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Digital Growth: a new approach to digital product development

We hear about Digital Growth all the time on the Internet, in lectures, and at events. But why has this term become so popular? To better understand this, we will first see what has been practiced in the market.

When it comes to technological development, digital products must be on continuous evolution and improvement, so that first, they continue to attract and retain users; second, they are used more often and for longer (which means being more useful); and third, they can offer a great experience.

Growth Hacking

The most famous and most talked-about term. It became known through Sean Ellis when he described what he did when he had to find a replacement to take over his work, which consisted in finding opportunities/loopholes (hacks) to create specific strategies aimed at rapid results for the growth of the company. If you want to know more about it, we recommend the book “Hacking Growth”, which was written by Sean Ellis himself and Morgan Brown.

Product-Led Growth (PLG)

Product-Led Growth is an evolution in the customer acquisition process, where the product itself is used to acquire and retain users. PLG analyzes the user’s behavior to find the time of day they are most inclined to making a purchase. If the product does not generate a specific revenue but was created to lower operating costs for example, you can use it to better understand why users have given up using this product and work to retain them or bring these users back.

For a product to be able to promote itself, we can implement Growth actions more daringly. The main requirement is to cause an amazing user experience. Without this, the product can have the reverse effect and instead of growing positively, it can increase the number of people who speak badly about it and negatively affect the company’s brand. To understand PLG better, Wes Bush describes a very interesting way of creating a product that sells itself in his book “Product-Led Growth”.

Growth-Driven Design (GDD)

A growth-oriented development methodology with the goal of shortening delivery time to focus on what will cause the greatest impact on the customer.

To start working on these small actions it is important to point out that the product needs to have found its market fit, that is, the product was received by the market in a positive way, it meets a need, and people want it and need it.

Once the MVP (Minimum Viable Product) is in production, the GDD will set a series of small deliveries. This will allow you to try out a strategy to leverage your product, either from a feature that is in production or from a feature that is still in the backlog. It is necessary to make sure that it is worth investing in its development, by creating and testing an experiment on your product.

In GDD everything becomes an experiment, so it is necessary to measure to see whether it worked or not. If an experiment is invalidated, the idea is to learn from the result and thus have a continuous process of improvement.

Data-driven

One thing that Growth methodologies have in common (as seen above) is that we are looking at data all the time. You cannot direct the growth of a digital product from opinions or good practices, you need arguments based on solid information. Sometimes we believe in something so much, that we let our perceptions influence our decision-making, focusing on what will not generate value and thus impacting the growth of the company. In Digital Growth, any discovery becomes a hypothesis to be validated and we obtain answers by measuring the data.

Data examples:

  • User behavior data
  • Service data
  • Support data
  • User research data
  • Market data (what the market trends are, technologies)

Use your digital product to leverage company indicators

Every digital product is created with a purpose. Whether it is to increase the company’s revenue or to lower operational costs, there is always a business indicator that guides the reason why that product was launched. That’s why Digital Growth has become so popular: it is possible to further enhance these indicators.

A funnel that helps us pursue these indicators is an adaptation of Dave McClure’s Pirate Metrics (AARRR), where we analyze the customer lifecycle through conversion. The acronym AARRR stands for Acquisition, Activation, Retention, Reference/Recommendation, and Revenue.

Each product can use one or all stages of the funnel. An example of this is to focus on growing the number of users — it generates an increase in revenue, average ticket, profitability, etc. Another is retention and engagement, because the more users make use of the digital product and solve issues themselves, the lower the costs to serve them are.

Other business indicators that we can leverage with Digital Growth:

  • Increased productivity, capacity, quality
  • Increased customer satisfaction and NPS
  • Increased saving – reduction in operational costs, expenses, contact rate

New approach 

We can see that in the coming years the way digital products are developed will change. The development time will be focused even more on what really makes sense and meets a real market need. The change will begin in the way we develop new features and improvements, using experiments to test the strategies created. Finally, the most important: decisions will be made through data to drive digital product growth in a way that significantly affects the business.

By Ana Cristine Veneziani, Head of Digital Growth.

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