Why marketers are embracing growth hacking techniques
- 03 November, 2016 07:13
Sean Ellis, the first marketer at Dropbox and founder and CEO of GrowthHackers.com, first coined the term ‘growth hacking’ back in 2009 when he was running growth at Dropbox.com. Andrew Chen, now running growth at Uber, then popularised the phrase with his seminal blog post describing the AirBnB/Craigslist hack, firmly putting the term on the Silicon Valley map.
As the story goes, these men were describing a new way to do marketing. And growth hacking has been generating plenty of buzz as a result. So what’s it all about? Why are marketers taking notice?
Growth hacking is considered a process of rapid experimentation across marketing channels and product development to identify the most effective, efficient ways to grow a business. Growth hackers are marketers, engineers and product managers that specifically focus on building and engaging the user base of a business. They have deeper access into the product where they can drive sharing, engagement and retention.
While growth hacking is focused on activities directly attributable to growth, marketing, on the other hand, is focused on activities including brand perception and awareness that have a softer connection to growth.
But growth hacking means many things to many people and is a contentious term, according to Matthew Lerner, who runs the London office for Silicon Valley Venture Capital fund, 500 Startups. He also leads the Distro Dojo growth hacking academy, has experience building and managing growth teams for startups, and spent 10 years leading growth teams at PayPal.
“Growth hacking is a somewhat controversial term, to be honest, because many charlatans are calling themselves ‘growth hackers,’ selling bad advice and discrediting the term," he tells CMO. "The term was invented and applied retroactively to a set of tactics that had been in-use since the late 1990s.
Examples of companies using growth hacking include Hotmail, Twitter, YouTube, Instagram, Facebook, Dropbox, LinkedIn, AirBnB, Quora, Pinterest, Zynga, Slack, Stripe and WhatsApp.
“If you study the growth of those particular companies, you’ll see they each did totally different things, unique things specific to their customers and products,” Lerner says, explaining growth hacking isn’t just a list of tricks or silver bullets. “It is a process that leads to the discovery and use of levers for growing a business where you get the actions of existing customers to bring your new customers.”
While there’s no one-size fits all approach, there are a couple of high-level patterns.
For B2C businesses like Facebook, Twitter, Dropbox or Instagram, for example, the product gets better for each individual user if they invite friends to use it. “The product is designed in such a way that it’s easy for you to connect/invite friends in, and the customers do all that work, so the companies don’t have to pay to get more customers,” Lerner explains.
For 'marketplace' businesses like eBay or AirBnB, there’s a 'supply' side (sellers on eBay, hosts on AirBnB) and a demand side (buyers on eBay, guests on AirBnB).
“In these two-sided marketplaces, one set of customers ‘gets’ the other set. So in AirBnB’s case, hosts could click a button to list their property on different Craigslist sites, free advertising that would bring lots of potential guests to AirBnB’s website,” he says.
For business-to-business companies, there are also a number of models. “One popular one is ‘land and spread’ - you make a simple free product that lots of people in the organisation will start using [like Slack]," Lerner says. "Then once lots of people are using it, it makes sense for the organisation to pay a per-seat monthly subscription fee to unlock premium features.”
Piece of the puzzle
For Vocus Communications’ general manager, marketing and customer experience, Jonathan Amery, the concept of growth hacking is one part of an overall marketing strategy.
“The fundamentals of it are that idea of rapid experimentation and focusing on growth, rather than sales. You go back to where it started, what the idea was. From a startup point of view, it’s that idea of how you focus on growth, and adding as many new subscribers as possible, rather than revenues."
For Vocus, it’s not just growth hacking, but a combination of good standards, quality marketing principles, campaigns, focus and programs in place, “and then subsidising that with all of the stuff that fits in the cracks, by being able to add small, continual, incremental growth that eventually adds up to something significant," Amery says.
"Growth hacking changes team thinking, from the mindset of always trying to do the biggest things, to instead focusing on what will have a big impact - and opening up the spectrum of ‘crazy ideas’," he says.
“An idea that adds a one per cent growth, or a half a per cent growth, multiplied over a team of 20 people, month-on-month, has an incremental benefit to the bottom line. And that’s where growth hacking really works - in changing the mindset of a team to look at small, incremental changes that combined have an aggregate effect over the output.”
Indeed, marketers are discovering an ecosystem built around growth hacking with previously unavailable tools that are easy to implement and give insight and understanding in areas such as analytics, content marketing, conversion rate optimisation (CRO), email marketing, lead generation, landing pages, marketing automation and SEO.
Use cases on the rise
Riveria flags a growth hacking campaign for Virgin Experience Days, which meant stepping away from traditional marketing mediums and adopting email marketing automation to send relevant messages to customers and influencers at exactly the right time.
“With more than 20,000 new subscribers every month, email is a key channel for Virgin Experience Days, and ultimately an easy way for the company to reach out to customers directly," she says. "Working with Campaign Monitor, Virgin Experience Days uses automation to power its email marketing services. The analytics provided by Campaign Monitor also allows brands to experiment with emails by looking at what's working through automation and changing it to suit.”
Riveria says this means when new customers sign up, they get an automated email welcoming them to the Virgin Experience community. Five days later, customers will automatically receive an email with more information about the experiences they offer.
Online shoe business, Shoes of Prey, is another company looking to growth hacking in order to grow the business. Its co-founder and chief creative officer, Jodie Fox, says growth hacking can be tailored to any budget and scaled up and down in line with the business’ resources.
Calling it an acceleration tool that can be used in times where heightened growth is required, Fox says social media has become an area where the company put growth hacking into action.
“One of the most successful campaigns we executed using growth hacking techniques involved partnering with a YouTube blogger, JuicyStar07 [Blair Fowler], in 2010, to educate people about the concept of designing their own shoes," she says. "She had, at that time, about half a million subscribers and was posting three videos a week, getting more than half a million views. She did a 10-minute video about her experience designing shoes with Shoes of Prey and at the end we ran a shoe giveaway competition.
Since then, Shoes of Prey has collaborated with social media influencers on many projects to reach new audiences and demonstrate the company's offerings.
He calls growth hackers “marketers, number crunchers and product developers that focus specifically on engaging and growing the customer base”. In order to growth hack the business, every activity within the organisation should be measured, studied and analysed at regular intervals.
According to De Silva, growth hacking has been incremental to Dropbox’s success. “With business growing more and more global, modern work is increasingly collaborative. Because of this, better collaboration tools can help employees transform their businesses," he says.
"By combining a large sharing network and ease of use, Dropbox Business is providing a faster and more seamless way to collaborate – allowing us to grow our user base at a rate faster than ever before.”
Hipages is also a growth hacking convert. Its CMO, Tracy Richardson, sees a growth hacker as someone who uses analytical thinking, data insight, product engineering and creativity to drive core growth metrics for a business.
Hipages grew during its startup phase by leveraging performance channels like SEO, SEM, EDM, alongside CRO.
“We use growth hacking to fast track our growth. There are a number of principles we have defined that support our growth hacking goals,” she says, including collaboration, an agile approach to marketing, data-driven strategy, and a focus on a specific goal or metric.
“Fundamental to growth hacking for hipages as an organisation is creating a culture of collaboration and implementing the right team structure support growth hacking approach," she says. "We do this by creating cross-functional teams which include marketers, product, data scientists and engineers. Each of these professions bring to our growth team a very different perspective and their own area of expertise. Which, when they combined, create both innovation and at its best inventiveness."
Going mainstreamGiving growth hacking a ‘global voice’ is the mission for Auckland-based Mark Hayes, who is the founder of one of the world’s first dedicated growth hacking agencies and full-service digital marketing consultancy, Rocketshp, and the author of The Growth Hacker's Guide to the Galaxy.
“If you go back to the early days of growth hacking, a lot of people at that time saw it as someone that sat in between the product team - so people that actually built the software-as-a-service or the mobile phone app - and the marketing team. And that was probably accurate for that time,” he says.
Hayes says the growth hacker has also been defined as the self-sufficient, digitally savvy marketer that combines creativity, data science and technology skillsets.
“Traditional marketing is usually focused around driving brand awareness, where growth hacking is more focused on creating a company-wide culture of experimentation that actually leads to quantitative and qualitative business metrics,” he continues.
While growth hacking was deeply rooted in the startup arena - and popular because it means you aren’t following a prescribed process and are looking for an outside-the-box perspective - Hayes says it’s starting to go mainstream with companies either opting for a growth hack in residence or hiring outside consultants.
“It has transitioned from being that cool, startup classic environment to being in the mainstream,” he says, adding it is also now coming into the fintech space, and is the next logical step in insurance and healthcare software arenas.
According to Hayes, marketers need information about growth hacking in several key areas: Acquisition, activation, retention, revenue and referral. They also need an understanding how the process works, and product market sets.
“We have to give them ideas on what channel to explore, and to discuss what they tried in the past," he says. "Give them a culture of experimentation and testing. With growth hacking, you need to run multiple experiments - and not all of them are going to be successful. And that’s okay - the idea is to find that experiment that drives huge amounts of growth.”