The term, “growth hacking” is thrown around on job descriptions and LinkedIn profiles, but what does it really mean?
Growth hacking grew out of Silicon Valley startup culture, which discovered new and impressive ways to create massive growth in very young companies.
The “hacking” part refers to the smart use of technology to achieve growth.
My definition of growth hacking as it is practiced today is “finding creative, measurable, and scalable ways to grow a business as quickly as possible.”
Does it work? Well, there’s certainly no ignoring the fact that many companies have grown extremely fast without using traditional advertising and sales methods.
Growth Hackers vs. Traditional Marketers
Growth hacking isn’t a replacement for traditional marketing, it is the perfect complement. It fills in the gaps where traditional marketing fails.
Let me explain.
Traditional marketers are focused on building brand awareness and customer acquisition. There is a softer emphasis on growth. They look at topline growth metrics such as Facebook Page Likes, the number of app downloads, the number of website visitors, CPC (cost per click), CPM (cost per thousand impressions) and CPA (cost per acquisition).
Growth hackers, on the other hand, are exclusively focused on growing the business. They look at the traditional question, "How do I get customers to buy our product?" and answer with "A/B testing, product design and development, email drip campaigns, referral programs, etc."
Growth hackers measure the entire growth funnel from acquisition and activation to retention, referral, and revenue. They pay attention to how users drop off as they move through each stage of the conversion funnel for growth.
Increasing Customer Acquisition
For new businesses, finding growth channels to acquire users is about gaining initial traction. Early stage startups have limited resources and should avoid over-investing in user acquisition channels that won’t support the company's growth.
Cold email, cold calling, paid advertising, blogging, influencer marketing, and social media are commonly used marketing and growth channels that can be effective to drive traffic.
Testing different channels helps to identify and focus on the one or two most effective channels that will get traction.
Optimizing Customer Activation
User onboarding is all about getting users to take the shortest path to that first 'Aha!’ moment.
Email, in-app messages, and product tours are practical ways to motivate, guide, and engage with users.
Many companies make the mistake of designing the onboarding process and forgetting it eventually. It's crucial to frequently revisit every step of the onboarding flow to clearly convey to users why they should use the product and explain how they can benefit from its features.
Improving Customer Retention
Most companies focus on the first two stages of the growth funnel. Then they end up spending all of their budget on gaining new users without achieving sustainable growth.
It costs 5 times more to acquire a new customer than to keep an existing customer. Increasing customer retention rates by 5% can improve profits by up to 95%.
The fastest growing companies invest in retention and revenue optimization first and then new customer acquisition and activation second.
Companies look at data to identify exactly what their customers are doing with their product, which features are being used, and which are being ignored. This allows them to make adjustments, introduce new features, and establish communication channels with their users to keep them coming back.
Some effective retention tactics that companies use are newsletters, drip email campaigns, great customer support, and community building.
Once customers come back to the product, optimizing viral growth mechanisms is absolutely essential for a company to achieve scale.
Referrals are one of the lowest-cost methods of acquiring new customers. More importantly, customers acquired through referrals from friends or family tend to be more loyal than other customers.
Startups with limited resources are better off using a ready-to-integrate referral program than to build one in-house. An effective referral program has simple participation conditions and offers mutual rewards to the referrer and the referee.
Not all companies find success with their referral program. This is because they wait for their users to discover it and forget to promote it via their blog, newsletter, employee email signatures, and other touchpoints.
At this stage of the growth channel, companies should know which acquisition channels are converting the most, how to activate and retain their customers, as well as get their customer’s friends on board.
Revenue is the ultimate KPI of a business. Increasing revenue becomes a matter of spending more money on the best performing acquisition strategies.
Through data analysis, a growth team can understand the effectiveness of its business operations and how much fundraising the company may need to continue to capture growth opportunities ahead.
Building Growth Teams
Over the last several years, forward-thinking companies have restructured their organizational charts to redirect resources from the marketing team to a growth team.
The growth team is a new business unit made up of members with various overlapping skill sets. This typically consists of a mix of product development and design, data analytics, and marketing.
The growth team leads the way in figuring out what it takes to turn their product into a "must-have" for their customers.
They collaborate on experiments that drive business growth throughout the customer lifecycle.
Not all the experiments will be successful, and that's okay. The purpose is to find the right growth channel that will serve as the backbone of the company's growth.
Examples of Companies Who Pioneered Growth Hacks
Growth hacking isn’t just a list of tactics or silver bullets. What may work with one business won’t necessarily work with another.
Here's a quick look at the fastest growing companies in the world and highlight a growth hack they found in order to grow faster than their competition.
Twitter grew quickly when they realized users were more likely to be active users if they followed at least 30 people. They refined their user experience by implementing “suggested people to follow” during signup.
Dropbox had already garnered a lot of attention by offering 2 free gigabytes of storage data to its users. The company grew exponentially when they offered registered users up to 16 gigabytes of data when they referred friends and family.
Tinder disrupted the dating app segment by using innovative product design to keep users addicted to their app. They used gamification with the easy left/right swipe feature to encourage users to continue using the app until they found a match.
Duolingo, the language learning app, attracted its users with an outstanding simplified onboarding experience. They ran A/B tests to determine which screens mattered and which didn't. They implemented the "less is more" approach and got better conversions after removing their 'welcome tour'.
Runkeeper, the GPS fitness app, kept their users engaged with a smart messaging strategy. The app sent push notifications and in-app messages to motivate its users and introduce them to new features. Personalized and timely engagement strengthened the app's stickiness and increased growth.
Crafting a Growth Strategy
You might be thinking these are small and simple ideas that wouldn't do much to the bottom line. They actually wouldn't move the needle without a clear growth strategy.
Sustainable growth requires a process built on a strategy and not some random tactics.
Launching rapid experiments regularly results in success only when the growth team is focused on the right growth levers at the right time to achieve the greatest impact.
The Future of Growth Hacking
Growth hacking has become an invaluable asset to startups and companies that do a significant portion of their business online.
Simply building an amazing product will not attract plenty of users. Companies need to learn as quickly as possible from experimentation and measurement of data to improve and market solutions to their customers.
All types of businesses from startups to brick-and-mortar stores to multinational organizations can benefit from the innovative thinking that growth hacking provides, and we won’t see it slow down anytime soon.