companies are getting smarter about how to segment different users down to a level where you understand their needs on a much more unique basis, and you start to have much more customized experiences across your platform."

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