An Introduction to Growth Hacking

An Introduction to Growth Hacking

How many growth hackers have you met all these years?

Let me guess — many.

These are the same people who jumped into the “Blockchain ship” when it was a hype and the same who will join (something like) the Cannabis industry soon enough.

But, growth hacking is NOT another hype or marketing buzzword and growth hackers are not dark magicians.

It’s a methodology and a process above all.

If you want to know what is growth hacking really all about, just keep reading.

Contents

Chapter 1: The Problem

Chapter 2: Growth Hacking Definition

Chapter 3: Growth Hacking Examples

Chapter 4: Growth Hacking Process

Chapter 5: Growth Hacking and the Pirate Funnel (AARRR)

Chapter 6: Last Thoughts

The Problem

The first traditional marketing strategies were introduced the time of the industrial revolution, which began in the 18th century.

Since then, marketing has evolved, passed through various stages and transformed into what we all know today.

Direct marketing, inbound marketing, outbound marketing, Email marketing, content marketing, search engine optimisation (SEO) or search engine marketing (SEM) are all marketing concepts that were widely used and misused.

The problem with traditional marketing campaigns was that (most of the times) they were not data-driven, didn’t involve experimentation and were aiming at the short run rather than the long term.

At the same time, traditional marketers focused on one thing at a time — for example, to generate awareness about a particular product or service.

The only problem?

The lack of a holistic approach to marketing products and services —

Growth hacking comes to give a solution to that problem, by focusing on the whole customer journey, the entire funnel.

Instead of just helping us bring in new customers, it also helps us retain them and make them be a promoter of our products and services.

Besides, growth hacking uses rapid experimentation and data-driven decisions to drive growth for a startup or an established business.

Growth Hacking: Definition

If you’ve ever heard of the term growth hacking, then you probably know Sean Ellis.

Sean Ellis is the man who coined the term growth hacking back in 2010.

He is a leading authority in growth hacking and has helped many startups and established businesses drive hyper-growth.

A few things you should know about him:

  • He invented the term in an attempt to ignite exponential growth for companies like Dropbox, Eventbrite, LogMeln and Lookout,
  • He is the author of the book Hacking Growth,
  • He is the Founder and CEO at GrowthHackers, a worldwide community that helps growth teams drive growth for stellar products and services,
  • He built and sold Qualaroo as Founder and CEO.

Let’s see a clear and understandable explanation of what growth hacking is:

Growth hacking is a process of rapid experimentation across channels, stages of the customer journey, product development paths and sales processes that help us identify the most efficient ways to grow a business.

As I hope is evident by now, growth hacking can help us determine the ways and channels that can drive growth for our business.

Equally crucial to growth hacking is the term growth hacker.

Now, you may be wondering:

What is a growth hacker?

As Sean Ellis defines it in his original 2010 post:

“A growth hacker is a person whose true north is growth.”

It is essential to understand that a growth hacker is not better than a marketer — nor it’s a supplementary role for a marketer — a growth hacker is just something different.

While traditional marketers are focused on promoting products and services, growth hackers are focused on growth.

Every decision growth hackers take, is data-driven and every experiment they run has an absolute purpose: to drive growth for a startup or established business. 

Growth Hacking Examples

This is the part where we present some of the most popular growth hacking examples.

We will present successful growth strategies executed by companies such as:

  • Hotmail
  • Dropbox
  • Twitter
  • Airbnb
  • Listerine

1) Hotmail

Hotmail was an Email service provider — it is one of the most popular growth hacking examples, using backlinks as a way to generate product awareness and acquire new users.

If you were born in the ’80s, then you’ve probably heard of Hotmail — chances are that you also had an account.

Hotmail was launched in 1996 by Jack Smith and Sabeer Bhatia as “HoTMAiL” (referencing HTML).

On December 29, 1997, Microsoft acquired Hotmail for $450 Million, and since then, the company has witnessed exponential growth that is worth mentioning up until this day.

But, how did they attained such growth — growth that leads Microsoft to want to acquire their company?

They added a simple note with a link to Hotmail’s landing page at the bottom of every Email. The note was:

Hotmail

The result?

Twelve million users in 1.5 years and acquisition by Microsoft.

2) Dropbox

Another classic growth hacking example is Dropbox.

Now, if you are into the tech/ startup community for a while, then you definitely have heard of Dropbox.

Odds are that you are using it for data storage purposes.

What is interesting about Dropbox — except for the fact that the company’s CEO Drew Houston turned down an acquisition offer by Steve Jobs — is how it managed to grow its user base to almost 500 Million users, while in the beginning, it was struggling to get new users and new customers.

Dropbox’s success is based on the company’s growth strategy, countless experiments and growth hacking tactics that were implemented throughout the years.

Keep in mind that Dropbox has tried to find its engine of growth using various traditional ways — for example, it used advertising with the Cost per Acquisition (CPA) to be $233-$388 for a $99 product.

How Dropbox managed to grow so fast in numbers?

It used a simple referral program, were the user had to invite their friends to Dropbox, in exchange for free space.

Dropbox Referral Program

This simple (but yet ingenious) hack, allowed Dropbox to grow its user base from 100,000 to 4 Million users in 15 months.

3) Twitter

Twitter is another example of exponential growth through rapid experimentation and the use of unconventional methods and growth hacking techniques.

What helped Twitter get from a few thousand users in March 2006 when the service was created to a huge 150,000 user base one year later?

The main problem that Twitter had to deal with in its early days was that even though there were many new sign-ups via referrals and media, many of these sign-ups were turned out to “zombie accounts”.

What Twitter did was that it prompted new users to manually select and follow 5-10 Twitter accounts, in their first day on Twitter — that little thing played a vital role in the engagement and growth of Twitter in the days that followed.

4) Airbnb

Airbnb’s growth strategy is well known to most marketers and founders.

Not doubt it, Airbnb used to struggle too in its first days after creation — but, the company’s dedication and use (once again) of unconventional growth hacking tools and tactics contributed into making it one of the most bright growth hacking examples.

So, how did Airbnb managed to attain exponential growth?

The competition from other Silicon Valley companies and the lack of a solid marketing strategy was what lead Airbnb use Craigslist to promote its users’ rooms and apartments to get initial traction.

What Airbnb did was, is that it integrated its platform with Craiglist so that users can post their Airbnb listing directly on Craigslist:

Airbnb Craigslist Listing Email

They used Craigslist as a growth hacking tool to get initial traction to their users’ listing and managed to reach:

  • 5 Million listings worldwide,
  • 81K cities with Airbnb listings,
  • More than 191 countries with Airbnb listings worldwide.

Airbnb’s story shows us that many times growth can come from sources that were never used before and that may seem unpromising in the first place.

5) Listerine

At this point, you may be wondering:

What is Listerine has to do with SaaS, tech-companies and growth hacking?

Well, let’s just say that Listerine used one of the first growth hacks ever.

The story began in 1921 when George Lambert, the son of Listerine founder Jordan W. Lambert coined the term “halitosis” as a way to describe bad breath.

The term consists of the Latin word for breath “halitus”, combined with the medical ending “osis”.

What the company managed to achieve, is that it gave a name to something that wasn’t even a medical condition.

Here is how the Ad for Halitosis looked like back then:

Listerine Halitosis

The rest is history, but we can say for sure that this growth hack played a key role in the company’s growth in the following years.

Many tech-companies like Quora, Hubspot, Groupon, Kissmetrics or LinkedIn have implemented similar growth hacking tactics and used unexploited (until then) growth hacking tools to drive growth.

All the above examples can give you an idea of what growth hacking is, and that (most of the times) it costs less than a traditional marketing campaign. 

Growth Hacking Process

A key element of growth hacking (that is widely misinterpreted) is the use of unorthodox tactics which — unlikely to traditional marketing — are based on informed and data-driven decisions.

Make no mistake — some of the best growth hacking tactics seemed unconventional when they were first implemented.

The good thing about the growth hacking process is that (almost) every company can implement it.

It is of paramount importance to understand that, in general, a growth hacking process can be applied after a startup business has found product-market fit.

We are not going to cover the growth hacking process in detail in this article, but we will try to give you an overview of what the necessary steps are — the same process applies for both B2B and B2C companies.

  1. Define actionable goals and KPIs: Every growth hacking process should start by setting goals and KPIs that are not vague
  2. Set up your tracking and analytics system: To measure the performance of your strategy and track what is important to you
  3. Define traction channels and mediums: Startup growth comes from specific channels — channels that you have to define before the experimentation process
  4. Set up and execute your experiment: To grow you have to test, and test means you have to experiment
  5. Monitor results and optimise your experiment: Leverage a/b testing and use results to make data-driven decisions so that you optimise your experiment
  6. Analyse results, refine, repeat: By seeing what is working and what is not working, you will be able to improve your strategy and repeat the process until you start seeing actual progress

One of the most common excuses for companies that are refused to systemize growth hacking and put it into a process is the lack of data.

But, as Amazon CEO, Jeff Bezos puts it:

“Most decisions should be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably slow.”

In addition to that, we often see companies that want to drive startup growth without paying attention to their product —

These are the companies that are leveraging tools like:

  • Facebook Ads
  • Quora answers
  • Messenger broadcasts
  • LinkedIn updates
  • Tweets
  • Youtube videos

They are using online marketing, Email marketing, they are building landing pages and hassle to get Email subscribers, but without paying attention to their product.

So, the lesson I’d like to instil here is:

Focus on your product — without a stellar product you will not be able to find product-market fit, and without a product-market fit, you won’t be able to implement a growth hacking process.

Growth Hacking and the Pirate Funnel (AARRR)

On Aug 8 2007, Dave McClure, an entrepreneur and angel investor in the San Francisco Bay Area,  published a slide deck that presented a new customer-lifecycle framework — this framework was called the Pirate Funnel.

This simple slide deck changed the way startups used to plan and implement their marketing strategies.

So, what is the Pirate Funnel?

It is a framework that includes 5 stages — stages a new user or new customer should pass through to become a paying customer, returning customer and then a promoter of the company (via referrals).

Here are the 5 stages of a (typical) Pirate Funnel:

  • Acquisition – Getting people to sign up for  a free trial
  • Activation – Getting people to reach the AHA! moment
  • Revenue – Getting people to conduct some monetisation behaviour
  • Retention – Getting users to keep coming back
  • Referral – Getting people to refer us to their friends and family

As I hope is evident by now, the Pirate funnel covers the whole customer journey from the first time someone will visit our website, to the moment they will refer us to their friends.

The last part, the referral, is what can create a viral loop for your company.

It means that we’ve created a condition were new customers (or new users) come in without having to pay to acquire them.

Viral marketing and viral loops are popular terms in the marketing world but at the same time are entirely misunderstood.

A company’s ultimate goal — regardless if it’s B2B or B2C — should be to get people to start promoting its products and services without waiting for an exchange.

Viral Loop Effect

Growth hacking helps you with every step/ stage of the process and includes actions and experiments for every stage while traditional marketing focuses on one step at a time.

As we mentioned earlier, the growth hacking process starts by defining actionable metrics — conversion metrics that will help you understand how each stage of your funnel performs.

By tracking and monitoring the conversion rate and other metrics that are important to your business, you know what you have to change or optimise before it’s too late.

The growth hacking process along with your conversion funnel can help you map out and seamlessly systemise your startup growth.

Last Thoughts

Growth hacking is the new way businesses can drive growth for their products and services.

The element that is hidden in plain sight is the fact that to attain sustainable growth (by expanding your user base/ customer base), you have to retain the customers you are acquiring.

As Alex Schultz (VP of Growth at Facebook) mentions, a company can drive growth only if it retains the users it acquires.

Thus, growth hacking can only be successful when we focus on both retention and customer acquisition instead of focusing solely on customer acquisition.

Growth teams within organisations have to systemize their growth strategies — this should happen on a long-term rather than a short-term basis.

A logical question arises here.

How do you get your feet wet and get started?

It’s simple — you have to get your gears turning and adopt a growth hacking process that will allow you to scale your business fast or die fast.

Above all remember: failure is just a part of the process — embrace it and start working on ways to overcome it until you find success.

Good luck!

About the Author: Aggelos M

I have over 8 years experience in Digital and Growth marketing. Currently, running Growth Sandwich, a London based Growth hacking Lab. Before turning in Growth hacking and viral marketing, I had the chance to pass by head marketing and head digital positions in Athens and London, work with numerous tech startups but also build and run companies. In my spare time, he is consulting ambitious startups about their Growth and Business strategy.