Growth hacking and marketing, identify ways to grow a business- chapter 1
Growth hacking is a process of rapid experimentation across marketing channels and product development to identify the most effective, efficient ways to grow a business. Growth hacking refers to a set of both conventional and unconventional marketing experiments that lead to growth of a business. Growth hackers are marketers, engineers and product managers that specifically focus on building and engaging the user base of a business. Growth hackers often focus on low-cost alternatives to traditional marketing, e.g. using social media, viral marketing or targeted advertising instead of buying advertising through more traditional media such as radio, newspaper, and television.
Growth hacking is particularly prevalent with startups, when the goal is rapid growth at an early-stage launch phase. Growth hacking may focus on lowering cost per customer acquisition, but growth hacking is a focus on long-term sustainability as Mason Pelt points out in a 2015 article on SiliconANGLE.com “The goal of any marketing should be long-term sustainable growth, not just a short-term gain. Growth hacking is about optimization as well as lead generation. Imagine your business is a bucket and your leads are water. You don’t want to pour water into a leaky bucket; it’s a waste of money. That’s why a true growth hacker would care about customer retention.”
Those who specialize in growth hacking use various types of marketing and product iterations—rapidly testing persuasive copy, email marketing, SEO and viral strategies, among others, with a purpose to increase the conversion rate and achieve rapid growth of the user base. It can also involve on-line community management and social media outreach or highly personalized outreach to news outlets to improve performance metrics such as driving customer acquisition and selling products. Some consider growth hacking a part of the online marketing ecosystem, as in many cases growth hackers are using techniques such as search engine optimization, website analytics, content marketing and A/B testing.
Product development is also heavily influenced by the growth hacker mindset. Instead of long development cycles followed by user testing. Growth hackers start user testing with wireframes and sketches; validating ideas at every stage. A growth hacker in a product development role would start user testing in a coffee shop instead of a corporate usability lab.
When the term first came in vogue many speculated that growth hacking would change marketing forever, others like Lauren Hockenson in a 2013 Mashable post said that growth hacking is just a new marketing buzzword. As of 2016 the term “growth hacking” has continued to pick up steam.
Sean Ellis coined the term “growth hacker” in 2010. In the blog post, he defined a growth hacker as “a person whose true north is growth. Everything they do is scrutinized by its potential impact on scalable growth.” Andrew Chen introduced the term to a wider audience in a blog post titled, “Growth Hacker is the new VP Marketing” in which he defined the term and used the short term vacation rental platform Airbnb’s integration of Craigslist as an example. He wrote that growth hackers “are a hybrid of marketer and coder, one who looks at the traditional question of ‘How do I get customers for my product?’ and answers with A/B tests, landing pages, viral factor, email deliverability, and Open Graph.” In 2012, Aaron Ginn defined a growth hacker on TechCrunch as a “mindset of data, creativity, and curiosity.”
In 2013, Sean Ellis along with Morgan Brown, Dylan La Com, Everette Taylor and team started GrowthHackers—an online community and a software as a service (SaaS) that enables teams to manage the growth experimentation process.
The second annual (2013) “Growth Hackers Conference” was held in San Francisco set up by Gagan Biyani. It featured growth hackers from LinkedIn, Twitter, and YouTube among others.
Fast Company defined the marketing problems facing many startups as:
don’t have budget allocated for “marketing”, and
don’t have a traditional marketing background.
To combat this lack of money and experience, growth hackers approach marketing with a focus on innovation, scalability, and user connectivity. Growth hacking does not, however, separate product design and product effectiveness from marketing. Growth hackers build the product’s potential growth, including user acquisition, on-boarding, monetization, retention, and virality, into the product itself. Fast Company used Twitter “Suggested Users List” as example: “This was Twitter’s real secret: It built marketing into the product rather than building infrastructure to do a lot of marketing.” However growth hacking isn’t always free. TechCrunch shared several nearly free growth hacks explaining that growth hacking is effective marketing and not mythical marketing pixie dust. As new tools(SaaS) come out specifically that focus on more advanced forms of Growth Hacking, more and more tools are being offered as free.
The heart of growth hacking is the relentless focus on growth as the only metric that truly matters. Mark Zuckerberg had this mindset while growing Facebook. While the exact methods vary from company to company and from one industry to the next, the common denominator is always growth. Companies that have successfully “growth hacked” usually have a viral loop naturally built into their onboarding process. New customers typically hear about the product or service through their network and by using the product or service, share it with their connections in turn. This loop of awareness, use, and sharing can result in exponential growth for the company.
Twitter, Facebook, Dropbox, Pinterest, YouTube, Groupon, Udemy, Instagram are all companies that used and still use growth hacking techniques to build brands and improve profits.
The phrase “growth hacker” was coined by Sean Ellis in 2010. When I asked Sean why he felt the need to coin a new phrase he said that it stemmed from his frustration when hiring replacements for himself.
While searching for his replacement he would often receive resumes that were legit, but not relevant. They had marketing degrees, and they had marketing experience, but they were still missing something. Sean knew that the kind of strategies he employed did not represent the typical playbook used by traditional marketers, and if he gave them the reins it would not be a good fit.
A traditional marketer has a very broad focus, and while their skill set is extremely valuable, it is not as necessary early in a startups life. In the first phase of a startup you don’t need someone to “build and manage a marketing team” or “manage outside vendors” or even “establish a strategic marketing plan to achieve corporate objectives” or many of the other things that marketers are tasked with doing. Early in a startup you need one thing. Growth.
Sean asked for marketers. He got marketers. So Sean changed what he asked for. The title of his watershed blog post was “Find a Growth Hacker for Your Startup” and the idea was born.
A growth hacker is not a replacement for a marketer. A growth hacker is not better than marketer. A growth hacker is just different than a marketer. To use the most succinct definition from Sean’s post, “A growth hacker is a person whose true north is growth.”
Every decision that a growth hacker makes is informed by growth. Every strategy, every tactic, and every initiative, is attempted in the hopes of growing. Growth is the sun that a growth hacker revolves around. Of course, traditional marketers care about growth too, but not to the same extent. Remember, the power of a growth hacker is in their obsessive focus on a singular goal. By ignoring almost everything, they can achieve the one task that matters most early on.
This absolute focus on growth has given rise to a number of methods, tools, and best practices, that simply didn’t exist in the traditional marketing repertoire, and as time passes the chasm between the two discipline deepens.
Traditional marketers are skilled at understanding traditional products, but the internet has created a radical redefinition of the word product. For thousands of years a product has been a physical good, but now they are invisible bits and bytes in the form of software products. Products used to only be things like cars, shampoo, couches, and guns. Now Twitter is a product. Your online accounting software is a product. Things you can’t hold, per se, are products. This transition is most responsible for the new age of growth hackers. The internet has given the world a new kind of product, and it demands a new kind of thinking.
For the first time, because of this redefinition, a product can play a role in its own adoption. Sound crazy? It is. A product like Facebook allows you to share their product with other friends to make your own experience on their platform better. Shampoo can’t do that. A product like Dropbox can give you free cloud storage if you get a friend to sign up with them. Couches don’t do that. If you don’t come to grips with this new classification of products that the internet has produced, you won’t fully grasp growth hacking.
Sean Ellis, that guy that coined the term “growth hacker,” was also the first person in charge of Dropbox’s growth. He understands what is new about internet products. Just look at the growth scheme in this screenshot:
Growth hackers understand the latent potential of software products to spread themselves, and it’s their responsibility to transform this potentiality into a reality.
Despite the importance of product, it would be foolish to restrict your activities to only the product. The same internet that redefined product has also redefined distribution, and not all distribution is within the product. Those with a strong understanding of how people flow online will be able to use that knowledge for the sake of their startup’s growth.
Consider the highway system built in America starting in the 1950s. McDonald’s understood that the interstate roads were a new channel for getting customers, and they took advantage of this. Exits are littered with golden arches to this day. This was an example of off-line growth hacking (if there is such a thing).
The internet is the modern counterpart to this analogy. If you grock the invisible online maps that now direct people, data, and ideas, then you can setup your own golden arches where you know they will be seen. Here are some basic examples to get you thinking in the right direction:
- Instead of highways providing a way to brick and mortar businesses, we have search engines providing a path to digital businesses. Those who master SEO are being seen by everyone who drives by digitally.
- Instead of roads that lead us to local movie theaters, we choose to browse YouTube. Those that truly understand this will be able to get eyeballs on their product in a number of different ways.
- Instead of streets providing a way to our friend’s house, we opt to socialize using Facebook. Those who are aware of this will be able to inject their own agenda into the conversation in implicit and explicit ways.
There are many more examples of the online infrastructure that is creating massive opportunities for product distribution, but the point is that those with an accurate notion of how people move about online will have growth advantages that are hard to imagine. Above are the examples that we all sort of get, but there are hundreds of other examples that take work to uncover, and that’s where the notion of a hacker comes in.
WHAT DOES THE “HACKER” IN GROWTH HACKER MEAN?
The word hacker has a few different definitions and connotations that inform the meaning of growth hacker.
Hacker is sometimes used to refer to someone who is clever, original, or inventive. They will use whatever is at their disposal to create a solution that might have been overlooked by others. A “life hacker” would be an example of this use of the term. This same attitude is found in growth hacker because they are forced to be ingenious if they are going to achieve growth. Paths to growth are not usually obvious and it takes extreme creativity to find them.
Hacker is sometimes used to refer to a software engineer, and while a growth hacker may or may not be a programmer, they use technology based solutions to achieve many of their goals. Growth hackers will use software, databases, API’s, and related tools to grow a startup. If a growth hacker is also a programmer they can sometimes make progress more efficiently, but this isn’t required. However, a growth hacker must understand technology very deeply to be successful. If a growth hacker isn’t a programmer they will still have to understand programming enough to coordinate others who do write code. Remember, products are now technology based, and mastering the technology will be essential for growth.
Hacker is also used to describe someone who gains unauthorized access to a system. They break into something without permission. A growth hacker will not hack in the illegal sense of the word, but they they will push the boundaries of what is expected or generally advised. A popular idea within computer hacking is “zero-day exploits”, which are security holes which create instant vulnerabilities once they are known. There are zero days between the knowledge of the security hole and the exploitation of the security hole. Likewise, a growth hacker will take advantage of similar kinds of exploits. When a new social platform releases an API a growth hacker might use it to gain users before the API is “fixed” to close the hole they used. Growth hackers are on the lookout for system weaknesses which will allow growth.
WHAT DOES GROWTH HACKING LOOK LIKE IN PRACTICE?
Up until now we’ve been talking very philosophically about growth hacking. We went through its history, its definition, and what makes it new in the marketplace of ideas. But I know what you’re thinking — give me an example!
In one sense the rest of this guide will be concrete examples, but here is one popular case study that we can use to wrap our head around growth hacking. It’s none other than the poster child of growth hacking, AirBNB. As many of you know, they allow anyone to convert their spare bedrooms into a hotel room that can be rented by perfect strangers. It’s an amazing idea, the execution is incredible, but growth hacking is what possibly put them on the map (pun intended).
This seems so obvious in retrospect, you may wonder why other companies hadn’t already saturated Craigslist with these kinds of cross postings, making it a noisy channel for customer acquisition. Good question. The answer lies in the fact that Craigslist didn’t have a public API. In layman’s terms, Craigslist didn’t offer an easy way for other companies (like AirBNB) to post to their service. There wasn’t a technological solution that AirBNB could implement easily, and there definitely wasn’t any reference documentation that AirBNB could use to make their listing appear on Craigslist automatically. Instead, they had to reverse engineer how Craiglist’s forms work, and then make their product compatible, without ever having access to the Craigslist codebase. API’s are easy. Reverse engineering is not.
Using this case study, think about how our philosophical meanderings from earlier actually ring true.
- First, AirBNB did something that a traditional marketer would have a hard time envisioning, much less executing. A bachelors in marketing, as it is currently being taught, is not going to give you the tool set, or even the conceptual framework, to arrive at this sort of deep integration with Craigslist, especially sans API.
- Second, AirBNB used their product as the primary means of distributing their product. The integration with Craigslist wasn’t something external to AirBNB’s app. It was a part of it. They didn’t run magazine ads to drive traffic to their product. The product drove traffic to itself.
- Third, AirBNB realized that the distribution mechanism that they needed to hijack was Craigslist. No product exists in a vacuum and the users they needed were already congregating in a different location. So they got their attention.
- Fourth, they were ingenious. They didn’t read about someone else using Craigslist to cross promote something. They thought of it themselves. Then they had the guts to execute on a beautiful solution when there weren’t any guarantees that it would actually work.
- Fifth, their growth mechanism was heavily technology based. The team at AirBNB that pulled off this strategy had to have a lot coding expertise, and a general understanding of how web products are built in order to reverse engineer Craigslist.
- Sixth, they took advantage of holes in an existing marketplace to acquire users. Craigslist didn’t create a public API for a reason. Craig Newmark doesn’t want you doing this on his service. AirBNB pushed the bounds of what is acceptable by not asking for an API, and moving forward without one.
In fact, it looks like Craigslist has “fixed” the vulnerabilities which allowed this integration. Now there is a FAQ answer on AirBNB’s site that says they no longer post to Craigslist. This serves as a great object lesson for growth hackers. Most growth mechanisms have a finite lifespan. It would be unwise for AirBNB to assume that they could post to Craigslist for the next 10 years, as if Craig would allow them to siphon off users little by little every day. But that’s ok. Taking advantage of this temporary opportunity gave them a base of growth that they could use to propel themselves forward.
They leveraged Craigslist, a platform with millions of users looking for accommodations, to increase their user base substantially. When you are filling out the form to list your bedroom on AirBNB they give you the option to also post the listing to Craigslist, so that it will show up there also, creating inbound links for you and for AirBNB as a platform.
THE FUTURE OF INTERNET BUSINESSES
Growth hacking is an interesting trend that gives us glimpses into the future of internet based companies. There has often been a barrier between the product team, and those responsible for acquiring users for the product. The coders build. The marketers push. It seemed to work for a while that way. Now, those in charge of growth are having to learn what an API is, and those in charge of programming are having to think about the customer experience within the product. Worlds are colliding.
This cross pollination makes sense. If growth really is the lifeblood of an organization, then why wouldn’t growth be woven into every aspect of the organization. Even customer support should be done by people that think about growth because angry customers churn. And designers should design with one eye on growth because beautiful art alone doesn’t always acquire users. The future of internet companies, and the teams that build them, will not look like they did yesterday.
One more note on the future. For now growth hacking is relegated to startups, but eventually, growth hacking will be a part of fortune 500 companies. Startups generally lack resources, and the established relationships, that would allow them to be effective with the tactics of a traditional marketer, so they are somewhat forced to growth hack. However, there is nothing about growth hacking that cannot be applied to larger corporations. If growth hacking can work without resources, imagine what it can accomplish with resources.
CHAPTER 1 SUMMARY
- Marketers are important, but early in a startup you need someone with a narrower focus on growth.
- The nature of internet products has produced a new way to think about growth. Product features can now be directly responsible for growth.
- Distribution channels are being redrawn, and those that understand the movement of people online will have control over where they end up.
- Growth hackers, using their knowledge of product and distribution, find ingenious, technology-based, avenues for growth that sometimes push the bounds of what is expected or advised.
- AirBNB is a great example of a company that embodies growth hacking.
- Growth hacking shows us a trend that will infiltrate more than the marketing department. Growth matters and multiple roles within companies will someday reflect that.
- Growth hacking is primarily found in startups, but it will eventually be found in larger organizations.