Growth Hacking: Data and Product Driven Marketing - David Arnoux

everybody super excited to be here today my name is David our new I'm not gonna bore you with a my life long story introduction you can check me on LinkedIn and today I'm going to introduce you to growth hacking in this 20 minute powerhouse session about growth hacking I tend to speak quite fast so just sort of brace yourself so I was reading this book by Malcolm Gladwell called David versus Goliath and in this book Malcolm Gladwell talks about a political scientist called arrogant offed so what arrogant toughed did is that he summed up all of the wars over the past 200 years between like very large and very small armies and he wanted to know what percentage of the time if any the small re was able to defeat the large army and it turns out the 28.5% of the time the small army sometimes ten times smaller than the big army was able to defeat the big army so I was like whoa how'd this happen holy moly um so he put his magnifying glass on these on these exceptions and he found that when the small army used unconventional tactics guerrilla warfare sort of subversive methods the small army was able to defeat the larger army sixty three point six percent of the time that's almost two thirds and for me as a cereal startup founder that really resonated you know as a start-up founder I'm up against the big Goliath I'm up against the big corporations against the big successful startups so enough about war there's a story of Listerine in the 1880s people were bathing in a pool of bacteria and Listerine was their go-to solution so sales were good but they weren't good enough for the CEO Gordon wheat Lambert so what his son did is he took this Latin word Hallett us which means bad breath and then he added the cool-sounding OSIS to the end of it and he created halitosis so you no longer just had bad breath you now had a medical condition which could be fixed with a Listerine and he went it even further he developed this fictional persona called Edna and Edna was unpopular with her kids couldn't find a man because she had this medical condition called halitosis the rest is kind of history and they became the huge brand that they are today in my opinion this was one of the first forms of growth hacking subversive growth hacking this is the baggage claim area at the Houston Airport I can't remember exactly in what year but the Houston Airport sent out a bunch of survey F asking what's the number-one complaint you have with the Houston Airport and an overwhelming majority of people said that it was the waiting waiting time at the baggage claim area they were waiting a whopping nine minutes people have really short attention spans so what they did is they spent millions of dollars on restructuring the way that the baggage was handled and they were able to reduce it from nine minutes to six minutes Wow huge success they sent out the survey again what was the number one complaint by people at the baggage claim area it was the waiting time so what did they do a few sort of creative civil servants decided to put the arrival gates a little bit further from the baggage claim area so that people actually had to walk six minutes from the baggage claim area to the to the familiar arrival gates to the baggage claim area and the complaints almost completely dropped so this is next story is probably the most famous story of growth hacking of all time you've probably heard about it it's the story of Airbnb so Airbnb does short term rentals I'm sure you all know them and after the first year they were kind of struggling to get a lot of users a lot of people to rent their their apartments and they also had some competition so what they did is they asked some of their users where did you go before you came to Airbnb for short-term rentals and a lot of a lot of their current users told them that they would go to Craigslist and Craigslist had millions and millions of daily visitors looking for apartments short-term rentals so what the clever team at Airbnb did is they reversed engineered Craigslist so that if I had an apartment in Idaho for example and I put it on Airbnb in four simple steps I could actually post it directly to Craigslist with almost no friction so almost all users who were posting their apartment on Grand Airbnb were also posting it on Craigslist and when somebody would come onto Craigslist and click on the Craigslist ad they would be redirected to Airbnb so essentially what they were doing is they were piggybacking off of the huge audience of of Craigslist they took things a little bit further they actually scrapes all of Craigslist because Craigslist you could contact people who had apartments by email and then they sent them these cool little emails from jail Jane saying I absolutely love your apartment you can post it on Airbnb it took about a year and a half for Craigslist to find out what was happening but the rest is kind of history and they absolutely second most famous example of all time of growth hacking is that of Dropbox so Dropbox was a really cool product but it was really hard to sell it was kind of unsexy and once they once they had a good product they tried to grow it through conventional marketing methods so one of the ones that they used was AdWords for example and they hired a really good performance market here the problem is that it was costing them between two hundred thirty three to three hundred eighty eight dollars per user for a 999 dollar product that kind of sucked what they did have however was a core group of users that really loved them and they they developed a modern-day referral program so basically if you were to send an invitation to Dropbox to one of your friends you would get free space and he would get free space as well and the results are stret they're absolutely staggering so they went from a hundred thousand to four million users from 2008 2010 2.8 million invites were sent in April of 2010 alone and up to this date 35% of all of their paid users registered users come from this referral technique everybody's copying this nowadays and that's the problem with these growth hacks is they work once but then everybody starts copying them and they don't work as well so I could do some more name-dropping of really famous growth hacks or growth techniques or whatever you want to call them what do all of these have in common notion of OPN other people's network so in the real estate world we talked about OPM other people's money so you're not going to buy your first health with your own money use like the bank's money or your parents money same thing in growth hacking it's extremely difficult to build an audience your target audience is already hanging out on other people's networks other people's platforms so why don't you start by first borrowing somebody else's a somebody else's a network or platform so there's about I think the last number was there's three billion people on the Internet today and it's actually becoming more and more easy to reach out to them so the number of platforms are growing this is a chart that I stole from James Korea and it shows the viral effectiveness of customer acquisition channels over time and it used to be so viral channels go through three phases they're born they grow they're big and powerful and then they sort of die off and the great thing is that the number of channels is actually growing exponentially over time so what's the next big thing what's the next big thing to get your customers is it one of the ones listed here is it one of the ones listed here these are all pretty famous you know Facebook Google Facebook messenger Twitter LinkedIn snapchat all those sort of the usual suspects but you actually have much more is the next big thing beam social is the next big thing wearable technology is it Instagram ads that were released about a month ago is it self-driving cars is it virtual reality is it augmented reality is it ello is it slack you know is it designer news is it producthunt you really have more and more choice to be able to tap into other people's audiences by the way there's a few more and them so there's a term growth hacking is sort of disorienting sometimes I just want to make something clear that growth hacking is basically I stole this from Alistair crow the guy that wrote lean analytics and he says that growth hacking is 80% best practices which people don't do in any case but also 20% subversiveness so most big successes most of them have at least a little bit of evil in them especially in the early days question is how how much evil do you actually want to do so why growth hacking why is it really buzzing why are we hearing about it why is it becoming so important so companies and products I think we talked about it with the talk just before we have limited resources in order to grow in order to acquire users but more importantly to retain them the second reason is is that um traditional marketing channels they tend to be expensive and saturated so I really like to use this chart this is the average u.s. online spend to get one user up until 2012 so it's an average so it lies but it still shows you that it's becoming more and more expensive to grab users to acquire users so you have to be more and more creative and more impactful on how you drive these users to your product and the third reason is probably the most important one so just show the hands who's actually working on a product here in this in this room all right so it's probably most of this room and one of the ills of today is that people tend to focus too much on product but actually your riskiest assumption is not building a cool product it's a lot easier to build a cool product nowadays than it was 10 years ago you have lean methodology you have reduced marginal costs what's harder is actually distribution because everybody's building cool basically and everybody is sort of fighting for attention don't trust my word for it trusty guys Steve Blank peter thiel dave McClure they all agree that one of the most difficult parts of your business model canvas or the survival of your company is actually distribution is actually how you can acquire new users and engage them and I'd love to use this stat by the ad agencies people are bombarded with anywhere between 250 to 3,000 ads on a daily basis your product your value proposition your app your icon it's just another blip in people's lives I mean people have like hernias they got to get their kids out of school their mothers are sick and then your product is just for another blip how can you have the most impact and how can you target the right customers at the right price as cheap as possible so the third reason is and this is kind of one of the foundational parts of growth hacking it's that ROI is much more important than anything else it's much more important than branding so the days of Madison Avenue Mad Men ad agencies are completely gone working on a six-month sort of campaign agency doesn't work anymore we borrow from the lean methodology where we have a scientific approach to marketing and to customer acquisition test first if it works keep going and finally it's exciting and it's fun and I believe it's inevitable I worked with a lot of companies and I believe that we are completely dissolving the gap between product and between marketing they are becoming one this one thing that we call growth hacking so what is growth hacking I love to use this Venn diagram because it's kind of visual and so first of all it's creative marketing so it's David versus Goliath using other people's networks thinking subversively thinking differently than everybody else the second of all it's about experiments and data so experiments like I said we have an experiment based approach to marketing an experiment based approach to marketing a scientific approach to marketing and second of all there's data so we can test our gut feelings or we can test things based on data that we've seen but then we should always test it to see if it works or not and we back that up with data and when I talk about data I don't just talk about hard data of course there is hard data when I talk about hard data usually people pull this this face probably not at this conference which is a good thing so we like to you to turn a lot of them these experiments into customer flows for example we use a lot of conversion funnels we use cohort charts predictive analysis and a lot and a lot of a B testing but we also talk about soft data because soft data is probably the most think the place where you get the most insights from your customers and soft data is talking to customers doing surveys doing a lot of usability testing I often say that usability testing is like flossing people know they should do it people don't actually do it and then when they actually do it they start bleeding so you should do it on a daily basis and I love this quote from Eric Ries and it basically sums it all up sustainable growth comes from understanding your best customers finding out where to find more of them and that's basically it if you retain anything from the content from this talk it's probably this one and then finally there's automation and engineering so I'll talk a little bit about the relationship between engineering and growth hacking in a few seconds but basically the notion is in order to have speed we need to use automation we need to use coding we need to use engineering and there's even if somebody doesn't know how to code there's a lot of tools out there that can enable them to take a tool off-the-shelf to test something without actually coding in it into his or her product so now I want to talk about some growth hacking principles really to get it into your brains so the first principle is if you build something no one will come people don't just magically come and I think people are really starting to come around to this it's not just by building something awesome a lot of people are building a lot of awesome stuff that's getting absolutely no recognition or awareness it's only in testing that will know something's going to work or not data levels all arguments data has kept me out of so many meetings it's absolutely incredible we only scale successes and we kill failures so it's all about speed there's no time for a gray area if it doesn't work kill it try maybe one more time than kill it if it works double down on it focus we have a lack of resources and then test as much as possible and as fast as possible speed usually wins so there's been a lot of talk about what's the difference between growth hacker and digital market here growth hacker is just digital market here same wine different bottle actually it's not the case so I'm not going to dwell on this too long but basically a growth I was a digital market here full stack market here for six years before naming myself a growth hacker and the main difference is the growth hacker is really implanted inside the product on the whole product funnel and the second big difference is that the growth hacker has a really strong technical skill set which I'll go into into the next slide so this is what a growth hacker looks like let's look at this two or three seconds so first of all you've got this base layer that the hacker knows about this head of growth knows about this programming behavioral psychology copywriting analytics he understands that you can talk the lingo he can actually also execute on some of it then you have a more even deeper foundation of this marketing foundation with a/b testing conversion rate optimisation it's pretty strong at funnel marketing and database query in' and then there's this third layer where he's really a marketing expert on all of these marketing channels he knows how to leverage marketing channels find new ones and how to how to how to use these channels and usually a growth hacker is really an expert an absolute expert on two or three channels so there's a big problem here is that this profile is extremely rare we call these guys unicorns we call these guys unicorns who live in clouds so unicorns because they basically don't exist and they live in clouds because they're extremely hard to find and then they and they tend to hide it so how do we solve this as a growth hacking agency and it is a growth hacking a firm the way we solve this is we build growth hacking teams inside companies so growth hacking team looks like this the first element is you've got your head of growth he's kind of a risk-taker he's analytical he's all those things that I just talked about the head of growths best friend is his kick-ass coder best friend his kick-ass coder is like a full-stack coder who's not scared to build stuff that's actually going to break he's into building stuff that he's into iterating really really quickly and he doesn't mind putting like two or three days into his sprint planning to make sure that he can build the data the data analytics framework needed to be able to track the results of what we're actually doing so their second best friend is the UX and UI designer of front-end developer and his role is to really use behavioral psychology and have customer empathy to be able to run these experiments and usually this type of profile is somebody who doesn't spend six hours on the opacity of the drop shadow for a call-to-action button who just sort of ships it as fast as possible and then iterates after it's been shipped and then finally there's the data analyst somebody who really understands data both large but also small amounts of data and who's not scared of self data and who's able to also find insights within that data actionable insights that's the most important part so this is the sad news is that even if you've got the team and the mentality there's actually no sea ocean there's actually no hack so it's actually a misnomer there's no hack to make your next product into the next big Facebook Linkedin Instagram whatever product you want but the good news is is that growth hacking is maturing and we are developing a process and the great thing about this process it has three main points first of all its adaptable so it's adaptable across organizations and its adaptable within the organization across different departments and second of all it's expandable it's it's scalable so it can actually grow as the company grows and third of all the most important because people are really lazy and it's extremely hard to change people's behavior it's that it's extremely easy to implement there's almost no friction this is what the process looks like so we stole a lot of this stuff from the Lean Startup in the lean methodology as well as conversion rate optimization and basically at the top you have like company objectives so these can be okay ours or any type of different objectives then we have data insights soft and hard data but also gut feeling using your your fast brain and your intuition and then we start running through these loops so the first part of the loop it's a brainstorm we brainstorm ideas we use a lot of dot voting and we steal a lot of methodologies from the Google design sprint and then second of all you have a prioritization framework we use a bunch of different prioritization techniques third of all we design experiments with minimum stress criteria much like people do in the scientific world then we execute we execute as fast as possible and we tend to use agile scrum and split sprint planning and then the most important part is the the analysis even if an experiment fails you can still get learnings from that experiment so it's actually not a failure when something works we build it into the product we code it into the product and if you can't code it into the product we systemize it inside the company and then we run these loops again and again and again and I have to admit nine out of ten experiments fail but from time to time we get these big wins and this is what we call the growth hacks so work with a lot of companies and this is what I usually see usually I see deaf teams only working on core functionalities functionalities that respond to current customers needs but this is the way that I see companies changing we're grabbing developers taking them out of this core functionality teams that spend 90% of the time on core functionalities and we're putting them on the acquisition team we're putting them on the activation team we're putting them on the referral team we're putting them on the retention team and then we grow so much that we could actually hire more developers to put them back into the back into the core functionality team and then these teams they roll the same process again and again and again and again so we run through these loops and the faster we can run through these loops the faster we get to success so I usually guess get asked whether it's time for growth or not actually there's four different types of growth there's top-line growth there's activation growth there's retention growth and there's monetization growth these two are their hardest ones to nail they're the ones that we spend the most time on but they're the most valuable ones but right now I want to talk about the sexy one I want to talk about user acquisition there's a book called traction book that shows that there's only a limited color palette on how you can actually acquire users but the thing is this color palette isn't actually so limited so if I narrow down into content marketing for example you'll see that there's also a lot of subsets of content marketing so you've got curating a blog infographics making videos ebooks podcasts flip boards Pinterest pins tweets LinkedIn posts google Instagram Facebook and the list goes on and on and on so it can be sort of overwhelming so you need a process for this too and the process is kind of easy so the first rule is that you should actually diversify your portfolio because if Google changes its algorithm overnight your SEO strategy is completely dead and I would say find two or three channels that actually work for you and only focus on those two or three channels we have a framework called the brass framework in order to determine which is the best customer acquisition channel start testing it's a mix of Blink gut feeling relevance product channel fit ease how easy is it to set up this customer acquisition channel and finally scalability if it works can I actually scale it so then when you're driving traffic to your to your product your website to your landing page whatever then what do you do then comes behavioral psychology this is James curry a from Google Labs he that you should spend 50% of all your resources on the first user experience on that first experience that a user has with your product and I'm not even talking minutes I'm actually talking seconds so you should be able to shore the core value of your product within the first five seconds of a person's visit just like with a date you know that first impression really count and then when you're done with the first five seconds you can use principles of persuasions to make sure that person signs up and actually gets to the core value of your product and understands gets to that wow moment what is the value that you're showing people have the attention spans of goldfish what are some of the best examples of user onboarding ever they actually come from video games so video games do this really well I don't know if anybody plays like World of Warcraft or whatever the first time you play they teach you to punch they teach you to jump they teach you to kick they remove all of the friction they teach you little by little how to get to that wow moment so once you've gotten somebody to that wow moment how do you know if they are actually using the product this is where we used to we start to use hard data hard data is really one of the foundations of growth hacking hard data tells us exactly what's happening on our website and we use things like events based analytics but also predictive analytics so hard data is great but then you can get too caught up in hard data and not really understand your users and get stuck in this sort of local Maxima of optimization so to get out of this local Maxima we use soft data and soft data is basically talking to your products and using doing usability testing there's no excuse to not talk to at least one customer every single day so then what do we do with these hypotheses where we do conversion rate optimization we do a lot of a/b testing and there's so much that you can a/b test signup forms you can a/b test landing pages you can a be test product pages you can a/b test referral pages there's so much to choose from that you also need a framework for this and now what so as a growth hacking agency we got we started to get a lot and a lot of requests for actual growth hackers so this is data pulled off of angellist and you see that the number one requested skill and marketing is actually growth hacking and so this is Amsterdam in the startup ecosystem report of 2015 I thought this was pretty cool Amsterdam finally made it into the top 20 one of the big ones that they're struggling with is actually Talent and we were having this problem too I get about 40 or 50 requests from for a good growth hacker or a technical market here the problem is that the ratio is seven to one there's only 18,000 proclaims growth hackers for about 120 or 130 thousand open positions so our solution for this was to stop with the consulting or continue with the consulting but to also build what we call the growth tribe Academy where we're going to teach people this skill set and the point of the growth tribe Academy is to make people ready to join teams the type of teams that are being used by these companies facebook spotify linkedin cora twitter and there's many many more so the difficulty is how do we train people to do this in a three-month period how do we train people to go through our whole curriculum and learn all of these skills in only three months the solution for this was that we would put them in actual growth projects and actual startups and we're only going to teach them what they need to know so this is UX this is everything you could learn about UX but we're only going to be teaching you this specific thought we've also signed up with really strong partners to build credibility but also to have help on the public side and on the private side for example we've partnered up with cata wiki which is one of the fastest growing startups here in the Netherlands and we've just launched our growth tribe Academy so if anybody's interested in this I'd really ask you to go check out our website Grouse tribe Academy comm where we're sort of building the future of the future of Education bridging the gap between product development and marketing and I just like to stop one of the quotes from our from our applicants and he says that education is the most powerful weapon which you can use to change the world growth hacking it's the second thank you very much

Channel: O'Reilly

Views: 74,079

Rating: 4.9058132 out of 5

Keywords: O'Reilly Media (Publisher), O'Reilly Open Source Convention (Conference Series), oscon 2015, oscon amsterdam, Growth Hacking (Profession), Marketing (Interest), David Arnoux, growth tribe, business hacks, Startup Company (Website Category), market hacking, customer acquisition

Id: ajccEoAhfmc

Length: 23min 33sec (1413 seconds)

Published: Tue Oct 27 2015