Growth hacking: with minimal investments to maximum growth
It sounds like every entrepreneur's dream: to run a successful marketing campaign with minimal (financial) resources. Is that possible in 2019? Growth hacking seems to be the answer.
Traditional marketing laws dictate that the output you get from your marketing campaign is directly proportional to the input you put into it. For every dollar invested, you can expect two in return. This is how many large companies, nationally and internationally, still reason today. Armies of marketers beg on a daily basis from the large multinationals for large budgets so that they can set up a super-tight, all-encompassing campaign around their product. And that while more and more business experts are slowly declaring traditional marketing dead.
One of the principles that is increasingly mentioned as the obvious successor to traditional marketing is growth hacking. The term growth hacking was introduced in 2010 by American entrepreneur Sean Ellis, best known for his part in the success of Dropbox. In its most flattened form, a growth hacker is someone who knows how to generate insane growth (in turnover and clientele), but does not have to make a large investment in money, FTE or other resources. Just like a life hack makes your life easier without having to buy an expensive device, a growth hack ensures significant growth in your sales without requiring a large investment. But how do you do that?
The end of large-scale campaigns
Successful traditional marketing has traditionally been a step-by-step process. A campaign is designed from a marketing point of view. It is then technically equipped. Finally, data analysis takes place to determine the success of the campaign. The latter is, incidentally, often a matter of guesswork; because how do you know how the performance of your product or service would have developed without this campaign? Analyzing traditional marketing campaigns will always look like coffee grounds to a certain extent.
Within large companies, these different aspects are often literally separate departments that have to work together (hopefully flawlessly). In smaller companies, it is one entrepreneur who always puts on a different hat.
This traditional marketing is increasingly losing its power as the world around us continues to digitize. A major marketing campaign that, if all goes well, will provide a few percent revenue growth for a costly investment: it is becoming increasingly unattractive in a world increasingly influenced by fast-growing start-ups and innovative new entrants who are closing their markets in no time. put a cup. Such a campaign is simply too cumbersome.
The growth hacker no longer sees three separate functions in marketing, development and data analysis. For example, development is also used as a marketing tool. The growth hacker does not invest a lot of time and money in traditional campaigns, but is more creative. The growth hacker is looking for a way to grow: grow fast, and grow fast.
The characteristics of a growth hacker
What makes someone a growth hacker now? What characteristics can be attributed to him? Building on the description of the traditional marketing campaign above: the growth hacker can be regarded as the marketer, data analyst and developer in one. He is the coding specialist who thinks like an entrepreneur, or the marketer who knows how developing works. He knows both sides of the spectrum and therefore looks in a completely revolutionary way at the time-honored business administration question: "How do I get more customers?"
For many companies, that question is more or less translated into the question: "How do I get more turnover?" Whether that revenue growth is due to an increase in the number of customers or an increase in value per customer does not even matter at the end of the day. In both cases, the result of the marketing efforts is assessed as positive. The growth hacker reasons radically differently. To grow fast and fast, it is not enough simply to bring in a little more value per customer. Many new customers need to be reached, and quickly.
To achieve this, the growth hacker is continuously looking for 'weaknesses' in the market system of his market segment. He analyzes the functioning of the market as it is today and tries to uncover where the system is going wrong. Think of the place where, for example, a lot of conversion is lost. The growth hacker takes advantage of these weaknesses by 'hacking' them: developing a trick to outsmart that weakness. Does it all sound a bit abstract? Time for a few telling examples.
Example 1: API growth hack
An API (Application Programming Interface) is a set of functions and procedures that allow different programs (or components of programs) to communicate with each other. The API growth hack is one of the simplest examples of a growth hack because the problem (and in many cases the hack that solves this problem) is very recognizable. The API growth hack is the answer to the question: “How do I quickly reach the right target group?” Traditional marketing often boils down to a shot: a banner on a website, an advertisement on TV, an advertisement in a magazine. It costs a lot of money to place them and it remains to be seen who actually looks at them.
The API growth hack is a form of piggybacking on a larger, successful platform with more or less the same target group as your service or product. Hence the name API: piggybacking (and therefore communicating) with other software. The best-known manifestation is the integration between social media among themselves and with other services. Instagram was able to become immensely successful in a very short time because it integrated with Facebook and Twitter and was therefore able to quickly gain fame among users of these services. Spotify is another great example: users could link Spotify to their Facebook account and let their friends know what music they were listening to.
The API growth hack actually does two things: it adds value for users, but below the surface ensures that you quickly bring your product to the attention of your target group without having to put in any effort. In some cases, users are even rewarded for promoting the product through another platform: in games like Farmville, you could earn extra points or credits if you posted on Facebook about your progress.
Example 2: Virality growth hack
The virality growth hack – it's already woven into the name – relies on the assumption that the 'viral' of your product is the key to rapid brand awareness and therefore business. When we think of viral, we often think of videos that suddenly pop up everywhere or tweets that are shared by hundreds of thousands of twitterers within a short time. However, going viral of a product or service works a little differently.
It's a misconception to think that content going viral is purely dependent on luck. Virality does have a formula. The growth hacker is aware of this formula and cleverly responds to it. The virality growth hack recognizes this power of the go viral and enforces this effect on users.
In the virality growth hack, users are more or less used as carrier pigeons for your commercial message. A good example comes from Sean Ellis, the man who introduced the term growth hacking. To make Dropbox go viral, he offered current users free storage on the condition that they invite their friends to create an account as well. The result: an increase of more than 100 million users.
Another early example is the rise of Hotmail around the turn of the century: the service only really became popular when the makers wrote the caption “PS I love you. Get your free email at Hotmail”. Of course including a link to the homepage of Hotmail. Every e-mail sent via Hotmail had now become a small advertisement.
Conditions for growth hacking
Growth hacking can be an important tool in almost every market segment to quickly reach a large target group and attract more customers. But not every company, product or service is susceptible to growth hacking. What should you take into account before you start with growth hacking?
First of all – and it sounds like an open door – your product good to be. Your product should no longer be in the MVP stage. You should already have a somewhat refined product that generates customer satisfaction. This has everything to do with the second condition, which is that both your product and your company are ready for scaling up. The term scalability ('scalability') is often mentioned in combination with growth hacking. A growth hack is of no use if, for example, it turns out after a short time that your server capacity is insufficient to be able to process an increase of new customers. Think about what would happen if you suddenly had twice as many customers tomorrow. Is there something going on then? How can you fix that before? Also good to realize: digital products and services are by definition best suited for growth hacking, because a digital product can be difficult to sell out or become full. In comparison: a hotel, restaurant or entertainment venue simply has a maximum capacity and is less susceptible to growth hacking, although you can use it to actually use that maximum capacity.
The next condition is having the right skills and knowledge. In many cases you will not be or employ the perfect growth hacker yourself, but you will start with a growth hacking team in which all required disciplines are present. This involves a developer, an SEO copywriter, a data analyst and a marketer with a healthy dose of entrepreneurship. It is also important to have a good picture of your current marketing and growth processes. How do you get customers now? What does your marketing look like? Where are you successful and where are you not? If necessary, draw up this system in order to identify the weakness in the system. In this context, also think of your landing pages, your distribution channels, your acquisition– and retention strategies and your customer satisfaction surveys.
Test, measure, know
When you start with your growth hacking team, it is important to realize that a growth hacking campaign works radically different than a marketing campaign. This is not something you live then, leaning back in your chair, wait for the phone to ring. Growth hacking is continuously testing, measuring and adjusting. You must constantly know how your strategy is working out.
A classic tool that can come in handy here is the A/B test. Here you put two different forms of your growth hack next to each other and test which variant sorts the most conversion. If you test multiple versions and variables simultaneously, it is called a multivariate test. Stop the variants that perform poorly and try to further fine-tune the well-performing variants.
Also indispensable in this regard is thorough user research. You want to know how your users experience that integration, especially if you are piggybacking on an integration with another service or platform. Do they find it an added value? Is it a pleasant experience? After all, you don't want the acquisition of new customers to be at the expense of the user experience of your existing customers. So continuously ask for feedback and respond actively to it.
When was your growth hack successful?
The key question that every entrepreneur would naturally like an answer to: when will I be successful? When it comes to growth hacking, that is a difficult question to answer. A successful growth hacking campaign is ultimately a perpetual cycle of agilely designed sprints in which you perform tests, run analyzes and implement improvements. You are successful if you continuously grow, but that doesn't mean you can rest on your laurels.
A good final example in this context is Airbnb. The history of that company is full of growth hacks. Many well-known examples of growth hacks concern companies and services that were still in their infancy, but Airbnb continues to hack through – even after its final breakthrough. A great innovation that came about through growth hacking had to do with a thorough analysis of houses, apartments and rooms that were hardly booked. There was one common denominator: all these poorly rented units had advertisements with low-resolution photos. When a number of units were visited by professional photographers and new photos were put online, the difference with units that 'just' performed well disappeared. The poor quality of the photos of the weakness in Airbnb's system; by measuring and applying data analysis, this weakness was identified and the weakness could be addressed. Relatively little effort and investment could thus lead to a significant increase in the number of rentals. Then your growth hack is successful.