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