Growth Hacker’s Digest – Edition 13
Can a large company innovate like a startup? My contention is that it can. I’ll show you 2 specific case studies after the break. One case will surprise you: it’s a 179 year old company innovating in the non-tech space.
Beyond the topic of “big company innovation”, I’ll also touch on measuring product / market fit and why I disagree on measuring it through NPS surveys. I’ll also show you a high-converting 22 email sequence for eCommerce companies, with some parallels to SaaS. Lastly, I’ll share what parameters to look at to get ready-to-buy, qualified leads.
P.S. I’m experimenting with a long-format newsletter. Hit reply to share what you think 🙂
Kenn from GrowthHackerKit | @kennyfrc
New at GrowthHackerKit
by Brian Balfour of HubSpot
A lot of founders look to grow their product immediately after they’ve built version 1 of their product. A lot of them struggle a lot in this stage, to the point of overshooting their burn rate targets. That’s because they’ve tried to scale too early. It’s imperative that they achieve product/market fit first. Brian Halligan shares with us 3 specific ways we can do that: 1) through NPS surveys, 2) ensuring enough engagement that it delivers value for the user, and 3) 30%+ retention rates.
Personally, while NPS surveys are popular, I’m not a big proponent of it. It is well known within the research and statistical community that there is a high margin of error for surveys. The main assumption you’re taking is that people are self-aware enough and are serious enough to answer surveys in the right way. But the problem is that we are in-built to misjudge our own behavior. That said, it is recommended to add more weight to the other 2 factors — hitting the “right” level of engagement and hitting 30%+ retention rates.
To the question of what is the “right” engagement rate, it depends on software because it’s hinged on the notion of hitting the “magic moment”, the moment where the user gets hooked with the product. A famous example is from Twitter where it needed to nudge the user to follow 7 accounts. Once that happens, the value (the stream of updates) is realized so the user starts to get hooked with the product.
by Bruce Brown of HBR
How can a large, slow company innovate against its peers? There are 2 specific case studies that you can look into: Procter & Gamble + Febreze and The Coca-Cola Founders Program.
Innovation is usually talked in terms of technology. But innovation in strict terms is about disrupting normal modes of consumption behavior through 10x benefits or 1/10th costs. In the 1960s, when the synthetic diaper was invented (Pampers), it’s an innovation because it delivered 10x absorbency over cloth. And it changed the way parents managed baby waste when they’re outside the home (omg no leaks!). Applying that principle, Uber is an innovation because it’s a 10x benefit across the value spectrum of comfort, speed-to-pickup, and service quality.
So how did a non-tech company like P&G innovate its own categories and how does it apply to tech startups? Back in 2000, P&G only had 15% of its “experimental products” hit revenue & profit targets. What changed the game for the company are 4 things: 1) decouple the innovation unit from the core business, 2) this unit should learn new experimental processes taking insights from Clayton Christensen & Alex Osterwalder, 3) this unit should have strategic priority in the company with regards to research investment, and 4) it should tap outside talent. These 4 factors tripled its innovation success rate, producing category-changing products like Tide Pods, Align Digestive Care, and its recent billion-dollar brand, Febreze.
The Coca-Cola Founders Program had to learn this the hard way. To set the course for its innovation program, it defined “billion-dollar challenges” that had strategic value for Coke: distributor enablement, youth engagement, and last-mile staffing. It had to go through 3 different structural iterations of its innovation unit before it arrived at its current & successful model. Their first iteration was to allow its own middle managers to build startups. It failed. Second iteration was to take outside talent and make them part of the company. It also failed. It’s only when they did a similar model as P&G — where they built a separate entity with outside talent and no line-of-sight with managers did results start to take fruit. In terms of results (2 years so far), they have 2 startups at Series A or above (out of a portfolio of 9) with none dead as of yet.
by John McIntyre of ReEngager
While you know that experimentation is key to grow your startup faster, it needs to be layered on top of a predictable, profit-positive funnel. By building an email sequence, you can automate a lot of the lead acquisition and lead nurturing to leave you space to hack for hockey-stick growth.
In this article, John McIntyre shares with us his 22 email system for converting traffic into revenue. While this is for eCommerce, you can transplant the principles into SaaS products as well: you’ll need a welcome sequence to indoctrinate the user on the brand, an education campaign to help the user achieve their goals (to complement the value of the software), a customer success campaign after purchase, an upsell campaign for renewing customers, and a win-back campaign for lapsed customers. The broad principle here is to generate value in each user lifestage.
by Guy Marion of AutoPilot
How do you ensure that you salesforce isn’t wasting too much time on leads that are just aren’t ready to buy from you yet? In this study from Guy Marion, there are weights that you can consider in your lead scoring process. The 4 biggest weights towards a qualified lead include: 1) submitted ‘contact me’ form, 2) visited pricing page, 3) attended a webinar, and 4) watched a demo.
What’s surprising is that ‘demo’ is ranked last. The data could be skewed given AutoPilot’s pricing (it’s on the affordable end thus it’s not representative of the average) so it’s fair to argue that the 4 factors will reverse its order more as the price goes higher.
Date: March 15, 2016