What is Growth Hacking? Using Data to Increase the Growth of a Business
The interest in the term growth hacking rose by 360% in the last ten years. So, chances are, if you’re involved in marketing, or even just happen to come across a marketing post on LinkedIn every now and then, you have probably heard about this term already.
Sure, “hacking” growth sounds great. But what does it mean, and how do you do it? Despite how it sounds, growth hacking has nothing to do with adding a piece of code to automatically gain new customers or doubling your revenue via AI.
What is growth hacking?
To define growth hacking, you first need a definition of growth. While growth may look different for every company, it usually corresponds to building a larger customer base and thus increasing revenue.
Growth hacking revolves around this goal. It aims to attract customers, increase revenue, maximize interest in a brand, and build a growing customer base.
Building a customer base isn’t only about acquisition, of course. It’s also about retaining customers (because if you gain 1000 customers overnight and lose 900 the next day, have you really grown your business?)
The “growth hacks” are then techniques that achieve all these goals in little time with a small budget.
The difference between growth hacking & traditional marketing
The term itself was coined in 2010 by Sean Ellis, who was looking for “a person whose true north is growth.” As his definition implies, Sean was looking for someone different from a traditional marketer.
How are these two positions so different? you may ask. Firstly growth hacking is a mindset. It focuses on finding the most effective way of growing a business. Growth hackers don’t only use marketing techniques to achieve this growth, they’re also involved in product optimization, brand positioning, awareness, and more.
Marketers, on the other hand, are not involved in the design and improvement of a product. They don’t try to optimize what they’re selling, while growth hackers help in optimizing a product so that it attracts more users. They use strategies like A/B testing, behavioral segmentation, analytics reporting, and more.
Also, traditional marketers aren’t afraid of spending big without seeing a direct effect on growth. Since they follow metrics other than growth they work more with high-exposure campaigns, even if they’re not directly impacting conversions.
Growth hackers, however, always look for new ways of driving conversions. They’re only interested in testing strategies that’ll grow the company. To find these strategies, they often test with new marketing channels and automation and follow a data-driven approach to track progress.
These differences don’t make one position better than the other. However, if you think that your company would benefit more from a growth hacking mindset, you can follow the steps below to get started.
Now that you have an idea about growth hacking let’s see how companies have used this strategy before.
3 Growth hacking examples
In 1996, Hotmail showed everyone how simple growth hacking can be. To attract users to their newly founded email platform, they simply added one line to the end of every email sent by their users, which read, “P.S I love you. Get your free email at Hotmail.” Receivers saw that the sender got Hotmail, and that it was free. This trick got three thousand users to sign up in one day, and in six months, Hotmail had got one million users.
This hack didn’t cost Hotmail anything, it was the reward of a creative risk.
With no advertising spend, Dropbox was able to gain millions of users just eighteen months after launching. One of their biggest hacks was their referral program, which increased their signups by 60%. Each time a user referred Dropbox to a friend, they got 500 MB more storage, and the referee started up with more storage than they would have with the regular sign-up process.
This incentivized both the referrer to refer more people and the referees to sign up. A win-win situation that costs Dropbox some storage space and nothing else.
The last example on the list, Airbnb’s tactic, proves once more how simple growth hacks can be.
Airbnb didn’t use a marketing campaign: they simply improved the UX by increasing the quality of the photos listed on their site. To do this, at first, they travelled to photograph the houses and apartments themselves. Soon, they had increased signups enough to hire professionals to take photos for them.
How to start growth hacking
So, now that you’ve seen how growth hacking has helped companies in the past, you might be wondering: where do I start?
Here are a few steps you can follow.
1. Understand the basics of marketing
Unless you really know about content marketing, product marketing, customer marketing, demand generation, etc., it’s hard to develop creative ideas that’ll work. Why? Because traditional marketing strategies are based on a fundamental understanding of consumer behavior, and it’s much easier to tweak them into powerful “hacks” than to come up with brand new strategies (when you’re first getting started, that is.)
For instance, one of the best product marketing strategies is to improve your onboarding sequence. Knowing this, a growth hacker can make small changes in the onboarding sequence that will improve acquisition.
2. Learn more about analytics
Once you’ve started using new ideas, you’ll need to test their effectiveness. For that, you’ll need lots of data and analytics tools that’ll help you analyze it.
Once you enter the world of analytics, you’ll find that there are countless analytics tools to choose from, each with an extensive list of features. So, learn about the metrics you’ll track and the visuals you need to perform sales analytics. Know the capabilities that you’re looking for in a tool, and know how that tool will help you improve your strategies.
3. Dive into all areas: sales, product, service…
Growth hacking goes hand in hand with many other areas such as analytics, marketing, sales, product management, etc, which is why it’s important to always be open to learning new things. A growth hacker shouldn’t only research campaign ideas, they should also be on the lookout for new features that would get attention, trends in data that signal sales opportunities, and so on.
Growth hacking strategies
Now that you know how to start, you may be looking for some tried and tested strategies that could help you out. Or, maybe you’ve already started growth hacking but lack inspiration. The strategies below are must-haves for any growth hacker.
Don’t try selling to everyone
When your product comes out, many people may not be willing to buy it. This doesn’t mean your product is bad–it may be far from it. The explanation lies in the product adoption curve.
A new product attracts people we call “innovators” and “early adopters.” In total, these customers make up 15% of the market. The remaining 75% of customers are less likely to buy your product once it comes out, since they want to ensure that your product is tried and tested.
So, if you don’t know what innovators and early adopters look like and target just about anyone, there’s little chance for your product to reach the mainstream market and be successful.
That’s why one of the best growth hacking strategies is to have a clear customer profile; one that captures innovators and early adopters. While the profiles will vary from company to company, they’ll have a few aspects in common:
- Innovators will be tech-savvy people.
- Early adopters will want quick time-to-value from your products.
- Both groups will be okay with paying the price. They can take a risk with your product, given that it promises to solve their pain points.
Here’s an example to demonstrate how profiling works. Say that you’ve created a new analytics tool. You then see a marketer writing about customer journey analytics on Twitter, asking for tool recommendations. They follow established analytics companies on their account, and like tweets about new features that come out. You’re likely to sell to this marketer, since he demonstrates interest and is actively looking for a solution like yours.
Constantly improve your product
No matter the customer profile, you need an excellent product to sell. And how do you define a “good product? The most important feature of a good product is that it’s demanded in the market. Another aspect is that it’s easy to use, visually pleasing, and constantly evolving as per the users’ needs.
So, to create a good product, you need to do a few things:
- Ask users for feedback. You may think that your product is perfect, but users can point to flaws that you couldn’t see yourself.
- Keep up with the changing demands in the market, and add new features accordingly.
- Be open to changing the UI to make the product more understandable.
- Have a good onboarding sequence. Users are less likely to leave when they’ve understood a product and its use cases.
These strategies all generate demand, and so, they’re indispensable to growth hackers.
Collect data and track your progress
I’ve stated before that a big part of growth hacking is about trial and error. You’ll be testing various strategies like the ones above, but not all of them will work for you for a number of reasons.
In order to determine the “hacks” that bring you new customers and revenue, you have to track growth metrics. These metrics include your MRR growth rate, conversion rate, CAC, revenue , etc.
You should also know how these metrics are affected by the strategies you’re implementing. Say that you’re testing a new strategy on Twitter. You’re starting every post with an unusual hook, connecting the hook to your tool and adding a CTA at the bottom of the post. You have to see how this strategy translates to growth by analyzing the new MRR generated by Twitter.
Drawing such connections between metrics and marketing platforms may seem complex, but the process is really simple with tools like HockeyStack. With customizable dashboards, you’re able to track the performance of each strategy. The only thing left for you to do is to pick the techniques that work and continue using them.
Now you know about the basics of growth hacking. Still, you may ask, Why try out all these new techniques? Aren’t traditional marketing strategies enough? For some businesses, they may be. But if you want to gain the benefits below, you’ll want to embrace growth hacking with open arms.
Benefits of growth hacking
1. Quick monetization
This first benefit is the reason why startups love growth hacking.
New business owners usually have excellent ideas but need money to build their infrastructure, and they need it asap to save themselves from financially sinking.
Many growth hacking techniques involve building momentum for your brand via cost-effective marketing strategies. These techniques include referral programs, creative content, and more. Said techniques were how many well-known companies like Airbnb and Dropbox (as I’ll soon explain) were able to grow their business.
What’s best is that these companies could create hype around their brands without having a fully finished product – and you can too! Once they started leveraging growth hacking, they were able to build the customer base, and so the source of revenue, that would fund their project.
2. Increases brand awareness
Growth hacking involves a lot of creativity, which is great as it helps businesses stand out amongst their competition.
When you come into the market with an engaging brand story, a campaign that no one has seen before, or service that’s directed at a specific and interested audience, you’re likely to gain a lot of attention via word of mouth. Once you get attention to your brand, you’re able to build and engage a new customer base.
And if you’re good enough, you can become so dominant in the market that your brand’s name becomes synonymous with the service you’re offering. This is the case for Uber, which has become synonymous with ride-sharing, or for Spotify, which has become synonymous with music streaming.
3. Attracts high-quality leads
Not all growth hacks will be effective, but they’ll all generate data that’ll be useful in creating powerful strategies. By using the customer data you have from past trials, you can determine the channels, content, and campaigns that got you the most quality leads.
Again, collecting and analyzing this type of data is easiest with tools like HockeyStack. With these tools, you don’t have to worry about storing data on Excel sheets and struggling to find past trials’ results.
Go get that growth!
Growth hacking can be as simple as adding a sentence or improving image quality. You only need to think outside of the box to find these hacks–no need for a huge marketing budget, teams, and complex plans that take ages to execute. Then, see what works and what doesn’t using analytics, and see how your acquisition and revenue skyrocket.
A growth hacker looks for every opportunity to grow a brand. Growth hackers use tactics ranging from product optimization to creative marketing tactics to generate demand.
By learning from other growth hackers, not being afraid to take risks, trying new ideas and always being on the lookout for novel strategies.