Most people realize that conversion rate optimization (CRO) is important, but not all CRO leads to growth. With so many things to test and optimize, how do you find the optimizations that actually grow your business?
In this webinar, Sean Ellis, CEO of Qualaroo and founder of GrowthHackers.com, shares how to find the optimization opportunities that really move the needle. Prior to Qualaroo, Sean held marketing leadership roles with breakout companies including Dropbox, LogMeIn (IPO), Eventbrite and Lookout.
Sean says a common mistake he sees is when people separate out broader growth initiatives from their optimization initiatives. To be successful in the long run, it’s really important that growth and optimization are included in the process. How do you make that happen so you can drive transformative growth for your business?
Growth Has Changed
In recent years, growth has changed a lot. When Sean started with LogMeIn 10-12 years ago, it was easier to spend money to drive growth. Today, there is about 3.5x more dollars going online per person competing for their attention. This makes it a lot harder and that’s why we need to re-think growth.
When you look at the actual change of how marketers reach people, it’s amazing how different it is today than even what it was 10 years ago. Things that worked a year ago aren’t working anymore. The image above is just a narrow list of viral channels, but it doesn’t even include things like display, search and changing algorithms around SEO. You have a lot more money chasing attention and an unstable set of channels to reach people through. But at the same time, you have some massive companies that have emerged that are doing well.
Big companies like Facebook and Dropbox have burst on the scene in the last 10 years. They really haven’t used much traditional advertising to grow, so the big question is: How have they done that and what can we all learn from them? The biggest commonality between all of them is that they engineered growth momentum. Growth was something they found through experimentation and were able to engineer and drive growth in a meaningful way.
We all know LinkedIn today, but for this example, put yourself in the early 2003-04 time period when LinkedIn was just getting started. Imagine how hard it was to drive growth to LinkedIn then. It isn’t valuable without people on it, so how did they get the first people on their platform and drive growth from there?
LinkedIn pioneered the address book importer and really changed the game. They were able to build in this relevant hook by asking people to share their contacts and connect their address book. For their contacts who weren’t on LinkedIn, users could invite them to join in the process. Most of us didn’t go for that, but it didn’t take very many people to say ‘Yes’ for LinkedIn to really get the word out and use the early seed of a base to spread to a lot more people. What LinkedIn did seemed very different at the time compared to how people had been approaching marketing online in the previous 10 years. Sean put a label on the ability of companies like LinkedIn to find unique advantages: “growth hacking.”
When Sean thinks of a growth hacking playbook, he thinks of experimenting with all available growth levers. In the case of LinkedIn, they built the growth engine into the product onboarding experience, but they’ve also experimented with ways to drive more engagement on the site and more revenue optimization. Each of these different growth levers run different experiments. It starts with the realization that there are a whole bunch of levers you can use to drive growth, but it’s also important to understand what’s already working. When something’s already working you want to be able to double down and make it much better.
What separates growth hacking more than marketing is the heavy focus on product, testing and optimization. It relies more on using the product to drive growth. Growth hacking has become an effective way to grow a business, but it’s only effective if you can take someone who comes to your site with a desire for your product and make it possible for them to have a good experience with you product. This is what conversion rate optimization is all about. If you try to grow without an effective way to onboard users into an experience, then you’re fighting an uphill battle.
With CRO, it is really hard to find a growth channel. The problem is, not all CRO leads to growth. There’s a lot of people who go through the motions and sort of understand CRO, but are frustrated because it’s not impacting growth. Their process looks like this:
They come up with some gut-driven test ideas, doing relatively small changes—maybe some button color changes. Over time, you’re seeing very little movement. When you do CRO this way, you lose momentum and people stop buying into it in your organization and you miss the opportunity to have something that would make growth and marketing work much better. So how can you actually gain traction with your CRO efforts and move the needle?
Place Your Bets Wisely
It all comes down to this. By randomly doing CRO, you won’t move the needle. But if you actually are very systematic and precise in what you’re trying to do, you can be very effective in it. It boils down to research. If you can do qualitative research (why people are doing something) and quantitative research (figure out what people are doing and not doing), then you can be in a position where you can make people do the things you want them to do. Once you understand this, the needle will start moving in the right direction.
For quantitative research, Sean’s tool of choice has been KISSmetrics. He tends to use Google Analytics as well. There are a variety of products where you can get a good view on what people are doing on your website. Segment them by channel and get a clean understanding of where people are dropping off in the process of becoming a gratified customer or user. Ultimately, how do you actually get someone from that initial visit to becoming a valuable customer?
For some products, you may find that it’s not just about getting users to experience the product once, but it’s actually getting them to become habitual customers. For some products, you may find that people use it once and drop off, so the biggest hurdle is to have people use the product again. For others, as soon as people use it once, they get it, so the biggest hurdle is to get them to use it once.
The best way to understand this is to look at concrete examples. Twitter is probably one of the best examples out there.
Twitter realized that the difference between their habitual users and the users that dropped off was in the number of people that they followed. They realized after a while that if someone followed 30 people, they would be active forever. If they followed less than 30, they were likely not to come back again. This gave Twitter the clear objective of getting users to follow lots of people. When you have that clear objective, you can run lots of test and optimize the calls-to-action. In Twitter’s case, this was giving users a list of interesting people to follow and getting them to that 30-people threshold. You can see just in the quantitative data, you can see direction of where you’re trying to lead somebody toward. If you can take the quantitative data and layer in ‘why’, then you have a very powerful combination.
HotelTonight is a great example of this. What they figured out is that it’s almost counterintuitive that people with a low-bandwidth connection actually seemed to be more valuable customers than people on high-bandwidth mobile connection. When they dug into why, they figured out that because they have a limited selection of hotels that they offered at a deep discount, it wasn’t just about the discount. It was about the simplicity of booking a hotel. That gave HotelTonight a lot more direction, from positioning to targeting people on low bandwidth connection and the types of messages to send. When you start to understand the ‘Why’, you have a pretty powerful way to drive context and connect with people that you can drive conversion.
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One of the most important areas to understand and unlock growth is a user’s intent. To learn more about this, the growth and optimization process and tying CRO to growth levers, watch the webinar here: