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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.