When the term “growth hacking” was first launched in 2014, many marketers thought it would only be a passing fad. But what exactly is growth hacking and how is it different from marketing?
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What is growth hacking?
Growth hacking is the improvement and rapid growth of a business through a number of technical skills, tools and tactics that are different from those used by a traditional marketer. Growth hacking is based on technology, creativity, analysis and the implementation of a marketing strategy aimed at a single goal: growth.
In short, the people who use it are marketers who simply have a different approach.
Growth hacking was born in the United States, in Silicon Valley. Although this practice has already existed for several decades, the term growth hacking was coined by Sean Ellis. At the time, this marketer was working at Dropbox and wanted to focus on other professional projects. When looking for his replacement, a question arose: how to title and define his position? Part of his mission was to develop Dropbox’s user base, but the term “marketing” seemed too narrow. It was then that he invented the notion of “growth hacker”, which could be translated as “growth pirate” in French. Sean Ellis is still one of the growth hackers to follow to improve the growth of his business.
Setting up a growth hacking strategy requires creating and combining many actions. To gain in efficiency, it is absolutely necessary to work on precise objectives, to prioritize your ideas, to launch experiments and to test their effectiveness. The AARRR framework then becomes an essential tool for doing growth hacking. This model traces the life cycle of a customer in five stages. Following this framework and applying it to each of the growth hacking actions implemented makes it possible to identify those having a real impact on the conversion rate and the growth of the company.
The AARRR framework
Acquisition refers to the acquisition of traffic, preferably qualitative. The growth hacker must therefore determine the best channel that will ensure rapid growth for his startup. In order to obtain the efficient results, it performs tests on the various web channels according to its targets. His goal is to gain as many prospects as possible in a short time on his company’s website. To do this, it uses strategies to improve the visibility of this site and attract Internet users such as natural referencing optimization, inbound marketing or marketing automation. The growth hacker also relies on deep learning techniques.
When the potential customer arrives on one of the pages of the company’s site, then comes the activation phase. The growth hacker must ensure that the prospect is interested and takes actions on the site, in particular by validating a purchase, by subscribing to a newsletter or by downloading a white paper. The design, the ergonomics of the site and the relevance of the content then take on all their importance. The first experience must indeed be positive to capture and retain potential customers. In order to ensure a high efficiency rate, it is important to rely on UX design techniques and copywriting.
The retention phase consists of maintaining a relationship with a user over time. To encourage them to come back regularly to the site and to be active there, the company can set up various growth hacking strategies: regular site updates, integration of new features, events, promotions, news, flash sales or Loyalty program. The increase in the number of active and loyal customers implies exponential growth. The retention stage certainly requires the most investment, but it is essential for the success of the company. The growth brought about by customer loyalty should never be overlooked.
Referral (or Recommendation)
Once the customer is loyal, it is important to transform him into an ambassador. Even if the name of the method may seem outdated, word of mouth should not be underestimated! A satisfied customer will recommend the brand’s products or services to his relatives, leave opinions or comments on social networks or on the e-commerce site on which he made his purchase. This notion of recommendation is one of the pillars of a startup’s growth. The user base can thus grow exponentially thanks to actions such as sponsorship offers, contests or promo codes. Nothing is frozen in growth hacking, and especially during this recommendation stage. The growth hacker must give free rein to his imagination and creativity to invent new ways to influence the rate of engagement and recommendation.
Last step: the inflow of money or monetization. In order to multiply revenue, it is important to increase customer lifetime value and decrease customer acquisition cost. Several levers can be activated, in connection with the previous four steps.
- Lower the cost of customer acquisition.
- Study the pricing of products and services sold.
- Work on a customer’s lifetime value (CLV), that is to say the value that a customer brings to a company during its entire life cycle, in particular by implementing cross-selling or upsell actions.
Growth hacking in SaaS
Even though growth hacking techniques can be applied to any type of business, they are particularly suitable for startups with a SaaS model. This economic model implies having few resources to allocate from the launch of the project in terms of customer acquisition. Growth hacking techniques generally allow them to launch a product quickly with a few features that will be developed subsequently based on feedback from the first customers.
Among the most popular growth hacking actions for SaaS software companies, here are some that have been tested and proven.
- Free trial: offering users to test software for free over a given period allows you to quickly expand your prospect base and then turn them into customers with a paid version.
- Freemium model: Like the free trial, many SaaS startups also offer a free version with limited functionality, encouraging prospects to sign up and then bringing them to a more complete and paid version.
- Influence marketing: find well-known influencers in the same field of activity as a startup who will be able to test the product or service and talk about it on their YouTube channel, on their blog or on social networks. Influencer marketing corresponds to the Recommendation step of the AARRR framework.
- Viral recommendation campaigns: this involves using the existing user base to offer them to refer other users. In return, they will earn credits to unlock additional features or services on the software.
- Content Marketing: The production of relevant and quality content on a blog fits perfectly into a traffic acquisition strategy. The company will have to pay particular attention to the keywords used to improve natural referencing and gain visibility on the web. Posting articles, infographics, videos, or white papers will help position yourself as an expert and gain the trust of prospects.
Startups and SaaS publishers often combine such growth hacking actions with other strategies such as inbound marketing. Growth hacking and inbound marketing have a common goal: to quickly gain customers and generate conversions.
4 examples of growth hacking
First example with the Airbnb platform, created in 2008. To develop its user base, Airbnb diverted traffic from another website with a strong audience. Its creators thus had the idea of posting Airbnb ads on the Craiglist site, the American equivalent of the Leboncoin site. When a user posted an ad on Airbnb, it was simultaneously posted to Craiglist. This growth hacking strategy has enabled Airbnb to quickly acquire a large base of users and achieve notoriety that no longer needs to be demonstrated.
In 1996, the Hotmail e-mail service was the first to be accessible from any computer with a free account. The creators, Jack Smith and Sabeer Bhatia, wanted to find new users quickly, but lacked the funds for marketing. It was then that an idea emerged, certainly the first act of growth hacking: adding a signature at the bottom of emails: “PS: I love you. Get your free e-mail at Hotmail ”. After clicking on this link, recipients could directly create their account and use Hotmail for free. The messaging service has grown from one to two million users in five weeks. This example of growth hacking mainly affects the recommendation stage, or referral.
Dropbox, the online document-sharing storage platform, also played on the recommendation by offering its users to get up to 16 GB of space for free by inviting 32 people to join the service. By participating, the user got 500MB of free space per referral.
Another example related to the retention stage with Twitter: the creators of this social network quickly realized that many users created their account, but remained inactive and lost interest in the application after a few days. To capture the attention and show the interest of the news feed, Twitter has therefore decided to offer a list of people to follow when creating an account. This simple suggestion has significantly reduced the number of accounts considered inactive.
Growth hacking resources
Growth hacking is in constant motion. A strategic watch is essential to stay informed and find ideas to boost the growth of your business.
The Growth Makers podcast is today the benchmark in growth management in France. The program has more than 170,000 listeners, proof of the importance of this subject for all companies. With Growth Makers, Gabriel Gourovitch helps French startups by providing methods to structure the growth of their business. A very interesting source of inspiration for growth hackers, the podcast covers cultures, projects, processes, recruitment and tools in 30 minutes with specialists.
The Marketing Mania podcast, founded by Stan Leloup, is all about conversion, the activation phase. He discusses the topic of marketing strategy, persuasion tactics and innovative hacks with expert guests on the subject.
Brian Balfour is known for the articles he has shared for several years on his blog. He discusses the different methods of growth hacking and changes the discipline. Reading this blog, which has tens of thousands of readers from around the world, is essential for startups who want to do growth hacking (site written in English).
Andrew Chen also establishes himself as a specialist in growth hacking with more than 650 articles to his credit, published among others in magazines such as Fortune, Wired or the New-York Times. He discusses themes such as product / market fit, virality, engagement metrics and conversion. After managing the teams at Uber, he joined the Andreessen Horowitz investment fund focusing on SaaS startups.
To go further, download this guide to help you understand and set up a growth hacking strategy for your business.