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The Scientific Method for Continuous Improvement cyprusinno cyprus cyinno knowledge lab copy

 

Time and resources are limited in every business, but especially so for startups. Despite this, many marketers and novices alike rely on an approach that is built upon luck. They look back on their past successes and imitate strategies. They sit around and brainstorm to come up with ideas that sound plausible, without truly understanding what they’re trying to achieve.

The most important lesson that we want to drive home is research! You can’t solve a problem if you haven’t properly defined the problem.

Rather than guesswork and luck, our growth framework focuses on identifying the biggest areas of potential, so that teams and resources and be utilised efficiently. It’s a scientific approach that’s driven by research, metrics, and experimentation.

 

1. Set the direction

The first step in any growth process is to identify the goal - that could be revenue, new user growth, retention, etc... This will serve to align your team and reduce the likelihood that they work on conflicting goals. It will also enable you to track your progress and allow your team to understand what success looks like.

Your goal should be absolute, rather than relative. In eBay’s case, they might set the goal as achieving 10M purchases in the next year. This can then be broken down into subgoals such as achieving 3M purchases from new users, 2M purchases from resurrected users, and 5M purchases from existing users.

For marketplaces like eBay, goals should be set for both the demand and the supply sides.

Your goal should be set with the endorsement of your CEO and other key stakeholders. It’s imperative that each team understands and aligns with the goal because it exists not only as a guide but also to prevent the issues that can arise when separate teams work on reasonable but ultimately conflicting goals.

 

2. Identify high-impact areas

Analyse the performance of each stage of your funnel and identify areas of poor performance, or drop-offs in conversion rate. You should focus your investigation on this stage of the funnel.

For example, if your advertisements had low click-through rates, then you’d focus on your awareness stage.

 

3. Investigate

Break down the stage of interest, just like we did for the entire funnel, to zone-in on the issue at hand. You might be able to identify issues with your existing data. However, you can also perform further research such as customer interviews.

 

To get started, you should answer following questions:

  • How does channel affect performance?
  • How does campaign affect performance?
  • Have changes been made that might be linked to performance?
  • How does performance differ between customer segments?
  • How does the data link back to your market research, customer personas, and job stories?
  • What’s special about users who do successfully progress through to the next stage? (E.g. retained Facebook users likely to make friends quickly, retained eBay users likely to make a purchase quickly.)

 

Following on with the example, poor performance in the awareness stage could indicate a number of issues such as poor product-market fit, poor targeting, or poor creative. Therefore, it would be a waste of time to optimise the creative if the targeting was off–even a perfect creative wouldn’t convert well in that case. The issue of poor targeting can also affect stages down the funnel: if you’re selling toys for dogs, but your advertising targets cat owners, you might get many clicks, but few purchases.

 

4. Strategy

At this stage, you’re likely to have a lot of ideas in your head. By going through the research stage, you’ve built up empathy for your customers, you understand how they’re thinking.

As a result of this, the solution you implement will be far from an idea that’s been picked out of a hat, instead, it has been tailored to a real issue that your customers face.

As a team, you should consolidate solutions and estimate both the upside and cost to implement. You should also decide on specific, measurable goals that you can use to gauge success.

 

5. Implementation

Next, execute your strategy and implement changes. Ensure that your tracking is correctly configured and test changes before you go live. We’ve seen campaigns from big startups fail because of misspelt landing page URLs.

Remember to focus on constantly learning. If you predict that this stage will take significant effort, then break it down and go live with a test early-on to ensure that you’re moving in the right direction.

 

6. Learning

The point of this process is for you to put your customers at the centre of everything that you do. Therefore, when you execute tactics you should constantly measure the reaction from your customers.

That way you’ll learn quickly when you do something that doesn’t work and you’ll spot the new potential for improvement to speed up the growth process.

 

Growth framework in action

One commonly lauded growth hack is Airbnb’s unofficial integration with Craigslist (Chen, 2012). Using the growth framework, they would have identified that their funnel was performing well and that most potential upside was at the top, in the awareness stage.

Through investigation, they would bring forward their customer research which showed that Craigslist had a high number of users who were part of the audience that they wanted to reach. They might have also seen that while users from channels such as PPC (pay-per-click advertising) performed well down the funnel, the initial acquisition was expensive when compared to the projected cost of syphoning Craigslist’s traffic.

When defining their strategy, they would have considered the effort it would take to develop the Craigslist integration. Due to the setup of the Craigslist site, this exercise was far from trivial and required significant effort from their engineers. In addition to this, owing to the unsanctioned nature of the integration, there was a risk that Craiglist would break the integration to prevent loss of users.

While the first launch of this integration is not known, it is likely that Airbnb experimented with a smaller implementation first. This would have saved on development if the integration had failed to drive enough traffic.

Looking back, we can see that this growth hack was a great success for Airbnb, and with our growth framework, you have the tool that you need to identify a similarly successful opportunity that is unique to your audience.

 

Growth framework in your startup

These steps, like the funnel, provide general guidance that you can tailor to the needs and goals of your startup. We hope that by introducing this idea to you, you’ll be able to think through other processes that can be improved by taking this customer-driven approach.

 

 


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References:

Content by:   

Chen, A. (2012). Growth Hacker is the new VP Marketing. Available at: http://andrewchen.co/how-to-be-a-growth-hacker-an-airbnbcraigslist-case-study/ [Accessed 18 February 2018]

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