In the last few years, the term “growth hacking” has become a buzzword of sorts, and has become one of the most sought after marketing strategies among startups and nascent firms.
Despite its popularity, few people actually know what the term means or have an understanding of how growth hack techniques work to boost the success of their project or business.
Here, we demystify one of the most cost-effective routes to growth there is, helping you decide the best path for your business.
Growth Hacking Definition
The term “growth hacking” was first coined by entrepreneur and angel investor Sean Ellis back in 2010 when describing the techniques used to help businesses grow. Growth hacking aims to help startups, as well as larger firms, rapidly gain users, revenue, popularity, or improve other important metrics as quickly and efficiently as possible, often by using unconventional techniques.
Growth hacking is found at the interface of marketing and data analysis, since growth hackers will typically use a combination of marketing experimentation and A/B testing to generate data on what works and what doesn’t — then using this data to further refine their approaches to maximize their results.
Growth hackers typically employ the following five pillars as part of their process:
- Analyze: In this step, the growth hacker collects data on the client and their target consumers. This will include using a variety of third-party and often proprietary tools to audit the client, gauge interest, and uncover actionable insights.
- Hypothesize: Next, the growth hacker will interpret the data that was uncovered and use it to form one or more hypotheses about how best to leverage the strengths of the project, the tools and skills available, and any assets at hand to achieve considerable growth in the target metrics.
- Strategize: The third step in the growth hacking process sees the growth hacker or agency generate a series of strategies used to test the hypothesis and gather further data. Typically different strategies will target different parts of the consumer relationship funnel and will have directly measurable outcomes. There may be multiple strategies developed to test each hypothesis, for the purposes of A/B testing.
- Execute: Once the strategies have been defined, next up is the testing stage. This involves testing each strategy on a small scale to see what works and what doesn’t. Initial strategies should always be designed to be quick and cheap to test, with the potential to scale up if successful.
- Review: Data from the execution step is collected, analyzed and used to either refine the current strategy, or prompt the development of a new one. This process is repeated until the expected results are seen.
What is a Growth Hacking Agency?
Growth hacking agencies are marketing firms that employ one or more experienced growth hackers tasked with helping clients achieve their growth goals.
These firms generally have a wealth of experience in driving ambitious marketing plans and have developed a range of tried and tested, as well as more experimental strategies designed to drive traffic, onboard users, improve market positioning, and more — typically for a fraction of the cost of a traditional digital marketing strategy.
As the name suggests, growth marketing agencies understand what it takes to help businesses grow. This includes helping clients find their niche, solve long-standing problems hindering their growth, and attract and retain the users and customers they are looking for.
Unlike traditional marketing firms, growth hacking agencies focus on short to medium-term timeframes and push for dramatic results quickly. Because of this, clients can generally see the results of growth marketing efforts in just days and weeks, rather than months or years for some less-effective, older marketing strategies.
Growth hacking agencies typically offer two main services:
Growth hacking packages that see their team of growth hack experts formulate, execute, and iterate a growth strategy custom-designed for the client’s needs. These packages are usually offered for either a fixed period of time or until specific milestones are reached — such as a 100% growth in active users or tripling social media engagements.
Consultancy services designed to help clients build a growth mindset and identify the opportunities for sustainable, cost-effective growth. This service typically involves discussing key performance indicators (KPIs), brainstorming areas for improvement, and nailing down the next steps to achieve growth with one or more growth hacking consultants.
Growth Hacking and Digital Marketing: What’s the Difference?
Although there is considerable overlap between growth hacking and digital marketing, there are some major differences you will want to be aware of.
On one side, digital marketing aims to help grow the awareness of a product, brand or service through digital mediums, like social media platforms and online news outlets, helping to build awareness and acquire new users. This might be achieved using a variety of strategies, including content marketing, search engine optimization (SEO), and paid search (PPC) — with little focus on data analysis and optimizing return on investment (ROI).
On the other side, growth hacking focuses on the entire lifecycle of a user or customer, including awareness, acquisition, activation, retention, referral, and revenue (AAARRR). Growth hacking is a tech and data-driven approach to growth, as growth hacking agencies leverage the latest tools, models, and techniques to tackle every layer of the sales funnel, ensuring the budget is spent as efficiently as possible while still generating strong results.
Unlike digital marketing which typically relies solely on tried and tested advertising and conversion strategies, growth hackers are not afraid to think outside the box, and will often create original, creative methods to push for growth in any layer of the AAARRR funnel.
Top growth hackers might use any combination of a wide variety of strategies, which might include influencer marketing, giveaways, targeting niche communities, and selective incentivization to boost the appeal of a product or service and supercharge the onboarding rate.
During their assignment, growth hackers will typically run several experiments to see which system works best to generate growth. This might involve A/B testing already established strategies, targeting unexplored markets and communities, gathering data and feeding the results of these back into the AAARRR funnel.
Growth Hacking Benefits
Although the main benefit of growth hacking is a lean, efficient pathway to improving your positioning in the market, there are a variety of other less obvious benefits to consider:
- Low cost: Growth hacking is often focused on achieving the best bang for the buck, making it accessible to startups and projects with a limited marketing budget. Most growth hacking campaigns can be executed by just a single growth hacker, thanks to pragmatic use of automation and professional marketing toolkits.
- Transparent: Most growth hackers use a wide variety of tools and analytics solutions to directly measure the effectiveness of their efforts. This gives them the insights needed to refine strategies, while also allowing the clients to easily keep track of progress and manage their budget.
- SEO: Although growth hacking isn’t primarily focused on building SEO for the most part, most strategies will pay dividends in improved search ranking, which can continue for long after growth hacking stops.
- Retain customers: Growth hacking is mostly concerned with growing a customer, user base, or other key metric as fast and cheaply as possible. But an effective growth marketing strategy also takes steps to retain and upsell current customers, improving revenues in more ways than one.
Before You Begin
Before beginning growth hacking, it’s important to understand that growth hacking will only work if the product or service you offer is actually desirable. Growth hacking is simply designed to maximize the number of conversions and users in as short of a timeframe as possible, but if there is an extremely limited potential user base, then it may be ineffective.
Because of this, it’s wise to take some time out to optimize your value proposition before hiring a growth hacking agency or starting growth hacking yourself. This might involve performing a competitor analysis to ensure your unique selling proposition is solid, performing in-depth research on the potential size of your target demographic, and ensuring any public-facing parts of your platform are attractive and easy to navigate.
Most of all, it’s important to test that your revenue model works, and is appropriate to the product or service you are looking to sell. Don’t be afraid to go back to the drawing board or ask your current customers, investors, and advisors for feedback to help make your product more marketable — it could pay off in the long-run.
Choosing a Growth Hacking Agency
Once you’ve nailed down the fundamentals and decided that you’re going to hire an agency to handle your growth hacking needs, it’s time to pick the one that is best to help grow your business and execute a tailored growth hacking marketing strategy.
The first thing you will need to look out for is experience. Is the agency you’re considering experienced in generating impressive results on a tight budget? Can they provide examples of the results they have produced and nail down the rough costs before signing the agreement? Are you willing to show you their content marketing examples? Don’t be afraid to ask for proof of their past performance.
It’s also important to be upfront with the agency about your budget, as this can significantly impact how successful a growth hacking strategy will be. Although growth hacking is by far the most cost-effective way to pull in customers and grow a brand, it’s not magic. Your growth partners will need to know what they are working with to design the best strategy for you.
You will also want to take a look at the team’s credentials. How long have they been in the marketing business? Have they worked with any prestigious firms in the past and can they provide references? Pay particular attention to their technical competence, since data analysis and programming skills can help with maximizing your ROI.
Finally, it’s always a good idea to nail down some KPIs as early as possible. For the first few days this might be simply producing a plan and laying down the groundwork, but soon after you’ll want to see results. Remember, growth hacking should get results fast (think days or weeks), and that’s what you should expect.
Growth Hacking Examples
Since growth hacking was first popularized more than a decade ago there have been numerous examples of extremely successful growth hacking efforts, some of our favorite success stories include:
LinkedIn: One of LinkedIn’s primary revenue drivers is its premium plan. The business networking platforms gives each user a small taste of premium features, and then teases them with potential contacts they’re missing out on to invoke FOMO (fear of missing out) to drive further subscriptions.
YouTube: Managed to grow its user base considerably between 2010 and 2020 by allowing users to easily share their own and other content on other websites using embed links.
Binance: Despite launching in just 2017, Binance is now regarded as by far the largest cryptocurrency spot exchange in operation and has racked up over $1 billion in cumulative profit. How? you might ask. Binance launched with its own native crypto token known as Binance Coin (BNB), which it funneled towards a variety of use-cases aimed at providing value to holders, who in turn helped spread the word and grow the platform.
TikTok: Between 2015 and 2018 TikTok leapfrogged other popular social media apps including Tumblr and Twitch thanks to its extensive cross-platform promotion and unique visual appeal that made it popular among millennials.
Mint.com: One of the most successful personal finance companies in the US and Canada achieved much of its success thanks to an aggressive content marketing plan consisting of well-written, actionable articles providing investment advice, money saving tips, and more — making them perfect for sharing (and growing the brand authority).
Dropbox: Provided additional storage space to users that connect their social media accounts to the platform and refer the service to their friends, family, and colleagues. This also helped to retain customers by providing them with added value.
Brave: This up-and-coming blockchain enabled internet browser managed to grow its user base from zero up to 8.7 million active monthly users between 2018 and November 2019. Since then, the platform has more than doubled in size, thanks to an aggressive growth marketing strategy focused on demonstrating how much users could earn by switching the Brave.
Dollar Shave Club: Created a humorous marketing video that went viral on several content sharing platforms — racking up more than 26 million views. After gaining 3.2 million subscribers, the startup was purchased by Unilever for a $1 billion cash deal.