Thoughts on Growth — May 4, 2018

Thoughts on Growth is Reforge's weekly newsletter of must-know updates and perspectives in growth. By subscribing, you'll join a few thousand PMs, marketers, UX folks, engineers and analysts at today's top tech companies. Check out today's edition below.


1. Being a featured app in the newly redesigned Apple App Store boosts downloads by up to 8x

Snippet1-5.4.18.jpg

LESS LEADERBOARD, MORE CURATION

Being featured in Apple’s updated App Store leads to as much as an 800% increase in downloads.

The new App Store was launched alongside iOS 11 last September. Previously the store's design put a greater focus on high performing apps using “Top Charts,” which elevated apps that were already popular.

THE NUMBERS

Being featured as the “App of the Day” resulted in a 685% increase in downloads, while the “Game of the Day” sees a 802% increase.

Apps included in Stories and Lists are boosted downloads by over 200%.

ANDREW CHEN, General Partner @ Andreessen Horowitz:

Early on in the App Store, getting featured was a huge deal - people were buying a lot of new phones, trying out a lot of new apps, so a head start in a category could directly lead to 10s of millions of new installs. In recent years it’s gotten a lot less relevant - with paid ad-driven installs becoming the dominant mobile channel.

With these changes, Apple could make App Store features relevant, which gives them more engagement in the developer ecosystem and the ability to steer folks towards the kinds of products they want.


GET THOUGHTS ON GROWTH


2. SEO's decline and what to do about it

We've all seen the evidence: Google has quietly been replacing “blue-link” search results with direct answers to the queries that users input.

Snippet2-5.4.18.jpg

EVERY CHANNEL HAS A SHELF LIFE, EVEN SEO

  • Data show CTRs have been gradually declining for organic results over the past couple of years.
  • If you're an aggregator (eg. Eventbrite, Grubhub, Yelp, online travel agencies, etc), you should update to AMP formats and generally play nice with Google.
  • But this could mean (even) lower clickthrough rates and fewer visitors to those sites.

THE SILVER LINING

Search traffic is up across the board, so the pie is getting bigger (even if your share is getting smaller).

CASEY WINTERS formerly Growth (and SEO) @ Pinterest, Grubhub, Greylock on what to do about it:

You used to create and optimize pages that aggregate inventory for popular queries (e.g. “san francisco food delivery” for Grubhub), but now those pages will be de-valued as Google replaces those listings with its own aggregator.

Instead:

  • Shift your strategy to distribution of your individual listings, so that you can outrank competition inside Google’s new discovery experiences
  • Updated those pages to AMP formats, to play nicely with the new discovery experiences inside Google search

Early adoption of AMP can give an early mover advantage that gives you additional share of a shrinking pie.

On top of that, companies need to aggressively start thinking about additional acquisition channels and loops that will make up for the inevitable decline of organic search.

Look for opportunities in:

  • paid acquisition
  • virality
  • referrals

You'll need to look more deeply at retention and monetization to give you an edge in those channels.

  • Better retention/monetization gives you an LTV vs. CAC improvement for paid acquisition
  • Increased retention gives you more opportunity to ask retained users to tell others about your product (virality and referrals).

The form factor is dictating the optimal user experience, and forcing Google itself to evolve. Users don't have the time or bandwidth to click ten blue links, and (on mobile, where search is growing) there are now a plethora of competitors in the form of apps for many of those queries.


GET THOUGHTS ON GROWTH


3. Price elasticity and emotional willingness to pay for SaaS buyers

  Image from ProfitWell's  Value Metric Benchmarks Report     

Image from ProfitWell's Value Metric Benchmarks Report

 

We know about the dangers of discounting in SaaS. How do you achieve the opposite — higher prices and better profit margins?

Answer: price against value from the customer's perspective (not just yours). To do that, understand the emotions driving your SaaS customer's purchase decision.

DAVID SKOK, GP @ Matrix Venture Partners

In the business world of software buyers, the driving emotions that can make them want and expect to pay a higher price are:

  • Their problems are so important to them that they are looking to make sure they have taken the best possible steps to address them
  • They want a serious commitment on behalf of their suppliers
  • They have a status need to own the best

Those buyers don't feel comfortable buying a “cheap” solution.

Once you have a handle on this, you can scale up pricing on:

  • Features
  • Number of users
  • Depth of usage (eg. storage, number of websites created, servers used, etc)
  • Support (dedicated support staff, turnaround time)

GET THOUGHTS ON GROWTH


4. Disagree... and commit

Snippet4-5.4.18.jpg

HIGH FUNCTIONING TEAMS WILL DISAGREE

It happens, and it should. But if leaders don't handle conflicts when they come up, things get unproductive at best, toxic at worst.

TOMASZ TUNGUZ, VC @ Redpoint Ventures, formerly Product @ Google, on how this works, and when it doesn't:

I’ve worked in environments in the past where management clearly communicated the obligation to dissent - and it’s wonderful.

The obligation to dissent empowers people to speak their minds freely, leads to more engaged meetings, better discussion and ultimately improved ideas.

This is the first half of disagree and commit, and it’s
Peter Drucker’s creation.

But, it only works if the team commits to the idea’s success. The second part is equally as important to the first.

Without the full team’s support and effort behind the idea, it won’t achieve its potential. Instead, apathy, confusion and infighting will torpedo the team’s execution. More broadly, and more importantly, morale suffers.


GET THOUGHTS ON GROWTH

Thoughts on Growth is Reforge's weekly newsletter of must-know updates and perspectives in growth.