A simple Growth Model for your Start-Up

The term ‘Growth Hacking’ has become pretty mainstream. It also makes a lot of people flinch. We can debate on semantics but one thing I’m sure we all unequivocally agree on — Every startup needs a framework/model for growth; a focused approach for scaling its organisation and user base. And let’s face it, ad hoc experiments or ‘hacks’ that worked for someone else on the Internet are far from it.

Andy John, VP of growth at WealthFront who has been on the early growth teams at Facebook, Quora, Twitter has come up with a simple foundation model to measure growth:

Source, Greylock Partners

1. You need to be able to drive users to your site and convert a significant percentage of them to paying users.
2. There has to be magic/aha moment which leads to a user understanding the value of a product — as a key to growth (Read more about aha moments here: Facebook’s Aha Moment Is Simpler Than You Think)
3. The product has to solve a real problem and there has to be a sizable market for it (Read more about Product-Market fit here: Product/Market Fit: What it really means, How to Measure it, and Where to find it)

(Last year I wrote about how startups can avoid chasing vanity metrics. Something that could come handy before you proceed with this post.)

Most of the tactics mentioned in this blog only work if you have achieved Product-Market fit and are solving a real problem. I will try to use the framework/model used by Andy Johns and try to come up with tactics your own growth team can implement to achieve scale for your startup.

Growth = Market Expansion * Vertical Expansion (More categories) * Merchants per vertical * Products per Merchant * Traffic to Site/ App * Conversion on each Page/ Screen * Increase in Average Ticket Size

You can use this formula to devise the top line growth of your startup. On the face of it, it appears to be relevant to only e-commerce but perhaps you can tweak it to make it work for your business model.

Let us try to go through each component in this formula.

a) Market Expansion

The more the markets you are in the more the number of potential users you will have. But which market do you explore next is the big question.

For a food tech company which is currently operating in the metros it might mean expansion to more tier 1 cities. Here are a few things you can do as part of the food tech’s growth team to help plan this better:

1. Check traffic to your site/app from Google Analytics.

Go to Google Analytics -> Audience ->Geo -> Location. Check the top 10 cities are getting visits from. If you are present on just 5 of them expanding to the rest makes sense if that’s something you can afford to do.

2. There are a few more steps to do before launching in these new markets though. Run Facebook teaser ads (targeting users of that particular cities) announcing your arrival. Take them to a ‘Coming soon’ page. This can be used to gauge interest of potential users.

3. Check volume of searches for keywords like ‘Online food order’ etc from these new cities you want to expand too.

These are just a few of the things you can do. The goal is to make better decisions based on data.

b) Vertical expansion

The more the verticals/categories the more/better your inventory.

If you are a marketplace the list of categories/products you add can be endless. So which ones do you go for?

1. Again Google Analytics can help a great deal in this. Go to Behavior -> Site Search -> Overview. You will find the most searched terms for your site/app. This will also let you know how people search on your site and help you make better product decisions.
2. If you are a women’s fashion app and realize that a lot of people are searching for Women’s party wear it can be an obvious move to add this category. And once you are done you can create a separate feed on your homepage highlighting the latest collection of party wear clothing items.

3.Whenever a new brand related to party wear is on boarded you can send an email/push notification to your users who have expressed an interest in party wear in the past.

c) Merchants per vertical

You need to have more/ better merchants than your competition. We’ve used Kimono Labs earlier to scrape data from our competitors’ sites to compare our merchants, categories, offers with theirs. This sort of data can really help your Business Development/Content team gain an edge.

You can use the same approaches mentioned in the market expansion + category expansion section here too.

RIP Kimono Labs. You were good to us.

d) Products per merchant

Again self explanatory. Have more/better products than all your competitors.

Come up with a list products that are missing from your site/app but are available on competitor sites. Again a scraper like Kimono will help here. Use historical data you have as well as search volume data from Google Keyword Planner to understand whether you need to add them to your site.

e) Traffic to site/app and engagement

User growth (over any given period) = New user signups + Reactivations of current users — Deactivation of current users — Churn

I found this really interesting formula for user growth in this blog post : Build a Growth Machine Like Andy Johns

Lets try to go through all the components.

New User SignUps (Acquisition)

For Desktop the channels for UA are: SEO, Paid Campaigns (Facebook, Adwords, GDN (Google Finance, Gmail, Blogger, and YouTube), Twitter, Outdoor campaigns), Referral Program, Social Share (Let people share products), Blog, Social Media (Instagram, Pinterest).

For Mobile Apps the channels for UA are: SEO (Have Install the app option in the search results), Paid CPI Campaigns (Facebook, Adwords, GDN (Google Finance, Gmail, Blogger, and YouTube), Twitter, Outdoor campaigns), Referral Program, Social Share (Let people share products), Blog, Social Media (Instagram, Pinterest), Launch on other App Stores, ASO/PSO.

Reactivation of current users, decrease of deactivations of current users and reduction of churn

Channels for App engagement: Push Notifications, Email, SMS, Deep link from google search results, Social Media (Instagram, Facebook, Pinterest).

Channels for Desktop engagement: SEO, Email, Social Media (Instagram, Facebook, Pinterest).

A few actionable items to get started:

1. Make people automatically subscribe to newsletter when they sign up. Apart from push notification it is the only external trigger available for most apps. Read more about triggers and the hooked model which people are using to build insanely addictive products here: http://cmxhub.com/product-hunt-hooked-community-habit/

Even better would be to read the complete book : Hooked: How to Build Habit-Forming Products

1. Design for secondary actions. Example: When a user sign ups most sites send a ‘Confirm your emailId’ mail with a confirmation URL. On click of that she is taken to a page with just a single line ‘Your emailID has been confirmed’. We can do so much better. Why not take them to a new landing page where there are secondary actions to perform. If we know the person has signed up from our website we can take them to a landing page where she can download your app (if you have one)/ ‘like’ your facebook page/ follow your blog/any other action you might want the user to perform.
2. Set up a process to improve Special campaign performance. During festivals/events like Diwali, New Year people are much likelier to increase spends. Have custom landing pages, write blog posts, give discounts, do whatever it takes during these high intent periods to drive up numbers. Also track performance of each Special campaign and see the impact on revenue/ daily metrics.
3. For scaling up marketing campaigns have custom landing pages. There has to be a panel where marketing can create and run these campaigns. Or you can use a tool like Unbounce. Don’t index these pages as they are temporary. Even for App you would need to have a similar strategy to run campaigns. Instead of directing these users to the home screen after install you might want them to take them to a specific screen with the help of deferred deep linking if you are running a highly targeted/specific campaign on facebook.

In a similar way existing users will be redirected to the specific screen instead of home page via deep linking after clicking on a push notification.

5. Come up with a way of calculating LTV which will help you make correct decisions regarding which channels to use for user acquisition. You might want to use an attribution SDK for this.

6. ‘Download the app’ banners is the biggest source of organic app installs for most companies. So make sure you are A/B testing those. Try different CTA text, button color. Give an incentive if required.

7. Since SEO is a highly critical channel for organic growth. Don’t ignore it at any cost.

Your SEO should not always be just changing keywords and descriptions. Spend time on link building and other activities. Improve your site speed.

Here is an interesting post on dividing SEO activity time. It says:

40% of time should be spent doing On-page SEO — Content, internal links, breadcrumbs, schema/microdata. Structure your site in a way which will help your SEO. Title, meta description, content on h1,h2 tags are given more priority by Google crawlers than something in your body. So make sure they contain the major keywords. While I was at CouponDunia I saw competitors go the extra mile to improve SEO traffic. One of our competitors (let’s call them ABC) had divided their site into 2 parts as they realized the importance of the keywords ‘coupons’ and ‘promo code’ for Uber. Their h1 had UBER Coupons and their h2 had UBER India Promo Codes. If you checked any other brand/merchant page the h1 and h2 would be different.

A complete SEO panel needs to be built as part of your CMS which can help our SEO team change Title, Description for categories/ merchants easily if you are an e-commerce site. The option has to be there for uploading templates with important keywords. But if someone wants to change meta data for individual merchants/ categories it should be possible too.

Make it easier for your users to navigate the site. Have breadcrumbs.

Spend 20% time on link building — Make your site a trusted website by getting high quality links.

Footer links don’t work as well as having a back link from the body.

20% on Social media — Learn to leverage it to your benefit. Post frequently to Instagram, Facebook, Twitter, G+. You can use Buffer.

Radio Virgin Lebanon is one page which has been doing it consistently well. Their content is funny/engaging and they are crushing it on facebook.

Ask yourself why your users would ‘Like’ or ‘Share’ your content.

10% Page optimization — Speed is one of the few things you can control in the SEO world. Ask yourself if you really need to load one extra image just for the heck of it. How you can make sure that the user is not frustrated and does not bounce. Make sure your site is fast. Use PageSpeed Insights for analysis.

10% Experiment — Try new techniques, test landing pages, try new ideas.

Focus on crawl errors rectification. Keep an eye on Webmasters and check for crawl errors. Remove 404 errors.

Fix mobile usability issues. Infinite scrolling affects your conversion. Read this: Usability findings in ecommerce

8. Start tracking Newsletter/ Push Notification performance.

Test different subject lines as well as preview text to help improve open rate for newsletters. In a similar way we need to test title as well as description for push notifications. Instead of relying on a third party tool which can close anytime (I am talking about you Parse) try to build your own dashboard for sending pushes. It is the cheapest way to driving engagement and you better spend building it well. If you want to still go for a 3rd party solution CleverTap is one I would highly recommend.

Also know the ideal time to send newsletters as well as Push Notifications.

Other things to figure out : What is the time when most people shop on App/ Desktop? Is it affected by Push notifications/ emails?

9. Have a user life cycle campaign set up where you on board users with a series on push/email. I have seen that for most apps the highest usage/transactions is during the first one week after which engagement goes down. So instead of sending generic push notifications send pushes based on how long the user has been active on your app. For my current startup we send a series of pushes — 2 hours, 1 day, 3 days, 5 days after the user installs the app. Earlier we used to send on the 7th day too but we realized the open rate and transactions were far lower and so we stopped. Keep checking engagement for all these push notifications and stop if they are not working out. Try image pushes, text pushes. Try deep linking to a particular screen. The goal is to learn what works and what doesn’t.

10. Send an email when a user has abandoned items on his shopping cart. This should ideally go within 1 hour, 3 hours, after a day (you can test the timings and see what works for your app). You can give a discount coupon in the mail too if there is a chance it will increase conversion. And if the user is on app you can send a push deep linked to the cart screen. Again you have to see what works and what does not. Try different things. Discard the ones which don’t work and double down on the things that do.

11. You can even send a promotional email when a user checks out products but does not take any action. This email should go after a day. Anything less than that will be too intrusive.

12. If you are an e-commerce app try to get more people to add items to their wishlist. Then keep periodically prodding them to buy them with the help of push and email. You can also build a personalized experience for your users based on the items he has bought in the past as well as wish listed. Amazon does this quite well.

13. Remember to do Play Store Optimization exercises. I have written more about them here : 6 Proven Tips to Boost your App’s Downloads

14. Publish your app on multiple app stores. Smartapp got 25% of their first 100K installs from these. Here is a list of Alternative App Stores for distributing your app.

15. Play Store rating is important. Here is how to improve yours : 7 Hacks to get 5-Star reviews on Play Store

16. Implement NPS on your website and have follow up communication with customers based on feedback. Here’s a guide: NPS Driven Growth by Nilan Peiris

17. Just getting installs is not enough. You need to decrease the number of people uninstalling your app too. Also make sure that they are using the app enough. So another key metric to track is how many of these users are active?What is the impact of Push notifications on user retention? Do people uninstall more on the days they get push notifications? Basically realize that they still have the app and then end up removing it. If yes that what is the correlation between push notifications and uninstalls for your app?

You need to know all these details.

18. You can send a ‘Sorry to see you leave’ mail like Haptik does after people uninstall the app. The goal is not to get them install the app again. There is a chance that might not happen. But you can learn a lot by talking to these users.

Still want more on this topic? I have written another post on how to acquire and scale your product here: How We Scaled CashBoss To 500K downloads in 5 months

f) Conversion on each page/ screen.

To improve conversion first you have to set up events correctly. Here is how you set up tracking on Google Analytics : Tracking

Once you have tracking setup then you got to set up your funnel. For a typical e-commerce app the funnel can be : App launched -> Product Description Page Viewed -> Add to Cart -> Purchase

Try to increase conversion on each step of the funnel and see where you are losing users.

g) Increase in Average Ticket Size.

If you are an e-commerce company it makes sense to do this. Figure out the average ticket size for now and have a road map of product features you are going to include to increase your average ticket size with time. Here is a great infographic by Kissmetrics on using cross-sells and upsells to increase revenue.

Final words: Growth hacking seems like a bunch of crazy hacks which will get you the magical “hockey stick” growth that most venture funded start-ups crave. It is not. Instead it is about setting growth processes. Building your analytics stack. And creating a versatile, focused, data driven and aggressive team for whom growth is the true north.

Thanks to @Aamna Khan for reading and providing feedback.