2.5. Growth Hypothesis

We have successfully run the problem hypothesis, the solution hypothesis, the segment hypothesis; we have obtained quality data and identified actions that have to be performed. Now we need to take another step — run a growth hypothesis. In order to understand how to run it, it is necessary to understand what it is.

Growth hypothesis is an assumption about how potential clients will discover and start using your product or services as well as how it will influence the development and growth of your business in the near future and long run.

How to Formulate?

If we do something, then we will get something. Usually, people don’t experience a lot of problems and are quite lucky with the ‘if’ part: if we simplify registration…, if we make the product faster…, if we remove these fields…, if we change the banner…, if we do a better translation…

It is the ‘then’ part that makes people get stuck on. ‘If we do this, then…’. Nothing changes. If our ‘if’ part doesn’t anticipate or bring any changes, then there is no reason in doing that. A good example of a growth hypothesis can be as follows: “If we change the title banner, then our registration conversion will increase twice.”

Moreover, it is very important that the thing we are testing is measurable. Measure allows to get a better picture of what is ahead. For the mentioned reason, the above-mentioned formula may be expanded to be more comprehensive and will sound as follows: “The action [X] will allow to increase the [N] metric by the [Y] amount, because [Z].”

How to Check?

There are many ways how to check growth hypotheses. Growth hypothesis implies that we need to change some metrics. It means that the product exists and that there are existing customers, and we need to increase some metrics — growth hack some metrics.

Growth hypotheses are usually checked by conducting experiments or doing CustDevs. You can ask your customers whether they will or have already reacted to the changes that you have or are only planning to implement. If you have that inner feeling that customers are not so interested in your product, they will not use it or recommend to other people, there is no energy in the following field, then you don’t need to spend time on any other way of checking the growth hypothesis.

Wait, Wait… No Interview Questions?

Growth hypothesis differs from the previously mentioned hypotheses in a way that there are no interview questions that have to be asked. You yourself have to decide on the ways of advertising your product or choosing the right customer segment, for example. But most importantly, data will say it all. If demand for your product or services increases, if the amount of sales increases, if the number of satisfied customers increases, if retention rate improves, then you’re moving in the right direction — in the direction of growth and profitability.

Final Words

As with the problem, solution and segment hypotheses, growth hypothesis is not a want-to, but a must-have. If correctly formulated and properly run, not only does growth hypothesis save you time, money and other resources, but also provides valuable insights and guides you in the choice of a right direction for your business.