What Is Growth Hacking?

Some startups seem to spring out of nowhere and experience rapid, huge growth in their first year of business. From the outside, it can seem impossible to crack the code for your own business to experience this kind of rapid growth. The answer for many of these businesses is growth hacking. 

Growth hacking is a relatively new concept but has already seen some huge companies, including Facebook and Airbnb, embracing this new approach. But what is it and how can you make it work for your business? 

Growth Hacking
Growth Hacking From Neil Patel

So, what is growth hacking?

The term ‘growth hacking’ was first coined by entrepreneur Sean Ellis in 2010. Ellis has been a consultant for many big start-ups and stumbled upon the idea of growth hacking while looking for people to put into businesses when his consultation period was ending. Modern businesses require a different approach, especially for start-ups. 

Traditional marketing focuses on budgets, expenses, and conversion. Growth hacking, however, ignores everything except growth. Growing quickly is essential for any new startup businesses. 

A good growth hacker will need an analytical mind and be able to come up with creative and innovative but inexpensive methods to help their company grow its customer base. The only focus of a growth hacker is growth. 

Growth hacking is principally associated with online activity, but it can be done offline too. A good example would be chained who have managed to get franchises into every shopping mall in America, like some of the large coffee chains. This saturation could be considered growth hacking. Taking advantage of cheap rents and getting your brand in front of millions of pairs of eyes is a good way to deal with a lack of marketing budget!

Scalable companies are prime for growth hacking. Therefore, online businesses are often the ones to see big growth. If you make a physical product, such as glassware, you need to keep making products to sell. However, for an online business, like Facebook, the user is constantly improving the service with your input. More sign-ups to the site happen with little work from Facebook, who only have one product to maintain. 

How do I get started in growth hacking?

The first step for any company hoping to experience some rapid growth is to make sure you have a product that people want. This might seem obvious, but so many companies fold in their first year because they haven’t properly researched the market and made sure there’s a demand for their product idea or service. 

The online world has made getting a product right much harder too. In the past, you had time to trial a product and adjust after launch. However, everyone is online these days, and word about a new product spreads much faster. If you release something sub-par, it is much harder to recover before the consumer already knows your product isn’t great. 

To get started well, so extensive market research to be sure there is a gap in the market for you and get as much feedback as you can before going public with your product. Don’t waste your time working on something that nobody wants. If you think you’ve had a great idea, start asking people. Would they want it? Would they buy it? Would it be useful for them? 

Asking your customers for feedback also helps to make them feel invested in the product and encourages them to talk about it. If they’re telling their friends about these cool things they’re involved with, that’s free word-of-mouth marketing for you that could bring in new customers with no effort or spend on your part. 

If you can, launch a free website or a YouTube channel in the same niche area as the product you’re thinking of. You can test out the interest level and start collecting some loyal followers (and most importantly, email addresses) who will be excited about and ready to buy your product when it launches. Start a blog, write an eBook, start a YouTube channel, send out a newsletter. Just get the word out there. 

Your next step is to work out your target audience. It’s tempting when you have an idea, you’re excited about to think that ‘everybody’ will love it, but this is unlikely. A properly defined target market will help you to market properly and get those first customers in. 

The first people who will find your product are early adopters and innovators. You need them to get on board quickly, or your product will fail. Create a detailed customer profile. Imagine your ideal customer as though they are a real person. Who would get the most from your idea? Who they are? Where do they live? How old are they? What career do they have? Where do they shop? Which websites do they use?

With a detailed customer profile like this, you can adjust your product and your early marketing to suit these people. You don’t need to throw a huge launch event or start with a big marketing campaign. Just release your product where you know that ideal customer already is. For example, if your customer is a young professional male, working in the tech sector who spends a lot of time online, launch at a tech conference. The people you want to reach are already there. All your marketing communication needs to talk to these people. 

Creating some hype like this is much more effective than going after traditional, more expensive marketing methods. You can get your startup off to a jump start with some excitement. Spread the word in your community and get those all-important first orders locked down. 

Another good trick is to get your existing customers to share your product for you. We’re all used to referral codes now because they work. How many of us signed to Uber first with a code for a free ride from a friend? That friend got a reward too, in the form of a free ride of their own. You might have downloaded the app purely the free trip, but you’re probably still using it. 

What is acquisition?

The acquisition is the most important first stage of growth hacking. Tech and software companies were the first to embrace growth hacking, and the big tricks for acquisition are still from those industries. There are three big ways to drive up customer acquisition; viral, stick and paid. You can use one or a combination of any of the three methods. Viral means growth through referrals. Stick is creating an irresistible customer package that drives customer retention. Paid would cover spending money to get customers. 

Viral marketing is hard to pull off but can be an amazing way to get your business in front of as many people as possible. You can go viral in a few ways, like using a bigger user base and leveraging the reach of other products. You still want to target that defined audience you worked out earlier, but you will use a bigger platform to do it. 

It’s important in the early days not to spread your marketing efforts too thin. Budget is always tight for startups, but many startups scatter their budget around too many platforms to cover all their bases. You’ll find yourself competing against businesses with much larger budgets, leaving you lost in the crowd. It might seem scary, but you should focus your budget in one place to make the most of it. If something isn’t working for you, don’t wait it out. Swap to something else quickly to save wasting budgets. 

Rewarding your customers for spreading the word can be effective. Reward them for sending links to their friends, or for connecting their social channels to their account with you. Offer incentives for adding buttons on their website or social channels. Make it easy for them to share, by adding share buttons or embed codes on any content like blog posts and videos. 

A viral marketing campaign is great, but what’s even better is a product that speaks for itself. For example, the first iPod adverts went viral in 2004, because the white headphones stood out so much against the black dancing figures. Most headphones were dark in color, so the white really stood out and caught attention. 

Build on the popularity of other big sites. For example, if you’re making great video content, share it on Facebook as well as YouTube. Facebook is really pushing its video service, meaning that if you upload the video directly to Facebook, instead of sharing from YouTube, Facebook gives your content a boost up the newsfeed, meaning more people see it. 

Integrations are also an easy trick. Most websites require you to sign up now, but lots of can’t be bothered with filling out yet another form. You can dramatically boost your sign-ups by making it as easy as possible. Sort out integration so users can log in with Google, Facebook or Twitter. If it’s easy to sign up, more people will do it. 

Sticky growth is a less common approach but used properly, can be used to fuel demand. Creating the perception that your service is exclusive can help to drive up interest. When Facebook launched, it was only for ivy league schools. Dropbox was invite-only at launch. Both companies are now household names with huge numbers of users. Restricted supply can create demand. 

When you’ve created the demand, you need your company to be ‘sticky’ and hold onto those customers. Take Facebook as an example. They don’t have a direct competitor in the market, meaning we all sink hours a day into the platform. It’s the stick, keeping us interacting and engaging with the platform. Learn what your customers like and keep tailoring your offer to suit them to stop them from going elsewhere. You’re aiming to create high retention with a low churn rate. If your rate of customer acquisition is higher than your churn rate, your business will grow.

It’s also worth finding ways to get more revenue from the customers you’re retaining. Cross-sell or upsell other products you offer or find a way to offer a customizable option to keep your customers loyal and engaged. 

Businesses that embrace viral and stick marketing are more common in software. Online growth can be much harder for other kinds of businesses. Instead, commercials can be better, as can other paid growth tactics. Paying to acquire new users can be risky but can really pay off. 

Spending money on ads can be justified by weighing you spend against the lifetime value of a customer. Push that number up with your retention strategies. 

Paid growth can be started easily with something basic like spending on PR or advertising. Decrease your costs elsewhere and drive up profits to make a profit that can be invested in paid growth. 

How can I convert visitors to customers?

Getting interested in people onto your website is only half the battle. You need to convert them into customers and get them across the line to spend money. Make it easier for visitors to sign up for your service, whether that’s making an account or signing up for your newsletter. The simpler this process is the more likely people are to complete it. Easier opt-ins are a good first step to converting. 

There are three phases of successful customer acquisitions. Pre-signup is anything the user experiences before deciding to opt-in or signs up. The first user experience is guided onboarding steps to get someone interested in your product or service. Post-signup is after option and the steps taken to make sure your customer is happy and doesn’t get buyer’s remorse. 

Knowing someone’s pre-sign up journey can help. For example, if they googled to find a solution to a problem, you know what product or service to suggest to them to solve that problem. 

You also want to make the option process as simple as possible. If someone has landed on your site from a google search, or a PPC ad, the landing page needs to quickly provide the information they were looking for and have an easy route to make a purchase or sign up. The more clicks between them and parting with their money, they’re often going to click off and go somewhere else. 

Look at your user flow. Where are people entering your site and where are they wanting to go next? How easy is it to get there? Can they easily browse for more information? Is your ‘buy’ or ‘sign up’ button front and center? Are they seeing the value of what you offer? 

If you have managed to attract their interest, the next stage is to make sure their first experience is a positive one. Your onboarding phase should be helpful; offer tutorials about getting the most out of your product, whether through training videos, instructional manuals, group demos or offering Skype calls for more complex services. Offer more detail for more complicated products.

Get your messaging right across the whole onboarding experience. You can use some automation for this and still use tailored messages. For example, if someone has used a specific feature, this can trigger a certain email to encourage them to take the next steps. Most automation platforms have good options to help you create these messages. This could email like reminding a customer that they have items in their basket but haven’t checked out. 

How can I retain customers? 

Customer retention is essential for any startup. If you’ve spent money on acquiring and converting a customer, you want to make sure you hang on to them. 

Repeat customers are the most likely to convert and spend the most money. Despite this, many companies spend a lot more money on attracting new customers than they do on looking after their existing ones. Instead, spend time and money on customer retention. 

Keep connecting with your customers. This could be via email or other platforms. If you have an app for your company, in-app messaging can be a good tool. Offer a live chat option in-app or on your website so customers can have issues resolved quickly and easily, without them having to take extra steps to contact you or wait for a response. 

Try automating messages depending on the user’s behavior on your site or app. Change messaging depending on location, such as targeting adverts for products that suit the weather in wherever your customers are. Push messages during the sign-up process or purchasing process to guide the customer and overcome any roadblocks. 

How can growth hacking boost revenue?

Money is always tough in the first few months of a startup business, and if you’ve invested heavily in growth hacking tricks, you’ll need to pull some revenue in fast. Make sure your team and infrastructure are ready to handle the work needed to do this. 

Don’t underprice yourself for the sake of drawing in customers, as it will take much longer to earn back your investment and start making a profit. If you’re already sending targeted messaging, some of these should be aimed at generating revenue. Send messaging that showcase what value your product or service offers. Messages with offers can be successful at this. 

An abandoned cart sequence is a classic tool for this. Many users fill a basket on an online commerce site and then abandon it. Abandoned carts often happen because a user goes to search for the same thing cheaper elsewhere or goes to look for offers. Shipping costs are also a big cause of abandoned carts. 

Run some tests on whether free shipping boosts your sales. Track total sales and the average order value to see if free shipping generates a better return on investment. Try offering free shipping on orders of over a certain value to encourage larger orders.

How can I get customer referrals?

We covered customer referrals earlier in this guide, but they’re worth exploring in more detail as an important part of growth hacking. 

Many companies put a lot of effort into finding different ways to measure customer satisfaction, but there is a much better way to measure this. Would your customers recommend you to a friend? 

Any time you’re gathering feedback from customers, ask them how likely they are to recommend you to a friend. A scale of one to ten to answer from makes this question easy to answer. Those who rate you between 0 and 6 can be classed as detractors, as they will likely be lost and more likely to tell others to avoid you. A score of 7 to 8 suggests the customer is passive; they’re content with your service but aren’t feeling interested in sharing it with others. A score of 9 and 10 come from a promoter; someone who will recommend you. 

Pay attention to that middle group. You want to convert them up to a 9 or 10 to make sure they don’t switch to a competitor. For referral purposes though, look at that top group. You need to keep those people happy to stop them from switching to something easier or cheaper. 

Make referrals easy for those happy customers. Add buttons to invite a friend to the service, or to forward your emails. Offer incentives to share, like vouchers in return for each person they get to sign up. 

What are some key industry terms in growth hacking?

Like any new marketing trend, growth hacking comes with the onset of jargon that might seem impenetrable to a newcomer. Here are some of the key industry terms you might come across if you decide to try growth hacking. 

Pirate Metrics – Pirate metrics is the term coined for the metrics laid out for growth hacking by ex-PayPal marketing director Dave McClure. The metrics important for growth hacking, McClure said, are Acquisition (getting your name out there), Activation (giving users a good first experience), Retention (bringing back repeat customers), Revenue (monetizing users) and Referral (getting users to tell their friends). He used the acronym AARRR, which then gained the nickname ‘pirate metrics. 

PMF – PMF stands for Product-Market Fit. This is the best foundation to encourage good growth. A good PMF is when the product or service you’re offering is in sync with the target audience. 

Growth Experiment – A company with growth hack potential, in an experimental stage.

Unicorn Growth Hack – Incredibly successful growth hacks. Uber and Airbnb are great examples of a unicorn growth hack. 

OMTM – One Metric That Matters. A single metrics defines the one goal that the whole startup should be working towards. 

User persona – A detailed profile of who your target audience is. This should be a profile that is heavily defined, with an idea of the age, gender, job and lifestyle of your audience. Avoid vague user personas. 

OPN – Other People’s Networks. This means leveraging the network of someone else to promote your company. OPA (other people’s audience) does much the same thing. This could include cross-promotion or targeting a company with the same audience as you, such as Uber offering free rides to visitors to the SXSW tech conference. 

Lean Analytics – The bare minimum of tracking, reporting, and analysis of analytics. Proper tracking comes a letter when you’re targeting something other than just growth. 

A/B Testing – Creating two versions of a product or service (usually a small change, like a website with two different versions of the home page) to compare which option performs better. 

Churn Rate – Loss of customers as time goes on. Keeping customers over time is called the retention rate. 

How do I measure the performance of growth hacking?

There are few good metrics to measure to help you track the success of your growth hacking. 

How are your sales metrics looking? When you’re measuring sales, don’t just look at the current numbers, but measure your revenue run rate. The run rate means you can predict your future performance in sales, which is very important for startups who need to report to investors. Don’t forget to factor in seasonal business or seasonal lulls, like Christmas or the Summer. 

You should also include average revenue per user or ARPU. You want to see this number trending upwards. This shows that you’re getting customers to spend more each time, which is a good sign that you’re doing something right.

Pay attention to your finances. Look at your burn rate. Burn rate is the amount of money you’re spending and can help you see how much time it will take before you can break even and start earning a profit. Good operational efficiency is essential too. You need to understand your expenses and operating margins in relation to your revenue and leave yourself enough room to grow. Measure your gross margin. This is the percentage of total remaining revenue left over after production costs and the costs of delivering your product or service. 

How do your customers feel about your business? As a startup, you need to measure customer acquisition costs and churn rates. Customer acquisition cost is the cost of attracting new customers or clients. How much have you invested in marketing per converted customer? 

Churn rate should drop over time, as you begin to gather a loyal customer or client base. To calculate your churn rate, take the number of clients you lost in a month and divide it by the number of clients you had at the start of the month. Reduce churn rate by meeting your customer’s expectations and take care of customer service. Stay ahead of the competition to retain your customers. 

If your company is operating online, then there are some other good signs that your growth hack has worked. A big increase in traffic to your website is a good way to see that your presence online is having an impact. Remember though, web traffic is nice, but it isn’t an indicator of success. Dig further into your web traffic to see where it’s coming from. Is it coming from search engines, referrals, or your social channels? Are you getting much direct traffic? Google Analytics is the best way to dig deeper into your web traffic. 

When you get those visitors onto your website, are they converting into sales or leads? Are they filling in contact forms, downloading resources, making appointments or buying things? Look for a conversion rate that is going up as you get to know your audience better. 

If you’re on social media, see if your followers or likes is shooting upwards, as this is a good way to see that your company is grabbing attention. Lots of followers are nice but aim for quality over quantity. You want a relevant, engaged audience who will convert into customers. 

What can I maintain success from growth hacking?

If growth hacking has gone well, you want to keep the momentum up with this success. You must keep improving your products or services to keep things ticking over. Even successful startups can take years to become profitable. This can be caused by low prices, free trial periods or making back setup costs. 

To boost revenue, remember that it is easier to sell to existing customers than new ones, and they need a reason to keep purchasing from you. 

Refine your onboarding process so customers feel like your company is offering good value. Keep tweaking things to offer new communication, useful information and refined versions of your service. Offering new services, or new features can really help to keep customers and keep them spending. For example, Uber grew very rapidly through growth hacking. They’ve stayed big by offering easy referral options and tweaking the service with new safety options and expansion into food delivery. 

You need to focus on user experience. Keep your website up to date with a fresh, easy to navigate design. Improvement should be ongoing. Growth hacking, no matter how successful, isn’t the end of the journey. What comes after your rapid growth is just as important if you want to create and maintain a successful, sustainable business. 


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