The Transcript

What Online Entrepreneurs Need to Know about Affiliate Marketing

Voiceover: Rainmaker FM.

You’re listening to The Digital Entrepreneur, the show for folks who want to discover smarter ways to create and sell profitable digital goods and services. This podcast is a production of Digital Commerce Institute, the place to be for digital entrepreneurs. For more information go to Rainmaker.FM/DigitalCommerce, that’s Rainmaker.FM/DigitalCommerce.

Sean Jackson: Welcome to The Digital Entrepreneur everyone. I am your host, Sean Jackson, and I’m joined as always by the diligent Jessica Frick. Jessica, how the frick are you today?

Jessica Frick: I am diligent, Sean. How the Jackson are you?

Sean Jackson: I am well. I am well as always.

Jessica Frick: You sound so much better, Sean. You haven’t been feeling well. You sound great.

Sean Jackson: You know, again, as I’ve always said, it’s for the audience. I feel like absolute pounded poo poo but I am going to make my way through it.

Jessica Frick: It’s that show biz flare. You got it.

Which is More Important: the Quantity of Leads or the Quality of the Process

Sean Jackson: There you go. So we left everyone hanging last week with the question of, “What matters more? The quantity of leads or the process of converting leads?” I’m going to go ahead and take the quantity argument because I want you to go in depth on the process side. Okay? Here is my argument for quantity of leads matters more than the process for converting them. Okay?

Jessica Frick: Okay.

Sean Jackson: If you don’t have leads, who cares what your process is? So you need to get them.

Jessica Frick: Well, that’s a good point.

Sean Jackson: You want a ton of them because being a small business, there will naturally be what I call spillage, right? There will just be people that are coming in who are, you’re just not going to be able to get to. Something is going to break in the system, and if you had a bigger team, if you had a bigger organization, then you can take care of spillage. But at the end of the day, being small, you can’t deal with it, so you might as well get as many as possible so that the few that don’t spill out, you can convert them. That would be one argument. What say you?

Jessica Frick: Well, the argument that I have would be the better argument, but you know, we are a customer-first company, and we always think about that customer perspective, and unless you have processes to treat them right, not only are they going to bail, but they’re going to tell their friends to not talk to you. They’re not taking their ball. They’re taking their ball and all of their friends with them.

Sean Jackson: Ah.

Jessica Frick: Acquisition is hard, but activation and retention, that requires process. And not only that, but if you don’t have process, your team is going to burn out fast. If you don’t have a team, what difference does it make if you have a million leads? You can’t do anything with them.

Sean Jackson: Yeah, very good point.

Jessica Frick: So process is more important, because the amount of leads that you have can be adjusted, but if you can’t activate and retain them, it doesn’t really matter.

Sean Jackson: Well, see. That is a good argument, and I will counter with this. I think that when you have a process, then you’re going to want to fill that pipeline up as much as possible, right? Now, it may not be a perfect process. It may be something that is good enough to get you to some sort of revenue for the business enterprise.

At that point, once you have a process, then of course, stacking as many leads into that pipeline then become paramount. If we find the middle ground, which I don’t always like to do, but if we found the middle ground, I would say that you have to have a process, but then once you have that process, then you want to stack up the quantity. What say you?

Jessica Frick: I think that sounds reasonable.

Sean Jackson: Okay.

Jessica Frick: I think it has to happen in that order. I think you need to have some leads, then work out your processes, then you get more leads and you tweak your processes, and you’re just always growing and changing with the demand.

Sean Jackson: Yeah, and I think that’s a part of it. I think really where the end output of this discussion is, is that it is a constant feedback loop, right? You have to have somebody who wants to buy what you’ve got to begin with and you’re going to have to put a process in. I would say start with the process first, right? I’m giving my honest opinion on this. I’d say have a process, get some leads into it, and then continually refine both the acquisition and quantity of leads and the process that goes with it so that spillage, which is natural, can be addressed through the continuous feedback loop and continuously addressing what is occurring in your little ecosystem.

I will say this. One of the things, it’s always hard to take a side of an argument is that if you are only closing 1% of the leads that you get in, then you could double the size of your business by just improving the process in closing 2%, right? But, if you’ve only got five people. You know what I’m saying?

I think the end output for our audience is very simple. It is a continuous feedback loop. It is a continuous process of putting a process in, filling the pipeline, refining the process, refining the pipeline, and that’s the back and forth. Because literally your business can grow not because you got a hundred million people coming in. It could grow because you’re just taking ten thousand and converting more of them in the process that you have. Would you say that’s a logical statement?

Jessica Frick: That sounds logical to me.

Sean Jackson: Good, and the nice thing about today’s show is that we actually have some experts as our guests who came up with this idea of “growth hacking.” In fact, they’re called the Growth Hackers. I’m going to let Jess really take the lead on this because she really is the process gal, and we’re going to interview the founders of Growth Hackers and the authors of the new book, Hacking Growth.

We are joined today by two, I would say, extraordinary individuals. Jess, wouldn’t you say that?

Jessica Frick: Absolutely.

Sean Jackson: We have with us Sean Ellis, who is the founder and CEO of Growth Hackers, which is convenient, given the fact that he coined the term “growth hacker” back in 2010. But prior to being with Growth Hackers, he was the founder and CEO of Qualaroo with customers such as Uber, Starbucks, Spotify, and Intuit. And he also laid the foundation as the first marketing executive to help grow five different companies including UpRoar, LogMeIn, Lookout, EventBrite, and DropBox to more than one billion in valuation.

Our second guest, who happens to be the coauthor of their book is Morgan Brown. Morgan is a startup marketing veteran with more than 15 years helping early stage companies find traction and growth. He took his first job at a startup in 1999, and then worked for a marketing agency, and then he moved to the startup world again to grow venture-backed startups such as TurnHere and ScoreBig. Morgan also writes regularly at MorganBrown.co. So with that introduction, gentlemen, welcome to the show, and Jess, I’m going to turn it over to you and let you run this interview.

Jessica Frick: I would love to, Sean. So Morgan, Sean, thank you so much for joining us.

Sean Ellis: Thank you Jessica.

Morgan Brown: Yeah, thanks for having us.

The Right Mindset You Must Have to Create a Growth Hacking Culture

Jessica Frick: As I’ve told you both, I’m very excited to read your new book when it comes out, and so since we’re talking about business growth on this week’s episode, I figured you guys would be perfect men to ask these questions. My first question: At a philosophical level, what is the mindset you need to be successful with growth hacking?

Sean Ellis: I’m happy to take that one. I think you have to have this recognition that everything you’re doing, there’s a better way to do it, and the only way to figure out the better way to do it is through testing. And that that testing should really be directed toward delivering more value to users, and when you do that, growth seems to be an outcome of that. That just continuous improvement mindset would probably be what I would latch onto the most. Anything you would add to that Morgan?

Morgan Brown: No, I completely agree. I think just the understanding that there’s always a better way to do things and that you can constantly improve is really at the heart of growth hacking, and I think the only other thing that I would add is that as people, we tend to underestimate how fast things are changing out in the world and how fast people’s behaviors are changing, the competition coming and going. You have to pair that constant improvement mindset with an urgency to move as quickly as possible and not be caught off guard with how fast things are actually moving, so I would add an urgency to that constant improvement.

Jessica Frick: That makes a lot of sense. I would imagine it’s very easy to get stuck. Now, you guys talk a lot about big businesses and rapid, successful growth. How can a solo entrepreneur use growth hacking, given the huge demands on their time already?

Sean Ellis: Well, we talk about big businesses. Most of the businesses that I worked with were tiny businesses when I started working with them. DropBox for example was less than 10 employees and I know that’s still not a solo entrepreneur, but I think for a solo entrepreneur, you want to be able to think holistically about the customer experience and not just gravitate toward, “I need more customers,” but instead think, “How do I get someone from consideration of my product to actually coming in and experiencing it?”

Really thinking about that full journey from there and just an understanding that there’s a lot of levers that can be flipped. And especially for a solo entrepreneur who doesn’t have a lot of time and, potentially, resources, making sure that the focus is on the area where you’re going to have the biggest impact is really important. And sometimes the biggest impact is not going out and spending a lot more money or figuring out how to get a lot more customers potentially interested, but figuring out how to convert and retain the customers that are already coming to you, for example.

How Understanding Leverage can Rapidly Accelerate Growth

Jessica Frick: That makes a lot of sense. That brings me to my next question perfectly. You talk about leverage being an important part of growth hacking. What does that really mean to you?

Morgan Brown: Kind of to Sean’s point, is that there’s so many things that you can do to try to grow your business and what I always try to think about when I’m working on my own business or working with the companies that I work with is, If I make a difference in what I’m doing right now, will it make a difference to the outcome of the business?

I think that’s the essential idea of leverage, is finding the one or two things that you can do and change and improve on that will create outsized results. As a solo entrepreneur, as a business owner, there’s a million things you could focus on at any one time, but you only have so much time and so much money to really … you can’t do it all. In growth hacking, really one of the first steps is identifying where you have the most leverage, where if you’re able to improve that one or two things, it will create dramatically better results and kind of outsized gains as a result of that.

Sean Ellis: I could give a quick example from LogMeIn about just the power of leverage. Sometimes-

Jessica Frick: Oh, that’d be awesome.

Sean Ellis: Sometimes it’s a little abstract without a specific example there, so at LogMeIn, we tried to grow the business initially, and I approached that as most marketers do initially where I just went out and started buying ads and could actually work on landing pages a little bit, but what I found was we quickly hit a wall at about $10,000 a month and how much we could spend to acquire users and get a positive return on investment.

What I was looking at, though, was optimizing to get people to sign up for the product, but basically, the majority of the people who signed up never actually used the product. So if they didn’t use it, then they weren’t going to pay us anything. They weren’t going to tell their friends. They weren’t going to stick around.

It was really beyond my control to do most of the things. After they registered, all of the things that needed to be done were beyond my control, so I brought the data to our CEO. We were still small enough where it wasn’t that hard to get the company to turn on a dime and realize that this activation area was where our leverage opportunity was.

The signup-to-usage was a goal that we put as an overall team where we all focused our energy on improving that. It took a few months of experimentation there, but we were able to get about a thousand percent increase in the number of people who signed up and actually used the product. Once we had done that, we went back to the same channels that previously scaled to $10,000 a month, and now we could spend over $1,000,000 a month on those channels.

Jessica Frick: Whoa.

Sean Ellis: Yeah, the money was paid back every three months so we got a fast return on that investment, so it just shows that power of leverage, where a lot of people are thinking about growth hacking, It’s this really creative trickery,” but ultimately we were fixing something that was kind of confusing in the onboarding path of a new user and then with no new creativity, we were much more effective on our customer acquisition. That’s really this idea of leverage, is just finding what’s that “choke point” that’s really preventing your growth.

The Importance of Experimentation to Implementing Testing

Jessica Frick: So you’re talking about activation and acquisition as huge levers. One thing that I was reading in the pre-order materials for your book, you were talking about testing at a high tempo. Of course, when I read that I’m like, “Oh my gosh. How fast can you actually do that? Doesn’t testing take time?” How would you recommend someone with a very small business go about something like that?

Morgan Brown: You have to start wherever you are. So if you’re a very small business and you haven’t done any testing at all, the first step is to commit to experimenting and to try to experiment with the things that you’re doing. My mom is a solo entrepreneur. She runs her own little business and I was talking with her about the book and she was like, “How can I start testing?” I said, “Well you send that weekly newsletter out constantly. Have you ever experimented with that?”

She says, “No, I just send it.” I said, “Well great. Start experimenting with the subject lines to see which ones generate the most opens so more people are reading your newsletter.” I think really you have to take that approach of just make a commitment to start experimenting and then try to speed up and build in more experiments as you get more comfortable and more adept at running them.

Once you kind of get the hang of what it means to experiment in your business and experiment on the parts of your business that have the most impact, then you can increase the velocity. Sean and I talk a lot about there’s two ways to go fast. You can go fast like a Formula 1 race car going around a hairpin turn, or you can go fast like a truck whose brakes have gone out on a mountain road. You definitely don’t want to be the trucks whose brakes have gone out.

I think it’s really about trying to build your speed as you get more comfortable experimenting. Sure, some companies like Amazon are going to run thousands of experiments. That’s not really what we’re talking about. If you’re a solo entrepreneur, it’s about trying to experiment just on a regular basis and building up your ability to do more and more tests. Sean, I don’t know if you want to add anything to that, but that’s-

Sean Ellis: Yeah, just a couple of things. There’s tools out there like Unbounce for landing pages and Optimizely. As Morgan was talking about with email, there’s really easy tools for doing these tests where some of these tests take five or ten minutes to implement. They’re super fast with the right tools.

It’s not really something that a solo entrepreneur shouldn’t have the capacity to do and they could be so high impact on the business that banging your head against the wall when it’s because you have the wrong headline on your page and that headline is really easy to test in something like Unbounce. It’s worth doing those tests.

Jessica Frick: Absolutely. Another thing you guys were talking about in hacking your funnel is retention. A lot of these things that we’ve been discussing, talk about acquisition and whatnot, but subject lines on newsletters, that’s retention focused. And you can also just keep them coming back for more.

Sean Ellis: One of the things with retention is the right first experience is probably the most powerful way to drive retention.

Jessica Frick: That makes perfect sense to me.

Sean Ellis: Yeah, if they don’t use a product correctly the first time, they’re not coming back.

Jessica Frick: Now, do you think people should be giving more focus to existing or new when it comes to growth hacking?

Sean Ellis: I personally feel like the highest leverage that I see for most companies who are just getting started is around activation. It kind of sits right in the middle of the existing and new. It’s essentially that first user experience, and really I like to start with the most passionate customers, really understand how they’re using the product, the benefit that they’re getting, and then build messaging that reflects that on the surface level, and then start to make the actual experience of a new user coming in. Experiment to get them to the experience as quickly as possible, that will make them a passionate customer.

To Survey or Not to Survey?

Jessica Frick: Now, here’s a question for you. I have my own personal thoughts on this, but I would love to hear your ideas on hacking growth and surveys. How do you feel about directly asking people what they want?

Morgan Brown: Sean, I’ll let you take kind of the mechanics of it.

Sean Ellis: Sure.

Morgan Brown: Sean and I are both passionate about surveying users, going right out and talking to them. Growth hacking, for us, is really a data driven, scientific approach to figuring out what moves the needle in your business and what helps you grow your business. But that data isn’t just the numbers in your analytics. It’s also the qualitative data you get from your customers.

The data in your analytics can tell you what’s happening, but only customer feedback can give you that context to help you understand why the behaviors that you’re seeing are actually occurring. I think at every step of the customer life cycle, there’s a case for surveys and a case for customer input. Sean, I don’t know if you can talk about some different ways to use them but-

Sean Ellis: Yeah. I mean, the only thing I was going to say on the high level question of, “To survey or not to survey,” is that interestingly, I had a VC way back in the early days of LogMeIn who pushed me to talk to customers and do surveys. I told him at the time, “I don’t actually care what customers say. I care what customers do, and I’m going to test, and surveying is really not that important to me.” And he said, “Well I just invested a lot of money and you’re going to do surveying.” So I said, “Okay.”

I really just went through the motions of surveying for several months and then one day I realized that my tests were so much better because I had the insights from the surveys. I was no longer guessing with my tests. My tests were addressing real problems that were revealed in these surveys. I actually ended up, later on, building a survey business that we sold last year. I became such a convert to the importance of surveys that I focused all of my energy on it for a few years.

Morgan Brown: Yeah, and I think one of the things that business owners who are listening should kind of take away is it’s not a one time thing. You don’t just survey people and say, “Okay, I know what people are thinking,” but you have to build it into your overall business process. At the business that I run, we survey our customers once a quarter, just the whole customer base once a quarter to kind of understand how we’re doing. Then we also are running surveys as people sign up for the service or hit a landing page and then go away without signing up. We try to survey them. It’s kind of a continual process of getting feedback and not kind of a one-time event.

Jessica Frick: Interesting, and so as you add more surveys, would you consider that a dovetail with your experimental testing?

Sean Ellis: Yeah, it definitely can, but go ahead.

Morgan Brown: Yeah, I was going to say it’s an input to help you figure out what to experiment on. If you get a bunch of feedback that a particular part of the product or service that you offer isn’t particularly valuable or on the flip side that there’s one or two things that really stand out to people as the ultimate value of what you offer, you should use that input to kind of feed into your marketing and customer acquisition efforts, how you refine and develop new products and so on and so forth.

The Essential Steps You Can Take Right Now to Grow Your Online Business

Jessica Frick: That’s awesome. You know that may be the answer to my last question here. Aside from buying Hacking Growth, obviously, which they could do at GrowthHacker.com, aside from buying Hacking Growth what is the one tip you have for small businesses and solo entrepreneurs who might be listening to this to deploy the growth hacking model to their online business?

Sean Ellis: So my tip, and then we ll let Morgan give his tip, but my tip would be just quantify the number of tests that you’re running. If you run zero tests today, that’s your baseline. Then start to track the number of tests you’re running, and try to get it to the point where you’re running multiple tests per week and when you run multiple tests per week, then you’ll get smarter about which tests you run and where you focus those tests. But for most people it’s about moving from not testing at all or very few tests to actually running more tests and it’s through those tests that you learn about what’s going to work and what’s not going to work. There’s a lot of other pieces that go into place to running really great tests, but start by just committing to running more tests.

Jessica Frick: I love that.

Morgan Brown: Yeah, and my tip would just be to look at your business currently and look at how you acquire new customers and how those customers turn into revenue for your business and identify, like Sean said, the one main pain point, or choke point, where those customers are falling off, where that process of turning a new visitor into a customer is failing and really try to understand that pinch point or that choke point and lean into there to try to improve that.

I think too often, as business owners and marketers, we kind of take for granted what’s broken is kind of the way things are and we go try to find new opportunities, and I think that’s a bit of a mistake. I think the better thing is to look at what’s already happening and then try to find the main choke point or pinch point and fix that first.

Jessica Frick: Love that, and I love that you guys have used that word “activation” as a real important part of the process to really focus on, in the middle of new and existing. So thank you so, so much. I would encourage everyone to visit GrowthHacker.com to learn more from Sean and Morgan. Gentlemen, I know you’re very busy with all of your book launch stuff. I appreciate you taking the time to talk with us.

Sean Ellis: Thank you Jess. We really appreciate the opportunity to share what we’re working on with you and your audience.

Morgan Brown: Yeah, thanks so much for having us. We really appreciate it.

Jessica Frick: And we’ll be back right after the break.

Sean Jackson: Hey, everyone. This is Sean Jackson, the host of The Digital Entrepreneur, and I want to ask you a simple question. What is your business framework for selling digital goods online? Now, if the question perplexes you, don t worry you re not alone. Most people don t realize that the most successful digital entrepreneurs have a framework or general process for creating and selling their digital goods in the online space. One of the best free resources is Digital Commerce Academy. Digital Commerce Academy combines online learning with case studies and webinars created by people who make a living selling digital goods online. The best part is that this material is free when you register.

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Recommendations for the Week

Sean Jackson: Welcome back from the break everyone. So Jess, now it’s time for our recommendations for the week. What should be people reading or using this week?

Jessica Frick: Obviously, I have to go with the book Hacking Growth.” I know this show is going to launch just before it comes out and they have some pre-launch bonuses, but it’s going to be worth every penny after it comes out. I have preordered the book, so I can’t wait to read it, but I know that just the information that these two gentlemen have in their head is worth every penny spent. I cannot wait.

Sean Jackson: And that’s at GrowthHackers.com, is that where it is? Or GrowthHacker. GrowthHacker.

Jessica Frick: Yes, GrowthHacker. I know there’s two of them-

Sean Jackson: Right.

Jessica Frick: But that’s my recommendation. What’s yours Sean?

Sean Jackson: Mine’s going to be Clearbit.com, and I’m going to tell you why. If you are familiar with it, you’ll understand. If you’re not, let me explain what it is. Clearbit.com has an API which is a fancy way of saying they have a way for computers and systems to talk to each other, and what it does is it can take email addresses and append additional information like people’s Twitter, Facebook, LinkedIn profiles, the companies they work for, their titles, where they’re located all automatically.

The one feature that they have that I really do like, which I think everyone who is listening should put it on their site right away, is they do have the ability for you to take the Clearbit API. Clearbit.com, get the API key, and you can put it into Google Analytics. So all of the visitors to your site, it can start appending information to the visitor data. Isn’t that cool?

Jessica Frick: Creepy and also awesome.

Sean Jackson: I’m a huge fan of that system and trust me, we have tested so many of them out. If you haven’t had a chance, go to Clearbit.com, sign up, get their API key, put it into Google Analytics. It is totally worth it. They also have a Google Sheets feature, so you can take email addresses in Google Sheets and append additional data.

It’s probably one of the best tools out there that I’ve found for augmenting customer data with additional data points. So we’ve got Hacking Growth at GrowthHacker.com, and we’ve got Clearbit API at Clearbit.com as our recommendations for the week. So Jess, to end the show, what is the question for the week?

And of Course, our Question for the Week When Should you Bring in Outside Help to Grow Your Business?

Jessica Frick: You know, talking with the guys, we were discussing all of this growth and I wondered, Sean, when is it the right time to bring in help?

Sean Jackson: Hm. You mean outside help right? When should you outsource some things versus trying to do it all internally?

Jessica Frick: Yeah, or when do you need to augment your team with someone to keep you from going crazy?

Sean Jackson: Yeah, I think that’s true because there is definitely an idea of the fact that we as solo entrepreneurs want to do it all ourselves, right? Maybe we do need some outside help. When do we bring that in? When is the decision? What do you say, you? When do you think you should bring them in?

Jessica Frick: I think you bring them in early before you lose your mind.

Sean Jackson: Uh, no, see, I’m going to take the opposite. I’m going to say later. You got to figure out what you’re doing so you can instruct them with the data. But you know what, Jess?

Jessica Frick: What’s that?

Sean Jackson: This deserves a bigger conversation, and we’re going to do that next time on The Digital Entrepreneur. Everyone have a great week.

Jessica Frick: Thanks for listening.