Since Sean Ellis coined the term Growth Hacker in 2010, there has been a considerable amount of hype around the term and its related verb Growth Hacking. Many proponents point to the most famous start-ups as examples of growth hacking and make great claims for its effectiveness. But what is growth hacking, and is it an effective technique for growth?
Growth hacking – a definition
Surprisingly, there is some difference of opinion about what growth hacking actually is.
Wikipedia defines it as: 'A process of rapid experimentation across the marketing funnel, product development, sales segments, and other areas of the business to identify the most efficient ways to grow a business'.
Another definition is that Growth Hacking is: 'An umbrella term for strategies focused solely on growth. It is usually used in relation to early-stage start-ups who need massive growth in a short time on small budgets. The goal of growth hacking strategies is generally to acquire as many users or customers as possible while spending as little as possible'.
Perhaps we should go back to the original source – Sean Ellis says: “A growth hacker is a person whose true north is growth."
Marketer or Growth Hacker – what’s the difference?
Looking at the definitions, you might be tempted to ask what the difference between a growth hacker and a marketing person is? According to its exponents, a growth hacker has a total and utter focus on growth. So it’s a concentration on growing the revenue of a business to the exclusion of everything else. This usually focusses on numbers of leads, conversions and new customers.
What makes growth so important anyhow?
For a start-up, it can be argued that growth is everything. Most start-ups have investors who are looking primarily at revenue figures to judge a company. They care less about costs as every start-up always has initial costs – what concerns them is growth. So young companies will want to demonstrate the maximum possible growth month on month.
Look at many of the past few years ground-breaking start-ups: Facebook, Instagram, Uber, Airbnb and the like, and they all demonstrate rapid growth. This rapid growth leads to further rounds of investment and this (hopefully) continues until the start-up goes public, or is bought out by another company – as Facebook did with Instagram.
What does a growth hacking strategy look like?
Typically a growth hacking strategy starts like any other marketing or business strategy by defining goals. Obviously, these particular goals will be directly related to growth. Then you need some way to measure these goals – to make sure that you know when you have hit them. Finally, and here is the part that is a departure from conventional marketing, you experiment with different and often radical, innovative or guerrilla marketing techniques to see what works best. This is typically done fast and often, and it is this that potentially sets growth hacking apart from conventional marketing.
So what techniques do Growth Hackers use?
Typically growth hackers will use a range of techniques, in three broad areas: content marketing, product marketing and digital advertising. But if they can achieve growth through partnerships, through tie-ups with other companies, through the use of a social platform – sanctioned or not – then they will do so. They might use guerrilla marketing techniques that they know are not sustainable, to gain short-term, rapid growth.
It’s this aspect of growth hacking that gives it a slightly ‘dodgy’ image – this relentless pursuit of growth at any cost, leading Samuel Scott of The Drum to call it: A long con that will only lose you millions.
But surely growth is good, right?
Well, yes – especially for start-ups who often need to demonstrate extreme levels of growth to keep investors happy, or to entice the next round of investors. But it’s the concentration on growth at any cost that is the issue – especially in the longer term. The temptation when you are focussed on growth at any cost is to give away the product or service, or even to effectively pay people to use it. Unless you also consider profitability as well as growth, you are effectively building your castle on sand. At the heart of your business may be a completely unprofitable product or service, but because you are forever growing your business, that is ignored until it eventually comes home to roost.
Of course many modern, digital businesses of the past few years have been able to be unprofitable and still manage to survive – either through investment funding or through successfully going public on the stock market. It’s well-known that many social media platforms have been unprofitable for most, if not all of their operating years. Twitter, for example, only reported its first quarterly profits at the beginning of this year (2018). Uber is still not profitable – despite aiming to go public in 2019. Often, finding out financial information from digital start-ups is next to impossible – and yet they are more than happy to boast of numbers of users/customers.
Unfortunately, history is littered with businesses that were over-hyped, that people invested fortunes in and that suddenly and spectacularly failed. It was less than a couple of decades ago that the dot.com bubble rose and then dramatically burst as businesses failed to live up to totally unrealistic company valuations. Remember boo.com? Pets.com or WordCom? I doubt you do, but they were huge before the fall in 2000. Some are even predicting that we are about to see another dot.com bubble because of the focus on growth rather than profitability.
Pile it high, Sell it cheap?
With growth at any cost, there is a tendency to over-promise – meaning that customers may well be disappointed when the product or service is not delivered or fails to perform as advertised. There is also a tendency to undervalue the product and use bulk-selling marketing techniques – all of which carves great chunks out of a company’s profitability.
This approach also tends to cheapen your brand. Once you get a reputation for selling cheap it’s very difficult to then move your brand or products upmarket. And generally speaking, in many industries, upmarket is often where the profit lies. A premium product or service often costs a little more but can be sold at a greater margin with the right marketing approach.
Now producing in high volume and selling cheap may well be your business’s chosen strategy – but if it isn’t, then this emphasis on growth at any cost is probably not going to be a good fit for you.
Ignore your customer at your peril
Growth at any cost also tends to side-line the customer. Once you have the customer, you are no longer interested in them, as it’s all about new customers, more customers. So customer service becomes a low priority.
This has a couple of serious implications – firstly, you miss the opportunity to sell more product or levels of service to existing customers, which is a proven source of revenue, and actually more profitable than business from new customers. Secondly, you also risk ending up with a lot of unsatisfied customers who may well share with their peers – thus bursting your sales bubble as prospective customers are put off by what they hear about the company.
So what can we learn from Growth Hacking?
Growth hackers, by and large, use marketing techniques that any modern marketing person will recognise. The use of content marketing, social media and digital advertising should all be part of any marketing toolkit today. There seem to be two ways the growth hacker is different, and I would suggest that one is good and one is bad.
Concentrating on growth at any cost simply makes no sense; unless you are a start-up desperate for finance and you like gambling your company. Sustainable growth is a much better target to aim at – building growth that takes into account costs, return on investment, profitability and building the brand.
On the other hand, the growth hacking idea of experimenting with different marketing techniques, platforms and approaches on a small scale for a short period of time, is a methodology that most marketing departments could use to good effect. Too many rely on the same strategies and techniques month after month. The idea of shaking it up and trying different test campaigns with A + B testing regularly is a good one. When you do, make sure you have a way of understanding the results and you act on the successes and failures.
This actually sounds a lot like the concept of Agile Marketing, and there are definite similarities between growth hacking and agile approaches.
Ultimately, there is nothing about growth hacking that is particularly revolutionary, most approaches are simply sensible modern marketing methods that anyone conversant with content marketing techniques and digital advertising would recognise. What IS different is the emphasis on a passion for growth and a willingness to experiment.
Growth hacking is a great subject to explore as it will likely give you ideas for campaigns, strategies and new techniques; but it’s definitely not for every business.
Running a successful company is not easy – there are many factors at play. If it was just a case of concentrating on one and ignoring all the others, it would be easy, and everyone would do it. The truth is that there are no shortcuts to growth, but there may be some useful experimenting to be done.