Tons of startups are emerging every year, but only a small number of them become large companies. Why?
You can do everything according to traditional marketing techniques, but still end up in the middle when the company needs a really big boost. What should you do to grow ridiculously fast and acquire millions of clients and dollars in revenue?
It's about a completely different way of looking at marketing. The marketing game has changed forever, and it requires a new growth hacker mindset from business owners and marketers.
Don’t believe anyone telling you there is a step-by-step guide for growth hacking. In growth hacking, there is no perfect recipe, only a never-ending circle of testing and learning.
In this post, we’ll show you how to think differently, dare to experiment, and find your own recipe that will help you grow your agency or business.
What Is Growth Hacking?
Growth hacking, or growth marketing, is a data-driven methodology that uses traditional marketing techniques for testing new hypotheses of business growth. The goal is to rapidly experiment across marketing channels and product development to identify the most effective, efficient ways to grow a business.
In growth hacker marketing, specialists test ideas that can improve the customer journey, replicate and scale the ideas that work, and modify or abandon the ones that don't before investing a lot of resources.
Growth Hacking Examples
Growth hacking is very much about thinking outside the box and testing your ideas. There are no stupid ideas; our biases often cloud judgment. As a source of inspiration, let’s look at some good examples of growth hacker marketing:
Airbnb’s Free Photographers
Airbnb, a platform that lets people rent out their property, started as a team of guys letting strangers crash at their place when hotels were sold out. Airbnb experimented a lot before finding their own growth hacks, for example, distributing flyers or going door-to-door.
There were two tactics that helped them grow significantly:
- Airbnb reverse-engineered its way into Craigslist, which means that any person who created a publication on Airbnb would be able to cross-post their listings to Craigslist. This gave them access to a huge user base that already existed.
- They offered to get your place photographed by a professional photographer for free. It is difficult to overestimate the role of photos in accommodation services, so this decision made them more popular and accessible.
Clubhouse’s VIP Only
Clubhouse, an audio chat and streaming platform, was launched back in April 2020, when most people were getting extremely bored of social isolation. The product was timely, but this wasn’t the only factor. The platform was invite-only, which makes its participants feel special.
When they started, they only had 1500 beta testers. Then, the boom of asking and sharing the invites started, and in just one year, the app reached the 2-million-user milestone.
Drорbоx’s ‘Rеfеr a Friеnd’
Dropbox, providing cloud file hosting storage, offered users 500MB extra storage space for every friend they invited as a new user. The person who received the invitation got an extra 500MB as well. Now it's a well-known strategy, but back then, they were one of the first companies to use a referral program.
The ‘Rеfеr a Friend' ѕсhеmе gеnеrаtеd viral growth through turning every single user into a free brand advocate. People generally warm up to referrals as they feel they’re much more credible than ads. The company witnessed exponential growth with more than 200,000 businesses on Dropbox. Dropbox was able to build an unassailable reputation while substantially increasing its customer base.
“The simplicity of genius” is a phrase that feels relevant here. Yes, creativity and innovation are the fundamentals of growth hacking. Some hacks may be tremendously complex, while others are so simple that it’s hard to believe how powerful they can be.
Why Do I Need Growth Hacking?
We discussed some pretty decent examples. But often, we find ourselves slipping into completing common routine tasks every day, forgetting to think strategically. Let's talk about why you should stop in the marketing race for a second and switch on growth hacking mode.
Here are some of the reasons why growth hacking should be integral to your marketing approach:
- Exponential growth — growth hacking lets you quickly identify and focus on what actually works for you among various types of marketing. By taking less-traveled paths, you can find yourself ahead of your competitors.
- Provable ROI — it’s all about experimenting and testing. You gather accurate data that informs every decision you make and shows whether you should continue with a tactic or move to another.
- Low-cost — commonly, the term is associated with startups and small businesses because those don’t have huge budgets for advertising but need results quickly. However, it’s a scalable concept if you build an online business and focus on maximizing marketing efforts at a minimal cost.
- Low resources — growth hacks are often developed and implemented by a single person and don't require an entire marketing team to execute.
Growth hacking is about numbers, conversions, and split tests. There are so many tools and channels in internet marketing that using all of them is theoretically possible but expensive. Therefore, in practice, this is impossible for most businesses. That is why growth hacking uses the Fail Fast principle, i.e., testing a hypothesis on a small budget and with minimal costs and then making a data-driven decision about scaling.
Here’s an example of generating an assumption requiring proof and conducting an experiment to prove or refute the hypothesis:
Hypothesis — if we include an offer to schedule a demo at the end of the gated content download form, we can increase the number of booked demos with people who are already interested in seeing our software from 8 to 22 per month.
Experiment — include one extra “Yes/No” field at the end of the form that says, “Would you like a demo of our software?” Track whether this increases the number of demos; make sure it doesn’t affect downloads.
How fast you grow depends on the number of hypotheses and experiments tested. The more tests there are, the more likely growth will be multiplied.
Growth Hacking Stages
Before moving on to growth hacking methods, there’s something we need to understand: no growth hacker marketing method will help if the offered product doesn’t give value to users. There must be a strong user need behind any product creation.
So, let's talk about “3 stages” of growth hacking success, presented by Sean Ellis, renowned growth expert and author of Hacking Growth book:
- Product Market Fit — the first stage of the pyramid is the basis, i.e., it’s the value you bring to users with your product. Sean Ellis highlights that your product should fall into the “Must have” category for a large addressable market.
Ask users: “How would you feel if you could no longer use this product?” The answer “Very disappointed” in more than 40% of cases reflects good fighting chances of being able to grow that business.
- Stacking the Odds for Growth — this stage is intended to find out who your users are and why they use your product. At this stage, you should conduct research to understand your users better, shed light on bottlenecks, and produce new hypotheses.
Who are your users?
Why is it a must-have for them?
How are they using your product?
- Scale Growth — the final stage intended to hack growth via hypothesis testing processes.
Growth Hacking Methods for Finding Growth Opportunities
To assist you in outgrowing your potential, leverage the following hacking strategies and increase profits sharply:
The AARRR Funnel or Pirate Metrics
The AARRR funnel is the main model to find the bottleneck, it was developed by Dave McClure, and the first letters of this pirate-sounding exclamation spell out AAARRR for Awareness, Acquisition, Activation, Retention, Referral, Revenue.
The framework helps cut a company down into pieces, shows you where to focus your attention, and helps to increase metrics that are vital for a product: active users and revenue.
McClure lays out five key stages in digital products’ customer life cycle:
This is the moment a user finds the company’s digital presence by coming from email, social media, SEO, or other channels. Your goal here is to find the channel with the lowest user acquisition cost.
Examples of hypotheses that can help you:
- Launch targeted advertising on social networks
- Launch contextual advertising
- Make publications on industry sources with high traffic
The acquisition stage can be measured by click-through rate (CTR), cost per click (CPC), cost per lead (CPL), and the number of leads.
At this stage, you engage users in interacting with the product for the first time and show them the product’s value.
Your goal is to guide them to the point when they solved their task with your product: booked a ticket, watched a movie, created a presentation. The action depends on the product. For example, in the case of Dropbox, it is uploading at least one file to a folder. For Facebook, make seven friends within their first 10 days.
Examples of hypotheses:
- Create a clear onboarding process that will make the product more understandable for users
- Simplify the registration process
- Offer a free month or demo
At this stage, you can track: conversions, CPA, session duration and depth, bounce rate.
This is the process of a new user becoming a long-term user. Your goal is to reduce customer churn.
Examples of hypotheses:
McClure recommends that businesses send out regular, automated emails to new users to boost retention. Describe how you improved the functionality and share success stories of working with the product.
You can measure the effectiveness by email open rates and click-through rates over time, session duration, churn, and recoverability.
This is the stage when a user takes a money-making action, for example, continuing a subscription past the free trial stage. Your task is to get the first money from clients.
Examples of hypotheses:
- Describe the benefits of a paid subscription in free content and add a link
- Set up emails or notifications that will inform the user about the limitations of the free version and offer to switch to the paid version
At this stage, you can track: new paid users, LTV, average check, the total income for the period.
The stage when users advocate for the product to other people. If all the previous stages have been worked out well, at this stage, you just have to remind users that their actions will help others to know about your business.
Examples of hypotheses:
- Send a recall reminder by email
- Give bonuses for recommendations
- Introduce an affiliate program where clients can receive a reward for each brought user
You can measure this through the Net Promoter Score, Customer Satisfaction Index.
Although you can work with the stages of the funnel in any order, it is important to keep the results of the previous one as you work through each new stage.
In general, this is a method for collecting basic information in one place, i.e., compressing a large plan into one table of 9 blocks. You can use it as a cheat sheet for drawing up new hypotheses. Miro offers a template that you can use for free.
Here is a quick explainer of each Lean Canvas block:
- Problem — list one to three high-priority problems that your customer segment has.
- Customer Segments — define the target audience who will use the product in the future: gender, age, interests, education, and other characteristics.
- Unique Value Proposition — think why you are different and why your customer segment should choose your product among various options.
- Solution — interview your customer segment, ask them questions, and take those learnings to find the perfect solution to their problem.
- Channels — think which channels will give you enough access to your customers and give you enough learning.
- Revenue Streams — think over the sources of income in advance; ask users if they are ready to pay for the product, analyze the channels for generating the income of competitors, and think about alternative methods of generating income.
- Cost Structure — list all the operational costs for taking this business to market.
- Key Metrics — visualize a funnel and identify some key metrics that you will use to monitor performance. A good model to help with this is the AARRR funnel that we talked about earlier.
- Unfair Advantage — think about what you have that no one else can buy, like special relations with customers, insider information, a dream team, expert endorsements, etc.
Customer Journey Map
A customer journey map is a visual representation of the customer journey. It allows you to optimize the customer onboarding process and understand the differences in buyer personas as they move from prospect to conversion through the buying funnel.
For each customer journey map, choose just one persona and one customer scenario to research and visualize at a time, even if you target multiple personas.
Here’s the process you need to follow to visualize your customers’ journey:
1. Gather information
Determine who your client is with the help of surveys, research, questionnaires, observations and other methods of collecting and analyzing information. Work out in detail each client, their fears and ways to overcome them.
2. Determine the stages the client goes through and determine the touchpoints
Before the client begins to interact with the brand, there are many touchpoints. For example, they could visit your site, chat with friends, see ads, and watch social networks. Collect all possible touchpoints, that is, situations, places, and interfaces of contact between the client and the company.
Define your character's goals, expectations, and challenges at each stage. The more intersections you find, the more detailed you will be able to analyze voids and weak points. Remember, even a lack of interaction can be a point of contact.
3. Find barriers and identify ways to overcome them
At each stage, the client encounters various barriers that prevent them from moving to the next stage. Think about what stops the client from making a decision or taking an action. It is also good to analyze feedback, reviews, complaints, and customer wishes.
Your goal is to make the customer journey as comfortable as possible, to reduce the number of barriers to a minimum, and this is the place for experimentation — you may have to reorganize the work and start using new tools.
Jobs to Be Done
Jobs to be Done is a concept focused on how and why people make their first purchase decisions. There's always a struggling moment before purchase, and JTBD helps to identify what the moment was about.
The idea is that people don't buy something just to have it. There is a need or emotion behind this.
The theory is based on this notion that people buy products to get a job done, i.e., to help them realize their interests. Knowing what these “jobs” are is the first step toward meeting customer demand in the right way. You, as a company, need to talk to them about what they’re trying to achieve and how they measure success at each step of the way.
То deconstruct a job that customers are trying to get done into specific process steps, use the Job Map framework. Here’s the flow offered by Lance A. Bettencourt and Anthony W. Ulwick in the “The Customer-Centered Innovation Map”:
Growth Hacking Hypothesis Testing
Now you have the right mindset in place and know common methods for finding growth opportunities, let’s break this growth hacking process down into four stages:
1. Hypotheses Generation
- Create a backlog where you’ll put your hypotheses ideas;
- Note at which stage of the AARRR funnel you’re testing your hypothesis;
- Specify anticipated results;
- Specify metrics impacted by your hypothesis;
- Formulate your hypothesis as “If _____, then _____”.
2. Backlog Prioritization
To prioritize correctly, evaluate how fast you can run a hypothesis, how much time you need to test it, and how much it will influence your growth.
The ICE Score (Impact, Confidence, Ease) method can help you prioritize hypotheses. You can identify a possible impact on a particular metric, ease of execution, and your confidence in a hypothesis.
After you’ve prioritized hypotheses by the ICE framework, pick the ones with the highest scores and include them in the sprint, and the rest remain in our backlog waiting for the next iteration.
This is the stage for running hypotheses, i.e.:
- developing landing pages
- running A/B tests
- reformulating your offers
- modifying the user journey during a session, etc.
4. Data Collection and Analysis
When all experiments and tests are done, put down all takeaways in one document. The better organized it is, the easier it’ll be for you to see where you’re going next. A well-structured document will help you avoid testing the same hypotheses.
The cycle goes on and on until you hack your growth.
Principles of Growth Hacking
The main goal behind growth hacking is to quickly and cheaply test a marketing idea, get data to analyze the outcomes, and decide on your further actions — whether you scale the idea or change the experiment.
Here are the essential components of this process:
- The more hypotheses you test, the more chances you have to grow
- No affection to specific tools, and therefore, no fear of new methods and tools for traffic generation
- All marketing activity should be based on web and product analytics
- Automation. Anything that can be automated must be automated
Growth Hacking: How to Understand Better
Growth hacking is a never-ending game, and you can constantly find new hypotheses for business growth and learn what other businesses did to scale. Here’s a list of resources we recommend for you to continue learning about the topic:
- Growth hacking cases from well-known companies: Slack, Buzzfeed, Tinder, WhatsApp;
- Sean Ellis' article on three key success factors in building a growth hacking process;
- Mark Zuckerberg on building a growth team at Facebook (video);
- Blogs to read: Growth Hackers, Andrew Chen, Brian Balfour;
- A book to read: The Growth Handbook.