How to Shape Human Behavior

20 important takeaways from this lecture:

00:01:13 With AltaVista in the 1990′s to win at SEO, all you had to do was have white text on a white background with all the keywords and you ranked number one on search engines. It was a really easy skill to learn.

Then came Google which ranked you based on algorythms, pageranks, inbound links, etc. But even in the early days simply having a listing on the Yahoo! directory got you to the top of Google searches as well.

Google’s adwords was the dawn of sophisticated SEO, which included buying paid clicks from Google and then reselling them through Ebay for a small margin using Ebay’s affiliate program. This became the precurser for ‘Internet growth marketing.’

00:02:26 A good product leads to customers, but you need those customers to stay on your site – retention. Retention is the single most important thing for growth.

Of course your monthly users will be 100% because they paid for the month. But what happens on the first day of the next month? The second day? How many of your users actually continue to use your product?

As long as you have a retention curve of % monthly active (Y-axis) versus number of days for acquisition (X-axis) which is parallel to the X-axis, you have a viable business and a viable fit for at least some sub-set of a consumer market.

What does good retention look like? Different businesses need different retention rates, so there is no one universal ‘good’ or ‘ideal’ retention rate. Look at your competitors’ rentention rates and then compare your retention rates to them.

Retention comes from having a great idea, having a great product to back up that idea, and then having a great product-market fit.

00:06:19 The number one problem I’ve seen inside Facebook for new products is that they don’t actually have market fit when they think that they do.

00:10:32 Assuming you have a good retention rate with a great e-commerce site with a 60% retention rate. To then take this position and then scale your business,

00:11:03 If you’re a startup, you shouldn’t have a growth team; the whole company should be your growth team. You, the CEO, should be the head of growth.

00:12:12 If you’re a messaging application, then the total monthly number of ‘sends’ is should be your most important number. If your users are only clicking ‘send’ on you application once a day, then your application probably isn’t their primary messaging system.

00:13:30 The second you have more than one person working on a project, you can no longer have 100% control over what everybody else is doing. And the thing is that it’s not always clear what the most important thing is for the company – the north star – the one thing that the company measures success by.

Of course a lot of your metrics will overlap: Daily Active Users will be pretty close to Monthly Active Users, Total Amount of Content Shared is also highly correlated to how many users there are because new users share new content. So you need to choose the deepest metric to be that one ‘north star’ metric that aligns with your company’s mission and values that you can focus on for the next few years and that guide your decisions.

00:16:32 How do you drive visiters to that magic moment when they become hooked on your service? With Facebook – as with EVERY other social media site – is connecting with your friends. That magic ‘Aha!’ moment is seeing that first picture of one of your friends already using the site. For Ebay it’s when you find that collectors item you’ve been looking for. For AirBnB it’s when you see a beautiful house, rent it, and then physically walk through the front door. On the rentor’s side of AirBnB it’s receiving your first order confirmation.

Think about what the magic moment is for your product, and then get people connected to it as fast as possible so that people come, sign-up, and then stay on your site. Then base your retention analytics around this and work on improving your retention rate.

00:10:50 When you are optimizing for growth, the people who are already using your product all the time are not the ones you have to worry about. Therefore it’s not always necessary to optimize for notifications (email updates that are automatically sent every time someone in a group updates an event – a new comment, uploaded a new photo, commented on your photo, etc.). Your power users are probably grown-ups and saavy enough to know how to use filters.

What you need to focus on is the marginal user – that one person doesn’t receive any notifications in a given day or month or year. If you’re running a social media site, then a low number of notifications probably means that that user isn’t connecting to their friends quick enough, and therefore won’t experience that magic moment you want them to to hook them on your product.

[EDITOR’S NOTE: For more advice on business growth, watch How To Start A Startup: Growing From Zero To Many Users.]

For more, read the book Viral Loop by Adam Penenberg and Ogilvy on Advertising.

00:23:00 Assuming you’ve created a product that dominates all other products/services in your market, don’t just believe that the world will start banging your door down for your superior product. This is where marketing comes in.

00:23:42 Internationalization. One of the biggest barriers to long-term growth is language and dealing with competition that is growing up in other languages around the world.

Facebook originally begin as a university-only access, so each university was a barrier. Facebook’s decision to expand beyond universities to high schools was a shaking moment for Facebook as they questioned whether the site and its culture could survive. Again, Facebook’s expanding to everyone was yet another shocking moment for the company as their user-base exploded until they finally ran into a brick wall of 100 million users.

This was when Facebook’s growth team was set up and and we chose to focus on 10 friends within 14 days metric as the North Star to guide the decisions that would continue to grow Facebook.

To grow Facebook outside of the English language, we took the time we needed to build a site that not only Facebook translated, but also users could translate themselves through our community translation platform. Facebook was translated into French in 12 hours. Today Facebook is in over 120 languages, 80 of those were translated by the community of users.

Next, we prioritized the languages by focusing in the big six: English, German, French, Italian, Chinese and Spanish. But today Italian is no longer a top, and French and German are quickly disappearing.

00:27:20 Building for where the world is today is an easy mistake to make. Instead, take the time to build for a scalable and adjustable product that allows you to move with the population.

00:28:00 Virality can be looked at in terms of:

1. Payload – how many people can you hit with any given viral blast?
2. Frequency – how many times cany you hit them?
3. Conversion rate – how much does it take to convert them?

Hotmail created the first brilliant viral compaign of its time by including ‘Email sent from Hotmail, get your free account here.’ to the bottom of EVERY email sent through their service. Today these email and social media providers allow you to import your entire email database and shoot them an email in just a few clicks.

Likewise, Paypal has both the buyer- and the seller-side to it. It’s mechanism for viral growth was offering money-back for people who sold on Ebay, and offered a ‘Sign up and get $10.’ Who wouldn’t sign up for it?

00:34:20 With virality, aim to remove as much friction from the flow as possible. Advertising online means people don’t have to see your billboard, remember your website, logon, find the register button, and then sign up.

00:34:38 Frequency and conversion are related in that the more times a person sees your ad, the greater the chance of recalling your brand in the future. However, it’s shown that the more times users see the same banner advertising, the less likely they are to click on the ad. This is why you should campaign with multiple banners.

[EDITOR’S NOTE: In a 30-minute interview on Dorm Room Tycoons, Dave Trott explains this concept as a branding campaign perfectly.]

00:39:00 When optimizing for keywords, do your research to know what consumer search for based on supply, demand, and value. For example, in the UK, people search for ‘cocktail recipes’ while Americans search for ‘Drink recipes.’

00:39:50 Next, build pagerank through valuable inbound links from high-authority websites and then distribute your link load internally so that Google’s bots don’t have to search very long or deep to find out if your website is relevant to a user’s search command.

00:41:40 Email is dead for people under 25 years old. Under 25s use WhatsApp, SMS, SnapChat, Facebook, etc. Consider how often you yourself use email versus other communication platforms.

00:42:38 If you spam consistently, your email will end up in spam and your email marketing will fail completely, your email will end up being blocked and your email will be bounced. Once email companies file you under spam, it’s very hard to get out.

This counts for SMS and push notifications as well. So be respectful and focus on creating titles that convert.

00:44:47 The most effective emails you can do are notifications, not newsletters. For example, you receive a lot of likes because you have a lot of Facebook friends. As a frequent user you certainly don’t want to receive a notification EVERY time someone likes or comments or uploads a photo. But for new and low-engaged, users those notifications are magic moments that turn the person into a loyal user.

What notifications you should be sending is the first thing you must think about.