How to achieve product growth and acquire and retain users at low cost?

In March 2017, Coca-Cola announced that it would replace its Chief Marketing Officer (CMO) with a Chief Growth Officer (CGO). In November 2017, Forrester Research released a report showing that at least eight of the Fortune 100 brands had eliminated the position of Chief Marketing Officer and assigned its responsibilities to the Chief Growth Officer.

In Silicon Valley, companies like LinkedIn, Facebook, Airbnb, and Dropbox have long begun using CGOs and growth hackers to empower their brands and achieve a major leap in "user levels and scale." They also abstracted "growth" from simple "data growth generated around users" into traceable signals - the brand's "a-ha" moment, which includes "product value", " user experience ", "number of active users" and so on.

The role of the growth team in increasing market share is like that of lean entrepreneurship in products and agile development in production - through fast-paced testing and iteration, low-cost user acquisition and retention , the company can achieve explosive growth.

So, how do we achieve growth? How to build a growth team? How is a growth team different from a marketing team? How to better measure growth? Today's article will answer your questions one by one. Below, Enjoy:

1. How to achieve product growth

Domestic entrepreneurs have all kinds of questions about growth teams - is it okay to just change the name of the marketing team? Who do they report to? What is the value of existence? What is the goal? What are the specific tasks? And, when should a company set up a growth team?

First, the purpose of growth is to expand the scope of use and value attributes of the product, and its measurement standard is what we call the growth model.

Before you even think about growth, the first question you should ask yourself is: Do you have product-market fit? The way to judge is that your users often use your product and go crazy when they can’t use it, which means that your users are "addicted".

Based on this, to understand your users/market, the first challenge is: how can you get more of the above types of users?

The best way to quantify this concept is to measure user retention .

1. User retention rate

Key Step 1: Find out what user acquisition value is

Reference frequency: How often we expect users to get value from the product

Key Step 2: Find the Optimal Value for Users

Reference frequency: the frequency with which users use offline alternative products

The best way to identify user behavior is to find out what value users must get from your product. The best way to determine frequency of use is to understand how often users use alternatives to solve related problems before your product is launched.

Taking Pinterest as an example, the user behavior is saving and the offline substitute is magazines. For Pinterest, the way users gain value is to provide information that interests them. The best way to tell whether they are interested is to see if they save the information.

2. How to use user retention to do business?

Once you have a fixed metric and frequency reference, you can draw a user retention curve. If the curve starts to flatten out, that means some users are consistently getting value from your product and you have product-market fit. But this is not enough, you need to promote the growth of this part of users .

Well-known venture capitalist Paul Graham once sent a tweet about the fastest-growing startup in Y Combinator’s portfolio . The business grew revenue from $0 to $350,000 in 12 months.

This startup is called Homejoy, and its main business is home cleaning services. But 20 months after its explosive growth, Homejoy went bankrupt. Here’s one thing to note about this company’s failure: “A cleaning company charges $85 for a 2.5-hour cleaning service. But to attract new customers , they use a promotional strategy and reduce the price to $19. So, what happens when the discount period ends?”

If you’re hoping to achieve market fit through discounts/promotions, you’re wrong. Because market fit isn’t revenue growth, or growth in the number of users, or getting #1 in downloads in the App Store. Market fit is your user retention, which supports the continued growth of your company.

2. Why do we need a growth team?

In the past, product teams were responsible for developing products that people loved, and marketing teams were responsible for getting people excited to try the product. So now, what changes have taken place with the addition of the growth team?

In fact, what growth teams change is people’s perception of what drives startup growth.

Generally speaking, startup growth can be divided into three stages:

• Phase 1: “Free” — Measurable and Scalable (Product Growth)
• Phase 2: “Paid” — Measurable and scalable (market performance)
• Stage 3: “Paid” — Not measurable, not scalable ( Brand Marketing )

Stage 1 is the most important, but few people truly understand it. In stage one, you need to adjust your product to achieve growth, such as improving the way new users register, increasing user conversion rates , etc. All of the above actions are free because they do not require an advertising budget. Their cost is the time and opportunity cost of the product team, which is measurable and has a certain scale.

The other two stages are marketing in our traditional sense. Marketing, such as advertising on Facebook or Google , is measurable, scalable, and positively correlated with the cost of advertising. Brand marketing usually requires more financial costs and time, and it is difficult to determine the market effect. In the short term, the marketing team's efforts will have a certain influence, but it is difficult to achieve long-term scale because the brand needs continuous empowerment to attract consumers.

This is why marketing cannot be responsible for all business growth. They are not capable of executing the most important part of product development. Even if they know they want to increase user conversion rates or get more traffic , they have no way of accessing the important part of product planning roadmap. Even if they could get help from a technical department, they don’t have the technical expertise to execute it.

Perhaps more important to understanding the difference between marketing and growth is how traditional channels to market change across businesses and across time. The traditional marketing model is "awareness-interest-evaluation-recognition-use", which is an old-fashioned model before the advent of the Internet - spending a lot of money to make people want to own the product.

Startups should offer products that people already want and focus on needs that already exist in the market. This model is more effective for companies that don't have a lot of budget.

Specifically, the following pattern can be followed:

• Favorite products—— Products, product recommendations
• Trial product——product, user conversion
• Using the product – notifications, goal resetting
• Need products – paid and organic search traffic sources
• Catering to core user needs - targeted advertising
• Widespread recognition - brand marketing

When you translate this into tactics, you’ll find that product-driven growth initiatives keep you prioritized. This doesn’t mean you no longer need marketing or branding, but they usually become very important later in the product life cycle .

The product team is mainly responsible for creating value or enhancing product value for users; the growth team does not directly create value, they are only responsible for allowing more people to understand and experience the existing value of the product.

3. How to set up a growth team?

Typically, the growth team will start with the growth drivers that the company has overlooked, and prioritize matters based on principles such as "high return, low cost, and high success rate." Then analyze the data , identify problems, and conduct experiments.

The most common ways to start a growth team are:

• Improve offline/logout experience (for conversion rate or SEO )
• Send more effective subscription emails and notifications
• Improve product recommendation and diffusion rates
• Optimize the new user registration process

Typically, SEO and new user registration processes are the most difficult to crack because they often require longer time cycles.

Companies do not necessarily need to recruit a VP of growth. They can find someone from existing staff who truly understands the company's core business and thus identify factors that hinder growth. They still report to their functional departments, but these few people need to meet frequently to focus on solving problems.

In the growth team structure, the essential personnel configuration is engineers and designers who are highly committed to the product. It would be even more perfect if project managers, analysts, and data experts were added.

4. What else does the growth team need to do?

Typically, the primary responsibility of a growth team should be user retention, not just user acquisition. User retention rate requires the team to focus on improving core products and reducing user discomfort. Simplifying the product usage process is often more effective than adding product features.

So how do we achieve simplification? First, you need to collect data related to user behavior and find out the logic behind user behavior. We’ve spent countless hours studying the journey of users using Pinterest — watching them sign up for the product and figuring out why they don’t activate.

We've made the registration process simple. In the past, people needed five steps to complete the registration, but now it only takes three steps, and one of the steps is pre-filled on the website, and the other two steps are optional.

But what we need to do is, when users want to get the information they are interested in, we need to create a little obstacle, such as asking them what their areas of interest are, which can help Pinterest provide better content.

We found that the more content users browse, the more likely they are to find content that interests them, which ensures an increase in user retention.

At the same time, the growth team also needs to work hard on emails and push notifications. Email is a key driver of user retention. While emails won’t solve your retention problems, if you do it right, they can help you retain users properly.

At Pinterest, people don’t care how much effort Pinterest spends on product development. They would rather know content related to their areas of interest. Therefore, the content of your emails should be like a personal assistant, rather than bombarding users with the same old content like marketers do, that is, creating "personalized customization."

Therefore, Pinterest has created a dedicated team to carefully study the content that each user cares about and customize the emails sent to different users.

Finally, the growth team must have clear goals. And this goal only works if you’ve found product-market fit. Once you have these, you’ll find that traditional product and marketing efforts are unlikely to help expand product usage, and that’s where the growth team comes in.

Using data and qualitative research, the growth team can understand the factors that hinder user growth and find the core value of the product. This means gains, but it can also mean reducing the features of your product or finding ways to remind existing users of the value your product creates.

The author of this article @Casey Winters was compiled and published by (Qinggua Media). Please indicate the author information and source when reprinting!

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