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2016-02-25 11:03:41
Jeff BussgangNadav Benbarak
February 19, 2016
Growing revenue and profits is a core objective of most companies, and it is
the responsibility of every function to contribute to the pursuit of this goal.
Yet, in recent years technology startups have embraced a new role, Growth
Manager alternatively Growth Hacker, Growth PM, or Head of Growth that
focuses on it exclusively. By viewing product development and marketing as
integrated functions, not silos, leading tech companies like Facebook and
Pinterest are rethinking their approach to driving growth and achieving
breakthrough results.
Yet, the Growth Manager role remains poorly understood, especially outside
Silicon Valley. As part of an entrepreneurial research effort for Harvard
Business School, we interviewed more than a dozen Growth Managers at
fast-growing startups and explored what they are doing to design a growth
function within an organization.
The Growth Manager function typically lives at the intersection of marketing
and product development, and is focused on customer and user acquisition,
activation, retention, and upsell. The Growth Manager usually reports either to
the CEO, the vice president of Product Management, or the vice president of
Marketing. They work cross-functionally with engineering, design, analytics,
product management, operations, and marketing to design and execute growth
initiatives.
As for responsibilities, the Growth Manager s job has three core components:
first, to define the company s growth plan, second, to coordinate and execute
growth programs, and third, to optimize the revenue funnel.
But before any of these things can take place, the Growth Manager needs to make
sure the right data infrastructure is in place.
Data is the fuel of the growth function and growth teams invest a significant
share of their resources to create the infrastructure that enables analysis of
user behavior, scientific experimentation, and targeted promotions. While many
growth teams have special requirements that compel them to build their own
custom data infrastructure, many choose to work with commercially available
SaaS products. These include everything from analytics tools like Adobe
Analytics and Google Analytics, to A/B testing tools like Oracle s Maxymiser
and Optimizely.
Growth Managers are typically responsible for selecting and integrating these
products into the company s analytics framework and working either on their own
or in partnership with the analytics team to provide dashboards and testing
tools as services across the organization.
Once data is available, the Growth Manager must help the company define its
growth objective, typically by answering two core questions. First, at which
layers of the funnel should growth initiatives be focused? For instance, should
resources go to user acquisition or to combatting churn? Second, the Growth
Manager needs to help the company to quantify and understand progress against
goals. This task is accomplished through the selection of key performance
indicators, and the development of reports on these metrics for consumption
across the organization.
Growth Managers also provide customer insight, by blending data with a deep
understanding of user needs, habits, and perceptions developed through targeted
interviews, usability studies, and customer feedback. Growth Managers utilize
the data they have to answer some of the troubling whys that a company may
have. For instance: Why are users dropping out of the sign up experience? Why
don t users come back to the application after the initial download? Why aren t
users responding to special offers? These insights are then fed back into the
product team to help prioritize product priorities, which impacts the product
roadmap, as discussed below.
Furthermore, the Growth Manager is responsible for prioritizing growth
initiatives and product changes. Ideas for initiatives to create growth
originate in virtually all functions in the organization. The Growth Manager is
the catcher and champion for product requests from outside the growth team.
Further, the Growth Manager must implement a framework for prioritizing
growth-specific product improvements, and organizing the testing rhythm.
Sean Ellis, founder of Growthhackers.com and former vice president of marketing
at LogMeIn, proposes a simple framework for prioritizing project ideas via
ranking on three core dimensions:
The impact of the change if it is successful
Confidence that the test will yield a successful result
Cost to execute the test.
Taken together, these three elements can help to negotiate priority across the
pool of ideas.
With a clearly defined growth objective, and a prioritized roadmap of ideas to
test, a Growth Manager turns their attention to designing and implementing
tests. If the test is to be conducted within the product, the Growth Manager
leads a product development process to implement the change. The process often
begins with a Product Requirements Document (PRD) or a summary slide
presentation that articulates the product changes needed. Next, the Growth
Manager works with a cross functional team including engineering, analytics,
design, marketing, and product marketing to execute the test.
So what makes a good Growth Manager?
If data is the fuel of growth, then analytics is its engine. The Growth Manager
must master statistical reasoning, understand how to design effective
experiments, and develop a quantitative intuition for interpreting user
experience data. Effective Growth Managers are conversant with data analysis
and the best tools for retrieving, manipulating, and visualizing data including
tools like MySQL, Excel, R, and Tableau.
Growth Managers also need to be fluent in the full spectrum of acquisition
channels at their disposal. James Currier, founder of Ooga Labs, identifies
three general types of acquisition channels:
Owned Media: Email, Facebook, Craigslist, Twitter, Pinterest, Apps
Paid: Ads (Mobile, Web, Video, TV, Radio, SEM, Affiliate), Sponsorships
Earned Media: SEO, PR, Word of Mouth
Each channel has its own advantages, trade-offs, and idiosyncrasies. An
intimate and specific knowledge of the channels that are most effective in
reaching a product s target audience is critical.
The Growth Manager also needs creativity, strategic thinking, and of course
leadership. The latter is particularly important since the Growth Manager must
align all market-facing functions to a shared growth objective without direct
authority, and must build a growth team whose culture is suited to the
challenging and experimental nature of the work.
Experience at numerous growing tech firms confirms that Growth Managers are
getting results across all parts of the user journey and at all levels of the
funnel.
By comparing behavior of retained users versus those users who churned, the
early Facebook growth team determined that a key driver of new user retention
was finding and connecting with at least 10 friends within the first two weeks
after signup. With this insight in hand, Facebook developed features to allow
users to quickly see and connect with friends who were already using the
service.
The growth team at Pinterest was able to increase new user activation by more
than 20% with an improved flow for new users. By changing the on-boarding
experience from a text-intensive explanation of the service, followed by a
generic feed of the most popular content, to a visual explanation and
personalized content feed based on a survey of user interests the team was
able to better explain the value proposition and train the user, which
ultimately led to better conversion.
Expect the Growth Manager to become a standard function in the coming years. As
with many organizational innovations, what begins in startups migrates to
larger organizations that wish to operate in an entrepreneurial fashion.
Jeff Bussgang is a general partner at Flybridge Capital and a Senior Lecturer
at Harvard Business School. He is author of the book Mastering the VC Game.
Nadav Benbarak is Head of Platform Product Marketing at Okta. Follow him on
Twitter @nadavbenbarak.