PDF Summary:Hacking Growth, by Sean Ellis and Morgan Brown

In today’s fast-paced, high-tech world, old approaches to marketing no longer work. Large scale, big budget advertising campaigns are too slow and imprecise for the online world. Better by far is to use growth hacking, the authors’ cutting-edge strategy for optimizing your business and skyrocketing its growth.

Hacking Growth presents Sean Ellis and Morgan Brown’s non-traditional approach to refining your marketing, product design, user experience, and more. Ellis and Brown were two of the first Silicon Valley pioneers to devise growth hacking strategies, and their methods have been used by top tech companies as well as startups to create massive growth.

In this guide, we’ll cover the basics of growth hacking—how to set up your team, gather data, generate insights, create ideas, and optimize your business for growth. We’ll also provide supplementary resources, note possible ethical concerns with data gathering, and suggest alternative strategies to the authors’ specific templates.

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Consider Common Growth Metrics

The point of tracking growth metrics is to determine whether your business is growing, and if not, how you can change that. Common metrics to consider include:

• Revenue/income: Track this basic metric overall (how much revenue your business as a whole generates) and for each product or service you offer (so that you can determine which ones are most profitable).

• Conversion rates: How often your sales strategies successfully convert leads (prospective customers) into paying customers. Tracking conversion rates for each sales tactic you try can help you determine which works the best.

• Active users: Track your daily active users through each month, and compare the months to find the trend in your active users. Compare that trend to the growth hacks you try each month, and you can see which hacks contribute best to an active user base.

Part 2: Growth Hacking in Practice

With your product, growth team, and data prepared, it’s time to put boots on the ground. In this section, we’ll explain the core practice of growth hacking: high-tempo testing performed in a continuous cycle. We’ll explain how to find insights in your data, generate possible hacks, determine the best contenders, and start testing. We’ll then discuss how to repeat the cycle and keep moving forward.

The Growth Hacking Cycle

The authors explain that the basic process of growth hacking is to rapidly analyze your product, generate ideas for growth hacks, select the best ideas, experiment with them (in that order), and repeat. This allows you to learn about your product and your users, quickly find changes that work, and stay flexible as you develop your business. In addition, growth hacking thrives on creative solutions to tough problems—so don’t be afraid to think outside the box.

By testing rapidly, growth hacking compounds many small wins to achieve huge successes. This is much like compound interest, where a small sum of money incrementally becomes much larger.

Decide on an initial tempo of experimentation to shoot for, then ramp up over time as the process becomes second nature. The authors recommend starting with at least two tests each week, which your team will determine during the weekly meetings you’ll hold (we’ll explain how below). Next, we’ll explain each phase of the growth hacking cycle.

Growth Hacking and Agile Software Development

Early in the book, the authors compare their methodology to agile software development, a popular development philosophy that focuses on making small, incremental changes that build up to a larger product. Much like growth hacking, agile software development allows teams to stay flexible, adapt on the fly, and make steady, measurable progress.

The authors’ notion of conducting weekly, high-tempo testing might be inspired by Scrum, a popular agile methodology that uses “sprints,” periods of fast-paced work that last for between two weeks and a month. Whether you’re growth hacking or using agile development strategies, think of your weekly or monthly sprints as the basic container for the rest of your efforts. Meetings, collaborations, and everyone’s individual work should contribute to running successful, focused sprints.

Step #1: Generate Insights

To start, the growth lead and data analyst should dive into your data to look for user patterns, which will give you insights (knowledge about how your users use your product or service). According to the authors, this is how you find opportunities to tweak your product and create growth. Pay attention to things such as where you typically lose customers in your marketing process (your sales funnel), how long they spend on each page, and the “open rates” for marketing emails.

At the same time, have your marketer conduct user surveys to gather information about user demographics and other distinguishing characteristics, such as shopping habits or favorite devices. If you can match user behaviors to demographic patterns, you can target tests on specific segments of your user base.

(Shortform note: In addition to generating customer insights, some advocate using predictive behavior modeling. This is a technique that involves building statistical models of the likely future actions your customers will take based on data you’ve gathered about their past actions. Note that while this can be highly effective—increasing sales, retention, and income—it’s also a feature of surveillance capitalism, according to Shoshana Zuboff. In The Age of Surveillance Capitalism, she argues that predicting customer behaviors in order to target them with better marketing isn’t an ethical practice.)

Step #2: Gather Ideas

According to the authors, growth hacking depends on a steady flow of ideas—without them, you won’t have any tests to run. To gather ideas, set up project management software that allows your whole team to create and submit ideas. Then, encourage constant brainstorming and idea submission. Let your team know that anything goes and all ideas are worth considering, no matter how crazy sounding. Highly resourceful ideas have rocketed many companies upward in growth—for instance, Dollar Shave Club made a ridiculous marketing video that went viral and gained them over 12,000 new customers in just two days.

Have every idea follow a template: a statement of the idea, a brief summary of reasoning, and a hypothesis. Each idea should target a key metric, and it should propose a specific, actionable change that can be measured.

(Shortform note: To improve your ability to generate ideas, try setting a goal to come up with a certain number of ideas each week. Track your progress using a spreadsheet or similar tool, and measure from week to week. Once you can consistently meet that goal, set it a bit higher, repeating until you get to the level you’d like to maintain. You can also have each member of your growth team do the same, until each member meets a level of idea-output that’s sufficient to maintain your group’s testing tempo.)

Step #3: Determine the Best Ideas

Each team member should score their own ideas before they submit them. The authors recommend using their ICE criteria: Impact, Confidence, Ease. Impact is the idea’s potential to produce big change. Confidence is how certain the team member is of success, and Ease is how hard it’ll be to implement the test. Don’t get hung up on the subjectivity of these scores—the rating is meant to be a general guide, not a definitive score.

Before your weekly meeting, have team members nominate three ideas for discussion. During meetings, the growth lead should reassess and adjust the ratings according to her judgment.

Alternative Prioritization Frameworks

In product development, there are numerous ways to determine which ideas, features, and tweaks should come first. The authors’ ICE method is one example; others include:

• Value vs. complexity: Score the ideas in terms of how much they’ll add to the product versus how complex they are. Simple, high-value ideas are best.

• The Kano model: Score ideas according to how much they’ll delight customers versus how much they’ll cost to implement. Delightful, low-cost ideas are best.

• Buy-a-feature: Give each team member a sum of “money” to spend on whichever idea they’d most like to see implemented. Use the idea on which team members spend the most money.

Test these out to discover the one that works best for your team, or try developing your own. Consider what’s most aligned with your company’s values—for instance, ICE prioritizes for impact while Kano prioritizes for delight—and then make that a key parameter in your model.

Step #4: Run the Experiment

Once your growth team has picked an idea to test, give ownership to the appropriate team members and have them begin working on the experiment. Collaborate across specialties to make whatever changes you need to the product, and notify the rest of the company before you’re about to change something so that it doesn’t interfere with their work.

In general, the authors recommend that when results seem neutral or ambiguous, assume the test didn’t work well enough. It’s better not to waste time chasing something that could work if it isn’t that promising to begin with.

(Shortform note: One way to think about your experiments is as random control trials (RCTs), which are a standard testing style in scientific and clinical studies. In Black Box Thinking, Matthew Syed explains that running an RCT involves establishing a control, introducing a variable to test, and measuring how that variable changes things compared to the control. Say you want to test a new landing page design—your old landing page is your control and the new one is your experimental variable. Measure how each performs (how many user actions each gets, and so on), and compare the two to determine which one is more effective.)

Repeat the Cycle

After you finish the test, the authors say it’s time to analyze the results and learn from what went well and what didn’t. Have your growth lead and data analyst work through the test results and create a report to present to the team. It should include a description of the test, where it was run, how it impacted your key metrics, and whether the original hypothesis was correct.

In addition, the authors recommend that you keep track of everything you learn by feeding the results of each test into a team knowledge base (a shared document or repository that lists all the tests you’ve run). This allows your team to verify and retain what works and what doesn’t, so that you can avoid repeating mistakes.

(Shortform note: An internal knowledge base can be a powerful tool that enables your colleagues and employees to tap into the knowledge of everyone at your business. The idea is that instead of keeping knowledge siloed within departments or individual’s minds, everyone contributes what they learn to a shared repository of solutions, lessons learned, and general know-how. Over time, this knowledge base will become an extensive resource that anyone in your company can search to find solutions or guidance, without having to waste time figuring things out on their own.)

How to Run Weekly Meetings

Now that you understand the growth hacking cycle, let’s take a look at how to run a growth team meeting. According to the authors, these meetings are your team’s center of gravity, where they come together to check in, strategize, review progress, and stay oriented toward creating growth.

Before the meeting, team members should check on any finished tests from the previous cycle and gather takeaways to bring to the meeting. Also, have your growth lead assess the team’s performance in terms of experiments launched and results gained and bring that data to the meeting.

(Shortform note: In addition to meeting with your team, consider having regular meetings with other growth teams. Meeting over lunch, look to exchange smart, informed questions with the outside team in order to test, pressure, and learn from each other’s processes and styles. Other teams can ask great questions that reveal blindspots in your team’s habits, and you can do the same for them—making this both a great strategy for developing your growth team and your professional network.)

Hold team meetings once a week, and have your growth lead conduct them. The goal is to get everyone on the same page about previous test outcomes, present ideas and experiments, and decide on the team’s next moves. The authors recommend following this format:

• Step #1: Review the data—Check on your North Star metric and other key growth metrics to see whether you’ve gained or lost ground. Brief the team accordingly.
• Step #2: Review the previous week—The growth lead reports on your team’s testing pace and whether any tests have been delayed due to technical difficulties.
• Step #3: Report on active experiments—The growth lead and analyst report on the progress of any active tests, including whether the data indicates growth.
• Step #4: Choose next experiments—Have each team member report on the experiments they’ve nominated to try next. Discuss the most promising options, and come to agreement about which tests to try in the coming week.
• Step #5: Ensure the ideas are flowing—Take a look at the idea pipeline and make sure team members are actively contributing new ideas for tests.

(Shortform note: For an alternative format, try this simple process: First, give an overview of progress toward your goals. Then, share the results of any active or completed tests. Next, focus on wins and challenges. Aim to motivate the team with positive feedback about what’s gone well, and then discuss what you can do better. Finally, discuss adjustments to your team’s performance, determine specific action steps for each team member, and conclude the meeting.)

Part 3: Apply Growth Hacking to Four Areas of Growth

Now that we’ve covered how to set up and implement the growth hacking methodology, we’ll discuss the authors’ recommended strategies and tactics for each phase of customer development—from your marketing to your sales funnel and user experience. Your growth team must optimize each of these at the right times to ensure maximum growth and profitability.

Customer development refers to how you take your customers from signing up to staying loyal for the long term. “Developing” a customer means crafting an experience, from top to bottom, that gets and keeps your customers excited and engaged by your product. Let’s look at the four phases—getting customers to sign up, stick around, stay loyal, and spend money.

Signing Up: Hack Your Marketing

According to the authors, the first step in hacking your company’s growth is to hack your customer acquisition. This involves two main steps:

• Step #1: Find your language and market fit: Craft appealing language in your marketing materials that gets people to try your product.
• Step #2: Find your channel and product fit: Find the best marketing channel for your product and optimize it for growth.

(Shortform note: Matt Lerner, CEO of Startup Core Strengths, argues that any company should find its language and market fit before doing anything else. The language you use can have a huge impact on how many prospects become customers, and having a product before language and market fit often means you haven’t yet done the work to understand your target audience. To do this, Lerner recommends appealing to people’s underlying emotions, desires, dreams, and goals. Messaging that speaks to people’s innermost hopes and worries will resonate much more than lists of features and functions.)

Language and Market Fit

The authors explain that users’ attention spans are shorter than ever—down to eight seconds—so you must craft concise, compelling language that immediately gets across how your product will improve the user’s life. (Note that you should already know your target market; this fit is about refining your language to appeal to it.)

According to the authors, doing this is as simple as running A/B tests. An A/B test means creating two different versions of the same component of a page—such as the header of an article—and measuring how users respond to each. This allows you to test for which language, fonts, colors, graphics, and overall page designs are more effective. Run these tests throughout your product and marketing materials to optimize your language/market fit.

(Shortform note: Note that in 2019, a US senator submitted a bill that, if made law, would make it illegal to “to subdivide or segment consumers of online services into groups for the purposes of behavioral or psychological experiments or studies.” This bill, called Deceptive Experiences to Online Users Reduction (DETOUR) would thus prohibit businesses from creating user cohorts in order to split test (try out different ideas on different user groups) different features or marketing. As of 2022, this bill hasn’t been passed into US law.)

Channel and Product Fit

A channel is a way (and place) to market to your customers, such as through Facebook ads, Google search results, business trade shows, or YouTube sponsorships. The authors recommend focusing first on one channel that makes the most sense for your business.

To find that channel, consider which channels make sense for your business, then narrow those down to one. For instance, a SaaS company with mainly young, online customers would consider paid Google search ads, Facebook ads, email marketing, and content marketing. In contrast, a B2B (business to business) hardware company might prioritize conferences and trade shows.

(Shortform note: Serial entrepreneur Brian Balfour argues that while the term is channel-product fit, a product actually needs to mold itself to a channel—not the other way around. You control your product, but you can’t control the channel (whether it’s Google paid ads, Facebook ads, email, or something else). Consequently, your product needs to appeal to the kinds of users that will come through the channel you’re using. For instance, if you use paid Facebook ads, you’ll need to quickly deliver on the value promised by the ad, since users have less patience with paid ads than with organic search.)

Sticking Around: Hack Your User Experience

Once you've acquired customers, the next challenge is getting them to stick around. According to the authors, to retain customers, you must make it easy for them to experience the core value of your product. Follow the authors’ three steps to do this:

• First, map the steps to your click moment: Identify each step users must take to reach the core value of your product—everything from signing up and payment to product tutorials.
• Next, measure how far people get toward that moment: Analyze your data and create a report that shows how many users “bounce” (leave the website) at each step.
• Then, survey your users: Reach out to users who did and didn’t drop at each step. Ask those who left what caused them to bounce, and ask those who stayed why they stuck around.

These three steps give you a clear picture of what you can adjust to get more users to reach your product’s core value. According to the authors, you often need to reduce friction—things that slow down or complicate the process—to get more users to follow through.

What Is User Experience Design?

The authors don’t go into detail on the basics of user experience design, so we’ll discuss it briefly for context. “User experience” (UX) refers to how your users interact with and experience your product; UX design means crafting a user experience that gets users to have the interactions and experiences you want them to. In other words, you can design your product and website to increase the chances that your users have a good experience.

UX design isn’t just digital, though. One great example of physical UX design is Apple’s packaging of iPhones—user experience is that moment when you open the sleek, clean new phone box and reveal everything placed neatly inside.

Good UX design should emphasize several key features:

• User-Friendly: The product should be easy to use and not confusing.

• Solve a problem: Any good product must be a valuable solution to your user’s problem.

• Appealing: Good UX design should be visually and aesthetically appealing.

The authors recommend two core strategies to reduce friction and optimize for user engagement:

Strategy #1: Optimize your new user experience (NUX)—First, eliminate friction in your new user experience. A bad NUX causes customers to bounce, whereas a good NUX helps users see how your product can become a valuable part of their daily lives. The authors recommend running growth hack experiments on your NUX’s landing page, language, aesthetics, and any steps the users have to take. They also suggest trying single sign-on (using an existing account with a major tech company to quickly create a new one) and/or giving users a free trial that highlights the core value of your product.

(Shortform note: Note that when designing your website—landing page, sales pages, and so on—there’s a fine line between “scrappy” and “shady” design. In 2010, UX designer Harry Brignull founded deceptive.design (formerly darkpatterns.org) to inform consumers of what he argues are unethical design tricks. Deceptive design patterns involve making it difficult to back out of subscriptions, adding hidden fees and costs to purchases or subscriptions, and misdirecting the user’s attention with colorful buttons and easy-to-miss text.)

Strategy #2: Use triggers to keep users coming back—Triggers are prompts that get people to respond or react in some way. These include push notifications, emails, and calls to action. Whatever triggers you use, make sure they concisely remind the user of your product’s value or alert them to a new feature or upgrade. According to the authors, you can use triggers to get users to form a habit of using your product. However, be aware that people are targeted by endless triggers today. If you overdo it or lack finesse, customers might think you're annoying or even sleazy and corrupt.

(Shortform note: One reason to avoid going overboard with triggers is that once you lose your customer’s trust, you might struggle to get it back—if you can at all. In addition, some argue that it’s best to avoid using triggers that cause customers to have negative emotions. This could include using artificial scarcity to induce anxiety that leads to a purchase, or causing people to feel that they’re going to suffer or struggle without your product.)

Staying Loyal: Hack Your Retention

Once you’ve acquired and engaged customers, you need to retain them. According to the authors, retention determines a company's success over time. If you can't keep your customers, you won't stay profitable. Retaining users involves analyzing what causes users to leave and optimizing to reduce those factors. (Shortform note: Customer retention is so important because it often costs more to acquire a new customer than to retain an existing customer. Hence, the effort spent to retain one customer gives a better ROI than acquiring one additional customer.)

First, break down your users into cohorts. A cohort is a group of users identified by a shared trait. You can divide cohorts by age, location, gender expression, educational status, and so on. The authors recommend starting with a cohort for each month’s customers: People who join in January are the “January cohort,” and so on for each month. This allows you to track retention by month and analyze users to find patterns in the behavior of those who leave. Knowing those behaviors, you can look for ways to change your user experience and reduce the losses. There are three areas of retention to work on: initial, middle, and ongoing retention.

#1: Initial retention—Immediately beyond your NUX, prompt customers to come back and continue to use your product. The authors recommend using triggers such as emails and notifications to prompt users to return. Apply the growth hacking cycle to optimize the language and presentation of these triggers and product experiences.

(Shortform note: Three types of effective trigger emails are: “Tips and tricks” emails that help your users learn your product, if necessary; emails that prompt inactive users to return and continue what they were doing; and emails that reward users for taking actions that you want them to. For each of these, you can tweak the messaging, presentation, timing, and more with growth hacking in order to personalize triggers for each customer or cohort.)

#2: Middle retention—Once the customer has opted to return, keep them engaged. You can do this with a variety of tactics, including loyalty programs, product ambassador programs, by offering in-app perks for regular use, and so on. The authors suggest rewarding your customers for using your product so they’ll form a habit of doing so. When a user forms a habit, your product will become a regular part of their life. In turn, they’ll keep paying for the service.

(Shortform note: In Hooked, Nir Eyal explains that the key to creating a product that hooks your customers is to use variable rewards, rather than consistent rewards. A predictable reward doesn’t cause cravings, but variable rewards cause people to crave the next unpredictable reward, much like a slot machine. Social media sites offer variable rewards in the form of likes and comments—when you post on Facebook, you’ll get varied amounts of engagement. So when one of your posts gets a ton of attention, it feels novel and rewarding.)

#3: Ongoing retention—Last, get customers to stick around for the long haul. The authors stress that you must continually introduce new features to keep your product competitive and valuable. To do this, talk to your customers to get feedback and build your product to serve their wants and needs. You can also use cohort analysis to find the features people use most and experiment with improving those. According to the authors, it’s important that you find a steady testing pace that doesn’t bother existing users. People get attached to what they like, but they’ll embrace changes if they come a little bit at a time.

(Shortform note: In addition to continually optimizing your product and analyzing your data, try developing your relationships with your customers. Treating people as people—not just as sources of income—humanizes your business and helps you build for the long term. Businesses that treat people with more respect tend to enjoy that same respect in return, as well as a favorable public image. This can be as simple as sending personalized thank-you notes, having engaged service agents who are in step with your company’s mission, and always being open to conversation with your customers.)

Spending Money: Hack Your Pricing

According to the authors, maximizing the amount of money you get from each customer is key to your business's profitability over time. Growth hacking can help you increase revenue by optimizing your sales funnel and your pricing.

As before, start by setting up your data. Create a “customer journey” funnel that tracks each point in your sales funnel, and gather data on where users stick or bounce versus where they flow through to the sale. Then analyze your users’ behaviors and then reach out with surveys to find correlations between where you lose customers and the steps in your sales process.

(Shortform note: Hubspot, a company that provides enterprise software for online businesses, offers several free templates for creating a customer journey map. A customer journey map is a visual representation of all the stops customers make along the way to purchasing your products or service. This could involve landing on your home page, shopping and filling their carts, exploring pricing options if you offer a subscription service, chatting with customer service, and so on. Creating a visual representation of this process allows you to identify every point in the customer’s experience and, in turn, target and improve them with creative growth hacks.)

With these insights in mind, start generating ideas to adjust your sales funnel. Then, test out one idea at a time to reduce friction and decrease the number of customers that bounce from your funnel. The authors explain that you should experiment slowly and incrementally, and avoid spooking your customers with aggressive sales pitches or marketing tactics.

Follow the same technique to optimize your pricing: Combine analyses of user behavior and surveys to get a sense for what customers are willing to pay. Then, experiment by testing out different price points on different segments of your user base within the range they’re willing to pay. The authors also recommend using pricing psychology tricks, such as including prices that end in .99 or .95, and using dummy prices—prices that bundle together a basic and advanced version of your product at a slightly lower price than the highest price point. This will get customers to spend more, thinking they’re getting the best deal by buying the bundle, at no extra cost to you.

(Shortform note: Pricing psychology takes advantage of the fact that humans don’t always act rationally—often, we choose based on emotion and we’re prone to various biases in our decision-making. “Dummy” or “decoy” pricing takes advantage of the compromise effect, a bias wherein consumers tend to prefer median prices and avoid extremes (lowest or highest prices). We assume that the median product is high enough in quality and has all the features we’ll need, while the high-end product is probably overequipped for our needs and the low-end product is probably insufficient. Researchers call this a “forced choice” strategy.)