The Art & Science of Growth Hacking

BUILDING A SALES & MARKETING MACHINE

Upsell/Cross Sell

CAC/LTV

Virality

Engagement

Retention

Freemium

ConversionRates

BY DAVID SKOK

FreeTrials

THE ART & SCIENCEOF GROWTH HACKING

Upsell/Cross Sell

CAC/LTV

Virality

Engagement

Retention

Freemium

ConversionRates

BY DAVID SKOK

FreeTrials

GROWTH HACKING

Accelerate GrowthThrough

Work on Funnel

A PERSONAL DEFINITION

INCREASEFLOW &CONVERSION

THIS USED TO BE MARKETING’S JOBWHAT’S CHANGED?

TODAY’S WORLD

• Freely available information• Free Trials• On-line reviews• Social Media commentary

THE CUSTOMER IS DOING THEIR RESEARCHBEFORE THEY COME AND TALK TO YOU

YOUR ON-LINE PRESENCE IS KEY

THE PRODUCT ISYOUR SALESPERSON

THERE’S A RICH FLOOD OF NEW DATA

METRICS

REQUIRES A NEW COMBINATION OF SKILLS

BOTH MARKETING AND TECHNICAL

DataScience

THE GROWTH HACKER

Creative Marketing

Inbound Marketing

CustomerExperience &

Product Design

Funnel Optimization

Instrumentation& Metrics

THE BASICSOF FUNNEL DESIGN

Suspects

Closed Deals

LoyalCustomers

who areAdvocates

Suspects

Closed Deals

LoyalCustomers

who areAdvocates

Virality

IN A PERFECT WORLD…

1 Step

IN A PERFECT WORLD…

MyProduct.com

HOW IT WORKSDESCRIPTIONOur product allows you …

BUY NOW!

Only $9,999.99

BUYERTHE

QUESTIONS & CONCERNS

• Will this solve my specific problem?• Is this the best product in the market?• Can I trust this vendor?• How hard is this to implement & use?• Is it a safe choice? (Who else is using it?)• Will I get a return on my investment?• Is it scalable, secure?• Etc.

DESIGNING YOUR FUNNEL

WHAT IS A FUNNEL?

ACTION

MOVEMENT

ACTION

MOVEMENT

ACTION

MOVEMENT

HOW DO WE DESIGN THE ACTIONS?

BUYERTHE

THE BUYERS JOURNEY

CONSIDERATION

CLOSEDDEAL

AWARENESS

PURCHASE

TRIGGERS• Moving house

• Movers, phones, cable TV, furniture, insurance, etc.

• Starting a new software project• PaaS (Platform as a Service), Dev Tools, etc.

• Need to hire a lot of new employees• Applicant Tracking System

• Just lost my data in hard drive crash• Backup software/service

• Read about a new scary computer virus• Anti-virus software

Suspects

ToFuTop of the

Funnel

MoFuMiddle of

the Funnel

ClosedDeals

SalesBottom ofthe Funnel

LoyalCustomers

who areAdvocates

CustomerSucess

RetentionFunnel

RetainExpand

Upsell / Cross sell

Nurture&

Qualify

Inbound &OutboundMarketing

Typical B2B FunnelAWARENESS CONSIDERATION PURCHASE

Suspects

ToFuTop of the

Funnel

Raw Lead

Inbound &OutboundMarketing

ToFu – Top of the FunnelAWARENESS

Email addressor other

contact info

Suspects

ToFuTop of the

Funnel

Inbound &OutboundMarketing

ToFu – Top of the FunnelAWARENESS

Latent Need?

• Buyer not aware they have a need• Or not aware there is a solution

Apparent Need?

• Buyer is aware they have a need,and they are looking for a solution

Suspects

ToFuTop of the

Funnel

Inbound &OutboundMarketing

ToFu – Top of the FunnelAWARENESS

Latent Need

• Market needs Education

Apparent Need

• Understand how they are looking• Ensure you get found during their

research

Suspects

ToFuTop of the

Funnel

Inbound &OutboundMarketing

ToFu – Top of the FunnelAWARENESS

Inbound Marketing

• Content Marketing• Blogging, YouTube, etc.

• Social Media for distribution

Outbound Marketing

• Cold calling – (Sales Development Reps)• Outbound email• Working with Partners

MoFuMiddle of

the Funnel

Nurture&

Qualify

MoFu – Middle of the FunnelCONSIDERATION

Raw Lead

MQL - Marketing Qualified Lead

MoFu – Nurture and Qualify

Nurture Qualify

Lead NurturingDatabase

Raw Lead

MQL

MoFu – Segment, Nurture & Qualify

Personalized Nurturing

QualifyRaw Lead

MQL

Segmented Database

What do we know about them?

Buyer Attributes

What do their actions tell us?

Behaviors

DATA: THE CROWN JEWELS

MARKETING INTERACTIONS

ENGAGEMENT / PRODUCT USAGE

SCREEN SHOT FROM TOTANGO

EXAMPLES OF USAGE:

• IN APP MESSAGING– “We noticed that you haven’t tried X feature. It has the following benefits.

Here is a link to a Video showing you how to use it.”

• EMAIL– Send to all RAW LEADS that are in the FINANCE vertical, we have a Webinar

showing how Customer X uses our product to do fraud detection.

• SALESFORCE.COM QUEUES– Add all Trial Users whose Engagement Score is below 50 to the Customer

Success Teams call queue

METRICS"IF YOU CAN NOT MEASURE IT, YOU CAN NOT IMPROVE IT."

- LORD KELVIN

METRICS FLOW / QUANTITY

CONVERSIONRATE

WHAT TO MEASUREFOR EACH STEP / ACTION:

NO OF ACTIONS % CONVERSION RATE

TIME TIME

VISITORS

CAMPAIGNS TO DRIVE TRAFFIC

TRIALS

CLOSED DEALS

CONVERSION %

CONVERSION %

THE KEY METRICS

OVERALL CONVERSION %

Visitors

Trial

5%

10%

$5,000 Customer

NOT ALL LEAD SOURCES ARE EQUALGoogle Ad Word Funnel FaceBook Ad Funnel

Visitors

Trial

2%

20%

$8,000 Customer

ROI by LEAD SOURCE

OVERALL CONVERSION %

(BY LEAD SOURCE)

Cost per lead

Lifetime value of the Customer

THEMAGIC OFFUNNELMATH

Raw Lead

Marketing Qualified Lead

Sales Accepted Lead

Opportunity

Closed Deal

FUNNEL MATH

20%

90%

25%

20%

CONVERSIONRATES

Raw Lead

Marketing Qualified Lead

Sales Accepted Lead

Opportunity

Closed Deal

REVERSE FUNNEL MATH

20%

80%

25%

20%

CONVERSIONRATES

Closed Deal1

Opportunity5

Sales Accepted Lead20

Marketing Qualified Lead25

Raw Lead125

SALES CAPACITY – A KEY PROBLEM

• An extremely common scenario:– Portfolio companies

miss their bookings by not having enough sales capacity

Quarter 1 Quarter 2 Quarter 3 Quarter 40

1

2

3

4

5

6

7

8

9

10

BookingsActual vs Budget

Actual Budget

Shortfall

SOLUTION

• Track Sales Capacity as a key metric• Hire ahead of the budget and sales plan• Build a recruiting machine• Build a superb On-Boarding training program

REFINING THE SOLUTION

• Become experts at Sales Coaching– Measure each step of the sale process

• Outbound calling• Leaving messages• Doing Demos• Closing

– Take the best at each stage and use to coach the worst

• Quickly remove the consistent non-performers

BUT EVEN IF YOU ARE MICROSOFT, CISCO, ORACLE, OR GOOGLEYOUR FUNNEL WILL HAVE

BLOCKAGE POINTS

Suspects Suspects

Suspects

SuspectsSuspects

Suspects

Suspects Suspects

Suspects

SuspectsSuspects

Suspects

IN DIAGNOSING MANY FUNNEL BLOCKAGE POINTS,I HAVE FOUND THAT THERE IS A

CLEAR PATTERN…

NOT MOTIVATED TO DOTHAT THEY ARE

CUSTOMERS WILL DOSOMETHING

YOU ARE HOPING YOUR

IN OTHER WORDS…

YOU DESIGNED YOUR FUNNEL THE WAY YOU HOPED IT WOULD WORK…

BUT YOU MAY NOT HAVE THOUGHT ENOUGH ABOUT

THE CUSTOMER’S POINT OF VIEW

JBOSS EXAMPLE

CUT THE DOWNLOAD RATE BY MORE THAN 10X

PUT A REGISTRATION FORM ON THEIR WEB SITE BEFORE A FREE DOWNLOAD

IMPACT

FRICTION

GET INSIDE YOUR CUSTOMER’S HEAD

CONCERNS

UNDERSTAND WHAT MOTIVATES THEM

MOTIVATIONS

FRICTION CONCERNS

JBOSS EXAMPLE

• Making $27,000 a month selling documentation

• Solution: • Give away documentation to

get their email address

EXAMPLE: DRIVING TRAFFIC TO YOUR WEB SITE

GETTING FOUNDNot going to find your site unless:

- On top page of Google search results

- Recommended by a trusted source

- Referred to in social media or blogosphere

friction &concerns

LESSONS FROM WEBSITE GRADER• Free tools drive viral spread• Low customer work required• High value delivered• Score leverages competitive urge, and acts as a trigger• Builds trust through clear

demonstration of expertise

GOOD LINKAGE TO NEXT STEP

using engineering for marketing

GROWTH HACKING

USING DATA TO DRIVE WEB TRAFFICSYSOMOS: SOCIAL MEDIA MONITORING

LEVERAGED THEIR DATABASE TO CREATE BLOG POSTS WITH DATA ON TOPICS OF CURRENT INTEREST:• IRAN ELECTION RIOTS• TWITTER’S GROWTH• FACEBOOK USAGE

LED TO:SYSOMOS ARTICLES IN ECONOMIST, NY TIMES

WEB TRAFFIC TO READ THE FULL REPORT

LEADS – IMPRESSED BY THE CAPABILITIES OF THE SOFTWARE

FREE TRIALSTHE PRODUCT IS YOUR SALES PERSON

WHAT IS YOUR TIME TO WOW! ?

Thanks to Gail Goodman of Constant Contact

WOW!

TIME TO WOW!

• How many steps?• How much time does it take?• How much FRICTION is involved

REMOVE STEPS& REMOVE FRICTIONe.g. Provide Sample Data instead of requiring them to load their own

WOW!

ANALYZE TRIAL STEPS AS THOUGH THEY WERE FUNNEL STEPS

Create a full profile

ImportContacts

Do a search for Prospects

See search results

Imagine a Sales Rep signing up for the old LinkedIn

WOW!

LOOK FOR BLOCKAGE POINTS

Create a full profile

ImportContacts

Do custom search for Prospects

See search results

Imagine a Sales Rep signing up for the old LinkedIn

HIGH FALL OFF RATES HERE

For an Outlook/Exchange User

WOW!Create a full profile

ImportContacts

Do custom search for Prospects

See search results

Downloadan App

Installthe App

Runthe App

APPLY BLOCKAGE POINT THINKING

WOW!

FRICTION

MOTIVATIONCONCERNS

Replace the downloaded App with request for emailcredentials and get contacts from Exchange.

Create a full profile

ImportContacts

Do a search for Prospects

See search results

• Concern:– I have tons of very private and confidential

emails. I don’t want anyone to read those.

You want me to give youthe password

to login to my email?!!!

APPLY BLOCKAGE POINT THINKING

WOW!

FRICTION

MOTIVATIONCONCERNS

Replace the downloaded App byconnecting to Contacts on iOS/Android

Create a full profile

ImportContacts

Do a search for Prospects

See search results

RE-THINK THE PROCESS

Source: Josh Porter – Designing for Social Traction

CONVENTIONAL APPROACH

SIGN UPFOR TRIAL

CONVERT TO

CUSTOMERWOW!

WOW! FIRST, REGISTER LATER WOW! SIGN UP

CONVERT TO

CUSTOMER

MAY VARY FOR DIFFERENTCUSTOMER TYPES

E.g. LinkedIn• Different personae:

– Recruiter– Sales person– Individual looking to find a job

MAKE SURE THERE IS A CLEAR PATH FOR EACH ONE

WOW!

A/B TESTINGWEB SITE, LANDING PAGES, PRODUCT DESIGN

ADD VIRALITY

Customer first sees your app

Tries it

Creates/sees information

that they want to share

Creates an invitation, looks up

addresses, and sends

Friend receives

information + invite to join

Friend decides to take a look

MEASURE FLOW & CONVERSION

Customer first sees your app

Tries it

Creates/sees information

that they want to share

Creates an invitation, looks up

addresses, and sends

Friend receives

information + invite to join

Friend decides to take a look

CONVERSION %

FRICTION

MOTIVATIO

N

CONCERNS

APPLY BLOCKAGE POINT ANALYSIS

Customer first sees your app

Tries it

Creates/sees information

that they want to share

Creates an invitation, looks up

addresses, and sends

Friend receives

information + invite to join

Friend decides to take a look

FOR MORE ON VIRALITY

The Science behind Viral Marketinghttp://www.forentrepreneurs.com/the-science-behind-viral-marketing/

WHY CHURN IS SO IMPORTANTSaaS & RECURRING REVENUE

Revenue Lost with 2.5% monthly Churn

Renewals

Lost dueto Churn

YEAR 3

$3m $7m

Becomes harder & harder to replace

this with new bookings

Renewals

Lost dueto Churn

YEAR 6

$30m $70m

CHI SCORECUSTOMER HAPPINESS INDEX

PROACTIVE STEPS TO REDUCE CHURN

• Identify high risk customers (CHI score)– Messaging (In-App, email) to try to correct– Calls from Customer Success team

PRODUCT STICKINESSCONTRASTING EXAMPLES

• SEO– High value in first 90 days– But not sticky

• Marketing Automation– Valuable Data that grows over time– Part of important daily workflows

NEGATIVE CHURN

INCREASED REVENUE FROM

RETAINED CUSTOMERS

LOST REVENUEFROM

CHURNED CUSTOMERS>

IMPACT OF NEGATIVE CHURNMRR (Monthly Recurring Revenue)

1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 $-

$1,000.0

$2,000.0

$3,000.0

$4,000.0

$5,000.0

$6,000.0

$7,000.0

$8,000.0

5% Churn

0%

Negative 5% Churn

REQUIRES PRICING THOUGHT

At least one axis where pricing increases:

EnterpriseEdition

ProEditionBasic

Users

Features

Depth ofUsage

Examples:- Mailing list size- Database size- Amount of storage used

BUSINESS VALUE

MOST STARTUPS MARKETAROUND FEATURES

• Ensure the product delivers this value• Ideally in a measurable way

• Focus Customer Success team on getting this result

• Measure the increase/change from a baseline

• Provide feedback on ROI by quarterly email

WHAT IS YOUR BUSINESS VALUE?

BUYERTHE

THE KEYS TO SUCCESS

GET INSIDEYOUR BUYER’S

HEAD

BUYER PERSONA

What characteristic most clearly identifies this Persona?• Job role?• Looking for a particular type of product?

When purchasing this kind of product:• What pain are they trying to solve?• What are their desired Business Outcomes?• What are their key Decision Criteria?• Is this buyer persona going to be receptive to our product?

• If not, what would they be receptive to?• Feature changes• Competitive products

• What are their Perceived Barriers to making a purchase?

BUYER PERSONA

• Role / job description? • What is the primary goal of this person’s job? • What is the greatest pain in this person’s work life? • What is their role in the decision making process? • Who do they report to? • How does their boss measure their success? • Who are their key influencers? • What publications do they read, & what events do they attend? • What messaging will appeal to them?

Secondary Questions – useful for Messaging & Content Marketing

For More information

• Visit my blog at www.forEntrepreneurs.com