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Justyna Piotrowska
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Justyna is the Growth Hacker in Residence at 500 Startups. She has over 10 years experience in sales conversion optimisation, email marketing, content marketing and SEO. For 6 years, Justyna was one of Mindvalley’s entrepreneurial marketing experts in the area of psychological and content marketing, responsible for launching 3 successful businesses in less than a year with more than US$3M in revenue.

In her last few years in Mindvalley, she was responsible for more than 70% of the revenue of the company that came from business automation. Justyna is certified in landing page optimization, email marketing and in the fundamentals of online testing by Marketing Sherpa, and Jeff Walker’s Product Launch Formula. She is currently the co-founder and CMO of Rascals Depot – a growth consultancy working with startups.

500 Startups

August 30, 2017

The Guide to Growth Hacking Your Startup

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What is growth hacking? We should know since we’ve funded over 160 startups in Southeast Asia alone over the past 4 years, and directly coached over 30 through our Series A Growth Hacking Program.

In this time, we’ve mapped out the patterns and trends, forged winning strategies and alliances with customers acquisition gatekeepers like Facebook and Google.

I’m sure you are familiar with the term growth hacking. You’ve heard it before and have an idea of what it means. While most marketers treat growth hacking as a one-time fix, we see it as long term, structured process of building a growth machine.

Growth Hacking: A Definition

The term was introduced first in 2010 by Sean Ellis in his article “Find a Growth Hacker for Your Startup”, defining a “growth hacker” as “...a person whose true north is growth. Everything they do is scrutinized by its potential impact on scalable growth. Is positioning important? Only if a case can be made that it is important for driving sustainable growth...”

Two years later, the term gained further popularity and went mainstream when Andrew Chen, Head of Growth at Uber wrote the “Growth Hacker is the new VP Marketing” article. Since then, the term has taken on a life of its own.

While there are several definitions, I agree more with Aaron Gin, Head of Growth at Stumbleupon that growth hacking is more of a mindset than a tool.

If you’re at the beginning of your growth hacking journey, here are 4 things I recommend you to start with to get your growth hacking mindset into gear.

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1.  Numbers and Decisions

How are decisions made in your company? Are they based on personal preferences or numbers which can support them?

Personal opinions kill business. So I encourage you to kill your opinions about what will and what will not work right now, unless they are based on the numbers.

Over the years, we have been practicing a mantra with the startups we work with: If it can be measured, it can be improved - a data driven approach drives growth (fullstop).

And when it comes to data, what data do you take decisions on? Incomplete? Corrupted? Or both?

For the above to be 100% accurate, you need data you can fully trust.

To ensure data accuracy, your backend integration of all tools you rely on needs to be bulletproof. All the properties and parameters need to be set up correctly and in full, not just an average copy-paste of the basic code.

So how do you make sure you are gathering the correct data? The guys at Conversion XL took care of this for us. Here are the reading materials in order:

I would highly encourage all of you to read the 3 reading gems above in full, in order to make sure you have the right data at hand to base your company’s growth on.

2.  Where is your revenue coming from?

Once you are sure you’re looking at the correct numbers, it’s time to understand where the revenue is coming from.

Do you know which of your marketing channels are the most profitable for you? Facebook, Adwords or maybe Email Marketing. Maybe you are investing 80% of your resources in a specific marketing channel because it’s trendy and everybody’s using it but in reality this channel is only bringing in 5% of your revenue.

As a startup about to scale up, you have limited resources so it’s crucial to understand how to best distribute them. Unfortunately most of the startups focus on social media, updating their Facebook or Instagram status' 5 times a day with very minimal results but don’t do email marketing as they think people don’t read emails anymore.

Email marketing remains as one of the best marketing channels for ROI. There are plenty of posts out there saying “Email is dead” but I’m here saying, you just haven’t done it right, yet.

In June 2016, Direct Marketing Association (DMA) and Demand Metric conducted a survey on US marketers and found that email had a median ROI of 122% — that’s four times higher than any other marketing formats examined, including social media, direct mail and paid search!

The study also found that while respondents allocated an average of 16% of their overall marketing budget to email for 2016, the program contributed to 23% of total sales, a ratio that indicates email’s positive ROI.

While working with startups I always hear: “we don’t want to send many emails because we don’t want to be spammy.

Well if you don’t want to spam your customers, don’t send spammy emails. Simple as that.

Instead, invest in good, engaging content and keep Seth Godin’s words in mind:

  • People buy from people, not companies
  • People buy from people they like and trust
  • People don't buy for logical reasons, they buy for emotional reasons
  • People don’t buy goods and services, they buy relations, stories and magic

Magic. It’s not about the dress or the next pair of shoes they buy. It’s about how the dress or new pair of shoes are going to make them feel. You need to understand the underlying emotion that goes along with the purchase.

Don't focus on your products or services, focus on the customer. Change your approach from company centric to customer centric. While they are opening your emails there are only 2 things on their minds:

  1. How does this solve my problem?
  2. What's in it for me?

One proven way to get positive ROI from email marketing, is to make use of functions such as personalisation, automation, dynamic content and mobile optimisation.

According to Campaign Monitor:

  • ~53% of emails are opened on mobile devices
  • 23% of readers who open an email on a mobile device open it again later
  • TechCrunch reported that 75% of Gmail’s 900M users access their accounts via mobile devices

And to make things clear, having optimised email templates in terms of responsiveness is not the same as email optimisation for mobile.

I would encourage you to read that sentence again.

So go back to your drawing board, review your email marketing strategy, and use proper segmentation and personalisation using cross-channel data in real time.

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3.  Conversion Rate Optimization

At this point, you know your numbers and you know which channels your revenue is coming from, it’s now time to look into your customer journey on web and mobile.

Do you know where your potential customers are dropping out?

On-site web optimisation is an on-going, do-or-die process for business growth. It will never stop.

There are 2 approaches to improving a website:

  1. You go in and change what you think might be a good idea to change - mainly on the home page - and hope the sales will go up
  2. You start by figuring out which pages are the cause behind your biggest drop-offs i.e. where the flow is stuck

Once you understand WHERE the problem is, you can proceed to identify WHAT the problem is.

You gather whatever quantifiable data you can to understand how people are moving along in the funnel (separately for web and mobile), and the impact each individual widget or form field (on a specific page in the funnel) has on your revenue.

Having said that, most startups still operate using the first approach. I talk with a lot of startups and you’d be surprised how many well-known companies are doing zero work in terms of conversion rate optimisation. They might change a few things on the website every now and then but all of that is done without a proper optimisation strategy in place.

It looks like this is a worldwide trend. Based on Conversion XL’s 2016 State of Conversion Optimisation report:

  • Only 32% of small companies (less than 500 employees) say they have a documented, structured optimization process in place
  • Even at large companies, that number only increases to 42%
  • 26% of all companies meet with their optimization team “only when necessary”
  • Only ~22% of businesses are satisfied with their conversion rates

According to the same report, only 29% of people said that there’s a single dedicated person who does optimization. In 30% cases there’s a team in charge of optimization, but 41% of companies had no one in particular that was accountable for Conversion Rate Optimization efforts.

More than half of the respondents (53%) said there was no documented budget for CRO in their companies either.

So what’s the point of sending new traffic to your website if you are not getting any new learnings with every single visitor?

There are a few companies worth following if you too, wish to completely revolutionize your CRO and Conversion XL is by far my favourite. Here are a few CRO easy processes that you can start off with and implement right away:

Keep in mind that there will be experiments that are easy to implement - a new USP might be one of them -  and I would encourage you to start with those. Others will require advanced engineering skills like an Add to Cart page’s UX as this is where the biggest drop off happens most of the time.

Don’t get discouraged. For every 5 tests you run, 4 will fail. Just keep track of all of your tests. With time, you will learn what is working and what is not and you will become a more sophisticated optimizer. Just one piece of advice: don’t wait - speed is largely the name of the game.

Experiments ideas. Talk to your customers.

You are not in the business of making money. You are in the business of solving your customer's problems. The more problems you solve, the more money you will make.

Period.

Your customers don’t have generic problems either, nobody does. They have highly specific problems that you need to learn about.

You think you know who you are selling to, but the truth is, most of the time you are selling to the idea of who you think your customers are. You have built your whole business on that idea and sometimes, that comes without any further verification if it is indeed, true.

So how do you go about it?

Well, first of all talk to your customer support team, the team that is left out and not considered important in most startups. All they have to do is reply to complaining customer emails/calls most of the time. Not a sexy source right? Wrong. Those exact calls/emails have all the information your business needs to grow.

I would encourage you to classify your customers into 3 groups and start talking to them. Just pick up the phone and call a minimum of 30 pax (at least) in each group.

Listen not only to the answers you hear but also to the words used about your products or services. Those same words are the ones you want to use on your website, ads, as well as in the emails defining your value proposition.

Group 1: People who have come to your website but have never bought from you. They might have signed up or created an account which allowed you to communicate with them again.

In this group you will also have people who have added your products to cart but have never finished the transaction.

Group 2: People who have bought from you only once.

Learn from them. Understand why they never came back and purchased a second time. It’s 3 times easier to convince a repeat customer to buy from you again than to convince a new customer. Don’t wait on your chance, learn what went wrong from your customer.

Group 3: People who have bought from you twice or more.

Here are some examples of questions to ask each group:

  • How would you describe us to a friend?
  • What do you like / don’t like about our products or services?
  • Where exactly did you first hear about us?
  • What would you miss the most if you could not use our product anymore?
  • What’s the one big thing we’re missing?
  • How would you describe yourself In one sentence?
  • What are your biggest everyday challenges?
  • What are the top 3 things that stopped / nearly stopped you from using us?
  • What are the top 3 things that persuaded you to use our company?
  • What could we have done to make your decision easier?

4.  Market sophistication

Defining market sophistication is the greatest marketing lesson I’ve ever learnt. The concept was defined by Eugene Schwartz in his book “Breakthrough Advertising”. If you ever come across this book, make sure you read it at least twice.

There are 5 Sophistication Levels of your market. You need to market your products or services differently depending on what stage of sophistication your market is currently in.

It’s not about the knowledge the prospects have of your products or services, but about all other solutions to your prospects problems that are available in the market.

The different “levels of sophistication” are defined by how many competitors there are in your specific market, what claims, benefits and guarantees they’ve made about their products or services, and how long your potential customers have been hearing about it.

Level 1: “Hello world”

Market scenario: There is no competition in the market, you are the very first one providing such products or services. It’s a complete novelty.

Example: When Gillette first introduced their products to the market all they had to say was: “Shave yourself”. If you were a man and you wanted to get a shave, you had to go to a barber shop, now you could do it yourself at home.

Level 2: “What is it”

Market scenario: The competition has showed up, your prospects now know about other available solutions. It is time to show how your product is different by enlarging your claim. Listen to your prospects objections and build your claim around it.

Example: At this point Gillette ads were showing babies holding razors implying that it was so safe to shave with Gillette, even a baby could do it.

Level 3: “How it works”

Market scenario: This is where the market is getting crowded. Everybody has the same claim, showing the same products or services with the same features or guarantees. At this stage it’s time to show how your product works, what is the mechanism behind it that makes it better than the competitors.

Example: With this market in place, Gillette now starts talking about double-edged safety razors for an even more safer shave using disposable razors etc.

Level 4: “Advance mechanism”

Example: Gillette now started building up on extra features; three blades with high-definition edges that provide a close shave, the pivoting head aids the blade in creating a close and comfortable shave, unique lubricating strip to a more comfortable shave with little to no irritation etc.

Level 5: “Talking to emotions”

Market scenario: This is the highest level of market sophistication. The market is super crowded, there are plenty of competitors around and everyone’s hearing all the claims, features, benefits and mechanisms behind the products or services. The market doesn’t buy into it anymore. This is where it becomes more of an identity to be using your products or services and to be associated with your brand.

Example: This is a market level where the biggest brands are in right now. When you look at Coca Cola ads, they don’t talk about what Coca Cola is and how it is made or what benefits it can bring. It’s all about the emotions and experience that come with drinking Coke. The product itself is either shown at the very end or not shown at all. The well known brand of Milo in Southeast Asia communicates aspirations; “Energy to Build Champions” or “I run for the future”. They speak directly to customer’s emotions.

Promote your products or services depending on what stage of sophistication your market is currently in.

Bottomline

To get into gear for your growth hacking journey, you need to:

  1. Rely on numbers rather than attitudes and preferences
  2. Understand your marketing revenue streams. Document and rank them in order of those bringing in the most ROI.
  3. Optimize. Optimize. Optimize. Continuously monitor your revenue streams to understand where your drop offs are happening and then keep testing ways of reducing that gap. Keep in mind that this is an ongoing, collaborative and experiential process.
  4. Study your market. Understand the sophistication level of the market you operate in and then communicate your brand according to which stage you’re in.

Growth hacking is not just another buzzword. It’s a proven process that works and it’s not optional anymore but an absolute necessity for your startup to scale up.

Are you ready to take on the mindset?

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ABOUT THE AUTHOR
Justyna is the Growth Hacker in Residence at 500 Startups. She has over 10 years experience in sales conversion optimisation, email marketing, content marketing and SEO. For 6 years, Justyna was one of Mindvalley’s entrepreneurial marketing experts in the area of psychological and content marketing, responsible for launching 3 successful businesses in less than a year with more than US$3M in revenue.

In her last few years in Mindvalley, she was responsible for more than 70% of the revenue of the company that came from business automation. Justyna is Certified in landing page optimization, email marketing and in the fundamentals of online testing by Marketing Sherpa, and Jeff Walker’s Product Launch Formula. She is currently the co-founder and CMO of Rascals Depot – a growth consultancy working with startups.

Visit her author bio page to find out more about Justyna and connect with her social profiles.

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