Growth Hacking sounds like another buzzword to add to your resume on LinkedIn. Isn’t everyone a hacker nowadays? Despite this unfortunate naming, it is a really useful concept to know about and to have it: You bring marketers, engineers, data-, product- and business-people together on a team to run data-driven experiments to improve your product, customer acquisition, activation and retention.

There are many of things I like about this concept. First, growth hacking is not about pulling dirty tricks (or hacks) on people to get them onto your product or to magically make some crappy thing go viral. You need to get a product-market-fit first to lay the foundation for any further growth hacking effort. This means that your product must give enough value for the customers already - that they would be really sad if the product disappeared. If that is not the case, your main responsibility would be to achieve that (e.g. by conducting interviews or surveys) before doing any marketing or growth hacking.

Further, I like that very cross-organizational teams with different skills are proposed. Marketing does not mean only marketing anymore, but different non-traditional skill sets play a part. Ideas for improvement can come from engineers, product owners, sales people, designers, data analysts as well as support staff. They can test these ideas in A/B experiments and analyze data to get insights. Also, the responsibility of this cross-sectional team does not stop at customer acquisition but also includes onboarding, customer retention and further things that can be optimsed. Quite a different thing from classical marketing that plans campaigns and blows hundreds of thousands on TV or AdWords. Being an engineer, this data-driven effort looks much nobler and more sustainable to me.

Growth Hacker Marketing

Ryan Holiday has written a short and easy to read primer on growth marketing (Growth Hacker Marketing). He contrasts big blockbuster movie launches, where you spend a lot on a big bang moment, with the continuous efforts of growth hacking and showcases successful growth hacks (yes, they are unfortunately called that way) such as adding invites to sign up at the bottom of every email message or the annoying “sent from my iPhone” spam (which was a success too). Those hacks can lead to an exponential growth with very little marketing efforts.

He summarizes the advantages of growth hacking:

“Whereas marketing was once brand based, with growth hacking it becomes metric and ROI driven. Suddenly, finding customers and getting attention for your product become no longer a guessing game. But this is more than just marketing with better metrics. Growth hackers trace their roots back to programmers—and that’s how they see themselves. They are data scientists meets design fiends meets marketers. They welcome this information, process it and utilize it differently, and see it as desperately needed clarity in a world that has been dominated by gut instincts and artistic preference for too long.”

The first step to achieving great and sustainable growth is to have a good product market fit. Many now-successful startups had to pivot before they hit the sweet spot that turned their apps into successes. That often happened by analyzing user data and improving their existing product from user feedback.

Ryan Holiday gives a case in point on product market fit:

“Much of the marketing I do is with authors and books. I’ve worked with dozens of bestsellers in the last five years—and, of course, many that weren’t successful. In my experience, the books that tend to flop upon release are those where the author goes into a cave for a year to write it, then hands it off to the publisher for release. They hope for a hit that rarely comes. On the other hand, I have clients who blog extensively before publishing. They develop their book ideas based on the themes that they naturally gravitate toward but that also get the greatest response from readers (one client sold a book proposal using a screenshot of Google queries to his site). They test the ideas they’re writing about in the book on their blog and when they speak in front of groups. They ask readers what they’d like to see in the book. They judge topic ideas by how many comments a given post generates, by how many Facebook “shares” an article gets. They put potential title and cover ideas up online to test and receive feedback. They look to see what hot topics other influential bloggers are riding and find ways of addressing them in their book. The latter achieves PMF; the former never does. One is growth hacking; the other, simply guessing.“

When you have ensured that you have a worthwhile product, you have good chances to achieve growth. As the author is a VP of marketing, he highlights that the old mindset would be that you start a big campaign to get eyeballs everywhere, while the new approach is rather targeted to a niche market. It can even be as small as finding your target customers by one and invite them to your service to build eventually a large number of passionate users.

When you want to achieve virality at a later stage, you need to give customers something worth sharing in the first place and provoke desire to share it (and you must make it easy to share it too).

“You can’t just expect your users to become evangelists of your product—you’ve got to provide the incentives and the platform for them to do so. Virality is not an accident. It is engineered. But we don’t simply set up viral features and hope they work. Keeping our growth engine going is a step unto itself. We must dive deeply into the analytics available to us and refine, refine, refine until we get maximum results.”

The fourth part of the book is about user retention and optimization, something that isn’t usually considered as core-marketing. User retention is one of the most important metrics for long-term growth and profitability:

“According to Bain & Company, a 5 percent increase in customer retention can mean a 30 percent increase in profitability for the company. And according to Market Metrics, the probability of selling to an existing customer is 60–70 percent, while to a new prospect it’s just 5–20 percent. Bronson Taylor, host of Growth Hacker TV, puts it in a phrase: “Retention trumps acquisition.””

There are always things that you can work on to improve your user experience when you are lacking growth and virality:

“Forget the conventional wisdom that says if a company lacks growth, it should invest more in sales and marketing. Instead, it should invest in refining and improving the service itself until users are so happy that they can’t stop using the service (and their friends come along with them).”

In the conclusion of the book, the author gives a compelling example how he worked with Tim Ferriss on the book “The Four Hour Chef". Here is an excerpt:

“Even Tim’s editing was data driven. Though the final book was roughly six hundred pages long, the early drafts were much closer to eight hundred. Those cuts weren’t made by gut instinct, but methodically. Tim used tools like SurveyMonkey and Wufoo to ask friends and colleagues about the sections they responded to most. We tested the back cover and subtitle repeatedly. Before a section was cut or added, multiple readers of the manuscript had to agree.”

They even selected popular fitting blogs from Alexa or crafted a package with sample chapters and videos that was distributed through BitTorrent.

If using this process for something like publishing a book is possible, there seems to be virtually no industry left that could benefit from this analytical approach.

What’s Next

It is just me who is new to this topic, there many resources and meetup groups available. Having gained enthusiasm and a basic idea of growth hacking, I read Hacking Growth by Sean Ellis and Morgan Brown. Their book is much more in depth and has a lot organizational and practical advice. Especially when you have already a startup or company that has so many resources that it can put some six people on a growth team, the first chapter describes the types of people needed and how to embed them organizationally.

The second chapter is about testing if your product is already so good (a “must-have”) that it actually makes sense to put growth marketing on it. They offer ideas what to do to find out if you have a product-market-fit and what to do if not (e.g. ask your customers how they would feel if the app/service would disappear and if they were disappointed).

Also, they coin the term “aha-moment” that is used throughout the book:

“This is the moment that the utility of the product really clicks for the users; when the users really get the core value—what the product is for, why they need it, and what benefit they derive from using it. Or in other words, why that product is a “must-have.” As a company you need to understand what is needed that your customers get to the aha-moment.

That may be to edit 5 videos in your app or add 30 friends before people understand your real value to them. Another measure whether your app is a must-have is your retention rate. If it is low, go back and improve your product first.

The third chapter describes how to find the most important metrics for your business – the so-called “north-star metrics” or your growth levers.

“Creating an aha moment and driving more people to it is the starting point for hacking growth. The next step is to determine your growth strategy. You have to understand exactly how you’re going to drive growth—what your growth levers are and whether they are the right ones to achieve desired results—before you move into high-tempo testing of growth ideas. Doing so will make the difference between strong sustained growth that is of real, revenue-generating value and illusory growth that sputters out.” Different metrics will matter for different companies (Ebay would for instance care about the number of products sold while Uber about the number of rides or available drivers).

The fourth chapter is about the growth hacking cycle (analyse -> ideate -> prioritise -> test -> analyse) and how to set it up in a practical and organizational context.

The second part of the book (chapters 5-9) is about different areas growth hackers can (and should) work on: acquisition (attracting potential customers), activation (how to engage your customers as most mobile apps lose 80% of their users within three days again), retention (minimizing churn) and monetization (increase customer lifetime value) and avoiding growth stalls or other pitfalls.

Conclusion

I just covered a little some growth hacking concepts, emphasizing the points that I am currently more interested in (making the text a bit repetitive).

To someone who is new to marketing, this topic seems quite daunting, especially if you don’t have a team of specialists. Reminds me a bit of the good old data science days where people were looking for unicorns (or experts of all traits) that can do several hard disciplines at once before recognizing that data science should be team effort (which, to be fair, is pointed out here).

Overall, I like this concept more than the standard marketing curriculum. It seems to be a better approach when starting out to learn it or starting your own marketing efforts.