By For startups, the mantra is always to grow or perish. More importantly, business growth can’t be slow; otherwise, another startup will disrupt your business and eat into your market share.
In this reality, the need for rapid customer acquisitions and revenue increases. This has made the term growth hacking so popular in recent years.
Everyone with a startup idea is looking for a growth hacker as a cofounder, and existing startups are sifting through thousands of CVs to find the perfect candidate with these skills.
But what exactly is growth hacking? Is it a special kind of marketing? Is it applicable to all companies, regardless of size?
In this article, we answer all these questions and more. We provide an overview of growth hacking, its stages, and effective growth hacking strategies you can employ. Additionally, we share top growth hacking tools and successful examples of growth hacking.
Overview of growth hacking
Growth hacking emerged sometime in 2010, primarily in tech startups, as a response to the need for rapid and sustainable growth in highly competitive markets. Sean Ellis coined the term after using growth hacking strategies to drive exponential growth for Dropbox.
Growth hacking is a process of rapid experimentation, often across marketing and product development, to achieve quick wins.
It usually involves creative, low-cost strategies and tweaks to acquire and retain customers, such as viral marketing, social media engagement, and analytics-driven app or website optimizations. The goal is to achieve accelerated growth in a short period.
The approach became popular because it offered a more agile and data-driven alternative to traditional marketing methods, allowing startups and small businesses to compete with larger, more established competitors.
Growth hacking is not just about your marketing strategies but the “spirit and intent” behind those strategies.
In his book, Hacking Growth: How Today’s Fastest-Growing Companies Drive Breakout Success, Sean Ellis noted that the key components of growth hacking are:
- The presence of a cross-functional team aligned to “break down the traditional silos of marketing and product development” in the same way RevOps advocates.
- The “use of qualitative research and quantitative data analysis to gain deep insights into user behavior and preferences.”
- Rapid generation and testing of ideas
- Well-thought-out metrics to assess the results of the ideas tested.
- Take decisive action based on the results of the test of the ideas.
One core emphasis of the growth hacking method is speed—speed of execution. For a startup and most highly competitive markets, days of delay can be detrimental.
Growth hacking works best for startups and early-stage companies looking to grow quickly and efficiently.
However, many businesses, including established companies seeking to revitalize their growth strategies, have adopted growth hacking techniques and principles.
Is there a difference between growth hacking and growth marketing?
Growth hacking and growth marketing share many similarities, but ultimately, they represent two separate schools of marketing thought. The primary differences are:
Focus and approach
As reiterated throughout this article, growth hacking focuses on quick experimentation and creative strategies to achieve rapid and scalable growth.
Conversely, growth marketing is a more comprehensive and strategic approach to driving growth through a broader range of tactics and channels, including traditional and digital marketing channels.
Scope
Growth hacking is more applicable to early-stage startups or businesses seeking rapid growth quickly. On the other hand, growth marketing can be applied to businesses of all sizes and stages, from startups to established enterprises.
Longevity and sustainability
Growth hacking focuses on achieving short-term growth objectives. Growth hackers typically prioritize speed and experimentation over long-term sustainability, even though some strategies may lead to long-term implementation.
Growth marketing takes a more holistic, long-term, and sustainable approach to growth, usually using tried-and-tested marketing methods.
Stages of growth hacking
Traditionally, your growth hacking funnel entails five distinct phases: acquisition, activation, retention, referral, and revenue. These stages highlight the hypothetical buying journey of the customer as they interact with your business.
You can utilize growth hacking in any of these stages. When examining growth hacking as a method itself, there are six distinct stages, including:
- Identifying growth channels
- Experimentation and testing
- Data analysis
- Scaling successful strategies
- Retention and monetization
- Continuous optimization and iteration
Below, we examine these stages.
1. Identifying growth channels
This stage identifies the most effective channels for reaching and acquiring customers. You may ask: isn’t that the purpose of the experiments anyway?
While true, you also want to start from a reasonable starting point. For example, a B2B tech startup will likely succeed more with content marketing than influencer marketing.
Although growth hacking seeks to conduct experiments quickly, its methods are still backed by sound judgment and research. You can identify potential growth channels by:
Conducting market research
Conduct market research to understand your target market and audience better, including their demographics, behavior, preferences, and pain points.
You can conduct surveys, read market reports, or talk to prospects and customers to understand their needs and motivations.
Conducting competitor analysis
Analyze what channels your competitors are using. This step may provide valuable insights into your target audience's most active channels and where they're more receptive to information in your industry.
It can also highlight opportunities that your competitors may have overlooked. Explore the different options within each channel, too.
2. Experimentation and testing
Growth hacking relies heavily on experimentation and testing. In this stage, you first create hypotheses (educated guesses) about what strategies might best drive growth and then test those hypotheses through small-scale experiments.
You can develop hypotheses based on the market research you conducted earlier or insights gleaned from analyzing internal website and business data.
An example of a hypothesis would be: “Adding a limited-time offer banner at the top of the homepage will increase the conversion rate.”
The next step in this stage is to develop and design experiments to test your hypotheses. To achieve stellar results, define clear objectives, identify key metrics to measure success, and determine dependent and independent variables.
A/B, split, and multivariate testing are common experimental techniques used in growth hacking.
For the limited-time offer banner example we shared above, the experiment would be implementing a banner offering a time-limited discount or promotion on one homepage version and comparing its conversion rate with the original version without the banner.
Do you want to increase conversion rates on your website? Peddle’s Web Ops services can help you optimize conversion rates with strategic website changes.
3. Data analysis
Data analysis plays a crucial role throughout the growth hacking process, especially when determining how well your tactics are performing.
Collect and analyze data on predefined KPIs and metrics to not only identify what’s working and what’s not but also to know why. This will inform if you’ll adopt the changes entirely or if it’s worth extending the experiment to get more data.
For example, the data may show that adding a limited-time offer to the home page increased the conversion rate by 2%.
The next question, however, is: Was the limited-time promo addition to the homepage responsible for the increase? That’s where statistical significance testing comes in.
Statistical significance testing helps validate experimental findings and ensure that observed effects, like the increase in conversion or open rate, are meaningful and not due to random variation. When the observed effects are statistically significant, you can decide to scale the tactics.
Examining the data to uncover why certain variants performed better or worse than others is also essential. The results from your experiments may vary when you consider independent variables like age, channel, and company type or size.
For example, you may find that your changes resonated better with web visitors from paid channels. These additional insights may help you manage resources and refine your target audience going forward.
4. Scaling successful strategies
This is where you capitalize on proven methods to achieve sustainable growth. Once you’ve identified successful strategies, you must allocate resources—such as budget, staffing, time, and technology—to scale these strategies effectively.
Scaling any successful growth hacking strategy involves deploying resources and efforts to maximize its impact while continually monitoring and refining it to maintain effectiveness.
One remarkable aspect of growth hacking is that it allows you to run multiple experiments concurrently. As such, this phase may also involve reallocating resources from less successful initiatives.
Your scaling efforts may include replicating proven approaches across different markets and segments.
However, note that you may need to experiment from scratch to confirm that the marketing strategy would still work. For example, a tremendously effective strategy in the United States may translate poorly in Europe.
5. Retention and monetization
Remember, the goal of growth hacking is not just to increase your customer base rapidly. The culmination of your strategies must impact the bottom line.
One trick we’ve observed about remaining true to this purpose is having an ultimate value metric or two for measuring growth.
For example, think of Netflix as a streaming platform. It’s not enough for people to sign up to stream movies. They must rack up a high number of view hours monthly.
Sign-up numbers tell the tale of their marketing strategies, but view hours are a better gauge of the quality of content on the platform.
Choose a metric tied to your core value proposition. For Netflix, that is providing quality entertainment 24/7. If the movies or series on the platform are not entertaining or engaging, users will watch one or two episodes and quit a series or abandon a movie halfway through.
When that happens, customers will most often not renew their subscriptions. Hence, view hours are a good value growth metric for this company.
6. Continuous optimization and iteration
Growth hacking requires continuous, iterative optimizations and adaptations. Effective continuous optimization will require collaboration across different departments and organizational functions.
Cross-functional teams, especially marketing, sales, and customer success teams, must bring together their diverse perspectives, skills, and expertise to tackle complex optimization challenges and drive innovation.
As market conditions change and new technologies and competitors emerge, you must stay agile and responsive, continually experimenting with new ideas and tactics to maintain and accelerate growth.
Effective strategies for growth hacking
We’ve mentioned that growth hacking requires creative and sometimes novel ideas and strategies. That said, you can test multiple growth hacks used by others to see if they work well for your business.
Here are some tips to implement:
Running referrals
Referrals with the right rewards that your customers value can significantly increase customer acquisition. You’ll need to experiment with multiple structures— rewards and requirements — to discover which option drives more growth.
The “Get More Space” referral program by DropBox led to 3900% growth within 15 months, and PayPal’s $10 referral program helped it reach 100 million users.
Optimizing onboarding
Removing friction when onboarding customers can help increase activation and retention. Approximately 74% of customers report dropping off if the onboarding process is too complicated, like filling out a long form. Tactics like rewriting onboarding messages for clarity can have an impact.
User-generated content
Like referral, user-generated content (UGC) can create a viral loop. UGCs like reviews, testimonials, and unboxing videos can encourage others within the user’s friends and followers to search for your product.
Using UGCs as ad creative can increase your click-through rate by 4X that of a regular ad. UGC-based marketing campaigns also reduce customer acquisition costs by 50%.
Invite-only sign-ups
Tools like Dropbox and Clubhouse released their products to the public but kept sign-ups invite-only. Invite-only sign-ups can create an air of exclusivity and fear of missing out (FOMO), helping the product go viral.
This can generate significant hype, with many people talking about the product and “hustling” for invites, creating a viral loop.
It’s one reason Clubhouse’s user base jumped from 600,000 to 2,000,000 between December 2000 and January 2021.
Encouraging social sharing
Another growth hack you can adopt is social sharing. When they started, YouTube and Facebook created ways for users to put their brand in front of everyone.
YouTube provided an easy means for users to share videos on MySpace, the leading social media platform of the day, and Facebook made embedding content in other places like blogs and websites very straightforward.
Airbnb did something similar, allowing users to cross-post their listings on Craigslist and tapping into the latter’s larger user base.
Depending on your product, you may run contests and promos to encourage and incentivize social sharing.
Top growth hacking tools
Many tools are available to assist with growth hacking efforts, spanning various aspects of marketing, analytics, automation, and optimization. Here are some of our favorites:
1. Hubspot marketing hub
Hubspot marketing hub is a comprehensive, all-in-one AI-powered platform for content management, lead generation, email marketing, social media management, CRM, and marketing workflow automation.
This tool is helpful for attracting visitors, converting leads, closing customers, and analyzing marketing performance.
With Peddle's HubSpot onboarding and implementation services, you can get the most out of HubSpot by enabling automation and artificial intelligence.
2. Hotjar
Hotjar combines heat maps, session recordings, surveys, and user feedback to provide insights into how users interact and navigate your website(s). It helps you understand user behavior, which you can turn into hypotheses to test.
3. Mailchimp
Mailchimp is an email marketing platform for creating, sending, and tracking email campaigns. We like it because it offers features like A/B testing, automation, and analytics, allowing you to experiment while running your campaigns.
4. BuzzSumo
BuzzSumo is a social listening tool for tracking how customers and prospects speak about your brand, products, and services. It also provides insights into the type of content that resonates with your audience.
5. Optimizely
Optimizely is a popular A/B testing and experimentation platform. With this tool, you can test different variations of web pages, landing pages, or copy to determine which ones perform best.
6. Buffer
Buffer is a social media management platform that allows you to schedule posts, analyze performance, and engage with your followers and other audiences across multiple social media channels.
7. SEMrush
SEMrush is an all-in-one SEO toolkit with features for keyword research, competitor analysis, backlink analysis, rank tracking, and more. It helps improve search engine rankings and drive organic traffic to your website.
Growth hacking examples
Here are two growth hacking examples:
Trello - changing home page headline message
The growth hacking team at Trello struggled to settle on a positioning strategy for the tool because the app serves multiple use cases, including project management, productivity, and collaboration.
The team hypothesized that positioning the product in a way that resonates with users will boost conversion on the homepage.
So, they ran an experiment by creating 11 different variations of the website, all featuring different messaging headlines. The experiment ran till the data collected was statistically significant.
Crunching the numbers, they found that positioning the product as a collab tool resulted in 2% more signups. The team scaled the winning messaging to other pages on the website.
InsightSquared- reducing form length
The team at InsightSquared found that only 15% of those who complete a form opt to provide their phone number. They reckoned that they could increase conversions by making forms shorter.
In the ensuing experiment, they removed the optional “phone number” field from the form. Results showed that the conversion rate in the variant without the phone number field was 112% better than the variant with the field.
Based on this finding, they updated all forms on the website by removing all optional fields.
Takeaway: Master growth hacking for rapid business growth
Growth hacking offers a strategic approach to rapid business growth.
From identifying the most effective marketing channels to testing and scaling creative ideas, growth hacking empowers you to achieve exponential growth.
You can unlock the potential for rapid customer acquisition and revenue increase by embracing experimentation, data analysis, data-driven decisions, and agility.
Whether you’re a startup founder or a seasoned entrepreneur, mastering growth hacking techniques can propel your business to new heights of success, as in the case of the Trello, Dropbox, and InsightSquared examples we shared.
Take your growth hacking strategies further by embracing Peddle’s revenue operations (RevOps), a practical methodology for aligning marketing, sales, and customer success teams for greater efficiency and results.