The popularity of Growth Hacking is increasing rapidly, but what is Growth Hacking?
Many companies lack a clear strategy for achieving growth and don’t know how to manage a (marketing) team in it…
Many marketers and entrepreneurs find Growth Hacking the best way to grow their business…
I’m going to explain to you:
- What Growth Hacking is
- What the advantages (and disadvantages) of Growth Hacking are
- And how you can get started with Growth Hacking including examples
Let’s get started.
Origin of Growth Hacking
Sean Ellis was a marketing manager at PayPal in 2011.
He was looking for someone to take over his role but didn’t think the term ‘marketing manager’ accurately described what he did.
So in 2011, Sean put a job posting online looking for a “Growth Hacker”…
In short, he was looking for someone:
Who is knowledgeable about technology, data, and marketing and has the ability to:
- Adapt themselves quickly to the latest technological developments.
- Putting speed before perfection.
- Be open to other problems and other solutions.
- Make decisions based on data rather than gut feeling.
What is Growth Hacking nowadays?
“Growth Hacking is a structured way of achieving growth within a company or organization by effectively using data, creativity, and technology.”
Growth Hacking thus originated at PayPal in Silicon Valley but was fairly quickly adopted by start-ups and scale-ups as a way to achieve (massive) growth in alternative ways.
Opposed to traditional marketing, Growth Hackers focus not only on reaching and bringing in new customers but also on improving the product:
Using the Pirate Funnel Canvas, a Customer Journey can be mapped to determine which part within a company is missing out on growth:
Sounds good. So now let’s look at why you should start Growth Hacking…
Why start with Growth Hacking?
Compared to traditional marketing, Growth Hacking has got a number of advantages:
- Measurable: everything is set up in a measurable way to measure the effectiveness of experiments.
- Efficient: small-scale experiments are done to save big costs for relatively little results.
- Potential: you grow in alternative ways, where there is less competition and customers are often not yet saturated. More chance of a ‘big win’ therefore.
Results must be traceable.
Traditional marketers often struggle with measurability, because there is no metric to hang on the feeling someone gets when a Porsche races over the German Autobahn at 240km/h.
As a Growth Hacker, you make as much use of data as possible to support your decisions, because hard data is difficult to disprove.
Traditional marketers, on the other hand, regularly make decisions based on gut feelings, a market survey or perhaps another report with ‘soft data’.
Experiment to cut costs.
An objective often comes from a bottleneck where growth is being missed or from a strategic standpoint…
As a Growth Hacker, you will then set up experiments to get closer to your objective.
When evaluating the results an experiment has produced, you can choose 3 possible next steps:
- Scale up
The advantage of working with experiments is that you can test an assumption on a small scale without needing a lot of budget or resources.
In case an experiment shows a bad outcome, you have saved money in 2 ways:
- By not immediately releasing the experiment on a large scale and wasting resources unnecessarily.
- Suppose the conversion rate would halve because of the experiment then the small-scale rollout has ensured that the conversion rate has not dropped across a large amount of traffic.
In traditional marketing, you still often see that a concept is thought out and worked on for a certain period…
It is then launched, but no one can say for sure that the desired result will eventually be delivered.
Higher likelihood of great success.
Traditional marketers often work with channels, such as:
- Social media
The problem these channels bring is that consumers often have become accustomed to the commercial messaging…
This makes it difficult to stand out. A good example of this is banner blindness; people hardly ever look at the right side of a website these days:
For years, people have been bombarded to death with ads on the right side of websites.
As a Growth Hacker, you don’t just focus on reaching people, you try to grow a business in whatever way you can.
By using alternative solutions, you have a greater chance of achieving growth, mainly because consumers are not yet used to it.
So a Growth Hack has more potential to bring in a significant result rather than a traditional marketing campaign
Difference from traditional marketing
Overall, these are the main differences between Growth Hacking and traditional marketing:
Who is Growth Hacking For?
Corporates, start-ups, and everything in between…
It doesn’t matter.
Growth Hacking can be applied by any company that wants to grow. However, it is important to note that if you don’t have a Product-Market Fit there is little point in starting with Growth Hacking.
Even for companies that have been running well for decades, it’s important to keep checking for a Product-Market Fit…
After all, it wasn’t the bookstores that chose to go out of business when Amazon came around the corner.
“Great marketing only makes a bad product fail faster” – David Ogilvy
Embarking on marketing without a Product-Market Fit often just means throwing money away.
Growth Hacking mindset
Growth Hackers generally have several beliefs in their way of working…
Ward van Gasteren has written an excellent article about the Growth Hacking Mindset.
I have added a few components that I am convinced contribute positively to the Growth Hacking process:
1. Speed is better than perfection
Striving for perfection takes time and is often unnecessary.
Small mistakes have little or no effect on the final result of an experiment. For that reason it is not useful to perfect such an experiment, because you want to validate your assumption as quickly as possible.
In many cases, the Pareto Principle (80/20 rule) applies:
80% of the output comes from 20% of the input.
If an experiment is going to be scaled up, it may pay to add more perfection. In many cases, this will also be necessary to be in line with the brand.
By rolling out experiments faster you will have netted more experiments at the end of the week. That results automatically in more successful experiments at the end.
By not fully perfecting experiments you also end up saving costs on failed experiments.
2. Be open to other problems and solutions
This is because management assumes that the positioning of the product must not have gone well.
If the blame does not lie with the marketing department, it is passed on to the sales department and then to the product development department.
As a Growth Hacker you look at the problem differently…
Disappointing sales results can be due to not reaching enough people with marketing, but it can also be due to customers not making repeat purchases often enough or referring friends to your company often enough.
3. Be data-driven and challenge assumptions
Growth Hackers believe in data.
Data can be used to validate assumptions and make informed decisions.
In addition, nowadays it is not rocket science to calculate how much you pay for a customer in a certain channel.
4. Respect marketing
Marketing has strengths, don’t forget that…
Data doesn’t have all the answers.
In fact, people make decisions based on emotion, and that’s something traditional marketers generally understand better.
To create real change, it takes a good mix of rational and emotional levers.
5. Strive for high digital intelligence
Innovation of channels and technologies is happening at an unprecedented rate:
The marketing landscape is becoming increasingly fragmented, how well are you able to adapt yourself quickly?
To quickly adopt a new tool, channel, or technique, it is important to have a high digital intelligence.
6. Bypass the silos
Innovation can come from any part within the company…
So from a support employee, but also from a software engineer.
Everyone has ideas, but if certain departments are fixated within their ideology, a culture can emerge where politics prevails and where people are afraid to share their ideas.
Growth Hacking works best in an open culture where people aren’t afraid to have ideas and where they don’t have to be afraid to make mistakes.
Growth Hacking Examples
I’ve listed some of the most well-known Growth Hacking examples for you:
Everyone knows Hotmail.com these days, but back in 1996 that wasn’t the case…
At the time, Hotmail.com was faced with the challenge of attracting more users without a huge marketing budget.
The result of a brainstorming session was to add one line to the end of every email:
“PS I love you. Get your free email at Hotmail.”
If people clicked on this they were directed to a registration page. The result was that Hotmail.com went from 20,000 to 12,000,000 users and was acquired by Microsoft.
When Gmail was launched, Google decided to implement an invite-only system…
The invite-only system was based on a simple concept, namely FOMO (Fear of Missing Out). If you have a product that people like then exclusivity can work very well.
It even became so popular that people started selling their Gmail invites on eBay.
Google later applied the invite-only principle more often to projects like Google+, but this didn’t work nearly as well.
Before AirBnB was big, many landlords used Craigslist to promote their living spaces.
AirBnB recognized that their most potential customers were therefore on Craigslist, to get these people from Craigslist to AirBnB they made an unauthorized integration with Craigslist to email all landlords via a bot that they would get better value on AirBnB:
In addition to automatically emailing landlords on Craigslist, AirBnB has also employed another Growth Hack
Namely, letting photographers take pictures of spaces rented out on AirBnB.
That worked quite well:
The way PayPal has grown is quite expensive, but effective…
PayPal gave $20 to each user who referred someone and $20 to the referred user. This resulted in 7-10% daily growth in users.
In addition to paying for new users, PayPal also had an additional Growth Hack, which was to use bots to show interest in certain eBay ads…
After the bots showed interest in the ad, they dropped out because the seller did not accept payments via PayPal.
Subsequently, sellers started complaining to eBay that they could not accept payments via PayPal so eBay then implemented PayPal as a payment method.
In the beginning, Dropbox paid between $233 – $388 for a new customer, Dropbox’s product cost $99. Obviously, that’s not profitable…
So they had to start paying less for a new customer, but how do you do that?
They started encouraging their existing users to refer friends in exchange for extra storage. For every friend referred, they got an extra 500mb of storage for free.
Why are these the best known examples
The above examples are typical Growth Hacks…
Make one small adjustment to the product and your business explodes.
Exceptional cases, but they have helped make companies great that are impossible not to imagine in today’s world.
Despite the fact that Growth Hacks are often associated with the above examples, there are a whole bunch of other Growth Hacks you can apply, but they are less sexy.
For example, consider the video from Dollar Shave Club which is more like an eye-catching marketing campaign:
The Growth Flywheel
Growth should be a formula for your business as well….
For example, look at Amazon’s growth formula:
A x B x C x D x E x F = Amazon’s growth
- A = Vertical expansion
- B = Product inventory per vertical
- C = Traffic per product page
- D = Conversion rate
- E = Average order value
- F = Returning buyer behavior
In other words, the more product inventory and traffic there is on a given vertical and the higher the conversion rate, average order value and number of returning buyers is, the faster Amazon grows.
For Spotify, the Growth Flywheel might look like this:
Number of hours listened > More data for Spotify > Better recommendations > Better product experience > Higher number of hours listened
How to start with Growth Hacking?
Before you start Growth Hacking, it is important to have the following:
- A Problem-Solution Fit and a Product-Market Fit.
- Having a validated and completed Business Model Canvas and Value Proposition Canvas.
- Completed the Pirate Funnel Canvas, discovered the bottleneck, identified the underlying problem, and created a One Metric That Matters (OMTM).
If you are missing one or more of the above, there is little point in starting Growth Hacking because you will never be able to get the maximum results out of it.
How to start Growth Hacking?
- Start by putting together your team
Identify the people you need for your Growth Team and find them together. Andrew Chen has written an article on building a Growth Team.
- Set up the North Star Metric
Using Google or my blog, you can create a North Star Metric that everyone can focus on.
- Fill in the Pirate Funnel Canvas
Try to ensure qualitative data and fill out the Pirate Funnel Canvas, map out your entire customer journey. In addition, it is good to fill out the Pirate Funnel Canvas for different segments and channels as well.
- Identify your bottleneck
Understand in which part of the Pirate Funnel Canvas your business is losing most of it’s growth and find the underlying problem for this.
- Define your One Metric That Matters
Establish the One Metric That Matters that the team can focus on for 2-6 months.
- Set up and run experiments
- Scale up, adjust or stop experiments
Evaluate the results of the experiments and decide whether to scale them up, modify them, or discontinue them.
- Start over…
Evaluate where you stand with Ward van Gasteren’s Growth Maturity Model and improve your Growth Hacking process.
How do you become a Growth Hacker?
You don’t have to have all the skills, because again, 80% of the results come from 20% of the knowledge (Pareto Principle)
To improve your skillset, it is important to ask yourself two things:
- Where do your interests lie?
- And what are you good at?
A Growth Hacking team often contains 4 different disciplines:
Check with yourself within which of these disciplines you would best fit and try to immerse yourself in them.
How do you start experimenting?
Growth Tribe has established a methodology with a focus on rapid experimentation:
I’m going to go over the steps with you:
1. Gather Ideas
Brainstorm as many ideas as possible with your team.
Give everyone at least 10 minutes to write down as many potential Growth Hacks as possible.
Inspiration can be gained in several ways:
- Have conversations with your customers, support department and sales department.
- See what competitors are doing in the step of the Pirate Funnel that belongs to your OMTM.
- Check what other markets are doing in your situation.
- Conduct interviews with specific customers.
- Hire an expert.
Don’t try to find the best idea right away, but focus on as many potential solutions as possible and ask yourself:
“How can we make this step in the Pirate Funnel 10 times better?”
Preventing one person from bringing the most input and making sure you keep order in the chaos can be done using the Experiment Canvas.
And ideas can be written down in the form of:
“We want to start doing this, because we’ve seen that…”
Within 2 hours, you’ll probably have pulled out most of the ideas and, based on your gut feeling, you can pick out the 5 to 10 best ideas to start prioritizing and working on…
2. Rank ideas
Decide which ideas you are going to start with.
If you and your team have gotten a bunch of ideas down on paper, you can now start further prioritizing the 5 to 10 best ideas
The I.C.E. Framework can be used perfectly well to prioritize your experiments:
- Impact: how big will the difference be between the future situation and the situation now?
- Confidence: how confident are we that this will work?
- Effort: how hard is it going to be to carry out this experiment?
The Experiment Canvas helps you prioritize ideas with your team.
In addition, the Experiment Canvas also allows you to attach a higher factor to, for example, effort if your team has little time, money or knowledge.
3. Outline experiments
Evolve your idea into an experiment.
From your idea you are going to create an experiment small enough to test your assumption, components you might include:
- Name: what are you going to call the experiment?
- Description: describe exactly what you are going to do.
- Hypothesis: what is the assumption you want to validate?
- Failure/Success criteria: when does your experiment succeed or fail?
- Measure: how are you going to measure the experiment?
- Stakeholders: who are the stakeholders you need or want to involve?
- Skills: what skills are needed to conduct this experiment?
- Costs: how many costs will have to be made?
- Control: how much control do you have over the experiment?
- Time: how long will it take before you have a good outcome?
- Scale: how large will be the scale in which the experiment will be conducted?
- I.C.E.: what is the final prioritization score?
Once you have a clear idea of what your experiment is going to look like you can get started…
4. Work, work, work
Conduct your experiments.
Start by implementing your top 3 ideas, an experiment should be able to be set up within 2 days otherwise you will make it too big or be too perfectionist.
You could do the execution of your experiments using an Agile working methodology, such as:
And with a project management tool such as:
You can keep track of a backlog, define sprints, create burndown charts, etc.
Tip: you don’t want to run multiple experiments at the same time for the same OMTM, because then you can hardly measure the individual results of the experiments.
5. Study the outcome
Get insights from the results of your experiments.
If your experiment has been running long enough, you can start studying the outcome
Beforehand, you’ve written down when you think your experiment succeeds and when the experiment fails.
- If the experiment meets your failure criteria you stop the experiment.
- Or if the experiment meets your success criteria then you scale up the experiment.
- And if you think the experiment still has potential or if you think you did not test boldly enough then you can adjust the experiment and run it again.
In addition, it is important to share your success with key stakeholders and share your insights from the successful or failed experiment with the rest of the company.
Perhaps the outcome of the experiment can even be implemented in other departments or places in the company.
It is important to see how reliable your outcomes are by looking critically at the hierarchy of evidence:
Rinse and repeat
By repeating Growth Tribe’s G.R.O.W.S. Process, you have a structural way to achieve growth for your business or organization…
Then it’s now important to pick up the pace and get more resources so you can test more and ultimately have more successful tests.
Blockers you may have when testing:
According to Ward van Gasteren, starting Growth Hackers achieve a success ratio of 1 out of 10 experiments and experienced Growth Hackers achieve 1 successful experiment out of 3 experiments.
Tip: more resources are not the only variable that creates more growth, there are multiple aspects responsible for that. Evaluate with the Growth Maturity Model how serious your company is with Growth Hacking.
Why is it important to start experimenting?
In many cases, there isn’t one simple hack you apply to help your company x10, but it pays to have a process in place that allows teams to test ideas at a fast pace…
That’s what allows companies to learn quickly and grow consistently:
“Our success at Amazon is a function of how many experiments we do per year, per month, per week, per day.”Jeff Bezos
It’s your turn…
If all goes well, you now know what Growth Hacking is…
Are you going to use Growth Hacking or what are you doing to achieve growth for your business?
Let me know in a comment below.
P.S. if you would like additional help let me know at [email protected]
Frequently Asked Questions
Growth Hacking is a structural process for growing a business in any way. Small-scale and measurable experiments are set up that can be scaled up after successful results or stopped/adjusted after disappointing results.
PayPal, Gmail, Hotmail, Airbnb, Dropbox, and Dollar Shave Club are well-known examples of companies that have been able to experience tremendous growth with the help of small Growth Hacks.
Growth Hacking is a structured way to achieve growth within a company or organization by effectively using data, creativity, and technology.
The Growth Hacking Funnel is often referred to as the Pirate Funnel or AARRR Framework. This funnel maps all parts of the Customer Journey so you can effectively determine in which part of the Customer Journey you are missing growth.
Growth Tribe’s G.R.O.W.S. Process is about brainstorming ideas, prioritizing those ideas, turning them into experiments, conducting the experiments and learning from the outcomes.
The Growth Hacking Process is about having a structural way to find bottlenecks, identify the underlying problem and start running experiments to fix it. Think about the G.R.O.W.S. Process or the Growth Machine.
1. Impact: how big will the difference be between the future situation and the situation now?
2. Confidence: how confident are we that this will work?
3. Effort: how difficult is it going to be to carry out this experiment?
The Experiment Canvas provides an ordered way to prioritize your experiments and track outcomes of the experiments conducted.
The Experiment Card allows you to turn an idea into a Minimum Viable Experiment with failure and success criteria and steps to take.
A Minimum Viable Experiment is a description of an experiment with the smallest possible scale to validate an assumption.
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