Thiago Rocha, Head of Growth & Performance at RD Station, discusses in this article some myths involving the techniques and brings some experiments that worked
The English expression Growth Hacking, coined by Sean Ellis in 2010, has gained a lot of popularity in recent years. It is increasingly common to see lectures, podcasts, blog posts and courses emerging with the aim of democratizing the understanding of this framework that draws more and more attention.
Having a team or a person that focuses on ways to grow the company using unconventional techniques and few resources is really tempting. As a result, we have over 30,000 people putting their position on LinkedIn as Growth Hackers.
We also have more than 400 vacancies for this type of professional, in addition to countless requests for nominations every week from people who want to grow their Growth team or start having a team for that.
It is natural that the search for creative, analytical people with a good understanding of business continues to grow – and it is not easy to find this profile in the market. In a market as dynamic as the current one, those who have the ability to learn new things, adapt to different scenarios and perform with excellence will certainly differentiate themselves in the market.
Growth, Marketing and the challenges of the current scenario
We are in a scenario where being digital is no longer optional. According to the Panorama PMEs Survey, carried out by Resultados Digitais, Endeavor and PEGN, 37% of companies changed their business model to focus on digital – they are added to many since they had this focus. Already 78% agree with the statement “my relationship channels will be primarily digital after the pandemic”.
This is the trend that we are beginning to see in the number of emails sent via RD Station Marketing in recent months. Today, people are doing more Email Marketing campaigns and using automation flows than seasonal peaks in the past. On the last Black Friday, in 2020, there was a 44% increase in the number of emails sent compared to the previous year.
The increase in the use of digital channels makes the competition for the same audience to increase as well. This poses a risk for businesses that are too dependent on a single channel.
How many companies that rely primarily on paid media for customer acquisition do you know? Since 2013, CPC (cost per click) has increased by around 100%, as shown in the chart below from Facebook.
Does this mean that digital channels will stop working? No!
It is through them that RD Station, for example, achieved its accelerated growth in recent years – and will continue to grow in the coming years. However, campaigns, acquisition methods, tools, teams and processes will need to be much more sophisticated so that we are not left behind.
In practice, the challenge we have is, in addition to the need for companies to continue or grow again after the economic shock caused by the pandemic, they need to seek alternatives in a scenario where the world is increasingly digital, increasing competition and, consequently, the CAC (acquisition cost) .
And it is under these circumstances that the role of a Growth team draws more attention. The fact is that only practice and daily life will bring the best way to learn how to grow in a predictable, scalable and sustainable way.
No matter how many examples you see in posts, communities and lectures, a CTRL C + CTRL V will hardly work. Instead of wanting to copy, consume this type of content to understand how people approach the problem in a given context.
History of Growth Hacking on RD Station
Here at RD Station, we started with the Growth Hacking team back in 2014, under the leadership of Gabriel Costa, Mineiro, one of the biggest references in the subject in Brazil. Since then, we have been learning, between mistakes and successes, with a series of situations that are frequent doubts of people who are in the early stages of Growth Hacking: what to prioritize, processes, analysis, data, communication, etc.
Naturally, changes in the Growth Hacking team’s processes and challenges also occur due to the changes and growth of the company itself. From there to here they went:
- From 30,000 to over 150,000 Leads generated per month
- From 2.5 thousand to more than 25 thousand customers
- From 250 to 750 employees
- From 1 to 3 different products
- More than 30 times growth
Does this mean that today is easier or more difficult than before? Neither this nor that. The difficulties and challenges are different, and this is reflected in the way the Growth Hacking process is run: routines, ceremonies, prioritizations, tools, resources, team building, etc.
Where’s the glam of Growth Hacking?
The rise of people searches to the role of “growth hacker” is evidence that companies are looking at marketing differently. The fact is that Growth Hacking is just a framework that will help you understand how your company grows and structure a routine of experiments and analysis to find ways to keep it growing in a sustainable, scalable and efficient way.
There is no such thing as a miracle hack. As tempting as it is for you to Google “growth experiments” and get a list of “X experiments you have to run in 2021”, the chance that none of them will work in your business is great.
It’s not because Dropbox has scaled using referral marketing or RD Station has grown through organic channels that these channels will be important to your growth strategy.
In fact, you will only learn Growth when you apply it to the day-to-day business. As attractive as it is to talk about growing exponentially, with low resources and in an accelerated way, the fact is that the role of a Growth team is much less sexy than it seems. In a practical way, we have weeks of many more mistakes than successes, needing to reconcile the operation and find the growth levers.
Through this scientific method applied to the business, you can understand the company as a whole and how its market, product/service, business model and distribution channels are related and constitute its growth model.
And why is that? Imagine that you produce and sell agricultural harvesters. The size of this market, the type of product, the complexity of the sale, the costs involved in logistics, production and customer relations will directly impact the distribution channels and the business growth model. More extreme, Instagram and Loops Viral will not bring you the company’s growth and sustainability.
Therefore, it is important to understand which channels can bring you your best customers, how to monetize properly given the acquisition cost, how to offer an appropriate experience and even how to have opportunities to expand revenue and retention.
This means that Growth Hacking is much less knowing if you increase conversion by 10% when changing the position of a button, and much more understanding the business in a holistic way. In this way, the framework helps you to find the growth levers that maximize the company’s LTV (LifeTime Value) – by bringing in customers who have great potential to be successful with your product or service offering – and who build strengths by obtaining a CAC (acquisition cost) much more favorable than the competition.
Rather than trying to “hack” something for instant success, commit to a long-term action plan. Think about how to create a fluid experience that solves a major customer pain that is being validated and adjusted through data-based testing.
Consistency in testing to minimize risk and in-depth analytics to get to know customers are what made the companies we admire soaring growth.
Where should the Growth team be located in the organization? In Product? In Marketing? Or should it be a separate structure?
One of the most common questions when talking about the Growth Hacking team is where this team should sit and what KPIs it should respond to. The answer will depend a lot on the characteristics of the product and how well the Growth process and the growth model are.
In cases where the product achieves a strong acquisition by itself, this team tends to be allocated within Product – cases of Zoom, Slack, Drift, etc. In other cases, when education and relationship with the market is necessary to generate traction in the acquisition, this team tends to be allocated within Marketing.
For the theoretical context, ideally, the Growth Hacking team should look at all the metrics of the operation and have a separate structure allocating energy to the company’s biggest opportunities.
A separate structure has some challenges: political alignment across many areas, low degree of deep vertical knowledge of focus, need to prove ROI at a fast speed, and the difficulty of allocating specific resources to work on a team without some predictability at first.
Thus, it is common for companies to start within a team context (Marketing or Product) and, as the team matures and has the predictability of deliverables, it expands to other focuses (activation, retention, monetization, etc.) with squads separate, but within the same management. In Brazil, it is more common to see Growth Hacking teams allocated within Marketing with the first major focus being on acquisition.
The team needs to understand the business as a whole.
In practice, trying to attack company-wide priorities can be a hindrance to proving results and being able to actually prioritize the biggest opportunity. At first, if you have the freedom to work in several areas, you can attack the low-hanging fruits (good opportunities with low effort) throughout the company, but later you will need to go deeper to continue growing at an accelerated pace.
However, it is essential that the team has knowledge of the business as a whole, even if it has a specific focus. This is important for you to optimize the operation for a global, silo-free maximum.
If you optimize your acquisition by volume and not for the ideal customer profile , this can negatively impact churn , deterioration of the brand’s strength in the market, higher service volume and cost of support/after sales, among other things they do the company suffer financially due to poor optimization.
Knowing the business growth model, who are the people who value the product, what is the pain it solves and how to access this market is essential for the company to grow sustainably and for the Growth team to really optimize for the growth KPIs.
>> Find out more: Very cool podcast with Matt Bilotti – Product Growth Manager – telling a little about how Drift has structured its Growth team since 2018
And how is Growth Hacking in RD?
Continuing the series of common questions that I ask in mentoring and benchmarking, the RD Growth team is divided into squads that have a great focus. In the case of the acquisition squad, it is composed as follows:
The focus of this squad is on acquiring new customers for RD Station Marketing (channel optimization, on-site CRO, product adjustments, new strategic partnerships, exploration of new growth loops, new channels, etc.). We don’t just want one more gas to reach the operational target for the month, but rather provide paths and clarity to ensure the company’s accelerated growth in 6/12 months.
Regarding acquisitions, I really like to make my Performance team, which is in charge of the channel operation and generates qualified opportunities for Sales, also take the time to run experiments and optimize our acquisition machine. A lot of learning is generated during the day-to-day operation, and not using this learning to test new things would be a waste.
However, for the operation not to harm the experimentation routine and vice versa, it is necessary to set aside a weekly time to focus on the experiments and guarantee a minimum rhythm of experiments to have cadence.
On average, the operation will consume 65%-75% of the time, and experiment the rest. In addition, each person on the team has to run at least one experiment and cannot drop the operation plate. In this way, Blue World City can have a rhythm and predictability of deliverables, such as:
- The team has 10 people
- If on average 2 experiments are performed per person per month, I have 20 completed experiments per month;
- If my success rate is 40% on average, I have 8 successful experiments per month;
- If each successful experiment generates an average of R$ 125 thousand more in the pipeline for me, I have predictability of R$ 1 million (R$ 125 x 8) more pipeline every month coming from the Growth Hacking team.
“So should I start with this Growth team structure?”
This team structure is related to RD’s priorities at the moment and to the evolution of the process over the years. If you already start with a bloated structure, the expectation of results will be huge and this can be harmful.
For every Growth Hacking team that will start, at least 3 super important roles are needed:
- Manager/Lead – It is usually the one who makes all the diplomatic challenges between areas, communicates the deliverables via reports with other stakeholders, and aligns budget and resources for the experiments. He is the most knowledgeable about the business within this team.
- Business Analyst – Generally, it is someone who has a more analytical and generalist profile to ensure that the analyzes are well done, that the process is being executed and that the experiment culture continues to be well applied;
- Dev – It’s who will help in the integrations between systems, testing ABs, triggering events, implementing code on the website, etc. There can’t be much love for the codes created, because the focus is on speed and not on robustness. Generally, this person is an accelerator (or bottleneck) of the volume of experimentation done within a squad.
In some cases, a person can play more than one role. Thus, the team’s growth and specialization will take place as the results emerge, making it easier to capitalize on more budget.
Finally, the experiments that each person on the team will perform are prioritized and executed based on in-depth analysis of the operation (acquisition, customer base, behavior within the product), benchmarking and impact modeling of each opportunity.
* MTV = Minimum Viable Test = Minimum Viable Test.
Why do we experiment?
The team’s vision is to find ways to expand the company’s revenue. Experiments are ways to minimize the risk of change and gather lessons quickly in order to:
1) Improve the user experience on our channels;
2) Increase the number of people free trial of the product;
3) Simplify the message and value proposition by getting users involved in our communications;
4) To better understand how Marketing and the Product can solve a certain pain;
5) Make the company have more paying and happy customers.
By running the experiments, we are able to isolate any improvement (or loss) in performance to a single factor and thus make business and product decisions based on qualitative and quantitative data.
RD Station is a B2B software company and this makes the sample size much smaller than B2C companies like Booking, Facebook and Magalu. This means that it takes longer for our experiments to reach statistical significance.
Thus, as we cannot have large analysis cohorts for multiple simultaneous experiments, it is more effective to run fewer tests. At the same time, we do in-depth analysis and focus on your potential for impact.
Experimentation based on consistent analytics, driven by customer insights and rapid iteration, is key to growing companies at every stage. As much as the experiments themselves at first seem to have a small impact, the fact is that the sum of small improvements and the implementation of successful experiments within the operation will make your company grow exponentially.
How do the experimentation process and routine work?
The entire process of aligning ideas, experimenting and applying them on a macro-scale takes place in 6 stages and 2 recurring ceremonies.
Priority alignment meeting with Heads
- Duration 1h. 2x per quarter
- Participants: Growth Lead + Managers who interface and need alignment (Directors + Execs + Managers)
- Definition and alignment of the Squad’s strategic objectives for the next 45 days;
- Growth Lead provides an overall update on key results and lessons learned since the last meeting;
- Any other additional alignment that needs to be done.
team strike meeting
- Duration 1h. Weekly
- Participants: All of the team
- Presentation and discussion of completed experiences;
- Discussion about current experiments and if any decisions/adjustments should be made;
- Discussion about which ideas will be prioritized and moved to the execution queue.
Steps in the experimentation process
- Alignment between leaders;
- Preparation, analysis and brainstorming ;
- Refining ideas and estimating the size of the opportunity;
- Prioritization of experiments;
- Execution of prioritized tests;
- Monitoring and adjustments of experiments;
- End of the experiment, sharing of learning and macro-scale application.
1. Alignment with leaders
Before starting to prioritize and run experiments, it is important to define the strategic priorities that should be the focus of the next 45 days with key stakeholders. In our case, the meeting takes place with: Growth Lead, VP of Marketing, Demand Generation Manager, Director of Product Marketing and the Director of Product.
For the experimentation routine to be effective, it is necessary to have a clear objective, aligned with everyone.
Based on this alignment, Growth Lead is responsible for deepening the analysis together with the team and compiling the latest learning to present to the team before brainstorming.
2. Preparation, analysis and brainstorming
For the creation of ideas to be effective, in addition to aligning with several leaders from other teams, everyone in the Growth team must have the same knowledge base and prepare for brainstorming.
We believe that good ideas will only emerge in two ways: based on in-depth analysis, both quantitative and qualitative; and benchmarking how other people solve a specific problem.
For this, we have compiled in a single document the lessons learned from the last few months, some benchmarking suggestions and what will be the priority and size of the challenge (goal, team, etc.) for the coming months. This way, the entire team can consume not only this document but also do the additional analysis so that good ideas emerge during the meeting.
We make it clear to everyone involved that there are no stupid ideas during a brainstorming session, which results in everyone sharing ideas and avoiding criticism (we leave that to the refinement of ideas).
The priority defined above provides a buffer so that ideas that come up in brainstorming are in alignment with the company’s strategy and are not too open. We also identify the metrics we want to improve and other metrics that influence so that ideas focus on them.
After the brainstorming session, we divide the team into small groups (3 or 4 people) so that a discussion can take place on the plausible ideas and experiments.
Ideas created in brainstorming go into a spreadsheet on Google Sheets to be further refined and to make a better estimate of the size of the opportunity. Each person will choose an idea from their group to refine the analyzes and studies to assess whether the experiment has the necessary potential.
3. Refining ideas and estimating the size of the opportunity
After a first estimate in the brainstorming session, we focus on analyzing the data further, interviewing users and trying to understand if it is worth running the experiment. At this point, people refine the idea by defining the primary and secondary metrics affected by the experiment and a summary of the economic impact if the test is successful.
This analysis forms the basis of all our experiment documents. These analyzes can include interviews with users, reviewing old experiments, extracting data from our tools (RD Station, Salesforce, Supermetrics, etc), building reports in Google Analytics, Amplitude or Mixpanel, etc.
From this, we can determine the potential impact of improving a specific metric, the confidence we have in the analysis done, and also an idea of how much effort it will take to run the experiment.
The effort may include team alignment, the number of people to develop the experiment, technical limitations, possible side effects, etc. It will often be at this point that we will de-prioritize an experiment because it has a low impact potential and a very high effort need.
4. Prioritizing the experiments
After the previous step, many ideas will be invalidated and discarded as we try to refine them to be an experiment with potential. The other experiments, which have been refined, enter the prioritization list.
Prioritization is based on estimating impact potential versus effort potential using a more quantitative version of the ICE Score (Impact, Confidence and Effort).
All prioritized experiments go into our experimentation kanban.
Link to template
What is the ICE Score? Should it be used as a prioritization method?
The ICE Score is a method aimed at associating scores with demands and pointing out which one is a priority in the teams’ routine. Based on this, the team can score their experiments based on three big points:
- Impact (I)
- Confidence (C)
- Easiness (E)
Because it is easy and simple to establish the process, the ICE Score is one of the main prioritization tools not only in Growth teams – but also in other areas of companies. However, would a score coming from ICE be the best way for you to measure the team’s impact?
Imagine the following situation: you write a report to the VP of Marketing or Product and state that “the team this month ran 10 experiments and succeeded in 4 with an ICE Score of 7”.
Your manager will ask:
- What does 7 mean? this is good or bad?
- Could it be that what is 7 for person A is also 7 for person B?
- Will this support the company’s growth?
- Should we have more or less investment (people, tools, etc) here?
Any score, without an estimate of the company’s revenue impact, is just an attempt to be quantitative in the process.
At the end of the day, a manager wants to have confidence in the roadmap of experiments, by which KPIs the team is being directed and optimizing, a reliable projection of the impact to be generated and clarity about what is being executed within that team.
This means that one of the main roles of Growth Lead is to ensure that the key people in the company are able to:
- Visibility: What is the team working on?
- Prioritization: Is the team working on the right things?
- Forecast: what will be the impact? ($$)
In addition to confidence in the work being done, providing this vision will help to have conversations about the role of the Growth team in a more strategic way within the company and even capitalize on the work delivered – asking for more resources such as headcount, tools, budget, etc.
Having an efficient prioritization method with clarity of impact is essential to facilitate communication with people who are not in the day-to-day process, compare experiments that impact different parts of the funnel and also to appropriately reject ideas from experiments that may come from other teams.
In short, if you have nothing or are starting an operation, use the ICE Score to “separate the wheat from the chaff” and make experimenting your primary source of learning to find the channel that will support your company’s growth.
If you’re already in a more mature operation, starting to prioritize and understand impact more deeply will be a great communication tool.
5. Execution of prioritized tests
Each prioritized experiment must have an owner. To ensure the pace of execution, by default, each person on the team must have at least one active experiment.
The experiment owner’s responsibility is: to model the experiment, align and prioritize with those who will be involved in the execution (dev, design, channel owner, etc.), report experiment updates in meetings, and update the experiment card in Kanban.
We like to use Trello to have control of our experiment pipeline, and also so that anyone else who wants to know what we’re doing can have access. In addition, Trello provides important flexibility to adjust it as needed.
Other tools that companies use are Growth Hackers Experiments (we’ve used them for a long time), Air Table and Pipefy. My suggestion is to test and see what works best for you and the team.
Link to template
Documenting each prioritized experiment plays a big role in our experimentation process. Writing the experiment document forces us to think about why it’s prioritized, including what we expect will happen, and determine if it’s worth doing in the first place.
Our experiment documentation includes analysis, benchmarking, hypothesis, the process for implementation, payback potential and a space to post the experiment result and key learnings.
You can have access to a template like we used by clicking here
With the Kaban card created and the experiment document structured, we performed the test and…
6. Monitoring and adjustments of experiments
At each team meeting, the experiment owner must quickly share the status of the experiments and bring up the points that need to be discussed or adjusted. And it’s a quick summary, just like this subtopic. 🙂
7. Closing the experiment, sharing learning and macro-scale application
The test owner documents and presents the learnings and conclusions of the experiment regardless of whether it is successful or not. At this point, the hypothesis, the learning objective, the results, the lessons learned and the next steps are recapitulated.
The team discusses what was presented. Often, new experimental ideas emerge from these discussions. The same owner of the experiment is responsible for ensuring that the test will be completed.
We don’t know what will work. That’s why we carry out experiments. On average, 45% of our experiments are successful. For these cases, the experiment owner is also responsible for aligning and ensuring that it becomes part of our acquisition playbook.
What tools are used in DR?
Another common question to hear is about the tools that are used within the Growth Squad to do analysis and run experiments. Below are the main tools we use:
- RD Station Marketing – It is software for your company to make better campaigns, nurture Leads, generate qualified commercial opportunities, and achieve more results. With it, it is possible to analyze in depth the behavior of your contact base and make an in-depth analysis of your Marketing actions.
- Google Analytics – It is an important tool to monitor your online performance and outline consistent strategies for your business. In it, you can make a multitude of analyzes and understand user behavior on your website and even how acquisition channels are related.
- Google Optimize – It is an essential website optimization tool to boost your website conversions through A/B testing.
- Surveymonkey or Typeform – Survey tools that help you do qualitative analysis. With them, you can easily create online surveys, receive feedback and gain important insights that drive business growth.
- Excel or Google Sheets – The spreadsheet is the number 1 tool for every company to have an analysis that contributes to decisions.
- Landbot – Chatbot tool that seeks to help companies create “conversational experiences” with visitors to their sites. With it, you can easily create quizzes and tools to test some strategy
- Trello – Collaboration tool that organizes your projects in whiteboards. In it, the company has a vision of which experiments are about to start, which ones are being executed, which ones have already been completed and the documents for the main lessons learned.
- Mixpanel and Amplitude – A product Analytics tool that helps us analyze the behavior of users within the product. All important user events are sent to these tools where we can break down analyzes over time, cohorts, conversion funnels, etc.
- Hotjar – Tool that helps you analyze site usage, providing feedback through tools such as heat maps, session recordings, and surveys.
- Integromat or Zapier – It’s a great tool for Growth professionals who need to use and connect multiple tools and automate actions.
- Sales Dashboard + Recordings – Getting data from your sales funnel is critical to understanding who are the people coming into the pipeline, what are their pains, what are their objections to the business process, what they have in common, etc. In addition to the quantitative funnel data and its profile breaks (segment, company size, position, etc.), it is important to listen to the connections between the sales team and the opportunities. Listening to calls is a weekly routine on my schedule. See below:
- Wootric – Tool to analyze NPS and CSAT results for a given period, as well as follow the user and customer feedback.
Examples of some tactics used
With structured analyzes and a strong pace of experimentation, we were able to continue growing rapidly even in a scenario of uncertainty and the economic impact caused by the pandemic. In the last 15 months, we’ve grown 8 times the number of people who started the RD Station Marketing free trial.
As you read, it’s natural for you to ask the question: but isn’t he afraid to share strategies that worked for RD and others to copy?
The truth is, no, for a few reasons:
- It doesn’t mean that if it worked for us, it will work for you. Even so, I see competitors still trying to copy our tactics;
- Growth channels or tactics tend to have a common behavior like the one in the chart below, losing efficiency over time. This means that: what was effective a few months ago may no longer be effective
- Sharing content and learning is something that has been ingrained in DR culture from the beginning. Sharing some Growth tactics makes our team more out of the comfort zone and look for new solutions to continue supporting the company’s growth.
Given that, here are two examples of tactics used to inspire you.
1. Optimize Paid Media for B2B
One of the biggest mistakes of B2B companies that invest in paid media is paying the same price for all types of Lead.
Imagine if you have an eCommerce: would you pay the same amount to acquire a potential customer who is interested in a TV and a potential customer who is interested in an iron? I imagine the answer is no.
If this is almost natural for a B2C business, why not use this strategy for B2B? To do this, you need to calculate the potential return that a given segmentation can provide you:
- Segmentation average LTV;
- Average conversion rate gave the characteristics (type of offer, position, company size, etc.);
- Maximum budget for each Lead in this segmentation.
This way, you can be much more efficient than your competitors in the acquisition strategy. In this context, even if your competitor doubles its budget, you will continue to impact the Leads with the greatest potential for return for the company.
2. Member Get Member with content
Member Get Member (or referral) is a strategy made famous by the exponential growth of Dropbox. Finding this viral acquisition loop was critical to Dropbox going from 100k users in 2008 to over 4M users in 2009.
For a viral loop to be effective, the product must:
- Have a clear benefit to others in the social circle;
- People in your product user’s social circle must also be interested;
- The value has to be clear and fast.
As it is a B2B product, RD Station Marketing would hardly be able to scale through a strategy like Dropbox. A referral is an important and very efficient channel in our sales funnel, but it won’t support DR’s accelerated growth by itself.
Even so, we use this strategy for a more popular product – our content. Possibly you’ve already seen the “Share and Earn” strategies from our webinar weeks. With this strategy, we encourage people who are participating in the event to invite other people from their circle to the event and, consequently, get to know RD and the products (Marketing, CRM, RD University ).
Given the nomination assumptions, we know that people tend to nominate other interested people from their circle of acquaintances. With that, we have two main types of indication:
- Indicate to co-workers – Advantage: studies show that for a B2B purchase process around 7 people influence the purchase process ;
- Professional colleagues from other companies – Advantage: CEO appoints CEO, Marketing Manager appoints Marketing Manager, Marketing Analyst appoints Marketing Analyst, etc.
As a result, the cost of a Lead that comes from a referral is 10x cheaper than in Paid Media, in addition to being more qualified.
Is that you? Do you have a Growth structure in your company?
Regardless of the size and segment of your company, never stop investing time to have a clear company growth strategy. This goes for whether you have a prepared structure or not.
Is that you? How do growth routines, prioritizations and experiments work in your company? Is it similar to what I described above?
It would be great to hear from you: what are the challenges you face in relation to Growth? Alignment? Quality of the experiments? Reviews? How to reconcile operation and experiments?