Dan Martell - November 20, 2017


Using High Tempo Testing In Your Startup To Create Predictable Growth


Episode Stats


Length

7 minutes

Words per minute

190.41733

Word count

1,489

Sentence count

64


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode, we talk about the importance of high-pace testing in order to achieve predictable growth in your startup. In this episode we cover: What are the 4 stages of testing How to identify your North Star Metrics Why you need to focus on the North Star metric 4 Steps to High Pace Testing The process of testing and iteration around it

Transcript

Transcript generated with Whisper (turbo).
00:00:00.280 Man, my hands are all, they're all red.
00:00:04.040 It's muscle ups, man.
00:00:05.040 They'll really tear your hands apart.
00:00:14.400 Hot tempo testing to generate predictable results
00:00:18.880 in your growth.
00:00:19.720 I am pumped today.
00:00:20.720 I don't know if you've ever been frustrated
00:00:22.280 with your team's kind of iterations around ideation
00:00:25.800 of testing different ideas and marketing
00:00:28.240 and you really don't feel like there's a process
00:00:31.080 or you're making any results, and it just feels wasteful.
00:00:34.640 Well, I wanna show you a way that I learned,
00:00:36.780 I feel so lucky to have been exposed to this process
00:00:40.120 where you create a very structured, very predictable,
00:00:43.620 very systematic way of creating predictable growth
00:00:48.020 in your startup.
00:00:49.420 I was lucky to meet a guy named Sean Ellis
00:00:52.500 who was the creator of the word growth hacking
00:00:55.940 Back in the day, in 2008, I met Sean,
00:00:59.380 and we became friends, and over the years,
00:01:01.540 when I ran into issues, I'd always reach out to him.
00:01:03.740 He also created the customer development survey,
00:01:06.360 some incredible questions, the concept of a must-have,
00:01:09.220 asking somebody if they're very disappointed,
00:01:12.000 and all these other things, but in regards to growth,
00:01:15.360 this has probably been the most impactful.
00:01:18.020 When I was building my company, Clarity,
00:01:20.160 I remember reaching out to Sean and talking about
00:01:22.860 the results of our surveys, but really thinking about
00:01:25.160 how do I structure the team to be able to focus
00:01:28.560 on a sprint by sprint basis, the growth of the company
00:01:33.060 so that it wasn't just arbitrary,
00:01:36.600 but actually had structure and systematization to it
00:01:39.980 that followed a metric.
00:01:41.160 And that's when Sean talked to me about
00:01:42.760 the North Star metric or your NSM.
00:01:45.080 So I'm gonna walk you through the pieces
00:01:47.860 of a high tempo testing, how to execute it,
00:01:50.160 so you're gonna wanna write this down,
00:01:51.720 and how to monitor and improve your cycle.
00:01:54.600 So the first thing you're gonna need is a North Star metric.
00:01:57.880 And the way I think about this is it's value captured.
00:02:01.480 So whatever your product does,
00:02:03.600 there needs to be some value created to the user
00:02:06.320 and you need to figure out what's the measurement,
00:02:08.420 what's the heartbeat that no matter
00:02:10.640 what department you're working in,
00:02:11.980 from support to sales to marketing,
00:02:14.380 that that number, if it goes up and to the right,
00:02:17.360 is a positive outcome to how the product's
00:02:20.220 performing for your customers.
00:02:22.060 So, for example, daily active users is what Facebook uses
00:02:25.960 because if you have most of your users,
00:02:29.000 I mean, I think the number's 80% on a monthly basis.
00:02:32.100 80% of almost two billion people use Facebook
00:02:34.840 on a monthly basis, that's crazy.
00:02:38.840 Airbnb uses bookings, how many bookings per night?
00:02:41.980 Because every team, from support to the product team
00:02:45.120 to marketing to partnerships, all that stuff,
00:02:48.380 all push towards that number growing.
00:02:51.680 For us at Clarity, the number we came out with
00:02:53.580 was completed calls because same concept as bookings.
00:02:56.180 If we were a marketplace that allowed two entrepreneurs
00:02:58.260 to get on the phone to help overcome their challenges
00:03:02.180 or achieve their goals, then the more completed calls
00:03:05.020 that were occurring on a daily basis,
00:03:07.500 we knew we were growing the business, right?
00:03:10.360 Word of mouth, the product usage, revenue.
00:03:13.100 So you need to figure out what your North Star metric is
00:03:15.680 and you put that up and to the right.
00:03:17.080 So that's what everybody's focused on.
00:03:18.640 What is our true north star measurement
00:03:22.300 out of all the other metrics, and you could have dozens.
00:03:25.260 What is the one that we all agree that captures the value
00:03:28.440 that we're creating for our customer?
00:03:29.720 So then we talk about the process of high tempo testing.
00:03:32.340 There's four very specific stages of testing
00:03:36.660 and iteration around it.
00:03:37.820 The first one is ideation.
00:03:39.600 It's all about coming up with as many ideas
00:03:41.860 for testing as possible.
00:03:43.060 And there's really two different types of tests
00:03:45.220 that you're gonna wanna focus on.
00:03:46.500 One is a discovery test,
00:03:47.740 and the other one is an optimization test.
00:03:49.660 Discovery tests are focused on getting some data
00:03:52.800 or learning about the product,
00:03:54.380 and it still has the same concept of,
00:03:56.040 I have a hypothesis, this is what I think it is,
00:03:58.440 and here's the result, so you still make it a test.
00:04:01.420 And then the optimization tests are,
00:04:03.580 okay, now that I have some data
00:04:05.160 and I know, directionally speaking,
00:04:06.600 kind of where we're at with that,
00:04:08.080 it could be SEO, it could be conversions in a funnel,
00:04:10.720 it could be email click-throughs.
00:04:12.920 The optimization is about,
00:04:15.220 I think we can improve our open rates,
00:04:17.060 or I think we can improve our SEO to sign up metric
00:04:20.260 or whatever it is in the product and that is a test.
00:04:23.340 That idea is captured and what you wanna do
00:04:25.400 is have as many people when you're doing the ideation
00:04:28.300 in the room throwing up ideas focused on
00:04:31.400 the North Star metric.
00:04:33.000 So once you have that, then the second step
00:04:34.880 is to prioritize and prioritize is really about
00:04:38.640 rank ordering and this is why I call it growth stacking.
00:04:41.580 It's what do I do today versus tomorrow versus next week
00:04:44.380 And for teams that have a dedicated growth team,
00:04:47.420 you want to be running two to three experiments per week.
00:04:50.980 So how do you prioritize?
00:04:52.140 You use the ICE method.
00:04:53.760 And the ICE method is pretty simple and straightforward.
00:04:56.060 It stands for impact.
00:04:58.060 So what do you think the impact's going to be
00:04:59.660 on the core metric that you want to test?
00:05:02.840 The second thing is confidence.
00:05:04.820 And I use a scale of one to five,
00:05:06.380 so whatever the scale is, or one to five.
00:05:08.460 So one to five confidence, do we know how to do this?
00:05:11.280 Do we think it's going to work?
00:05:12.500 Second is, or impact, then confidence,
00:05:15.400 so impact one to five, confidence one to five,
00:05:17.740 and then finally, easy question mark.
00:05:19.780 How easy is it for us to make this change?
00:05:21.940 Is it super easy, which is like,
00:05:24.980 I think it would be like a five,
00:05:28.380 or is it gonna be a one meaning
00:05:30.580 that's gonna be super hard?
00:05:31.980 So you wanna measure it because you wanna tally up
00:05:35.060 the score so that you have the highest score at the top,
00:05:37.960 that you have the highest impact, highest confidence,
00:05:40.460 and is it easy, has the highest score for being easy.
00:05:44.100 That number tallyed up will rank order your ideation
00:05:47.840 so that you know where to start.
00:05:49.020 So that's ideation, prioritize,
00:05:50.740 and then third step is to run the test.
00:05:53.160 Now the way to do that is ideally
00:05:55.100 you use an agile development process and you use sprints.
00:05:58.820 So you do a two week sprint on those tests.
00:06:01.320 Now this is different than product development.
00:06:03.200 A lot of people confuse bug fixes, product development
00:06:06.320 with the growth and high tempo testing.
00:06:09.180 It's not, it's a separate team ideally,
00:06:11.100 or maybe the existing team, but a very clear focus
00:06:14.240 on moving the North Star metric up and to the right.
00:06:17.480 So you run the test, two-week sprints.
00:06:19.140 And then what's cool, and most people forget this step,
00:06:21.380 is you want to report on the findings.
00:06:24.040 What did you learn?
00:06:25.200 And you wanna save that in a knowledge base.
00:06:26.780 On the low level, you wanna save that
00:06:28.780 in some kind of document.
00:06:30.180 On a higher end process, you can use a tool.
00:06:33.040 There's many other incredible tools out there today
00:06:36.020 that you can use to capture and share that information
00:06:40.000 with your team, then you take that and you go back up,
00:06:43.040 ideation step, prioritize using ice,
00:06:45.500 test it in using sprints, and then again,
00:06:47.680 report and save that in the knowledge base.
00:06:50.040 That process is high tempo testing,
00:06:52.940 moving your North Star metric up and to the right.
00:06:56.400 So, I know that for many of you guys,
00:06:58.640 you might feel like, well, this is another thing
00:07:00.580 I've gotta do within my team,
00:07:02.620 but I just wanna challenge you to maybe look
00:07:04.600 at a new resource that's just focused on this.
00:07:07.440 It could be a part-time developer, it could be an intern,
00:07:11.240 it could be taking 20% time, maybe every Friday
00:07:14.840 you guys focus on just running experiments for growth
00:07:17.160 and that's your rhythm.
00:07:18.480 But it's really important to have it on a weekly basis,
00:07:21.320 some team, some portion of your time focused on growth,
00:07:25.100 not just building features.
00:07:27.200 So, as per usual, I wanna challenge you
00:07:29.180 to live a bigger life and a bigger business
00:07:31.340 and I'll see you next Monday.
00:07:32.840 If you like this video, be sure to subscribe
00:07:34.380 to my channels for other videos on how to grow
00:07:37.100 and scale your SaaS business.
00:07:38.920 I'd also encourage you to join my newsletter
00:07:40.660 for private invites to events, exclusive contests,
00:07:43.720 and other free training.
00:07:44.800 And if you're ready to get going,
00:07:45.620 I got two more videos queued up and ready for you right now.
00:07:47.980 I'll see you next Monday.