Below you will discover one of the most innovative marketing concepts today. Although almost unknown in Romania, growth hackers are in high demand in Silicon Valley and other areas with a developed startup ecosystem.
It’s the same marketing concept used by companies like Facebook, Linkedin and Airbnb to get where they are today.
Let’s get started
It was 1996. Sabeer Bhatia and Jack Smith, former Apple engineers, finally managed to find funding for their innovative idea: a web-based email client that anyone could use from anywhere. Nowadays, having a free email client like Gmail or Yahoo! seems normal, but in 1996 it was a major innovation.
Next up was another meeting with the venture capital firm that funded them, Draper Fisher Jurvetson, where the two entrepreneurs were to present their marketing strategy.
At the meeting, they presented all sorts of well-intentioned promotional ideas: radio ads, street banners, etc. To which Draper, one of the backers, replied, “My God! These are very expensive marketing ideas for a product we’re giving away for free! Can’t you find a way to just give it to the other guys on the web?”
Then Draper remembered a case study he discussed while doing his MBA. It was about Multi Level Marketing (MLM) businesses and how they succeed in turning customers into business advocates. After some thought, he asked the founders if they could put a message in the body of each email to help them do just that.
“Oh stop it, you don’t want to do that,” one of the founders replied.
“Okay, okay, but technically can you do it?” asked Draper again.
“Of course we can do it” replied the engineers.
“Good. Then put a message like ‘P.S. I love you. Get your free email from HoTMail” with a link back to our website where they can sign up.”
With a shocked look on their faces and a look that said “of all the investors in the world we hit just this one”, the two engineers said they didn’t even want to hear about it, as there could be backlash, with some people wondering what else they could put in their emails. And besides, who would do that to their product?
Seeing no success, Draper agreed to postpone the discussion. The actual launch of HoTMail followed. Celebrated with pizza and beer, launch day brought the first users of the email service. In the days that followed, new users continued to arrive, but there was no sign of the growth that everyone involved had expected.
Then the founders agreed to include that footnote in the body of each message that stays when you forward to a friend and, if you’re interested, sends you to the HoTMail website where you can sign up too. The impact was almost instantaneous.
Within hours of the change, Hotmail’s growth curve (yes, at this point they dropped the hideous capitalization of some letters) started to look like a hockey stick. They started attracting 3,000 new users a day. Within months they were up to 750,000 and within 6 months of launch they reached 1 million users. In just 2 weeks that number doubled.
In 1998, Microsoft bought Hotmail for about $400,000,000. Not bad for a deal only 2 years old, right?
What happened here? How can you grow so fast with so little money?
Today, the Hotmail example has also become a case study. It has shown us that there are alternatives to traditional promotion methods and that you don’t have to invest huge amounts of money to attract new customers/users.
For example, Hotmail became the biggest email client in Sweden without spending a cent, unlike their competitors at Juno who pumped $20,000,000 into marketing. This can happen if you make the product part of your marketing strategy!
We’ll look at this principle and other equally powerful ones below and see how we can apply them to our business.
What is growth hacking marketing and why we need it?
In this chapter we will try to better understand what growth hacking marketing is, how the concept came about and why it is so important and relevant today.
How did the term growth hacking come about?
Growth hacking is a term introduced by Sean Ellis, a US-based startup growth marketer who couldn’t find a name for this “function” when he wanted to let someone else do it for him.
The name for his job wasn’t marketer, because in a startup that didn’t have the budget of Fortune 500 companies, you couldn’t grow through traditional marketing methods, namely, piles of money pumped into advertising.
He understood that having a product/service that fits like a glove to human needs can become one of the best marketing channels to grow your business. Add a lot of testing, experimentation and measurement and you get something totally different to the way marketing is normally done.
Well, when he was interviewing people to replace him, who had a traditional marketing background, their strategy always included the same tactics for attracting customers, which simply didn’t work for digital and that new generation of business. These marketers had similar ideas to Hotmal’s founders.
So Ellis decided to get rid of the marketer designation and introduced the term “growth hacker.”
It was 2010. At the time, very few marketers could be called growth hackers. But the successes of companies like Facebook, Linkedin, Twitter, AirBnB, and Dropbox were to draw attention to this new approach to marketing.
I was to discover in the 3+ years I’ve been studying this approach that it’s not just tech companies that can benefit from the power of growth hacking, but any marketer or entrepreneur who truly understands the purpose of marketing and is willing to do things differently.
What is growth hacking?
As a new concept, there are a lot of questions that have not yet been answered and an even greater number of questions that have been answered wrong :).
For example, although the word “hacking” brings to mind hackers hacking into the websites of banks or public institutions, growth hacking is not necessarily about programming, but rather about finding other creative means you can use to reach customers and thus “short-circuit” the growth of your business.
If we were to give a definition…
Growth hacking is a new approach in marketing, originating from tech companies, that relies on a lot of testing, measurement, combined with creativity in order to find the best channels to grow a business.
Growth hackers have left aside the classic way of marketing, which involves spending large amounts of money, and focus only on what is testable, measurable and scalable.
But the thing that really makes growth hacking special, and my experience has proven this, is all about attitude.
“Growth, because otherwise…”
Unlike other marketers, growth hackers have one goal: to help the business grow. Usually, that means attracting new customers/users or increasing sales. They don’t care about other terms like branding, top-of-mind awareness and other marketing clichés that, while sounding good, have no real and sustainable impact on the business. These are fine if they show up as side effects, but they will never be a target for a growth hacker.
Why growth hacking?
Growth hacking was born, on the one hand, because of the conditions in which a startup operates, namely the lack of resources. Therefore, the only things that can drive a small business to success are (1) making sure you offer the product people really want, (2) always being focused on attracting new customers, and (3) finding the most effective and easy-to-use marketing channels and strategies.
When I still give trainings or presentations, the question that is never missing is this: What’s the best marketing tactic? What’s the SECRET? The one tip? The ultimate hack?
And then there are the disappointed looks on the faces of those who have asked me, when I nonchalantly tell them “I don’t know”. And how could I? Every company is so different, has its own idiosyncrasies, has its own environment, history, competitors, etc., that it’s impossible for me to answer what will work best for them unless I do a few days, or even weeks, of analysis.
But even then, it would only be an educated guess and not a certainty. Because, let’s be honest, if someone is selling us a sure-fire way to get rich, we should run as far away from him/her as possible.
Another reason why we need growth hacking is because…
What works for others won’t necessarily work for us.
First, the audience, product, business model, etc. all vary from business to business and product to product. Although two businesses may seem similar, what worked for one will not necessarily work for the other if the audience is different.
Secondly, growth is a sum of many factors and there is no ‘silver bullet’ in marketing. We’re all looking for those magic decisions, that moment when the business has started to take an upward turn and has only been growing ever since. But that’s not the only moment to look for.
Case study: How Dropbox went from losing money on every customer to a $10 billion market share
Let me, before I go any further, give you an example to understand what growth hacking looks like in action, in “reality”.
Dropbox, you may have heard of it, is a service that allows you to store your files securely in the cloud and then easily access them from wherever you are and on multiple devices.
Well, when they were just starting out, the folks at Dropbox tried the same marketing strategies as everyone else, one of which was Google Adwords promotion.
The problem came, however, when they calculated how much they needed to pay in total to attract a customer to buy the service and how much they could hope to earn from it. They realised that it cost them almost $300 to get a customer (Acquisition Cost) but they could only hope to earn $90 from it (Lifetime Customer Value).
It wasn’t a very profitable business, was it?
They understood that the only thing they would get out of it was bankruptcy. But then Sean Ellis, one of the first growth hackers, joined the team.
Dropbox changed its strategy from paying to attract customers to using the product itself to bring in new users.
So they came up with a strategy that is very familiar today: they offered free space to users who invited other friends to join the service.
Basically, what they did, and we can all do, was to offer a piece of their product that was valuable to their customers but didn’t cost them much, and thus turned existing customers into business promoters.
The effects didn’t take long to show. Dropbox’s growth curve began to take an upward slope and the rest is history. Today, Dropbox is worth somewhere around $10 billion.
I’d like to emphasize once again the point mentioned above: growth is a sum of many factors.
While we tend to look at an idea like the one above and attribute a company’s success to a moment of inspiration, most of the time it took a lot of testing to come up with that one idea that had exponential effects.
Also, rarely is a single idea enough to keep a company growing for any length of time.
We’re all looking here:
When, in fact, we should be looking at what happened in all these places:
Apart from having a really good product, which doesn’t guarantee success either, I don’t know any magic that can be done in marketing.
Also, if we look at how marketing channels appear and disappear, how their effectiveness rises and falls, if we don’t develop a repeatable and scalable attitude and process within the business, when what we’ve done before no longer works, we risk losing everything.
A graph showing the changing effectiveness of key marketing channels.
What we really need is a marketing machine that is scalable, repeatable and predictable. And this is where growth hacking comes in. With the right attitude and using the process detailed in the following chapters, you can always identify which are the best ways to grow your business that work for you.
And you can do that whenever you need to. Because, in my view, to focus on a tactic is to put the cart before the horse, it is to reverse the natural order of things.
But before we get to the processes, one thing we need to discuss is…
The most important principles in growth hacking
One of the main things that differentiates a growth hacker from other marketers is their mindset. And in this section we’ll get a better understanding of how they think and what their vision of marketing is.
We have seen that there is no universally accepted definition of what growth hacking is. Nor should it. The important thing is to understand what it entails. So, below, we outline the principles by which a growth hacker operates.
Growth, because otherwise…
If you ever hear a “growth hacker” suggest, or agree, with a branding campaign, run away. Or, better yet, say “Thank you and goodbye”.
That’s because the major difference between a growth hacker and a marketer, generally speaking, is the orientation, almost obsession, they have towards growth. For them, branding, notoriety and other vague and hard-to-measure aspects are ok if they appear as side-effects, but the goal will always be to attract new customers or increase the lifetime value of existing ones.
We’ll discuss more about what marketing goals should look like in the next chapter.
If you can’t measure it, it doesn’t exist.
When starting work on a new project, or preparing to test different marketing ideas, a growth hacker will first make sure they can measure the effectiveness of the tactics they try.
For example, for a website, they will make sure they install systems to measure visitor behaviour on the site.
Or, if it’s an offline business, that it can know where a customer came from and whether they bought from it because of a marketing campaign, and not other external factors.
Test, test, test.
A growth hacker is aware and accepts that all the things he believes and bases his decisions on are just assumptions until he comes to validate them. That’s why he will always try multiple approaches and strategies, see what works and then double down on the channel that proves to be the most profitable.
Focus on the customer.
A growth hacker knows that the customer is always right. He will always try to validate his ideas by getting feedback from customers, this feedback coming either from the measurement and analytics systems in place, or by talking to customers live and trying to understand them better.
Especially at the start of a business, this part of getting feedback from customers is crucial!
Because he or she is always looking for new creative ways to grow the business, once a marketing idea is validated, a growth hacker will try to automate it as much as possible so that he or she can focus on other ideas or needs of the company.
For example, if he discovers Facebook as an effective marketing channel, he will create a mechanism whereby every visitor to the site enters a sales funnel, and depending on their behaviour and stage, will see certain messages on Facebook that will lead them closer to a purchase.
With a hacker mentality, marketers who adopt this concept are always trying to find easier ways to achieve their goals. Although they test many ideas and tactics, they will focus on the 20% that bring 80% of the results.
They know that a startup doesn’t have enough resources (be it financial or human) to work on many fronts, so they will find those methods that bring the best results with minimal investment.
To put all these principles into practice we need to move on to…
The process of growth hacking
If we want to always find the best channels and ideas for business growth, we need a scalable and repeatable marketing machine.
Budgets do not allow us to invest in all marketing ideas, so the question arises: what strategy, what method of promotion should I choose for my business?
Unfortunately, this has also led to an obsession with tactics, with easy tricks. We live in a world of hack-tricks where we are only looking for solutions that will magically work overnight. It’s enough to log on to a marketing or entrepreneurship blog and look at the most popular articles.
But the problem is that by only pursuing superficial ideas and tactics, we’ll never end up developing sustainable internal solutions for our business. And at a time when the effectiveness of marketing channels changes from day to day, we need something that will constantly help us grow our business.
1. Define actionable objectives and come up with ideas
When we actually want to find new ways to grow our business, whether that means attracting new customers or converting them better, the first thing we need to do is define a very specific goal. Let me repeat: very specific!
In other words, “we want more customers” doesn’t help, but “increase the conversion rate of customers coming through Google Adwords from 2.7% to 5%” is great.
“Let’s increase business” will never be a direct goal, but it will be the result of all the other specific goals.
My point here is to not limit yourself to goals related to attracting customers. Those at the bottom of the sales funnel are much more important. Let’s try an example to understand better:
Let’s say we get 1,000 people a day on our website, of which 100 end up on the product page and 10 buy. That means we have a final conversion rate of 1%.
And let’s say that for these 1000 people who visit our website every day we pay 1000 lei on Facebook Advertising.
If we want to double sales, we’ll have to increase traffic to the site to 2000 people, that means double costs.
But a much better alternative would be to focus on conversion rate optimisation. For example, if we can get 1,000 people to come to the site and 200 to the product page, we have double sales. If we also manage to increase the conversion rate from 1% to 2%, we end up with 40 customers, an increase of 400% without spending on more traffic to the website.
When setting goals, it’s important to steer clear of vanity indicators. Eric Ries, in his book LEAN Startup, one of the foundational books for entrepreneurship in the 21st century, draws a lot of attention to these. “Vanity indicators” are numbers that may be easy to track and usually grow, but they don’t really reveal how our business is doing, nor can they tell us what we’ve done well and what we haven’t.
For example, indicators such as the total number of visitors/users are often used as a benchmark. Or they tell us very little about how our product or business is really doing.
It may well be that even though the number is growing, those who use the product may not return a second time, or may use it very little. By no means do more visitors mean more sales.
While the ultimate goal is growth, you can’t achieve it if you don’t break it down into smaller, data-driven goals. It’s often hard to tell if a goal is specific enough or not. A good way to check this is to think of it as a hierarchy. We need to get as close to the bottom as possible, so that the final objective can be identified by a single task.
Focus on one goal at a time and you’ll see how slowly, slowly, they will show up in sales.
Once we’ve set our goal, it’s time to come up with ideas on how to achieve it. This is where I recommend brainstorming with your team or (if you’re working alone) spending a few days trying to come up with ideas.
I’ve found that it’s most effective to organize ideas visually and add a little context to each one: more details about the idea, where it came from, why you think it works. We most often use Trello and Google Drive for this stage.
At this stage, gather as many ideas as possible relevant to the specific objective previously set.
More on marketing tactics and growth hacking, especially on the customer acquisition side, will be discussed in the next chapter.
Now it’s time to talk about the next step in the process:
Case study growth hacking – Airbnb
Airbnb is, in my view, the best example of growth hacking in action. From mindset, to processes and organisational culture, they were trained from the start to market differently.
The Airbnb Case – A Growth Story You Didn’t Know About
In 2007, designers Brian Chesky and Joe Gebbia could no longer afford the rent on their San Francisco apartment. To make ends meet, they decided to rent out their living room to people travelling in the city.
A design conference was being held in the city at the time, and accommodations were limited. Because posting the ad on Craigslist (a US classifieds site) seemed too impersonal, they decided to create their own website.
So a simple website was born, where they presented their offer: their living room furnished with a few mattresses and the promise of a cooked breakfast the next morning.
They had their first “customers”. Only, in the following days, something started to happen. They started receiving emails from people in other parts of the world asking when the site would be made available in their country.
That was the modest beginning of what would become Airbnb, which today is worth $30 billion, almost as much as hospitality giants Hyatt and Hilton combined.
Airbnb is a platform available in over 190 countries that facilitates home rentals. It allows you, on the one hand, if you have an apartment or a room available to list it on the platform, and on the other hand, you can find tenants for it and have another source of income.
On the other hand, it allows you to easily find rentals when travelling to other cities or countries at a lower price than a hotel, plus you are more likely to enjoy an authentic local experience.
How Airbnb grew?
The AirBnB story is a complex one, taking us from the sheer perseverance of the founders who struggled to keep the company afloat, to an offline approach when the situation demanded it, even though they are a digital company, to hacking and complex algorithms. Airbnb is the perfect example of what growth hacking is all about: a growth-oriented attitude, the discipline of knowledge, and combining it with creativity and hard work.
Early evidence that Airbnb’s founders were prepared to do things differently can be seen in the very early days of the company.
Being just starting out and needing money to live and invest in their new venture, the two founders bought a ton of cereal and created a collection of boxes themed around the US election (which was happening at the time).
They raised about $30,000 which helped them sustain themselves because their website still didn’t have much traction.
Hacker mentality kicks in
One of the main challenges of Airbnb, and other platform businesses, is that it has to provide both the demand and supply sides. They have to make sure they have both apartments on their site that can be rented and people to rent them.
This usually creates a Catch 22 problem for founders. In order to attract more listings on their site they need more traffic from people who want to rent apartments, and to attract these visitors they need as rich a supply of rental housing as possible.
And so came one of Airbnb’s most ingenious marketing tactics. In order to increase the number of visitors to the site and thus ensure that apartment listings find customers, Airbnb created an integration with Craigslist, a US-based classifieds site, which is one of the most visited sites in the world at the time.
Basically, after posting your ad on Airbnb you had the option, by pressing a button, to post the same ad on Craigslist.
Ads posted on Craigslist linked back to Airbnb. So you could benefit from the exposure the listing site gave you, but you increased your chances of renting because of the better design Airbnb had, and you could use the platform to manage your rentals more easily.
You have to understand that this tactic was implemented at a time when no one else knew the concept of API integration.
For a traditional marketer, such an idea would have been impossible to conceive. Firstly, because you needed a technical background to even imagine the idea.
That’s why I say growth hacking is a fundamental break from the way we view marketing and entrepreneurship. Airbnb could try online or TV ads to promote their platform. Instead, they took a very targeted approach and went exactly where the attention of potential users was.
Measure and do things that don’t scale
Another crucial moment for Airbnb’s growth that I think we should dwell on is a few years down the road. At the time, the platform was focused on international growth.
But France proved to be a tough market for them. Although tourism is a huge industry in the country, the French didn’t rush to list their homes on the new online platform.
So Airbnb set up a team to deal directly with the country and took two different, even opposing, approaches.
On the one hand they tried digital methods. They focused mainly on online ads promoting the platform and its benefits.
On the other hand, they had an “offline” team. This team took a less scalable approach. They talked to Airbnb users who had already listed their accommodation to understand their motivation and any difficulties they encountered.
They also organised various parties and events where the product was presented, handed out promotional materials, offered to create the listing themselves and the owner just gave their OK to publish, etc. Or, as one company representative put it, “they did whatever it took”.
But Airbnb didn’t simply try these two approaches hoping for success and then move on. They set up their metrics, meticulously documented each thing they tried and how much it cost them.
To my surprise at least, the “offline” team proved to be 2x more cost effective in attracting new users to the platform.
This example shows how important it is to measure everything. As growth hackers, we’re usually inclined to go straight digital. But sometimes it pays to do things that “don’t scale,” things that can’t be immediately applied to tens or hundreds of thousands of other people. By talking to people we can better discover their needs and what’s stopping them from using our product.
While we’re on the subject of measurement. Growth Hacking is always identified with the ultimate ideas that influenced the growth of a business with the ideas we call the most “creative”, most wow. But there’s usually a lot of testing and numbers behind them that make your head hurt.
The picture above isn’t necessarily “sexy” and if al wrote an article about what’s behind it it probably wouldn’t even be read by my team. But it’s the one that gives the Airbnb team the most important information about how we use the platform and what they can do to improve our experience. You can read more about the Airbnb experience here.
Product is always the best marketing tactic
Another thing that was extremely important to the founders of Airbnb, right from the start, was the customer experience. The breakfasts they offered to those staying in their apartments were a testament to this principle.
This orientation later led them to yet another idea that impacted Airbnb majorly.
Still in their early days, they noticed that there was a large discrepancy between the number of rentals that apartments had. Some of them were attracting a lot of renters, while others were almost completely failing to do so.
Spending time and analyzing the listings, the founders noticed that the listings that had quality pictures were by far the best rented.
And after all, that’s only natural, right? We want to clearly see what the place we’re going to spend our vacation looks like, we don’t just want to see a dark picture taken with a cell phone on the fly.
So Airbnb hired some photographers to go and take pictures of the listed apartments.
The impact was instant:
After seeing the success of this idea, they hired freelance photographers around the world to go and take photos of the apartments.
I hope that I have succeeded, through this case study on Airbnb to exemplify all the points mentioned above, both related to the principles of growth hacking and to understand why a process is crucial for rapid and especially sustainable growth.
The success of Airbnb, and other companies using growth hacking, is not due to a single idea or tactic. There have always been multiple ideas whose cumulative impact has led to exponential growth. And behind those ideas is a team and an organizational culture that understands that marketing needs to be done differently.
Growth hacking ideas and tactics
To help you attract new customers, we’ve put together a massive list of the most popular growth hacking ideas and strategies. From inbound marketing to product usage, this list will be your marketing team’s main source of inspiration.
Before we can actually start implementing a marketing campaign, whether we use growth hacking or not, we need to answer 3 crucial questions:
Who is the customer?
What needs does the customer have?
Where is the customer’s attention?
Although they seem like trivial questions, you’d be amazed how often we miss them. But by answering them correctly, we will be more aware of the whole framework within which our marketing campaign is taking place and we will always be able to check whether what we are doing is strategically effective or we are blindly trying to find something that “works”.
For every growth hacking goal we set and every experiment we run, there are a multitude of techniques and methods we can use.
Next, we will review 3 categories of marketing and growth hacking tactics and approaches that can be used to grow our business:
- – attract customers to the product,
- – push them towards the product and
- – use the product itself to reach them.
These are focused on the attraction side of the business, because “that’s what the public demanded”, but I stress again the importance of optimising the sales funnel from the bottom up, from conversions and retention, towards attraction.
We’ll see that in between these techniques we discover other marketing concepts already known. These include inbound marketing, search engine optimization, paid campaigns, etc. All need to be used together to help the product grow.
There are a multitude of marketing ideas and strategies you can use to achieve your goals.