Category posts
Growth channels

One of the concepts that is crucial to product work is compound interest and exponential growth. This is a topic that has been adopted from other fields of natural and social sciences into product management. It is crucial in tracking, measuring, and forecasting product growth loops. Understanding compound interest and exponential growth can help you identify growth opportunities, make correct decisions and avoid the pitfalls of product growth.

In this article, we will discuss the basics of compound interest and exponential growth and how it applies to product management.

In collaboration with GoPractice, Letyshops CMO Zakhar Stashevsky continues to discuss product growth through effective advertising channel management.

Table of contents for this series of essays

1. Errors in calculating ROI and unit economics. Impact of attribution models and incrementality on the ROI calculation of marketing channels. In this column, we discuss why, when calculating the unit economics, it is impossible to ignore the influence of the used attribution models and advertising incrementality.
2. Traffic attribution models. Why attribution models should change along with growth channels, product, business challenge and external environment [you are here]

In this piece, we discuss how to select attribution models to assess the effectiveness of advertising channels based on the specifics of the product, marketing mix, business objective, and environmental conditions. We will also explain why it is necessary to revise and adapt the attribution model in the event of changes in these factors.

From here on, Zakhar tells the story.

In the previous essay, we discussed how the incorrect calculation of the unit economics and ROI can lead to an underestimation or overestimation of the advertising channel and, as a result, erroneous marketing decisions. Excessive scaling or channel shutdown can lead to direct or indirect financial loss, which leads to missed growth opportunities on the market.

Such errors can happen for a variety of reasons. One of the most common is marketing and analytics teams not paying enough attention to the attribution models based on which they make their decisions. They simply use the default attribution model available in the analytics system, or select a model when they start working with a new channel but don’t change the model as the company evolves and the marketing mix, the length of the product sales cycle, and external factors change.

→ Test your product management and data skills with this free Growth Skills Assessment Test.

→ Learn data-driven product management in Simulator by GoPractice.

→ Learn growth and realize the maximum potential of your product in Product Growth Simulator.

→ Join our discussion on LinkedIn. New topics to talk about every week.

In a series of essays for GoPractice blog, Zakhar Stashevsky, CMO at Letyshops, will explore how to influence growth through effective channel management. Letyshops is a cashback service that allows users to return part of the money they spend on online shopping.

In the first essay, Zakhar discusses why you pay careful attention to the details of attribution model and incrementality when calculating the unit economics (ROI) of your ad campaigns.

Calculating unit economics is easy when you have perfect tracking and attribution for your ad campaigns. But in the real world, perfect tracking and attribution is virtually impossible.

Without understanding the features of the attribution methods used, the specifics of the channels, and the problem of traffic incrementality, unit economy calculation can lead to one of two errors:

• The team underestimates the channel and does not take a full advantage of it
• The team overestimates the channel (this is called incrementality) and loses money

Many teams make these mistakes. We made them ourselves when we were scaling Letyshops. Thanks to this experience, I can now share my thoughts on how to identify and avoid these errors.

→ Test your product management and data skills with this free Growth Skills Assessment Test.

→ Learn data-driven product management in Simulator by GoPractice.

→ Learn growth and realize the maximum potential of your product in Product Growth Simulator.

→ Join our discussion on LinkedIn. New topics to talk about every week.

In late 2013, Fab, a fast-growing e-commerce startup that had raised $330 million in funding, realized that it had a serious problem: Its business model wasn’t working. The company started on a downward sloped that began with laying off many employees (including its co-founder). In 2015, the company, which had been valued at more than $1bn, was acquired by PCH Innovations for a mere $15 million.

What went wrong? Well, like all commercial failures, Fab’s story is complicated and unique. But one recurring theme can be seen in the demise of this once-promising startup: over-reliance on paid marketing.

In this essay, I’ll talk about a growth model based on paid marketing. I will discuss the limitations and the hidden risks of these models, and the consequences of ignoring these risks. I will also discuss how to make the growth model based on paid marketing sustainable and secure.

Let’s assume you’ve reached the product/market fit, which means your product generates value for a specific market segment. You’ve also found the advertising channels where LTV (Lifetime Value) of the acquired users exceeds CAC (Customer Acquisition Cost)—you have created effective channels for delivering the product to your target audience.

That’s great news because few products get this far. The vast majority get eliminated from the race at earlier stages. But it’s not yet time to sit back and relax. There are new dangers ahead, especially if the product’s growth becomes highly dependent on paid user acquisition channels.

→ Test your product management and data skills with this free Growth Skills Assessment Test.

→ Learn data-driven product management in Simulator by GoPractice.

→ Learn growth and realize the maximum potential of your product in Product Growth Simulator.

→ Join our discussion on LinkedIn. New topics to talk about every week.

Classical economics is built on the assumption that people act rationally, which means their decisions are aimed at maximizing their benefits. This statement (which is a base for the classic economics theory), is a bit doubtful, partly because people usually don’t have all the necessary information to make the best decision in a given situation. But even within the framework of the available information, people tend to make irrational decisions.

In this post I will show you some interesting experiments that highlight relevant characteristics and patterns in humans’ decision making processes. Most of these experiments are about the way people behave when deciding about purchasing something, so you can easily apply them to your business or everyday life.

I have to say, I really like the picture below as it perfectly portrays the main idea of ​​this article. Interestingly, squares A and B have the same color in this picture. (You can check it yourself using Photoshop or some other photo-editing tool if you don’t believe me.)

→ Test your product management and data skills with this free Growth Skills Assessment Test.

→ Learn data-driven product management in Simulator by GoPractice.

→ Learn growth and realize the maximum potential of your product in Product Growth Simulator.

→ Join our discussion on LinkedIn. New topics to talk about every week.

A couple of years ago, I wanted to turn my theoretical app store optimization (ASO) knowledge into a working skill.

So I decided to develop a mobile game. My goal was to validate the hypothesis that in the super-competitive mobile gaming market, you can launch a product that will grow into something large solely through organic traffic.

Let me say right away that I did validated this hypothesis: A mobile game we created over the weekend ended up amassing over 2 million downloads, and received over 30,000 new users per day at its peak, all through organic traffic.

But the path to success looked nothing like the original plan.

Here is the story of how the project evolved and how one small change increased the number of downloads by 200%.

→ Test your product management and data skills with this free Growth Skills Assessment Test.

→ Learn data-driven product management in Simulator by GoPractice.

→ Learn growth and realize the maximum potential of your product in Product Growth Simulator.

→ Join our discussion on LinkedIn. New topics to talk about every week.