What is a Growth Hypothesis and How to Formulate It Strategically?

In a growth marketing strategy , the hypothesis is the foundation of any experiment. You need to know exactly what you want to change and propose a potential path for optimization. It's by following this path through a well-designed experiment that you can validate your idea. Validating it opens the door to increased revenue, traffic, retention, and more. However, for these experiments to be effective, you absolutely must learn how to formulate them correctly. This will help you immensely when designing your experiments later on.

In this article, we will define what a growth hypothesis is and show you how to formulate it to optimize your methodology, and therefore your results.

Definition of a growth hypothesis

A growth hypothesis is a prediction based on observations or data that guides your marketing or product testing. It rests on the idea that if you take a specific action, it will have a measurable impact on one of your company's growth levers and drivers (acquisition, activation, retention, monetization, or referral).

A well-formulated hypothesis should be:

• Precise : It clearly identifies what you are going to test.
• Actionable : It describes a specific action that you are going to take.
• Measurable : It is based on performance indicators to evaluate the results.
• Validable : It must be able to be proven true or false (an open question therefore).

Example of a growth hypothesis:

" If we improve our website's loading speed by 20%, then the conversion rate will increase by 10%."

This hypothesis is based on the idea that visitors abandon their session because of the slowness of the site, and that by improving this aspect, we can increase conversions. It is clear, measurable, and focused on a growth lever (conversion).

The components of a growth hypothesis

To formulate a solid growth hypothesis, it must integrate the following elements:

a) The context

Context explains the situation or problem you are trying to solve. Why are you testing this hypothesis? What observations, data, or customer feedback is it based on?

Example : Our users leave our payment page before completing their order.

b) The specific action

What action will you take to address this problem? The action must be feasible within a defined timeframe and must relate to a specific part of your strategy (for example: changing the text of a CTA button, adjusting email segmentation).

Example : We will simplify the payment page to reduce the number of steps required.

c) The expected result

What is the measurable result you hope to achieve through this action? This result must be linked to a specific KPI and be ambitious enough while remaining realistic.

Example : We expect a 15% reduction in cart abandonment rate on this page.

d) Measurement

How will you measure the results of your hypothesis? This includes the measurement tools used (Google Analytics, Hotjar, etc.) and the metrics to monitor (conversion rate, time spent on page, etc.).

Example : We will use Google Analytics (GA4) to track the conversion rate on the payment page and compare the results with those obtained before the change.

How to strategically formulate your growth hypothesis

The key to formulating a strategic growth hypothesis lies in simplicity and impact . Too often, companies formulate vague or difficult-to-test hypotheses, which dilutes their efforts and leads to inconclusive results. Once your hypothesis is well-formulated, you're truly on the right track for the next steps. That's why we take the time to give you all the tools you need to formulate it strategically.

Use a formal framework:

A popular method for formulating hypotheses is to use the following structure:

• Si [ACTION],
• so [EXPECTED RESULT],
• because [REASON].

This forces you to focus on the essentials and include an explanatory element , specifying why you think the action will lead to this result.

Example of wording:

" If we segment our email marketing campaigns by purchasing behavior, then we will see a 20% increase in open rates, because our messages will be more relevant to each user group."

The different types of growth hypotheses

There are several types of hypotheses you can formulate depending on the different objectives of your growth marketing strategy. Here are some typical examples:

a) Acquisition Hypotheses

These assumptions concern actions aimed at attracting new users or customers.

Example : "If we increase our Facebook advertising campaign budget by 15%, we will see a 10% increase in the number of sign-ups."

b) Conversion Assumptions

These hypotheses target improving the conversion rate of users already engaged in your sales funnel.

Example : "If we test an explainer video on our landing page, we expect a 12% increase in the conversion rate."

c) Retention Hypotheses

These hypotheses focus on ways to retain your users and extend their lifespan in the customer cycle.

Example : "If we offer a discount on their next order to all users after their purchase, we will increase the retention rate by 5%."

You can actually have one hypothesis for each stage of your sales funnel, or even multiple hypotheses. Assume that there's always something to optimize. Start with the stage that's most significant for your revenue, and work backward from there.

How to test a growth hypothesis: a 3-step method

Once you have formulated your hypothesis, it is time to test it through controlled experimentation . This means:

1. Set up an A/B test : Compare your new idea (the "treatment") to an unchanged version (the "control") to see if it produces better results. This is truly the equivalent of science lab experiments: a control and your experiment.
2. Set a test period : Your experiment should last long enough to obtain significant results, but not so long that you waste time in case of failure.
3. Analyze the results : At the end of the experiment, compare the data to see if your hypothesis is validated or not.

Example : If your test shows that modifying the landing page led to an increase in the conversion rate, you can validate this hypothesis. If not, it's time to revise your hypothesis and try a new approach.

We have explored the concept ofAB testing and the main mistakes to avoid and How to know if your business is ready for AB testing ?
Please note that you can test hypotheses without implementing AB testing. Depending on your company's maturity level, you can directly test a new option for 1, 2, or 3 months and analyze the results over the same period.

The Importance of Continuous Review

Formulating growth hypotheses isn't a one-time process. It's essential to continuously re-evaluate and refine them. A rejected hypothesis isn't a failure, but an opportunity to learn what isn't working and pivot to a new idea. By accumulating tests and refining your hypotheses over time, you can build an effective and scalable growth strategy.

A well-formulated growth hypothesis is the cornerstone of any successful experiment. It allows you to test specific actions, measure tangible results, and continuously learn to adjust your strategy.

By following these steps, you will not only be able to formulate clear and strategic hypotheses, but also maximize the impact of your tests and accelerate your business growth.

Your growth strategy will rely on these test-and-learn moments. Growth is achieved through experimentation. Thus, through a process of validation and experimentation, you continuously optimize your processes, your sales funnel, and your methods. However, keep in mind that hypotheses cannot be the sole engine of your growth strategy. You must constantly generate enough traffic around you, your company, your brand, to give your teams something to think about. Fundamentally, you can't build hypotheses on nothing.
The best starting point for effective hypotheses is to start with your data. It's the data that has something to say. That's why our experts are data specialists.