What is Growth Hacking?
Put succinctly, growth hacking is an approach to that focuses on quick, concerted experimentation in marketing and product development. But what does that mean? The phrase comes from entrepreneur and adviser Sean Ellis, who wrote a piece defining the concept in a 2010 blog post. In it, he wrote “A growth hacker is a person whose true north is growth.” Ellis’ success is self-evident, and he was the first marketer at Dropbox, Lookout and Xobni. This need for a growth hacker in a startup comes from the belief that early in its existence, it needs growth first and foremost. So what is growth?
Growth is anything that boosts part of an enterprise’s success. It can be improving revenue through better sales, or providing better services to end users. It can be increasing profitability through cutting operational costs. These may seem like no brainers, but in the beginning of a startup, or other entrepreneurial endeavor, there can be so much to do that it’s easy to get bogged down and lose focus on what’s most important. The economy is littered with businesses that failed because they were too focused on building a marketing team, or strategy, or setting up better relationships with external vendors, instead of recognizing that in order to execute any of those (and many other) aspects of a business is meaningless if the business can’t sustain itself. That sustainability is predicated on growth, and finding a way to quickly and efficiently grow is the essence of growth hacking. Until you’re able to grow, wasting time and resources on perfecting other aspects of your business are counterproductive, and often can sink you.
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So what’s hacking? Hacking is a way to maneuver closer to what you want in the easiest, most cost-efficient way possible, and to find new, simpler and more beneficial ways to do anything. They both seem like intuitive concepts, no? Putting them together and putting them into practice is another story.
Mason Pelt, a digital strategist, marketing and product development consultant may have described what growth hacking is best in a 2015 article on growth hacking published on SiliconANGLE.com:
“The goal of any marketing should be long-term sustainable growth, not just a short-term gain. Growth hacking is about optimization as well as lead generation. Imagine your business is a bucket and your leads are water. You don’t want to pour water into a leaky bucket; it’s a waste of money. That’s why a true growth hacker would care about customer retention.”
Pelt also gave a great example of how hacking can apply to anything at all, whether it’s growing a business, gaining access to information, or physical goods.
“I hack Chipotle every time I ask for ‘a half scoop of steak and a half a scoop of chicken.’ I’m manipulating a system that doesn’t have a ‘half scoop’ measurement. The result is, that with no price increase, I get 1.7 times the meat on average. Try it sometime; hacking is fun.”
In that article, Pelt gives an example of working with a business that asks users to book appointments weeks in advance. Pelt tried to discover what the value of automated communication with the users to remind them of their appointments. Despite strong lead generation, 30% of users didn’t show up to their appointments. A traditional, flawed solution to this problem would be to up the marketing budget, and target marketing towards convincing users not to skip their appointments. However in Pelt’s view, if 70% of customers came to their appointments, the goal is to convince the other 30% to do the same without spending lots of money. As he put it, the answer was to “fix the bucket.”
When you prioritize growth over everything else, you’re able to block out all the seemingly important distractions that often destroy startups. Traditionally, marketing was done based around a tangible product. If you were selling shoes, you had to find a way to convince people that your shoes were desirable, that they made sense financially, and ultimately, that their experience with the shoes was worth repeat business, or recommendations to their friends and family. But in the digital age, a product is no longer something physical. A large part of Facebook’s success is that its platform’s existential basis was formed by encouraging participation of others, and user experience and engagement improved in direct proportion to the number of people using it. Successive digital companies like Uber or DropBox incentivize their customers to recommend and push the apps on anyone they know through in-app rewards. Products like these set up pre-written friendly messages, so spamming a friend or loved one is easy and nearly automatic. Through simple messages to existing users, companies using these models can make it clear that customer experience will be improved by convincing others to use products the users already enjoy. This is an instantaneous, low cost way that startups can hack growth.
Another central cog of growth hacking is distribution. In the not so distant past of an entirely physical world, a business like McDonald’s could look at the nation and see that interstate highways were an infrastructure that could be exploited with strategically dispensed storefronts near highway exits. The skeletons of that success still decorate the country, even as McDonald’s is starting to struggle in a world that increasingly prizes at least the vaguest nods towards health conscious products. The same way that McDonald’s used proximity to the highways to attract customers, growth hackers use search engine optimization (SEO) to attract customers through search engines on the internet. By crowding their content with key words that reflect searches in their market, startups can efficiently and affordably hack growth without increasing their budget. At its core, growth hacking is embracing, inventing and capitalizing on change. Now SEO isn’t being applied to just search engines. Just like with the existing infrastructure of the highways, startups are starting to use the infrastructure of larger former startups like Facebook, Twitter, Youtube or Instagram.
Media companies have gone from tiny blips to power players in the digital landscape, strictly through analyzing and understanding what kind of content is most likely to be shared on social media, then creating it cheaply. Once it goes out, an exponential army of potential customers unleash it upon the world, with all the ripples coming back in the form of growth.
Another excellent example of growth hacking comes from an article on Quick Sprout. It cites AirBNB, a company that began growth hacking in the conception of its idea. AirBNB understood that in a fragile, collapsing economy, one thing that many humans still have access to is a place to live. So AirBNB gave people the option to convert their spare rooms or living space into an area they could rent out on a nightly basis. In that moment, they took a business that was mostly confined to property owners or hotels, and let anyone access it. But how did they get their first users? AirBNB used Craigslist, which already had millions of users looking for a place to stay, the very thing AirBNB users would provide. When users posted their rooms on AirBNB, they were prompted to also post the listing on Craigslist. The result was inbound business for the users and AirBNB from a gigantic existing pool of the exact audience both were trying to court.
Ideally, AirBNB would have been able to post any listing it received on its site to Craigslist automatically, if Craigslist offered an Application Programming Interface or API (which it didn’t). The simplest explanation of an API is it’s the part of servers that receives requests and responds to them. Instead of being able to utilize a public API for Craigslist, AirBNB had to find a way to get its users to do so for them, thus the growth hacking prompt suggesting they list it. While it may be annoying for people looking to rent rooms as quickly as possible, the inherent value of casting a wider net for potential customers served both AirBNB renters and the company itself.
In conclusion, growth hacking is finding new ways to do new things, and abandon previous assumptions. It eviscerates the idea that different people do different things, and finds the crossover between coders, marketers, designers, executives, users, and more. Startups are often short on resources, relationships, customers, just about everything. Growth hacking takes that into account, and finds imaginative solutions given those basic parameters. Familiarizing yourself with this way of thinking will likely pay immense dividends in your business ventures, or just everyday life. In your growth hacking endeavors, don’t forget the words of its creator, Sean Ellis, in his reminder to remain dogged in one pursuit, even when you feel pulled in endless directions. Describing the way of the growth hacker, Ellis said: “Everything they do is scrutinized by its potential impact on scalable growth.”
Now all you need to do is get to it.