Growth by 1,000 hacks: why micro tests are the key to growth hacking success

An article from Intercom’s Ben McRedmond about growth hacking has been doing the rounds over the past week or so.

The headline ‘growth hacking is bullshit’ makes the author’s position quite clear from the outset.

growth-hacking-is-bullshit

Ben starts off by questioning the very concept of growth hacking:

“I’m not even sure if Growth Hacking is a real thing. If it is, where are the prominent Growth Hacking successes?”

I guess that depends on what we mean by ‘growth hacking’, which often seems to be viewed as ‘marketing on steroids’ or some fantastical CRO tactic, when it fundamentally exists at the product level. 

Plenty of other teams can contribute a great deal to business performance, but growth is primarily determined by the product team. 

Some product teams have a separate growth team, as a distinct cluster of people working on tasks aimed at moving the acquisition and onboarding needle. Other growth teams sit as a kind of umbrella across the business, covering areas such as data, marketing, product development, HR and the business model itself. Facebook used this kind of setup to grow to 1bn users and beyond.

Product = marketing

The very best products require no marketing at all, as the customer base does all of the legwork. Customer recommendations are the very best form of marketing that exists. Direct referrals are certainly the cheapest and most profitable form of lead generation that I can think of.

So, which companies have done a great job of building in growth? Where are those prominent success stories that Intercom wants to see?

Well, any product that is focused on the network effect is focused on growth. Many of the world’s most prominent tech brands understand this only too well, inviting users to forge connections, and in some cases directly incentivising them to do so.

dropbox-homepage

There are other things to focus on, aside from the network. Twitter makes you follow people, to see it in action, and to encourage habitual usage – a real KPI for any social media platform, and in many cases a valuation multiplier. 

Slack’s business model allows teams to get a lot of usage out of it before being asked to pay anything. This way it solves the most critical challenge that team-orientated apps have: how to get lots of people to use it. Slack’s model is very much ‘try before you buy’, but it goes well beyond a free trial. Pay it forward, while encouraging habit forming behaviour at team level. 

Slack is perhaps the most zeitgeisty poster boy for growth hacking, as it blends a fine product with inbuilt network features. Slack’s incredible rise to fame has largely been accomplished by its devotion to detail: it has executed brilliantly and it’s a fine example of the old adage about great design being invisible. 

daily-active-growth-slack

(Here’s a brilliant Gif of the growth shown above)

So, what is growth hacking, assuming it isn’t actually bullshit? I’d say that product fundamentally determines the growth rate of a business, but marketing, customer experience, sales and the business model itself also play a key part. 

When it comes to growth, product comes first

Intercom asks – and answers – another question:

“Is your product solving a real problem? The foundation of all growth is product — or put another way, everyone works on growth.”

If you don’t have a solid product/market fit then no amount of growth hacking is going to help you. I hate the term, but… pivot, or be damned. If your product sucks, why are you even thinking about growth?

If your product isn’t right for the market, you’re in a game over situation. But if your product is useful, then a culture of constant change is essential to maximising your chances of success. Otherwise you’re not making the most of things.

Intercom doesn’t seem quite so sure. The article talks about “the pitfalls of micro metrics”, and the danger of “focusing on the trivial”.

“The size of the changes you’re willing to make, will directly correlate with the size of your returns.”

Yes, but lots of little things can become a big deal. Micro tests are not trivial. Not when you make enough of them to make a difference. I call this ‘growth by 1,000 hacks’, and to me it is the very essence of product development, of growing a business, and should be a cornerstone of company culture. I believe in this so much that I’m building a platform to help people to do it, and to measure the results.

Continuous improvement is the very definition of growth hacking. The desire to tweak early and often is what turns a good product into a great one, and a great one into something truly world class. These “micro efforts” come in plenty of different shapes and sizes. Cumulatively, they are not trivial, in terms of effort or results. 

What does Intercom consider trivial? Button colours, and headline tweaks, among other things. Alas.

Who says button colours don’t matter?

The most highlighted quote in Intercom’s article is this:

“A billion dollar company was never built off better button colors.”

I couldn’t agree less with this statement. If you care about the little things, the big things will take care of themselves. And once you’ve achieved some kind of scale, these kinds of “trivial” tests can add serious value to a business. Moreover, it’s a cultural thing. Death to HiPPOs, and all that. Let the data be the judge.

Back in 2009, the New York Times wrote a piece on Marissa Mayer’s decision making, which is anchored around research and data, rather than her personal opinion. At the time Mayer still worked at Google, which was worth around $100bn when the article was written (Google is now worth more than five times that amount).

Mayer asked her team to test 41 different shades of the blue used for Google’s links, to see which colour users clicked on the most. The winning blue was subsequently found to have increased clickthrough rates by around 2%. 

Last year, Google UK’s Dan Cobley provided a little more background:

“We saw which shades of blue people liked the most, demonstrated by how much they clicked on them. As a result we learned that a slightly purpler shade of blue was more conducive to clicking than a slightly greener shade of blue, and gee whizz, we made a decision. The implications of that for us, given the scale of our business, was that we made an extra $200m a year in ad revenue.”

Given that Google runs at roughly 8x revenue to market capitalisation, that test will have added $1.6bn to its market valuation. Clearly it already had the kind of scale that made a test of this type worthwhile, and in real terms it contributed no more than half a percent of additional annual revenue. But that’s still growth, and this is just one micro test. There are hundreds – if not thousands – of others to try. Growth by 1,000 hacks.

Intercom actually seems to agree, despite laying the smack down on “trivial” micro efforts. 

“Growth doesn’t come from silver bullets. Growth comes from winning a thousand tiny battles: 0.5% here, 1% there. Real growth needs a whole load of lead bullets. Real growth originates from the very first line of code, from a great product, and from the work of an entire team.”

Totally, but I’ll happily take 0.1% here and 0.3% there, and then move on to the next test. Growth needs to be measured, and anything that contributes to uplift is a success, no matter how trivial it might be. 

Small iterations – made early enough and released rapidly – can have a stunning impact on your business. 

Paul Graham’s notes are always worth referencing when thinking about growth: “A company that grows at 1% a week will grow 1.7x a year, whereas a company that grows at 5% a week will grow 12.6x.” And if you can manage 10% a week it adds up to 142x growth over a year. A huge difference.

In data we trust!

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