What is a Scalable Startup?

What is a Scalable Startup?

Infants learn to walk before they run, just as companies need to scale before they expand. Any attempt to rush the process will only result in careless accidents and mistakes. But then the question becomes: how can a business scale responsibly?

Before we can get to that question, we must first define what a scalable business is.

 

What is scalability in business?

Investopedia defines scalability as “characteristic of a system, model, or function that describes its capability to cope and perform well under an increased or expanding workload or scope.”

So how does this apply to business? A scalable business is one that can grow in revenue or production while cutting or stabilizing operating costs. It can mean achieving economies of scale. Or it can also translate to savings in cost that is proportional to the added level of production.

Seeking to understand what it means to scale vs. grow? Read our previous post, Scaling Your Business.

 

What does it mean to have a scalable startup?

Let’s explore the implication of scalability on startups and small businesses. We turn to entrepreneur Eric Ries, founder of one of the earliest 3D social networks, IMVU, to guide us. Ries is the author of The Lean Startup, a guide to modern entrepreneurial management. He is also one of the most experienced and authoritative people on this topic.

Ries, along with co-founder Will Harvey, made six important decisions that helped define IMVU as a scalable startup:

1. Their vision for IMVU was transcendent. They pictured 3D avatars and the global availability of virtual goods online. They aspired to build an industry, not just a product or a company.

2. Their goal extended beyond monetary rewards. Rather, it was about achieving growth within their company. And there was never an exit plan to sell the company to make money. They believed their vision and work was either going to be worth a lot more, or worth zero.

3. They envisioned that their tiny startup was to going to be worth $100 million/year. They would achieve this by creating an entirely new market for virtual goods.

4. They used Customer & Agile development to search for a scalable and repeatable business model. It reduced risk while allowing them to aim high.

5. They hired a world-class team, with co-founders and employees who shared their vision.

6. They fervently believed that only they were the ones who could and would make this happen.

Breaking this down even further, we can draw 3 main traits of a scalable startup:

1. A scalable idea will lead to the development of its’ own market, industry, or network.

2. The business model is a repeatable and scalable process.

3. The company has a singular vision that unites a growing team.

 

Scalable Startup Examples

Some of the best scalable businesses were started with just a vision and a simple prototype. Here are two examples of startups with very different concepts. However, note that they still share the same general spirit.

 

Instagram

Even after its acquisition by Facebook, Instagram’s popularity surpasses other social media platforms. And it remains an inspirational example. Kevin Systrom, former Google programmer and Stanford graduate started it all. He first created an app called Burbn, with location-based photos and note-sharing ability.

Soon after, Kevin met Mike Krieger and they decided to hone in on the photo-sharing feature. Since then, the app has gone through several reiterations and prototypes to become what it is today.

Within a few hours, the pair saw the scalable potential of the network. The main costs were the servers and time spent maintaining the app. And costs grew at a steady, proportional rate. Though users continued to sign up for free, ads & sponsorships would eventually generate revenue. Instagram became one of the earliest examples of a scalable social media service.

 

23andMe

Consumer DNA tests have become popular in recent years. One of the biggest human genome research companies that serve this need is 23andMe. The company was founded by Linda Avey, Paul Cusenza, and Anne Wojcicki back in 2006. Within a year, they had secured $3.9 million in venture capital.

By 2009, Wojcicki was the only remaining founder. But investor intrigue remained high. In 2012, he raised $50 million, and another $115 million in 2015. With this funding, the company channeled investments into brand marketing. One of their most notable ads was sponsored by the movie Despicable Me and narrated by Warren Buffet.

Last year, a partnership was formed with GlaxoSmithKline. With a funding of $300 million, they’ve started developing new medicine and potential cures using genetics. Today, the company is worth roughly $1.75 billion.

23andMe demonstrates that companies are not always scalable in the first few years. There may still be some hurdles to overcome and reliance on venture capital. For 23andMe, many of the challenges were regulatory. In the early years, the company had a fraught relationship with the FDA. In recent years, this relationship has become much more productive.

 

Scalable Startup Ideas

We’ve introduced some real-life examples of scalable businesses. Now, here are some scalable business ideas that you may want to explore for your own business.

 

1. Content and Media

Audiences are always searching for new information to consume. They may look for articles, videos, or podcasts. Ultimately, all examples are the output of content and media. This is part of the scalable process. As you work to build the quality of your blog or YouTube channel, your audience will grow. Continue to create content that increases your authority and helps you stand out.

 

2. Online courses

If you’re a coach or consultant, one way to make passive revenue is by building out a course on your area of expertise. Benefits to your company are generating revenue and increasing brand equity. Whatever the focus, your users will find tremendous value in quality courses. More people are willing to pay a higher premium for a set of classes than a single ebook.

 

3. Apps and Software

You can purchase apps or software applications for almost every device. These can include note-taking apps, calendars, organization tools, plugins, and even games. If you’re in the business of app making, continue to leverage this strength. The ROI may continue to support you for years. The cost to create and maintain an app is far more affordable than you may expect.

 

4. E-commerce

Amazon and eBay were once unique in that they were the only platforms used to sell online. But entrepreneurs now have a variety of choices. Platforms like Shopify and Magento also allow you to build an online storefront. The best part is that you don’t need to own a warehouse, salespeople, or even a physical store. You save thousands in operating costs. As with the other ideas, expect to see a lot of competition if you plan on entering the e-commerce space.

 

5. Investing

You want to support a business through growth. But you’re not interested in managing its operations. If this rings true, you may want to consider being an investor. There are various ways for you to do this. You can provide seed funding, manage a portfolio, or trade commodities & currencies. Unlike the other ideas in this post, investing should be thought of as a long term commitment. While profit will take time to generate, the returns will be worth the wait.

 

How to know if your startup ideas can scale

Perhaps you already have an idea of what you want to do. How can you tell if the idea has the potential to scale?

 

Proven concept

Above all, your idea must have some basis in truth or data. It provides the foundation for which you can build on. There will always be risks attached to starting and growing a business. But proving the idea, even with few customers, will be an invaluable experience.

 

Lack of competition

The fewer competitors in your space, the better. Highly scalable businesses tend to be innovators or vanguards in their industry. Because there is not as much competitive pressure, they can price higher. There is also the added benefit of being first to market. Your brand has a greater chance of making an impression. As well, you’ll be at the forefront of customers’ minds.

 

Strong cash flow

Profitability should not be a metric used to measure scalability. However, cash flow can be used as a determinant of your future performance. It’s essential to gain a solid understanding of the business’ finances. Companies that are built to scale must first master the balance of cost and revenue.

 

Repeatable process

Whether it’s selling a product or putting on an event, you should aim to standardize your process. It not only makes it easier, but it also makes it more cost-effective. Creating this winning formula will carve out your competitive advantage.

 

Exceeding targets and goals

Every business needs to have a goal — such as reaching one million users or expanding to new markets. If you find that you’ve quickly surpassed these goals, then you may have to reassess your standards. Goals should be hard to achieve. They should push your business to improve and excel.

 

 

It’s simple to look at the most famous brands and expect to emulate their process or success within a few years. But the reality is that the competition is as fierce as ever. A stay-at-home parent has as much a chance to succeed as an experienced entrepreneur. Use this as inspiration, and not as an excuse. Scaling a startup requires experimentation, hard work, and above all, patience. Trust in your ideas and your research, and the scalability will come.

Growth Marketing Essentials

Growth Marketing Essentials

Over the past few weeks, we’ve illustrated the successful growth hacking strategies used by startups. These have provided various outcomes to startups, such as operations or audience expansion. In Airbnb’s case, this involved the literal hacking of Craigslist for listing promotions. Zapier exemplified that more nuanced strategies like brand partnerships can also be effective.

If there’s anything to take away, it’s that each company has its own approach to growth marketing. But there are a few “ essentials” to keep in mind if you do plan on using a growth marketing strategy for your company.

 

What is growth marketing?

Let’s start with a quick recap. Growth marketing is an evolution of traditional marketing methods. It centers around accelerated growth using a modest budget. And it’s relevant to the needs of startups who want to acquire customers, but don’t have major funding. Tactics include viral marketing campaigns, social media, SEO, and other online techniques.

Benefits of growth marketing include faster customer acquisition, lower CAC (customer acquisition cost), and higher lead quality. But businesses other than startups can also benefit from this. For these reasons, growth marketing has also made its way to corporate environments.

 

The difference between growth and regular marketing

The role of a growth marketer will not be much different from a traditional marketer. But what is unique is that their sole focus will be on customer retention and acquisition. As such, growth marketers are not strictly salespeople or marketing executives— they may be engineers, writers, web developers, and even social media managers.

Growth marketers must be able to navigate through uncertainty, and with scarce resources. This makes their role somewhat more challenging compared to traditional marketing.

 

Key growth marketing concepts

To grasp the essence of growth marketing, it’s first important to understand the concepts that define growth marketing.

 

A/B testing and validated learning

One of the core tenets of growth marketing is to test every worthwhile theory with an experiment. This is an effective method of minimizing uncertainty while ensuring high ROI. One effective experiment might be testing the efficacy of two different landing pages (known as A/B testing). Another one might be running a low-budget ad campaign on social media.

 

Understanding the buyer persona

Understanding the buyer persona will set the groundwork for any campaign. This persona represents your ideal customer. Analysis should include everything from demographics, goals, pain points, to purchase behavior. Keep in mind, data will be composed of the aggregate of a much larger audience. But this will help your business make more accurate decisions related to acquiring and retaining customers.

 

Analyzing the customer journey

Whether you call it a conversion funnel, sales funnel, buyer’s journey, or customer journey, growth marketing is about understanding your customer. You should strive to understand their pain points and needs along the entire path. This may start with the moment a customer hears about you through an ad on social media. Or it might begin when a customer clicks to sign up. By exploring the fine details of their journey, you can develop more relevant ways to reach out to your audience.

 

WATCH: The four growth marketing principles you need to create your unicorn

 

Growth hacking vs. marketing

Growth hacking, growth marketing— what exactly is the difference? We’ve covered both concepts in the past, but is growth marketing the same as growth hacking?

Short answer— no. Growth marketing focuses on choosing strategy through experimentation and validating the best theories. Growth hacking, on the other hand, focuses on a single tactic or channel that yields the best ROI with a low budget.

If you’re still confused, here’s an example to clarify. Growth marketing may involve the use of multiple social media platforms to reach potential customers. The ultimate goal of each platform remains the same: to grow the company under a smaller budget. Differently, growth hacking would involve the development of highly-targeted social media ads or Facebook groups that encourage greater post engagement.

Other key differences between growth hacking and marketing include:

  1. Product focus. Growth hacking is more focused on improving a single product or channel, while growth marketing looks at the entire customer journey.
  2. Unconventional concepts. Growth hacking is more likely to feature unconventional or innovative concepts with greater risk, while growth marketing relies on more proven and tested practices.
  3. Tactics v. Strategy. Growth hacking may involve a single tactic, such as Airbnb’s cereal box sale. Growth marketing encompasses strategic decisions, such as the tactics to be used in social media or SEO.

Instead of having to choose between the two, consider how your company may use both. These are not mutually exclusive options. You can develop a solid growth marketing strategy while also experimenting with different growth hacking ideas. But be sure that your company plans accordingly to avoid wasting precious resources.

 

Growth marketing tactics

 

Stage-based content marketing

Content strategy plays a vital role in growth marketing. It is optimal as content production can be affordable, effective, and dynamic. Content can include blog posts, videos, podcasts, and other material found on your website that users can find value from. As your brand generates content that is relevant to your users, more people will seek out your brand. This will effectively save you time and money from developing costly marketing campaigns.

There’s a helpful way to approach your content using the ToFu, MoFu, and BoFu method:

  1. ToFU (Top of the Funnel) – this approach is centered on the number of leads. This stage may not be as persuasive and only seeks to provide useful information regarding a need or want of a customer.
  2. MoFu (Middle of the Funnel) – this approach is centered on positioning the brand as the leader of a certain industry or field. Content in this category is much more targeted.
  3. BoFu (Bottom of the Funnel) – this approach is centered on closing a sale. Content in this category is geared towards converting or convincing customers to try your product or service out.

Brainstorm the different content ideas your company can offer. How can you stay relevant in your customers’ minds as they move through the buyers’ journey?

 

Social media outreach

You cannot run a business in 2019 without the use of social media. Not only is it free to open an account, but you have the potential of reaching thousands of users across the world. Different social media tactics may include:

  1. Social media advertising
  2. Facebook and LinkedIn groups
  3. Direct message outreach
  4. Viral social marketing campaigns
  5. Video marketing

Each social network has a unique purpose, and it’s not advisable to use every single one. Instead, focus on the most relevant channels to your brand and audience. To learn more about the various social networks, check out our previous blog, 7 Important Social Networks for Entrepreneurs.

 

Pricing strategies

The price of your product or service is a strategy in itself. After researching your intended audience, you should have a good understanding of their budget and willingness to pay. There are four main pricing strategies to understand:

  1. Premium pricing – This strategy involves offering a product at a high price to evoke a connotation of quality or luxury. iPhones, for example, carry a premium price. But consumers are willing to pay because of the value and quality the phones provide.
  2. Penetration pricing – Conversely, this strategy is to offer the product at a competitively low price to amass as many customers as possible. This is a typical strategy for new product launches. You may see new restaurants or fast food places offer a major deal when they open shop for the first time.
  3. Economy pricing – Also known as mass-market pricing. The cost of this product typically has low marketing or overhead costs. Examples include household products and office supplies.
  4. Skimming strategy – For innovative products, a high price may initially be acceptable. When more competitors flood the market, the price will be forced down. You may see this strategy used by gaming consoles, televisions, and other electronic devices.

Think long and hard about your price. The number you end up settling on can have major implications on your supply chain as well as your consumer perceptions.

 

Paid advertising

Advertising is all over the internet. You may see it reading an article, before a video starts, or even when you search for something. It’s easy to discount paid ads, but they can be an effective means of gaining customers. According to Formstack, PPC ads are one of the top three generators of on-page conversions.

Set up a small budget to test an ad campaign. You may set it up on Google Search, YouTube, social media, or various other platforms. To learn more about the efficacy of PPC marketing, check out QuickSprout’s article.

 

Examples of growth experiments

How can your company get started with experiments and validated learning? Here are a few simple ways that won’t break your budget but can yield useful results in strategic planning:

  • Landing page A/B testing – When your customer lands on your website, what do they see? Will it be an ongoing deal, an exclusive offer? Whatever it is, you’ll want to test a few variants of design to see how effectively you can capture that user. Even the wording of your landing page can make the difference between a new lead and a lost opportunity.
  • Price elasticity testing – How much demand is there for your product? Pricing tests can help you determine how sensitive consumers are to changes in price. This should help lead you to set the sweet spot for your product.
  • Content-based experiments – Your customers need information, and your brand can provide answers. Consider a wide range of content types – guest blogs, infographics, user guides, reviews… the list goes on. It’s always important to understand your customer preferences before producing your content.
  • Rich media experiments – Any ad that uses video or audio can be considered rich media. This experiment may be more costly, as it will have to involve a certain A/V production quality. But if your team focuses on media heavily, this experiment may lead to more leads.
  • Programmatic experimentation – Programmatic advertising is an emerging field of ad building and selling. It is intended to lower the cost of your ad. This allows teams to create multiple variants of an ad, and test several copies or formats, without spending a fortune. To learn more about programmatic advertising, check out Marketing Week’s beginner’s guide.

 

Summary

Experimentation is of the utmost importance when it comes to growth marketing. Many of the previous techniques employed by startups were theories put to the test. There is no standard when it comes to growth strategy, except that it should involve the same principles and methods as any other experiment. Start small, review your analytics, and re-tool based on feedback.

Growth marketing is a more deliberate approach to growth compared to hacking. Don’t expect overnight returns. Instead, work towards incremental improvements, slowly adding to your service’s value over time.

Look no further than Gabriel Weinberg’s story, the founder of DuckDuckGo and one of the biggest alternatives to Google today. Even though his search engine launched in 2008, he didn’t begin seeing results until years later. He recalls his story to Forbes:

I launched DuckDuckGo at the end of 2008, and in March of 2009 my first son was born and I decided to stay at home with him for at least the first two years. Through those two years I just kept at it and tinkering with it. At the end of 2010 all the iterative work on the project became better. Something clicked and people started to switch to it. Then in 2011 I started to treat it as more of a real thing, and at the end of 2011 I went and raised $3 million from Union Square Ventures.

Don’t lose sight of your company’s vision. The first few years of growth marketing may be an uphill climb, but the journey is half the experience.

Looking for audio content on growth marketing? Check out the Growth Marketing Toolbox podcast, a biweekly show about important growth marketing strategies companies use today.

Differences Between Entrepreneurship and Small Business

Differences Between Entrepreneurship and Small Business

People tend to use entrepreneurship and small business interchangeably to describe a business with limited resources seeking to achieve a certain objective. While this may be true, the similarities end there. In reality, entrepreneurs and small business owners tend to have opposite views on their objectives and approach. So what are the differences between entrepreneurship and small business?

In this post, we’ll cover the various characteristics of both a small business and an entrepreneurial venture to describe the main differences.

 

What are the differences between an entrepreneurial venture and a small business?

A small business is an organization, partnership or sole proprietorship that has fewer resources and annual revenue than a medium or large company.

An entrepreneurial venture is the concept of starting a small business to offer a product or service with the intention of disrupting an industry or maximizing profit.

 

Entrepreneurship

Objective: Innovation, High Growth, and Profit. Entrepreneurial ventures aren’t just concerned with making money, they want to make more. They’re the ones that dare to shake up a market by introducing an innovative product or feature or become the most recognized brand from the quality of service or production. Entrepreneurial ventures are typically founded with a great idea or concept behind them.

Leadership Traits: Highly Motivated and Influential. Entrepreneurs are visionaries. They can see the forest for the trees, the overall plan towards success that no one else can see. Entrepreneurs know how to keep people motivated while also holding them accountable.

Team Traits: Experienced and Specialized. Team members of an entrepreneurial venture are constantly improving their processes and finding ways to do their work more efficiently and develop more unique products and offerings. They may also have a sense of friendly competition between teams as they constantly look to improve themselves.

Management Strategy: High Risk and Long-Term Planning. There’s a misconception that entrepreneurs are always taking risks without any plan. Conversely, some believe they are veterans in business development. In reality, they are simply attempting to develop an idea, service, or product under extreme uncertainty, and planning as much as possible to minimize waste and loss. This can apply to the college student with a startup, or the CEO leading his fourth company.

Environment: Fast-paced and Competitive. Businesses looking to grow don’t have time to waste, and often rely on smart time management and prioritization. Their offices are designed to encourage collaboration and discussion, while also promoting productivity.

 

Small Businesses

Objective: Maintaining regular business. Small businesses aren’t always concerned with growing or becoming more profitable, they just care about the work they do day-to-day. Their goal is to ensure longevity and continual development.

Leadership Traits: Patience and Discipline. Small business owners are more driven by small gains over time and improving efficiency than competing with other businesses. They want to ensure the business continues to operate smoothly and steadily.

Team Traits: Calm and Objective. While small businesses can still be competitive, they are made up of individuals who care less about wins or profit and care more about their recurring duties and obligations.

Management Strategy: Flexible and Low Risk. The overall strategy is to ensure that there is a continuous stream of work and money for the team. While there may be uncertainty early in the business, after reaching certain milestones, small businesses become comfortable in their processes and routines.

Environment: Relaxed and Comfortable.  A small business has a calm and quiet environment so everyone can do their work without any stress or concerns. Because of the limited resources, small businesses may operate out of smaller offices than other firms, or may even work remotely from their homes.

While entrepreneurs and small businesses have a lot in common, they are fundamentally different in terms of goals, strategies, and culture. Remember that entrepreneurs are looking for growth in profit and scale, while small business owners focus on building steady work and income. Neither one is particularly better than the other, but the two management styles can make a difference depending on the line of work.

 

The Pros & Cons of Entrepreneurship and Small Business

While entrepreneurial ventures and small businesses have their differences, they also share many of the same pros and cons:

Pros

Flexibility – Small businesses and entrepreneurial ventures are able to make decisions at a much faster rate compared to a major corporation. Since their teams are smaller and hierarchies are less frequent, they don’t have much bureaucracy to deal with. This makes for greater innovation and efficiency.

Greater Profit – With fewer people on the team and lower overhead than a corporation, small businesses and entrepreneurs can stand to profit much more with a lot less. With social media and digital marketing, a team of four can reach the same number of people as a company in the thousands.

Problem-solving – Big companies tend to be held back by years of dogmatic thinking and narrow-minded leadership boards. Small businesses and entrepreneurial ventures, in contrast, have younger spirits, willing to experiment and solve problems in creative ways.

Community – Small companies and entrepreneurs are like local heroes. They’re the ones sponsoring community events, the ones that get to know each customer on a personal level. They may not win the numbers game, but they’ll always have a loyal community (if they put in the time to cultivate one).

Passion – Most startups and small businesses were started out of passion, a deep yearning to make the world a better place. There’s something to be said about the personal satisfaction people receive from working with limited resources with a noble purpose in mind.

 

Cons

Risk and Uncertainty – No matter how many analysts or experts you hire, businesses are bound to experience some level of risk. These may include market conditions, the competitive landscape, or unpredictable consumer behavior. The best you can do is study the market and plan accordingly.

Workload – Entrepreneurs and small business owners should expect to work longer hours to ensure their company remains competitive. Without the resources of bigger companies such as HR, tech support, and sales, most people in a small business may have to work multiple roles or undesirable duties. Employees should be careful not to develop excess stress and burnout.

Financial risk – Small businesses, but entrepreneurial ventures even more so, must learn to manage certain cash flow limitations. Poor financial management can lead to stalled supply chains or even bankruptcy.

 

Key lessons to start a small business or entrepreneurial venture

Conduct market research. Before entering any industry, you need to do your due diligence. A SWOT analysis is a good starting point, but you’ll also want to analyze the competitive landscape, socioeconomic or geopolitical conditions (as it relates to your business), as well as the general market reception.

Validate your idea. Use a focus group even if it’s your friends or family. Share surveys and questionnaires that can bring you new insights. Develop an MVP (minimum viable product) or a prototype. These little experiments can help you determine whether your idea is really worth pursuing.

Focus on your value proposition. It’s easy to become distracted by industry trends, but you need to stick to what makes your brand unique (and it shouldn’t be price). Do you offer a more luxurious experience? Perhaps you speed up a slow or arduous process. Or maybe your product is unlike anything on the market. Focus on highlighting that value for your customers.

Build on your branding. Branding is what helps customers relate to a company. What colors, fonts, imagery, styles will you use to evoke your company’s personality? What vocabulary best represents your unique voice?

Develop your financial education. Most companies skip this step, but it’s also the most important. Without an understanding of how cash flow works, or how to manage your revenue, your company may end up in dire straits.

Build a road map. Strategy is key to winning long term. Create monthly and quarterly milestones to determine your company’s progress towards its goals. Only then can you judge whether you are on the right path, or if you need to revisit your tactics.

 

Choosing the Right Work Environment

Regardless if you’re a small business owner or an entrepreneur, it’s important to align everyone on your team towards that vision. A big part of your overall strategy is choosing where you work. Level Offices provide options for both kinds of leaders, from open areas that encourage discussion and networking, to private offices and suites just for your team. Book a tour with Level today.

Growth Hacking Strategies

Growth Hacking Strategies

In our previous post, we introduced you to the concept of growth hacking and the impact it can have on your business. Now, you’re looking to build your own strategy for expansion. But where should you start? Finding a starting point may seem challenging if you lack the entrepreneurial experience or the funding. But we’ll help you overcome this hurdle with some recommended concepts.

In this week’s post, we cover the main strategies you need to iterate growth hacking and expand your business quickly.

 

Gamification in Growth Strategies

Gamification has bigger implications than its’ use in video games and apps. It’s also a foundation for engaging users, without the hassle of spam or annoying sales calls. Gamified platforms are designed to motivate users to continue their participation, whether that means moving forward in the buyer’s journey or even joining a competition. Brands around the world have already begun implementing gamification in their services in various ways.

 

LinkedIn & gamifying the resume

Though LinkedIn is a platform dedicated to creating professional networks, it takes a surprisingly gamified approach to engaging its users. Take for example, how it encourages users to complete their profiles.

LinkedIn Profile Strength

Each user is shown a meter with an accompanying profile strength rating: 1) Just beginning, 2) Intermediate, 3) Advanced, 4) Expert, and 5) All Star. The rating will be dependent on the amount of data in your profile. Hence, missing profile information results in a lower profile rating. The system is simple, and yet it encourages LinkedIn’s audience to have complete, comprehensive profiles. According to the company, roughly 51% of profiles are complete.

On top of profile strength, LinkedIn offers badges, which are graphical representations of your LinkedIn profile on another website. All you need is a snippet of code to put in your website. But again, LinkedIn implements use of gamification through badges to turn the process of networking and self-promotion into a fun activity.

 

How Dropbox gamified onboarding

From the moment a user signs up on Dropbox, they’re incentivized to invite others on the platform. All users are given free storage with a limit of 2GB. But by inviting others, users are given the chance to increase that limit.

Users can invite their friends via email or social media. For every friend added, Dropbox will give you 1GB of added space. And even better, once your friend signs up, they too can receive a bonus of 500 MB.

Dropbox Storage Offer

Of course, users always have the option to upgrade if they don’t feel like referring to anyone. But the referral program is a simple, affordable, and highly effective way to onboard and grow your audience— a perfect example of growth hacking at work.

 

Buzzfeed and the value of interactive content

Gone are the days of promoting your brand on the radio and hoping your message was received by the right audience. If you want loyal customers, you need to produce engaging content. Gamification is as much about interactivity as it is about rewards. The more agency and control you give your customers, the more likely they are to convert.

Buzzfeed Quiz

Need proof? Look no further than Buzzfeed’s use of quizzes. On average the company creates 7.8 quizzes a day, with questions like “Are You Going To Be Tik Tok Famous?” and “Upgrade Your Cell Phone And We’ll Tell You What To Be For Halloween”. On average, 96% of users that start a quiz finish them. Despite how you feel about the topics for some of these sponsored quizzes, there’s no denying that these are engaging examples of content.

 

The badges of Codecademy and Khan Academy

Just as Boy Scouts and Girl Scouts earn badges for exploring interests and skills, users can now earn badges for completing online courses in code, science, art, history, and more. Khan Academy and Codecademy are two examples of education platforms that use badge systems.

The badge system has become a staple in gamified platforms for several reasons. But the main reason is that they reward hard work and encourage users to engage further. Users can be rewarded for mastering different skills or watching hours of video on a single topic. Another factor is that, they also offer users a way to promote the platform in a non-intrusive, on-brand way. For example, rather than asking a user to repost content on their social media page, an interaction may simply consist of posting questions on a community board.

 

The impact of brand image and professionalism

Don’t expect growth hacking to provide a quick fix to your marketing challenges. As with any company, presentation still matters. No matter how small the team or how limited the budget, your company should strive towards professionalism in its brand image.

Any creative material that brandishes your company logo or colors must be polished, error-free, and aesthetically pleasing. Depending on the type of business, your website could be the primary visual representation of your brand. It is a storefront with which your customer interacts. So it’s vital that your website is intuitive and works properly, but it also looks beautiful.

You only have 50 milliseconds to capture your audience’s attention, so make sure your website is simple to navigate while still evoking your brand’s personality.

Your physical place of business must also evoke that same sense of professionalism and align with the image of your brand. Not only for your customers, but for your team as well. In the Fellowes Workplace Wellness Trend Report, 93% of workers in the tech industry stated that they would stay longer at a company that offered healthier workplace benefits, such as wellness rooms, healthy lunch options, and ergonomic seating.

Workspaces mean more than just having a place to meet. The place itself must inspire creativity and accountability, encourage team-building and easier collaboration, and ultimately help you develop constructive business habits. Explore some of the best office space options available for your business today.

 

Instilling a sense of urgency

Buy today. Limited-time offer. While supplies last. Wherever you go, you’re bound to find an urgent, time-sensitive call to action.

To learn about the effect of urgency on sales, let’s look at the story of Marcus Taylor and his music business. Taylor packaged $1,250 worth of products for musicians in a single bundle worth $69. Though the checkout price was higher than what people would have normally spent, Taylor discovered that adding a time limit to the checkout page helped increase conversions from 3.5% to 10%. The fear of missing out (FOMO) became too intense for many customers.

There were other factors that Taylor found to influence urgency. The offer had to be clearly conveyed, free of distractions so that the customer would know what to expect. The offer itself also had to be trustworthy and believable. And finally, the offer had to be valuable and relevant to the customer.

Big companies like Amazon use similar techniques in the marketplace today. For example, customers are eligible for faster shipping on some products, but as long as they order within a time limit. Others, such as Groupon show you product availability and stock levels to instill urgency. Once again, customers will act more impulsively from the fear of missing out.

Experiment with your own offer by adding a time limit. You will find that customers will spring at the opportunity, and are less likely to abandon their cart.

 

Leverage your network

Networking remains a timeless tactic for spreading awareness. But harnessing your network can also yield great insights early in the startup phase. Seasoned entrepreneurs, as well as friends and family, can be great sources of advice, helping steer your business away from the pitfalls of entrepreneurship.

Find the right places to network. Networking can happen anywhere— at a birthday party, at a wedding, or on a business trip. But networking events and trade shows are still the best way to find new contacts. Sign up for local conferences, presentations, or festivals. Websites like Meetup and Eventbrite can help you discover local events (as well as social networks such as Facebook and LinkedIn).

Ask for feedback as much as you can. Great businesses thrive on honest reviews and recommendations from those we trust— be it friends, family, employees or loyal customers. Don’t just file their complaints away. Really listen to what they have to say. That input can and should be used to create a higher-quality product or service.

Join a peer advisory group. Peer advisory groups are effective tools for developing leaders. They usually comprise of eight to 15 senior business owners from different industries and backgrounds. Members are encouraged to share goals for professional development and to hold each other accountable to their objectives. To learn more about peer advisory groups, check out Vistage or the Entrepreneurs’ Organization.

 

Employ a freemium model

How many times have you been offered a free trial or tier, with the full version locked away behind a subscription or purchase? As restricting as they may feel, freemium models are popular for a reason. As services are limited to the bare necessities, it encourages customers to invest in the more premium or expensive tiers.

So why use a freemium model at all? The main purpose is to decrease your customer acquisition cost (CAC). This metric measures the overall initial cost of attracting new customers. By removing or mitigating the costs of this stage, companies can allocate resources towards engaging and retaining loyal customers.

If you plan on using a freemium model for your service or product, make sure you implement some form of limitation. These may include:

  1. Feature limitations: Offline access, additional storage, exclusive access, or discounts limited to premium tiers.
  2. Usage quotas: Limits to active accounts, storage, or a similar resource.
  3. Limited support: Restricted access to customer service.

A critical next step in offering a freemium model is encouraging users to actually upgrade. Without this, they may be content with limited versions forever. Create an onboarding strategy that answers how you will engage the customer. Perhaps it may involve sending regular newsletters with CTAs to upgrade, or it may tie in the “sense of urgency” by limiting freemium to a certain date.

Balance is everything in creating a freemium model that encourages rapid sign ups, but also eventual upgrades.

 

Create Contests and Giveaways

Everybody loves a little competition or free prize. Excitement is easy to build, and customers are eager to join in the fun. But to create a successful contest or giveaway, it’s important to set defined goals. Will you aim to bring as many customers to your store? Or perhaps your goal is to get as many sign ups for a service as possible. By setting clear goals, you can ensure that progress is measurable and leads to the desired ROI.

For a contest to be successful, the prize has to be valuable to participants. Otherwise people will not bother engaging. Gift cards, travel packages, and limited edition products usually top people’s wishlist, and they’re easy enough for companies to procure without breaking the bank. But the more valuable and coveted the prize is, the more likely people are to join. Be sure to allocate a prize that is within the theme of the competition, or relevant to what your users need.

With your marketing goals defined and your prize chosen, you need to notify all your customers about the competition. Email campaigns can help you tailor the message to certain audiences. But you can also analyze the open rate to determine the efficacy of your messaging. Similarly, social media can reach thousands of people, and doesn’t cost much to set up a post (although we highly recommend promoting social media posts for added exposure). Make sure your website also reflects current information on competitions, as participants will turn to this for more information.

Once the competition is over, it’s a good practice to share the winner’s identity (as long as they consent). Not only does it give the winner the bragging rights, but it also encourages more people to join in future contests.

Dove held an excellent contest that set the standard for many beauty brands. Their “Real Beauty Should Be Shared” contest encouraged users to share someone’s name and the reason why they’re beautiful. Instead of offering a physical prize, the best answers were featured on Dove’s website and social media. Everything about the contest was on-brand. Instead of focusing on some big prize, Dove put the spotlight on its audience, and in turn, customers flocked to engage with the brand.

 

The Power of Influencer Marketing

Our last strategy is one of the newest but also most impactful strategies in this modern age. Influencers on social media may not star in Hollywood films, but they’re by no means less influential. These are individuals with thousands to millions of followers on Instagram and you stand to benefit greatly from partnering with them.

Benefits of partnering with influencers:

  1. They convert users. With such devoted fanbases, influencers can have a much stronger sway over an audience than a traditional corporate brand. They need only plug a product or service, offer some discount, and traffic numbers are likely to spike.
  2. They appear more real and authentic. The reason influencers are so powerful is precisely because they are anti-corporate. Usually they are picky with the brands they choose to partner with, out of fear of seeming like a sell-out.
  3. They’re more affordable than celebrities. Unlike celebrities who require million-dollar deals, influencers may ask for a couple thousand a post, depending on their fanbase. This can help your company save a lot of money in the long run. In a battle between a micro influencer (someone with followers in the thousands) and a celebrity influencer, you’d be surprised just how much traction the former can get you.
  4. They have massive followings. Influencers have more followers than an average account, usually between one thousand to one million. Any one of them could be your next customer.

An important distinction to note: influencers are different from brand ambassadors. The latter are usually hired for long term contracts, similar to a paid spokesperson with insider information. In contrast, influencers are real people with public personas, and the contract usually is limited to a few posts or messages.

According to one study, 19% of marketers will spend $1,000 to $10,000 per year on influencer marketing in 2019, while 18% will spend between $100,000 and $500,000 per year. This shows a dramatic increase in recent years on the reliance on influencers.

Take a look at how Dunkin Donuts took advantage of marketing on National Donut Day. Partnering with their agency Trilia and an entertainment studio, Collab, they created a national Snapchat campaign featuring eight influencers. Influencers encouraged users to visit Dunkin stores to redeem a special offer. They also created Geofilters for the event, encouraging people to take photos. The result: Dunkin’ Donuts “gained ten times more followers” than they usually do in the month. The campaign reached 3 million people— a testament to the power of influencer marketing.

These are just a few examples of some of the most effective growth hacking strategies used by both startups and enterprises today. But already new ideas are starting to surface. Brands are partnering with companies in totally different industries to produce unique content, like Vox creating a Netflix show, or Salesforce sponsoring a Spotify podcast.

Growth hacking isn’t limited to these methods. In fact, growth hacking isn’t a specific strategy. It’s a mindset of scaling rapidly but on a budget. What strategies will your company use to grow?

Looking to learn more about growth hacking? Read our previous guide for more in-depth explanations.

Risk vs Uncertainty: What it Means for your Business

Risk vs Uncertainty: What it Means for your Business

Business professionals are no stranger to risk and uncertainty. Whether it’s reaching out to a new client, or releasing a new product, risk and uncertainty influence every business decision. They can push a startup to innovate faster, or bankrupt businesses that fail to plan accordingly.

But what are the differences between the two concepts? Are they similar, or more different than people think?

 

The Difference Between Risk and Uncertainty

Risk

Risk is defined as the possibility or probability of an unpleasant or undesirable event.

In business, risk might suggest the potential loss of money, time, or information. Most importantly, risk can be calculated or measured. Entrepreneurs can use market data to calculate whether a new product may be worth introducing. Accountants can use balance sheets to measure the profitability of certain stores. Calculated risk can be beneficial, as risk takers can also generate significant returns.

 

Uncertainty

On the other side, there’s uncertainty. In contrast, uncertainty involves situations with unknown variables, information, and outcomes. Uncertainty cannot be measured or calculated.

Since uncertain events are unique and difficult to plan for, they come with even greater downsides for unprepared businesses. During the dot-com era, companies invested heavily in expensive domains before understanding their value. When the bubble finally burst, several companies disintegrated, and thousands of employees laid off.

The main takeaway from these two concepts: risk can be measured and predicted, while uncertainty cannot.

 

Examples of Risk and Uncertainty

Here are a few examples of risk and uncertainty in the business world:

  • Risk is when an online clothing store decides to sell a new line of clothing, based on customer analysis. Uncertainty is when that same clothing store introduces a new, unrelated product without research, such as a new furniture line.
  • Risk is when a company moves their processes and data to the cloud. Uncertainty is when a major outage affects multiple servers across the nation.
  • Risk is when an ad agency opens an office in a new country. Uncertainty is when the country enters a recession.

 

Risk Management: How to Plan for High-Risk Events

Fortunately, risk is something that can be predicted and planned for ahead of time. Gary Patterson’s Million Dollar Blind Spots, outlines a simple but repeatable process for risk management:

  1. Identify risk – Spot the risk early through research and historical analyses.
  2. Assess the probability – Evaluate all the factors involved, including the likelihood of positive and negative outcomes
  3. Make a cost-benefit analysis of alternatives – Measure the pros and cons of each decision you could take.
  4. Choose a response
  5. Evaluate results – How did the chosen action impact the business?
  6. Ongoing monitoring – Risk events should be constantly checked for changing circumstances. In some cases, risk aversion may be the best option.

While uncertainty cannot be measured, the same approach may be taken in addressing related tasks and challenges. While a recession cannot be predicted, a business can take steps to protect the future of its employees and customers.

 

Turning Risk Into Opportunities

Risk and uncertainty surround every business. Weighing options and outcomes, and deciding the final action as a team is just one way a business can remain vigilant. With enough practice in risk analysis and assessment, risk turns from an obstacle into a challenge. Risk forces startups to mature and innovate faster through competition, and rewards entrepreneurs with greater experience of the market and industry. Risk can’t be avoided, but when businesses learn to prepare, risk can open up new business opportunities.

 

Conclusion

Risk vs Uncertainty

The main differences between risk and uncertainty can be summarized by control and predictability. Risk can be measured, and therefore, controlled. Changes in sales because of the season can be predicted and planned. This is why risk analysis or risk assessment can be important for a business’s strategic development. Calculated risks can lead to great rewards.

Uncertainty on the other hand cannot be quantified or controlled. For example, a new local competitor can have unpredictable effects on your own sales. You cannot measure uncertainty, you can only deal with uncertainty. This is why we look for certainty as much as we can: the more certain future events are to take place, the better a business can prepare.

Need help with preparation? Read our 5 tips on business planning.

Addressing risky situations requires courage and leadership. Learn how to develop those skills.

For more tips and guides on managing businesses and startups, follow Novel Coworking’s blog today.

Startup Growth Hacking & Scalability

Startup Growth Hacking & Scalability

Back in 2010, marketer Sean Ellis ran a blog called “Startup Marketing”. He wanted to share his insights from helping startups like LogMeIn and Uproar reach IPO status. But one post in particular has a far-reaching influence.

Ellis wrote a blog post titled “Find a Growth Hacker for Your Startup” in which he detailed the unique growth challenges of a modern startup and the ideal candidate that could scale the business. But he unwittingly coined a new term and invented a new field. The “growth hacker”was someone who could efficiently and consistently take the startup to the next level.

In this post, we’ve applied Ellis’s insight and cover startup growth hacking and scalability. If you’ve been running or working at a startup for some time, read on!

 

What is growth hacking?

Ellis describes a growth hacker as “a person whose true north is growth. Everything they do is scrutinized by its potential impact on scalable growth.” In other words: growth hacking is about cultivating major growth (in audience numbers or revenue) in a short amount of time with a relatively small budget. A growth hacker is responsible for developing strategies around rapid growth.

Growth Hacker traits

But what are the components of growth hacking? There are at least four main points to remember.

  1. Data analysis – growth hacking is based on real data, not emotion or bias. What is the current trend or forecast for the industry? How will the audience respond? Startups must begin with thorough research before taking any other action.
  2. Development of SMART goals – Once you discover actionable data, your startup needs to set realistic goals. An example of one might be determining the number of customers to target on a specific channel. Who should be the target audience? How should they be reached? How will success be measured?
  3. Testing the goals – After your team agrees on a set of goals, you then need to start testing. You’ll soon discover a myriad of challenges and insights you never would have thought of during your planning stage.
  4. Analyzing and re-testing – Once your experiment is complete, it’s time to measure the efficacy of your work. How successful were your theories? What lessons were learned? Growth hacking is a series of constant testing, analysis, and re-testing.

 

The importance of growth hacking

So, why is growth hacking important? For one, startups can be expensive ventures. The U.S. Small Business Administration estimates it takes anywhere between $2,000 to $5,000 to start a business. Not all entrepreneurs can front this cost, so rapid growth isn’t just an ideal goal. It becomes a necessity.

But startups aside, even larger corporations are starting to see the benefits of growth hacking. Why pour millions into expensive television and print advertising campaigns, when a viral or social media marketing campaign can be more effective in drawing customers?

Growth hacking has become an important mindset to have in marketing. But you don’t have to be a marketer to understand growth marketing. Ellis himself has mentioned engineers and salespeople becoming excellent growth hackers. To be able to incorporate rapid growth into your business plan, take some time to understand the strategy behind it.

 

Growth hacking strategies

Growth hacking has led to the rise of new and innovative means of finding, attracting, and engaging customers. We describe some of the most effective methods employed by various companies.

 

Gamification

We can learn a lot from how games like Candy Crush utilize user engagement as a marketing tool. Take Duolingo, for example. The app has helped people across the world learn a new language through simple but exciting challenges. Each time you reach a new milestone or complete a course, you receive a simple achievement. Users are encouraged to study each day, as breaking a streak will result in fewer rewards.

Duolingo Streak

But Duolingo’s gamification also affects its growth strategy. Each achievement can be shared by friends. A leaderboard shows which users are most active. Over time, a user’s profile can become their trophy case, encouraging them to continue learning and continue interacting with others.

 

Brand image and professionalism

While not strictly a strategy for growth, how a brand presents themselves can have a major impact on how customers engage with the company. Place yourselves in the shoes of your customers. Would you rather choose a legitimate business with an office space? Or someone that works out of their apartment?

Though companies like Mozilla and Coinbase have headquarters in California, they have chosen to rent office spaces with Novel Coworking in Chicago. The physical space in which business is conducted represents a brand’s legitimacy and professionalism, two key ingredients in drawing in customers in person.

 

FOMO/Sense of urgency

FOMO, or the fear of missing out, is a powerful way to incentivize your customers to action. By setting a time limit, customers are far more likely to engage in a call to action. They’re far more likely to purchase, join, register, or visit so they don’t miss out.

According to OptInMonster, about 60% of millennials make purchases because of FOMO. Social media has a direct influence on the feeling of FOMO. Apps like Instagram and Facebook force users to constantly view other people’s lives, without the ability to take part or participate. However, FOMO can be a delicate feeling to grapple with. So be careful how it’s incorporated into your marketing strategy.

FOMO

Leverage networking

Networking will always be an important means of attracting customers, finding new partners, and hiring new employees. In fact, word of mouth campaigns can be far more effective than the most expensive TV ad campaigns. That’s why countless trade shows and conferences pop up each year. They’re great ways to expand a business and learn more about your industry.

We recommend reading our post, Make the Most of Any Networking Event which takes a deeper dive into the topic.

 

Freemium

These days, it’s not at all uncommon to see companies offer their software or service for free, but withholding key features. While the freemium version may be perfectly acceptable at the start, these missing features become crucial later on.

Dropbox, the popular file storage and sharing service, offers 2 GB of space, file sync and sharing for free. Once you’ve reached this cap, you’re offered upgrades such 2 TB of space, 30 day file recovery, and more. Dropbox Professional offers even more, allowing users to comment on videos and search in documents and images. These tiers are specifically structured to encourage people to end up paying, especially if they want to use the service with multiple people (such as for a startup business).

 

Leverage influencers

The term “influencer” is a new one, a product of the new age of social media that we live in. Influencers are like social media stars and celebrities— not quite on Hollywood’s level, but with a much larger following than your aunt or uncle. Influencer may refer to a brand or person with thousands of followers on a single social media platform. It may also be used to refer to brands or people with only a few hundred followers, but attract higher levels of engagement than most.

Influencers are not to be underestimated — they have the ability to move the opinion of masses instantaneously. That’s exactly the strategy used by Filip Tysander, founder of Daniel Wellington. In 2011, he paid $30,000 out of pocket to start the watch brand, and within a few years became Europe’s fastest growing private company. Rather than using expensive celebrity endorsements, Tysander focused on Instagram influencers, spending a few thousand for a single post that would generate thousands more clicks. He unknowingly started a new trend in growth hacking: leveraging influencers.

Social media influencers

 

Growth hacking success stories

Now that you know the strategies behind rapid growth, you may be curious to learn about the tales of success behind some of the biggest brands.

 

DuckDuckGo

Competing with a behemoth like Google, the world’s largest search engine, is no easy task. Yet DuckDuckGo, the internet privacy company and search engine, has carved a large chunk of its market share. Founder Gabriel Weinberg attributes the growth to 19 specific channels, including blogs, search engine marketing, social media display ads, email marketing, trade shows, and much more. In 2016, DuckDuckGo saw 4.1 billion queries on its site. In 2018, that figure was well over 8 billion.

To learn more about DuckDuckGo’s story, we recommend reading FourWeekMBA’s coverage on their growth hacking strategy.

 

Airbnb

If any brand embodies the spirit of growth hacking, it’s Airbnb. Starting with nothing but a few air mattresses on the floor of a San Francisco loft, Airbnb has grown to a valuation of over $10 billion, surpassing even Hilton Hotels in bookings.

During its early phases, Airbnb struggled to find enough visitors for its properties. So it turned to Craigslist. Airbnb users could post property rentals on Airbnb’s site, as well as on Craigslist. They also “poached” Craigslist posts. For any post on Craigslist that featured a property, the original poster would receive a message encouraging them to also post on Airbnb. Over time, the Airbnb/Craigslist integration led to a surge in traffic, propelling one of the best starts for a new venture in recent history.

To learn more about Airbnb’s growth hacking strategies, check out the post by GrowthHackers.

 

PayPal

Before the Internet became a worldwide sensation, PayPal was one of the first to start a viral referral campaign. David O Sacks, former COO of PayPal, explains how the program would incentivize people to invite their friends and family by paying them. “Users just had to sign up, confirm their email address, and add a (unique, authorized) credit card. The money was simply added to their account. This was real money. Users could send it to someone else or withdraw it.” As their network grew, PayPal could no longer offer $20 per referral, and gradually reduced it to $5 (while adding more hurdles, like bank verification). But the plan was a success. According to Elon Musk, they had 100,000 customers after the first month.

Learn about PayPal’s rise in ReferralCandy’s blog post here.

 

Zapier

Bryan Helmig, Wade Foster, and Mike Knoop were friends before starting Zapier. Helmig messaged Foster one day about a “killer web app” that would “extend the functionality of paid apps’ APIs”. Launched in June 2012, Zapier started with only 34 app integrations and $1.2 million in funding. Today it has over 1,300 app integrations generating an annual revenue of $50 million.

In the beginning, the founders did not focus on growth, instead prioritizing customer support. As they acquired more happy customers, they began to feature far more customer stories on their blog. Now the company has become a quintessential example of growth hacking.

To learn about the four main reasons of how Zapier was able to grow, check out Drift’s blog post.

 

The relationship of scalability and growth

Growth and scalability are terms that tend to be used synonymously in describing a business’s expansion. But to truly differentiate your company from the competition, you need to have a firm understanding of the difference between the two terms. Growth means adding resources as the same rate as adding revenue. Scaling is about adding revenue at an exponential rate, while adding resources at an incremental rate.

If you want to learn more about the differences between scaling and growing, check out our post on scaling your business.

So if scaling is the smarter, more responsible way to grow a business, how do you scale a startup? You need only keep two things in mind: increasing your revenue sources while keeping your costs low. This is the basis of growth hacking. In doing so, you can develop a scalable business model— a way to generate business while still having money to run.

The question then becomes: how do you create a scalable business model? While each company’s blueprint is different, we can give you an outline that can be incorporated into every company’s mindset:

  1. Start with a scalable idea. While developing an Apple-killer or Google-killer is admirable, you want to start with something simple that can expand over time.
  2. Develop a business plan and MVP. You have your idea, now how will you pitch it to employees, customers, and potential investors? You need a prototype, a demo, a trailer, otherwise known as a minimum viable product that will help you measure your idea’s efficacy.
  3. Build your team of specialists. You won’t be able to work on everything. In fact, the more you can focus on the big picture of the business and less on the day-to-day nuances, the faster your company will scale. Find other salespeople to help on-site, or outsource your work to contractors. Consider automating some processes (such as responding to client inquiries) to save your team time.
  4. Use modern growth hacking strategies. Social media, viral marketing, and display ads can win over more customers than an expensive billboard or commercial. Think outside the box on where you may find your customers and how you may reach them.
  5. Take in feedback and iterate. Listen to what your customers and stakeholders have to say. What are their favorite aspects of your brand and offering? What are their pain points? Remember that it’s all about the customer in the end, and they can tell you more about how to steer your business than you may realize.

We’ve seen a few examples of a scalable business model already, such as offering a freemium service or software. Offering a product for free while saving its best features for a premium version is guaranteed to convert some people.

Perhaps the most prominent example is the growth model used by many online companies. Consider Netflix, which was initially head-to-head with Blockbuster’s physical rental business model. By switching to an online sales model (i.e. a streaming platform), Netflix could effectively save on inventory costs, rent, and salespeople. Savings were allocated towards investments in server maintenance and recruiting software designers. In the end, Netflix dominated, and Blockbuster became just another part of history.

 

The concept of growth marketing

Now that you know about growth hacking, let’s talk about growth marketing. Not all marketers are fond of the term “growth hacking”, since it doesn’t really involve any hacking. Instead, they prefer using “growth marketing”, an evolution of traditional marketing with an emphasis on data analysis, experimentation, and optimization. So in essence, growth marketing is the same as growth hacking, only with a more specific and data-based approach to growth.

So how does growth marketing work? Instead of merely focusing on the awareness and acquisition phases of marketing, growth marketing and testing follows your customer all the way through retention and referral— making them ambassadors for your brand. It’s about checking in on the customers and keeping them engaged. Ultimately, they’ll do the promotion for you.

Another main difference with growth hacking is the focus on experimentation. Growth marketing is about A/B testing, optimizing for SEO, writing creative ads, and analyzing the user journey— all from a data-based approach. It’s following the customer at every stage, and finding out how you can add value to their experience.

 

Growth hacking tools & resources

Product Hunt

Think Reddit meets Kickstarter, and you have Product Hunt. Anyone can share, comment, or vote on new products. The website organizes products into four categories: technology products (such as software, websites, apps, hardware products), games, books, and podcasts. As of 2016, Product Hunt has lead to the discovery of 100 million products across 50,000 companies. The company is valued at over $22 million. Any brand with a physical or software offering should have this website on their radar and plan to establish a brand presence here.

 

Outbrain

Ever notice a grid of recommended articles, videos, or webpages after reading an article? There’s a good chance those are Outbrain ads. This advertising platform is known for curating content to display to users when they are looking for something to read or watch. The upside to Outbrain is its cost. Compared to alternatives, Outbrain is cheap and offers you access to premium publishing channels. If your product happens to be a channel or a blog, Outbrain is a resource you should consider.

 

Hotjar

The ability to visualize how your users move through and engage with your website can be a powerful insight, and that’s exactly how Hotjar works. Using heatmaps, Hotjar allows you to display and track exactly where users click and move their mouse. This data can help you gain a better understanding of how effective your web pages are in converting customers. You can additionally use hotjar to gather surveys and feedback from your audience, making Hotjar a one-stop shop for analyzing your user’s behavior on your website.

 

Drip

Having troubles with mapping your customer’s journey? Drip can help with that. More than your standard CRM tool, Drip gives you a comprehensive view of your customer’s actions with your website, so that you can better personalize webpages and email campaigns to their unique journey. As well, Drip offers beautiful dashboards that help you visualize revenue attribution, clicks, and conversions. Drip is such a valuable tool for ecommerce brands, that the brand calls their product an ECRM— ecommerce customer relationship management platform.

 

SendGrid

SendGrid the email campaign tool championed by Uber, Spotify, Glassdoor, Airbnb, and Yelp. You can design beautiful emails, target the right audiences, and schedule your campaigns for the best time. Then, analyze the engagement of your campaigns through beautiful graphs and visualizations. SendGrid is powerful, flexible, and sleek all in one. The tool is so popular, that SendGrid claims to have over 80,000 customers, and processes 50 billion emails each month.

 

Google Analytics

No list of tools and resources would be complete without Google Analytics. Google’s web analytics platform remains unbeaten at analyzing the performance of your website and monitoring traffic. From measuring session duration to conversions, Analytics helps you review the efficacy of your webpage, right down to each link and click. You can also link your campaign to Google Ads, so that you can track how successful your advertising efforts are. Best of all, Google Analytics doesn’t cost a dime. If you can only choose one tool out of all the ones we mentioned, let it be Google Analytics.

 

Growth hacking will continue to play a pivotal role in the development of startups. With an increasing pool of competition coupled with rapid innovation, many startups can no longer settle with slow, risky growth. Fast and unconventional scaling will make the difference between a startup with longevity, and one that fizzles at the onset. Future-minded companies realize that models of advertising such as billboards and television ads are quickly becoming outdated. To stay blue ocean and ahead of the curve, it is in every company’s best interest to develop the mindset of growth marketing is the future of marketing.