How do you fit a near infinite amount of matter in a finite amount of space?
The question at first may appear ludicrous, that’s impossible is everyone’s initial reaction. But as it turns out, there is a solution.
So hopefully, the first thing that came to mind as you were thinking about this question was compression. That is compressing matter further and further, folding it and therefore making it more dense.
This act of folding would create layers, and it’s this creation of layers that allows you to fit a large amount of matter in a tiny space. It’s how the human body fits 21 feet of intestines into a small abdomen, or how the human brain fits the surface area of a table, in a tiny self-contained skull.
While my exploration into the efficiency of the human body may appear trivial, it got me thinking of how do you leverage the efficiency of creating layers or folds for other purposes. Can you apply the same physiological phenomena of compression and density to something as abstract as a group of users? What would that look like for a business? How do you create layers for any given business or product so you can do more with less?
My first thought was to start with your user-base, but what would the creation of layers within a given user-base look like?
The answer I think is relatively straightforward. It’s the commonalities of your users that you would sort them by and create layers or segments to understand them. And it’s these layers that would allow you to achieve additional growth.
We already see the implementation of this evident across industries – e-commerce recommendation engines serve product offers based off of commonalities in purchase data, search engines display results based on which sites other users found useful for the same query, social media serves you content based on what your friends liked etc.
While this may all sound relatively obvious, the benefits of leveraging data for mid-funnel growth isn’t talked about enough at growth marketing conferences. Rather, us marketers tend to focus on stuffing the hell out of the top of the funnel with the latest in user-acquisition tactics (i.e. influencer marketing, App Store search ads etc…). Can’t blame us, we’re creatures of habit like everyone else and tend to fall back on what we know best. Unfortunately, these tactics are empty calories if you don’t understand how your users gain value through usage of your product. Expect your users to churn if you have no idea how to manage them. As someone who has spent a good amount of time at the top of the funnel, I have seen this happen all too often (*cough*, Zynga, *cough*). You decide to open the fire-hoses way too soon, based on way too many assumptions, and bad shit happens within weeks if not days of your expensive time-wasting marketing efforts. What then ensues is a sad episode of the blame game, “it was the shitty traffic Dan, pull another lever!”, “No, we have a leaky bucket, fix the goddamn product!” etc…
Ok…I will close those wounds now, but you get my point.
Instead of spending valuable resources hunting for a new source of traffic, analyzing the data you have to better understand how your users are engaging with the product is critical – you should know whether engagement across your user-base is power-law distributed or normally distributed, furthermore if your distribution is power-law distributed, are you seeing 80/20’s or 50/1’s, i.e. is the distribution fractal? I have seen entire businesses saved when drilling down into LTV and finding fractal distributions (50/1’s) to build an acquisition model off of.
Additionally, the average conversion window (time it takes a user to convert from sign-up), life cycle of said user, and engagement metrics prior to conversion are all very important. I can’t emphasize this enough, especially for businesses with long conversion windows and a small percentage of paying customers (ex: e-commerce or freemium products). What the hell are all those users doing day in and day out?
Once you analyze all of this, different segments (or populations) of your user-base should be transparent, and it will be easier for you to build out different on-boarding flows via all owned channels (e-mail, push, SMS etc.…). This is pretty much low-hanging fruit…not a key insight.
Rather, the big question is how do you leverage the commonalities or layers of your user-base to iterate on features that will help you build growth into the product?
This is the holy grail, and something that should be talked about more, even though it’s difficult to achieve. This takes a good amount of brainpower, and cookie-cutter 3rd party marketing commodities aren’t going to help you do it. Optimization only gets you so far, eventually you hit local maximum at each stage of the funnel, at which point you have to redesign the funnel and create new user flows to continue to grow. If you do this properly, you build out a competitive advantage that maximizes the value of all the top-of-funnel activities you’re expending resources on.
Increasingly, I have seen a new role pop-up for someone who does this, growth product manager. But I think it’s vital that this mindset is not outsourced to one individual (who then optimizes with the levers s/he has) but rather is embodied in the leadership team across the organization. Either that, or the growth product manager has substantial resources across the organization to test and implement new user flows and experiences with the purpose of achieving greater growth.
Optimizing commoditized channels will not save you, growth needs to be integrated into the product by design.
For further reading on this topic, I recommend Viral Loop by Adam Penenberg to learn how some of the most iconic web 2.0 companies accomplished this. You can also find a great talk on the subject here – great discussion on how Lyft completely redesigned its driver on-boarding flow in the early days of the company to achieve greater scale.