Hacking growth
Unlocking explosive growth: tactics of today's leading enterprises
Description
Growth hacking is a dynamic approach to marketing and product development, focusing on rapid experimentation across various channels and aspects of the business to find the most efficient ways to grow. Companies like Pinterest, LinkedIn, Spotify, Evernote, Facebook, and Uber have leveraged growth hacking to integrate marketing into their products, closely align with customer desires through iterative testing, and accelerate their growth.
This methodology emphasizes data-driven analysis and experimentation, enabling businesses to systematically exploit data to uncover growth opportunities. It's a comprehensive strategy that enhances product development, market optimization, customer experience, engagement, and revenue generation.
Table of contents
01Methodology for growth hacking
Growth hacking is a methodology that focuses on swift and continuous experimentation across various marketing channels and product development areas to find the most effective and efficient ways to expand a business. This approach often combines traditional marketing techniques with innovative experiments. Typically, companies have a sales funnel where marketing and sales teams concentrate on increasing customer awareness and attracting new people through branding and advertising. Meanwhile, product and engineering teams work on integrating features that will hopefully make users love the product. These teams usually operate in silos without much collaboration.
When bittorrent introduced its app, the marketing team employed standard marketing tactics to raise awareness. However, they realized that significant growth opportunities were further down the sales funnel, particularly in maximizing the value of existing customers. They discovered that many customers were unaware of the paid pro version of the app, which offered additional features. By simply adding a button on the app's home screen to promote the upgrade, bittorrent experienced a 92% surge in revenue.
Growth hacking is essentially a data-driven approach to business growth. It involves analyzing data to identify patterns, generating ideas for experiments to test hypotheses, prioritizing these experiments, and then conducting them. After reviewing the results, the team decides on the next steps, focusing on promising areas and discarding ineffective strategies. This creates a cycle of continuous improvement, where each iteration builds on the previous successes, leading to a cumulative effect of increased results over time, as described by sean ellis and morgan brown.
Assembling growth teams
To kickstart successful growth hacking, it's crucial to form a well-rounded team with a clear grasp of your strategy and goals. This team should include a savvy leader who manages, owns the product vision, and approaches tasks scientifically, tracking key metrics. A product manager should take charge as if they were the product's ceo, while software engineers develop features for testing. Marketing experts bring their extensive experience to the table, and data analysts delve into customer data for insights. Product designers are tasked with implementing changes and updates. An executive sponsor, preferably a high-ranking individual who can protect the team from red tape, is also essential. This person should ideally be the ceo or founder, or at least someone who reports directly to them.
The growth team's position within the company structure is also important. They could report to the vp of product, which is a functional setup allowing for the management of multiple growth teams across various business segments. Alternatively, the team could be an independent entity reporting to a vp of growth, giving them the freedom to run experiments across all products and explore strategic growth opportunities.
Growth teams often face internal pushback, especially from those who feel a sense of ownership over products. To navigate this, it's important to foster a culture that values data-driven decisions and experimentation. When data backs a growth hack, it's easier to address objections, and the tangible results of successful experiments can help overcome emotional attachments to existing strategies. Celebrating successes helps to build enthusiasm for the growth-focused approach company-wide. As the company evolves, it's vital to maintain or even expand the growth teams to embed a continuous improvement mindset. Without this, even the most innovative products can falter. Growth teams are the guardians against stagnation, ensuring that the pursuit of progress is a constant feature of the company's ethos.
02Playbook for growth hacking
To execute growth hacking, you conduct trials to determine how to stimulate and expedite growth throughout your entire sales funnel. The crucial aspect is to formulate experimental hypotheses that can be tested to identify what precisely propels growth in every segment of the funnel, not merely the acquisition of new customers. Growth hacking aids in discovering victories wherever they may be located in your business and/or customer lifecycle.
Customer acquisition
Every company aims to attract new customers, but the key challenge lies in the cost of customer acquisition and ensuring that the lifetime value of these new customers surpasses the acquisition costs. The process of growth hacking can aid in identifying the most cost-efficient methods to acquire new customers and optimize these methods to stimulate growth. This process can be thought of as a three-phase approach. The first step is to find a suitable language/market fit to articulate your product in a way that resonates with potential customers. This involves experimenting with your marketing message to make it compelling and appealing to your future profitable customers. A prime example of this is how steve jobs didn't market the original ipod as an advanced mp3 player, but rather as "1,000 songs in your pocket". The next step is to optimize your channel/product mix and identify one or two core channels to concentrate on. Instead of trying to utilize every available messaging channel, it's more effective to focus on one or two that will yield the majority of the results. Messaging channels can be categorized into three types: viral/word of mouth, organic, and paid.
To select channels for experimentation, consider factors such as whether people are using search to find a solution, whether existing users share via word of mouth, whether having more users enhances the experience, whether your target users are active on other platforms, and whether new users have a high lifetime value. The final step is to devise innovative ways to incorporate viral marketing mechanisms into the product itself. This involves designing and experimenting with viral customer loops, like the famous hotmail email signature that encouraged recipients to sign up. However, it's important to remember that maintaining viral loops usually requires a great deal of experimentation and ongoing fine-tuning. In conclusion, making acquisition efforts as cost-effective as possible is always beneficial, and all companies should strive to stimulate strong word of mouth to reduce the expense of acquiring new customers. The growth hacking process is designed to help discover the most cost-effective ways to acquire new customers and then optimize those efforts to drive growth. It's crucial not to rush into large-scale customer acquisition until you've achieved product/market fit, meaning that your product is not only good, but also compelling to its target market.
User activation
Attracting a large number of new users is beneficial, but ensuring they remain engaged after being attracted to your product is crucial. Studies indicate that most mobile apps lose about 80% of their new users within the first three days, and approximately 98% of website traffic doesn't result in user activation, highlighting a common challenge for many companies. To improve activation, a one-size-fits-all approach doesn't work; strategies must be customized to the product's unique aspects. Begin by identifying and simplifying the steps that lead new users to their "aha moment," making the activation process straightforward and valuable. Next, develop a funnel report detailing conversion rates at each step and monitor the channels through which users arrive, searching for patterns that influence activation rates.
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