What is Growth Hacking?

A lot of people say they can't understand why growth hacking is different from marketing, but for us the difference is simple. The boundaries of marketing and development have blurred to create growth hacking which (unlike marketing or development teams) has just one focus. Growth!

Growth hacking isn't purely marketing but it's not purely development territory either. It's kind of like the love child of both. In growth hacking, the skill sets of marketers and developers are merged to take on business growth problems. Growth hacking couldn't exist without both developer and marketing traits and skillsets.

So what does Growth Hacking do?

Growth hacking is a way of finding growth using a process of controlled experimentation to drive iterative gains across the entire marketing, sales and product funnels. Each iterative gain, no matter how small, stacks up to push a business, company or product above the noise. It's all about compounding growth all the way across a user journey. Albert Einstein certainly understood the power of compound growth when he said...

"Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it."

To make the power of compound growth clear to you let's run through a quick example:

Imagine you made a 1% improvement on your website each day for an entire year. After 365 days, your website will have improved almost 38x from its starting level!

Conversely, a 1% decline everyday will result, after 365 days, in a website performance 0.0255x that of its starting level.

These iterative gains could occur anywhere, in any channel or within the product. However, the goal of growth hacking is always the same, to find growth and so it occurs across websites, apps and even business functions. Each gain is the result of a growth tactic found through rigorous controlled experimentation, carried out with a team grounded in agile methodology.



Where did Growth Hacking come from?

As we mentioned earlier, growth hacking is an amalgamation of marketing and development. If you're a growth hacker, you will use an agile methodology process similar to what agile software development teams in technology companies have used since 2001. This is when The Agile Manifesto was created in Utah. The key values of the Agile Manifesto are:

  • Individuals and interactions over processes and tools
  • Working software over comprehensive documentation
  • Customer collaboration over contract negotiation
  • Responding to change over following a plan

During this time, tech companies began to emerge with more and more frequency. These new companies structured very differently to the organisations of yesterday. With limited money and resources but big ideas, tech companies couldn't afford to do things - specifically software development - by the old book (often referred to as "waterfall development").

Waterfall development is a sequential non-iterative design process and consists of big scale upfront planning and a very long cycle time (3-6 months) to deployment. The phases of this approach are:

  • Requirements
  • Analysis
  • Design
  • Coding
  • Testing
  • Operations

What was the problem with this? Well, there were a few. As the product wasn't tested by customers during early development, there was no way for the company to receive essential user feedback across the product as to whether is was solving a real problem or was easy to use.

This meant there were massive assumptions about user requirements/wants within a product (and even the need or want of the product itself) meaning products were often substandard. This resulted in users not coming come back. Also, as the process was one directional and is effectively a series of dependencies, any delay resulted in large queues, project delays and lost revenue and profit.

Emerging tech companies couldn't afford to potentially waste time or money. Developers working together (or alone) on a product therefore gravitated away from waterfall development.

They needed to move and shape their product and win the attention of customers more quickly. They also needed to figure out what was and wasn't working, fast. This would ensure they didn't spend too much time on one product feature which might not turn out to give the results predicted.

In short what they wanted was a new organisational model for software development; a model that put user feedback in the middle and facilitated teamwork, faster cycle times, fewer development queues and better data driven decision making. This would also ultimately decrease time to revenue and profit. It was about deploying the MVP (minimal value product) and watching the reaction of the users, taking feedback and modifying/fixing things that weren't working.

Project management was the key foundation for this new direction, with well defined and understood capacity and requirements. Things moved quickly, startups became lean with productivity being (like it still is) key. This movement was swiftly followed by all kinds of useful project management tools such as Pivotal Tracker, Atlassian, Agilio and many others. These products were eaten up by this new school of development team, hungry to embrace a new culture of business.



Why did this affect marketing?

At the same time, marketing was still stuck in the same kind of waterfall prison that development teams had been escaping. Slow campaign planning and deployment and no opportunity for customer feedback on campaigns until the budget was allocated meant that marketing teams were slow and clunky. Teams were never ahead of the curve and not able to think and act on their feet.

Marketing needed a way to become more about high intensity feedback from users, ensuring the product and campaigns were being developed in line with user expectations. In the world of startups where resources/budgets were non existent and in an effort to showcase growth for investors, businesses had to find ways to grow from scratch with no money. This meant marketers started to take inspiration from their agile developer colleagues.

Marketing teams began using many of the tools originally meant for development teams. They started working in much shorter sprints, measuring results, taking user and customer feedback and making changes accordingly. Limited cash meant they stripped back the budgets and began testing marketing ideas and theories with Minimum Viable Tests instead of working for 3 to 6 months on projects they weren't 100% sure would work.

Marketing and development began to work a lot more closely. Changes were made by development teams to answer questions that marketing teams had... Anything from "If we move a button here, will more people click on it? or "Users keep telling us they find it hard to find the right product amongst all the ones we have, can we not develop a feature than recommends products?" or "If we could scrape listings here, and put them there, will we acquire more customers?".

Marketers (you could say these new marketers were the first growth hackers) became very, very interested in the functionality of the product. In times past, marketers usually had some kind of product or service to push, but it the world of startups, the product was their job - the company's interface with the end customer. Websites and apps were popping up everywhere and with it, a whole new way of thinking about business growth.



How did tech startups take advantage of this?

These new products offered a whole new plethora of potential activities and opportunities when it came to marketing. Products could play a role in their own growth, finding ways to leverage users to share the product to non-users in return for something. A great example of this is Dropbox, who offered current users more free storage space every time that user got a friend to sign up to the service.

Airbnb famously took it one step further and reverse engineered Craigslist to scale their business by automatically loading all properties from their website to Craiglist, giving them so much more visibility via Craiglist's huge audience. The ROI on this tactic was literally billions! Learning to exploit and take advantage of other larger sites was becoming the name of the game.

Traditional marketers still needed to communicate brand values, facilitate sales and hone branding. Developers still had to create and design a fully functioning product without having to wonder about how to market what they'd built... but now there was a hybrid. This is where this new form of marketing began to break away from development and marketing and become its own thing.

Growth hacking was officially born. This mash of marketing and development that came together in a burst of ingenious glory would change marketing forever. It was a way of making small bets, of making educated guesses on what would or wouldn't work for a user or product and testing it. What worked, was then scaled. Growth hackers listened, tested and informed startups if they were heading in the right direction and if not, how to get there.



What are the objectives of Growth Hacking?

The objectives of growth hacking are - somewhat obviously - to grow a business. In order to grow a business you must identify in what areas the business is not growing. These are bottlenecks. You must find out where the bottlenecks are, find out why they are there and then find out how to break through them. Once a bottleneck is broken through, you begin work on the next one. You keep breaking through bottlenecks and the business begins to grow.

As a growth hacker you must grow the entire product funnel from top to bottom, working all the way down the marketing and product stacks. From top line awareness to engaging users on your site to get to the "aha" moment, all the way to revenue funnel testing and beyond. You're aiming to bring users back in for a second purchase or subscription. You don't just need to get users... you need to get retained users driving monthly recurring revenue. The key metric that drives growth hackers is Customer Lifetime Value (CLTV).

What is the process of Growth Hacking?

The process of growth hacking is kind of cyclical, but if there's was a beginning, you begin with analysing the data - any data - you already have. To help gather data, you would implement an analytics schema so you can visualise your marketing and product funnel and how it's being used, from traffic to user acquisition, to sales and revenue and back again.

Start with a basic analytics schema and build into it. You should treat it like a product. Build out the bits that deliver value and provide important and informative data. You will then be able to see where the bottlenecks lie. Get the data to tell you enough about a business to know a) where they need to grow and b) if there are any bottlenecks in the way of that growth.

As we mentioned previously, growth hackers work on bottlenecks all the way down the marketing and product funnel. You don't just need to acquire visitors but get them to take action, to buy and buy again. In order to help with this you will need to find a way to visualise the funnel or user journey in some way. A great example of this is Dave McClure's Pirate Metrics (AARRR):

  1. Acquisition
  2. Activation
  3. Retention
  4. Referral
  5. Revenue

You will examine all possible activities you can use to break the identified bottleneck in any given part of the funnel and begin to run 'scientific like' experiments to fix or break through that bottleneck. To run an experiment, you must have the following:

  1. Hypothesis - if I try X, I believe that Z will happen.
  2. Methodology - you will want to document your experiment so that another tester can re-test easily without asking you what you did (i.e. it needs to be easily repeatable)
  3. Assumptions - a clear understanding of what metrics you're looking at within the experiment, and what success looks like (e.g. an increase in conversion rate by 15%)
  4. Results - a clear set of results that are a numerical description of what happened. This should certainly include statistical significance, either Frequentist or Bayesian.
  5. Observations - Was the experiment a success? Did it drive growth or do you have a null hypothesis (i.e. no correlation between activity and results)
  6. Learnings - What did you learn? This is, in all honesty the most important part.
  7. Action Points - If you have any action points or wish to conduct any future testing. The learnings should really inform your ongoing work and assumptions.

If you find experiments that deliver growth, no matter how small, the challenge is to scale into them. You must also learn from failed experiments, as this nullifies your hypothesis and stops you going down the wrong path for too long. It's all about finding out what does and what doesn't work. Knowing what doesn't work will save everyone from concentrating on a dead end and wasting time - so it's important. Remember that agile development is all about time to profit? Well growth hacking is all about time to learning that empowers growth.

Once you're done, you move onto the next bottleneck, just rinse and repeat to deliver iterative gains across your business.



Requirements of a Growth Hacker

One growth hacker can be wildly different to another - you don't usually get to a role like this without a strong personality - but they will always have a few things in common.

Technical abilities

No matter if you come from a content, design or development background you'll need to have a solid working knowledge of analytics. Analytics has to excite you. Finding out what data means and how you can manipulate it with action is paramount to being a growth hacker. The more you master analytics, the more you'll grow to love it because it has the power to answer your questions.

The best growth hackers are really passionate about analytics, so if you want to follow in their footsteps, the best place to start is a simple Google Analytics course. Here is a basic free one to get you going, something we ask that all interns or junior hires at Rebel Hack to jump into straight away to get them up to speed fast.

Growth hackers can come from anywhere within a business. It's not always about a particular set of skills as any talented business user can pick up the growth hacking process, as long as they have the right mindset.

A great team of growth hackers could contain any of the following people or skill sets:

Paid marketing channel expert

In many ways the most desirable way to scale a business is to use paid channels as it's predictable and therefore easy to model and scale - and investors love predictability. Paid marketing channels are also a massive part of business growth. You just need to work out how to do it as cheaply and effectively as possible, and where the opportunities for scale are.

Content marketer or writer

You need someone with the ability to turn ideas into words that work. Great copy feeds into almost everything you do, from CTAs to landing page and web page design. Content marketers understand blogging and inbound marketing and they're also able to effectively communicate with the customer through different channels. No matter how good an idea is, if you can't communicate it well then you're always losing.

Developer

It really helps to be able to code. A knowledge of CSS, Javascript, HTML, Python libraries empower growth hackers to to build widgets and microsites or develop product features without development support. This means growth teams can move quickly and work independently of development which keeps the product development undisturbed and on track.

UI-UX

An understanding behind what drives a great user experience and the ability to test that is invaluable. Knowing how a site should flow, how users interact with the product and what changes promote a better user experience can be the difference between success and failure. An understanding of human psychology and decision making helps shape products that are not just good, but truly great in the eyes of the user.

As you can see, the potential skillsets are varied. Having at least one deep skill set is important but even more important is having the right mindset. You need a passion for hustle, getting out there and trying new things. You should be good at managing a lot of diverse projects but still be able to focus on moving one metric at a time.

You can't be afraid of failure, but be willing to learn from any null hypothesis' and use them to inform future work. You need to be curious, willing to learn and to question your own assumptions.

What does a Growth Hacker use?

Growth hackers use all kinds of tools, from CRO platforms to Analytics and automation platforms. Here are a few examples, but there are way more:

Conversion Rate Optimisation platforms

Data & Analytics platforms

Email platforms

Automation & Social Media platforms

Landing Page deployment

Paid channel management

Design

Scripting and scraping

Domain & Brand Name Search:

Keyword and Hashtag Search

Free Image Sources

There are a load of great products out there you can use for various aspects of growth, but ultimately you'll just use the ones you like most. Those above are just a few of our favorites.

Trying new platforms is an important aspect of growth, so learning to learn fast is a crucial part of being the growth hacking game! However, one word of warning. Don't spend your entire time (and budget) testing new platforms over and over as there are just not enough hours in the day. Make a decision as to what your toolkit looks like and get on with the work involved to grow your business. I would review your toolkit once a year, and make any adjustments required.



Growth Hacking delivers business ROI

Growth hacking is ideally suited to deliver high Return On Investment (ROI) as it's low risk, low cost and iterative nature enable micro adjustments and small gains that compound over time.

As we mentioned earlier when talking about how growth hacking emerged, startups don't have unlimited resources. They need to focus on conserving what resources they can, therefore ROI is critical (much more so than businesses with inflated marketed budgets). This ROI is also expected on an individual basis too, so both teams and individuals need to be able to hold themselves to account.

When you use growth hacking tactics and methods, you should account for all the users who come in and out of a product. You can see which channels work to bring users in, who is buying and who isn't, who's returning and who isn't. We call it 'growth accounting'. This helps to identify where where a business is haemorrhaging customers (aka revenue), so that it can be fixed.

Using statistics and insight analysis you can really understand your growth rates over time and identify when patterns emerge. Running cohort and retention analysis is important in order to showcase ROI to those in your team, and to see how user behaviour is changing over time. Instead of just looking at the immediate data, you can also have a long term overview of the progress of a business.

Where does a growth team sit in a business?

A growth team is not part of marketing or development and in larger organisations may emerge headed up by a VP of Growth. A growth team needs to be able to act autonomously and experiment outside the "normal" rules of business engagement. They should be able to act across all business units and challenge and test into all aspects of the business. If they can't go where the bottleneck is, they can't fix it.

Many companies get too bogged down with wrong assumptions. They build assumptions up about their business and about what works best without really ever having tested them. Spending hours ensuring the right font is used or exactly the right tone of phrase (when the tone or font has never been tested) totally misses the point of growth hacking. Growth hacking experiments won't fail due to failures to sticking to brand guidelines, they will fail due to inflexible businesses drowning in a dogma of assumption.

If you want your business to get into growth hacking you will need to learn to let go, and move toward becoming an agile business letting growth hackers into every part of your business.



The Future of Growth Hacking

To date, growth hacking has been adopted around the world by technology startups and has made massive inroads into FTSE and S&P 100 businesses too.

Although it started in the tech startup space, growth hacking is being taken up rapidly by non technology business such as the financial sector (now dubbed fintech), service companies and even manufacturing. Growth hacking as it now stands is just one part of a larger machine which is growth marketing, sitting inside a process of agile marketing. Growth hacking is here to stay, and will continue to drive business value for many businesses.

We predict the same mindset will be adopted by non technical businesses, government organisations, charities and everything in between. It's a sure fire way to find growth, without taking large risks.

Growth hacking could be used in many other business functions, driving growth in different ways. Analysing software development cycles and performing iterative testing could easily reduce cycle times and therefore increase profit. Also, testing across processes within customer service could (using just one example) reduce call waiting times, thus improving a business's Net Promoter Score (NPS). So watch this space, as we predict growth hacking process will creep into many other operational areas of a business, driving profit in any number of ways.

Why do you need Growth Hacking in your business?

Growth hacking is useful for almost any business. It can be applied across an organisation and will help you work through growth impediments quickly and in a structured manner. Even if you're just starting out (even better if you're just starting out) you can test your assumption before you launch your app, website or product. The ability to do this is invaluable for new businesses as it might help you make adjustments to your business model early on before you have invested a lot of time and money into it.

For more established businesses, as well as improving ROI it allows new insight, data and experimentation to help you understand new and current customers better and what new customers want. You learn how to shape your business, keep a competitive edge, attract and retain customers.

Growth hacking also enables a business to get their development team closer to the end user and help better prioritise development focus to build products that are actually useful. It gives development teams the ability to receive feedback from the end user as soon as possible, shaping their ongoing work.



How to get started with Growth Hacking?

A lone growth hacker will not make you millions - you usually need a wider skillset and a change is business mindset.

The skills required to be a growth hacker are in high demand and you will need to ensure you have a growth hacker alongside other skills on your team. Therefore, if you're not sure what you want exactly it can be easy to spend a lot of money and get the wrong thing. We might be biased but we think the best way to approach this is to hire an agency to get you going, set your growth machine up and find out what part of growth hacking is most important to you.

This will save you a ton of money in the long term and mean you get access to a wide range of specialist from the start, that know how to manage themselves, are used to working as a team and won't need any micro management.

A good growth agency will just start to deliver growth and a great one will also start to help you see how to incorporate growth hacking into your organisation organically. The latter is what we do. As well as giving you the proverbial fish, we believe (as the saying goes) you need to learn how to catch them yourself in the long run if you want to thrive.

Each business is different - or at least - should be, but delivering growth always has the same principles. If you want to find out more about the ways we can deliver growth for your company then get in touch. We'd love to hear more about your business and your story so just drop us an email or comment below and we'll get in touch, it would be great to chat!


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